REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 3838 OF 2010

(@ SLP (C) No. 20767 of 2008)

Special Land Acquisition Officer …

Appellant

Versus

Karigowda & Ors. …Respondents

WITH

C.A. No. 3839/2010 [@ SLP(C) No. 21730/2008], C.A.Nos.3840-3841

/2010 [@ SLP(C) Nos. 3971-3972/2009], C.A. No.3842/2010 [@ SLP(C)

No. 31169/2008], C.A. No. 3843/2010 [@ SLP(C) No. 7293/2009], C.A.

No.3844/2010 [@ SLP(C) No. 9875/2009],C.A. No.3845/2010 [@

SLP(C) No. 10393/2009], C.A. No.3848/2010 [@ SLP(C) No.

15773/2009], C.A.No.3849/2010 [@ SLP(C) No. 19684/2009] and C.A.

Nos.3850-63/2010 [@ SLP(C) No. 31096-31109/2009].

JUDGMENT

Swatanter Kumar, J.

1. Leave granted.

2.All the above appeals under Article 136 of the Constitution of India

raise a common question of law based on somewhat similar facts and

are directed against different judgments of the Karnataka High Court

and the judgment of the Principal Civil Judge (Senior Division) and

JMFC, Srirangapatna (hereinafter referred to as the “Reference Court”).

3.Civil Appeals arising out of SLP (C) Nos. 20767 of 2008 and 21730 of

2008 are directed by the Special Land Acquisition Officer (for short the

‘SLAO’) and the Managing Director Irrigation Board (for short the

‘Board’) respectively, against the judgment and order dated 23

rd

January, 2008 passed by the High Court in MFA No. 8544 of 2007,

whereby the High Court enhanced the compensation of the acquired

land to Rs.5,00,000/- per acre for the wet land (garden land).

4.Civil Appeals arising out of SLP (C) Nos. 31096-31109 of 2009 are

directed against the judgment of the High Court dated 22

nd

February,

2008 in MFA Nos. 6924 of 2007 (LAC) C/W Nos. 6925/2007,

7289/2007, 7290/2007, 7291/2007, 7292/2007, 7294/2007, 8541/2007,

8543/2007, 8545/2007, 8546/2007, 8549/2007, 8551/2007 and

8553/2007 (LAC), whereby the High Court while relying upon its

judgment in the earlier cases granted the compensation at a sum of

Rs.5,00,000/- per acre for wet land (garden land) and Rs.2,53,750/- per

acre for dry land.

2

5.Appeal arising out of SLP (C) No.31169 of 2008 is directed against the

judgment of the Reference Court dated 16

th

March, 2007 in LAC No.

219/2006, vide which the learned Court granted compensation at

Rs.2,92,500/- per acre in respect of wet lands (garden land).

6.In other words, we will be dealing with the above appeals as well as

other connected appeals, relating to the same acquisition, preferred by

the State against the judgment of the High Court as well as that of the

Reference Court. At the very outset, we may also notice that objection

was raised with regard to the maintainability of the appeal against the

judgment passed by the Reference Court.

7.Simple but an interesting question of law that falls for consideration of

the Court in the present appeals, relates to the ambit and scope of

Section 23 of the Land Acquisition Act, 1894 (for short ‘the Act’) –

whether, manufacturing or commercial activity carried on by the

agriculturist, either himself or through third party, as a continuation of

the agricultural activity, that is, using the yield for production of some

other final product can be the basis for determining the fair market

3

value of the acquired land, within the parameters specified under

Section 23 of the Act, in the facts of the present case?

8.The learned counsel appearing for the parties, have addressed varied

arguments in support of their respective cases while primarily focusing

their submissions on the above-referred question of law.

9.It will be appropriate to refer to the facts giving rise to the present

appeals at the very outset. As the facts in all other connected appeals

are more or less similar, thus, it will not be necessary for us to refer to

the facts of each case in detail. For the purposes of brevity and in order

to avoid repetition, we will be referring to the facts in the civil appeals

arising from SLP(C) Nos. 20767/2008 and 21730/2008.

10. The respondents in these appeals are the owners of the lands varying

between 2 to 48 guntas ( total acquired land measured 146 acres and 7

guntas relating to nearly 419 claimants) situated in Village Sanaba,

Chinakurali Hobli, Pandavapura. These lands got submerged under the

backwaters of Tonnur tank in the year 1993 due to construction of

Hemavathi Dam. The water from the dam which was canalized to the

tank resulted in submerging of the land belonging to different

respondents. The physical possession of the land, belonging to the

4

owners was taken on or about 24

th

October, 1996 and 26

th

December,

1999 respectively. However, the notification under Section 4(1) of the

Act came to be issued on 4

th

April, 2002. The crops belonging to the

owners were damaged. The SLAO passed an award dated 28

th

August,

2003, fixing the market value of the wet lands at the rate of Rs.90,640/-

per acre and for dry land at the rate of Rs. 37,200/- with statutory

benefits. Other awards were made by the SLAO on different dates.

11. Aggrieved by these awards passed by the SLAO, the claimants sought

reference to the Civil Court for determination of the compensation.

The Reference Court vide its judgment and award dated 16

th

March,

2007 enhanced the compensation payable to the claimants to

Rs.2,92,500/- per acre for the wet lands (garden land). In other cases

Rs.1,46,250/- for dry land (lightly irrigated) and Rs.1,20,000/- for dry

land (without mulberry crop) were awarded. This compensation was

awarded with other statutory benefits. Still, the claimants felt

dissatisfied and preferred appeals before the High Court. These appeals

were disposed off by the High Court vide its judgment dated 23

rd

January, 2008, enhancing the compensation payable to the claimants at

the rate of Rs. 5,00,000/- per acre for wet/garden land (in other cases)

Rs.2,53,750/- per acre for dry lands. The High Court also awarded

5

interest on enhanced compensation from the date of their submergence

in the backwaters of Tonnur Tank. Aggrieved by the judgment of the

High Court, the SLAO on behalf of the Government filed the present

appeals against its judgment.

12.Against the judgment of the Reference Court, directly an appeal had

been filed by the Board before this Court. This appeal arises from SLP

(C) No. 31169 of 2008, wherein the judgment of the Reference Court,

granting enhancement of the awarded compensation, in view of the

judgment of the High Court, has been challenged. Usefully, it can also

be noticed at this stage itself, that when the claimants had filed appeals

for further enhancement before the High Court in other matters, the

State Government had neither filed any appeal against the judgment of

the Reference Court nor any cross objections. This fact has duly been

noticed by the High Court in the judgment under appeal. The challenge

to the judgment of the High Court is primarily on the ground that

there was no evidence on record before the High Court which would

justify enhancement of compensation by more than five times to the

compensation awarded by the Collector. The findings of the High

Court besides being based upon no evidence are contrary to the very

spirit of the provisions of Section 23 of the Act. The contention, inter

6

alia, raised is that the judgment of the High Court is erroneous and

contrary to law as the High Court could not have taken into

consideration the ultimate manufactured product i.e. silk thread from

silk cocoon in contra-distinction to the agricultural product i.e.

mulberry crop in determining the fair market value of the land. In the

submission of the appellant, another pure question of law which has

been raised is that the High Court could not have granted interest on the

enhanced compensation, from the date the land belonging to the

claimants submerged in the backwaters of Tonnur Tank, as such benefit

in terms of Section 23(1A) and Section 23(2), can only be granted from

the date of notification issued under Section 4 of the Act.

13. Another contention raised on behalf of the appellant is that the High

Court has allowed a uniform enhanced compensation to be paid to the

claimants without drawing any distinction between wet and dry lands.

Such findings of the Courts below suffer from a palpable error apparent

on the face of the record and the impugned judgment is thus liable to be

set aside. With reference to another ancillary legal issue, it has been

emphasized on behalf of the appellants, that the claimants do not have

any license as required under Section 4 of the Mysore Sales (Control)

Act, at least none was produced before the Reference Court and thus

7

the compensation awarded on the alleged ground, that they were

carrying on the activity of sericulture resulting in manufacture of silk

thread ought not to be the foundation for grant of compensation.

14.According to learned counsel for the respondents-claimants, the Court

below and the High Court have correctly appreciated the evidence and

taken the view that the crops grown by claimant are shown as Mulberry

crops and the documentary evidence clearly shows that about 250 to

400 silk cocoon clusters can be obtained in one crop in wet land. 100

silk cocoon clusters weigh about 45 to 50 kgs. in wet lands and 30 to 35

kgs. in other lands depending upon rain. The average price of the silk

cocoons per kg. would be Rs. 100/- to Rs.150/-. Karigowda, PW-1

had submitted these figures and the Expert report, particularly, Exh. P.9

and P.10 showing the average yield of silk cocoons per crop. The

Reference Court, therefore, rightly took into consideration the evidence

and computed the income after deducting 50 per cent of the income

towards cost of cultivation as per the judgment of this Court in State of

Gujarat & Ors. vs. Rama Rana and Ors. [AIR 1997 SC 1845]. While

applying the capitalization method and multiplier of 10, the Reference

Court had granted compensation to the claimants at Rs. 2,92,500/- for

the wet land (garden land) which was enhanced to Rs. 5,00,000/- by the

8

High Court. According to the respondent-claimants, there was

sufficient evidence on record including the expert evidence to ignore

the method of sale statistics and determine compensation by applying

the capitalization method.

15.As is evident from the above stated facts, the principal controversy

between the parties is with regard to the method adopted for

computation of compensation payable to the claimants and the quantum

thereof. The appellant has raised the argument that the method of

computation adopted by the Reference Court as well as the High Court

is impermissible in law. The Court cannot take into consideration the

commercial activity which may result from, and be indirectly incidental

to, the agricultural activity particularly when both of them are carried

on independent of each other. This being the main controversy, it will

be necessary for us to refer to the methodology adopted by the

Reference Court as well as the High Court while awarding the

compensation impugned in the present appeals.

