1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE First Appeal No.653 of 1991 The State of Maharashtra Appellant Vs. The Walchandnagar Industries Ltd. Respondent With First Appeal No.709 of 1991 The Walchandnagar Industries Ltd. Appellant Vs. State of Maharashtra Respondent Mrs.G.P.Mulekar, AGP for State. Mr.S.U.Kamdar i/b.Mrs.S.V.Sonawane for claimant - company. CORAM: B.H.MARLAPALLE & D.B.BHOSALE,JJ. Reserved on : August 28, 2008. Pronounced on : November 19, 2008. JUDGMENT (PER B.H.MARLAPALLE,J.) : 1. These First Appeals are directed against the award dated 14/3/1990 passed by the learned Extra Joint District Judge, Pune in Land Reference No.6 of 1982. 2. The Government of Maharashtra had published a notification under Section 4 of the Land Acquisition 2 Act, 1894 ("the Act" for short) on 26/10/1972 for acquisition of the lands located in village Kumbhargaon, Taluka Indapur, Dist. Pune as they were falling under the submergence of the Ujani Dam Water. The Land Acquisition Officer passed his first award on 13/3/1976 and he did not grant any compensation to the company except an amount of Rs.53,668/- towards the labour charges for the removal of material. The SLAO passed his second award on 9/12/1981 and granted compensation to the claimant-company as under:- (a) Jirayat superior land admeasuring 4 H. 87 R. at the rate of Rs.3000/- per hectare Rs. 14,610.00 (b) Jirayat inferior land admeasuring 27 R. at the rate of Rs.1500/- per hectare Rs. 405.00 (c) Pot Kharaba land admeasuring 1 H. at the rate of Rs.200/- per hectare. Rs. 314.00 ------------- Total Land Value Rs. 15,329.00 3 (d) Value of wells Nil (e) Value of structures Nil (f) Embankment 39,032.94 (g) CD works 43,491.12 (h) Labour charges for removing rails and steel sleepers 12,754.17 (i) Solatium 16,591.08 -------------- 1,27,198.31 ============== The company in its claim dated 25/10/1976 had claimed a total amount of Rs.1,31,039/- in respect of the length of the trolley line submerged in the backwater i.e. 6 to 7 kms. The company had made an additional claim of Rs.1,49,85,251/- by way of severance and injurious affection for the trolley line becoming obsolete and running through the unacquired portion of about 28 kms. and the same was rejected on the ground that the figures mentioned in the claim were arbitrary and no separate compensation for severance and damages was awarded in land acquisition cases of Takrarwadi and Diksal through which the trolley line was passing. The Land 4 Acquisition Officer also noted that the company had already started transportation by road even prior to the relevant dated i.e. 27/9/1972 as transportation by trolley line was not found to be economical. 3. The claimant - company has its factory at Walchandnagar and initially it was engaged in manufacturing of sugar, with a crushing capacity of about 1750 metric tons of sugar-cane per day. It has established a well developed self contained township around the factory area, not only for its industrial workforce and officers but also for the residence of its employees. At the relevant time it was employing about 4500 workmen. Subsequently the factory started manufacturing industrial machinery for the sugar factories and was supplying the same to various locations in India as well as abroad. It also started manufacturing and supplying cement machinery for setting up cement plants. It also started manufacturing other engineering goods and products and was a supplier for defence and other Government establishments. It also established its own distillery at Walchandnagar and a separate division of manufacturing of plastic articles and goods. The 5 Walchandnagar township has been provided with all the necessary facilities, amenities and utility services like roads, water supply, drainage, electricity, educational institutions and so on and so forth. At the relevant time there were about 200 teachers in the schools run by the claimant - company in Walchandnagar area and there were about 5000 students in all these schools. This township also has well equipped hospital, sports facility and playground for tennis and cricket etc. The township also has post and telegraph office, banks and bus stand of MSRTC along with well laid down and organised bazarpeth. The population of the township at the relevant time was about 20,000. Its surplus land was taken over by the Government of Maharashtra and handed over to the Maharashtra State Farming Corporation Ltd. For the purpose of its trading and manufacturing activities, the claimant - company was required to depend upon the Indian Railways for transport of machinery, goods, raw materials and other manufacturing goods including exports of sugar bags and machinery from Walchandnagar. The nearest railway station on the Central Railway was at a distance of 30 Kms. from Walchandnagar and there was no direct railway connection from the said station to Walchandnagar. 