State of Kerala v. A.P. Moidu and others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE PIUS C.KURIAKOSE & THE HON'BLE MR. JUSTICE A.V.RAMAKRISHNA PILLAI THURSDAY, THE 19TH DAY OF JANUARY 2012/29TH POUSHA 1933 LAA.No. 538 of 2010 (D) & C.O. No. 96 OF 2010 ----------------------LAR.296/2006 of SUB COURT, THALASSERY APPELLANT(S)/RESPONDENT IN LAR: ------------------------------ STATE OF KERALA, REP. BY THE DISTRICT COLLECTOR, KANNUR. BY ADV. GOVERNMENT PLEADER SRI.C.R.SYAMKUMAR RESPONDENT(S)/CLAIMANT & R2 IN LAR: ----------------------------------- 1. A.P.MOIDU, S/O. ABOO, KUTHUPARAMBA AMSOM, NARAVOOR DESOM.(DIED) 2. THE EXECUTIVE ENGINEER, KSTP., KANNUR. ADDL. RESPONDENTS 3 TO 6 3. NASEEMA P.K. W/O LATE A.P.MOIDU, AGED 52, NAFEESA MANZIL, KOOTHUPARAMBA AMSOM, NARAVOOR DESOM, KANNUR, PIN 670643 4. ARSHAD P.K. S/O A.P. MOIDU, AGED 32, DO. 5. AFSAL P.K. S/O A.P.MOIDU, AGED 30, DO. 6. NAFREENA P.K. D/O A.P.MOIDU, AGED 25, DO. ADDL. RESPONDENTS 3 TO 6 ARE IMPLEADED AS THE LEGAL HEIRS OF THE DECEASED 1ST RESPONDENT VIDE ORDER DT. 26-7-11 IN IA. 2189 OF 2011. R,R BY SRI.P.U.SHAILAJAN R,R BY SRI.A.K.GOPALAN THIS LAND ACQUISITION APPEAL HAVING BEEN FINALLY HEARD ON 1901-2012, ALONG WITH CO. 96/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **PIUS C. KURIAKOSE & A.V.RAMAKRISHNA PILLAI, JJ.** -------------------------------------------------------------LAA. No. 538 of 2010 & C.O. No. 96 of 2010 -----------------------------------------------------Dated this the 19th day of January, 2012 ## **J U D G M E N T** ## **Pius C.Kuriakose, J.** The Government is the appellant in LAA No.538 of 2010 and the memorandum of cross objections is filed by the claimant. The property under acquisition was in Kuthuparamba Village and the acquisition was for the purpose of up-gradation of Thalassery-Valavupara Road pursuant to Section 4(1) Notification published on 28/01/2005. The Land Acquisition Officer awarded land value at the rate of Rs.38,000/- per Cent. The Reference Court under the impugned award re-fixed the land value at Rs.1 lakh per Cent. Apart from that the Reference Court awarded further compensation of Rs.50,000/- for “ _loss of earnings/loss of business_ ”. The Government contends that the market value re-fixed by the Reference Court is excessive. The Government also contends that the award of LAA. 538/10 -2- Rs.50,000/- as compensation for loss of earnings and business is unauthorised. In the memorandum of cross objections filed by the claimant, it is urged that the land value ought to have been re-fixed by the Reference Court at Rs.3 lakhs per Cent. 2. We have heard the submissions of learned senior Government Pleader and Shri P. U. Shailajan, learned counsel for the cross objector claimant. Our attention was drawn by Sri. Shailajan to the judgment of the learned Single Judge in L.A.A No.1049 of 2009. Learned Counsel submitted that under the judgment in L.A.A No.1049 of 2009, this Court has re-fixed the value of the property under acquisition in that case at Rs.75,000/-. It is argued that by that judgment, this Court has given indirect approval to the award of Rs.1 lakh per Cent in the present appeal in view of the fact that the present property is superior. It was submitted that the land under acquisition LAA. 538/10 -3- in this appeal is situated only 20 metres away from Kuthuparamba bus stand, unlike the land involved in L.A.A No.1049 of 2009 which is situated 200 metres away from the bus stand. The learned counsel submitted that the property was situated almost adjacent to the bus stand and therefore, there is justification for awarding at least Rs.1,50,000/- per Cent. 3. The learned Senior Government Pleader, per contra submitted that it is not correct to say that this Court in judgment in L.A.A No.1049 of 2009 has approved the award of Rs.1 lakh per Cent to the property involved in this appeal. This appeal was never considered by this Court along with L.A.A No.1049 of 2009. The maximum increase over that amount which can be awarded for the property involved in this appeal is Rs.10,000/- per Cent. The learned senior Government Pleader would very strongly assail the award of Rs.50,000/- as compensation for loss of earnings LAA. 538/10 -4- and business. The learned senior Government Pleader referred to Section 23(1) Clause fifthly and submitted that what is contemplated under that clause is only the reasonable expenses incidental to the shifting of the residence or place of business. Towards shifting charges the award of Rs.50,000/- is quite excessive. 