Karnataka High Court
Shivsharnappa (Deceased) By L.Rs. And ... vs The Special Land Acquisition Officer ... on 13 April, 2000
Equivalent citations: 2001(3)KARLJ229
JUDGMENT
1. These appeals arise from the common judgment and award dated 29th June, 1996 delivered by the II Additional District Judge (Mr. V.K. Dwarakanath), Gulbarga in Land Acquisition Case Appeal Nos. 45, 46, 83, 84, 85, 86 of 1992 and 1 to 3 of 1993 which had been filed from the common judgment dated 2-1-1992 delivered by the Additional Civil Judge (Mr. P.G. Kulkarni), Gulbarga, in Land Acquisition Case Nos. 29, 30, 31, 32, 33, 34, 35, 36 and 37 of 1989.
2. From the common judgment delivered by the learned Additional Civil Judge, Gulbarga, above land acquisition cases the said appeals have been allowed by the learned II Additional District Judge, Gulbarga, with costs.
3. Before proceeding further, it will be appropriate to give the following chart which indicates the number of M.S.A., L.A.C.A. and L.A.C., survey number and the extent of land involved in each case and the nature of land:
M.S.A. No. L.A.C.A. No. LAC. No. Survey No. Extent Nature of land 1 2 3 4 5 6 A.G. 557 of 1998 2 of 1993 31 of 1989 45/B5 4-00 Dry 558 of 1998 46 of 1992 34 of 1989 46 8-10 Dry 559 of 1998 84 of 1992 36 of 1989 48/2 2-32 Dry 560 of 1998 85 of 1992 35 of 1989 49 5-38 47 8-13 Wet 49 2-00 561 of 1998 86 of 1992 33 of 1989 48 3-14 70/D1 9-06 Wet 50/D4 2-34 70/D1 3-00 562 of 1998 3 of 1993 30 of 1989 48/3 3-10 50/2B 1-04 Dry 70/B 1-12 70/5 6-38 70/B3 1-22 Wet 70/5 563 of 1998 83 of 1992 29 of 1989 48-A 2-26 50/A6 1-22 Dry 70/A4 0-08 70/6 5-26 70/4A 4-00 Wet
4. The facts of the case in nutshell are.--That vide notification under Section 4(1) of the Land Acquisition Act, dated 10-11-1983, the lands belonging to the claimants-appellants had been acquired by the Government for Minor Irrigation Project, Gulbarga Division and the Special Land Acquisition Officer, Gulbarga, gave the award awarding compensation in respect of the masari lands mixed with red soil at the rate of Rs. 2,500/- to Rs. 3,000/- per acre and in respect of irrigated lands at the rate of Rs. 5,500/- per acre.
5. That on reference under Section 18(1) of the Land Acquisition Act, the learned Additional Civil Judge, Gulbarga, enhanced compensation to Rs. 6,000/- per acre for the dry land, while in respect of the irrigated land at the rate of Rs. 9,500/- per acre. The claimants whose lands have been acquired dissatisfied with the enhancement made by the reference Court have preferred the appeals challenging the award given by the learned Additional Civil Judge, Gulbarga and claimed that they are entitled to the compensation at a higher rate. But for want of funds to pay heavy Court fee, the appellants have confined their claim in the first appeal for the compensation at the rate of Rs. 8,000/- per acre for the dry land and at the rate of Rs. 12,000/- per acre for the wet bagayat land. The learned II Additional District Judge, Gulbarga, considered the mat-ter and opined that the lands were acquired in November 1983, but the learned Additional Civil Judge, Gulbarga, has taken the minimum value as prevailing in January, February and March 1984 which is the harvest season during which period, the prices would normally be low. The lower Appellate Court opined that as the acquisition notification was issued on 4-11-1983, so at least the average is to be taken from July 1983 to December 1983. Taking this view, the lower Appellate Court opined that the average of minimum price during that period works out to Rs. 456/-per quintal. The lower Appellate Court accepted the finding of the Reference Court i.e., the Trial Court that the average yield or produce has rightly been taken to be three quintals per acre. The lower Appellate Court opined that dry cultivation does not require much irrigation nor much cultivation expenses and hence 40% of the yield can be taken as cultivation charges in view of the decision of this Court in Land Acquisition Officer v B.P. Angadi. The