Citation Codes

Equivalent Citations

citation codes

Case Number

C.R.P No. 204 of 1994

Attorney(S)

For the Appellant: B.Rudra Gowda, Nyayamitra, Advocates.

Judges

Hari Nath Tilhari, J.

Acts

16(3) of Indian Telegraph Act, 1885, hereinafter referred to as Act
Works Clauses Act, 1847 (C. 17), S. 6 see also Water Act 1945 (C. 42)
Bombay Provincial Municipal Corporation Act, 1949,
S. 10(d) of the Indian Telegraph Act, 1885.9.
Sec. 10 of the Indian Telegraph Act, 1885
S. 16(3) of the Indian Telegraph Act, 1885,

See more information ...

Smart Summary

Structured Summary of the Legal Opinion

Factual and Procedural Background

This is a Civil Revision under Section 115 of the Code of Civil Procedure arising from an order of the District Judge, Chitradurga dated 28-9-1993 in Misc. Case No. 31/90, which proceeded under Section 16(3) of the Indian Telegraph Act, 1885.

The petitioner owned about ten acres in several survey numbers at T. Nagenahalli, Hiriyur Taluk, Chitradurga District. On that land the petitioner had fruit-bearing trees including coconut, tamarind and neem trees. In December 1989 the respondents (seeking to lay a 220 KV transmission line between Hiriyur and Gowribidanur) issued notice and thereafter cut and removed trees: specifically 48 coconut trees, 4 tamarind trees, 8 neem trees and certain other trees (claimed in total to be 64).

On 27-1-1990 the respondents paid Rs. 20,344 to the petitioner as per the respondents' Schedule of rates fixed by a Government Order dated 1-8-1988 (Exhibit D1); the petitioner accepted that payment under protest as inadequate. The petitioner filed proceedings under Section 16(3) of the Indian Telegraph Act before the District Judge claiming compensation based on the age and future productivity of the trees (capitalisation of recurring income). The petitioner's claimed computation totalled Rs. 8,30,000, less the compensation already paid, leaving a claimed balance of Rs. 8,00,656.

The District Judge relied on Exhibit D1 (the schedule rates) and awarded compensation based on per-tree rates (totaling Rs. 41,248), less the amount already paid (Rs. 29,344), leaving a balance of Rs. 11,904. The petitioner challenged that award by filing this revision petition under Section 115 CPC.

Legal Issues Presented

Whether the District Judge erred in assessing compensation by reference to officially determined schedule rates/market price instead of awarding "full compensation" under Section 10(d) of the Indian Telegraph Act, which, according to the petitioner, should include capitalisation of future recurring income from fruit-bearing trees.
Whether "full compensation" under Section 10(d) of the Indian Telegraph Act includes compensation for deprivation of usufruct (future yields/profits) and therefore requires capitalising annual net yield (with an appropriate multiplier) rather than valuing the trees at a sale/market price.
Whether the District Judge was required to award interest on the unpaid portion of compensation (and whether Civil Procedure Section 34 can be applied to grant interest from the date of claim to payment).
What is the scope of interference under Section 115 CPC in a matter that principally involves disputed findings of fact: i.e., whether the District Judge's approach amounted to acting illegally or with material irregularity such as to justify interference under S.115.

Arguments of the Parties

Petitioner's Arguments (Sri N. Devadas, counsel)

The District Judge acted illegally and contrary to settled principles in valuing fruit-bearing trees by reference to schedule/market rates (Exhibit D1) rather than awarding "full compensation" under Section 10 of the Indian Telegraph Act.
Section 10(d) requires the Telegraph Authority to "do as little damage as possible" and to pay "full compensation" for damage; the term "full" is significant and must include compensation for recurring income that the trees would have produced over their productive lifespan.
The correct method is to assess annual net yield (annual yield minus cost of production) and capitalise that by an appropriate multiplier to arrive at full compensation (the petitioner sought capitalisation over years for coconut trees, tamarind, neem etc.).
The District Judge failed to apply these basic principles and therefore committed a jurisdictional error justifying interference under Section 115 CPC.
The petitioner also sought interest on the unpaid portion of compensation, asserting that the amount became a debt from the date of cutting and that interest is allowable under Section 34 CPC (ordinary or bank rate depending on nature of transaction).