4. We have given our anxious consideration to the submissions addressed at the Bar. We have taken into account the judgment of this Court in LAA. No. 1049 of 2009. We are unable to accept the submission of Sri.P.U.Shailajan that by the judgment in LAA. No. 1049 of 2009 this court has given indirect approval to the award which is impugned in this case. At the same time we keep in mind the fact that this court awarded Rs.75,000/- per cent to the property covered by the judgment in LAA No. 1049 of 2009 and the land under acquisition in this case is nearer to the Municipal Bus Stand and other important LAA. 538/10 -5- institutions than the property covered by LAA. No. 1049 of 2009. According to us, there is justification for awarding more land value for the property in this case than the property covered by LAA. No. 1049 of 2009. We re-fix the value of the land under acquisition in this case at Rs.75,000/- per cent. 5. We find considerable force in the submission of the learned senior Govt. Pleader that the award of Rs.50,000/by the learned Subordinate Judge towards loss of earnings from business is not warranted. Clause fourthly of subsection (1) of Section 23 is the provision which enables the reference court to award compensation with reference to the earnings of the land owner. Clause fourthly is extracted as follows: ## **23. Matters to be considered in determining compensation:--** (1) In determining the amount of compensation to be awarded for land acquired under this Act, the Court shall take into consideration-- LAA. 538/10 -6- ## xxx xxx xxx _Fourthly:_ The damage (if any) sustained by the person interested, at the time of the Collector's taking possession of the land, by reason of the acquisition injuriously affecting his other property, movable or immovable, in any other manner, or his earnings;" As there was an argument from the part of the learned senior Government Pleader that the sum of Rs.50,000/awarded by the court below can only be towards shifting charges; it is necessary to extract clause fifthly of subsection (1) of Section 23 which deals with shifting charges. _"Fifthly:_ if, in consequence of the acquisition of the land by the Collector, the person interested is compelled to change his residence or place of business, the reasonable expenses (if any) incidental to such change;" The claimant in the present appeal was conducting footwear business, while the claimants in two other cases which were jointly tried along with the present case were conducting stationary business and studio respectively. The learned Subordinate Judge under the impugned judgment awarded a LAA. 538/10 -7- uniform sum of Rs.50,000/- as compensation for loss of earnings and business loss on account of acquisition in all the three cases. What we find from the judgment is that apart from referring to Section 23 of the Land Acquisition Act and saying that under the said section "can take into consideration the aspects of change or residence or place of business and also the damages caused due to injurious affection of the property or in any other manner the acquisition affects his earnings", there is no detailed or independent consideration of the amount to be awarded to the claimants towards those counts. What is discernible from the impugned judgment is only that there was a claim of loss of earnings and the court below awarded Rs.50,000/towards that claim. We are called upon to decide whether the award of so much amount towards loss of earnings by the reference court is justified. We may clarify now that the amount has been awarded clearly towards loss of LAA. 538/10 -8- earnings/loss of business and not as shifting charges. The award purports to be under clause fourthly of sub-section (1) of Section 23. In view of the importance of the issue raised we called upon both sides to address further arguments regarding the above point. 6. Sri. Shailajan would place strong reliance on the judgment of the Supreme Court in Ramesh Dutta v. State of Punjab, (2004) 7 SCC 388 and argue that loss of earnings or business which is in fact a movable property belonging to the owner is the loss of business earnings suffered by the owner whose property is acquired on account of the compulsory nature of the acquisition. Mr. Shailajan relied also on the judgment of a Division Bench of this Court in State of Kerala v. Krishna Udayar, 1984 KLT 617 to argue that as it is the business premises of the owner which has been acquired and as it is no longer possible for the claimant to conduct business in the property remaining after LAA. 538/10 -9- the acquisition, business loss or loss of earnings has to be calculated and awarded under clause thirdly and fourthly of sub-section (1) of Section 23. Per contra the learned senior Government Pleader Mr. Syamkumar would place reliance on the judgment of the Supreme Court in Jaspal Singh v. Union of India, (1997) 2 SCC 640. It was argued by the learned senior Govt. Pleader on the basis of the above decision that the mere fact that the claimant who was conducting a poultry farm on the acquired property was displaced on account of the acquisition and he could not resuscitate himself by establishing a poultry farm business anywhere, cannot be a ground under clause fourthly to determine the compensation on that basis and to have loss of earnings till date of resettlement in that behalf. On the basis of the same decision it was submitted that in terms of clause fifthly of Section 23(1) the mere fact that a claimant could secure the alternative land only in an unsecured place LAA. 538/10 -10- for setting up his business cannot be a ground entitling him to claim compensation under clause fifthly. What is contemplated under clause fourthly of Section 23(1) is only the loss of earnings resulting from immediate dispossession from the place of business and not the loss of earnings resulting over a fairly long period till the owner resettles his business elsewhere, so submitted the learned Senior Govt. Pleader on the basis of the judgment of the Supreme Court in Ramesh Dutt v. State of Punjab, AIR 1996 SC 2831. 