lower Appellate Court, as such, held, that applying the formula 40% of the gross yield towards the cultivation charges or expenses, the net income would come to Rs. 274/- per quintal. He opined that the average yield being 3 quintals per acre the net proceeds would come to Rs. 822/- per year. Thereafter, he applied the multiplier of 10 to the net annual income and arrived at a conclusion that the compensation for the dry land would come to Rs. 8,220/- and therefore it can be safely taken at Rs. 8,000/- per year. So the market value of the dry land would be Rs. 8,000/- per acre. The lower Appellate Court further opined that the learned Additional Civil Judge, erred in fixing the value at Rs. 6,000/- per acre and held that the market value of the dry land will be Rs. 8,000/- per acre, The lower Appellate Court further opined that the net yield of irrigated land will ordinarily be IMt times the yield of the dry land and held that with respect to the irrigated land the compensation can be fixed at Rs. 12,000/- per acre. Thus, the lower Appellate Court has modified the judgment and award of the Trial Court and held that the claimants-appellants will be entitled to the compensation at the rate of Rs. 8,000/- per acre for the dry land and rupees 12,000/- per acre for the irrigated bagayat land as market value of the land. After having recorded the above findings, the lower Appellate Court held and ordered that the claimant in L.A.C.A. No. 83 of 1992 (L.A.C. No. 29 of 1989) is entitled to the compensation at the rate of Rs. 12,000/- per acre in respect of Survey No. 7074A measuring 4 acres which is a bagayat land, while in respect of the other dry lands the claimant will be entitled to the compensation at the rate of Rs. 8,000/- per acre.
6. In respect of L.A.C.A. No. 85 of 1992 (L.A.C. No. 35 of 1989) the lower Appellate Court awarded compensation with respect to Survey No. 49 measuring 2 acres 00 guntas at Rs. 12,000/- per acre as market value and in respect of the dry land the claimant would be entitled to the eompeneation at the rate of Rs. 6,000/- per acre. It appears that there appears to be some typographical mistake as the lower Appellate Court had determined the compensation at the rate of Rs. 8,000/- per acre for the dry land. In respect of L.A.C.A. No. 86 of 1992 (L.A.C. No. 33 of 1989) the land bearing Survey No. 70/D1 measuring 3 acres which was treated as bagayat irrigated land the lower Appellate Court held that the claimant would be entitled to the compensation at the rate of Rs. 12,000/- per acre and for the remaining land of 9 acres 6 guntas the claimant would be entitled to the compensation at the rate of Rs. 8,000/-per acre.
7. With respect to L.A.C.A. No. 3 of 1993 (L.A.C. No. 30 of 1989), the lower Appellate Court held that the land bearing S. No, 70/5 measuring 1 acre 22 guntas being wetland the claimant will be entitled to the compensation at Rs. 12,000/- per acre and for the remaining land the claimant would be entitled at the rate of Rs. 8,000/- per acre for the dry land as compensation.
8. Taking the same view, the lower Appellate Court observed that in respect of the L.A.C.A. Nos. 45/2, 46, 84 of 1992, L.A.C.A. Nos. 1 and 2 of 1993 as these appeal cases involve only dry lands, the compensation is enhanced and the claimants will be entitled to get the same at the market rate of Rs. 8,000/- per acre. The lower Appellate Court has awarded additional market value of 12% per annum to the claimants as per Section 23(1-A) of the Land Acquisition Act from the date of the notification till the date of the possession being taken and will be entitled to the other benefits under the law.
9. Being dissatisfied with the judgment and award of the II Addi tional District Judge, Gulbarga, the claimants have come up before this Court by way of these second appeals under Section 54 of the Land Acquisition Act.
10. I have heard Sri S.P. Shankar, learned Counsel for the appellants and Sri M. Ramaiah, learned Government Advocate for the respondent.
