Full Judgment Text
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PETITIONER:
RAMACHANDRAIAH ETC.
Vs.
RESPONDENT:
LAND ACQUISITION OFFICER, SAGAR
DATE OF JUDGMENT10/01/1973
BENCH:
SHELAT, J.M.
BENCH:
SHELAT, J.M.
CHANDRACHUD, Y.V.
CITATION:
1973 AIR 701 1973 SCR (3) 261
1973 SCC (1) 352
ACT:
Land acquisition-Lands under personal cultivation of owner
and lands under cultivation of tenants-Principles of
compensation.
HEADNOTE:
The respondent acquired the lands of the appellants. Some
of the lands were cultivated by the appellants themselves
and others by tenants. As a result of the Mysore Tenancy
Act, 1952, which was amended by Mysore Acts 16 of 1957, 24
of 1962 and 12 of 1963, and, the Mysore Tenants (Temporary
Protection From Eviction) Act, 1961, the tenants, though
they were inducted originally as annual tenants, they got as
deemed tenants, a fixed and secured tenure for additional
periods.
The respondent fixed compensation at Rs. 600 per acre for
tank-fed lands and Rs. 500 per acre for rain-fed lands. On
a reference under s. 18 of the Land Acquisition Act. 1894,
the compensation’ was increased to Rs. 2500 per acre for
tank-fed lands and Rs. 2000 for rain-fed lands.
On appeal, the High Court fixed a uniform rate of compensa-
tion at Rs. 1250 for all lands, whether tank-fed or rain-
fed, and whether self-cultivated or cultivated by tenants.
On the question whether the High Court followed a correct
principle, this Court, in appeal,
HELD : The matter should be remanded to the High Court for a
fresh calculation of the compensation.
(1) The High Court was in error in equating lands
cultivated by the tenants and those under the personal
cultivation of the appellants and applying to both a uniform
measure. The two kinds of lands ought to have been
separately treated and even if the rent in the case of
tenant occupied land was taken as a measure for such land,
that could not properly be the measure for arriving at the
market value of the land under the appellants’ personal
cultivation, because, the net return to the appellants from
each of the two kinds of lands is bound to differ. The
annual rent paid by the tenant may not be the correct or
real income obtainable by the appellants, the rent agreed
upon several years ago may not be the fair rent by reason of
several factors and the lands themselves may not be equal in
quality, situation or productivity. [265 C]
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(2) in view of the provisions of the Mysore Act, it should
have been ascertained whether the tenants had any interest
in the land and whether they were entitled to any share in
the compensation payable in respect of lands under their
cultivation, subject to any bar of limitation under s. 18 of
the Land Acquisition Act. If the tenants are entitled to
any share of the compensation, it should be allocated to
them. If this were to be done, the annual income of the
lands will have to be ascertained afresh from the evidence
on record or otherwise to arrive .it the correct market
value. [266 F]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1353 to
1355 of 1967.
263
Appeals by certificate from the judgment and Award dated
15th September 1966 of the Mysore High Court at Bangalore in
Misc. First Appeals Nos. 199 to 201 of 1963.
R. B. Datar, for the appellants.
M. Veerappa, for the respondent.
The Judgment of the Court was delivered by
SHELAT, J. These three appeals, by certificate, are by three
Khatedars, whose lands were acquired for the submersion area
of the Linganmakki reservoir in Mysore State. The areas so
acquired were all wet lands and measured 29 acres and 37
guntas, 3.32 acres and 8.20 acres respectively. The Special
Land Acquisition Officer classified these lands into rain-
fed and tank-fed lands, i.e. one crop and two crop lands,
and adopting the method of valuation of capitalising the
annual rent paid to the appellants fixed Rs. 600 per acre
for the tank-fed, i.e., perennially irrigated wet lands, and
Rs. 500 per acre for the rain-fed wet lands. He arrived at
these figures on, a finding: that the average annual rent in
respect of these lands was 1-1/2 pallas of paddy per acre
which meant that the gross rent was Rs. 37.50 at the rate of
Rs. 25 per palla. Deducting land revenue and bad debts he
found that the net annual income was Rs. 30 per acre. On a
reference by the appellants under sec. 18 of the Land
Acquisition Act, 1894, the District Judge increased the
valuation to Rs. 2500 per acre for tank-fed lands and Rs.
2000 per acre for the rain-fed lands. The District Judge
also adopted the method of valuation by capitalising the
income by 20 years. But what he did was to take the whole
of the net income arising from the lands instead of capita-
lising, only the rent payable to the appellants by the
tenants of some of, the lands.