Respondent's Arguments (Sri R. Rudre Gowda, counsel)

Revision jurisdiction under Section 115 CPC is limited. This Court cannot reappraise pure questions of fact or interfere with the quantum of compensation unless there is a jurisdictional error covered by clauses (a), (b) or (c) of S.115.
The assessment of compensation is essentially a finding of fact; the District Judge did not commit jurisdictional error and sought to award the best possible compensation based on available material (schedule rates), so interference is not warranted.
The petitioner has not shown that the District Judge acted illegally or with material irregularity within the meaning of Section 115 so as to justify revisional interference.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Stroud's Judicial Dictionary (5th Ed., p.1060) — Water Works Clauses Act 1847 reference	Explains "full compensation" in context of prohibiting use of property: compensation must be what owner would have made from the property during the period he was prevented from using it (example: a colliery owner deprived of coal profits).	The Court used this definition to emphasize that "full compensation" means compensation for loss of profit/use (not merely market value) and that assessment must consider what the owner would have earned over the relevant period.
Meyers v. City of Daytona Beach (cited in Words and Phrases)	Defines "full compensation" in a constitutional/expropriation context as payment for what the property owner is being deprived of.	The Court cited this definition to support the proposition that "full compensation" requires indemnification equivalent to the deprivation (including future earnings).
The Bwllfa and Merthyr Dare Steam Collieries Ltd v. Pontypridd Waterworks (Law Reports 1901 (2) KB 708/805)	Holds that compensation for prohibition of working a mineral is not the value of the coal-field but the profit the owner would have made during the time it would have taken to get the coal (capitalisation of expected profits).	The Court relied on this authority to illustrate that compensation analysis must focus on real loss (profits) and to justify capitalising future yields rather than applying a sale/market-price concept.
Richard v. The Great Western Railway Company (Law Reports 1905 (1) KBD 68)	Affirms the principle that compensation is not the price as upon a sale but the sum to be assessed by way of compensation (focus on appropriate measure of loss).	The Court cited this to support the view that measuring compensation requires an assessment of loss (including future earnings) and not simply a sale-price valuation.
Municipal Corporation of the City of Ahmedabad v. State of Gujarat, AIR 1972 SC 1730; (1972) 1 SCC 802	Explains that statutory provisions providing "full indemnification" require compensation to be determined according to judicial norms and by appropriate methods of valuation so as to achieve full indemnity against loss.	The Court applied these observations to Section 10(d) of the Indian Telegraph Act, holding that "full compensation" must be attained by employing valuation methods appropriate to the property (including capitalisation of future yields for fruit trees).
Kerala State Electricity Board v. Varghese Thomas, AIR 1961 Kerala 237	States that destruction of fruit-bearing/income-producing trees deprives the owner of their usufruct for their productive period and that compensation can permissibly be based on the usufruct (future yield) rather than market value of land.	The Court relied on this authority to endorse assessing damage by capitalising expected future yield (age, productivity, life-span factors) as a permissible and often simple method for fruit-bearing trees.
State of West Bengal v. Banerjee (cited)	States that compensation refers to the amount which the owner has been deprived of (compensation = deprivation).	The Court invoked this principle to underscore that full compensation equals the deprivation suffered, reinforcing the approach of valuing lost future earnings.

Court's Reasoning and Analysis

The Court set out the statutory text of Section 10 of the Indian Telegraph Act, 1885, focusing on sub-section (d) which requires the Telegraph Authority to "do as little damage as possible" and to "pay full compensation" to persons interested for any damage caused.

