THE MANIPUR TEA CO. PVT. LTD.versusTHE COLLECTOR OF HAILAKANDI

A                    THE MANIPUR TEA CO. PVT. LTD.
                                         v.
                    THE COLLECTOR OF HAILAKANDI

                              DECEMBER 13, 1996

B               [K. RAMASWAMY AND G.T. NANAVATI, JJ.)

          Land Acquisition Act, 1894: Sections 4(1), 18, 23 and 28.

        Land Acquisition-Compensation-Principle for determination
C of-Tea Estate's land acquired for laying railway tracks-Compensation
  awarded by Land Acquisition Qfficel"-Enhancement of compensation by
  Reference Court-Reduction of compensation by High Court-Reliance ·
  placed by Cowts on sale statistics-Sale deeds relating to agricultural land 5
  years prior to the date of Notification u/s. 4(1) produced by land-owners-Not
  accepted by Trial Court and High Court-Appeal before Supreme
D Court-Held the sale statistics cannot ipso facto form a basis to determine
  the compensation-In this case the High Court and the Reference Cowt had
  correctly rejected three sale deeds produced by the appellant in determining
  the compensation which relate to the agricultural land; not the tea garden of
  estate-Having rejected the sale deeds relied on by the appellant td do justice
E to the respondent, they relied on sale statistics relied by the Land Acquisition
   Officer-There is no ground to interfere with the approach adopted by Cowts
  below.

        Land acquisition-Determination of-Market value under section
  23(1)-Burden is on the claimants to prove by adducing cogent reliable and
F acceptable evidence-Principle of determination of the compensation under
  section 23(1) of the Act is entirely different and distinct from the principles
  applicable in determining the compensation under Land Reforms Act.

        Land Acquisition--Escalation charges for determination of the com-
G pensation to the tea garden-There was no illegality committed by the Cowts
  below in granting the escalation at Rs. 270 per bush.

        Land Acquisition-Determination of severance charges-By reason of
  the acquisition of the land of the appellant to lay the Railway tracks, the
  contiguity of the tea estate was severed and 2/3rd of the estate has remained
H on one side and 113 on the other-High Court found that the appellant was
                                        108
     MANIPUR 1EACO(P)LID. v. COLLECTOROFHAILAKANDI                     109

required to set up a fencing and the drainage channel, an amount of Rs. A
2, 36, 000 as estimated, would be sufficient to meet the expenditure-fleld it
being an estimate made by the appellant, there is no error of law warranting
interference.

      Land acquisition--Compensation-/nterest-l'roviso to section
28-Word 'may' has to be constrned as 'shall'-Therefore the claimants would B
be entitled to interest at the rate of 9% on enhanced compensation for one
year and thereafter @ 15% till date of deposit in the Court.

      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.16967-71
~~                                                                           c
      From the Judgment and Order 17.8.92 of the Assam High Court in
.F.A. No. 67 of 1987.

      Dr. A.M. Singhvi, Manoj Arora, Ms. S. Hazarika and Ms. H. Wahl
for the Appellant.                                                   D
      S.N. Chaudhary and S.A. Syed for the Respondent.             /

      The following Order of the Court was delivered :

      Leave granted.                                                         E
     We have heard learned counsel on both sides.

      These appeals by special leave arise from the Judgment of Division
Bench of Assam High Court, made on August 17, 1992 in First Appeal
Nos. 67/87 and 11-14/88. Notification under Section 4(1) of the Land F
Acquisition Act, 1894 (for short, the "Act") were published on 5.9.1981,
21:9.1982, 23.9.1982 and 24.9.1982 acquiring 123 Bighas 11 Cottahs and 13
Chitaks of the appellants' tea Estate for laying Railway tracks. The Collec-
tor by his award dated March 19, 1985 and also by another award dated
March 25, 1985 awarded in respect of the lands acquired a sum Rs.
17,59,975 against the total claim of Rs. 1,77,92,238 on the computation G
made in that behalf. On reference under Section 18 of the Act, the Court
enhanced the compensation to Rs. 43,89,038 with solatium, and interest
thereon in the sum of Rs. 67, 60,730 has been awarded as additional
compensation. On appeal, the High Court reduced the compensation from
Rs. 43,89,038 to Rs. 40,89,038. Feeling aggrieved by the impugned judg- H
     110                  SUPREME COURT REPORTS[l996] SUPP.10 S.C.R.
A    ment, these appeals have been filed by the appellant.

