R. Saragapani (Dead) Through Lrs. v. Special Tahsildar, Karur-Dindigul Broadguage Line .

The Judgment of the Court was delivered by

G.S Singhvi, J.— These appeals are directed against the judgment dated 5-10-2001 of the Madras High Court whereby the compensation determined by the Reference Court vide award dated 2-4-1993 passed in LAOPs Nos. 29 and 30 of 1988 was substantially reduced.

2. On a requisition sent by the Executive Engineer (Construction), Southern Railway for the acquisition of land for construction of Karur-Dindigul Broad Gauge Line, the Government of Tamil Nadu issued a Notification under Section 4(1) of the Land Acquisition Act, 1894 (for short “the Act”), which was published in the Official Gazette dated 30-5-1984 for the acquisition of 19.72 acres land including the land comprised in Survey Nos. 658/2, 663/3B, 664, 665/1, 667/1 and 668 owned by R. Saragapani and Soundararajan (both of whom are now represented by their legal representatives) situated in Village Vembur, Vadasandur Taluk, Dindigul District. The Special Tahsildar inspected the acquired land and submitted a report dated 6-1-1987 to the District Revenue Officer, Anna, District Dindigul indicating therein that the value of the acquired land and coconut trees available at the site including 30% solatium would be Rs 3,70,190.50.

3. The Land Acquisition Officer and the Special Tahsildar, Karur-Dindigul Broad Gauge Railway Line, Unit II, Dindigul (for short “the Land Acquisition Officer”) passed the award dated 19-5-1987 and declared that the landowners are entitled to compensation at the rate of Rs 6500 per acre. He also awarded Rs 160 per yielding coconut tree and Rs 30 per young coconut tree (trees with flowers and flowering stage).

4. Feeling dissatisfied with the award of the Land Acquisition Officer, the landowners filed applications under Section 18 of the Act. Thereupon, the Collector made reference to the court for determination of the compensation payable to the landowners. The same were registered as LAOPs Nos. 29 and 30 of 1988. In what was described as the counter-statements filed by them, the landowners claimed that they were entitled to compensation at the rate of Rs 1,50,000 per acre. They also claimed that the coconut trees were capable of giving crop for 50 years at the rate of Rs 500 per annum.

5. During the pendency of the reference, the Reference Court appointed an Advocate Commissioner for inspection of the acquired land to ascertain the number of trees and their age. The Court Commissioner took the assistance of the Village Administrative Officer and Shri P. Nagarajan, Agricultural Development Officer, Panchayat Union, Vedasandur and inspected the acquired land on 7-11-1992 after giving notice to both the parties. The landowners and their advocate, Shri K. Subramanian were present at the time of inspection but none appeared on behalf of the respondent. After inspecting the site, Shri P. Nagarajan submitted a report dated 7-11-1992 with the finding that the trees were 17 years old and would give better yield for a further period of 70 years. He also opined that each tree will give a total income of Rs 29,890. Thereafter, the Advocate Commissioner submitted a report dated 20-11-1992 to the Reference Court endorsing the report of Shri P. Nagarajan.

6. The Reference Court first considered the question as to how many trees existed on the acquired land, referred to the evidence of the parties as also the Advocate Commissioner's Report and observed:

“What is the number of coconut trees present in the lands acquired in LAOP No. 29 of 1988?