16.We have already indicated that we would be referring to the facts of the

two appeals except where it is necessary to refer to particular facts of

another appeal. The Reference Court as well as the High Court noticed

9

that the State should be fair and reasonable in compensating the

uprooted agriculturists as well as the fact that no sale instances from

Village Sanaba were available prior to 2002, though sale statistics of

adjoining villages were produced before the Court. In this backdrop,

they awarded the compensation on the basis of capitalization method

and discussion in that regard can usefully be reproduced at this stage.

(Reference Court)

“13.Keeping the evidence of P.W.1 in mind, I

have gone through the documents produced by

the claimant who got marked RTC as per Ex. P.2

to P.7, award Thakthe as per Ex.P.8, yield

notification and price list of Mulberry crop as per

Ex.P.9 and P.10 and estimation as per Ex.P.11.

On perusal of the documents relied by the

claimant, it is noticed that, in the RTC extracts,

the nature of crops being grown by the claimant

is shown as Mulberry. The production of RTC

Extracts as per Ex. P.2 to P.7 supports the say of

PW.1 with regard to growing of mulberry crops

over the lands in question. Further the production

of Ex.P.9 and P.10 goes to show that, during the

year 1999-2001, 4-5 Mulberry crops are being

grown in one acre of land. It is clear from these

documents that, about 250 to 400 cocoons can be

obtained in one crop in wet lands. 100 silk

cocoons used to weigh about 45 to 50 kgs in wet

lands and 30 to 35 kgs. in lands which are

depending upon rains. Further, in the year

2001-2002, the average yield in a wet land would

be 250 to 300 silk cocoons per crop. 100 silk

cocoons used to weigh 50 to 55 kgs. The average

1

price of silk cocoons per kg. would be Rs. 100/ to

Rs. 150/-.

14.Looking to the evidence of PW.1 and the

contents of Ex.P.2 to P.10, it is clear that, the

claimant used to grow minimum 4 mulberry

crops in the lands submerged under Tonnur Tank.

Further in the award Thakthe itself that, the LAO

has admitted regarding the growing of Mulberry

crop in the lands acquired by him. The

documents i.e., Ex.P.9 & 10 are the letters issued

by Assistant Director of Sericulture in favour of

Assistant Executive Engineer, No. 24 Sub-

Division, Pandavapura and in favour of

Advocate for claimants. Both, these documents

i.e., Ex.P.9 and P.10 contain the average yield of

silk cocoons per crop and average price of silk

cocoons per kg. As such, as per the contents of

Ex.P.9 and P.10 a farmer would get a minimum

of 250 to 400 silk cocoons per crop. Further, it

is also clear that, a farmer would grow a

minimum of 4 to 5 Mulberry crops in a year in

wet lands. Hence, I deem it proper to take into

consideration 4 Mulberry crops in a year so as to

determine the market value in respect of wet

lands in the case on hand on the basis of

capitalization method. As such, if we take

average yield of silk cocoons per crop on the

basis of Ex.P.9 and P.10, it comes to about 325

silk cocoons per crop. Then, if we take the same

into consideration, then the total yield per acre

per year out of 4 Mulberry crops, it comes to

about 1300 silk cocoons per year per acre. If 100

silk cocoons used to weigh 45 kgs., then 1300

silk cocoons would weigh about 585 kgs. per

acre. So it is clear that an average of 585 kgs. of

silk cocoons could be grown, out of 4 crops in a

year. As such, if we take minimum price of the

cocoons per kg. i.e. Rs. 100/- as per Ex.P.9 and

1

P.10. Then, it comes to Rs. 58,500/- per acre

per year. If we deduct 50% of the income,

towards costs of cultivation as per the ruling

reported in AIR 1997 S.C. page 1845, it comes

to Rs. 29,250/- which shall be multiplied by 10 to

arrive the market value of the lands in which the

Mulberry crop was being grown. As such, if we

multiply an amount of Rs. 29,250/- by 10, it

comes to Rs. 2,92,500/- which is to be

determined as the market value of the lands in

question of claimant per acre. Hence, I

determined the market value of the lands in

question at Rs. 2,92,500/- per acre.”

17.Not only affirming but while further enhancing the compensation, the

High Court held as under :-

“6.As to the number of mulberry crops grown

in the said land, the Reference Court has

observed at Paragraph-14 of the impugned

Judgment that as could be seen from Exs. P9 and

P10, the claimant was growing maximum of 6

mulberry crop in a year. Despite making this

observation, the Reference Court has taken only

four crops a year, which is the minimum.

Therefore, as rightly submitted by the learned

counsel for the appellant, the Reference Court

ought to have taken at least 5 crops in a year

which is average of minimum and maximum of

the number of crops. Further, it is not in dispute

that the claimant was getting 325 silk cocoons

from each of the crops. Further, though the

evidence is to the effect that, 100 cocoons weigh

50 kilograms, the Reference Court took 45

kilograms as the weight of 100 cocoons.

Therefore, the contention of the learned counsel

for the appellant, that the learned Reference Court

1

ought to have taken 50 kgs. as weight of 100

cocoons deserves our acceptance.

7.Further, though Ex.P.10 price list reveals

that the price of 1 kilogram of cocoons was

from Rs. 100 to 150/-, the Reference Court

committed error in taking the minimum

price Rs.100/-. In our view, it ought to

have taken the average of minimum and

maximum prices i.e. Rs.125/- per kilogram.

If 5 mulberry crops per year and 325

cocoons per crop are taken and if weight of

100 cocoon is taken at Rs. 50 kilograms

then per acre yield of cocoons in a year in

terms of weight comes to 812.5 kilogram

which may be rounded to 800 kilograms.

Further, if the price per kilogram of

cocoons is taken at Rs. 125/- the annual

gross income per acre of land under

acquisition comes to Rs. 1,00,000/- (one

lakh). If 50% of this income is deducted

towards the cost of sericulture, the net

annual income from sericulture comes to

Rs. 50,000/- per acre. By multiplying this

amount with the multiplier ‘10’ we get the

market value at the rate of Rs. 5 lakhs per

acre, to which, in our opinion, the

appellant-claimant is entitled and therefore,

we hereby award the same in his favour.”

18.In SLP (C) No. 21730 of 2008, the High Court gave a somewhat

further elaborate reasoning in coming to the same conclusion of

enhancing the rate to Rs. 5,00,000/- per acre.

“5. PW-1 has stated in his evidence that

he used to grow maximum of 6 crops of mulberry

1

plants in the land under acquisition for the

purpose of feeding the silk worms. Further in

Ex.P.9 (which is referred to; as Ex.P.8 in the

evidence of PW.1) it is clearly mentioned at Sl.

No.s. 81 and 82 that the claimant Karigodwda

was growing mulberry crop in the land under

acquisition to the entire extent of 37 guntas for

the purpose of sericulture. This document is not

disputed by the respondent-SLAO. Therefore,

the contention of the learned AGA that the very

fact that the claimant was doing sericulture in the

land under acquisition by growing mulberry crop

has not been established by adducing adequate

evidence cannot be accepted.

6.As to the number of mulberry crops grown

in the said land, the Reference Court has

observed at Paragraph -14 of the impugned

Judgment that as could be seen from Exs.

P.9 and P.10, the claimant was growing

maximum of 6 mulberry crop in a year.

Despite making this observation, the

Reference Court has taken only four crops

a year, which is the minimum. Therefore,

as rightly submitted by the learned counsel

for the appellant, the Reference Court

ought to have taken at least 5 crops in a

year which is average of minimum and

maximum of the number of crops. Further,

it is not in dispute that the claimant was

getting 325 silk cocoons from each of the

crops. Further, though the evidence is to

the effect that, 100 cocoons weigh 50

kilograms, the Reference Court took 45

kilograms as the weight of 100 cocoons.

Therefore, the contention of the learned

counsel for the appellant, that the learned

Reference Court ought to have taken 50

1

kilograms as weight of 100 cocoons

deserves our acceptance.

7.Further, though Ex.P.10 price list reveals

that the price of 1 kilogram of cocoons was

from Rs. 100 to 150/- the Reference Court

committed error in taking the minimum

price Rs.100/-. In our view, it ought to

have taken the average of minimum prices

i.e. Rs. 125/- per kilogram. If 5 mulberry

crops per year and 325 cocoons per crop

are taken and if weight of 100 cocoon is

taken at Rs. 50 kilograms then per acre

yield of cocoons in a year in terms of

weight comes to 812.5 kilogram which

may be rounded to 800 kilograms. Further,

if the price per kilogram of cocoons is

taken at Rs. 125/- the annual gross income

per acre of land under acquisition comes to

Rs. 1,00,000/- (one lakh). If 50% of this

income is deducted towards the cost of

sericulture, the net annual income from

sericulture comes to Rs.50,000/- per acre.

By multiplying this amount with the

multiplier ‘10’ we get the market value at

the rate of Rs. 5 lakhs per acre, to which,

in our opinion, the appellant-claimant is

entitled and therefore, we hereby award the

same in his favour.”

Scope of the statutory scheme for awarding the compensation under

the provisions of the Act.

19.The challenge by the appellant-State is primarily based upon the

permissible methodology which can be adopted by a court of law while

granting fair market value of the land and the admissible quantum

1

thereof. In order to examine the merit of the contentions raised before

us, particularly in this regard, it would be necessary to examine the

scheme of the Act.

20.It has been held that the provisions of the Act are self-contained and it

is a Code in itself providing for a complete procedure and steps which

are required to be taken by the authorities concerned, for acquisition of

land and payment of compensation. Part II and Part III of the Act deal

with this aspect. Part II commences with a mandate that the

appropriate authority shall issue a notification in terms of Section 4 of

the Act, whereafter objections for acquisition are invited by the

Collector and he shall conduct an inquiry in accordance with law.

