LAA No.526/15 & conn. cases (LA App No. 526 of 2015) vs LAR 358/1997, Sub Court Thalassery

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE & THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN MONDAY, THE 23RD DAY OF OCTOBER 2017/1ST KARTHIKA, 1939 LA.App..No. 526 of 2015 () --------------------------- AGAINST THE ORDER/JUDGMENT IN LAR 358/1997 of SUB COURT,THALASSERY DATED 24-02-2015 APPELLANT(S)/2ND RESPONDENT: --------------------------- THE MANAGING DIRECTOR KSIDC, THIRUVANANTHAPURAM. BY ADV. SRI.JOBY CYRIAC, SC, KSIDC RESPONDENT(S)/CLAIMANTS AND RESPONDENTS 1 AND 3: ------------------------------------------------ 1. K.V.SUDHEER BABU RESIDING AT VAYALIL HOUSE, P.O.MOORIYAD 670 643. 2. K.V.VINOD KUMAR (REPRESENTED BY HIS WIFE PARAYI SHEEJA RESIDING AT DO- DO- 3. K.V.ARAVINDAKSHAN, PEEDIKAKANDY HOUSE, KUTHUPARAMBU AMSOM MOORIYAD DESOM 670 643. 4. SPECIAL TAHSILDAR (LA) THALASSERY 670 101. R3 BY ADV. SRI.CIBI THOMAS R1-R2 BY ADV. SRI.B.KRISHNAN R1-R2 BY ADV. SRI.R.PARTHASARATHY R4 BY SR GOVERNMENT PLEADER SMT.K.AMMINIKUTTY THIS LAND ACQUISITION APPEAL HAVING BEEN FINALLY HEARD ON 21-7-2017, ALONG WITH CO. 165/2016 & CO. 12/2017, THE COURT ON 23/10/2017 DELIVERED THE FOLLOWING: ## **A.M. SHAFFIQUE & ANU SIVARAMAN, JJ.** ======================== LAA No.526 of 2015, Cross Objection No.165/2016 & Cross Objection No.12/2017 ===================== Dated this, the 23[rd] day of October, 2017 ## **J U D G M E N T** ## _**Shaffique, J.**_ This appeal is filed by the 2[nd] respondent in LAR No. 358/1997 challenging judgment dated 24/2/2015 in LAR No. 358/97. An extent of 166.91 Ares of land in Sy.No.243/1B1 of Manantheri Village, Manantheri Desom was acquired pursuant to a notification issued under Section 4(1) of the Land Acquisition Act, 1894 (hereinafter referred to as the LA Act) published on 26/5/1995. The Land Acquisition Officer valued the land on the basis of comparable sale method with reference to 63.58 Ares of land and adopted capitalisation method for the balance land having an extent of 103.33 Ares. The amount awarded for 63.58 Ares was at the rate of `605/- per Are corresponding to `245/- per cent. In respect of the LAA No.526/15 & conn.cases -:2:- balance 103.33 Ares, Land Acquisition Officer awarded `7,93,170/-. taking into account the capitalisation method. 2. Claimants objected to the Award by which they claimed tree value at `10,000/- per tree and land value at `8,000/- per cent. Before the Reference Court, the first claimant was examined as AW1 and reliance was placed on Exts.A1 to A9. The respondent did not adduce any oral evidence but they relied upon Exts.R1 to R3. The commission reports were marked as Exts.X1 and X2. The Reference Court refixed the land value at `1,620/- per cent. Further, an amount of `4,02,000/- was also awarded as timber value over and above the value granted on capitalisation basis. Since the claim has been raised only by claimants 1 and 2, 2/3[rd] of the amount was given as land value and timber value. 3. While impugning the aforesaid judgment, learned counsel for the appellant submits that the court below was not justified in placing reliance upon Ext.A6 series of judgments and there was no basis for awarding a further amount of `1,500/- per tree over and above the compensation already given by the Land Acquisition Officer. LAA No.526/15 & conn.cases -:3:- 4. On the other hand, learned counsel appearing for respondents 1 to 3, the claimants supported the stand taken by the Reference Court. 5. The Reference Court found that no documents were produced to prove the market value of land at `8,000/- per cent as claimed as on the date of notification and therefore, such a claim is not justified. However, proceeding further, Reference Court observed that Ext.R3 document bearing No.1145/94 of Kuthuparamba Sub Registry which is relied upon by the State is not a comparable land and therefore the said document cannot be relied upon to fix the market value of land under acquisition. Ext.R3 is a sale deed executed on 18/5/94 by which 18.61 Ares of land in Sy.No.1/1 of Cheruvanchery Village, Cheruvanchery Desom is purchased for `15,000/- and the centage value will come to `326/- per cent. The Reference Court observed that the land covered by the document is in a different village and in a different desom compared to the acquired land and therefore the said document could not have been the basis for fixing the land value. 