6 The claimant - company, therefore, laid down a trolley line, by acquiring lands from farmers, so as to connect Walchandnagar to Bhigwan railway station. It had to construct a number of culverts, embankments and bridges as well as necessary structures for this trolley line which was about 36 Kms. in addition to 14 Kms. within the township. The company had also constructed a yard with a big siding at Bhigwan railway station and constructed various buildings along the trolley line, for the trolley line staff. The rolling stock for the trolley line consisting of engines, wagons, carriages, tankers etc. were also purchased by the company and it was running diesel locomotive on the said line. 4. On account of construction of the Ujani Dam on the Bhima river near Indapur a large lake was formed behind the dam spreading the dam waters and, therefore, about 7 Kms. of the trolley line came under the water submerged area of the said land and passing through the villages such as Tarkar Wadi, Bhigwan, Diksail, Dhalj, Kumbhargaon. In the award passed on 13th March 1976 the compensation for the lands covering 6 Kms. trolley line was not granted but in the subsequent award dated 9/12/1981 the 7 Special Land Acquisition Officer awarded the compensation in respect of Survey Nos.296 and 325. However, no compensation was paid for the remaining 28 Kms. of the trolley line on account of damages for severance, injurious affection and diminution etc. The claimant - company, therefore, submitted its claim statement on 25/10/1976 and claimed compensation for damages and injurious affection of the trolley line. The details of the compensation claimed were as under: . Claim for severance Rs.1,13,947/-, 15% solatium - Rs.17,092/- and claim for damages and injurious affection for the trolley line becoming obsolete - Rs.1,49,85,251/-. Thus the total claim preferred was Rs.1,51,16,290/-. 5. The Land Acquisition Officer passed his award on 9/12/1981 and awarded compensation of Rs.1,27,198.31 (Rupees one lakh twenty seven thousand one hundred ninety eight & paise thirty one only). The claimant - company was not satisfied with the said award and, therefore, submitted an application under Section 18 of the Act on 12/1/1982 to the 8 Special Land Acquisition Officer claiming compensation of Rs.1,51,16,290/- (One crore fifty one lakhs sixteen thousand two hundred ninety only) with a prayer to refer the same to the Court for enhancement of compensation. In the application filed on 12/1/1982 before the SLAO, the Company claimed a total compensation of Rs.2,22,09,845/- and also for interest at the rate of 4% per annum under Section 34 of the Act from the date of possession till the date of payment of compensation. In Exhibit "A" to the said application, the summary of claim for compensation was set out under three different heads, namely, (A) Compensation for the land, (B) Compensation for Severance and (C) Compensation towards Injurious Affection. More particularly, the claim made under these three heads was as under:- (A) Land in Acquisition in Kumbhargaon Village 1. Lands acquired 20 H. 74 Rs. Rs. 50,325.00 2. Embankment Rs. 63,850.00 3. C.D. Works Rs. 68,200.00 4. Trees Rs. 360.00 --------------- Total Rs.1,82,735.00 5. Solatium @ 15% 27,410.00 --------------- Total Rs.2,10,145.00 --------------- 9 (B) Severance 1. Lands 60.38 Hectares Rs. 6,03,800.00 2. Dimunition in value for lands in Walchandnagar Township Rs. 8,64,000.00 3. Embankment, C.D. Works & Buildings Rs.18,85,200.00 4. Trees 27,000.00 --------------- Total Rs.33,80,000.00 --------------- (C) Injurious Affection 1. Rails Sleepers etc. Rs.48,45,000.00 2. Telephone Line Rs. 16,000.00 3. Rolling stocks Rs.22,17,600.00 4. Increase in transportation costs Rs.80,07,180.00 5. Remoddelling of Bhigwan Yard Rs. 4,72,100.00 6. Loss of earnings (profits) Rs.35,62,000.00 7. Retrechment compensation Rs. 1,00,000.00 ----------------- Total Rs.1,92,19,880.00 ----------------- 6. The impugned award is in two parts. The first part of the award deals with the company’s claim under Clauses thirdly and fourthly of Section 23(1) of the Act on account of severance and injurious affection in respect of the trolley line running across 28 kms. in the unacquired portion of the land admeasuring 60.38 H. (width of the trolley line was any where between 60 ft. to 100 ft.), whereas the second part of the award is in respect of the trolley line spread over about 7 kms. and in the area 10 submerged in the backwater. In the first part of the award, the Reference Court has allowed the