11. It has been contended by Sri S.P. Shankar, learned Counsel (for the appellants that the compensation assessed for the land by applying the multiplier of 10 firstly is insufficient and not according to law. The learned Counsel contended that the multiplier of 12 or 13 should have been applied. He further contended that even if the multiplier of 10 had been applied, the market value and the rate of compensation should have been assessed and awarded at least at the rate of at least Rs. 8,220/- per acre and not Rs. 8,000/- per acre for the dry land. The learned Counsel for the appellants submitted that the market value of Toor crop in the month when the land was acquired was Rs. 460/- per quintal and when the market value of Toor crop was Rs. 460/- per quintal, the lower Appellate Court erred in taking Rs. 456/- per quintal as the price of toor crop. The learned Counsel for the appellants submitted that the compensation awarded at the rate of Rs. 8,000/- per acre for the dry land and Rs. 12,000/- per acre for the wet bagayat land is erroneous and liable to be modified, and even if the lesser Court fee has been paid by the claimants and they are entitled to the higher rate of compensation, the lower Appellate Court should have been awarded the compensation at a higher rate in order to do justice. The lower Appellate Court could have directed the appellants to pay additional Court fee, if it was needed or required.
12. The learned Counsel for the appellants, in support of his contention that multiplier 12 should be applied invited my attention to the following decisions;
(i) In Special Land Acquisition Officer, Davangere v P. Veerdbhadarappa .
(ii) In Union of India and Another v Smt. Shanti Devi, the Supreme Court had laid down that 13 to be the proper multiplier.
(iii) In Koyappathodi M. Ayisha Umma v State of Kerala, their Lordships, in this case, have laid down that multiplier 15 would be the proper multiplier.
(iv) In State of Haryana v Gurcharan Singh, their Lordships of the Supreme Court have laid down that for agricultural land 12 years multiplier shall be suitable multiplier.
13. The above contentions of the learned Counsel for the appellants have hotly been contested by Sri M. Ramaiah, learned Government Advocate for the respondent.
14. The learned Government Advocate for the respondent contended that multiplier 10 has rightly been applied by the lower Appellate Court and the multiplier 12 is not applicable to this case. He made reference to the decisions of the Supreme Court in the case of Additional Special Land Acquisition Officer v Yamanappa Basalingappa Chalwadi and in the case of State of Gujarat v Rama Rana and Others.
15. The learned Government Advocate on the basis of the above decisions vehemently contended that multiplier 10 adopted by the lower Appellate Court cannot be said to be unjustified. The learned Government Advocate contended that multiplier 10 to be held as proper multiplier done by capitalisation method.
16. I have applied my mind to the above contentions advanced by the learned Counsels appearing for the parties.
17. No doubt, in State of Haryana's case, supra, relied on by the learned Counsel for the appellants the multiplier 12 has been held to be the proper multiplier and in the other set of cases relied on by the learned Government Advocate it appears that multiplier 10 has been held to be the proper multiplier.
18. It would be appropriate at this juncture to refer to the earlier decision of the Supreme Court in the case of Union of India, supra, where their Lordships of the Supreme Court dealt with the question of capitalisation and the question of multiplier and the principles applicable in the matter of determination of the proper multiplier. In the case of Union of India, supra, their Lordships have laid down as follows:
"The relevant date for determining compensation of a property acquired under the Land Acquisition Act, 1894 is the date on which the notification under Section 4(1) is published. The capitalised value of a property is the amount of money whose annual interest at the highest prevailing interest at any given time will be its net annual income. The net annual income from a land is arrived at by deducting from the gross annual income all outgoings such as expenditure on cultivation, land revenue etc. The net return from landed property generally speaking reflects the prevalent rate of interest on safe money investments".
(emphasis supplied)
19. After referring to certain earlier decisions, their Lordships further observed in paragraph 16 of the said report as under:
"A perusal of the decisions referred to above and some others which have not been cited here shows that in India the multiplier which is adopted in determining the compensation by the capitalisation method has been 33 1/3, 25, 20, 16 2/3, 11 and 8. The number of years purchase has gradually decreased as the prevailing rate of interest realisable from safe investments has gradually increased -- the higher the rate of interest the lower the number of years purchase. This method of valuation involves capitalising the net income that the property can fairly be expected to produce and the rate of capitalisation is the percentage of return on his investment that a willing buyer would expect from the property during the relevant period. . . .It means that if the land yielded a net annual income of Rs. 8/- a willing buyer of land would have paid for it Rs. 100/- i.e., a little more than 12 times the annual net income. The multiplier for purposes of capitalisation would be about thirteen".