6. It is further observed that a Commission was taken by LAA No.526/15 & conn.cases ## -:4:- the claimants and Ext.X2 shows a comparative analysis of the acquired land with the basis land. According to the Advocate Commissioner, the acquired property is a rubber plantation and has road access from Kuthuparamba Cheruvanchery road, whereas the basis land i.e., Ext.R3 is having no road access. It is a rocky land in comparison with the acquired land. The acquired land therefore had two advantages, one is that it was a fertile garden land and secondly, it has direct road access. Hence it was found that Ext.R3 cannot be the basis for valuation of the land in the case. The Reference Court further placed reliance on Ext.A4 judgment in LAR No.359/97 and connected cases wherein the land value was enhanced from `245/- per cent to `1,500/- per cent. Ext.A6 series documents are the judgments in the appeals preferred against those cases. The appeals were allowed and the land value had been fixed at `1,710/- per cent. Reference Court thereafter proceeded to consider different sale deeds and finally observed that land value could be fixed based on Ext.A6 judgment. However, a reduction of 10% has been made taking into account the vastness of the area and accordingly land value was fixed. As far as the other extent of 103.33 Ares of land was LAA No.526/15 & conn.cases -:5:- concerned, the Land Acquisition Officer followed capitalisation method. It is observed that the Land Acquisition Officer has not forwarded the records relating to the number of trees and how the capitalisation method had been worked out. The property was a garden land and the Advocate Commissioner had reported that 402 rubber trees were standing in the acquired property. According to him, the yield will come to `1,68,333/- per year, after deducting the expenses to be incurred for tapping and maintaining them. The Reference Court observed that it is not clear from the report as to how the trees were selected for test tapping. It is observed that in the absence of any test tapping of the trees in the acquired property, it may not be possible to arrive at a conclusion regarding the productivity and thereby to arrive at the capitalised value. On a finding that there was no award for timber value, Court directed payment of `1,000/- per tree for 402 rubber trees. 7. While impugning the aforesaid judgment, learned counsel for the appellant contended that there was no basis for fixing either the land value at such a rate or for directing payment of timber value. Capitalisation method is adopted for the purpose LAA No.526/15 & conn.cases -:6:- of granting value in the case of yielding trees. This Court in _**State of Kerala v. Geevarghese Kathanar**_ (1980 KLT 880) had adopted procedure for valuing the income from rubber trees. After referring to an earlier judgment in _**State of Kerala v. Periyar and Pareekanni Rubbers Ltd., Palai**_ (ILR 1973 2 Kerala 1), it was held that in determining market value, there cannot be an award of land value separately once value has been determined on the basis of capitalisation income, and nothing precludes the Reference Court from applying the proper method for determining market value. It was further held that in order to determine the value on capitalisation method, as far as rubber trees are concerned, the usual method adopted is to conduct test tapping of trees. The yield obtained on such test tapping would be the basis for determining the annual income from the property. But when there is no test tapping conducted by the Commissioner, and he merely observes on an inspection of the trees the estimated income, it may not be of much assistance. The Commissioner in such instances is to place such materials collected by him so as to take decision on such materials. It is further held that normally the income from trees which are LAA No.526/15 & conn.cases -:7:- yielding are taken into account for the purpose of calculating the total income from the property to determine its proper value. But if there are non yielding trees, or trees which are used as timber or firewood, the value as timber or firewood would also be added on to the capitalised value of income to determine the market value. The learned counsel for appellant also placed reliance on judgment in _**State of Haryana v. Gurcharan Singh and another**_ [1995 Supp (2) SCC 637]. It is held that when the market value