2010 Supreme(SC) 365

2010 (3) Supreme 445
SUPREME COURT OF INDIA
R.V. Raveendran and Swatanter Kumar, JJ.
Special Land Acquisition Officer — Appellant
versus
Karigowda & Ors. — Respondents
Civil Appeal No. 3838 of 2010
(@ SLP (C) No. 20767 of 2008)
Decided on : 26-04-2010

IMPORTANT POINTS
1. It is settled principle of law that, the onus to prove entitlement to receive higher compensation is upon the claimants.
2. 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 the facts of a given case.
3. Where there is commonality of purpose and common development, compensation based on statistical data of adjacent villages is proper.
4. 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.
5. 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 is not done to the claimants and they are not deprived of their property without grant of fair compensation.
6. Comparable sales methods of valuation is preferred because it furnishes the evidence for determination of the market value of 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

Headnote:Land Acquisition Act, 1894- Section 23-Ambit and Scope of –Whether, manufacturing or commercial activity carried on by agriculturist, either himself or through third party, as a continuation of agricultural activity, that is, using the yield for production of some other final product can be the basis for determining the fair market value of the acquired land, within the parameters specified under Section 23 of the Act- Held The manufacturing and commercial activities for manufacture of tea, sugar and for that matter silk from silk worms cannot be treated 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 who 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 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 covered under the provisions of Section 23 of the Act-Even by the process of judicial interpretation, it would 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 relevant provisions of the Act- Basic error of law to which the courts below had fallen was that ultimate manufacturing of silk thread under the nomenclature of cocoons had 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- Error committed by courts in appreciation of evidence was that they had treated the cocoons as the crop and not mulberry leaves- In fact, it was the very basis of a claim for higher compensation that cocoons being the agricultural end product, they were entitled to higher compensation-However no direct evidence was led by claimants in this regard-There being no direct and appropriate evidence to show any nexus to support the claim of the claimants, cocoons could not be considered as a crop even as per literature submitted by the respective parties- Hence finding recorded was held unsustainable even on appreciation of evidence. (Paras 49 to 57)

       Interpretation of Statutes-The intention of the Legislature is an important factor in relation to interpretation of statutes- The statute law and the case law go side by side and quite often the relationship between them is supplementary- 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 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 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. (Para 22)

       Land Acquisition Act, 1894- Section 23-Compensation-Determination of -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 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. (Para 41)

       Methods for computing the compensation - In applying Sales Statistics Method 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 land- The land covered under sale instance should have similar potential and occasion as that of the acquired land -In Capitalization of Net Income Method of determination of market value, capitalization of net income method or expert opinion method has been applied-In Agriculture Yield Basis Method Agricultural yield of acquired land with reference to revenue records and keeping in mind the potential and nature of the land - wet (irrigated), dry and barren (banjar)-Normally, where the compensation is awarded on agricultural yield or 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. (Para 60)

       Fair market value of the acquired land-Determination of- 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 land-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 where such evidence is not available court can safely rely upon the sales statistics of adjoining lands provided the instances are comparable and the potentiality and location of the land is somewhat similar- 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 such other compensation as would be just and fair-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 impermissible- Where there is commonality of purpose and common development, compensation based on statistical data of adjacent villages was held to be proper. (Paras 64, 65)

       Fair market value of the acquired land-Determination of - Genuine sale instance -Claimants can be given benefit of awarding compensation on the 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 proximity to the date of notification under Section 4 of the Act-Since 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 to apply sales statistics method in the facts and circumstances of the case- Admittedly, the claimants produced no sale instances- However held that these sale instances could be taken into consideration by the Court and benefit of the highest instance could 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 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)