In appeals filed by the Acquisition Officer against the
awards by the District Judge, the, High Court of Mysore
reduced the compensation to Rs. 1250 per acre for all the
lands, irrespective of whether they were tank-fed or rain-
fed lands or whether they were self-cultivated or cultivated
by tenants. This. the High Court did on the footing that
the income from the land was represented by the rent paid by
the tenants. in respect of some of the lands, that such rent
on an average came to 2-1/2 pallas of paddy and that at the
rate of Rs. 25 per Dalla, by capitalising the rent by 20
years, the compensation would come to Rs. 1250 an acre. The
High Court., in addition, awarded interest at 6% per annum
on the amount of compensation awarded by it. In modifying
the District Judge’s award and reducing the rate, of
compensation to Rs. 1250 an acre. the High Court rejected
the measure adopted by the District Judge, viz,., "that the
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geni (rent) plus the quantity which the tenant would retain-
for himself would be the net average in
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come of the land". According to the High Court, the
District Judge overlooked the fact that the tenant who get
some income by cultivating the land did so because he and
the members of his family had to expend labour thereon, and
that therefore, both the expenses of cultivation as, also
the value of such labour expended by the tenant ought to be
taken into consideration. The High Court, held
"In assessing compensation for lands acquired,
on the basis of capitalisation of annual
income the usual method adopted is to
capitalise the annual rent on the basis of
certain number of years purchase."
The High Court also rejected the argument that the land
measuring 7 acres 10 guntas, which is the subject-matter of
Civil Appeal No. 1354 of 1967 and part of the lands which
are the subject matter of C.A. No. 1353 of 1957 were not
cultivated by any tenant and were in fact under the
Khatedars’ personal cultivation and that therefore
compensation in regard to them could not be fixed by
capitalising the annual rent only. The High Court held that
if the measure of capitalised annual rent "is good in
respect of the lands leased, it is equally good in respect
of the lands personally cultivated by the claimants". On
this basis, the High Court allowed the Land Acquisition
Officer’s appeals, reduced the compensation to Rs. 1250 per
acre in respect of all the lands, irrespective of whether
they were under tenants’ cultivation or under the personal
cultivation of the claimants.
The question raised before us is whether the High Court
followed a correct principle while awarding an uniform rate
of compensation for all the acquired lands. It may be that
resort may be had to fair rent as a true measure of income
derived from a particular land by its proprietor for fixing
the compensation by multiplying it by 20 years as has been
done here by the High Court where no other method of
valuation is Dossible. But where the acquired land has been
under the personal cultivation of a claimant, the annual
rent obtained by him from a tenant from another land may not
be the correct or real income obtainable by the claimant.
The rent of the land under a tenant’s cultivation’ may have
been agreed upon several ’years ago or may not otherwise be
the fair rent by reason of several factors. Quite apart
from that, the two lands may not be equal in quality,
situation and productivity and therefore the rent obtained
for one cannot be the same for the other. Obviously
therefore, the annual rent obtained by a claimant from his
tenant for one acquired niece of land cannot be applied as,
a measure for another niece of land which is personally
cultivated by the claimant. The net return to the claimant
from each of the two lands is bound to differ. Ordinarily
rent payable by a tenant would be fixed after calculating
approxi-
265
mately the gross income less the tenant’s cost of
cultivation, cost of labour expended by him and a certain
amount of return for all the labour thrown in by him. In
the case of land personally cultivated by a claimant, on
the other hand, the income derived by such a claimant is
arrived at by taking the gross income and deducting
therefrom his expenses of cultivation, other expenses and
outgoings. The net income thus arrived at is usually
multiplied by 20 years purchase and the amount so calculated
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would be considered as equivalent to market value. In our
view, the High Court was in error in equating the lands
cultivated by the tenants and those under the personal
cultivation of the claimants and applying to both a uniform
measure, viz., the annual rent obtained from the former
for fixing compensation. The two kinds of lands ought to
have been separately treated and even if the rent in the
cases of tenant-occupied land was taken as a measure for
such land, that could not properly be the measure for
arriving at the market value of the land under the
claimant’s personal cultivation.