Having disposed off the objections after hearing the concerned parties,

the Collector is expected to make an award. The possession of the

acquired land has to be taken in accordance with the provision of the

Act. Part III deals with the procedure of making a reference to the

Court of specified jurisdiction and the procedure to be adopted

thereupon. It also spells out what factors are to be taken into

consideration by the Court and what should be ignored while

determining the compensation. It is a compulsive acquisition and the

lands are acquired without the voluntary action or consent of the land

1

owners as they are left with no choice. The legislature in its wisdom

has laid down the procedures and the guidelines which have to be

adopted by the authorities concerned and subsequently by the Court of

competent jurisdiction in regard to the acquisition of land and payment

of compensation thereof. It is expected of the State to pay

compensation expeditiously. Thus, it is obligatory on the part of the

Court to follow the legislative intent in exercise of its judicial

discretion. The legislative intent is of definite relevancy when the court

is interpreting the law. Keeping in view the scheme of the Act, it will

not be appropriate either to apply the rule of strict construction or too

liberal construction to its provisions. The Act has a unique purpose to

achieve, i.e. fulfillment of the various purposes (projects) to serve the

public interest at large, for which the land has been acquired under the

provisions of this Act by payment of compensation. The power of

compulsive acquisition has an inbuilt element of duty and

responsibility upon the State to pay the compensation which is just, fair

and without delay. Thus, it will be appropriate to apply the rule of

plain interpretation to the provisions of this Act.

21.We may notice that Part III provides for procedure and rights of the

claimants to receive compensation for acquisition of their land and also

1

states various legal remedies which are available to them under the

scheme of the Act. Under Section 18 of the Act, the Reference Court

determines the quantum of compensation payable to the claimants.

Section 23 provides guidelines, which would be taken into

consideration by the court of competent jurisdiction while determining

the compensation to be awarded for the acquired land. Section 24 of the

Act is a negative provision and states what should not be considered by

the court while determining the compensation. In other words,

Sections 23 and 24 of the Act provide a complete scheme which can

safely be termed as statutory guidelines and factors which are to be

considered or not to be considered by the Court while determining the

market value of the acquired land. These provisions provide a

limitation within which the court has to exercise its judicial discretion

while ensuring that the claimants get a fair market value of the acquired

land with statutory and permissible benefits. Keeping in view the

scheme of the Act and the interpretation which these provisions have

received in the past, it is difficult even to comprehend that there is

possibility of providing any straitjacket formula which can be treated as

panacea to resolve all controversies uniformly, in relation to

determination of the value of the acquired land. This essentially must

1

depend upon the facts and circumstances of each case. It is settled

principle of law that, the onus to prove entitlement to receive higher

compensation is upon the claimants. In the case of Basant Kumar and

Ors. v. Union of India and Ors. [(1996) 11 SCC 542], this Court held

that the claimants are expected to lead cogent and proper evidence in

support of their claim. Onus primarily is on the claimant, which they

can discharge while placing and proving on record sale instances and/or

such other evidences as they deem proper, keeping in mind the method

of computation for awarding of compensation which they rely upon. In

this very case, this Court stated the principles of awarding

compensation and placed the matter beyond ambiguity, while also

capsulating the factors regulating the discretion of the Court while

awarding the compensation. This principle was reiterated by this Court

even in the case of Gafar v. Moradabad Development Authority [(2007)

7 SCC 614] and the Court held as under:

“As held by this Court in various decisions, the

burden is on the claimants to establish that the

amounts awarded to them by the Land Acquisition

Officer are inadequate and that they are entitled to

more. That burden had to be discharged by the

claimants and only if the initial burden in that

behalf was discharged, the burden shifted to the

State to justify the award.”

1

Thus, the onus being primarily upon the claimants, they are expected to

lead evidence to revert the same, if they so desire. In other words, it

cannot be said that there is no onus whatsoever upon the State in such

reference proceedings. The Court cannot lose sight of the facts and clear

position of documents, that obligation to pay fair compensation is on the

State in its absolute terms. Every case has to be examined on its own facts

and the Courts are expected to scrutinize the evidence led by the parties in

such proceedings.

22.At the cost of some repetition, we may notice that the provisions of

Sections 23 and 24 of the Act have been enacted by the Legislature

with certain objects in mind. The intention of the Legislature is an

important factor in relation to interpretation of statutes. The statute law

and the case law go side by side and quite often the relationship

between them is supplementary. In other words, interpretation is

guided by the spirit of the enactment. Interpretation can be literal or

functional. Literal interpretation would not look beyond litera legis,

while functional interpretation may make some deviation to the letter of

the law. Unless, the law is logically defective and suffers from

conceptual and inherent ambiguity, it should be given its literal

meaning. Where the law suffers from ambiguity, it is said

2

“interpretation must depend upon the text and context. They are the

basis of the interpretation. One may well say that if the text is the

texture, context is what gives it colour. Neither can be ignored. Both

are important. That interpretation is best which makes the textual

interpretation match the context. A statute is best interpreted when we

know why it was enacted.” [Reserve Bank of India v. Peerless

General Finance and Investment Co. Ltd. & Ors. : (1987) 1 SCC 424].

23.The principle of construction of law is stated by Justice Holmes as

under :-

“You construe a particular clause or expression

by construing the whole instrument and any

dominant purposes that it may express. In fact,

intention is a residuary clause intended to gather

up whatever other aids there may be to

interpretation besides the particular words and the

dictionary.”

(Principles of Statutory Interpretation by Justice

G.P. Singh, Page 15, 9

th

Edition 2004, Wadhwa &

Co., Nagpur)

24.Where a statutory provision confers rights and also states mandatory or

implied conditions which would have to be satisfied before the claim,

can culminate into a relief, such considerations or conditions are

relevant for the purposes of interpretation as well. A power conferred

2

by the statute, often contains an express condition for its exercise and,

in absence of, or in addition to the express condition, there are also

implied conditions for exercise of power. Exercise of statutory power

in breach of express or implied conditions will be illegal, if the

conditions breached are mandatory. This principle, to a large extent, is

applicable to exercise of rights arising from beneficial legislations,

when an owner claims benefits under statutory provisions, it is for him

to show that what is contemplated under the conditions attached thereto

has been satisfied, particularly when such legislative intent is clear

from the bare reading of the provisions. Like the cases in hand, it is for

the claimants to show that, to award the compensation payable under

the statutory provisions, they have brought on record, evidence to

satisfy the criterion and conditions required to be fulfilled for such a

claim.

25.The provisions with which we are concerned primarily are the

provisions of the statute which are coupled with obligations and

limitations specified in them. The power is vested in the Collector to

grant compensation; in courts to enhance the same in favour of the

claimants whose lands are acquired, in case they are aggrieved. But,

this power has to be exercised while keeping in mind the settled

2

guidelines and parameters stated in Sections 23 and 24 of the Act. It

will, thus, not be permissible for the authorities to go beyond the scope

and purview of the provisions or the pre-requisites stated in these

provisions for determination of the fair market value of the land. The

statutory law as well as the judgments pronounced by the courts has

consistently taken the view that compensation has to be determined

strictly in accordance with the provisions of Sections 23 and 24 of the

Act. The matters which are to be governed by the terms of Section 24

of the Act cannot be taken into consideration by extending discretion

referable to the matters which should be considered by the courts in

terms of Section 23 of the Act. To put it in another way, the court

should apply the principle of literal or plain construction to these

provisions, as the Legislature in its wisdom has not given to the court

absolute discretion in matter relating to awarding of compensation but

has intended to control the same by enacting these statutory provisions.

26.About the principle of plain meaning, it has been observed more than

often, that it may look somewhat paradoxical that plain meaning rule is

not plain and requires some explanation. The rule, that plain words

require no construction, starts with the premise that the words are plain,

which is itself a conclusion reached after construing the words. It is not

2

possible to decide whether certain words are plain or ambiguous unless

they are studied in their context and construed. [ Refer - D. Saibaba v.

Bar Council of India & Anr.: AIR 2003 SC 2502 ].

27.The true import of the rule of plain meaning is well brought out in an

American case Hutton v. Philips [45 Del 156], where Judge Pearson,

after reaching his conclusion as to the meaning of the statutory

language said :

“That seems to me a plain clear meaning of the

statutory language in its context. Of course, in so

concluding I have necessarily construed or

interpreted the language. It would obviously be

impossible to decide that language is ‘plain’

(more accurately that a particular meaning seems

plain) without first construing it. This involves

far more than picking out dictionary definitions

of words or expressions used. Consideration of

the context and setting is indispensable properly

to ascertain a meaning. In saying that a verbal

expression is plain or unambiguous, we mean

little more than that we are convinced that

virtually anyone competent to understand it and

desiring fairly and impartially to ascertain its

significance would attribute to the expression in

its context a meaning such as the one we derive,

rather than any other; and would consider any

different meaning by comparison, strained, or far-

fetched, or unusual or unlikely.”

2

There are certain provisions which are capable of being given general

description. Normally such provisions have two concepts - factual

situation and the legal consequences ensuing therefrom. As already

noticed, it is for the claimants to ascertain as a matter of fact - location,

potential and quality of land for establishing its fair market value. After

this fact is ascertained, its legal consequences i.e. awarding of

compensation in terms of Sections 23 and 24 of the Act, the question

before court of law is, whether the factual situation before it falls within

the general description and principles in the statute. [Principles of

Statutory Interpretation by Justice G.P. Singh, Page 51, 9

th

Edition 2004].

28.In the light of these principles now we may advert to the language of

Sections 23 and 24 of the Act. The provision open with the words, that

in determining the amount of compensation to be awarded for land

acquired under the Act, the court shall take into consideration the stated

criteria and in terms of Section 23(1-A), the claimants would be

entitled to additional amount @ 12 % per annum on such market value

for the period commencing on and from the date of the publication of

the notification under Section 4, to the date on which the Award is

made by the Collector or possession of the land is taken, whichever is

earlier. In addition to this, in terms of Section 23(2), the land owners-

2

claimants are entitled to 30% ‘on such market value’ because of the

compulsory nature of acquisition. ‘Such market value’ is an expression

which must be read ejusdem generis to the provisions of Section 23(1)

of the Act, as they alone would provide meaning and relevancy to the

guidelines which are to be taken into consideration by the courts for

determining the market value of the land. The expression ‘shall’ can

hardly be construed as ‘may’ giving an absolute discretion to the court

to take or not to take into consideration the factors stated in Section

23(1) of the Act. The expression ‘shall’ thus would have to be

construed as mandatory and not directory. It is more so, keeping in

view the language of Section 24 of the Act, which mandates that the

court shall not take into consideration the matters indicated in firstly to

eighthly of Section 24 of the Act. This legislative intent needs to be

noticed for beneficial and proper interpretation of these provisions in

the light of the scheme underlining the provisions of the Act.