       Fair market value of the acquired land-Determination of -Claimants, by leading definite evidence had shown on record that lands in question were not only lands having regular source of irrigation through the backwaters but otherwise were also lands superior to the other garden lands used for ordinary agricultural activities- The fields in question were being used exclusively for growing mulberry crops-Mulberry leaves were the only and the specified food for cocoons- Agricultural purpose for which the fields in question were being used was a special purpose and the crop so grown was again used for a specific commercial purpose to which there was no other alternative- Claimants had not only lost their agricultural land but they had also been deprived of seasonal income that was available to them as a result of sale of mulberry leaves- Deprivation of livelihood was a serious consideration- Court was entitled to apply some kind of reasonable guess work to balance the equities and fix just and fair market value in terms of parameters specified under Section 23 of the Act- The SLAO had 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 had not proved and produced on record sale instances- They had also not 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 was 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 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. – While adopting the average sale method as the formula for awarding compensation to the claimants, held that in peculiar facts and circumstances of the case and the fact that the land was being compulsorily acquired, the claimants should be awarded a higher compensation- The compensation at the rate of Rs. 2,30,000/- per acre for wet land and at the rate of Rs. 1,53,400/- per acre for the dry land held to be just and fair compensation and would do complete justice between the parties. (Para 73)

       Land Acquisition Act, 1894- Section 23-Ambit and Scope of –Whether, manufacturing or commercial activity carried on by agriculturist, either himself or through third party, as a continuation of agricultural activity, that is, using the yield for production of some other final product can be the basis for determining the fair market value of the acquired land, within the parameters specified under Section 23 of the Act-The claimants had proceeded on the assumption that they would 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- Held that the determination of the market value by capitalization of yield method would depend upon 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 produced by feeding such mulberry leaves to the silkworms-The yield of silk cocoons was the result of further human effort and industry, value of which obviously could not be capitalized for the purpose of arriving at the market value of the agricultural land- Keeping in mind the facts and circumstances of the case, held 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 land in question- Entire land including village Sanaba and all other villages was acquired for the purpose of submerging the lands because of the water coming from the Hemavathi Dam. In view of the cumulative discussion referred to above, held that it would be just, fair, equitable and in consonance with Sections 23 and 24 of the Act that the market value of the land could 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 by one third, the rate would be Rs.1,53,400/- per acre in the case of dry land. (Paras 74, 75)

       Facts of the Case :

       Issue in consideration in present case was whether, manufacturing or commercial activity carried on by agriculturist, either himself or through third party, as a continuation of agricultural activity, that is, using the yield for production of some other final product can be the basis for determining the fair market value of the acquired land, within the parameters specified under Section 23 of the Act.

       Findings of the Court :

       The manufacturing and commercial activities for manufacture of tea, sugar and for that matter silk from silk worms cannot be treated 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 who 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 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 covered under the provisions of Section 23 of the Act.Even by the process of judicial interpretation, it would 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 relevant provisions of the Act. Basic error of law to which the courts below had fallen was that ultimate manufacturing of silk thread under the nomenclature of cocoons had 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. Error committed by courts in appreciation of evidence was that they had treated the cocoons as the crop and not mulberry leaves. In fact, it was the very basis of a claim for higher compensation that cocoons being the agricultural end product, they were entitled to higher compensation. However no direct evidence was led by claimants in this regard.There being no direct and appropriate evidence to show any nexus to support the claim of the claimants, cocoons could not be considered as a crop even as per literature submitted by the respective parties. Hence finding recorded was held unsustainable even on appreciation of evidence.

       The claimants had proceeded on the assumption that they would 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. Held that the determination of the market value by capitalization of yield method would depend upon 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 produced by feeding such mulberry leaves to the silkworms. The yield of silk cocoons was the result of further human effort and industry, value of which obviously could not be capitalized for the purpose of arriving at the market value of the agricultural land. Keeping in mind the facts and circumstances of the case, held 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 land in question. Entire land including village Sanaba and all other villages was acquired for the purpose of submerging the lands because of the water coming from the Hemavathi Dam. Hence held that it would be just, fair, equitable and in consonance with Sections 23 and 24 of the Act that the market value of the land could 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 by one third, the rate would be Rs.1,53,400/- per acre in the case of dry land.