l Appeal No 1036 of 1976
551 From the Judgment and Order dated 1161975 of the Kerala High Court in Appeal Suit No 764 of 1972
TT Kunhikannan for the Appellant
section Padmanabhan and EMS Anam for the Respondent
The Judgment of the Court was delivered by K RAMASWAMY J
This appeal by special leave is against the judgment and decree of the Kerala High Court dated June 11 1975 made in AS No 764 of 1972
The notification under section 3 of the Kerala Land Acquisition Act 1961 Act 21 of 1962 was published in the Gazette on February 28 1967 acquiring six acres of land in the city Of Calicut to construct staff quarters of P  T of Govt
of India
The Land Acquisition Officer by award dated February 29 1969 awarded compensation  Rs230 per cent and also the value of the trees by capitalisation method in a sum of Rs26942155 p towards the land improvement together with 15 per cent solatium and 4 per cent interest
On reference the Civil Court enhanced the market value by judgment and award dated February 9 1972 at Rs500 per cent ie in total Rs300000 towards land value and confirmed the award of the Land Acquisition Officer of 26942155 p towards land improvement making in all 56942155 p with solatium at 15 per cent and interest at 4 per
cent from the date of dispossession
In the appeal by the State against the en hanced compensation it was contended that the Civil Court committed grave error in fixing market value separately to the land and the trees on capitalisation basis to make up the compensation
That contention was found favour with the High Court and it set aside the award of the Civil Court of the value of the land of Rs300000 and confirmed the award of Rs26942155
Calling in question the reversing decree of the High Court this appeal has been filed
Two contentions have been raised by Shri Padmanabhan the learned senior counsel for the appellant
Firstly he argued that there is an intensive cultivation in the ac quired land not only of the fruit bearing trees therein but also using the vacant space for other short term crops to establish which the appellant sought remand to the Civil Court to adduce additional evidence under Order 41 of Rule 27 etc
The High Court had wrongly rejected the request for additional evidence
we find no force in the contention
It was not the case that the appellant was prevented to adduce evidence in this behalf
Remand 552 under order 41 Rule 27 CPC cannot be made to adduce fresh evidence when though available but was not adduced
Even otherwise it was further argued that the land and the trees together constitute the value of the acquired lands and so are separately valued which would reflect the true and correct market value
The Civil Court has correctly adopted the method and the High Court is unjustified in interfering withthe award of the Civil Court It is also further contended that the land possessed of potential value as building sites and therefore the reliance by the Civil Court on exhibit A 1 dated February 19 1964 which worked out at Rs400 per cent and exhibit A 2 dated February 17 1967 under which 14 were purchased worked out at Rs556 percent and award of market value  Rs500 per cent by the Civil Court was not illegal
exhibit B 1 under which Rs230 per cent accepted as claimed by the State cannot be relied upon as the document dated June 3 1966 does not relate to the lands in the neighbourhood
Admittedly they are situated six furlongs away from the limits of Calicut city and one mile from the acquired lands
On the other hand the lands under exhibit A 1 and A 2 are situated one furlong from the acquired lands
Therefore they provide the comparable sales for fixation of market value
The second contention is that the appellant is entitled to 30 per cent solatium under section 232 of the Land Acquisition Act 1 of 1894 as amended under the Land Acquisition Amendment Act 68 of 1984
The learned counsel appearing for the State has resisted the conten tions
He argued that exhibit A 1 and A 2 relate to small extent of 5 cents and 14 cents together with the buildings situated therein
Therefore when a large extent of six acres was acquired they offer no comparable price
Small plots always fetch higher price and that therefore they cannot form same basis to fix the market value at Rs500 per cent
He also further contended that the lands and the trees cannot be valued separately
The court should adopt only either the value of the land or income of the trees with suitable multiplier but not both
The High Court is there fore well justified in rejecting the sale deeds and the total valuation and confirmed the capitalisation method of valuation
He also contended that the Land Acquisition Act 1894 and 1984 Amendment Act have no application since acqui sition proceedings were admittedly taken under the Kerala Land Acquisition Act
The crucial question therefore is what is the proper method of valuation of the land in question
The total extent of the land is six acres consisting of 1130 coconut trees 65 arecanut trees and 45 pepper wines
The Civil Court fixed the market value of the lands at 553 Rs300000
Admittedly the appellant did not file any cross objections in the High Court seeking any higher com pensation
Accordingly the market value of the lands fixed at Rs300000 became final
The fixation of the market value on capitalisation method also became final
It is settled law that the methods of valuation to be adopted in ascertaining the market value of the land as on the date of the notification are i opinion of experts ii the price paid within a reasonable time in bona fide transaction Of the purchase or sate of the lands acquired or the lands adjacent to the lands acquired and possessing similar advan tages and iii a number of years purchase of the actual or immediately prospective profits of the lands acquired