claim as under:- (A) Severance (Rs.) 1. Diminution in value of land in Walchandnagar Township Nil 2. Land (60 H. 38 R) 1,50,950.00 3. (a) Embankments 16,83,758.00 (b) C.D. Works 2,27,597.00 (c) Wells 21,000.00 (d) Structures & Buildings 83,664.00 4. Trees Nil (B) Injurious Affection 1. Retrenchment Compensation 10,000.00 2. Increase in Transportation Cost 8,00,718.00 3. Loss of Earning (Profits) Nil 4. Telephone Line Nil 5. Rails and Sleepers 31,21,816.00 6. Rolling Stock 17,79,884.00 7. Remodelling of Bhigwan Yard 1,30,338.00 The total compensation granted by the Reference Court is Rs.80,09,725/- and it rejected the claim of the remaining amount i.e. 1,41,20,974/-. . In the second part of the award in respect of the trolley line running across 7 kms., the Reference Court has granted compensation as under:- 11 (a) Compensation for land admeasuring 6 H. 71 R. at uniform rate of Rs.4000 per H. 26,840.00 (b) Embankment 62,661.25 (c) CD works 56,250.00 (d) Trees Nil 7. The claimant-company has filed its appeal being dis-satisfied with the award passed by the Reference Court and it contends that the entire amount claimed i.e. Rs.2,19,99,880/- ought to have been granted by the Reference Court and there was no justification in denying the balance amount of Rs.1,41,20,974/-. 8. The State Government filed its Written Statement at Exh.17 before the reference court and opposed the claim. It was contended that only 6 Kms. of the trolley line was running over the land submerged in the backwater and the SLAO had already granted compensation for the same. So far as the 12 remaining 30 Kms. of trolley line was concerned, it was submitted that the Company did not adduce satisfactory evidence before the SLAO and, therefore, the said claim was rejected. It was claimed that the compensation demanded was an imaginary and fantastic amount and there was absolutely no possibility of any damage being caused to 30 Kms. stretch of the trolley line. There was no difficulty in using the unacquired portion of the trolley line for transportation and for the remaining stretch of 6 Kms., it was possible for the Company to build an alternative trolley line. It was in the year 1974 the claimant-company informed the State Government regarding the prohibitive costs of building the additional stretch of trolley line and, therefore, it had decided to drop the acquisition for diversion of the trolley line. The company resorted to transport by road sometimes in September, 1972 as it was very economical and safe mode of transportation, as per the State Government. It was also alleged that the use of trolley line for transportation was for a seasonal period, limited to about 4 to 6 months a year and for the remaining period transportation was by road. It was denied that transportation by road was costlier than the Rail transportation. It was 13 also pointed out that the trolley line was built in the year 1946 between Walchandnagar Township and Bhigwan Railway Station admeasuring about 36 Kms. 9. The Company examined 18 witnesses and the State Government examined 5 witnesses. The whole claim of the Company was based on the sole ground that the trolley line could not be used as 6 Kms. of its stretch had submerged in the backwater of Ujjani Dam and, therefore, it was required to abandon the trolley line in its entirety and resort to road transportation. As per the company the costs of transportation of goods by the trolley line was 20 paise per tone per km., whereas by the road transport (by trucks) the transportation cost came to 80 paise per tone per km. and thus resulting into an increase of 60 paise per tone per km. It further claimed that the trolley line was transporting about 35000 MT of goods per year and the same would increase year by year in future. The Company claimed that the increase in transportation cost would come to Rs.8,07,718/- per year. 9A. When both the parties had examined several witnesses, as noted hereinabove, it was possible to 14 calculate the difference, if any, between the transportation cost by trolley line and the transportation cost by road and fix the compensation amount to be given to the Company. Unfortunately, none of the parties put up their case in the said manner before the Reference Court and in fact in our considered opinion which also has been supported by the learned counsel for the respective parties that it could have been just and proper to consider only the additional component of transportation cost, if any, and award compensation to the Company so as to meet its claim in its entirety, rather than considering the claim under various heads like severance and injurious affection etc. For the first time the learned AGP tried to convince us that the