Supreme Court of India
SPECIAL LAND ACQUISITION OFFICERversusKARIGOWDA & ORS.
- Citation
- 2010 INSC 242
- Decided
- 26 April 2010
- Disposal
- Case Partly allowed
- Bench
- R V RAVEENDRAN
Holding
Compensation for compulsorily acquired land must be determined solely on the basis of the land's direct agricultural value under Sections 23 and 24, excluding any commercial benefits from sericulture, and interest cannot be awarded for the period before the Section 4 notification.
Summary
The Supreme Court examined the compensation awarded for land compulsorily acquired for the Hemavathi Dam project, where claimants cultivated mulberry for sericulture. The lower courts had enhanced compensation by treating silk cocoons as an agricultural product and using a capitalization method, also granting interest from the date of submergence before the acquisition notification. The Court held that only the direct agricultural produce (mulberry leaves) is relevant under Sections 23 and 24 of the Land Acquisition Act, and that silk cocoons constitute a manufacturing activity not permissible for valuation. It clarified that interest cannot be awarded for the period prior to the Section 4 notification and that sale‑statistics of adjacent villages are admissible evidence. The Court set compensation at Rs 2,30,000 per acre for wet land and Rs 1,53,400 per acre for dry land, granted statutory benefits under Sections 23(1‑A) and 23(2), and directed the Collector to consider rent/damages for the pre‑notification period.
Issues considered
- The scope of Section 23 of the Land Acquisition Act: whether sericulture (silk cocoons) can be treated as an agricultural activity for determining fair market value.
- Whether compensation can include commercial benefits arising from the end product of mulberry cultivation.
- Whether interest on compensation is payable for the period before the issuance of the Section 4 notification.
- The appropriate method of valuation: sale‑statistics of adjacent villages versus capitalization of net income.
- The admissibility of using sale data from adjacent villages in the absence of local sale instances.
- The burden of proof on claimants to justify higher compensation.
Legislation cited
- Land Acquisition Act, 1894s. 20, s. 23, s. 23(1-A), s. 23(2), s. 24, s. 28, s. 4, s. 48
Subjects
Land acquisitionCompensationFair market valueSection 23Section 24SericultureMulberry cultivationValuation methodsInterest on compensationStatutory interpretation
Judgment
[2010] 5 S.C.R. 164
A SPECIAL LAND ACQUISITION OFFICER·
·, v.
KARIGOV'llDA & ORS.
(Civil Appeal No. 3838 of 2010 etc.)
APRIL 26, 2010 . ,. .
B
[R.V. RAVEENDRAN AND SWATANTER KUMAR, JJ.]
. Land Acquisition Act, 1894:
',\\
c ss. 23 and 24 - Pair market value - Of acquired land -
In compulsive acquisition - Determination of - Grant of
compensation - Held: For determining the market value, the
relevant consideration would be the value of land with its
peculiar advantages and disadvantages with reference to
0 commercial value - Other consequential right, legal or
commercial, which remotely flows from.an agricultural activity
will not be treated as a relevant consideration - The
computation of compensation has to be in terms of ss. 23 and
24 - Only statutory benefits in terms of ss. 23 (1-A) and 23
E (2) would be available to the claimant - Manufacture of silk
which is the result of the silk worm fed by mulberry leaves is
not an agricultural activity, but sericulture - This activity would
fall in the domain of manufacturing 'and commercial activity
and is not directly covered under s. 23.
F ss. 23 and 24 - Interpretation of - Held: The court should
apply the principle of literal or plain construction to these
provisions - In view of the scheme of the Act, it will not be
appropriate either to apply the rule of strict construction or too
liberal construction to the provisions of the Act -Interpretation
G of statutes.
ss. 4 and 48 - Land acquisition - Land taken in
possession prior to issuance of notification u/s. 4 - Grant of
interest for the period prior to the notification - Held: Grant of
H 164
SPECIAL LAND ACQUISITION OFFICER v. 165
KARIGOWDA & ORS.
interest for the period prior to notification not permissible - A
However, for such period, court can direct the Collector to
examine the extent of rent or damage - s. 48 would come to
the aid of claimants.
Land Acquisition: B
Compensation for land acquisition - Methodology for
computation of - In compulsive acquisition - High Court
adopting Capitalization of Net Income Method, negating the
Sales Statistics Method by taking instances of adjacent
villages adopted by the Land Acquisition Officer - Held: C .
'
· Adoption of method of Capitalization anq multiplying the
same by 10, is without the support of.evidence, hence
inconsequential - Sale instances of adjacent villages can be
made basis for determining the fair market value - On facts,
the instances considered by Land Acquisition Officer are D
relevant instances - Claimants are entitled to increase at the
rate of 15% P.A. compounded, in view of increasing trend in
sale price and since the land was used for production of
mulberry crops which had restrictive use in the manufacturing,
commercial or industrial activities - The Court is entitled to E
apply some reasonable guess work to balance the equities
and fix just and fair market value in terms of parameters uls.
23 of Land Acquisition Act - In the peculiar facts of the case,
claimants are given higher compensation - What could be
capitalized was the value of mulberry leaves used for F
sericulture and not the value of silk cocoons - Land
Acquisition Act, 1894 - ss. 23 and 24.
Compulsive acquisition - Power of compulsive
acquisition has an inbuilt duty and responsibility on the State
to pay just and fair compensation without delay. G
Interpretation of Statutes:
Legislative intent - Held: Legislative intent needs to be
noticed for beneficial and proper interpretation of the H
166 SUPREME COURT REPORTS [2010) 5 S.C.R.
. A provisions in the light of the scheme underlying the provisions
of the Statute.
Literal/Plain construction - The plain words require no
construction - However, whether the words are plain or
8 ambiguous can be determined by studying them in their
context.
Interpretation - Guiding principles - Held: Interpretation
can be literal or functional - Literal interpretation not to go
beyond litera legis - Functional interpretation can make some
C deviation to the letter of law - The interpretation is best which
makes the textual interpretation match the context - A statute
is best interpretated when the purpose of enactment are
known - Where statutory provision confers rights and also
states mandatory or implied conditions, such conditions are
D relevant for interpretation - Exercise of statutory power in
breach of the express of implied conditions will be illegal, if
the conditions breached are mandatory.