29.The expression ‘such market value’ used in Sections 23(1-A) and 23(2)

respectively obviously would mean and refers to the market value

determined in terms of Section 23(1) of the Act. This expression has

been well explained by different judicial pronouncements and they

have consistently been following what the Privy Council in the case of

2

Municipal Council of Colombo v. Kuna Mana Navanna Suna Pana

Letchiman Chettiar [ AIR (34) 1947 PC 118], laid down. There it is

stated that “such market value” as used in Section 23 of the Act is the

price which a willing vendor might be expected to obtain in the open

market from a willing purchaser. It is the price which would be payable

to a person after the complete appraisal of land with its peculiar

advantages and disadvantages being estimated with reference to

commercial value.

30.This principle holds good even now and any other consequential right,

legal or commercial, which remotely flows from an agricultural activity

will not and should not be treated as a relevant consideration.

31.Equally true will be the principle that the extent of compensation would

always depend on the facts and circumstances of the given case and it

is not possible to set any absolute legal principle as a panacea which

uniformly will be applicable or capable of being applied as a binding

precedent dehors the facts of a given case.

32.The discretion of the Court, therefore, has to be regulated by the

legislative intent spelt out under these provisions. It is no more res

2

integra and has been well settled by different judgments of this Court,

requiring that the computation of compensation has to be in terms of

Sections 23 and 24 of the Act and that too from the date of issuance of

the Notification under Section 4 of the Act. It is only the statutory

benefits which would be available in terms of Sections 23(1-A) and

23(2) of the Act.

33.A Bench of this Court in the case of Nelson Fernandes & Ors. v.

Special Land Acquisition Officer, South Goa & Ors. [(2007) 9 SCC

447], while discussing on this aspect of the Act and its relevancy to the

market value of the land, held as under :-

“22. In determining the amount of compensation

to be awarded, the LAO shall be guided by the

provisions of Sections 23 and 24 of the Act. As

per Section 22 of the Act, the market value of the

land has to be determined at the date of

publication of notice under Section 4 of the Act

i.e. 25-8-1994. As per Section 24, the LAO shall

also exclude any increase in the value of land

likely to accrue from use to which it will be put

once acquired. The market value of the land

means the price of the land which a willing seller

is reasonably expected to fetch in the open market

from a willing purchaser. In other words, it is a

price of the land in hypothetical market. During

the site inspection, it has been observed that the

land under acquisition is situated in Sancoale and

Cortalim Village adjacent to the land already

acquired for the same purpose earlier.”

2

34.This was also reiterated by this Court in the case of Mohammad

Raofuddin v. The Land Acquisition Officer, [ (2009) 5 SCR 864 ]

stating that Section 23 contains a list of positive factors and Section 24

has a list of negative, vis-à-vis the land under acquisition, to be taken

into consideration while determining the amount of compensation, the

first step being the determination of the market value of the land from

the date of publication of Notification under sub-section (1) of Section

4 of the Act.

35.The next question which is of some importance arises out as a corollary

to the above discussion. Should there be direct nexus between the

potentiality of the acquired land as on the date of the Notification or

can any matter which may be consequential or remotely connected with

the agricultural activity be the basis for determining the market value of

the land? Does the scheme of the Act, particularly with reference to

Sections 23 and 24 of the Act permit such an approach? This question

has to be answered in the negative. What is required to be assessed, is

the land and its existing potentiality alone as on the date of acquisition.

Moreover, the potentiality has to be directly relatable to the capacity of

the acquired land to produce agricultural products or, its market value

2

relatable to the known methods of computation of compensation which

we shall shortly proceed to discuss.

36.The second circumstance specified in Section 23(1) to be considered by

the Court in determining compensation is the damage sustained by the

person on account of any standing crops or trees which may be on the

land at the time of the Collector’s taking possession thereof. Even

from a reasonable practicable view it has to be understood that the

compensation which is payable to the claimants is in relation to the

acquired land, the standing crops or trees and what they earn from the

agricultural crops or fruits or trees on the agricultural land. To extend

the benefit for the purposes of compensation, considering that the fruits

grown on the agricultural land would be converted into Jam or any

other eatable products will not be a relevant consideration within the

scheme of the Act. The purpose is not to connect the acquisition to

remote factors which may have some bearing or some connection with

the agricultural activity being carried on, on the land in question. Such

an approach by the Court is neither permissible nor prudent, as it would

be opposed to the legislative intent contained under the provisions of

Sections 23 and 24 of the Act.

3

37.Similarly, another example which can usefully be referred at this stage

itself is that a person growing sugarcane on the land, which is acquired,

would be entitled to the compensation of the land with reference to the

agricultural yield and/or capitalization thereof only in respect of

sugarcane. The rate of sugarcane in the market may be a relevant

consideration but the fluctuating prices of sugar and other allied

products in the market will be of no relevance in determining the fair

market value of the acquired land.

38.It is the option of the agriculturist to give his sugarcane crop for

manufacture of sugar or gur or for any other purpose which he may

choose using his business wisdom but the costing and manufacturing

activity of that particular product for which the sugarcane had been

supplied by him would not be, in our view, a relevant consideration for

determining the fair market value of the land, whichever be the method

of computation of compensation adopted by the court of competent

jurisdiction.

39.Such approach is in consonance with the judicial pronouncements of

this Court as well as the requirements of law. In the case of State of

Orissa v. Brij Lal Misra and Ors. [ (1995) 5 SCC 203 ], the Court

3

clearly stated the principle that any increase in the amount awarded by

way of compensation keeping in view the potentiality of the land and

further increase on future potentiality would be contrary to the

provisions of clauses fifthly and sixthly of Section 24 of the Act. The

provisions of the Act require the court not to take into consideration

various other factors including increase in the value of the acquired

land, likely to accrue from the use for which it was acquired may be put

to on a subsequent stage in regard to any lay out or improvement

scheme etc.

40.Thus the restriction stated in law has been followed by the judgments

of this Court and there is no occasion to take any view at variance to

the existing law.

41.On proper analysis of the above stated principles and the relevant

provisions of law, we have no hesitation in coming to the conclusion

that consequential or remote benefits occurring from an agricultural

activity is not a relevant consideration for determination of the fair

market value on the date of the Notification issued under Section 4(1)

of the Act. It is only the direct agricultural crop produced by the

agriculturist from the acquired land or its price in market at best, which

3

is a relevant consideration to be kept in mind by the court while

applying any of the known and accepted method of computation of

compensation or the fair market value of the acquired land.

42.Having answered the question of law, now we would proceed to apply

this principle to the facts and circumstances of the cases before us. In

paragraphs 16, 17 and 18 of this judgment we have referred to the

findings recorded by the Reference Court and the High Court for

enhancing the compensation from Rs. 90,640/- to Rs.2,92,500/- (by the

Reference Court) and Rs.5,00,000/- (by the High Court ) for wet

(irrigated) land. The same is not in conformity with the settled

principles of law.

43.Mulberry crop is a crop which is grown on the land and then this crop

is used as feed for silk worms which ultimately results in producing silk

thread used for various purposes at a commercial level.

44.The respondents in the present appeal had filed an affidavit dated 14

th

July, 2009 to substantiate their arguments that cocoons and silk thread

is the end product for which the Mulberry crop is being used and,

therefore, the income from or market value of cocoon and even the silk

thread would be a relevant consideration for determination of

3

compensation. In paragraph 1(1) of the affidavit it has been averred

that cocoon (a female moth) in a single laying lays 450-550 Grains

DFL (Deceased Free Layings) on a single day. The same is made to lie

on an egg sheet. The entire 450-550 Grains are called as one egg and

each of these Grains will develop as one cocoon. Therefore, out of one

egg the claimants get 450-550 cocoons which weigh 1.5 gms to 2.00

gms. each. The literature annexed to this affidavit shows that

Sericulture, the technique of silk production, is an agro-industry

playing an eminent role in the rural industry of India. It also says that

the cost of producing mulberry has a direct impact on the cost of

producing cocoons, as nearly 60% of the total cost of production of

cocoons goes to the production of mulberry leaves.

45.The photographs contained in the literature placed on record also show

that mulberry crop is grown like other crops and its leaves are used as a

feed to cocoons. It is after they are provided with this food that they

convert themselves into cocoons which are then industrially processed

to the manufacture silk and is ultimately converted in those

manufacturing units as a silk thread.

3

46.The handbook issued by the Central Silk Board under the title

‘Handbook of Sericulture Technologies’ shows that the full grown

plant is a plant which is ready for pruning and suggest that to improve

the leaf quality as well as the productivity, whenever necessary, plant

protection measures must be followed. These measures are taken only

after pruning and 15 to 18 days before leaf harvest for brushing. From

brushing to two feedings after second instar, the silk worms are fed

with tender leaves. The leaves to be harvested are from below the

largest glossy leaf, which is yellowish green in colour. The cardinal

point is shoot tip and it should not be removed during any crop. Below

the glossy leaf, about 3 leaves during the first (1-3) and about 3 leaves

(4-6) during the second instar can be harvested. Silk worms grow best

when fed with fresh mulberry leaves, which are rich in nutrients and

moisture. Under tropical conditions, driage of leaf is faster. Usually,

the leaves are harvested twice a day and are preserved for successive

feedings, depending on the necessity. During the periods, the leaves

should be properly preserved.

47.Thus, the literature submitted by both the parties before us clearly show

that manufacture of silk from cocoons is a process of manufacturing

where the silk worms are fed with the mulberry leaves grown on fields

3

and which alone is an agricultural activity. There is a connection

between the two but it is not of such a direct relevancy that it should

form the criteria for awarding compensation in terms of Section 23 of

the Act. The mulberry crop is like tea crop and is grown in the shape of

small trees or bushes. The leaves are taken off and used for feeding the

silk worms for production of silk thread. It is upon the person carrying

out the agricultural activity whether he sells his mulberry crop to a

manufacturing unit or establishes his own unit for that purpose and

utilizes the mulberry crop grown on the fields for the process of

manufacturing by providing it as a food to the silk worms.

