Holding

A seven‑year multiplier is appropriate for capitalising the net income of the cardamom plantation, resulting in a market value of Rs.36 lakh, with the price of Rs.220 per kg being correct.

Summary

The State of Kerala acquired 52.88 acres of cardamom plantation for the Periyar Tiger Reserve under a notification issued under s.3(1) of the Kerala Land Acquisition Act, 1962. The Land Acquisition Officer initially valued the land at Rs.14.75 lakh, which was enhanced by the Subordinate Judge to Rs.197.77 lakh; the High Court later reduced it to Rs.23.73 lakh. The claimants appealed, contending that the High Court erred in fixing the average yield and the price per kilogram of cardamom, and in applying an inappropriate multiplier for the capitalisation method. The Supreme Court held that the price of Rs.220 per kg was reasonable, but the multiplier used by the High Court was incorrect; a seven‑year multiplier was appropriate, leading to a market value of approximately Rs.36 lakh, together with 30% solatium and interest as per s.23(1‑A). The Court allowed the appeal and directed the parties to bear their own costs.

Issues considered

What is the correct prevailing price per kilogram of cardamom for valuation?
Which multiplier should be applied in the capitalisation method to determine market value of a cardamom plantation?
Who bears the burden of proving the higher compensation and what evidence is required?
Whether the High Court's determination of yield and multiplier was erroneous.

Legislation cited

Kerala Land Acquisition Act, 1962s. 18, s. 23(1-A), s. 3(1)

Subjects

land acquisitioncompensationcapitalisation methodmultipliermarket valuecardamom plantationsolatiuminterestburden of proof

Judgment

K.A.A. RAJA AND ORS. ~ '
A
v.
STATE OF KERALA AND ANR.

APRIL 26, 1994

B [K. RAMASWAMY AND N. VENKATACHALA, JJ.]

•
•
Kera/a land Acquisition Act. 1962 : S.3( 1}-Acquisition of cardamom
plantation Capitalisation method used in determining market value of the
land so acquired-Determination of appropriate multiplier.
c
The respondent proposed to acquire 52.88 acres of cardamom plan ta-
tion by a Notification issued under Sec.3(1) of the Kerala Land Acquisition
Act, 1962, for Periyar Tiger Reserve. The possession was handed over to the
State and the Land Acquisition Officer determined the market value of the
said land in a sum ofRs.14,75,385.25. On reference under Sec.18 of the Act,
D the Subordinate Judge enhanced the market value to 1,97,77,772.60. The
appeal by the State was allowed by the High Court and the High Court
determined the market value of the said land at Rs. 23,73,967.70.

Partly allowing the appeal against the said judgment, this Court
E
HELD: 1. The High Court was right, fair andjust in determining the
rate of Rs. 220 per kg. as the reasonable prevailing price of cardamom
taking into account the prevailing price for three years prior to the year
1982-83 and worked it out at the average and determined the price at Rs. 220
per kg. But the multiplier for the purpose of capitalisation of net income >
F applied by the High Court was not correct. In every case it is the duty of the
claimant who is demanding a higher compensation for his land to place
before the court necessary evidence on the value of land and equally heavy
is the responsibility and duty of the concerned officers to place before the
reference court the true state of affairs regarding the number of trees, their
G ages, their yield etc. in particul..,. where capitalisation method is to be
adopted to determine market value of the acquired land.
[742-H, 743-A, 744-A-C]

·· Joginder Singh Saini v. State of Horyana, AIR (1990) SC 1219 and .,
Periyar and Pareekanni Rubbers Ltd. v. State of Kera/a, AIR (1990) SC 2192,
H referred to.
740
K.A.A. RAJ A v. STATE 0 F KER ALA. 741

2. The Court equally has duty on an overall consideration of facts A
and circumstances available in particular case on hand, keeping in view
the number of trees, their ages, their yield and the price fetched or likely
to fetch in the open market should apply appropriate multiplier in deter-
mining the market value of the pla!ltation. 7 years multiplier for purpose
of capitalisation of net income would he proper multiplier though income
may vary depending on evidence. Calculating on the aforesaid basis, the
B
appellant would be entitled to the market value in a sum Rs. 36 lakhs for
the total extent of 32 acres 88 cents and usual benefits of 30% solatium on
the enhanced market value and interest at 9% for the first year from the
date of taking possession and 15% interest from the date of expiry of one
year till date of making payment of compensation. However, the entitle- C
ment with regard to the payments of the interest under Sec. 23(1-A) would
depend upon the decision to be rendered by the Constitution Bench in K.S.
Paripoomam's case. [744-E·F, 745-A·C]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2001 of D
1992.