Evidence:
E Onus to prove - Land acquisition - Entitlement to receive
higher compensation - Held: Onus to prove entitlement to
receive higher compensation is on the claimants - But it
cannot be said that there is no onus on the State - Land
Acquisition.
F
Administration of Justice:
For proper administration of justice, State advised to act
fairly and for benefit of public at large :.... Decisions of the State
should be such as to avoid unnecessary litigation.
G
Maxim:
'Boni judicis est lites dirimere, ne /is ex lite oritur, et
interest reipublicae ut sint fines litium' - Applicability. ·
H
SPECIAL LAND ACQUISITION OFFICER v. 167
KARIGOWDA & ORS.
The questions for consideration before this Court A
were 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 s
value of the acquired land, within the parameters
specified u/s. 23 of the Land Acquisition Act, 1894 in the
facts of the present case; and that whether the claimants
were entitled to interest for the period before the date of
notification u/s. 4 of the Act, as the possession of the c
land was taken over, before the acquisition notification.
Partly allowing the appeals, the Court
HELD: 1.1. The provisions of the Land Acquisition
Act are self-contained and it is a code in itself providing D
for a complete procedure and steps which are required
to be taken by the authorities concerned, for acquisition
of land and payment of compensation. Keeping in view
the scheme of the Act, it will not be appropriate either to
apply the rule of strict construction or too liberal E
construction to its provisions. 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 F
provisions of this Act. [Para 20] [192-G-H; 193-E-G]
1.2. 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 G
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 "interpretation
H
168 SUPREME COURT REPORTS [2010] 5 S.C.R.
A must depend upon the text and context. They are the
basis of the interpretation. 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
B interpreted when we know why it was enacted." [Para 22]
[195-F-H; 196-A]
Reserve Bank of India v. Peerless General Finance and
Investment Co. Ltd. and Ors. (1987) 1 SCC 424, referred to.
C Principles of Stafutory Interpretation by Justice G.P.
Singh, 9th Edition 2004, Page 15, referred to.
1.3. Where a statutory provision confers right!i and
also states mandatory or implied conditions which would
0 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
by the statute, often contains an express condition for its
exercise and, in absence of, or in addition to the express
E 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
F 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. [Para 24] [196-D-G] · ·
G
1.4. 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
H market value of the acquired land. These provisions
SPECIAL LAND ACQUISITION OFFICER v. 169
KARIGOWDA & ORS.
provide a limitation within which the court has to exercise A
its judicial discretion while ensuring tha~ 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 B
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 depend
upon the facts and circumstances of each case. [Para 21] c
[194-B-F]
1.5. 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 possible to decide whether D
certain words are plain or ambiguous unless they are
studied in their context and construed. [Para 26] [197-F-
G]
D. Saibaba v. Bar Council of India and Anr. AIR 2003 E
SC 2502, referred to
Hutton v. Philips 45 Del 156, referred to
Principles of Statutory Interpretation by Justice G.P.
Singh, 9th Edition 2004, Page 51, referred to F
1.6. It will not be permissible for the authorities to go
beyond the scope and purview of the provisions or the
pre-requisites stated in ss. 23 and 24 for determination
of the fair market value of the land. Compensation has to G
be determined strictly in accordance with the provisions.
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
H
170 SUPREME COURT REPORTS [2010] 5 S.C.R.
A 23 of the Act. 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
B enacting these statutory provisions. [Para 25] [197-B-E]
1.7. The expression "Such market value" as
occurring in Section 23(2), 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
C 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' as occurs in
Section 23(1) can hardly be construed as 'may' giving an
absolute discretion to the court to take or not to take into
D consideration the factors stated in Section 23(1) of th.e
Act. The expression 'shall' thus would have tJ 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
E 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. [Para 28] [199-C-F]
F
1.8. 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. "Such market value" is the
G 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. Thus, other consequential right, legal
H
SPECIAL LAND ACQUISITION OFFICER v. 171
. KARIGOWDA & ORS.
or commercial, which remotely flows from an agricUltural A
activity will not and should not be treated as a relevant
consideration. The potentiality has to be directly relatable
to the capacity of the acquired land to produce
agricultural products or, its market value relatable to the
known methods of computation of compensation. [Paras a
29, 30 and 35] [199-F-H; 200-A-B; 201-G-H]
Municipal Council of Colombo v. Kuna Mana Navanna
Suna Pana Letchiman Chettiar AIR (34) 1947 PC 118,
referred to
c
1.9. 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 D
the facts of a given case. The discretion of the court,
therefore, has to be regulated by the legislative intent
spelt out under these provisions. 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 E
Notification under Section 4 of the Act. It is only the
statutory benefits which would be available in term~ of
Sections 23(1-A) and 23(2) of the Act. [Paras 31 and '32]
[200-C-F]
Mohammad Raofuddin v. The Land Acquisition Officer F
(2009) 5 SCR 864, relied on
Nelson Fernandes and Ors. v. Special Land Acquisition
Officer, South Goa and Ors. (2007) 9 SCC 447, referred to
G
1.10. 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 is neither permissible nor prudent,
as it would be opposed to the legislative intent contained
H
172 SUPREME COURT REPORTS [2010) 5 S.C.R.
'\
A under the provisions of Sections 23 and 24 of the Act.
.
[Para 36] [202-C-E]
.