(emphasis supplied)
20. These observations so far as the later part quoted where the multiplier thirteen has been referred with reference to the expected net value from the land in the year 1962-63 taking the annual net return to be 8%. Therefore, it held that multiplier thirteen would have been applicable as proper multiplier. But the basic principle which has been laid down in this case is to the effect that the net return from the landed property generally reflects the provisional rate of interest on safe money investments and that higher rate of interest the lower the number of years purchase and according to it this method of valuation involves capitalising the net income that the property can fairly be expected to produce. So, it has to be looked into in such cases to determine what is the proper multiplier to find out what has been the provisional rate of interest on the deposits made in the Nationalised Banks during the relevant period when the notification under Section 4 was published and that can be taken to be as an intending purchaser intends to invest the money on the land would expect. In this decision, their Lordships very clearly laid down that a higher return of the order of 10% is usually anticipated and the return of at least 10% p.a. on safe investments is almost assured on account of developments that have been taken place from 1959-60 onwards. Applying this principle of 10% return, it can be said that if a land yielded a net annual income of Rs. 10/- a willing buyer of land would have paid for it Rs. 100/-. It means, the multiplier of 10 in such cases during which period the intending buyer may get 10% of return on his investment, the proper multiplier can be said to be 10. As mentioned earlier, in the case of Union of India, supra, the acquisition of the land was made in 1962-63 and in 1962-63 the investor in agricultural land expected an annual return of at least Rs. 8/-. In 1983 an investor expected the assured return of Rs. 10/- p.a. on safe money investments. Therefore, the net annual income from the land is to be taken at 10% of the money to be invested. Therefore, the market value of the land in November 1983 could be arrived at by applying multiplier 10 and multiplier 10 could have been a proper multiplier.
21. In the case of Special Land Acquisition Officer, supra, their Lordships of the Supreme Court have reiterated the same principle. In paragraph 12 of the said report, their Lordships observed as under:
"During the imperial days, investment in gilt-edged securities was looked upon as the only safe form of investment. But after the attainment of independence the country has taken long strides in the growth of commerce and trade. Due to growth of industries both in the public, as well as in the private sector, investment of capital in such industries, if not any more secure, have come into the law, merchant and such other alternative available securities have attracted persons who are inclined to invest rather than gilt-edged securities alone, apart from making fixed deposits in the scheduled banks. This accounts for the variation of the proper multiple to be adopted. The line of inquiry in such cases must therefore be: What was the prevailing rate of interest on long term deposits with scheduled banks or in the public or private sector".
(emphasis supplied)
22. In paragraph 21 of the said report, their Lordships further observed as under:
"In the premises when the rate of return on investment was 8.25% in the years 1971 and 1972, a person investing his capital in agricultural lands would ordinarily expect 2% to 3% more than what he could obtain from gilt-edged securities or other forms of safe investment and therefore the proper multiplier to be applied for the purpose of capitalisation could not in any event exceed "ten"."
23. No doubt, in the case of Special Land Acquisition Officer, referred to above, it was contended that proper multiplier to be applied would be 12 1/2 in computation of the capitalised value of the land in the case having regard to the rate of return at 8% at the relevant time i.e., on the date of the notification under Section 4(1) of the Land Acquisition Act. Therefore, the Court held that it must be held that multiplier 12 1/2 should be applied in computation of the value of the land. It may be mentioned here that the case was considered in the context of the acquisition notification issued in 1971 and 1972.
24. These cases bring out the basic principle. That in order to determine the proper multiplier what was the prevailing rate of interest on long term deposits during the relevant year. The learned Counsel for the appellants has not shown the prevailing rate of interest in 1983 was less than 10%, and as such the investor would have expected at least 10% of the annual net income of his investment. The decision in the case of State of Haryana, supra, the Bench consisting of the Hon'ble Sri K. Ramaswamy and N. Venkatachala, JJ., observed as under:
"Under no circumstances, the multiplier should be more than 8 years multiplier as it is settled law of this Court in catena of decisions that when the market value is determined on the basis of the yield from the trees or plantation, 8 years multiplier shall be appropriate multiplier. For agricultural land 12 years multiplier shall be suitable multiplier".