These methods however do not preclude the court from taking any other special circumstances obtained in an appropriate case into consideration
As the object being always to arrive as near as possible in an estimate of the market value in arriving at a reasonable correct market value it may be necessary to take even two or all those matters into account inasmuch as the exact valuation is not always possible as tow lands may be the same either in respect of the situation or the extent or the potentiality nor is it possible in all cases to have reliable material from which that valuation can be accurately determined
In State of Kerala vs
PP Hassan Koya  the question arose whether the separate valuation of the land and building would be proper method to be adopted to determine the market value of the acquired property  This Court held that the land and the building constitute one unit and the value of the entire unit must be determined with all its advantages and poten tialities
When the property is sold with building it is often difficult to have sale of single land with building approximately in time to the date of the notification
Therefore the method which is to be adopted in determining the value of the land and building is the method of capital isation of return actually received or which might reasona bly be received from the land or the building separate valuation of the land and building was not approved and the annual rent received with the proper capitalisation was adopted by the courts below was approved by this Court
In Special Land Acquisition Officer vP Veerabhadrappa etc
  this court held that the method of valuation by capitalisation should not be resorted to when other methods are available
However where definite materi al is not forthcoming either in the shape of sales of simi lar lands in the neighbourhood at or about the date of notification under section 41 or otherwise
the court has no other alternative but to fall back on the method of valua tion by capitalisation
In valuing land or an interest in land for purposes of land acquisition proceedings the rule as to number of years purchase is not a theoretical or legal rule but depends 554 upon economic factors such as the prevailing rate of inter est in money investments
The return which an investor will expect from an investment will depend upon the characteris tic of income as compared to that of idle security
The main features are 1 security of the income 2 fluctuation 3 chances of increase 4 cost of collection etc
The traditional view of capitalised value being linked with gilt edged securities no longer be
rigorous when invest ment in fixed deposits with nationalised banks National Savings Certificates Unit  Trusts and other forms of Govt
securities and even in the share market command a much greater return are available
The capital in agricultural lands normally when the rate of return on investment was 825per cent in the years
1971 72 the proper multiplier to be applied for the purpose of capitialisation would not in any event exceeding 10 per cent
In that case the State had agreed to apply 12 12 per cent capitalised value of the lands this court upheld capitalisation of the value of land at 12 12 per cent In Admn
General of West Bengal vs Collector Varanasi  this  Court held that usually land and building there9n constitute one unit
Land is one kind of property land and building  together constitute an alto gether different kind of property
They must be valued as one unit
But where however the property comprises exten sive land and the structure standing thereon do not show that full utilization of potential of the land realised it might not be impermissible to value the property estimating separately the market value of the land with reference to the date of the preliminary notification and to add to it the value of the structures as at that time
In this method building value is estimated on the basis of the prime cost or replacement cost less depriciation
The rate of depricia tion generally arrived at by dividing the cost of con struction less the salvage valued at the end of the period of utility by the number of years of utility of the build ing
The factors that prolong the life and the utility of the building such as good maintenance necessarily influ ence and bring down the rate of depreciation
In that case larger extent of 2366 acres together with building of 25000 sq
feets comprises of 35 roomshalls and other appurtenances and 43 1 fruit bearing and 13 timber trees and 12 bamboo clumps situated in the city of Varanasi were acquired
With regard to the value of the trees this Court held that where the land is valued with reference to the potentiality for building purposes the trees on the land cannot be valued independently on the basis of its horticul tural value or with reference to the value of the yield but this principle does not come in the way of awarding the timber value after deducting costs for cutting and removing them from the lands as salvage value
555 It is thus settled law that in evaluating the market value of the acquired property namely land and the build ing or the lands with fruit bearing trees standing thereon value of both would not constitute one unit but separate units it would be open to the Land Acquisition Officer or the court either to assess the lands with all its advantages as potential value and fix the market value thereof or where there is reliable and acceptable  evidence available on record of the annual income of the fruit bearing trees the annual net income multiplied by appropriate capitalisation of 15 years would be the proper and fair method to determine the market value but not both