State of Orissa v. Brij Lal Misra and Ors. (1995) 5 SCC
203, relied on. ·
B 1.11. 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 wa~,. a presumption in the
mind of the court as well as the claimants that, the
C 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. [Para 48] [206-A-C]
D
1.12. Activity of agriculture cannot 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,
E · and then converted through the specified process into
cocoons and ultimately silk thread and its sale is an
activity of sericulture which primarily fa,lls 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
F 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
G relevant provisions of the Act.· [Para 49] [206-D-G]
f:( Lakshma9an. and C~. and Ors. ~- Commissioner of
Income Tax, (19~8) 9 SCC 537, relied on ,
1.13. The basic error of law to which the courts below
H
SPECIAL LAND ACQUISITION OFFICER v. 173
KARIGOWDA & ORS.
have fallen is that ultimate manufacturing of silk thread A
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. The courts .have treated the cocoons as the crop and
not mulberry leaves. [Paras 53 and 55] [208-A-B-E] B
2. The onus to prove entitlement to receive higher
compensation is upon the claimants. The claimant, can
discharge the onus while placing and proving on record
sale instances and/or such other evidences as they deem C
proper, keeping in mind the method of computation for
awarding of compensation which they rely upon. The
onus being primarily upon the claimants, they are
expected to lead evidence to revert the same, if they so
desire. It cannot be said that there is no onus whatsoever
upon the State in such reference proceedings. The court D
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 E
proceedings. [Para 21] [194-E-G; 195-C-D]
Basant Kumar and Ors. v. Union of India and Ors. (1996)
11 SCC 542; Gafar v. Moradabad Development Authority
(2007) 7 sec 614, relied on. F
3.1. The methodology adopted by the courts as well
as the extent of compensation awarded to the claimants
cannot be upheld. 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 G
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. There is no
direct and appropriate evidence to show any nexus to
support the claim of the claimants. Thus, cocoons cannot H
174 SUPREME COURT REPORTS [2010) 5 S.C.R.
A 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.
· [Paras 54, 57 and 58) [208-B-C; 209-E-F]
3.2. The courts have been exercising their discretion
8
by adopting different methods, viz. Sales Statistics
Method, Capitalization of Net Income Meth'od and
Agriculture Yield Basis Method. Normally where the
compensation is awarded on agricultural yield or
C 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 has
accepted the principle of granting compound increase at
D 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
E negative mandate contained in Section 24· of the Act is
not offended. How one or any of the principles is to be
applied by the courts, would depend on the facts and
circumstances of a given case. [Paras 60 and 61) [210-
C-D; 211-C-E]
F
Faridabad Gas Power Project, N. T.P.C. Ltd. and Ors. v.
Om Prakash and Ors. 2009 (4) SCC 719; Shaji Kuriakose
and Anr. v. Indian Oil Corp. Ltd. and Ors. AIR 2001 SC 3341;
Ravinder Narain and Anr. v. Union of India 2003 (4) SCC.
481; Union of India and Anr. v. Smt. Shanti Devi and Ors.
G 1983 (4) SCC 542; Executive Director v. Saraf Chandra Bisoi
and Anr. 2000 (6) SCC 326; Nelson Fernandes and Ors. v.
Special Land Acquisition Officer, South Goa and Ors. (2007)
9 sec 447, referred to
H 3.3. In the present case, the court has declined to
SPECIAL LAND ACQUISITION OFFICER v. 175
KARIGOWDA & ORS.
accept the method adopted by the Collector for granting A
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 the village in question, three years prior to
2002 were available and instances of adjacent village B
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. [Para 62] [211-F-
' H; 212-A] C
3.4. 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. 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 D
land. 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 E
such other compensation as would be just and fair.
[Paras 62 and 64] [212-8-C, F-G; 213-A-B]
Kanwar Singh and Ors. v. Union of India JT 1998 (7) SC
397; Union of India v. Bal Ram and Anr. AIR 2004 SC 3981; F
Kanwar Singh and Ors. v. Union of India AIR 1999 SC 317,
relied on
Kantaben ManibhaiAmin and Anr. v. The Special Land
Acquisition Officer, Baroda AIR 1990 SC 103, referred to
, G
3.5. The 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 H
176 SUPREME COURT REPORTS [2010] 5 S.C.R.
A record produced and proved by the respondents, cannot
be denied to them just because they have not produced
evidence by way of sale instances. [Para 71) [218-E-F]
3.6. The sale instances which were taken into
8 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. In view of the
date· of the notification uls. 4 shows that all the sale
instances of the adjacent comparable lands are in
C proximityiof time to the date of notification u/s. 4 of the.
Act. Since the sale instances relied upon are nearly
around 1 to 2 % 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
COmJ!QUnded. [Para 72) [218-G; 219-C-D]
D
3.7. The increase 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
E 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 disadvantage of the land
F 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, the
G State Government itself has given some additional
compensation to the claimants for mulberry crops which
were standing at the time of submerging. This stand of
the State Government is reasonable and fair. [Para 73)
[219-E-H; 220-A]
H 3.8. The claimants, by leading· definite evidence have
SPECIAL LAND ACQUISITION OFFICER v. 177
KARIGOWDA & ORS.
shown on record that the lands in question are not only A
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 B
are the only and the specified food for cocoons. 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. [Para 73) [220-E-G] c
3.9. 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. The court is entitled D
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 E
to the special agricultural purpose and the purpose for
which the mulberry crop had to be utilized. The claimants
have not proved and produced sale instances. They have
also not produced on record any specific evidence to
justify the compensation awarded to them by the F
Reference Court and/or the High Court. There is hardly
any evidence, much less a cogent and impeccable
evidence to support the increase on the basis of net
income capitalization method. [Para 73) [220-G-H; 221-A-
C] G
3.10. 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
H
178 SUPREME COURT REPORTS [2010] 5 S.C.R.
A is not done to the claimants and they are not deprived of
their property without grant of fair compensation. While
adopting the average sale method as the formula for
awarding compensation to the claimants, in thejl'eculiar
facts and circumstances of the case and the fact that the
B land is being compulsorily acquired, the claimants should
be awarded a higher compehsation. 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
c justice between the parties. As far as claimants are
concerned, they have not produced and proved any sale
instance and 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, the
0 claimants have failed to discharge their onus fully and
satisfactorily. (Para 73] (221-D-H; 222-A]
Land Acquisition Officer, A.P. v. Kamadana
Ramakrishna Rao (2007) 3 SCC 526, referred to
E 3.11. 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
F produce. Therefore, what could be 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
G 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. [Para
74] [222-B-D]
3.12. Keeping in mind the facts and circumstances
H of the case, it will also be just and fair to adopt some
SPECIAL LAND ACQUISITION OFFICER v. 179
KARIGOWDA & ORS.