The Court analysed the meaning and scope of "full compensation" by reference to established authorities and definitions (Stroud's Judicial Dictionary; Words and Phrases; decisions such as Bwllfa and Merthyr Dare, Richard v. Great Western Railway and Ahmedabad v. State of Gujarat). From these authorities the Court distilled the following legal principles (as articulated in the opinion):

"Full compensation" is intended to make the affected person whole for the loss suffered and therefore may extend beyond the market price of the property to include what the owner would have earned from using the property — i.e., lost profits or usufruct.
In cases of deprivation (for example, prohibition of working a mine or cutting of income-producing trees), the correct inquiry is what the owner would have made from the property during the period of deprivation; valuation is by reference to loss of earnings (capitalisation) rather than sale-price alone.
For fruit-bearing trees, a permissible method is to assess annual net yield (gross income less cost of cultivation) and multiply that by an appropriate capitalisation multiplier reflecting age, remaining productive life and risk; for coconut and arecanut trees multipliers in the range of 15–20 are commonly applied (the Court mentions 20 or at least 15 in some cases).
Judicial norms require employing valuation methods appropriate to the property being assessed so as to achieve full indemnity; arbitrary reliance on official schedule rates without applying relevant valuation principles may constitute acting illegally or with material irregularity.

Applying these principles to the present case, the Court observed:

The District Judge assessed compensation as if it were a sale, relying on schedule/market rates (Exhibit D1) and thus failed to apply the principles governing "full compensation".
The record contains evidence about life-span, yield and cost of cultivation (statements of P.W.1, P.W.2, P.W.3): e.g., life-span of coconut tree (85–100 years), yielding period starting around 10–12 years, sample yield ranges (30–80 coconuts per year in various witness statements), cost of cultivation estimates, and tamarind tree lifespan and yields. Thus there was material to assess annual net yield and capitalise it.
No evidence was produced by the respondent (Karnataka Electricity Board) to counter or displace the claimant's evidence on yields and costs; the Court found the District Judge's reliance on schedule rates without applying capitalisation inappropriate.
The District Judge also rejected the claim for interest on the unpaid portion of compensation on the ground that the Telegraph Act does not provide for interest; the Court found substance in the petitioner's contention that interest might be awarded under Section 34 CPC and that the District Judge's blanket refusal for that reason was legally infirm.

In light of these findings, and keeping within the remit of Section 115 CPC (which permits interference where subordinate courts act illegally or with material irregularity), the Court concluded that the District Judge had committed an error of law/procedure in assessing compensation and in refusing to consider interest. Rather than substituting its own computation, the Court set aside the District Judge's order and remanded the matter for fresh assessment in accordance with the principles articulated, permitting further evidence if necessary.

Holding and Implications

Core Holding: Revision allowed. The Court set aside the District Judge's award and remanded the matter to the District Judge, Chitradurga, for fresh determination of compensation in accordance with the legal principles stated in the opinion.

Specific directions and immediate consequences (as stated in the opinion):

The District Judge is to reassess compensation payable to the petitioner on the basis of the evidence on record and the criteria outlined in this opinion. If further evidence is needed, it may be adduced by either party.
For coconut and tamarind trees a multiplier in the range of 15 to 20 may be applied when capitalising annual net yield; the net annual yield should be computed as annual yield minus cost of production and then capitalised by the appropriate multiplier, taking into account age, productivity and risks.
For non-fruit-bearing trees their utility and potentiality should be considered in determining value rather than mechanically applying schedule or market rates.
The question of grant of interest on the amount of compensation (as determined, less amounts already paid) is to be considered in the light of Section 34 CPC — i.e., interest may be awarded from the date of the claim petition to the date of payment where appropriate.
The District Judge was directed to decide the matter afresh expeditiously, within a maximum period of six months from communication of the remand order.

Implications beyond the parties: The Court explained and applied established principles on the interpretation of "full compensation" and on the appropriate methodology (capitalisation of future yields) for fruit-bearing trees. The immediate legal effect is the remand and reassessment in this case; the opinion applies established authorities and does not purport to create a novel legal principle beyond applying those authorities to the facts before the Court.

Show full summary ...

T. Giri Thimmaiah v. Karnataka Electricity Board, Bangalore And Others

1. This Civil revision u/S. 115 of CPC, arises from the order passed by the District Judge. Chitradurga, dated 28-9-1993 in Misc. Case No. 31/90 in proceedings u/S. 16(3) of Indian Telegraph Act, 1885, hereinafter referred to as Act No. 13/1885.