In the former case the trees are to be separately valued as timber and to deduct salvage expenses to cut and remove the trees from the land
In this case the award of compensation was based on both the value of the land and trees
Accordingly the determination of the compensation of the land as well as the trees is illegal
The High Court laid the law correctly
It is seen that exhibit B 1 relied on by the State was rejected by both the courts and therefore it cannot offer any reasonable basis to fix the market value of the land
It is equally seen that exhibit A 1 and A 2 relate to small extent of land together with buildings standing thereon
Therefore they too do not also form any reasonable basis Or guide to determine market value of large extent of six acres of the acquired land
The High Court rightly did not place reliance therein
But from the evidence it is clear as found by the Civil Court that the lands possessed of poten tial value as building sites as the lands are situated in the city itself
There was all round development around the lands
The lands are situated half a furlong from the Bom bay Kanyakumari National Highway
It also abutts the road to Naduvattom a busy bus route within the Corporation Cali cut
It is situated nearby the industrial area
The Western India Steel Mill the Premier Steel Mills Arts and Science College Cinema Theatre Police Station and other offices are situated in close proximity to the lands and that therefore the lands are possessed of potential value but unfortunately the appellant did not place any material of the prevailing prices as house sites
However the value of the land as fixed at Rs300000 became final
The market value of the income from the trees with 15 years multiplier was  worked out at Rs26942 155 p by the Civil Court and the High Court accepted to be the correct valuation and it was also not questioned
But it is lesser than the value of the land
Being higher in value the appellant is entitled to the value of the land as determined by the Civil Cout at Rs300000 three lakhs in total
The value of the trees as fire wood shall be determined towards compensation
We have noted the number of coconut trees etc
The learned counsel has left to this Court 556 to fix any reasonable compensation and On the totality of the facts and circumstances we are of the opinion that total sum of Rs 10000 would be reasonable compensation towards the value of the total trees as fire wood or as for use of other purposes after deducting salvage expenses
Accordingly we hold that the appellant is entitled to total cOmpensation of Rs310000
Admittedly the appellant is entitled to solatium at 15 percent and 4 per cent interest under the Kerala Land Acqui sition Act
Section 30 sub section 1 of the Land Acquisi tion Amendment Act 68 of 1984 reads thus Transitional Provisions 1 the provisions of sub section 1A of section 23 of the Principal Act as inserted by Clause a of section 15 of this Act shall apply and shall be deemed to have applied also to and in relation to a every proceeding for the acquisition of any land under the principal Act pending on the 30th day of April 1982 the date of introduction of the Land Acquisition Amend ment Bill 1982 in the House of People in which no award has been made by the Collector before that date b every proceeding for the acquisition of any land under the principal Act commenced after that date whether or not an award has been made by the Collector before the com mencement of this Act
2 The provisions of sub section 2 of section 23 and section 28 of the principal Act as amended by CI
b of section 15 and section 18 of this Act respectively shall apply and shall be deemed to have applied also to and in relation to any award made by the Collector or Court or to any order passed by the High Court or Supreme Court in appeal against any such award  under the provisions of the principal Act later the 30th day of April 1982
the date of introduction of the Land Acquisition Amend ment Bill 1932 in the House of the People and before the commencement of this Act
A reading of the provisions would reveal the legisla tive intendment that the transitional provisions could apply to every proceeding for acquisition of any land under the principal Act namely Act 1 of 1894 Central Act pending on the 30th day of April 1982 557 namely the date of introduction of the Land Acquisi tion Amendment Bill 2982 in the House of the People in which no award has been made by the Collector before
that date or the award made by the
Civil Court at the date of the Amendment Act namely September 24 1984
Thus it is clear that the Amendment Act 68 of 1984 including sub section 2 section 23 per se is inapplicable to the acquisition of the land under the Kerala Land Acquisition Act 1961
In Kanthitnathy Plantation Pvt Ltd vs State
of Kerala  Ors this Court held thatby operation of the Land Acquisition Amendment Act 68 of 1984 read with Art 254 of the Constitution the Kerala Land Acquisition Act 1961 by necessary implication stood repealed in its application to the State of Kerala and that the Land Acqui sition Act 1 of 1984 as amended by Central Act 68 of 1984 stands applicable
Therefore the proceedings  under the Kerala Act being pending proceedings would be continued from the stage at which they stood at
Shri Padmanabhan thencontends that the ratio in Union of India  Ors
vs Filip Tiago De Game of Veden Vasco De Gama 1990 1 SCC 277 would attract the facts in this case and the appellant is entitled to 30 per cent solatium under the amended Act
We are afraid we cannot accede to this contention
The admit ted facts in this case are that the award was made by the Collector on February 29 1969
On reference the Civil Court made the award on February 9 1972