liberal approach with some element of guess work to A
provide the claimants with just and fair market value of
the land in question. The entire land including the village
in question and all other villages was acquired for the
purpose of submerging the lands because of the water
coming from the Hemavathi Dam. It will be just, fair, B
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 c
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. [Para 75] [222-G-H; 223-A-B]
Executive Engineer, Dhenkana/ Minor Irrigation Division, D
Orissa and Ors. v. N. C. Budharaj (deceased) by Lrs. and Ors.,
(2001) 2 SCC 721; Satinder Singh and Ors. v. Umrao Singh
and Anr. AIR 1961 SC 908, distinguished
4. The Reference Court as well as the High Court E
could not have granted any interest under the provisions
of the Act, for a date anterior to the issuance of
Notification u/s. 4 of the Act. The provision of the Act
clearly lays down the procedure required to be followed
while taking possession of the acquired land. The words F
"from the date on which he took the possession of the
land" occurring in Section 20 would mean lawful taking
of possession. 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 G
alone the land 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 H
180 SUPREME COURT REPORTS [2010] 5 S.C.R.
A entitled to. The provisions of s. 48 of the Act would come
to aid and the court would also be justified in issuing
appropriate direction. However, the Collector is directed
to examine the question of payment of rent/damages to
the claimants, from the period when their respective lands
s were submerged under the back water of the river, till the
date of issuance of the Notification uls. 4(1) of the Act,
from which date, they would be entitled to the statutory
benefits on the enhanced compensation. [Paras 77 and
78] [224-B-D; 227-E-H; 228-A-C]
c Shree Vijay Cotton and Oil Mills Ltd. v. State of Gujarat
(1991) 1 SCC 262; R.L. Jain (0) by Lrs. v. DOA and Ors. 2004
(4) sec 79, relied on
5. The Government Authorities are expected to
D advert to the factors relating to the pendency pf various
appeals including those before the Reference Court and
take steps at the earliest to remedy the legal grievances
raised b'y the claimants at different levels of justice
administration system. Despite its might, the State is
E 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
F established maxim "Boni judicis est lites dirimere, ne !is 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.
G This doctrine would be applicable with greater emphasis
where the judgment of the Court has attained finality
before the highest court. All 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
H
SPECIAL LAND ACQUISITION OFFICER v. 181
KARIGOWDA & ORS.
the small land owners have been deprived of their small A
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, the
State authorities are directed and the courts are B
requested, where ca~es are pending arising from the
same notification, to dispose of the pending proceedings
without any further delay. [Para 79) [229-B-H]
Case Law Reference:
c
(1996) 11 sec 542 Relied on. Para 21
(2001) 1 sec 614 Relied on. Para 21
(1987) 1 sec 424 Referred to. Para 22
D
AIR 2003 SC 2502 Referred to Para 26
45 Del 156 · Referred to Para 27
AIR (34) 1947 PC 118 Referred to Para 29
(2007) 9 SCC 447 Referred to Paras 33 E
and 60
(2009) 5 SCR 864 Relied on Para 34
(1995) 5 sec 203 Relied on. Para 39
F
(1998) 9 sec 537 Relied on Para 50
2009 (4) sec 119 Referred to. Para 60
AIR 2001 SC 3341 Referred to. Para 60
2003 (4) sec 481 Referred to. Para 60 G
1983 (4) sec 542 Referred to. Para 60
2000 (6) sec 326 Referred to. Para 60
1998 (7) SC 397 Relied on. Para 65 H
182 SUPREME COURT REPORTS · [2010] 5 S.C.R.
A AIR 2004 SC 3981 Relied on. Para 65
AIR 1999 SC 317 Relied on. Para 66
AIR 1990 SC 103 Referred to Para 70
B (2001) 3 sec 526 Referred to Para 73
AIR 1961 SC 908 Distinguished Para 76
(2001) 2 sec 121 Distinguished Para 76
(1991) 1 sec 262 Relied on. Para 77
c
2004 (4) sec 79 Relied on. Para 77
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3838 of 2010.
D From the Judgment & Order dated 23.1.2008 of the High
Court of Karnataka at Bangalore in MFA No. 8544 of 2007
WiTH
C.A. Nos. 3839, 3840-3841, 3842, 3843, 3844, 3845, 3848,
E 3849, 3850-63 of 2010.
Basva Prabhu Patil, Brijesh Kalappa, Divya Nair, N.
Ganpathy, Anitha Shenoy and Rashmi Nandakumar for the
Appellant.
F
Shanth Kr. V. Mahale, Harish S.R. Hebbar, Rajesh Mahale,
M. Puttegowda and Somachari for the Respondents.
The Judgment of the Court was delivered by
G 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
H Principal Civil Judge (Senior Division) and JMFC,
SPECIAL LAND ACQUISITION OFFICER v. 183
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
Srirangapatna (hereinafter referred to as the "Reference Court"). A
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, B
against the judgment and order dated 23rd 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 C
of 2009 are directed against the judgment of the High Court
dated 22nd February, 2008 in MFA Nos. 6924 of 2007 (LAC)
C/W Nos. 6925/2007, 7289/2007, 7290/2007, 7291/2007,
7292/2007' 7294/2007' 854112007' 8543/2007' 8545/2007'
8546/2007, 8549/2007, 8551/2007 and 8553/2007 (LAC), D
whereby the High Court while relying upon its judgment inthe
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.
E
5. Appeal arising out of SLP (C) No.31169 of 2008 is
directed against the judgment of the Reference Court dated
16th 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).
F
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 G
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 H
184 SUPREME COURT REPORTS [2010] 5 S.C.R.
A 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
8 can be the basis for determining the fair market 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
C 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
D 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.
E
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 r.elating to nearly 419
claimants) situated in Village Sanaba, Chinakurali Hobli,
Pandavapura. These lands got submerged under the
F 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 owners was taken on or about 24th
G October, 1996 and 26th December, 1999 respectively.
However, the notification under Section 4(1) of the Act came
to be issued on 4th April, 2002. The crops belonging to the
owners were damaged. The SLAO passed an award dated
28th August, 2003, fixing the market value of the wet lands at
H the rate of Rs.90,640/- per acre and for dry land at the rate of
SPECIAL LAND ACQUISITION OFFICER v. 185
KARIGOWDA & ORS. [SWATANTER Kl)MAR, J.]