company’s claim was required to be considered only for the additional transportation cost and she urged before us to consider the evidence adduced by the parties only to calculate the additional cost, if any, that was required to be incurred by the claimant-company and substitute the award only by granting compensation for additional cost of transportation. We are afraid, this cannot be done by the Appellate Court when the parties did not put up such a case before the Reference Court and indeed 15 the additional cost of transportation was one of the components considered under the head of Injurious Affection by the Reference Court. Though, we agree that the company’s case for severance and injurious affection was not required to be considered if the claim was considered by the Reference Court only for the additional cost of transportation, because the entire stretch of 30 Kms., including the land remained with the Company and so was the case with the buildings and structures along with the said stretch of the trolley line. Even the locomotives, trolleys, wagons, rails, girders and so on and so forth could have been sold by the Company and it could not be permissible to claim compensation on the ground of non use of trolley line if the award was limited only to find out the compensation payable for the additional transportation cost. Be that as it may, we will proceed to consider the challenge to the award by both the parties on merits and as per the compensation claimed and granted under different heads, in the impugned award. 10. Section 23 (1) of the Act states that in determining compensation to be awarded for the land acquired, the court shall take into consideration- 16 first, ....... secondly....... thirdly, the damage (if any), sustained by the person interested, at the time of the Collector’s taking possession of the land, by reason of severing such land from his other land; 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; fifthly, ....... sixthly, ....... . The Reference Court, therefore, considered the 17 case of the Company under sub-clause thirdly and fourthly of Section 23 (1) of the Act. The Reference Court reproduced the following observations of the Supreme Court in the case of Balammal and ors. vs. State of Madras and ors. [AIR 1968 SC 1425] [AIR 1968 SC 1425] [AIR 1968 SC 1425], "Where there is nothing to prove that the owners had sustained any loss by reason of the severance of the land from their other lands, nor is there any evidence to prove that by reason of the acquisition the remaining lands were injuriously affected or the earnings of the owners were affected, nor is there any evidence to show that there was any damage resulting from diminution of the profits of the land between the time of the publication of the declaration and the time of taking possession of the land, the owners cannot claim compensation in respect of the damages due to the severance of their lands." 10A. So far as the compensation in the second part of the award is concerned, the Land Acquisition Officer had fixed the market value of the land at different rates for different kind of lands i.e. 18 Jirayat superior - Rs.3000/- per hectare, Jirayat inferior - Rs.1500/- per hectare and Pot Kharaba land - Rs.200/- per hectare. . The Reference Court did not agree with this valuation and it noted that when the entire land was submerged under the backwater, there was no justification in making classification of the entire land admeasuring 6 H. 71 R. in different categories. The Reference Court considered the evidence of Shri Talim (PW 15) and Shri Gham (DW 1). Both of them had agreed and based on the earlier award passed in LAR No. 169 of 1977 that the market value could be uniformally fixed at Rs.6250/- per hectare. By giving due allowance to the compact land and its restricted demand, the Reference Court fixed the market rate of the land at Rs.4000/- per hectare uniformally and the learned counsel for the claimant-company had consented for the same. Thus the total compensation amount came to Rs.26,840/- for the land. Out of the total land of 6 H. 71 R., land admeasuring 3 H. 13 R. was owned by the Maharashtra State Farming Corporation and, therefore, an amount of Rs.12,520/- was directed to be paid to the said Corporation. The remaining amount of Rs.14,320/- in 19 respect of 3 H. and 58 R. of land was directed to pay to the company. As regards the embankment for the acquired portion of village Kumbhargaon, there was no dispute that the quantity was 13502 cubic mtrs. The Reference Court accepted the valuation of Shri Talim (PW 15) of the total quantity of embankment at Rs.70,000/- but it did not agree with the depreciation rate of 9.1% fixed by the said witness. On