25. It may be mentioned here that this was also a case in which the land was acquired vide the notification dated 22nd June, 1974 and it was not a case of acquisition in 1983. While in the case of Additional Special Land Acquisition Officer, supra, the Bench consisting of the Hon'ble K. Ramaswamy and N. Venkatachala, JJ., the Court after taking note of its earlier decision in the case of Special Land Acquisition Officer, supra, opined that while disposing of the appeals in the above mentioned case, this Court held that multiplier of 10 years would be the proper method in determining the total market value by following the method of capitalisation as just and reasonable and the Court held that multiplier of 10 will be appropriate. Later case viz., in the case of State of Gujarat, supra, as well the Bench consisting of the Hon'ble Sri K. Ramaswamy and Sri G.T. Nanavati, JJ., have observed that proper multiplier should be 10 years period as settled by several judgments of this Court. Following the basic principle of law, it is necessary in order to determine the proper multiplier and in respect thereof the enquiry has got to be made as to what %, i.e., percentage of net income of yield one would expect from the money to be invested by him, and it will depend as to on what rate of interest one will earn or would have earned of on safe deposit at relevant time as no one expect net return from his investment lesser than the higher rate of interest on investment on safe long term deposit. In my opinion, whether multiplier 10 will be the proper multiplier or 12 or more will be the proper multiplier it will depend upon the enquiry as to what interest the investor may earn every year on the money invested by him in securities or in land with reference to the year in which the land was/is acquired and if the rate of interest is higher, multiplier to be applied will be lower in number of years. Where the interest earned on securities is on higher rate, less number of years will furnish a proper multiplier and where it is shown that lower the rate of interest on securities is available at the relevant time viz., the time of acquisition more number of years or maximum number of years will provide the multiplier. We cannot with certainty say that with reference to every year or every period there shall be only one multiplier. The multiplier will depend upon only on the rate of interest which the investor may earn every year on safe security deposits whether run by the nationalised banks or private persons. The decision in the case of Union of India, supra, delivered in October 1993. Their Lordships pointed out that a return of 10% per annum on safe investment in 1983 was almost assured and a higher return of the order of 10% is usually anticipated. This has to be read with reference to 1983. When a return of 10% is expected and the net annual income from the agricultural land is to he deemed to be 10% of the net annual income it means as mentioned earlier that if a person is going to get an income of Rs. 10/- per year from his investment in the land, then he will invest for it Rs. 100/-. It means the multiplier of 10 with reference to the acquisition period of the land in the present case which had been made in November 1983 has been proper and was rightly applied for. No doubt, one discrepancy, I find in the judgment and award viz., that in November 1983 when acquisition was made and the notification under Section 4(1) of the Land Acquisition Act, 1894 was published the market value or market rate of 'Toor' in November 1983 has been Rs. 460/- per quintal and 40% of gross yield was to be deducted towards the cultivation charges/expenses which may come to Rs. 184/-. In other words Rs. 460-00 - Rs. 184-00 = Rs. 276-00 is the net income per quintal. Thus, for three quintals which the average production per acre the net income will come to Rs. 828-00 per year per acre and applying the multiplier of 10 the market value will come to Rs. 8,280/- per acre of dry land. Even if this formula is applied, the lower Appellate Court took the minimum price of one quintal of Toor to be as Rs. 456/- in November 1983 then after deduction of cultivation expenses the net income had been arrived by it to be Rs. 274/- per quintal and for three quintals, which is the average yield the net value has been assessed at Rs. 822-00 per year and after applying multiplier 10 the lower Appellate Court has held that the annual net income would come to Rs. 8,220/-. Once the lower Appellate Court arrived the net annual income from or value of dry land to be Rs. 8,220/- on what basis and for what reason it has reduced to figure Rs. 8,000/- is not clear. In such cases, the lower Appellate Court should at least have held that in every circumstance the appellants were entitled to the compensation of Rs. 8,220/- for the dry land and with respect to the wetland by applying this formula the net annual income from the irrigated bagayat laud is to be one and half times more than that of dry land, the lower Appellate Court ought to have held that the appellants-claimants were entitled to the compensation at the rate of Rs. 12,330/- per acre of wetland and not Rs. 12,000/-. The lower Appellate Court has not given any reason for reducing the amount from 8,220/- per acre to Rs. 8,000/- per acre of dry land and from Rs. 12,330/- per acre to Rs. 12,000/- per acre of wetland. Hence, the judgment and award of the lower Appellate Court to this extent needs modification. That as market rate of Toor was Rs. 460/- per quintal in November 1983, the month in which notification under Section 4(1) of the Land Acquisition Act, 1894 was published. The net yield per year per acre would be Rs. 460/- minus 40% cultivation charges i.e., minus Rs. 184/- i.e., Rs. 276/- multiplied by per acre yield of three (quintals) would be Rs. 276/- x 3 i.e., Rs. 828/- per year. The per year net income from per acre dry land thus would be Rs. 828/- which is to be multiplied by ten and it would be Rs. 8,280/- as per acre market value of dry land, and one and one half times more of value of dry land will be the net value of irrigated land i.e., Rs. 12,420/- per acre.