         Dr. A.M. Singhvi, learned senior counsel appearing for the appellant,
  contends that the High Court and the Reference Court committed grievous
                                                                                        [
  error in relying upon the sale statistics earlier relied on by the Land
B Acquisition Officer without examining any witness which formed basis for
  his award. The Courts also had wrongly rejected three sale deeds Exs.
  17(1) to 17(3) proved on behalf of the appellant and, therefore, there is
  clear error of law in reaching that conclusio.n. On the face of it, we find
  force in the contention. The sale statistics relied on by the Land Acquisi-
  tion Officer are not a proof unless persons connected with the sale deeds
c and the documents, also made part of the record, are examined. Therefore,
  the sale statistics cannot ipso facto form a basis to determine the compen-
  sation. As regards the three sale deeds relied on by the appellant, both the
  High Court as well as the Reference Court came to the conclusion that
  they relate to the agricultural land while the acquisition is in respect of tea
D garden.  Therefore, they could not form the basis to determine compensa-
  tion. Moreover, it was also found that they relate to sale transactions which
  took place 5 years prior to the date of notification published under Section
  4(1). Neither the vendors not the vendees were examined as witnesses.
  Therefore, the rejection of those sale deeds is perfectly in accordance with
  law. They do not form any base for determination of the compensation. It
E is settled law that the burden is on the claimants to prove by adducing
  cogent, reliable and acceptable evidence the market value under Section
  23(1) of the Act. The burden does not shift over to the Government but it
  is the duty of the Court to assess the evidence adduced by the claimants
  and determine the compensation on the touchstone of prudent purchaser             1


F in the open market, i.e., whether he would offer market value at the rates
  proposed by the Court. The evidence has to be put to test whether the sale
   deed or the evidence adduced would offer the market value higher than
   that has been determined by the Land Acquisition Officer. The compen-
   sation awarded by the Land Acquisition Officer is an offer that binds the
   Government but it is not conclusive. It is for the claimants to prove as to
G what would be the reasonable compensation which the land is capable of
   fetching in the open market. The question is : whether the land under
   acquisition, if put to the private sale in an open market, would be capable
   to secure the same price as offered by way of determination of the
   compensation after compulsory acquisition. Considered from this perspec-
H tive, the Court considered the evidence adduced and determined the
         MANIPUR TEACO(P)LID. v. COLLECTOROFHAILAKANDI                    111
                               ""'
    compensation. The High Cou~t and the Reference Court, therefore, cor- A
    rectly applied the test and did not accept three sale deeds produced by. the
    appellant in determining the compensation which relate to the agricultural
    land; not the tea garden or estate. Having rejected the sale deeds relied
    on by the appellant to do justice to the respondent, they relied on sale
    statistics relied by the Land Acquisition Officer. Under these circumstan- B
    ces, we do not find any ground in the approach adopted by the Courts
    below.
                          '-
         It is then contended that tea garden always secures higher value than
    the paddy fields. In that behalf, reliance was placed upon Section 42 of
    the West Bengal Estate Acquisition Act, 1953 and similar provision in C
    Assam Land Acquisition Act and Assessment Ordinance, 1989, as ap-
    plicable, to show that the market value of tea garden is required to be
    determined at the rate twice the value- of paddy. A distinction has been
    made between the two in determination of compensation, by the statute as
    tea gardens are required to be assessed at the rate 2-1/2 times higher than D
    the paddy fields. Therefore, the said yardstick is required to be adopted in
    determining the compensation. We do not agree with the contention.