is determined on the basis of yield, then applying suitable multiplier, the compensation needs to be awarded. The claimant is not entitled for market value of land as well as the value of land on the basis of yield from fruit bearing trees. It is held that after compensation is determined on the basis of value of land as distinct from the income applying suitable multiplier, then the tree would be treated as firewood and necessary compensation will be given. When the market value is determined on the basis of the yield from the trees or plantation, 8 years' multiplier shall be the appropriate multiplier. For agricultural land, 12 years' multiplier is the suitable multiplier. 8. Cross objection No.12/17 had been filed by claimants 1 LAA No.526/15 & conn.cases -:8:- and 2 and Cross Objection No.165/16 had been filed by the 3[rd] claimant. In Cross objection No.165/16, the claim is for awarding him land value at `1,710/- per Are in respect of his 1/3[rd] share. In Cross objection No. 12/17, claimants make a claim for the rubber trees on capitalisation basis based on the income determined by the Advocate Commissioner in terms of Ext.X2 report. 9. First we shall consider the award of land value. Ext.A6 had been relied upon by the Reference Court to fix the land value. Ext.A6 is the judgment in LAA No.1469/2009 and connected cases. It relates to acquisition of land in Manantheri village pursuant to a notification published on 26/5/1995. This Court relied upon an earlier judgment in LAA No.112/2004 wherein 10% deduction was given on `1,800/- on account of the largeness of the extent involved. That was a case in which Land Acquisition Officer awarded value at the rate of `245/- per cent which was enhanced to `1,500/- per cent. Having regard to the fact that this property is situated in the very same village and this Court has granted enhancement after taking note of largeness of the area and the Reference Court having relied upon the same and fixed the land value taking into consideration all relevant facts, we do LAA No.526/15 & conn.cases -:9:- not think it necessary to interfere with the judgment as far as land value is concerned. 10. Now coming to the value given on capitalisation basis, the contention urged by the appellant is that the court below was not justified in granting timber value when capitalisation method is already adopted whereas claimants 1 and 2 seek for enhancement on the basis of capitalisation based on the Advocate Commissioner's report. Claimant No.3 who is the cross objector seeks for award of amounts based on the judgment in respect of land value. Apparently, the Cross Objector in CO No.165/2016 did not seek for any reference. But when a property is jointly owned by several persons, and a reference is made by the Land Acquisition Officer, notice ought to have been given to all the claimants. It is borne out from records that the 3[rd] claimant was impleaded as a party to the proceedings but no award has been passed in his favour. We are of the view that this procedure is absolutely wrong. When a common award is passed and several parties are involved, and an objection is filed by one of the parties, the reference involves the entire case and cannot be confined only to the party who had objected to the award. A LAA No.526/15 & conn.cases -:10:- wrong procedure had been adopted by the Land Acquisition Officer and the Reference Court. The third claimant ought to have been heard by issuing notice. He having impleaded himself in the proceedings, necessarily an award ought to have been passed in favour of the third claimant also which has not been done in the present case. This position is rather clear by the judgment of the Apex Court in _**A.Viswanatha Pillai v. Special Tahsildar for Land Acquisition**_ (AIR 1991 SC 1966) wherein it is held that when a reference is sought by one of the co-owners of the land, all the co-owners will be entitled for enhanced compensation prorota as per their shares. The law is further reiterated by the Apex Court in _**Jalandhar Improvement Trust v. State of Punjab**_ (AIR 2003 SC 620). 