From the Judgment and Order dated 21.1.91 of the Kerala High
Court in L.A.A. No. 226 of 1990.

M.R. Thyagarajan, M.A. Chinnasamy and M.K. Krishnamoorthy for E
the Appellants.

M.T. George for the Respondents.

The following.Order of the Court was delivered :

This appeal by special leave arises from the judgment of the Division
F
Bench of the Kerala High Court dated January 21 1991 in L.A.A. No
226/90 and cross-objections. The appellants are the claimants. The Govern-
ment of Kerala proposed to acquire 52.88 acres of Cardamom plantation
situated in Mappara village in Peermade Taluk of Idukki district of Kerala
State by a notification issued under s.3(1) of the Kerala Land Acquisition G
Act, 1961, Act 21 of 1962, for short 'the Act' and published in the State
Gazette on January 10, 1984, for Periyar Tiger reserved forest. Possession
was taken on May 7, 1984 and the same was handed over to the Forest
.,, ~ Department on June 8, 1984. The Land Acquisition Officer by his award
dated October 10, 1985 detenpined the market value of the said land in a H
742 SUPREME COURT REPORTS [1994] 3 S.C.R.

A sum of Rs. 14,75,385.25. On reference under s.18 of the Act, the Land
Acquisition Court (Subordinate Judge) enhanced the market value of the
said land by his judgment and decree dated February 22, 1990 to
Rs.1,97,77,772.60. On consideration of the appeal by the State and also the
cross-objections filed therein, the High Court while allowed the appeal of
B the State, dismissed the cross objections. It determined the market value
of the said land at Rs. 23,73,967.74. Dissatisfied therewith, the appellants
have filed this appeal seeking enhanced market value of the lands a.:quired.

The contention of the learned counsel for the appellants was that the
High Court had committed grievous error in accepting Ex. B-4 and B-5(a)
C in fixing the average of the yield at 100 Kgs. per hectare and also the price
per kilogram at Rs. 220 per kg. The learned counsel has taken us through
the evidence and the findings recorded by the Land Acquisition
Court(Subordinate Judge) as well as the High Court. As seen from its
judgment, the high Court has committed gross mistakes in compnting the
D income from the estates acquired. Ex. B-4 is a statement made by the
Reserved Forest Officials on June 16, 1984 to the effect that the plantation
was not properly maintained and that on the date of taking over, there was
considerable damage to the crop. There is no reason to dispute the same.
Ex.B-5(a) is the certified copy of the record relating to assessment of
agricultural income secured by the Land Acquisition Officer. It was
E marked in the Civil Court by consent of the parties and the Government
has relied upon it. We find therefrom that for the years 1980-81, 1981-82
and 1982-83, the appellants have submitted nil income returns for the
assessments of the income derived from the lands but the Agricultural
Income Tax Officer had assessed the income by best of judgment. Therein
F the Agricultural Income-tax Officer had relied upon the statement made
by the eight sets of claimants in the assessments. They concluded that total
land was 52.88 acres and the yield for the year 1982-83 was 3079 .5 kg. which
we have rounded at 3089 kg. Though the learned counsel sought to rely
upon the auction sales held in the year 1983 at the relevant time for Rs.
4,459 of 6.3. kg. and Ex.B-13 Rs. 472.81 for auction held on December 13,
G 1983 and Rs. 483.22 for the auction held on December 6, 1983 and the
average was worked out by the Civil Court at Rs. 471.87 per kg. The High
Court has rightly rejected the working out the average at the aforesaid rate
for valid reasons. It had determined at the rate of Rs. 220 per kg. as the
reasonable prevailing price taking into account the prevailing price for
H
K.A.A. RAJA v. STATE OF KERA.LA 743

three years prior to the year 1982-83 and worked it out at the average and A
determined the price at Rs. 220 per kg. The method adopted by the High
Court is fair and just, and that it meets the exigencies of the situation. The
High Court also found that there was 8 hectare of the plantation where
five years old plants were found, in 7 hectare of the plantation where six
years old plants were found and 6.14 hectare plant~tion where 9 years old
plants were found. It was agreed that maximum period which the plants
B
would yield Cardamom would be 15 years. On that basis the learned Judges
worked out the capitalised value at 10 years, 9 years and 6 years yields
•
respectively and determined the market value evolving multipliers for those
years. It worked out to average yield at 100 kgs. per hectare. This principle
adopted was not correct since actual yield as assessed by the Asst!. lncome- c
tax Department for the purpose of income-tax was there and it had attained
finality. The State produced and relied upon this assessment order as
evidence It is clear that the income assessed by the Agricultural Income-tax
Officer, as having been derived by the appellants from the lands in question
during the relevant years, was accepted by the appellants and suffered the D
tax. For the relevant years 1982-83 the Income-tax Officer estimated the
total yield of the Cardamom as 3080 kgs. If it is multiplied by Rs. 220 per
kg. Rs. 6,77,600 would be estimated gross income derived by the appellants.
High Court also found that the expenditure incurred by the appellants was
Rs. 3036 per acre which worked out to be for 53 acres at Rs. 1,60,590.00
Thus after deducting the expenditme from the gross income the net income E
would be Rs. 5,17,000. The question then is what would be the appropriate
multiplier that would be applied in a case like this. ·