          The principle of determination of the compensation under Section
(
    23(1) of the Act is entirely different and distinct from the principles
    applicable in determining the compensation under Land Reforms Act. E
    What is required to be determined is the prevailing market value of the
    land as on the date of the notification published under Section 4(1) of the
    Actand, therefore, the principle for determination of the compensation
    under the Land Reforms Act or the Acquisition Act has no relevance or
    bearing.                                                                    F

          It is then contended that the courts below have committed error in
    not granting escalation charges for the determination of the compensation
    to the tea garden. In that behalf, it is contended that the Reference Court
    proceeded in paragraph 30 on the basis that the age of the tea bushes G
    would be 35 to 40 years. The report of the Tocklai Expermintal Station
    of Tea Research would indicate that the life of the trees would be more
    than 25 to 30 years. The yield would be more than 25 to 30 years and
    thereafter gradually decrease. The Court below were not right in determin-
    ing 20 years as the age of the bushes and on that basis fix the yield ~er
    month at Rs. 270. In fact even on the basis of those calculation, the H
    112                   SUPREME COURT REPORTS[l996) SUPP. 10 S.C.R.
A claimants are entitled to more than Rs. 367 per months. It is now an
    admitted position that except one witness, Bharthakur who has stated
    about the age of the trees, there is no evidence in proof of the above
    statistics given by the Research Station. Therefore, though the Land Ac-
    quisition Officer. had relied upon that statement in determining the com-
B   pensation, in trial, before the Court that did not ipso facto form part of the
    record unless the person connected with the Research Station was ex-
    amined as witness in that behalf. Admittedly, no witness has been ex-
    amined. In fact, if State had filed an appeal perhaps the things would have
    been different. The High Court and the Reference Court had adopted
    wrong principle of law with a view to give the benefit to the appellant rather
C   than dismissing its application for enhancement of the compensation. The
    District Judge as well as the High Court prceeded on the basis of the said
    report and fixed the age of the bush at 20 years for the maximum yield.
    Therefore, we do not find any legal base to interfere with that.

D         Further, Dr. Singhvi says that it being an arithmetical mistake, liberty
    may be given to the claimants to approach the Reference Court for
    amendment of the decree. It may do so, if it is open to it. The District
    Judge as well as the High Court have held that for the remaining 15 years
    the tea bushes would give their yield though every year, it would gradually
    decrease. They have taken 200 gms. per bush as the average yield as stated
E   in paragraph 30 of the award which reads as under :

             "In other words, the tea bushes are not likely to produce 400 grns.
             of made tea for the remaining 15 years. The production will go
             down gradually till the economic viability will become zero at the
F            end of 15 years. In order to assess the quantum of viability; we are
             to take the mean of 200 gms. per year in average per bush for the
             15 years. The yield per bush as on today cannot be expected during
             next 15 years. In spite of increasing variable costs such as costs of   1
             manure etc. the return will gradually go down till its economical
             viability becomes zero after 15 years."
G
         The finding thus recorded is a pure question of fact considering the
    economic viability, the nature of the yield and the longevity of the trees.
    Therefore, the Reference Court rightly had put it as 200 grns. per year for
    average bush for 15 gears and this calculation was made in paragraph 31
H   and the actual amount receivable, riamely (15 years x 200 grns.) (21.81 -
     MANIPUR 1EACO(P)L1D. v. COLLECTOROFHAILAKANDI                        113