It is found that the number of trees mentioned in the award is wrong. Ext. R-6 would show that the same is wrong. Ext. R-6 is the report filed by the Land Acquisition Officer after inspection on 6-1-1987. It is shown in the report that there are 9 yielding and 46 young coconut trees in SF No. 658/2, that in SF No. 665/1 there are 6 yielding coconut trees, 59 coconut trees with flowers, 199 young coconut trees, that there are 11 coconut trees in SF No. 668, that there are 56 coconut trees and 6 very small coconut trees of not yielding and of no value in SF No. 667/1. Thus it is shown in the abovesaid document separately the yielding coconut trees, coconut trees of yielding stage, young trees, not yielding valueless coconut trees. Hence the number of trees as mentioned in the award is not correct. When the railway line was being laid under this broad gauge plan few coconut trees were cut. Ext. R-8 is the Letter dated 24-2-1987 written by the Railway Department to the Special Tahsildar. It is stated in the said letter that 13 coconut trees were cut and 94 young coconut trees had dried/perished due to the hot sun and want of water. Thus 107 coconut trees had been destroyed. The property had been taken into possession is seen as 19-5-1987. Thus 107 coconut trees had been destroyed before taking possession, due to laying of the railway line by the Railway Department. It has to be seen as to how many trees belonging to whom had been destroyed. Ext. R-10 would render much help in that extent. The Land Acquisition Officer has mentioned in Ext. R-7 as follows:

‘It has been stated that the coconut trees in the place where the present broad gauge line has been laid were cut by the Railway Department and then the railway line laid up.’

Further, the Village Administrative Officer in his statement would state that it was true that coconut trees were cut but he does not know how many trees were cut. Therefore it can be confirmed after enquiring that there were more trees than that are present now.

It is further stated in p. 6 that it has to be considered that 9 trees were cut in SF No. 658/2; that in SF No. 665/1, 12 trees were cut; 15 trees were cut in SF No. 668; 37 trees were cut in SF No. 667/1. RW 1 in his evidence has admitted in Ext. R-10 that it was stated that 64 trees were present in SF No. 658 and 9 trees were cut, 15 trees were cut in SF No. 668 and 11 were remaining. That there was a total of 276 coconut trees in SF No. 665/1 the trees cut were 12, that in SF No. 667/1, total of 99 trees cut were 37. Hence based on Ext. R-6 and on comparing Exts. R-7, R-10 and the admission of RW 1 the coconut trees present in the land has to be seen as per calculation. SF No. 658/2 belongs to the claimant in LAOP No. 29 of 1988 and the claimant in LAOP No. 30 of 1988. Hence taking into account, what has been stated in the award, I am allotting the balance to LAOP No. 30 of 1988.

Therefore in SF No. 658/2 there are 9 yielding trees and 13 young coconut trees. In SF No. 665/1 according to Ext. R-6 there are 6 yielding trees, 59 flowering trees, 199 young coconut trees. 12 coconut trees which were cut were in this number. I included these cut down trees with young trees. Therefore the young trees are 199 + 12 = 211. Similarly, in SF No. 668 there are 11 trees along with 15 cut trees, the total is 26 i.e the young trees present in this survey field. It is shown in Ext. R-6 that 56 young coconut trees are present in SF No. 667/1. It has also been stated that 6 coconut trees do not have any value in both LAOPs Nos. 29 and 30 of 1988. 37 trees were cut from it, including the said trees the total comes to 93 trees. The statement in Ext. R-6 that there are 6 coconut trees of no value in SF No. 667/1, is accepted. Thus after taking into consideration the character of the coconut trees the cut trees are included along with the number of young coconut trees.”

7. The Reference Court then adverted to the question as to what would be the annual income of the coconut trees and held that the average annual income of one tree would be Rs 200. The process of reasoning by which the Reference Court arrived at this conclusion is reflected in para 24 of its award, which is extracted below:

“24. The annual income of a coconut tree must now be seen. PW 1 would state that a good variety of coconut tree will yield one nut in 45 days, that about 30 to 45 nuts can be got, and there will be 8 harvests in a year and 100 nuts would sell from Rs 350 to Rs 500. PW 2 would state that the coconut trees had grown very well, that they yielded good nuts, that it belongs to the tall variety, that the yield is about 200 to 250 nuts in a year and each nut has been sold at Rs 3.30 to Rs 4. PW 3, the owner of the lands adjacent to the acquired land in his evidence would state that the coconut trees were planted in the lands 17 years back, that it has red soil and each tree would yield about 200 to 250 coconuts in a year. PW 4, the Vedasandur Agricultural Development Officer who has been in government service for the past 19 years would state in his evidence that these coconut trees are of the tall variety, it has good growth, that there would be 12 to 13 flowerings in a year in these trees and each flowering would have 10 to 15 nuts and there would be an yield of 100 to 150 coconuts in a single tree and the trees would be 17 years old and each tree would yield 120 coconuts. He in his report Ext. C-3 given to the Commissioner has stated all about the income, age, and type of the coconut trees present in the land belonging to the claimant Sarangapani which is near the acquired lands. PW 7, Rathina Nadar of Chozhavandan has stated that he used to purchase coconuts for a price from Sarangapani and Ext. C-8 is the bill given to Sarangapani on 4-3-1983. He has purchased 15,190 nuts for Rs 37,644. He has stated that the rate of the nuts would be around Rs 2.50 to Rs 3.00

It is argued on behalf of the petitioner on the basis of the said evidence that the annual income from a tree is Rs 375 and excluding the expenses the income is Rs 334 and the same is of minimum scale and it is insisted that the annual income of a single coconut tree must be calculated on the abovesaid basis. The evidences let in would show that the coconut trees in the acquired lands belong to a good variety. There was proper irrigation facility. It is also shown that it has been properly cultivated. But it is definite that the annual income from a single tree has been shown to be very high on behalf of the claimant. Because the cost to maintain the coconut trees cannot be stated in a planned way. Further, the annual income of the coconut tree under Section 4(1) of the Act as per Notification on 30-5-1984 amended as per order in IAs Nos. 289 and 290 of 1993 of 30-4-1993, must be calculated as on that date. If the period for calculating the income, the expenses involved in maintaining the coconut tree and the evidence are taken into calculation then I consider it correct and justifiable to fix the annual income of a coconut tree at Rs 200. Therefore I find the annual income of a coconut tree to be Rs 200.”

8. The next question considered by the Reference Court was as to what would be the value of the remaining land i.e the land not covered by the trees. After examining the oral and documentary evidence produced by the parties, the Reference Court observed:

“Ext. R-4 is the sale deed taken by RW 1 for calculating the market value. It is given in No. 9 in Ext. R-3. RW 1 says that on that basis the value of one acre is Rs 6500, when it was suggested to RW 1 that it was a dry land and the well in it had no water, he denied the same. But he has also said that he has not seen the said land. The statement of RW 1 that the said land was equivalent land for calculating the market value without seeing it cannot be accepted. He has only functioned in a manner so as to show the value of the land as very low. The land should be taken for comparison to be irrigated garden land. The argument placed on behalf of the claimant that they were not given an opportunity to cross-examine the purchaser or the seller of lands taken for comparison, regarding its nature as they have not been examined on behalf of the Government and the seller and buyer have not been examined only because the lands are not eligible for comparison, has to be accepted.

PW 5 states that she sold 21 cents of land for Rs 41,500 vide Ext. C-4. PW 6 would state that she purchased the land near the acquired lands for Rs 44,280 vide Ext. C-5. The lands sold vide Ext. C-4 have again been sold vide Ext. C-5. 21 cents of land has been sold for Rs 31,500 as per Ext. C-4. The value of the well is shown to be Rs 5000. The value of the motor is shown as Rs 5000. The land sold is marked as No. 25 in Ext. R-3. The Land Acquisition Officer has taken these lands for comparison. It is shown as No. 25 in the sale deed taken up. But he has rejected it on the ground that it was not similar. This is a dry land cultivated with irrigation facility. Further, Ext. B-3 would only show that these lands situate near to the lands acquired. It is clear that only this land has to be taken for comparison for calculating the market value of the land. Therefore the lands sold vide Exts. C-4 and C-5 are taken for comparison. This sale would show the market value. 21 cents has been sold for a sum of Rs 31,500. Therefore the value of one cent is Rs 1500. The market value of one acre is Rs 1,50,000….”