That long delay would occur from the date of the proposal to acquire
a particular land for a public purpose till final decision in that behalf is F
taken and a notification under s.4(1) of the Land Acquisition Act is issued
and published in the gazette. In the meanwhile it would become a matter
of common knowledge, in particular, the o~ners will come lo ~,;iown that
their lands will be proposed for acquisition. Instances are not uncommon
where attempts will be made to boost up the value of the ·acquired lands.
Some times fruit bearing trees are planted and reports are obtained of the G
existence of the trees \vith reference to their specific ages. This case itself
establishes from the record that, but for the report of the Forest Officer,
the report given by the Subordinate Officers of the Revenue Department
.-"' -.....
would have persuaded the courts to accept the report of the Revenue
Officers that the plantation maintained was of high standards and in good H
744 SUPREME COURT REPORTS [1994] 3 S.C.R.

A conditions which wa.' belied by the report of the Forest Officials, as
accepted by the High Court, Therefore, it would be necessary in every case
to place a correct report before the reference court, the true state of affairs
regarding the number of trees, their ages, their yield, in particular where
capitalisation method is to be adopted to determine the market value of
the acquired land. In Joginder Singh Saini v. State of Haryana, AIR (1990)
B
SC 1219 this court held that the mother trees are to be valued as wood and
the nursery plants are not to be separately valued, but with a direction to
be taken away by the owner. In Periyar and Pareekanni Rubbers Ltd. v. State
of Kera/a, AIR (1990) SC 2191 = [1990] Suppl. SCR 362, this court held
that it is the duty of the court to determine just and fair market value and
C the conduct of the Land Acquisition Court or officer in that behalf, if found
to be a misconduct, lhe officer was amendable to disciplinary proceedings
for misconduct. That apart the claimants should produce necessary
evidence on the value of 'and since the burden of proof is on them to
establish the higher compensation claimed. Equally the Officer-in-Charge
D has responsibility and duty to place all material and relevant evidence in
rebuttal of the enhanced claim. As a part thereof the condition of the trees,
the ages of the trees their number and the total yield derived from the trees
being material and relevant facts to adjudge not only the value of the
produce, but also to apply suitable multiplier to rletermine the market value
as compensation. The court equally has duty, on an overall consideration
E of the facts and circumstances available in the particular case on hand,
while determining the number of trees, their ages, the yield and the price
fetched or likely to fetch in the open market should apply appropriate
multiplier in determining the market value of the grove or plantation etc.
In any case for want of appropriate evidence as to multiplier adduced by
F either party, we take seven years' multiplier for purpose of capitalisation
of net income, though income may very depending on evidence.

We have seen from the evidence the nature of the trees and their
yield accepted by the Income-ta.x authorities and the price fixed by the
High Court. On an overall consideration of the prevailing prices though
G for one year there may be higher prices, but on an average it was found
that the price would be at Rs. 220 per kg. To apply the capitalisation
method, on the facts and circumstances, we consider that in assessing the
market value of the plantation of a large extent of the lands acquired in
the notification, the suitable and proper multiplier could be taken as 7 ..
H years.
K.AA RATA v. STATE OFKERALA 745

Therefore, applying the 7 years multiplier with reference to the year A
of acquisition for the propose of capitalising the net income we consider
that the just and proper market value would be round figure of 36 lakhs.
The appellants, therefore, would be entitled to the market value of sum of
Rs. 36 lakhs of the total extent of 52 Acres 88 Cents. Therefore, the
appellants are entitled to the market value of Rupees thirty six lakhs for B
their lands with everything thereon and usual benefits of 30% solatium on
the enhanced market value and interest at 9% for the first year from the
date of taking possession and 15% interest from the date of expiry of one
• year till date of makiog payment of compensation. The entitlement with
regard to the payment of the interest under s.23(1-A) would depend upon
the decisions to be rendered by the Constitution Bench in KS. C
Paripooman's case and the auth_ority depending upon the judgment would
work out that benefit also.

The appeal is allowed to the above e;,ient. But in the circumstances,
the parties are directed to bear their own costs.
D
S.S.H.R. Appeal allowed.

)

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