2. The facts of the case in the nut shell are that the petitioner has been the owner in possession of land comprised in Sy. Nos. 160/2, 159/2, 31/1, 158/2 and 23/1C measuring about ten acres in total at. T. Nagenahalli, Hiriyur Taluk, Chitradurga District. Petitioner on his land had grown Coconut Trees, Tamarind Trees, Ncem Trees etc., all were fruit bearing trees. During December, 1989, the respondents with a view to lay 220 KV transmission line between Hiriyur and Gowribidanur passing through the said lands of the petitioner, issued notice dated 2-12-1989 and thereafter cut and removed 48 fruit bearing coconut trees, 4 tamarind trees, 8 Neem trees and according to the petitioner certain other trees in all 64 trees. The case of the Revision Petitioner is that on 27-1-1990, the respondents paid to the Revision Petitioner a sum of Rs. 20,344/- as per the Schedule of rates fixed by them vide G.O No. KEB/319/7654/84-85 dated 1-8-1988 (Exhibit D1). According to the petitioner's case, the petitioner, received the said amount under protest as the amount was inadequate and unreasonable compensation paid by the Board. The Revision Petitioner initiated the proceedings under S. 16(3) of the Indian Telegraph Act, 1885, before the Court of the District Judge at Chitradurga, making a claim of compensation having regard to the age of the fruit bearing trees and the capitalisation of the amount based on certain number of years. The claimant put the claim as under:

(1) 48 Coconut trees — 51,600/- year × 15 years (at the rate of Rs. 3/- per coconut) = 7,74,000/- (2) 4 tamarind tees = 30,000/- (3) 9 Neem trees, 7 jally trees and one Eachala mara = 26,000/- Total = 8,30,000/- Less: Compensation awarded = 29,344/- Balance = 8,00,656/-

3. According to the petitioner's case, the learned District Judge relied on the Schedule rates exhibited by Ex. D. 1 which had been fixed in 1984-1985 and then assessed and awarded compensation as under:

(a) 48 coconut trees at Rs. 803/- per tree = Rs. 38,496/- (b) 8 Neem trees at the rate of Rs. 120/- per tree = 960/- (c) 4 tamarind trees at the rate of Rs. 400/- = 1,600/- (d) 4 Honge trees at the rate of Rs. 48/- = 192/- Total = 41,248/- Less: Compensation paid = 29,344/- Balance …… = 11,904/-

Feeling aggrieved from the order and award of the District Judge, the claimant-petitioner in Misc. No. 31/90 has come up before this Court by filing the civil Revision Petition under S. 115 of the Code of Civil Procedure.

4. I have heard Sri N. Devadas, an Advocate of this Court representing Nyayamitra, on behalf of the petitioner, and Sri R. Rudre Gowda, learned counsel for the respondent. Sri Devadas, learned counsel for the petitioner contended that the Court below has acted illegally and against the well settled principles of law regarding the valuation of the fruit bearing trees and acted illegally in assessing the compensation at the rate of the price of the trees exhibited as officially determined, vide Ex. P. 1. Learned counsel contended that under S. 10 of the Act, it has been provided and directed that in exercise of powers conferred under S. 10, the Telegraph Authority shall do as little damages as possible and when it has exercised those powers in respect of those properties other than referred to in clause (c) of the section, it shall pay the full compensation to all the persons interested for any damage sustained by them by reason of exercise of its powers. Learned counsel contended that the scheme of the provision under S. 10 of the Act clearly shows that intention of the framers of the legislation is that least possible damage may only be done by the Telegraph Authorities when exercising powers under S. 10 in regard to maintenance of telegraph lines under and over and across a property. Learned counsel submitted that provision directs that full compensation is to be paid to the persons interested in damage. Learned counsel submitted that the expression ‘full compensation’ used in the section is the term of utmost importance. Compensation, no doubt, learned counsel contended, means that he shall be paid the money or goods that may be sufficient enough to completely compensate the loss. Learned counsel contended that in addition to the compensation, the Legislature has expressly used the expression “full” along with the compensation. Learned counsel for the revisionist contended that use of expression ‘full’ does not merely mean the price of the property which had the potential to provide regular recurring income. Learned counsel contended that the expression ‘full’ compensation includes in itself the compensating of the loss regarding income from those objects taking into the period upto which or during which or the years for which that income would have accrued at time to time. Learned counsel contended that cutting of the trees was not only the loss of the trees property, but it has resulted in the loss of recurring income which these trees and their fruits did provide in particular, coconut trees, tamarind trees and other trees. Learned counsel contended that the learned District Judge did not apply his mind to this aspect of the matter. Learned counsel contended that the District Judge acted illegally when he acted in breach of these well settled principles of law for determination of the compensation or full compensation for the trees. Learned counsel for the petitioner contended that apart from the trees and valuation of the trees, the claimant should have been awarded compensation for the loss of recurring income from the product of the trees. Learned counsel contended that this is not a question of what is the quantum of amount of compensation assessed erroneously awarded, but here is a case where the basic principles of law relating to assessment of compensation or say, full compensation have been ignored and the significance of the expression ‘full compensation’ has not been taken into view by the learned District Judge. As such, this is a fit case for interference with the order of the learned District Judge under S. 115 of CPC as it amounts to District Judge illegally on account of his failure to take in view and apply the relevant and essential yards and principles, in law.