9. The respondent challenged the award of the Reference Court by filing appeals under Section 54 of the Act, which came to be registered as Appeal Suits Nos. 976 and 977 of 1993. On being noticed by the High Court, the landowners filed Cross-Objections Nos. 23 of 1995 and 111 of 2001 and claimed that they were entitled to additional compensation.

10. During the pendency of the appeals and the cross-objections, the landowners filed CMPs Nos. 15193 and 16047 of 1997 for placing on record the Letter dated 17-2-1995 sent by the Deputy Chief Engineer (Southern Railway), Gauge Conversion Arasaradi, Madurai to the Special Tahsildar (Land Acquisition) in which it was mentioned that the Railway Department entered upon the acquired land comprised in Survey Nos. 658/2, 663/3B, 664/2, 665/1, 667/1 and 668 of Village Vembur, Vedasandur Taluk, Dindigul, Anna District on 11-3-1985.

11. The Division Bench of the High Court re-evaluated the evidence produced by the parties and held that the trees existing on the acquired land must have been 2-4 years old only. The reasons assigned by the High Court for recording this conclusion are extracted below:

“It is pertinent to note that at the time of inspection, there were only 354 numbers of trees (6 yielding trees and 325 young trees) and as a matter of fact, R-1 in his statement given by the claimant before the Award Officer dated 22-4-1987, has admitted the particulars of the land and the nature of his cultivation. He had stated that he knew the extent of the land that is sought to be acquired and he had also stated the extent of the land that he had been in enjoyment and that he had no objection for the land being taken over and agreed to receive the compensation determined. All the tender or young trees were planted after coming to know of the acquisition. The claimant admits to have purchased 1500 tender/young trees, but he had not obtained receipts for them. Though in his cross-examination as PW 1 he has stated that the said statement was signed because he was asked to sign, it cannot be accepted. In the light of the fact that the existing yielding trees in the extent of the land i.e six will not constitute a thope, since minimum 80 trees per acre are required to claim it as thope and for valuing it by capitalising the income of the trees by 20 years of purchase. The Award Officer taking into account that the tender or young trees were planted on or about the date of proposal and considering its age, determined the value of the trees as timber. We do not find any illegality in the same. Ext. A-7, the report of the Agricultural Officer is based on the inspection dated 7-11-1992 at the instance of the Advocate Commissioner appointed before the sub-court. The Reference Court failed to take note of the fact of lapse of 8 years from the date of notification and nearly 12 years from the date of proposals for the Railways. The court did not go into the question of planting the coconuts during 1980's and in any event, at the time of Section 4(1) notification in the year 1984, these trees must have been 2-4 years old only. Hence there is no scope of valuing them on the basis of capitalisation method. The decision of the Supreme Court in K.A.A Raja case (1994) 5 SCC 138 referred to above squarely applies to this case.”

12. The High Court did not agree with the method of valuation adopted by the Reference Court for determining the market value of the acquired land and held that the landowners are entitled to compensation at the rate of Rs 1,00,000 per acre. The reasons assigned by the High Court for recording this conclusion are as under:

“The Reference Court has taken Exts. A-4 and A-5 as data sale deeds. By Ext. A-4 21 cents of land was sold on 8-9-1982 for a sum of Rs 41,500. The same land was sold by Ext. A-5 on 6-7-1983 for a sum of Rs 41,500. The court below has taken this sale deed as representing the correct market value and found that the value per cent will be Rs 31,500 '21=> (sic) Rs 1500. Based on that, he fixed the market value of the land per acre at Rs 1,50,000. In our view, the said method of valuation is not correct as the said value cannot be taken for comparison. Besides, the parties to the sale deed were not examined to find out under what circumstances these 21 cents of land were sold. From the award and the judgment it is seen that the Land Acquisition Officer has taken the valuation at the rate of Rs 6500 per acre. In his evidence as DW 1, he has stated that the document referred to in the award dated 20-5-1982 was taken as a data sale deed and the rate was fixed at Rs 6500 per acre. The Officer has not given full particulars as to how he considered this as comparable to the acquired land. Hence the said document cannot be relied on for fixing the market value. Therefore, we are left with only Ext. A-4. However, considering the small extent of land, the value as determined on the basis of this data sale land can be taken into account provided development charges of 33.33% are deducted from this value. If so deducted, the value will be Rs 1,00,000 per acre. The claimant is entitled to get compensation at this rate for 1.52 acres of land acquired from him, plus the value of trees assessed as timber by the Award Officer i.e Rs 24,375. The claimant shall be entitled to interest and solatium on this amount as per law on the value of the land plus trees.”

13. Shri L. Nageswara Rao, learned Senior Counsel for the appellants argued that the impugned judgment is liable to be set aside because the determination of market value made by the High Court suffers from multiple errors and fallacies. The learned Senior Counsel submitted that the Reference Court had rightly relied upon the report of the Advocate Commissioner, which was founded on the report of Shri P. Nagarajan, Agricultural Development Officer for the purpose of determining the number, age and yielding potential of the coconut trees existing on the acquired land and the High Court committed a serious error by upsetting the said finding by assuming that the trees were planted by the landowners after coming to know about the proposed acquisition of their land. The learned Senior Counsel submitted that this observation of the High Court is based on pure conjectures because no evidence was produced by the respondent to show that the landowners had prior knowledge of the requisition received from the Executive Engineer (Construction), Southern Railway for the acquisition of their land. Shri Nageswara Rao further argued that the High Court was not at all justified in treating the flowering trees as timber for the purpose of fixing their value.

14. Shri Rao then submitted that the Reference Court had rightly relied upon the sale deeds, Exts. A-4 and A-5 vide which land measuring 21 cents was sold in 1982 and 1983 for Rs 41,500 and the High Court committed an error by discarding the two sale deeds only on the ground that the same related to a small piece of land. The learned Senior Counsel emphasised that the respondent had not produced any evidence regarding the cost required to be incurred for making the land fit for construction of broad gauge line and argued that the High Court was not at all justified in applying ⅓rd cut towards development charges.

15. Shri Nageswara Rao then argued that both, the Reference Court and the High Court committed an error by awarding interest w.e.f 20-5-1987 despite the fact that possession of the acquired land had been taken by the Railway Department on 11-3-1985. In the end, the learned Senior Counsel submitted that in terms of the judgment of this Court in Sunder v. Union of India (2001) 7 SCC 211, the appellants are entitled to interest on solatium and the additional amount.

16. Shri R. Sundaravardan, learned Senior Counsel for the respondent, supported the impugned judgment and argued that the determination of market value by the High Court is based on correct application of the settled principles of law and does not merit reconsideration by this Court. The learned Senior Counsel submitted that the Reference Court had erroneously fixed the age of coconut trees, which were newly planted and were only at the flowering stage. Shri Sundaravardan submitted that the new trees could not have been taken into consideration for fixing the value of yield of the total number of trees. He then argued that the determination of market value of the remaining land by the Reference Court was per se erroneous inasmuch as the sale instances relied upon by the landowners related to a small parcel of land measuring 21 cents and the High Court rightly applied the rule of ⅓rd cut towards the development charges.

17. We have given serious thought to the respective arguments and scrutinised the record. At the outset, we consider it proper to observe that the High Court committed a serious error in deciding the appeals without even adverting to CMPs Nos. 15193 and 16047 of 1997 along with which the appellants had placed on record the Letter dated 17-2-1995 written by the Deputy Chief Engineer (Southern Railway), Gauge Conversion Arasaradi, Madurai to the Special Tahsildar (Land Acquisition) clearly indicating therein that possession of the acquired land had been taken on 11-3-1985. In our opinion, the letter of the Deputy Chief Engineer is conclusive of the date on which possession was taken i.e 11-3-1985 and both, the Reference Court and the High Court committed an error by awarding interest with effect from 20-5-1987.