48.It would have been more desirable for the reason that there was no

evidence led by the claimants to substantiate and justify their claim

with reference to the alleged silk cocoons being an agricultural activity,

the onus being upon them. There was a presumption in the mind of the

court as well as the claimants that, the manufacture of silk thread by the

stated process of boiling silk cocoons which is the result of the silk

worm being fed by mulberry leaves is an agricultural activity. This

presumption is contrary to law and the literature referred by the expert

body as well.

3

49.It is quite similar to the crops grown in different parts of the country for

example sugarcane and tea. The tea leaves are pruned and used for

manufacturing different kinds of tea and allied products. Similar is the

case with the sugarcane. The manufacturing and commercial activities

for manufacture of tea, sugar and for that matter silk from silk worms

cannot be treated as a permissible factor to be taken into consideration

by the courts for determining the fair market value of the land. Activity

of agriculture cannot thus be equated to sericulture. While agricultural

activity is the growing of mulberry crop and disbursing it, manufacture

of silk thread from silk worms who are fed with mulberry leaves, and

then converted through the specified process into cocoons and

ultimately silk thread and its sale is an activity of sericulture which

primarily falls in the domain of manufacturing and commercial activity.

This activity of producing silk from silk worms for which mulberry

crop is used as food, therefore, cannot be an activity directly covered

under the provisions of Section 23 of the Act. Even by the process of

judicial interpretation, it will amount to drawing an impermissible

inference that sericulture is a part of agricultural activity, that too to the

extent to make it a permissible consideration under the relevant

provisions of the Act.

3

50.We may also usefully refer to a judgment of this Court in the case of

K. Lakshmanan and Co. and Ors. v. Commissioner of Income Tax,

[(1998) 9 SCC 537], where the Court was primarily concerned with

what is the agricultural income for the purposes of the provisions of the

Income Tax Act. The Court considered that the assessee was growing

mulberry leaves which were not otherwise marketable and could only

be used to feed the silk worms from which he was obtaining silk

cocoons. It was held by the Court :

“Had mulberry leaves been subjected to some

process and sold in the market as such then

certainly the income derived therefrom would be

regarded as agricultural income but the case of

the appellant before the authorities, and in this

Court, has been that, mulberry leaves cannot be

sold in the market and they can only be fed to the

silkworms. The agricultural produce of the

cultivator will be mulberry leaves and by no

stretch of imagination can the silkworms, and

certainly not the silk cocoons, be regarded as the

agricultural produce of the cultivator.”

51.The aforesaid judgment clearly shows and supports the view that we

have taken, that silk worms being converted into silk cocoons and final

product being silk thread for which some process or manufacturing

activity is taken by the manufacturer, does not include growing of

mulberry crop which is a food only for silk worms and thus, is only an

3

agricultural activity and the entire remaining process cannot impliedly

or by inference be termed as agricultural activity or an activity directly

connected to agriculture for the purposes of Section 23 of the Act.

52.The learned Reference Court which enhanced the compensation to

Rs.2,92,500/- in relation to wet land ; Rs.1,46,250/- lightly irrigated

land and Rs.1,20,000/- to other land, and the High Court in enhancing

compensation to Rs.5,00,000/- for wet land and Rs.2,53,750/- for dry

land have primarily based their reasoning which is not sustainable in

law being contrary to the statutory scheme of the Act.

53.We are unable to appreciate the approach adopted by the learned

Reference Court and as upheld by the High Court. The basic error of

law to which the courts below have fallen is that ultimate

manufacturing of silk thread under the nomenclature of cocoons has

been treated as a purely agricultural activity relevant for determination

of fair market value of the land in terms of Section 23 of the Act.

54.We are unable to uphold the methodology adopted by the courts as well

as the extent of compensation awarded to the claimants. The other

reasons for our not accepting the findings recorded and compensation

allowed by the High Court is that, there is no evidence on record to

3

show that there is any intrinsic or inseparable link between the two

activities. Furthermore, there is hardly any evidence on record, and in

fact nothing was brought to our notice by the claimants have proved by

documentary or any other cogent evidence, that they were carrying on

the activity of sericulture and were utilizing mulberry crop only for that

purpose. Even if that was so, we have serious doubt that even in those

circumstances, whether it could be said to be a relevant consideration.

55.The error by the courts in appreciation of evidence is that they have

treated the cocoons as the crop and not mulberry leaves. In fact, it is

the very basis of a claim for higher compensation that cocoons being

the agricultural end product, they were entitled to higher compensation.

We have already indicated that there is no direct evidence led by the

claimants in this regard. The courts have only referred to the statement

of PW-1 to say that there were six crops of mulberry plants. Further,

the document Exh. P-9 showed that claimant Karigowda (respondent

herein) was growing mulberry crop on the entire acquired land of 37

guntas for the purpose of sericulture. Thus relying on Exhs. P-9 and P-

10, statement of PW-1 and on the computation put forward by the

claimants, enhanced compensation was granted. It may be noticed that

PW-1 in his own statement has stated that mulberry plants are used for

4

the purposes of feeding the silk worms. He stated that farmers are

doing sericulture in huge quantity in the area but which of the person

was carrying on the said activity has not been stated. No record has

been produced. Neither any other claimant entered in the witness box

in support of the compensation claimed, nor any statistics or figures

were produced, supported by the previous record, as to how they were

carrying on this activity. The so called expert opinion again is not

specific and supported by any scientific data. In fact, it is based more

upon what the expert felt rather than the opinion which the expert

would support, by actual physical inspection of the lands in question,

data and literature.

56.It is also come on record that the entire lands situated in the village do

not have the same fertility. Vide Exh. P-9 it was stated that the yield of

cocoons per acre differ from crop to crop and this was an average

estimated report. This exhibit is of no help to the claimants inasmuch it

does not give the statistics with regard to mulberry crops but talks of

cocoons which were stated to be 250-300 in one acre wet land (for 1

crop).

4

57.While adopting the criteria of capitalization and multiplying the same

by 10, the finding of the High Court is clearly not supported by any

cogent evidence on record and thus the question of applying the

multiplier to a figure which has been arrived at, without any evidence

would be inconsequential.

58.There is no direct and appropriate evidence to show any nexus to

support the claim of the claimants. Thus, cocoons cannot be

considered as a crop even as per literature submitted by the respective

parties. Therefore the finding recorded is unsustainable even on

appreciation of evidence.

What method should be adopted for determining fair market of the

acquired land

59.To examine what method could be adopted for determining the market

value of land and criticism of the method adopted by the Land

Acquisition Collector, by the courts, that the same is not in accordance

with law, we must notice various methods which are normally adopted

by the Courts for determining the fair market value of the land and

which of the method can be more properly applied in the facts and

circumstances of this case.

4

60.Sections 23 and 24 of the Act spell out the have and have nots,

applicable to the scheme of awarding compensation by the Collector

but do not describe the methodology which should be adopted by the

courts in determining the fair market value of the land at the relevant

time. By development of law, the courts have adopted different

methods for computing the compensation payable to the land owners

depending upon the facts and circumstances of the case. The Courts

have been exercising their discretion by adopting different methods,

inter alia the following methods have a larger acceptance in law :

(a)Sales Statistics Method: In applying this method, it has been

stated that, sales must be genuine and bonafide, should have

been executed at the time proximate to the date of notification

under Section 4 of the Act, the land covered by the sale must

be in the vicinity of the acquired land and the land should be

comparable to the acquired land. The land covered under the

sale instance should have similar potential and occasion as that

of the acquired land {Faridabad Gas Power Project, N.T.P.C.

Ltd. & Ors. v. Om Prakash & Ors. [2009 (4) SCC 719], Shaji

Kuriakose & Anr. v. Indian Oil Corp. Ltd. & Ors. [AIR 2001

4

SC 3341], Ravinder Narain & Anr. v. Union of India [2003 (4)

SCC 481]}.

(b)Capitalization of Net Income Method: This method has also

been applied by the courts. In this method of determination of

market value, capitalization of net income method or expert

opinion method has been applied. {Union of India & Anr. v.

Smt. Shanti Devi & Ors. [1983 (4) SCC 542], Executive

Director v. Sarat Chandra Bisoi & Anr. [2000 (6) SCC 326],

Nelson Fernandes & Ors. V. Special Land Acquisition Officer,

South Goa & Ors. (supra)}

(c)Agriculture Yield Basis Method: Agricultural yield of the

acquired land with reference to revenue records and keeping in

mind the potential and nature of the land – wet (irrigated), dry

and barren (banjar).

61.Normally, where the compensation is awarded on agricultural yield or

capitalization method basis, the principle of multiplier is also applied

for final determination. These are broadly the methods which are

applied by the courts with further reduction on account of development

charges. In some cases, depending upon the peculiar facts, this Court

4

has accepted the principle of granting compound increase at the rate of

10% to 15% of the fair market value determined in accordance with

law to avoid any unfair loss to the claimants suffering from compulsive

acquisition. However, this consideration should squarely fall within

the parameters of Section 23 while taking care that the negative

mandate contained in Section 24 of the Act is not offended. How one

or any of the principles afore stated is to be applied by the courts,

would depend on the facts and circumstances of a given case.

62.In the present case, the Court has applied the method of agricultural

yield and multiplier of 10 years. Further, it has declined to accept the

method adopted by the Collector for granting compensation to the

claimants for the reason that the SLAO ought not to have taken

recourse to the method of sale statistics. It was further recorded that no

sale instances of Sanaba Village three years prior to 2002 were

available and instances of adjacent village should not have been taken

into consideration. Instead, the market value should have been

calculated by adopting capitalization method and no reason was stated

as to why this method was not applied. We are unable to accept the

approach of the High Court as well as that of the Reference Court on

both these issues. Firstly, we are of the considered view that adopting

4

the method of agricultural yield and applying the multiplier method on

the basis that the cocoon was an agricultural crop and resultantly silk

cocoon itself was an agricultural activity was not correct. We need not

elaborate on this aspect in view of our detailed discussion on it supra.

Secondly, we are also of the firm view that the Reference Court fell in

error of law in stating that the lands of the adjacent or nearby villages

could not have been taken into consideration and compensation could

be determined with reference to the sales statistics.