5. These contentions of the learned counsel for the revision petitioner have hotly been contested by Sri. R. Rudre Gowda, learned counsel for the respondents.

The learned counsel for the respondents contended that powers of revision under S. 115 of this Court are limited and circumscribed by the conditions to be satisfied under S. 115 of IPC. Sri Rudra Gowda contended that the quantum of damages awarded or to be awarded as compensation or its assessment or the quantum of amounts assessed rightly or wrongly is not something which can be interfered with by this Court under S. 115 of CPC. Sri Rudre Gowda submitted that jurisdiction of this Court is confined to jurisdictional error either usurption thereof which is not vested or illegal refusal to exercise jurisdiction vested or Court's acting illegally and with material irregularity in exercise of its jurisdiction vested in it and unless error is shown to be coming within the four corners of either the clauses (a), (b) or (c) and is established and injustice is shown to be emanating from the order, this Court, as laid down in very many cases, has no jurisdiction to interfere with the order awarding compenstion and the quantum of compensation fixed. Learned counsel further contended that primarily this revision is concluded by pure finding of fact and this does not call for interference by this Court under S. 115. Learned counsel contended that the learned District Judge did not commit any error instead he has tried to award the best possible compensation. Inthese circumstances of the case therefore, revision may be dismissed.

6. I have applied my mind to the contentions made by the learned counsel for the parties. There is no dispute so far as basic principle of law under S. 115 is concerned that the jurisdiction of this Court can be exercised and suitable orders can be passed in cases where the order passed by the subordinate Court suffers from jurisdictional error within the framework of either of the three clauses (a), (b) or (c) of S. 115 and ordinarily a finding of fact cannot be interfered with in exercise of its jurisdiction under S. 115 unless the said findings can be shown and be held to be the result of jurisdictional error or Courts acting illegally or with material irregularity only. Acting illegally means acting in breach of settled principles of law or provisions of Act and acting with material irregularity refers to the acting of the Court in a manner amounting to error of procedure. Keeping these basic principles, we have to proceed. But it has to be taken note of when a Court committing breach of material principles applicable or in breach of certain principles of law, it may be a case of Court acting illegally under S. 115 of CPC, may be the Court acting on a misapprehension of those basic principles, may it be that, the error has crept in because of Court's not applying its mind to the relevant basic principles.

7. Keeping the above basic principles, this Court proceeds to examine. Sec. 10 of the Indian Telegraph Act, 1885 reads as under:

“Sec. 10. Power for Telegraph Authority to place and Maintain Telegraph Lines and Posts:

The telegraph authority may, from time to time, place and maintain a telegraph line under, over, along or across, and posts in or upon, any immoveable property:

Provided that—

(a) the telegraph authority shall not exercise the powers conferred by this section except for the purpose of a telegraph established or maintained by the (Central Government), or to be so established or maintained;

(b) the (Central Government) shall not acquired any right other than that of user only in the property under, over, along, across, in or upon which the telegraph authority places any telegraph line or post; and

(c) except as hereinafter provided, the telegraph authority shall not exercise those powers in respect of any property vested in or under the control or management of any local authority, without the permission of that authority; and

(d) in the exercise of the powers conferred by this section, the telegraph authority shall do as little damage as possible, and, when it has exercised those powers in respect of any property other than that referred to in clause (c); shall pay full compensation to all persons interested for any damage sustained by them by reason of the exercise of those powers.”