18. Adverting to the arguments of the learned Senior Counsel on the issue of fixing the market value of the trees, we find that while the Reference Court had relied upon the reports dated 7-11-1992 and 20-11-1992 of Shri P. Nagarajan, Agricultural Development Officer and the Court Commissioner for the purpose of recording a finding that as on the date of notification under Section 4(1) of the Act, the age of the trees could be 8 to 9 years and in due course even the flowering trees would become fruit-bearing trees and yield income for the next 60 to 70 years. The High Court totally ignored the two reports and fixed the market value of young trees by treating the same as timber. The learned Senior Counsel for the respondent could not put forward any tangible argument as to why the report of an expert should not be relied upon for the purpose of fixing the value of the trees with reference to their expected yield. Therefore, we are convinced that the High Court committed an error by upsetting the view taken by the Reference Court on the issue of market value of the trees.

19. Equally erroneous is the approach adopted by the High Court in fixing the market value of the remaining land. Although the appellants' argument that the Reference Court should not have segregated the land covered by the trees for the purpose of fixing the market value of the remaining land, may not be acceptable because once the market value of the trees was separately fixed, there could be no justification for clubbing the two types of land for the purpose of fixing the market value, the High Court committed a serious error by ignoring the two sale instances, Exts. A-4 and A-5 and, at the same time, applying ⅓rd cut. It is true that the two sale instances related to a small parcel of land but, in the absence of any other exemplar, such sale instance could be relied upon for the purpose of fixing the market value of the acquired land, on which trees had not been planted, after applying an appropriate cut. By Ext. A-4 dated 8-9-1982, 21 cents of land was sold for a sum of Rs 41,500. The same piece of land was sold vide Ext. A-5 dated 6-7-1983 at the same price i.e Rs 41,500. The notification under Section 4(1) was published on 30-5-1984. If the rule of escalation in the land price evolved by this Court is applied, then a minimum increase of 10% is to be added to the price specified in Ext. A-5. Thus, as on the date of Section 4(1) notification, the approximate value of 21 cents of land would be Rs 45,550. This would be equivalent to approximately Rs 2169 per cent and Rs 2,27,750 per acre. Though the respondent did not produce any evidence to show the amount which was likely to be spent on making the land useful for the purpose of laying the broad gauge line, if ⅓rd cut applied by the High Court is considered reasonable in view of the principles laid down by this Court in Kasturi v. State of Haryana (2003) 1 SCC 354, which were reiterated in Tejumal Bhojwani v. State of U.P (2003) 10 SCC 525, V. Hanumantha Reddy v. Land Acquisition Officer (2003) 12 SCC 642, H.P Housing Board v. Bharat S. Negi (2004) 2 SCC 184 and Kiran Tandon v. Allahabad Development Authority (2004) 10 SCC 745, the market value of the acquired land will be about Rs 1,50,000 per acre.

20. We also agree with Shri Nageswara Rao that the appellants should be given the benefit of the principles laid down by the Constitution Bench in Sunder v. Union of India (2001) 7 SCC 211. It appears that attention of the High Court was not drawn to that judgment else it would have, in all probability, extended the benefit of that judgment to the appellants.

21. In the result, the appeals are allowed. The impugned judgments are set aside and the award passed by the Reference Court is restored with modification that the appellants shall be entitled to interest on the enhanced amount with effect from 11-3-1985 i.e the date on which possession of land was taken by the Railway Department. They shall also be entitled to interest on solatium and the additional amount in terms of the judgment in Sunder v. Union of India (2001) 7 SCC 211. The respondent is directed to pay the balance amount of compensation and interest to the legal representatives of the landowners within a period of 3 months from the date of receipt/production of a copy of this judgment.