Rs. 37,200/- with statutory benefits. Other awards were made A
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 8
and award dated 16th 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, C
the claimants felt dissatisfied and preferred appeals before the
High Court. These appeals were disposed off by the High Court
vide its judgment dated 23rd 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) D
Rs.2,53,750/- per acre for dry lands. The High Court also
awarded 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. E
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 F
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 G
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 H
186 SUPREME COURT REPORTS [2010] 5 S.C.R.
A 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 alia, raised is that the judgment of the High Court is
B erroneous and .:ontrary 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,
c 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 ~e
granted from the date of notification issued under Section 4 of
0
the Act.
13. Another contention raised on behalf of the appellant
is that the Hi~Court has allowed a uniform en,hanced
compensatiorncfbe paid to the claimants without drawing any
E 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
---
F 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 the compensation awarded on
the alleged ground, that they were carrying on the activity of
sericulture resulting in manufacture oLsilk thread ought not to
G 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 M"ulberry crops and the
H
SPECIAL LAND ACQUISITION OFFICER v. 187
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
documentary evidence clearly shows that about 250 to 400 silk A
cocoon clusters can i:>e 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 B
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 c
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 High Court. According to the
0
respondent-claimants, there was sufficient evjdence 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 E
controversy between the parties is with regard to the method
adopted for computation of compensation payable to the
.::laimants 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 F
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 ·G
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 H
188 SUPREME COURT REPORTS [2010] 5 S.C.R.
A refer to particular facts of another appeal. The Reference Court
as well as the High Court noticed 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
B 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)
c
"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
D per Ex.P.9 and P.10 and estimation as per Ex.P.11. On
perusalof the documents relied by the claimant, it is
noticed that, in the RTC extracts, the nature of crops beiflg
grown by the claimant is shown as Mulberry: The
production of RTC Extracts as per Ex. P.2 to P.7 supports
E 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
F 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
G
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
H minimum 4 mulberry crops in the lands submerged under
SPECIAL LAND ACQUISITION OFFICER v. 189
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
Tonnur Tank. Further in the award Thakthe itself that, the A
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 B
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 c
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. 0
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 E
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 P.10. Then, it comes to Rs. F
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 G
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, 1determined the market value of the lands
in question at Rs. 2,92,500/- per acre."
190 SUPREME COURT REPORTS [2010] 5 S.C.R.
A 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.
B
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
c 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
D 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 kgs. as
weight of 100 cocoons deserves our acceptance.
E
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
F 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
G
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
H
SPECIAL LAND ACQUISITION OFFICER v. 191
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
this amount with the multiplier '1 O' we get the market value A
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 ,
8
somewhat further elaborate reasoning in coming to the same /
c1:>nclusion 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 plants in the land
under acquisition for the purpose of feeding the silk worms. C
Further in Ex.P.9 (which is referred to; as Ex.P.8 in the
evidence of PW.1) it is clearly mentioned at SI. 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 D
document is not disputed by the respondent-SLAG.
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 E
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 F
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 G
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
H
192 SUPREME COURT REPORTS [2010) 5 S.C.R.
A 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 kilograms
as weight of 100 cocoons deserves our acceptance.
B
7. FurthE:lr, 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
c 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
D 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
E 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."
F 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
G admissible quantum 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-
H contained and it is a Code in itself providing for a complete
SPECIAL LAt-fd
ACQUISITION OFFICER v. 193
KARIGOWDA & ORS. [SWATANTER KUMAR, J.)
procedure and steps which are required to be taken by the A
authorities concerned, for acquisition of land and payment of
coi:npensation. Part II and Part Ill. 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 B
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 Ill deals with C
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
c9mpensation. It is a compulsive acquisition and the lands are D
acquired without the voluntary action or consent of the land
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
E
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
F
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 G
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
H
194 SUPREME COURT REPORTS [2010) 5 S.C.R.
A plain interpretation to the provisions of this Act.
21. We may notice that Part Ill provides for procedure and
rights of the claimants to receive compensation for acquisition
of their land and also states various legal remedies which are
available to them under the scheme of the Act. Under Section
8
18 of the Act, the Reference Court determines the quantum of
compensation payable to the clairhants. 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
C 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 Ac::t 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
D 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
E 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
F essentially must 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
G 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·
H compensation which they rely upon. In this very case, this Court
SPECIAL LAND ACQUISITION OFFICER v. 195
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
stated the principles of awarding compensation and placed the A
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: B
"As held by this Court in various decisions, the burden is
on the claimants to establish thatthe 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 C
in that behalf was discharged, the burden shifted to the
State to justify the award.'~
Thus, the onus being primarily upon the claimants, they are
expected to lead evidence to revert the same, if they so desire. D
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 E
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 F
the Legislature is an important factor in relation to interpret~tion
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 G
interpretation would not look beyond litera /egis, 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 "interpretation H
196 SUPREME COURT REPORTS [2010] 5 S.C.R.
A must depend upon the ·text and context. They are the basis of
the interpretation. One r:nay 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
B when we know why it was en~cted." [Resetve Bank of India v. ·
Peerless General Finance and Investment Co. Ltd. & Ors. :
(1987) 1 sec 424).
23. The principle of construction of law is stated by Justice
Holmes as under :-
C
"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
D be to interpretation besides the particular words and the
dictionary."
(Principles of Statutory Interpretation by Justice G.P.
Singh, Page 15, 9th Edition 2004, Wadhwa & Co.,
Nagpur)
E
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
F interpretation as well. A power conferred 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
G 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
H when such legislative intent is clear from the bare reading of
SPECIAL LAND ACQUISITION OFFICER v. 197
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
the provisions. Like the cases in hand, it is for the claimants to A
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.
B
25. The provisions with which we are concerned primarily
are the provisions of the statute which are poupled 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 C
acquired, in case they are aggrieved. But, this power has to
be exercised while keeping in mind the settled 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 D
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 E
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 F
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 G
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. H
It is not possible to decide whether certain words are plain or
198 SUPREME COURT REPORTS [2010) 5 S.C.R.
A ambiguous unless they are studied in their context and
construed. [Refer - D. Saibaba v. Bar Council of India & Anr.:
AIR 2003 SC 2502 ].