The use of the expression ‘full compensation’ in this section that ‘Telegraph Authority’ shall pay full compensation is an important expression. This provision per se indicates that no person should be made to suffer loss on account of activities of State and is to be compensated to the full extent to mitigate the loss suffered on account of the action of the authority. What is the importance of this expression ‘full compensation’ and what is its meaning, these questions call for an answer and may have to be considered. Here, the Act of 1885 uses the expression ‘full compensation’. The mandate of law is that in case of damage caused in exercise of power under S. 10 of the Act, with respect to any property, other than one referred to in clause (c), the Telegraph Authority shall pay full compensation to all persons interested and entitled for the damage caused on account of exercise of powers under S. 10. Use of ‘full compensation’ very clearly connotes the idea that every effort shall be made to fully compensate the person for the loss and damage. With reference to Water Works Clauses, Act 1847 particularly S. 6 thereof. In Stroud's Judicial Dictionary, it has been observed:

“(2): In determining what was the ‘full compensation’ to be made by the undertakers under Water Works Clauses Act, 1847 (C. 17), S. 6 — see also Water Act 1945 (C. 42) when they required a colliery owner to leave unworked a seam of coal, the true inquiry is not as to the value of the coal-field or of the coal, but as to what the colliery owner, if he had not been prohibited, would have made out of the coal during the time it would have taken him to get it”.

(see Stroud's Judicial Dictionary, 5th Edition, page 1060).

In Words and Phrases (permanent Edition), Vol. XVII-A at page 482, with reference to the expression ‘full compensation’, it has been defined as under:

“The phrase ‘full compensation’ as used in provision of Constitution that no private property, nor right of way shall be appropriated until ‘full compensation’ therefor shall be first made, means nothing less than payment for that which the property owner is being deprived of Meyers v. City of Daytona Beach, 30 So. 2d 354, 355 : 158 Fla. 859.”

In the case of The Bwllfa and Merthyr Dare Steam Collieries (1891), Limited v. The Pontypridd Water, Phillimore, J., observes Law. (Reports 1901 (2) KB 708/805):—

“The Water works company here have not bought the coal-field; they have not even bought the coal; they have only bought the right to prohibit the owners of the coal from getting it. The true inquiry is not what is the value of the coal-field or of the coal, but what would the colliery company, if they had not been prohibited, have made out of the coal during the time it would have taken them to get it. Assuming that it would have taken them five years, the real loss to the colliery company is what they would have made by getting the amount of coal they naturally would have got in the first year, in the second year, and so on.”

This decision reveals that in such cases what has to be looked into is what is the real loss that is the profit which the party would have made out who is being deprived of that property.

In the case of Richard v. The Great Western Railway Company (Law Reports 1905 (1) KBD 68, it has been observed.

“Taking those two decisions together, it appears that the matter to be determined is not what is the price to be paid as upon a sale, but what is the sum to be assessed by way of compensation.”

Justice Collins M.R quoted with approval the observations from the decision of House of Lords in the case of Bwllfa and Merithyr Dare Steam Collieries v. Pontypridd Waterworks Company:—

“Held, that there was no purchase of the coal or transfer of the property in the coal; that the inquiry was not what was the value of the coal at the date of the counter-notice, but what would the coal owners, if they had not been prohibited, have made out of the coal during the time it would have taken them to get it; and that the evidence was admissible.”

Stirling L.J, observes,

“The property remains where it was. The mine owner is prohibited from working, and the undertakers are bound to make full compensation. That is all.”

These observations reveal that what is to be looked into is the real loss in the sense that is what profits a person would have made from working and user of that property.