11. Therefore, we are of the view that the third claimant was also entitled for a decree as had been awarded by the Reference Court and subject to the appeal and cross appeal in the above case. 12. Next question to be considered is regarding the adequacy of the capitalised value awarded by the Reference Court. As already indicated, Reference Court did not interfere with LAA No.526/15 & conn.cases -:11:- the amount awarded as capitalised income whereas Reference Court directed payment of additional amount of `1,000/- per tree. When a capitalisation method of valuation is adopted, it is settled law and as held in the judgments aforesaid, the annual yield from the rubber trees have to be obtained by way of test tapping from the yielding rubber trees and thereafter a multiplier method has to be adopted in order to arrive at the capitalised method of valuation. When capitalised method of valuation is taken, no other amount shall be given by way of timber value since the acquisition of the property includes the yielding trees. 13. This position is further fortified by the judgment of this Court in _**State of Kerala v. Lucy Kochuvareed**_ (1987 (1) KLT 578) which was followed in _**State of Kerala v. Varghese Joseph**_ [1989 (2) KLT S.N.51 (Case No.63)]. In _**Lucy Kochuvareed**_ (supra), it was held that a number of years' purchase of the actual or immediately prospective profits of a land acquired is also one of the method of valuation. This method is known as capitalisation method which depends upon various circumstances. The rate of capitalisation is normally the percentage of return on investment that an investor would expect LAA No.526/15 & conn.cases -:12:- during the relevant period. It is further held that there is no difference between cultivation of rubber and agricultural operation. A person investing in rubber plantation is always conscious of the various imponderables in the matter of return and would expect a higher return than in the case of investment in nationalised Banks. In that case, the Reference Court computed the yield of rubber plants at 190 kgs per Acre, computed the price of rubber at `5.20 per kg, the expenses at `550/- per Acre and the multiplier as 12 times. The value of immature plants was fixed at `10/- per plant. The court therefore fixed net income at `438/- per Acre for yielding plantation. The High Court modified the Award by fixing the market value of yielding rubber plantation by adopting the price of rubber at `5/per kg instead of `20/- per kg. It could therefore be seen that no separate timber value will be given in instances of yielding rubber plants and timber value will be given only if the plants are not yielding at the time of acquisition. 14. Timber value is given only in an instance where the trees are non yielding and the land is valued on the basis of value of land alone. For yielding trees, timber value will not be given, LAA No.526/15 & conn.cases -:13:- but the market value of the land will be based on capitalised income alone. Therefore, primarily, the Court below committed serious error in directing payment of timber value in addition to the capitalised income that had been arrived at by the Land Acquisition Officer. 15. The next question is to consider whether Ext.X2 can be the basis for enhanced capitalisation value. Perusal of Ext.X2 would not show that any particular method of test tapping has been conducted by the Advocate Commissioner. She stated that the yield from 12 rubber trees were taken and 7 litres rubber milk is obtained. The Advocate Commissioner has also given a formula without any basis. The respondent had filed objection stating that no test tapping was conducted. To enable a Court to assess the market value based on capitalisation method, the yield from the rubber trees should be calculated based on random test tapping. Despite an objection being filed, the Advocate Commissioner was not examined. In the absence of any test tapping being conducted, as rightly pointed out by the Reference Court, it is not possible to enhance the capitalised income, as has been claimed in the case. LAA No.526/15 & conn.cases -:14:- 16. In the result, these appeals and cross objections are disposed of in the following manner:- (1) LAA No.526/15 and Cross Objection No. 165/16 are partly allowed and Cross Objection No.12/17 is dismissed. (2) The decree and judgment of the Court below shall stand modified as under:- (a) That the decree for payment of timber value of `4,02,000/- is hereby set aside. (b) The claimants 1 to 3 shall be entitled for the decree amount in equal proportion. - (c) In all other respects, the decree shall stand confirmed. Sd/- ## **A.M. SHAFFIQUE, JUDGE** Sd/- ## **ANU SIVARAMAN, JUDGE** Rp //True Copy// PS to Judge