 14.00) • 3 x 7.81 per bush · and Rs. 23.43 per bush was fixed. Under these A
.circumstances, it was held that tliey are entitled to compensation at that
rate per bush and the Collector, after deducting the amount already paid
was directed to make the balance payment. It being an arena of apprecia'
 tion of evidence on the factual matrix, we are not inclined to interfere with
that finding.                                                                  B
      It is next contended that the Reference Court having noticed that in
three months an area of 90 Cottas 11 Chittaks was sold on May 21, 1979
@ Rs. 2,539.68 per Bigha and 18 Cottas 13 chittaks of land was sold on
March 7, 1980 @ Rs. 1,268.83 per bigha and a further area of 1 bigha 4
Cottas and 4 chittaks was sold@ Rs. 4,948.45 per bigha on January 3, 1981, C
which would show that there was a gradual rise in the prices, fixing the
escalation charges at Rs. 270 per months was wrong; instead, escalation
must be @ Rs. 367. Thus the principle adopted by the Court is not correct
in law. In fact, the above finding is incorrect in law for-the reason that the
 persons connected with those sale deeds were not examined to .show the D
nature of the land under acquisition and of the lands under the sale deeds.
The circumstances under which the purchase came to be made, the relative
distance of the land and the respective prevailing prices in respect of those
areas are the factors to be taken into account. In this case, such an attempt
was not made. It was required to be proved that "there was really an
increase in the value of the land. As a matter of fact, it has to be established .E
that there is gradual increase, every month, in the value of the land of that
area and, therefore, when the compulsory acquisition was made, the appel-
lant was entitled to higher compensation. Though the State has not ap-
proached this Court, we can hold that there is no illegality committed by
the Courts below in granting the escalation at Rs. 270 per bush.                  F

      It is then contended that the Reference Court awarded a sum of Rs.
4,71,312 as severance charges. The High Court has found that due to the
severance, the appellant had to put not only the fencing but also the
drainage to protect the tea garden and the expenses incurred therefor came
to the tune of Rs. 2,36,010. Instead of adding severance charges awarded G
by the Reference Court, the High Court has reduced the compensation.
Therefore, it committed an error of law. We find no force in the contention.

      Clause thirdly, of Section 23(1) envisages that the damage (if any)
sustained by the person interested, at the time of the Collector's taking H
        114                   SUPREMECOURTREPORTS[1996) SUPP. lOS.C.R.

A possession of the land, by reason of severing such land from his other land
        is required to be determined as compensation under sub-section (1) of
        Section 23. It is seen that by reason of the acquisition of the land of the
        appellant to lay the Railway tracks, the contiguity of the tea estate was
        severed and 2/3rd of the estate has remained on one side and 1/3 on the
        other. The question is : what would be the compensation for that
    B   severance? The question is confined to the extent of expenditure. The
        compensation has to be awarded for such severance. It is stated by the
        claimants that they were required to put up fencing for protecting the tea
        estate and also the drainage channel. It is seen that the High Court has
        proceeded on that premise and it is not a case of the parties that on
    C   account of the acquisition of the land, the tea estate is exposed to the public
         and the public have access into the tea estate only the railway tracks would
         pass through the estate and, therefore, setting up of the fencing or of the
         drainage to protei:t the tea estate may not be necessary. We need not go
         into that question since the State has not come in appeal. Suffice it to state
    D    that the High Court having found that the appellant was required to set up
         a fencing and the drainage channel, an amount of Rs. 2,36,000 as estimated,
         would be sufficient to meet the expenditure. It being an estimate made by
         the appellant, we do not find any error of law warranting interference.

              It is then contended that by operation of the proviso to Section 28
    E   of the Act, the claimants would be entitled to interest for one year from
        the date of taking possession @ 9% per annum and for the balance period
        @ 15% per annum on the enhanced compensation. We find force in the
        contention.

    p          It is sought to be contended for respondents that the Reference
        Court and the High Court have proceeded on the principle that the Court
        has discretion to award interest @ 15% or less and on facts, the Court
        found that 9% would be reasonable rate of interest. We find that the
        approach adopted by the Reference Court and High Court is not correct             •
        since the statute has given measure of assessment of interest for the first
    G   year @ 9% from the date of taking possession and on expiry thereof @
        15% till date of deposit into Court on the enhanced compensation. It is a
        legislative principle that the claimant would be entitled to the rate of
        interest for the said period.

'
'. H           Under these circumstances, though the word 'may' has been used in
         MANIPUR TEACO(P)LID. v. COLLECTOROFHAILAKANDI                       115

    proviso to Section 28. of the Act it has to construed as 'shall' and, therefore, A
    the claimant would be entitled to interest at the rate of 9% on erihanced
    compensation for one year and thereafter @ 15% till date of deposit in
    the Court.

          The appeals are accordingly allowed only to this. extent. But, in the
    circumstances, without costs.                                                   B
    T.N.A.                                                     Appeals allowed.




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