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Kerala State Electricity Board And Ors. vs Varghese Thomas And Ors. on 24 January, 1961

In Kerala State Electricity Board v. Varghese Thomas, 1961 Ker LT 238 : (AIR 1961 Ker 237), a Division Bench of this Court had occasion to consider in detail the basis of quantification of compensation for destruction of fruit bearing or yielding or income producing trees standing on the land through which electric supply lines were drawn. This Court took the view that it is not the rule of capitalisation that has to be followed, but, on the other hand, compensation has to be fixed as the present value of an annuity which gives a return at the rate of 5% per annum. The reason for rejecting the method of capitalisation was that such method 'fails to take note of what is so obvious, that the tree would cease to be productive after a certain number of years and yet, what is paid, amounts to investment of capital, yielding what is the equivalent of the net annual rental, in perpetuity'.
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