8. In the case of Municipal Corporation of the City of Ahmedabad v. State of Gujarat 1973 (1) SCR 1 : ((1972) 1 SCC 802 : AIR 1972 SC 1730) in the context of the Bombay Provincial Municipal Corporation Act, 1949, in the context of Ss. 212 and 216 which provided for the compensation being payable under Ss. 211, 212, 230 and 240 for any loss which the owner may sustain in consequence of his building or land being acquired and for any expense incurred, observed (at page 1736 of AIR):—

“It appears to us that this very difficulty in specifying any known rule of compensation is responsible for the wording of S. 216 and S. 389 of the Act which, in our opinion, gets over the difficulty by providing full indemnification for the loss or deprivation suffered by the owner of the building or other interests in the property. We have referred to the provisions with regard to appeals. The first appeal lies to the Judge of the Small Cause Courts and a second appeal to the District Judge. The involvement of Civil Courts in finally determining compensation imports judicial norms. Since full indemnification in accordance with judicial norms is the goal set by the Act it is implicit in such a provision that the rules for determination of compensation shall be appropriate to the property acquired and such as will achieve the goal of full indemnity against loss. In other words, the Act provides for compensation to be determined in accordance with judicial principles by the employment of appropriate methods of valuation so that the person who is deprived of property is fully indemnified against the loss. This, by itself, in our opinion, is a specification of a principle for the determination of compensation……………………………Any arbitrary determination is bound to be set aside in appeal because the Judges in appeal will be chiefly concerned to see whether the enquiry is made in accordance with normal judicial procedures for evaluating the loss by the application of methods of valuation appropriate to the particular acquisition before them”.

These observations of their Lordships will apply with full force to the interpretation of S. 10(d) of the Indian Telegraph Act, 1885.

9. Thus considered, it appears that those principles have to be kept in view in determining the full compensation which will be appropriate to achieve the goal of full indemnity for the loss. The expression “full compensation” for the loss or deprivation suffered really give the guidelines and indicate principles. We have to look to the nature of the property, we have to look to the possible profits arising there from which the owner of the property, be at streets, is likely or being deprived of those profits as well in addition to the corpus of property. So therefore in the case of State of West Bengal v. Banerjee, the compensation has been defined to refer which is equivalent to the amount which the owner has been deprived of. A Division Bench of Kerala High Court in the case of Kerala State Electricity Board v. Varghese Thomas, AIR 1961 Kerala 237 has observed (at page 239):—

“It can hardly admit of any doubt, particularly in the case of an agricultural land, that the destruction of a fruit bearing or yielding or income producing tree standing on it, deprives the owner of its usufruct for the period during which it would be productive, and causes damage to that extent; nor is it possible to deny, that it is specific item of damage which can be valued and assessed, though in a given case, it may be combined with other damage.”

It is the deprivation of the use or profit for the period during which the fruit bearing tree would be productve as to which on the destruction of the fruit bearing tree, the owner of those trees may be deprived of and this deprivation of use of the trees has to be compensated. The Kerala High Court further observed.

“In assessing damage on account of the destruction of fruit bearing or yielding trees, it is a permissible and often a simple method, to base it on the usufruct of which the owner has been deprived, without embarking upon an enquiry as to the market value of the land before and after the damage was caused.”

In majority of cases, the simplest and straight forward course in such cases is to ascertain the yield of tree during the period of its productivity in future. In that context, what it is to be looked into is the age of the trees, their productivity i.e, the period at which they start to produce fruits and the period during which i.e, upto what age they will continue to produce the fruits in future. The method of capitalisation may be like, the net value of the product yielded by the fruit bearing tree every year multiplied by the period during which its productivity is continued. It has been held in some cases of trees other than coconut trees such as teak trees for timber ten times of annual yield. So far coconut trees or Arecanul trees are concerned, they have to be valued at 20 times or at least 15 times of the annual yield. It is the net profit i.e, gross profit reduced by the cost of cultivation from gross profit, net annual profit or value has to be assessed and then the annual net profit is to be multiplied by the multiplier running in between 15 to 20 keeping in view the age of the tree, its productivity as well as chances of natural calamity on the average of net income. Really it is not a case of sale or purchase of the trees, but it is really a case where a tree has been cut because of the act of the State or Department. We have to look into the profit or earnings, which if the tree would not have been cut, the owner of the tree would have earned out of the yields. That has to be compensated.