63.It is not in dispute before us that the entire land was acquired for the

same purpose and, in fact, the entire land including the land of the

adjacent villages had submerged or was utilized for the purposes of

construction and operation of the Hemavathi Dam. This Court has held

in number of judgments that the lands of the adjacent villages can be

taken into consideration for determining the fair market value of the

land, provided they are comparable instances and satisfy the other

ingredients stated in this judgment. It can hardly be disputed that the

land in the area of village Sanaba and the adjacent village is being used

for growing mulberry crops which is supplied by the agriculturists to

the silk factories or they use the same for their own benefit of

manufacturing silk. The lands were given two classification i.e. wet

4

land and lands which were not having their own regular source of

irrigation (dry lands).

64.It is a settled principle of law that lands of adjacent villages can be

made the basis for determining the fair market value of the acquired

land. This principle of law is qualified by clear dictum of this Court

itself that whenever direct evidence i.e. instances of the same villages

are available, then it is most desirable that the court should consider

that evidence. But where such evidence is not available court can

safely rely upon the sales statistics of adjoining lands provided the

instances are comparable and the potentiality and location of the land is

somewhat similar. The evidence tendered in relation to the land of the

adjacent villages would be a relevant piece of evidence for such

determination. Once it is shown that situation and potential of the land

in two different villages are the same then they could be awarded

similar compensation or such other compensation as would be just and

fair.

65.The cases of acquisition are not unknown to our legal system where

lands of a number of villages are acquired for the same public purpose

or different schemes but on the commonality of purpose and unite

4

development. The parties are expected to place documentary evidence

on record that price of the land of adjoining village has an increasing

trend and the court may adopt such a price as the same is not

impermissible. Where there is commonality of purpose and common

development, compensation based on statistical data of adjacent

villages was held to be proper. Usefully, reference can be made to the

judgments of this Court to the cases of Kanwar Singh & Ors. v. Union

of India [JT 1998 (7) SC 397] and Union of India v. Bal Ram & Anr.

[AIR 2004 SC 3981].

66.In this regard we may also make a reference to the judgment of this

Court in the case of Kanwar Singh & Ors. v. Union of India [AIR 1999

SC 317], where sale instance of the adjacent villages were taken into

consideration for the purpose of determining the fair market value of

the land in question and their comparability, potential and acquisition

for the same purpose was hardly in dispute. It was not only permissible

but even more practical for the courts to take into consideration the sale

statistics of the adjacent villages for determining the fair market value

of the acquired land.

4

67.We are unable to hold, that the SLAO had exceeded its jurisdiction or

failed to exercise its jurisdiction properly while making the sale

statistics of the adjacent villages Sanaba and Pandavapura as the basis

for computing the compensation payable for the acquired land.

However the extent of compensation which ought to have been

awarded, we shall discuss shortly.

68.At this stage, we may notice the proceedings of the SLAO, where he

submitted the draft compensation award of the acquired land to the

Government for its approval in accordance with law. As per clause 6

of this Report, he had visited and inspected the lands in the presence of

various officers at Village Sanaba, Chinakurali Hobli, Pandavapura

Taluk, Karnataka which were flooded by the backwaters of the river.

Even the claimants were present and they had prayed for compensation

of Rs. 60,000/- per acre for dry land and Rs. 90,640/- per acre for

garden land. But they did not produce any document before the said

authority for determining the compensation for the acquired land. The

Report reads as under :

“In this regard, as per confirmation letter of

the guidance value at the office of the Sub-

Registrar, Pandavapura, the guidance value of the

dry land during the period 1998-99 to 2001-02

are as follows :

4

Years Per Acre of dry land

1999.2000 Rs. 36,000-00

2000-2001 Rs. 36,000-00

2001-2002 Rs. 38,000-00

3 years Rs. 1,10,000-00

Average 1,10,000= 36,666.66 or 36,667-00

Per Gunta Rs. 916.68 or Rs. 917/-

While fixation of the compensation for the

dry land, it is Rs. 37,200/- per acre of dry land

and Rs. 930/- per gunta as per the statement of

sale transaction at the office of the Sub Registrar,

Pandavapura Taluk and as per the guidance value

it is observed to be Rs. 37,200/- per acre and Rs.

930/- per guntas of land.

While fixation of compensation amount to

the garden lands, since there are no sale

transactions of the garden lands in Sanaba

Village, the statement of the same are not

available for consideration at the office of the

Sub-Registrar, Pandavapura. For the said reason,

the statement of the sale transactions of the

garden lands within the Hobli Circle of the said

village is taken as base. As such, the details of

the transactions are as under :

Sl

No

Name of the

Village

Sy.

No.

NatureExtent

of

land

Sale

considera

tion

R.No. &

date

01Mahadevapura

(Melukote

Hobli)

84/1Garden

land

0-10 GRs.260001318/99-

00

4-10-99

5

02Hosahalli

(Chinkurali

Hobli)

12/6Garden

land

0-18 GRs.375001770/99-

00

6-12-99

03Dinkakaval

(Chinkurali

Hobli)

Out

of 33

Garden

land

0-10 GRs.27000184/00-

01

29-04-00

04Vaddara halli

(Kasaba Hobli)

36/4

36/2

36/3

Garden

Land

Garden

land

Garden

land

0-09

0-03

0-02

0-14

Rs.30000199/01-

02

20-4-00

05Vaddara halli

(Kasaba Hobli)

51/7Garden

land

0-17½ Rs.370001028/01-

02

26-06-01

Total 01-29 ½ 1,57,500

The extent of garden land in which there was

transaction : 01 Acre 29 ½ Guntas

Total amount of transaction : Rs. 1,57,500/-

Per Acre 1,57,500 x 40= 90647-48 or 90640-

00

69.5

Per gunta 2266-18 or 2266-00

Per Acre Rs. 90,640/- and per gunta Rs. 2266/-

In the same matter, the guidance value of

the garden lands available at the office of the

Sub-Registrar, Pandavapura is examined and the

details are as under :

Year Per Acre of garden land

5

1999.2000

Rs. 85,000-00

2000-2001 Rs. 85,000-00

2001-2002 Rs. 90,000-00

Rs. 2,60,000-00

Per Acre = 2,60,000 = Rs. 86,666.67

3 or Rs. 86,667 and

Per gunta Rs. 2167/-

While fixation of the compensation amount

for the garden lands, finally, the statements of the

sale transactions and the guidance value details

were made in comparison. AS such, the

statements of sale transactions as base is

considered to be just and hence per acre of garden

land Rs. 90,640/- and per gunta as Rs. 2,266/- is

decided and fixed.

For the amount of compensation fixed i.e.

Rs. 37,200/- per acre of dry land and Rs. 90,640/-

per acre of garden land, as statement shall be

prepared and for the said amount a legislative

compensation at the rate of 30% without interest

shall be paid”

69.The above compensation was computed by the SLAO on the basis of

the sale instances of the villages falling within the same Circle as well

as on the basis of the guidance value maintained in the Register of the

Sub-Registrar of the concerned villages. From the Report, it is evident

that both these villages Sanaba and Pandavapura are located in the

same Circle and are practically part of the larger revenue estate. It was

5

not in dispute before us that primarily all these lands were being used

for cultivating mulberry crop which is the sole agricultural activity.

The court has to keep in mind a very pertinent equitable principle while

awarding compensation, i.e the court should grant just and fair market

value of the land at the time of the acquisition while ensuring that there

is no undue enrichment. These are compulsive acquisitions but the

guiding factor for the court is sale instances of a willing seller and a

willing purchaser while determining the compensation payable. To

award fair compensation is the obligation of the State and depending on

the facts and circumstances of the case, the courts may enhance the

compensation within the framework of law. The sale instances referred

to by the Collector in his report are from the same villages or nearby

villages or adjacent villages which are a part of the same Circle and

where the land can easily said to be comparable as the entire chunk of

the land was being used for raising mulberry crop and was acquired for

common purpose, that is, the lands were submerged in the water

coming from the Hemavathi Dam.

70.This Court in the case of Shaji Kuriakose (supra) held that out of the

three afore stated methods, the courts adopt comparable sales method

of valuation of land while fixing the market value of the acquired land,

5

comparable sales method of valuation of land is preferred than the other

methods such as capitalization of net income method or expert opinion

method. Comparable sales methods of valuation is preferred because it

furnishes the evidence for determination of the market value of the

acquired land which a willing purchaser would pay for the acquired

land if it has been sold in open market at the time of issue of

notification under Section 4 of the Act. In Kantaben Manibhai Amin &

Anr. v. The Special Land Acquisition Officer, Baroda [AIR 1990 SC

103] this Court also stated that latest sale instance closer to the date of

notification for acquisition of the land should be taken into

consideration.

71. It is also an accepted judicial norm that the claimants can be given the

benefit of awarding compensation on the basis of the genuine sale

instance containing the highest rate, provided it has been proved in

accordance with law and is a comparable instance. Such sale instance

must satisfy all the requirements and pre-requisite stated in the Act. It

should be a bonafide transaction and should also be in reasonable

proximity to the date of notification under Section 4 of the Act. Since

the SLAO had referred to the four sale instances which were produced

before him and being part of the reference file, they were duly noticed

5

by the Reference Court as well as by the High Court. But the Courts

held that it was not appropriate to apply sales statistics method in the

facts and circumstances of the case. Admittedly, the claimants

produced no sale instances. In our view, these sale instances can be

taken into consideration by the Court and benefit of the highest

instance can be granted to the claimants in accordance with law in

fixing the market value of the acquired land. Whatever benefit accrues

to the claimants from the record produced and proved by the

respondents, cannot be denied to them just because they have not

produced evidence by way of sale instances.