21: The true import of the rule of plain meaning is well
8 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
C necessarily construed or interpreted the language. It 'f\'OUld
obviously be impossible to decide that language is 1plain'
(more accurately, that a particular meaning seems plain)
without first construing it. This involves far rriore than
picking out dictionary definitions of words or expressions
D 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 anyo~e
competent to understand it and desiring fairly and
E 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 co~sider any
different meaning by comparison, strained, or far-fetched,
or unusual or unlikely."
F 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
G 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
H Statutory Interpretation by Justice G.P. Singh, Page 51, 9th
SPECIAL LAND ACQUISITION OFFICER v. 199
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
Edition 2004]. A
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,
B
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 C
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-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 D
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 E
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 F
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.
G
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 H
200 SUPREME COURT REPORTS [2010) 5 S.C.R.
A following what the Privy Council in the case of 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
B 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.
c 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.
D 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
E 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 integra and has been well settled
by different judgments of this Court, requiring that the
F 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.
G
33. A Bench of this Court in the case of Nelson Fernandes
& Ors. v. Special Land Acquisition Officer, South Goa & Ors.
[(2007) 9 sec 447), while discussing on this aspect of the Act
and its relevancy to the market value of the land, held as under
'
H .-
SPECIAL LAND ACQUISITION OFFICER v. 201
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
"22. In determining the amount of compensation to be A
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 B
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 c
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."
34. This was also reiterated by this Court in the case of D
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-a-vis
the land under acquisition, to be taken into consideration while
determining the amount of compensation, the first step being E
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. F
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 G
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 H
'-
202 SUPREME COURT REPORTS [2010] 5 S.C.R.
A directly relatable to the capacity of the acquired land to produce
agricultural products or, its market value 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)
8
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
C 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
D 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.
E 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.
F 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
G 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
H
SPECIAL LAND ACQUISITION OFFICER v. 203
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
crop for manufacture of sugar or gur or for any other purpose A
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 B
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. [ C
(1995) 5 SCC 203 ], the Court 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 D
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. E
40. Thus the restriction stated in law hasbeen 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 F
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 G
is only the direct agricultural crop produced by the agriculturist
from the acquired land or its price in market at best, which 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. H
204 SUPREME COURT REPORTS [2010] 5 S.C.R.
A 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
B 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
C 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
D affidavit dated 14th 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 compensation. In
E 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
F 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
G 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
H and its leaves are used as a feed to cocoons. It is after tl'\ey
SPECIAL LAND ACQUISITION OFFICER v. 205
KARtGOWDA & ORS. [S\IVATANTER KUMAR, J.]
are provided with this food that they convert themselves into A
cocoons which are then industrially processed to the
manufacture silk and is ultimately converted in those
manufacturing units as a silk thread.
46. The handbook issued by the Central Silk Board under B
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 producti~ity,
whenever necessary, plant protection measures must be
followed. These measures are taken only after pruning and 15 C
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 :iot be removed during D ,
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 E
feedings, depending on the necessity. During the periods, the
leaves should be properly preserved.
c 47. Thus, the literature submitted by both the parties before
us clearly show that manufacture of silk from cocoons is a F
process of manufacturing where the silk worms are fed with the
mulberry leaves grown on fields 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. G
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
H
206 SUPREME COURT REPORTS [2010] 5 S.C.R.
A 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
8
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
C 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.
49. It is quite similar to the crops grown in different parts
D 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 m<;1nufacture of tea,
sugar and for that matter silk from silk worms cannot be treated
E 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 w.ho
. F 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 tlie
domain of manufacturing and commercial activity. This activity
of producing silk from silk worms for which mulberry crop is
G 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 foo to the extent to make it a permissible
consideration under the relevant provisions of the Act
H
SPECIAL LAND ACQUISITION OFFICER v. 207
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
50. We may also usefully refer to a judgment of this Court A
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 B
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 proeess and C
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 D
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 E
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 agricultural activity and the F
entire remaining process cannot impliedly or by inference be
termed as agricultural activity or an activity dire.ctly 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 ; G
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
H
208 SUPREME COURT REPORTS (2010] 5 S.C . R.
A 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
8
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 mlthodology adopted by
C the courts as well as the extent of co,J;pensation awarded to
the claimants. The other reasons f¢r our not accepting the
findings recorded and compensation allowed by the High Court
is that, there is no evidence on reco~d to show that there is any
intrinsic or inseparable link between the two activities.
D 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
E doubt that even in those circumstances, whether it could be said
to be 3 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
F 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.
G Further, the document Exli. P-9 showed that claiman.t
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,
H
SPECIAL LAND ACQUISITION. OFFICER v. . 209
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
enhanced compensation was granted: It may be noticed that A
PW-1 in his own statement has stated that mulberry plants are
used for 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 B
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 c
Is based more upon what the expert felt rather than the opinion
~which the expert would support, by actual physical inspection
Q.f 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 D
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). E
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 F
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 G
unsustainable even on appreciation of evidence.
What method should be adopted for determining fair
market of the acquired land
H
210 SUPREME CO~RT REPORTS [2010] 5 S.C.R.
A 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
B 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.
60. Sections 23 and 24 of the Act spell out the have and
have nots, applicable to the scheme of awarding compensation
C 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 own,ers depending upon the
D 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) Sa/es Statistics Method: In applying this method, it has
E 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
F 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 SC 3341],
Ravinder Narain & Anr. v. Union of India [2003 (4) SCC
G
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
H
SPECIAL LAND ACQUISITION OFFICER v. 211
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
method or expert opinion methqd has been applied. A
. {Union of India & Anr. v. Smt. Shanti Devi & Ors. [1983
(4) SCC 542], Executive Director v. Saraf Chandra Bisoi
& Anr. [2000 (6) SCC 326], Nelson Fernandes & Ors. V.
Special Land Acquisition Officer, South Goa & Ors.
(supra)} B
(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).
c
. 61. Normally, where the compensation is awarded on
agricultural yield or capitalization method basis, the principle
of multiplier is also applied for final determinatio.n. These are
broadly the methods which are applied by the courts with further
reduction on account of developmenfCharges. In some cases, o
depending upon the peculiar facts, this Court 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 E
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.