10. In the present case, no evidence has been produced on behalf of the respondents i.e, the Karnataka Electricity Board. Here in the present case, the court below has proceeded as if it was a case for sale and assessed the compensation on the basis of the price of the trees as at the rate of Rs. 800/- per tree or its market value.

11. This appears not to be correct one. Here what was the annual yield from each tree has to be looked into. So far as fruit bearing trees are concerned, may be coconut trees, may be Tamarind trees, annual yield has to be calculated as follows:—

Annual yield minus the cost of production i.e, the net annual yield multiplied by the relevant multiplier.

The life span of the Coconut tree has been stated by the P.W 1 to be running in between 85 years to 100 years while witness produced on behalf of the claimant i.e, P.W 2 has also stated the life span of the Coconut tree to be 100 years. It has been stated that from the date of planting of coconut tree, after the period of ten years or twelve years the trees start yielding fruits. The yielding period runs from the period of ten years, to eighty years and during the period from fourty years to eighty years, the trees yield good number of fruits. It has been stated by P.W 2 who is a Horticulture Officer that a tree of ten to twelve years would yield 30 to 40 coconuts per year. Its leaf entries can be made use of also. The respondents appears to be taking the case that the life span of coconut tree to be sixty years. The Forest Officer has stated that the average yield of a coconut tree would be 60 to 80 coconuts per year and the cost of cultivation per coconut tree, according to his statement, runs between Rs. 8/- to Rs. 10/- per year. The life span of tamarind tree is stated to be 100 to 150 years and it starts yielding fruits after 15 years and its yield will increase year by year. P.W 2 has stated that cost of cultivation of tamarind tree is nil, but has stated its by product may be used for fuel. P.W 3 who is a Range Forest Officer has stated the average income of tamarind tree to be Rs. 750/- to Rs. 1,000/- p.a As regards income from coconut tree and tamarind tree “no doubt”, there appears to be some evidence on record. About neam tree, the evidence of plaintiff is that it is in between Rs. 200/- to Rs. 300/- per year which is the income from its seeds and leaves. The District Judge really in this case has applied wrong principles and yard sticks in determining the compensation. The learned counsel for the petitioner also made one more submission that the learned District Judge has illegally refused to grant of payment of interest on the amount of compensation. He submitted that when the trees were cut and no proper compensation has been paid, it became a debt and on that amount, the interest should have been awarded in every case at the Bank rate. But the learned District Judge has illegally refused to do it. Learned counsel submitted that even under the code of Civil Procedure vide S. 34, the Court is given the power to award interest from the date of award till the date of payment on ordinary transactions at the rate of 6% p.a and on transactions of commercial nature at the bank rate. There appears to be some substance in these contentions. By taking a wrong view that merely because the Act does not provide for interest, the learned Court below illegally refused to consider the question of grant of interest.

Thus considered, instead of myself determining the compensation, I think to set aside the order passed by the learned District Judge and to remand the case to the District Judge, Chitradurga, to assess the compensation on the basis of evidence on record, payable to the revisionist-applicant taking into view the criteria referred to above and if there is any need of further evidence, that may be adduced by both the parties. In case of coconut and tamarind trees, multiplier of something in between 15 to 20 may be applied. In respect of non fruit bearing trees, their utility and potentiality may be taken into consideration in determining their value. The question of grant of interest on the amount of compensation as determined minus the amount already paid may also be considered in the light of S. 34, CPC from the date of claim petition to the date of its payment.

Revision, as such, is allowed. The learned District Judge is directed to decide keeping in view the observation made above the matter afresh at the earliest, in every case within a period of maximum six months from the date of communication of this order.

12. Revision allowed.

T. Giri Thimmaiah v. Karnataka Electricity Board, Bangalore And Others

Structured Summary of the Legal Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments (Sri N. Devadas, counsel)

Respondent's Arguments (Sri R. Rudre Gowda, counsel)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

T. Giri Thimmaiah v. Karnataka Electricity Board, Bangalore And Others

Comments