72.The afore noticed sale instances which were taken into consideration by

the SLAO, and which were part of the reference file show that there

was an increasing trend in the sale price of the land in these villages as

10 guntas of garden land was sold in Mahadevpura (Melukote Hobli)

for a sum of Rs. 26,000/- on 04.10.1999 while 9 guntas of garden land

was sold in Vadara Halli (Kasaba Hobli) for a sum of Rs. 30,000/- on

20.04.2000. Similarly, 18 guntas of garden land was sold in Hosahalli

(Chinkurali Hobli) for a sum of Rs. 37,500/- on 06.12.1999 and 10

guntas of garden land was sold in Dinkakaval (Chinkurali Hobli) for a

sum of Rs. 27,000/- on 29.04.2000, all these sold lands fall in the same

5

circle. Besides this increasing trend and the fact that all these villages

are adjacent villages to each other, the highest price fetched was for the

sale instance executed on 26.06.2001 where 17 ½ guntas of garden land

was sold in village Vaddara Halli (Kasaba Hobli) for a sum of Rs.

37,000/-. The notification under Section 4 was issued on 04.04.2002

that means that all the sale instances of the adjacent comparable lands

are in proximity of time to the date of notification under Section 4 of

the Act. The average of sale statistical instances referred above comes

out to be Rs. 1,57,500/- for sale of 01 Acre 29 ½ Guntas i.e. 90,647.48

per acre. Since the sale instances relied upon are nearly around 1 to 2

½ years prior to the date of notification, they are relevant

considerations and, therefore, the claimants are entitled to an increase

at the rate of 15% per annum compounded.

73.The aforesaid increase, in our view, is justified and equitable – firstly,

on the ground that there was increasing trend in the sale price of that

land and secondly, the lands acquired were being used by the

agriculturists for production of mulberry crops which had a restrictive

use in the manufacturing, commercial or industrial activities i.e.

feeding the silk worms which are ultimately used for production of silk

thread. The court cannot use this admitted restricted use to the

5

disadvantage of the land owners and some benefit should be given to

them while balancing the equities in accordance with law. The concept

of fair compensation payable for the acquired land is embodied in the

Act itself, particularly in view of secondly and fifthly of Section 23 of

the Act. In fact, it was stated during the course of arguments by the

learned counsel appearing for the appellants that, the State Government

itself has given some additional compensation to the claimants for

mulberry crops which were standing at the time of submerging. We

find this stand of the State Government to be reasonable and fair.

Thus, giving a 15% compounded increase for 2 ½ years on the sale

price of Rs. 1,08,000/- in respect of garden land, the claimants would

be entitled to get compensation at the rate of Rs. 1,53,542.50 per acre

for the wet (irrigated) land. This can even be examined from another

point of view, that is, the sale instance no. 3 where the land in village

Dinkakaval (Chinkurali Hobli) garden land of 10 guntas were sold for a

sum of Rs. 27,000/- on 29.04.2000, i.e. approximately 2 years prior to

the date of notification under Section 4 of the Act. This would give the

sale price of the surrounding village lands to the acquired land at the

rate of 1,08,000/- per acre for the garden land. Giving it a compound

increase of 15% for two year it will come to Rs. 1,42,830/- (Rs.

5

1,08,000/- + 15% on Rs. 1,08,000/- = Rs. 1,24,200/- for the first year;

Rs. 1,24,200/- + 15% on Rs. 1,24,200/- = Rs. 1,42,830/- for the second

year) and Rs. 1,42,830/- + 7.5% of Rs. 1,42,830/- = Rs. 1,53,542.50 for

two and half years.

We have two important facts which cannot be ignored by the Court.

Firstly, that the claimants, by leading definite evidence have shown on

record that the lands in question are not only lands having regular source

of irrigation through the backwaters but otherwise are also lands superior

to the other garden lands used for ordinary agricultural activities. The

fields in question are being used exclusively for growing mulberry crops.

Mulberry leaves are the only and the specified food for cocoons. In other

words, the agricultural purpose for which the fields in question are being

used is a special purpose and the crop so grown is again used for a specific

commercial purpose to which there is no other alternative. In fact, none

was stated before us by the learned counsel appearing for the parties. In

all these peculiar facts, it cannot be disputed that some additional benefits

have to be provided in favour of the claimants. In the present cases, the

claimants have not only lost their agricultural land but they have also been

deprived of seasonal income that was available to them as a result of sale

of mulberry leaves. Deprivation of livelihood is a serious consideration.

5

The Court is entitled to apply some kind of reasonable guess work to

balance the equities and fix just and fair market value in terms of the

parameters specified under Section 23 of the Act. The SLAO has ignored

both these aspects firstly providing of annual increase, and secondly,

giving some weightage to the special agricultural purpose and the purpose

for which the mulberry crop had to be utilized. The claimants have not

proved and produced on record sale instances. They have also not

produced on record any specific evidence to justify the compensation

awarded to them by the Reference Court and/or the High Court. In fact,

there is hardly any evidence, much less a cogent and impeccable evidence

to support the increase on the basis of net income capitalization method. It

is a settled rudiment of law that the Court, in given facts and

circumstances of the case and keeping in mind the potentiality and utility

of the land acquired, can award higher compensation to ensure that

injustice is not done to the claimants and they are not deprived of their

property without grant of fair compensation. Reference, in this regard, can

be made to the judgment of this Court in the case of Land Acquisition

Officer, A.P. v. Kamadana Ramakrishna Rao [(2007) 3 SCC 526]. While

adopting the average sale method as the formula for awarding

compensation to the claimants, we are also of the considered view that in

5

the peculiar facts and circumstances of the case and the fact that the land is

being compulsorily acquired, the claimants should be awarded a higher

compensation. The compensation at the rate of Rs. 2,30,000/- per acre for

the wet land and at the rate of Rs. 1,53,400/- per acre for the dry land

would be just and fair compensation and would do complete justice

between the parties. This element of increase had not been added by the

SLAO which ought to have been done. As far as claimants are concerned,

they have not produced and proved any sale instance and as already

noticed, they have not even brought on record any specific evidence to

justify their claims relatable to and based upon net income capitalization

method. In fact, we do not hesitate in observing that claimants have failed

to discharge their onus fully and satisfactorily.

74.The claimants have proceeded on the assumption that they will be

entitled to get compensation, by treating the silk cocoons reared by

them as the yield from the land and by capitalizing the value of the silk

cocoons. We have already held that the determination of the market

value by capitalization of yield method will depend upon the

agricultural yield, that is, value of agricultural produce less expenditure

for growing them, and not with reference to a further sericultural

activity by using the agricultural produce. Therefore, what could be

6

capitalized for determination of market value was the value of mulberry

leaves used for sericulture and not the value of silk cocoons produced

by feeding such mulberry leaves to the silkworms. The yield of silk

cocoons is the result of further human effort and industry, value of

which obviously cannot be capitalized for the purpose of arriving at the

market value of the agricultural land. The evidence discloses that the

acquired lands were used for growing mulberry crop which was being

harvested to provide feed for the silkworms by way of sericulture.

Therefore, one way of arriving at the market value is to provide

appropriate addition for the mulberry cultivation to the value arrived at

for the land without mulberry cultivation. The second method is

instead of taking the value of cocoons for the purpose of capitalization,

take a part thereof, being the value of the mulberry crop input and

capitalize the same. The land in question is special garden lands being

used only for growing mulberry crop.

75.Keeping in mind the facts and circumstances of the case, it will also be

just and fair to adopt some liberal approach with some element of guess

work to provide the claimants with just and fair market value of the

land in question. It must be remembered that, the entire land including

village Sanaba and all other villages was acquired for the purpose of

6

submerging the lands because of the water coming from the Hemavathi

Dam. In view of the cumulative discussion referred to above, we are of

the considered view that it will be just, fair, equitable and in

consonance with Sections 23 and 24 of the Act that the market value of

the land as on 04.04.2002 can safely be taken as Rs. 2,30,000/- per acre

in the case of garden land and, applying the accepted principle of

reducing the said compensation in the case of dry lands by one third,

the rate will be Rs.1,53,400/- per acre in the case of dry land keeping in

view the peculiar facts and circumstances of the present case and the

evidence on record.

Claim in regard to interest payable on taking of possession

76.The claimants while relying upon the judgment of this Court in

Satinder Singh & Ors. v. Umrao Singh and Anrs. [AIR 1961 SC 908]

and some other judgments of the High Court had claimed that they are

entitled to receive interest from the date when their lands were

submerged in the year 1993 onwards and not from the date of the

Notification i.e. 4

th

April, 2002. It was contended that since they had

lost possession and interest being payable in lieu of possession, they

would be entitled to receive interest from those dates i.e. from 1993,

6

and not from the date the Land Acquisition Collector had granted, i.e.

4

th

April, 2002. The Reference Court as well as the High Court

accepted this contention while referring to the judgments of the

Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa &

Ors. v. N.C. Budharaj (deceased) by Lrs. & Ors., [(2001) 2 SCC 721 ]

and Satinder Singh (Supra), granted the relief to the claimants as

prayed.

77.The reliance placed by the respondents upon the judgment of N.C.

Budharaj (supra), was with reference to the scope and interpretation of

the relevant provisions of the Act. That case related to the provisions

of the Indian Arbitration Act, 1940 and with reference to the relevant

sections of the Interest Act, 1839, where this Court has held that

provisions of the Act could be made applicable to arbitration as there

was nothing to indicate that its application was restricted. Thus, it is

not necessary for us to deliberate on the judgment of N.C. Budharaj

case (supra) any further. Further, even the reliance placed upon

Satinder Singh case (supra) is not of much help to the respondents.

This judgment relates to the period, prior to introduction and/or

amendment of Sections 23(1A), 23(2) and 34 of the Act i.e. on 30

th

April, 1982 and 24

th

September, 1984. It has been contended on behalf

6

of the appellants, that it is now a well settled proposition of law that

Reference Court cannot grant interest for any period prior to the

issuance of the Notification under Section 4 of the Act. As such,

possession even if taken or assumed to have been taken earlier would,

dehor the provisions of the Act and, therefore, was improper. Thus, the

possession has to be legal and within the framework of law. The

provision of the Act clearly lays down the procedure required to be

followed while taking possession of the acquired land. The words

“from the date on which he took the possession of the land” occurring

in Section 20 would mean lawful taking of possession. The case of

Shree Vijay Cotton & Oil Mills Ltd. v. State of Gujarat [(1991) 1 SCC

262], also stated the principle that, interest on the compensation amount

could be awarded under Section 34 of the Act, with effect from the

date of taking possession. However, this controversy need not detain us

any further, as the three Judge Bench of this Court in the case of R.L.

