1. Land acquisition for irrigation project — Submergence of trolley line — Claim for compensation for severance and injurious affection under Section 23(1), Land Acquisition Act, 1894. (Para 1 , 3 , 4 , 5 , 7 , 8 )
Back
Next 
2022 Supreme(SC) 130
SUPREME COURT OF INDIA
(From the High Court of Judicature at Bombay)
HEMANT GUPTA, V. RAMASUBRAMANIAN, JJ.
Walchandnagar Industries Ltd. – Appellant
Versus
The State of Maharashtra and Another – Respondents
Civil Appeal Nos. 2671-2672 of 2016
Decided On : 04-02-2022
Important Points
Under Section 23(1) of the Land Acquisition Act, 1894, 'injurious affection' to movable property is distinct from 'injurious affection' to earnings. Compensation for property is warranted if acquisition renders remaining assets useless, while earnings claims require evidence of actual financial loss not offset by price increases.
Subject
Property Law - Land Acquisition
Act Referred
LAND ACQUISITION ACT: S.17, S.18, S.23, S.24, S.28, S.34, S.4, S.49(1)
MADRAS CITY IMPROVEMENT TRUST ACT: S.71
MADRAS CITY IMPROVEMENT TRUST ACT: S.71
Headnote
(A) Land Acquisition Act, 1894 - Sections 4, 17, 18, 23, and 28 - Claim for compensation for injurious affection of railway infrastructure - Court upheld portions of the Reference Court's award for depreciated value of rails and sleepers and reversed denial of compensation for rolling stock and transportation cost - Key findings centered on interpretation of severance and injurious affection under relevant statutory provisions. (Paras 30, 29, 77, 79)
(B) Compensation Principles - The court determined that compensation must reflect genuine economic loss resulting from land acquisition, considering operational disruptions and reinvestment needs for affected businesses. (Paras 30, 29)
Facts of the case:
The appellant, a company owning a township, challenged a High Court decision that modified the Reference Court's compensation under the Land Acquisition Act tied to their trolley line rendered obsolete due to dam construction. (Paras 1, 6, 18)
Findings of Court:
The High Court improperly denied compensation linked to rails and sleepers over a wider area influenced directly by acquisition implications, emphasizing scope of severance and injurious affection is linked to property use. (Paras 79, 80)
Issues: The core issue was whether the appellant suffered compensable damages due to severance and injurious affection from the loss of operational capacity of the trolley line, particularly in light of previous transportation shifts. (Paras 22, 24, 26)
Ratio Decidendi: The Court reinforced that claims under sections of the statute must consider effective utility loss attributable to the acquisition process in line with economic principles governing compensation. (Paras 30, 39, 79)
Result: Appeals partly allowed; compensation for rails and sleepers restored. (Para 79)
(B) Compensation Principles - The court determined that compensation must reflect genuine economic loss resulting from land acquisition, considering operational disruptions and reinvestment needs for affected businesses. (Paras 30, 29)
Facts of the case:
The appellant, a company owning a township, challenged a High Court decision that modified the Reference Court's compensation under the Land Acquisition Act tied to their trolley line rendered obsolete due to dam construction. (Paras 1, 6, 18)
Findings of Court:
The High Court improperly denied compensation linked to rails and sleepers over a wider area influenced directly by acquisition implications, emphasizing scope of severance and injurious affection is linked to property use. (Paras 79, 80)
Issues: The core issue was whether the appellant suffered compensable damages due to severance and injurious affection from the loss of operational capacity of the trolley line, particularly in light of previous transportation shifts. (Paras 22, 24, 26)
Ratio Decidendi: The Court reinforced that claims under sections of the statute must consider effective utility loss attributable to the acquisition process in line with economic principles governing compensation. (Paras 30, 39, 79)
Result: Appeals partly allowed; compensation for rails and sleepers restored. (Para 79)
Legal Category Hierarchy
Advocates appeared:
For the Appellant(s) : Mr. Jatin Zaveri, AOR Mr. Neel Kamal Mishra, Adv. Mr. D. S. Mishra, Adv.
For the Respondent(s): Mr. Sachin Patil, AOR Mr. Rahul Chitnis, Adv. Mr. Aaditya A. Pande, Adv. Mr. Geo Joseph, Adv. Ms. Shwetal Shepal, Adv. Mr. Nishant Ramakantrao Katneshwarkar, AOR Mr. Uday B. Dube, AOR
For the Appellant(s) : Mr. Jatin Zaveri, AOR Mr. Neel Kamal Mishra, Adv. Mr. D. S. Mishra, Adv.
For the Respondent(s): Mr. Sachin Patil, AOR Mr. Rahul Chitnis, Adv. Mr. Aaditya A. Pande, Adv. Mr. Geo Joseph, Adv. Ms. Shwetal Shepal, Adv. Mr. Nishant Ramakantrao Katneshwarkar, AOR Mr. Uday B. Dube, AOR
Table of Contents
2. Entitlement to compensation for obsolete rails, sleepers, rolling stock, and increased transportation costs — Dispute over whether costs were absorbed or passed to customers. (Para 18 , 26 , 27 )
3. Relocation of a small rail segment is impractical, rendering the entire line redundant — Lack of evidence that increased transport costs were not passed to customers. (Para 56 , 57 , 64 , 73 , 74 , 75 )
4. Injurious affection to movable property under Section 23(1) fourthly is distinct from injurious affection to earnings and may be awarded independently. (Para 78 )
5. Appeal partly allowed — Compensation for rails and sleepers restored — Claims for rolling stock and increased transportation costs rejected. (Para 79 , 81 )
6. What is the legal distinction between severance and injurious affection under Section 23(1) of the Land Acquisition Act, 1894?