F
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 G
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 vall;!e should have been
H
212 SUPR,EME COURT REPORTS . [2010] 5 S.C.R.
A calculated by adopting capitalization method and no reason
was stated as to why this metho~ 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 the method of agricultural
8 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 sup(a. Secondly, we are also of the firm view that the
Reference Court fell in error of law in stating that the lands of
C 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
E> 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 constructi~m 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
E 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
F 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 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
G 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
H
SPECIAL LAND ACQUISITION OFFICER v. 213
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
where such evidence is not available court can safely rely upon A
the sales statistics of adjoining lands provided the instances
are comparable and the potentiality and location of the land is
somewhat simila't. 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 B
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 C
system where lands of a number of villages are acquired for
the same public purpose or different s·chemes but on the
commonality of purpose and unite 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 D
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) E
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 F
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 G
sale statistics of the adjacent villages for determining the fair
market value of the acquired land.
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 H
214 SUPREME COURT REPORTS [2010] 51S.C:R.
A Pandavapura as the basis for colnptiting the compensation
payable for the acqui~ed land, However the extent of
compensation which ought to have been awarded, we shall
discuss shortly.
8 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
C 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
D 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,
E Pandavapura, the guidance value of the dry land during the
period 1998-99 to 2001-02 a;e as follows :
Years Per Acre of dry land
1999-2000 Rs. 36,000-00
F 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
G
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
H of the Sub Registrar, Pandavapura Taluk and as per the
SPECIAL LAND ACQUISITION OFFICER v. 215
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
guidance value it is observed to be Rs. 37,200/- per acre A
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
B
not available for consideration at the office of the Sub-
Reg istrar, 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 :
c
SI Name of the Sy. Nature Extent Sale R.No.
No Village No. of cons id- &
land eration date
01 Mahadevapura 84/1 Garden 0-10 G Rs.26000 1318/99-00
D
(Melukote land 4-10-99
Hobli)
02 Hosahalli 12/6 Garden 0-18 G Rs.37500 1770/99-00
(Chinkurali land 6-12-99
Hobli) E
03 Dinkakaval Out Garden 0-10G Rs.27000 184/00-01
(Chinkurali of land 29-04-00
Hobli) 33
04 Vaddara halli 36/4 Garden 0-09 Rs.30000 199/01-02 F
(Kasaba land 20-4-00
Hobli)
36/2 Garden 0-03
land
3613 Garden 0-02
land G
05 Vaddara halli 51/7 Garden 0-17Y, Rs.37000 1028/01-02
(Kasaba land 26-06-01
Hobli)
Total 01-29 y. 1,57,500 H
216 SUPREME COURT REPORTS [201 O] 5 S.C.R.
A The extent of garden land in which there was transaction :
01 Acre 29 Yi Guntas
. Total amount of transaction : Rs. 1,57,500/-
P~r Acre 1.57.500 x 40 = 90647-48 or 90640-00
B 69.5
Per gunta 2266-18 or 2266-00
Per Acre Rs. 90,640/- and per gunta Rs. 2266/-
C 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
D 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
E
3 or Rs. 86,667 and
Per gunta Rs. 2167/-
While fixation of the compensation amount for the
F 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
G 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%
H
SPECIAL LAND ACQUISITION OFFICER v. 217
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
without interest shall be paid" A
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 B
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 not in dispute before us that primarily all these lands were
being- used for cultivating mulberry crop which is the sole C
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 D
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 E
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 F
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 G
market value of the acquired land, 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
H
218 SUPREME COURT REPORTS [2010] 5 S.C.R.
A 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
B also stated that latest sale instance closer to the date of
notification for acquisition of the land should be taken into
consideration. I ,
71. It is also an accepted judicial norm that the claimants
can be given the benefit of awarding compensation on the
C 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
D 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 by the Reference Court as well as by
the High Court. But the Courts held that it was not appropriate
E 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
F 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.
G 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
H
SPECIAL LAND ACQUISIT!ON OFFICER v. 219
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
sold in Vadara Halli (Kasaba Hobli) for a sum of Rs. 30,000/- A
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
Oinkakaval (Chinkurali Hobli) for a sum of Rs. 27,000/- on
29.04.2000, all these sold lands fall in the same circle. Besides B
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 ~ 7 Yz~
guntas of garden land was sold in village Vaddara Halli
(Kasaba Hobli) for a sum of Rs. 37,000/-. The notification under c
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 Yz Guntas i.e.
0
90,647.48 per acre. Since the sale instances relied upon are
nearly around 1 to 2 Yi 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.
E
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, F
commercial or industrial activities i.e. feeding the silk worms
which are ultimately used for production of silk thread. The court
cannot use thi~ admitted restricted use to the disadvantage of
the land owners and some benefit should be given to them while
balancing the equities in accordance with law. The concept of G
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 H
220 SUPREME COURT REPORTS [2010] 5 S.C.R.
A 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 % years on the sale
·price of Rs. 1,08,000/- in respect of garden land, the claimants
B would be entitled to get compensation at the rate of Rs.
1,53,542.50 per "'"re for the wet (ir;igated) land. This can even
be examined fivrn 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.
c 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. 1,08,000/- + 15% on Rs. 1,08,000/- =
0
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.
E 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 fo the other garden lands
F used for ordinary agricultural activities. The fields in question
are being used exclusively for growLng mulberry crops. Mulberry
leaves are the only and the specifieCl food for cocoons: In other
words, the agricultural purpose for whj9h the fields in questiori
are being used is a special purpose and the crop so grown is
G 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 claimantc. In the
H present cases, the claimants have not only lost their agricultural
SPECIAL LAND ACQUISITION OFFICER v. 221
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
land but they have also been deprived of seasonal income that A
was available to them as a result of sale of mulberry leaves.
Deprivation of livelihood is a serious consideration. 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 B
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 c
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 D
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. E
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 the peculiar facts and circumstances of the case F
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 G
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
H
222 SUPREME COURT REPORTS [2010) 5 S.C.R.
A 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 faile'd to discharge their onus fully and satisfactorily.
74. The claimants have proceeded on the assumption that
8
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
C 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 capitalized
for determination of market value was the value of mulberry
leaves used for sericulture and not the value of silk cocoons
D produ~ed by feeding such mulberry leaves to the silkworr:ns. 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
E 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, cultiv(ltion. The second method is instead of
F .
taking the valua;-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.