Even in respect of lands cultivated by tenants, no notices
appear to have been issued to them either by the Special
Acquisition Officer or by District Judge though some of
them did appear as witnesses for the claimants for deposing
to the income of the land. Presumably, no such notices were
issued to them on the ground that they were annual
tenants and had, therefore, no alienable interest in the
lands cultivated by them. We do not know whether by the
expression ’annual tenants’ we meant that their tenancy
was for one year only and would lapse on the expiry of the
year. Even if it were so, by the time the notifications
under secs. 4 and 6 of the Act were issued, (in April and
August 1960), the Mysore Tenancy Act XIII of 1952 had come
into force. Sec. 4 of that Act provided that a person
lawfully cultivating any land belonging to another person
shall be deemed to be a tenant if the conditions there set
out are satisfied. Under s. 5 (1), there can be no tenancy
for less than five years and all tenancies in force on the
date of the commencement of the Act shall be deemed to be
tenancies for a further period of five years from such date
of the commencement of the Act. Under sub-s. 2 of s. 5,
no tenancy is terminable before expiry of the period of
five years except on the grounds set out in s. 15, e.g.,
default by such a tenant in paying rent or the fair rent
fixed under the Act as the case may be.
The Mysore Tenancy Act, ’13 of 1952 was amended first by
Mysore Act, 16 of 1957, and again by Mysore Acts 24 of 1962
and 12 of 1963. See. 4 of Act 16 of 1957 provided that every
tenancy in respect of which the period of five years
specified in s. 5 of Act 13 of 1952 was due to expire
during, 1957 shall be deemed to be a tenancy for a further
period of one year from the date on which the said period of
five years was due to expire. Sub-
266
sec. 3 of sec. 4 further provided that notwithstanding
anything contained in any law, notices given before the 11th
day of March, 1957 by landlords to tenants terminating their
tenancies at the expiry of the said period of five Years
referred to in sub-sec. 1 on the ground of such expiry or
on the ground that the landlord required the land for his
personal cultivation shall be deemed to have been cancelled
and shall have no effect and all applications made by
landlords for possession of lands in pursuance of rent
notices shall on the 11th March, 1957 stand dismissed. In
1961, the Mysore Legislature passed the Mysore Tenants
(Temporary Protection From Eviction) Act, 37 of 1961. The
Act was to remain in force till March 31, 1962 or such other
date not later than one year after that date as the State
Government may by notification specify. Sec. 3 of the Act
provided that notwithstanding any thing contained in any law
or agreement, decree or order of a civil or revenue court or
a tribunal, no tenant shall be evicted from the land held by
him as a tenant during the period that the Act remained in
force. Sec. 4 of the Act staved during the operation of the
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Act all suits and proceedings in execution of decree or
orders and other proceedings for the eviction of tenants
from the lands held by them as such. The result of these
provisions would appear to be that though the tenants of the
lands in these appeals were inducted thereon originally as
annual tenants, they got a fixed and secured tenure for
additional periods and as deemed tenants they ceased to be
persons entitled to possession only for one year as provided
by their original leases. The point, therefore, is whether
they acquired as a result of these provisions any share in
the compensation.
In view of these provisions the Special Land Acquisition
Officer and the District Judge ought to have ascertained
(which neither of them did) whether the-tenants had any
interest in the land and whether they were entitled to any
share in the compensation payable in respect of lands under
their cultivation. In the absence of the tenants before us,
we find it difficult to into these questions. Nonetheless,
we do feel that in fairness to the tenants (if they are
still on the land) their interests ought to have been
ascertained and if they are entitled in law to any bare.
compensation according to the market value of the land
should be ascertained afresh and their, bare. if allowable:
to them, should be allocated to them. If this were to be
done, the annual income of the, lands in question will have,
to be ascertained afresh from the evidence on record or
otherwise and the net total income after deducting, the
costs of cultivation and other outgoing ascertained in order
to arrive if the correct market value. If the position of
the tenants as a result of the operation of the Tenancy Act
has changed so as to make them entitled to a part of the
compensation that also will require to be ascertained. This
is, of-course. sub-
267
ject to the bar of limitation under s. 18 of the Act-, for,
it would prima facie appear that the tenants by appearing as
witnesses for the claimants knew of the acquisition and the
award and yet had made no application to be made parties to
the reference before the District Judge. Even if it is
found that the tenants are not entitled to. any share in the
compensation, the lands under tenant’s cultivation and those
personally cultivated by the, claimants cannot be. valued on
the same footing for the grounds set out earlier. A fresh
calculation of compensation in any event of lands under the
claimants’ cultivation is called for on the principles set
out hereinabove.
We, therefore, allow the appeals, set aside the judgment of
the High Court and remand these, appeals to the High Court
for a fresh calculation of compensation in the light of the
observation,-, hereinabove made and in accordance with law.
If for that purpose it may become necessary in the opinion
of the High Court for fresh evidence to be led, parties may
be given liberty to adduce such further evidence. Costs of
these appeals will abide by the result in the High Court.
V.P.S. Appeals allowed.
268