Severance relates specifically to damage sustained by reason of severing the acquired land from other un-acquired land. Injurious affection is broader, covering damage to other movable or immovable property, or the earnings of the person interested. (Para 34 , 42 )
7. Can a claimant receive compensation for the redundancy of an entire rail line if only a small portion is acquired?
Yes. Because railway lines cannot be easily deviated like roads, the acquisition of a small segment that submerges or blocks the line can render the entire remaining stretch redundant and useless, justifying compensation for injurious affection to the property. (Para 57 )
8. Under what conditions is a claim for increased transportation costs as injurious affection to earnings rejected?
Such claims are rejected if there is no evidence that the increased costs were absorbed by the owner. If the costs could be passed on to customers through pricing, no loss of earnings is established. (Para 69 , 74 )
9. Does a general reduction in business profits automatically support a claim for injurious affection to earnings?
No. A reduction in profit is insufficient unless it is specifically and demonstrably attributable to the increased costs resulting from the acquisition, rather than general market trends or decreased sales turnover. (Para 73 )
JUDGMENT :
V. RAMASUBRAMANIAN, J.
1. Challenging a common Judgment rendered by the High Court of Judicature at Bombay in two appeals, modifying the award of the Reference Court passed under Section 18 of the LAND ACQUISITION ACT , 1894 the claimant-landowner has come up with these civil appeals.
2. We have heard Mr. Gopal Sankaranarayanan, learned senior advocate appearing for the appellant; Mr. Sachin Patil, learned advocate appearing for the first respondent-State and Mr. Deepak Nargolkar, learned senior advocate appearing for the second respondent-beneficiary.
3. The appellant is a company incorporated under the Companies Act. It has established a township in a vast area measuring about 16000 acres of land, located 136 kms. away from Pune. The nearest railway station to the township is at Bhigwan, located 36 kms. away from Walchandnagar Township.
4. For the purpose of transporting sugarcane and other goods, the appellant had laid trolley lines covering a distance of 50 kms. inside its estate. The appellant has also set up a 36 km. narrow gauge trolley line from Walchandnagar to Bhigwan for transportation of heavy engineering goods.
5. In the year 1967, the Government of Maharashtra approved the BHIMA (Ujjani) Irrigation Project. As part of the project, a 18 feet height dam across the Bhima River was proposed to be constructed at Ujjani about 1½ kms. upstream from Hingangaon bridge on Pune-Sholapur National Highway. Before undertaking the construction of the dam, a general survey was carried out, which revealed that a section of the trolley line may get submerged. Therefore, a spate of correspondence and personal discussions ensued between the officials of the Government and the representatives of the appellant for exploring the possibility of diverting the trolley line.
6. It is the case of the appellant that they wanted the Government to invoke the urgency clause for the acquisition of some other land for diverting the trolley line. But it is the case of the respondents that the appellant had by then abandoned transportation through trolley line and switched over to road transport.
7. Be that as it may, a notification under Section 4 of the LAND ACQUISITION ACT , 1894 was published on 26.10.1972. The proposal included the land on which a section of the trolley line passed. The extent of land covered by the trolley line that was expected to be submerged was measured to be 6 hectares 7 ares. Since the total land acquired for the project, included the lands of the appellant, which were located in different villages, a series of awards were passed.
8. For our present purpose, it may be noted that the Land Acquisition Officer passed an award on 9.12.1981. The claim of the appellant in the Award Enquiry was not only for the market value of the land, but also for: (i) compensation for the loss and (ii) compensation for the injurious affection due to the trolley line becoming obsolete. The claim of the appellant also included a claim for the loss sustained by the appellant on account of the un-acquired portion being rendered useless.
9. By his Award dated 9.12.1981, the Land Acquisition Officer awarded:
(i) Rs. 15,329 for the acquired portion of land.
(ii) Rs. 39,032.94 for embankments, rails, bullies, sleepers.
(iii) Rs. 43,491.12 for C.D. works.
(iv) Rs. 12,754.17 towards labour charges for removing rails and steel sleepers.
(v) Rs. 16,591.08 for solatium.
10. In effect, the Land Acquisition Officer awarded total compensation of Rs. 1,27,198.31/- and rejected the claim of Rs. 1,49,85,251/- for the un-acquired portion.
11. Not satisfied with the award, the appellant sought a reference under Section 18 on 12.01.1982. It was referred to the District Court, Pune, which took the same on file as Land Acquisition Reference No. 6 of 1982.
12. Before the Reference Court, the appellant claimed enhancement of compensation for the land acquired. In addition, the appellant also claimed compensation for severance and compensation for injurious affection. The c