7. The ratio emerging on a cumulative consideration of the three judgments of the Supreme Court, i.e., Ramesh Dutta v. State of Punjab, (2004)7 SCC 388, Ramesh Dutt v. State of Punjab, AIR 1996 SC 2831 and Jaspal Singh v. Union of India, (1997) 2 SCC 640 is that compensation for loss of earnings or loss of business contemplated by clause fourthly of Section 23(1) is not the compensation for the loss suffered by a business man who has been deprived of LAA. 538/10 -11- his business premises as a direct result of the acquisition. So also the above compensation is not a compensation for the loss resulting from his inability to secure an equally ideal place for relocating his business or from the fall in his business earnings on account of relocating of the business in another premises not so ideal for business as the premises acquired. What is contemplated is the damage sustained by a person at the time of taking possession by reason of his business earnings being affected on account of such taking possession. The loss can include the loss during "the time that would be required to restart his business". Here again while assessing the loss suffered during the time required, the reference court is expected to allow only the normal time to restart the business and not the time which may be taken by a lethargic person who on account of his unwillingness to part with the business premises under acquisition thinks in terms of restarting the business only LAA. 538/10 -12- after he is dispossessed. In cases where the acquisition proceeds under the ordinary provisions, the scope for awarding compensation under clause fourthly for loss of earnings will be very limited. But in cases where the acquisition proceeds under the emergency provisions of Section 17 where even before the award is passed possession is taken over there may be more scope to award compensation for loss of earnings under clause fourthly as in such cases normal time will have to be allowed to the business man who has been deprived of his premises to relocate the business. 'Ramesh Dutt' was a case where the emergency provisions were invoked; as specifically referred to by the Supreme Court in paragraph 12 of its judgment (2004)7 SCC 388. But in the present case the acquisition proceeded under the ordinary provisions. The claimant was put to notice of the impending acquisition and deprivation of the business premises sufficiently early. In the present LAA. 538/10 -13- case, compensation towards loss of earnings could only have been the minimum loss of earnings at the time of taking possession, together with reasonable charges for shifting his business could have been awarded under clause fifthly of Section 23(1). As rightly argued by the learned senior Government Pleader clause thirdly of Section 24 which deals with matters to be neglected in determining compensation should deter the reference court from awarding exorbitant compensation towards loss of earnings; as obviously in private sales such loss cannot be claimed by a vendor from his vendee. 8. Now coming specifically to the facts of this case, it is seen on reading the claim statement filed by the respondent that what he has claimed is loss of earnings every year at the rate of Rs.50,000/- as though the footwear business which he used to conduct has been lost to him once and for all. But it was fairly submitted before us by Sri. LAA. 538/10 -14- P.U. Shailajan, learned counsel for the claimant that at a distance of some 200 metres or so, from the acquired property the claimant/respondent started a new footwear shop which is even now functioning. No evidence at all is adduced as to any difficulties experienced by the claimant in securing the new premises or also as to any fall in the business profits on relocating the business at a place 200 metres away. Thus the evidence in the case falls short of holding that the claimant respondent is entitled for award of Rs.50,000/- towards loss of earnings. In the absence of such evidence the maximum that could have been granted was Rs.10,000/- towards loss of earnings and loss resulting from shifting of business on guess estimates in a reasonable manner. According to us the award has to be modified. The compensation towards earnings/loss of business has to be reduced to Rs.10,000/-. It is ordered accordingly. 9. The appeal is allowed to the above extent. C.O. is LAA. 538/10 -15- disposed of. On the re-fixed land value the claimant respondent will be entitled for all statutory benefits. On the re-fixed sum of Rs.10,000/- awarded under clause fourthly and fifthly of Section 23(1) the claimant will be entitled only for interest under Section 28. The parties are directed to suffer their respective costs in this appeal. ## **(PIUS C.KURIAKOSE, JUDGE)** **(A.V.RAMAKRISHNA PILLAI, JUDGE)** ksv/-