Jain (D) by Lrs. v. DDA & Ors. [2004 (4) SCC 79] considered all these

aspects of the matter and held as under :-

“…….

15. Similar view has been taken in a recent

decision by a Bench of two Judges in Lila Ghosh

v. State of W.B., reported in (2004) 9 SCC 337

6

and the reasons given there in para 16 of the

Report are being reproduced below:

16.……There are two decisions of this Court,

wherein same controversy arose, namely, whether

the claimant would be entitled to additional sum

at the rate of twelve per centum on the market

value where possession has been taken over prior

to publication of notification under Section 4(1).

In Special Tahsildar (LA), PWD Schemes v.

M.A. Jabbar, reported in (1995) 2 SCC 142

which has been decided by a Bench of two

Judges (K. Ramaswamy and Mrs Sujata V.

Manohar, JJ.), it was held that the claimant would

not be entitled to this additional sum for the

period anterior to publication of notification

under Section 4(1). However, in Asstt. Commr.,

Gadag Sub-Division v. Mathapathi

Basavannewwa, reported in (1995) 6 SCC 355

also decided by a two-Judge Bench (K.

Ramaswamy and B.L. Hansaria, JJ.) it was held

that even though notification under Section 4(1)

was issued after taking possession of the acquired

land the owners would be entitled to additional

amount at twelve per cent per annum from the

date of taking possession though notification

under Section 4(1) was published later. For the

reasons already indicated, we are of the opinion

that the view taken in Special Tahsildar (supra) is

legally correct and the view to the contrary taken

in Asstt. Commr.(supra) is not in accordance with

law and is hereby overruled.

17. Shri Dave, learned counsel for the appellant

has also placed strong reliance on Satinder Singh

v. Umrao Singh (supra) wherein the question of

payment of interest in the matter of award of

compensation was considered by this Court. In

this case the initial notification was issued under

Section 4(1) of the Land Acquisition Act, 1894

but the proceedings for acquisition were

completed under East Punjab Act 48 of 1948. The

High Court negatived the claim for interest on the

ground that the 1948 Act made no provision for

award of interest. After quoting with approval the

following observations of the Privy Council in

6

Inglewood Pulp and Paper Co. Ltd. v. New

Brunswick Electric Power Commission, reported

in AIR 1928 PC 287.

“upon the expropriation of land under statutory

power, whether for the purpose of private gain or

of good to the public at large, the owner is

entitled to interest upon the principal sum

awarded from the date when possession was

taken, unless the statute clearly shows a contrary

intention”

the Bench held as under:

“... when a claim for payment of interest is made

by a person whose immovable property has been

acquired compulsorily he is not making claim for

damages properly or technically so-called; he is

basing his claim on the general rule that if he is

deprived of his land he should be put in

possession of compensation immediately; if not,

in lieu of possession taken by compulsory

acquisition interest should be paid to him on the

said amount of compensation”.

17.1. The normal rule, therefore, is that if on

account of acquisition of land a person is

deprived of possession of his property he should

be paid compensation immediately and if the

same is not paid to him forthwith he would be

entitled to interest thereon from the date of

dispossession till the date of payment thereof. But

here the land has been acquired only after the

preliminary notification was issued on 9-9-1992

as earlier acquisition proceedings were declared

to be null and void in the suit instituted by the

landowner himself and consequently, he was not

entitled to compensation or interest thereon for

the anterior period.

18. In a case where the landowner is dispossessed

prior to the issuance of preliminary notification

6

under Section 4(1) of the Act the Government

merely takes possession of the land but the title

thereof continues to vest with the landowner. It is

fully open for the landowner to recover the

possession of his land by taking appropriate legal

proceedings. He is therefore only entitled to get

rent or damages for use and occupation for the

period the Government retains possession of the

property. Where possession is taken prior to the

issuance of the preliminary notification, in our

opinion, it will be just and equitable that the

Collector may also determine the rent or damages

for use of the property to which the landowner is

entitled while determining the compensation

amount payable to the landowner for the

acquisition of the property. The provisions of

Section 48 of the Act lend support to such a

course of action. For delayed payment of such

amount appropriate interest at prevailing bank

rate may be awarded.”

78.We are bound by the decision of the larger Bench, which had

considered the case of Satinder Singh (supra), on which the reliance has

even been placed by the claimants in the present appeal. The larger

Bench after detailed discussion on the subject, rejected the claim for

payment of interest claimed by the respondents in those cases, prior to

the date of issuance of the Notification under Section 4 of the Act. As

is evident from the above dictum of the Court, despite dispossession,

the title continues to vest in the land owners and it is open for the land

owners to take action in accordance with law. Once notification under

Section 4 (1) of the Act has been issued and the acquisition proceedings

culminated into an award in terms of Section 11, then alone the land

6

vests in the State free of any encumbrance or restriction in terms of

provisions of Section 16 of the Act. The Court, in situations where

possessions has been taken prior to issuance of notification under

Section 4(1) of the Act, can direct the Collector to examine the extent

of rent or damage that the owners of land would be entitled to the

provisions of Section 48 of the Act would come to aid and the Court

would also be justified in issuing appropriate direction. This was the

unequivocal view expressed by the Court in R.L. Jain case (supra) as

well. This legal question is no more open to controversy and stands

settled by this Court. We would follow the view taken and accept the

contention of the appellant-State that the Reference Court as well as the

High Court could not have granted any interest under the provisions of

the Act, for a date anterior to the issuance of Notification under Section

4 of the Act. However, following the dictum of the Bench, we direct

the Collector to examine the question of payment of rent/damages to

the claimants, from the period when their respective lands were

submerged under the back water of the river, till the date of issuance of

the Notification under Section 4(1) of the Act, from which date, they

would be entitled to the statutory benefits on the enhanced

compensation.

6

79.As noticed in the opening part of the judgment, the respondents had

taken an exception and raised objection to the maintainability of the

appeal before this Court being directly filed against the judgment of the

Principal Civil Judge, Senior Division (Reference Court). It is true,

that right of appeal is a statutory right. It normally should be exercised

in terms of the statute but the fact of the matter, in the present appeals,

is that the High Court had followed its earlier view and disposed of

number of appeals against the judgment of the Reference Court against

which appeals have been preferred before this Court. In the

meanwhile, the Reference Court had passed different judgments

granting the same compensation against which appeal before the High

Court would hardly be of any substantial benefit and would have been

academic only. It also requires to be noticed at this stage that certain

appeals preferred by the State against the judgment of the Reference

Court, before the District Judge were also pending during the period

when the High Court disposed of the above-noticed appeals. In other

words, the fate of the appeals preferred by the State before the District

Court (First Appellate Court) challenging the quantum of compensation

awarded by the Reference Court stood decided in view of the judgment

of the High Court and became academic. In these circumstances and

6

keeping in view the peculiar facts and circumstances of these cases, we

do not propose to accept the objection raised by the respondents and

while leaving the question of law open, dispose off the said appeal on

merit.

The above-noticed facts clearly indicate that appeals are even now

pending before various Courts in the State of Karnataka. The Government

Authorities are expected to advert to the factors relating to the pendency of

various appeals including those before the Reference Court and take steps

at the earliest to remedy the legal grievances raised by the claimants at

different levels of justice administration system. Despite its might, it is

expected to be a responsible and reluctant litigant as there is obligation

upon the State to act fairly and for the benefit of the public at large. It will

be in harmony with the principle of proper administration that State also

takes decisions which would avoid unnecessary litigation. An established

maxim “Boni judicis est lites dirimere, ne lis ex lite oritur, et interest

reipublicae ut sint fines litium”, casts a duty upon the Court to bring

litigation to an end or at least endure that if possible, no further litigation

arises from the cases pending before the Court in accordance with law.

This doctrine would be applicable with greater emphasis where the

judgment of the Court has attained finality before the highest Court. All

7

other Courts should decide similar cases particularly covered cases,

expeditiously and in consonance with the law of precedents. There should

be speedy disposal of cases particularly where the small land owners have

been deprived of their small land-holdings by compulsive acquisition.

Any unnecessary delay in payment of the compensation to them would

cause serious prejudice and even may have adverse effect on their living.

In these circumstances, we consider it necessary to issue appropriate

directions to the State authorities and request the Courts, where cases are

pending arising from the same notification, to dispose of the pending

proceedings without any further delay.

80.In view of the aforesaid discussion, we allow these appeals in part, with

the following directions: -

(i)The appeals filed by the State are partially allowed.

In the peculiar facts and circumstance of the present

case, the claimants would be entitled to get

compensation at the rate of Rs.2,30,000/- per acre for

the wet/garden land and at the rate of Rs.1,53,400/-

per acre for the dry land.

7

(ii)The claimants - land owners would be entitled to get

statutory benefits on the enhanced compensation

under Sections 23(1A) and 23(2) of the Act and

interest in terms of Section 28 of the Act.

(iii)Since, the appeals filed by the State have been

partially allowed by this Court, we hope that the

Government shall grant compensation to all the

interested persons whose lands have been acquired

under the same notification and pay them

compensation in terms of this judgment without any

further delay.

(iv)Following the principle and the directions stated by

this Court in R.L. Jain’s case (supra), we grant liberty

to the claimants to file applications before the

competent authority (State Government/concerned

Collector) to claim damages for their dispossession

from the lands owned by them as a result of

submerging, till the date of issuance of notification

under Section 4 of the Act i.e. 4

th

April, 2002. These

7

applications may be filed within eight weeks from the

date of pronouncement of this judgment. If such

applications are filed we direct the competent

authority to consider the same sympathetically and

award such amounts to the claimants as may be

payable in accordance with law expeditiously. We

make it clear that the amounts, if already paid for this

period, shall be adjusted.

(v)The direction of the High Court for payment of

interest for the period prior to the issuance of the

notification under Section 4 of the Act i.e. 4

th

April,

2002 is hereby set aside and order to be deleted.

(vi)The appeals are allowed to the above extent.

(vii)Parties to bear their own costs.

........................................J.

[ R.V. RAVEENDRAN ]

........................................J.

[ SWATANTER KUMAR ]

New Delhi

April 26, 2010

7