In Filip Tiago s case the award was made on March 5 1969 and the Civil Court on reference under section 18 made its award on May 28 1985
In the light of those facts this Court by processual interpretation of transitional provision of section 302 avoided injustice by eschewing literal construction and advanced justice by mending the law
The ratio is clearly distin guishable
In Union of India  Anr
vs Raghubir Singh dead by Lrs
  a Constitution Bench of this Court to resolve the conflict of decisions as to the applicability of the Amendment Act to pending appeals in the High Court and in this Court held authoritatively that the award made by the Collector referred to in section 302 is an award made under section 11 of the Parent Act and the award made by the Principal Civil Court of original juris diction under section 23 of the Parent Act on reference made to it by the Collector under section 18 of the Parent Act
There can therefore be no doubt that the benefit of enhanced solatium intended by section 302 is in respect of an award made by the Collector between April 30 1982 and September 24 1984
Likewise the benefit of the enhanced solatium is extended by section 302 to the case of an award made by the Civil Court between April 30 1982 and September 24 1984 even though it be upon reference from the award made before April 30 1982
Thus it was held that the pend ency of the appeals against the 558 award made preceding the aforestated two dates in the High Court or this Court would not attract the application of section 302 and that therefore enhanced solatium under section 302 read with section 232 is inapplicable
Thereby the appellant is not entitled to enhanced solatium at 30 per cent
As regards interest is concerned it is fairly conceded that the claimant is entitled only to 4 per cent as awarded by the courts below
Accordingly we allow the appeal set aside the judgment of the High Court and hold that the appellant is entitled to Rs310000 as enhanced compensation with 15 per cent sola tium and interest at 4 per cent on enhanced market value from the date of dispossession
The appeal is accordingly allowed with costs of this Court
VPR Appeal al lowed


Summary:
The petitioner and its predecessors had licence for distillery at Ujjain to manufacture rectified spirit and the last of such licence held by the petitioner was for the period 141976 to 3131981
For the licensing period commencing from 141981 to 3131986 the petitioner was unsuccessful and the licence was granted in favour of Rajd hani Distillery Corporation
The petitioner impugned the same but failed both before the High Court as also before the Court
Thereafter the petitioner filed a writ petition in the High Court claiming restitution of the distillery but failed and an appeal against the High Court s order was preferred before this Court which has been disposed of whereby this Court has declined to grant restitution but directed that the petitioner should move an application before the State Government to have the value of the plants licence on February 191982 and reiterated his request by number of reminders including the one in November 3 1986
In the interregnum the Government policy was changed by a cabinet sub committe policy decision dated 30121984 whereby they decided to grant licence to the existing licen sees of the distilleries and that they should construct the factories at their expenses on the land allotted by the State Government or acquired and allotted by the State Government and that they shift the business to new factories and the licence would be for a period of five years
Several writ petitions including the one by the petitioner were filed in the High Court challenging the policy
The High Court quashed part of the policy decision
Against that order petitions were filed by the State and the unsuccess ful petitioners including the petitioner in this Court
Those petitions were disposed of by this Court by its judg ment in the case of State of MPv
Nandlal Jaiswal and Ors
  The court upheld the validity of the Government policy
During the course of the arguments the Attorney General of India conceded that if the petitioner makes an application for grant of licence it would be considered by the Govern 493 ment and disposed of quickly
Pursuant thereto the petition er made an application on December 25 1987
The State Government rejected the application by letter dated February 8 1988 which among other things is impugned in this peti tion under Article 32 of the Constitution
It is contended on behalf of the petitioner that the intention behind the solemn undertaking given by the State in Nandlal Jaiswal s case clearly showed that the intention was to grant the licence to the petitioner rejection is contrary to the undertaking and violating the fundamental right of the petitioner to establish and trade in the manu facture and distribution of the liquor further it is dis criminatory is as much as licences have been issued to others similarly placed
Alternatively it is contended that if it is not found feasible to grant licence for Ujjain the same be granted for Ratlam Distillery
Counsel for the State urged that it has not been found feasible to grant licence to the petitioner due to grounds stated in the order which are in confermity with the change in policy and the court should not interfere
On behalf of Rajdhani Distillery Corpn
it was urged that unless there is cut in the supply area of the operation of the existing licences and a sepa rate supply area is carved out no licence could be issued to the petitioner that new policy is in vogue for the succeeding licensing period of 1991 to 1993 and the li cences having been issued to persons who are not represent ed in this court the court should not grant the relief asked 1or in the writ petition
Dismissing the writ petition this Court