G 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 !arid in question. It must be
remembered that, the entire land including village Sanaba and
all other villages was acquired for the purpose of submerging
H
SPECIAL LAND ACQUISITION OFFICER v. 223
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
the lands because of the water coming from the Hemavathi A
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, B
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. c
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 D
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 ..4th April,
2002. It was contended that since they had lost possession and E
interest being payable in lieu of possession, they would be
entitled to receive interest from those dates i.e. from 1993, and
not from the date the Land Acquisition Collector had granted,
i.e. 4th April, 2002. The Reference Court as well as the High
Court accepted this contention while referring to the judgments F
of the Executive Engineer, Dhenke.nal 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 G
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
H
- 224 SUPREME COURT REPORTS [2010] 5 S.C.R.
i . ,r. 1ddU;· i"•·'., ·• .. , ... .. .. .. '
A Act, 1839, where t_his Court has held that provisiqns of t~.e,. Act
couid be made applicable to arbitration as there was n6thing
tb 'indicate 'tnat its application was· restricted. Thus, it is not
necessary for us to deliberate on the judgment of N.C. ·audharaj
case (supra) any further. Further, even the reliance placed upon
B Satinder Singh case (supra) is not of much help to the
respondents. This judgment relates to the period, prior to
intrbductit:ih and/or amendment of Sections 23(1A), 23(2) and
34 of the Acti.e. on 30th April, 1982 and 24th September, 1984.
It has been contended on behalf of the appellants, that it is now
C 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 oeen taken earlier would,
dehor the provisions of the Act and, therefore, was improper.
Thus, the possession has to be legal and within the framework
0
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 pos_session
of the land" occurring in Section 20 would mean lawful taking
of possession. The case of Shree Vijay Cotton & Oil Mills Ltd.
E 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
F R.L. Jain (0) by Lrs. v. DOA & Ors. [2{)04 (4) SCC 79]
I COnSidered all these aspects Of the matter and held aS ,under
I :- .
"
G 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 sec 337 anrl the reasons given there
in para 16 of the Report are being reproduced below:
H
'
SPECIAL LAND ACQUISITION OFFICER v. 225
KARIGOWDA & ORS'. [SWATANTER KUMAR, J.] ..,
,·,,\ cirtj tr' C" ; - , 1-'' "' ;• .' ' :<tH ,:·•:1·1,. ':·· :d l'1LI
16....... There are two decision~ ,of this Court, wherein A
same controversy arose, namely, whether the claimant
would be entitled to additional sum at the rate of tweh(e
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 B
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 c
4(1). However, in·Asstt. Commr., Gadag Sub-Division~.v::.
fvlathapathi Basavannewwa, reported in (1995) 6 SCJ;
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 0
possession of the acquired land the owners would be
entitl~d 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 E
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 F
(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 b,ut the
proceedings for acquisition were completed under East G
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
Inglewood Pulp and Paper Co. Ltd. v. New Brunswick H
226 SUPREME COURT REPORTS [2010) 5 S.C.R.
A El~ctric 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
B
principal sum ayvarded from the date when possession
was taken, unless thEt-.statute clearly shows a contrary
intention" ·
the Bench held as under:
c ..
": .. 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
D 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".
E 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
F 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
G 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 under Section
4(1) of the Act the Government merely takes possession
of the land but the title thereof continues to vest with the
H
SPECIAL LAND ACQUISITION OFFICER v. 227
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
landowner. It is fully open for the landowner to recover the A
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 B
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 landowne·r is entitled while
determining the compensation amount payable to the
landowner for the acquisition of the property. The c
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, D
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 E
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 F
acquisition proceedings culminated into an award in terms of
Section 11, then alone the land vests in the State free of any
encumbrance or restriction in terms of provisions of Section 16
of ttie Act. The Court, in situations where possessions has been
taken prior to issuance of notification under Section 4(1) of the G
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 H
228 SUPREME COURT REPORTS [2010] 5 S.C.R.
A· Jail7'0ase:{supra) as welt This' legal question is"no·niore~-0pen
. to controversy and stands settled by this Court. We wou!d 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
B date anterior to the issuance of Notification under Section 4 of
the Act. However, foflowing the dictum of the Bene~. we direct
the CollectOr to examine the question of payment of rent/ '
damages to the cla.imants, from the period when their
respective lands were submerged under the back water of the
C 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.
79. As noticed in the opening part of the judgment, the
respondents had taken an exception and raised objection to
D the maintainability of the appeal before this Court being directly
filed against the judgment of the Principal Civil Judge, Senior
Division (Reference Col)rt). 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
E 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
F 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 cer:tain appeals preferred by the
State against the judgment of the Reference Court, bef~\the
District Judge were also pending during the period wh~n· th~
G 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
H academic. In these circumstances and keeping in view the
SPECIAL LAND ACQUISITION OFFICER v. 229
KARIGOWDA & ORS. [SWATANTER KUMAR, J.]
peculiar facts and circumstances of these cases; we db not A
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 8
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 ~rliest to remedy the legal grievances raised by the
claimants at different levels of justice administration system. C
Despite its might, it is expected to be a responsible and
reluctant litigant as there is obligation upon the ·~tate 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. D
established maxim "Boni judicis est lites dirimere, ne tis ex
lite oritur, et interest reipublicae ut sint fines litium", casts a
duty ~pori the Court to bring litigation to an end or at least
1
endure that if possible, no further litigation arises from the cases
pending before the Court in accordance with law. This doctrine "E
would be applicable with greater emphasis where the judgment
of the Court has attained finality before the highest Court. All
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 F
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 G
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.
'.
I" I
230 SUPREME COURT REPORTS [2010] 5 S.C.R.
A 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
B 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.
(ii) The claimants - land owners would be entitled to get
c 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
D 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.
E
(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/
F 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. 4th April,
2002. These applications may be filed within eight
G 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
H law expeditiously. We make it clear that the
SPECIAL LAND ACQUISITION OFFICER v. 231
KARIGOWDA & ORS. [SWATANTER KUMAR, J.)
amounts, if already paid for this period, shall be A
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. 4th April,
8
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.
K.K.T. Appeals partly allowed.
c
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