26. Thus considered, the claimant-appellants would be entitled to get the compensation at the rate of Rs. 8,280/- per acre for dry land, while with respect to irrigated bagayat land the claimants-appellants would be entitled to the compensation at the rate of Rs. 12,420/- per acre.
27. Thus, considered the above Miscellaneous Second Appeals, as such, are hereby allowed.
28. It is ordered that the appellant-claimant in Miscellaneous Second Appeal No. 560 of 1998 arising from L.A.C.A. No. 85 of 1992 and L.A.C. No. 35 of 1989 is entitled to the compensation for Survey No. 49 measuring 2 acres which is an irrigated land at the rate of Rs. 12,420/- per acre as market value and in respect of the remaining land, i.e., Survey No. 49 measuring 5 acres 38 guntas, which is a dry land, the aforesaid claimant-appellant is entitled to the compensation at the rate of Rs. 8,280/-per acre as market value.
29. In respect of M.S.A. No. 561 of 1998 arising from L.A.C.A. No. 86 of 1992 and L.A.C. No. 33 of 1989 with regard to Survey No. 70/D1 measuring 3 acres which is an irrigated bagayat land, the claimant-appellant is entitled to the compensation at the rate of RB. 12,420/- per acre, while in respect of other land, Survey No. 70/D1 measuring 9 acres 6 guntas, which is a dry land, the claimant-appellant is entitled to the compensation at the rate of Rs. 8,280/- per acre as market value.
30. Similarly in M.S.A. No. 562 of 1998 arising from L.A.C.A. No. 3 of 1993 (L.A.C. No. 30 of 1989) with respect to Survey No. 70/B3, 70/5 measuring 1 acre 22 guntas, which is an irrigated wetland, the claimant-appellant is entitled to the compensation at the rate of Rs. 12,420/-per acre and in respect of the remaining dry lands, the claimant-appellant is entitled to the compensation at the rate of Rs. 8,280/- per acre as market value.
31. That similarly claimant-appellant in M.S.A. No. 563 of 1998 arising out of L.A.C. Appeal No. 83 of 1992 and L.A.C. No. 29 of 1989 will get compensation at the rate of Rs. 12,420/- per acre for Survey No. 70/A4 area 4 acres which is wetland, and in respect of his other land which is dry land the claimant-appellant is entitled to be awarded and given compensation-at the rate of Rs. 8,280/- per acre.
32. As regards M.S.A. Nos. 657, 558, 559 of 1998 arising from L.A.C. Case Nos. 31, 34, 36 of 1989 which are in respect of and covered by the dry lands, the claimants-appellants are entitled to the compensation at the rate of Rs. 8,280/- per acre as market value.
33. All the claimants-appellants will also be entitled to be paid additional market value at 12% per annum from the date of the notification under Section 4(1) of the Land Acquisition Act till the date of award or taking possession of the lands whichever is earlier as per Section 23(1-A) of the Act and they shall also be entitled to the other statutory benefits under the Land Acquisition Act.
34. Thus, all the Miscellaneous Second Appeals are partly allowed as above with costs and the judgment and awards delivered by the lower Appellate Court in respect of claimants-appellants in above mentioned Miscellaneous Second Appeals are modified to the extent as has been indicated above.