the other hand, DW 1 had calculated the depreciation at the rate of 44%. The Reference Court rejected both and fixed the depreciation at 25% from the estimated cost of the claim i.e. Rs.70,000/- and thus fixed the net value for compensation at Rs.52,661.25 paise. Similarly, for the CD works the value estimated by PW 15 was Rs.75000/- and he had allowed depreciation at 9.1%. The witness of the State i.e. DW 1 Shri Gham had estimated the CD work cost at Rs.65,744/- and allowed depreciation at 33.85%. The Reference Court accepted the estimated cost at Rs.75000/- and fixed the depreciation rate at 25% and calculated the net compensation payable at Rs.56,250/-. We are satisfied that no interference is called for in the second part of the award in respect of the trolley line area submerged in the backwater and running across about 7 kms. The 20 Reference Court rightly rejected the additional payment under Section 23(1A) as the award was passed on 9/12/1981 and the possession of the land was lost in the year 1976. However, the Reference Court awarded the increased solatium under Section 23 (2) of the Act but denied the benefit under Sections 28 and 34 of the Act. We shall deal with this issue of benefits under Sections 28 and 34 of the Act while dealing with the first part of the award. 11. At the out set, while considering the main issue as to whether the impugned award in the first part calls for interference in favour of either of the parties or both of them, we must note that the evidence on record clearly demonstrated the steps taken by the State Government to bring to the notice of the Company way back in the year 1967 that it would be advisable for it to lay an alternative trolley line in place of the stretch of 6 kms. running through the submerged area in the backwater of Ujani Dam. The State Government in its Written Statement also emphasised this issue and pointed out that the Company did not take due steps to lay an alternative trolley line so that the entire stretch of the trolley line from the Company premises to 21 Bhigwan Railway Station could be continued as in the past and thereby without affecting the transportation cost on the goods movement. The Company on its part claimed before the Reference Court that laying of an alternative line was impossible as the length of the trolley line would have increased and acquiring of the land stretched over a distance of about 11 or 18 kms. on the alternative line was impossible. PW 9 Shri D.M. Kothadiya had stated while in the witness box that the company had a plan of having an alternative trolley line after the acquisition of the part of the old trolley line and in that connection he had talks with the Collector, Pune as well as the Secretary in the Revenue Department, Government of Maharashtra. He also claimed to have held discussions with the Agriculturists through whose lands the proposed line would pass and such discussions had taken place between 1972 to 1974. He further stated that the Government was willing to acquire the land for the Company for the new line but was not inclined to apply for urgency clause for acquisition and none of the agriculturist had shown willingness to sell the land by consent. He, therefore, stated that under such circumstances it would have taken 5 to 6 years for completing the 22 acquisition of the land and the equal time span for completing the diverted trolley line. In his cross-examination by the learned DGP, it clearly came out that the witness was not disclosing the facts before the court. He admitted in his cross-examination as under:- ". A plan was prepared for the diverted route of the trolley line. There was no written correspondence made with the agriculturist. It was not found necessary to do so. I cannot tell when for the first time we requested Government to apply urgency clause but it was some time after 1972. I know that some meetings had taken place of the officials of the company with Pune Divisional Commissioner in respect of the proposed diverted route and I was not with those officials. I do not know if there was any resolution passed by the company for proposing a diverted route. . For every outgoing letter an outward number is given. There is no outward number given to letter at Sr.No.2 with list Exh. 48. 23 I cannot say if this letter was sent by post or per messenger. The copy is not signed by Shri S.G. Shah, my superior. I do not know if there are any postal acknowledgement about reaching of these two letters. I do not remember if from 1967 there was proposal to divert the trolley line. I cannot say if Executive Engineer had sent letter to our company in 1967. I cannot tell if any letter was really sent by our company to Mantralaya for applying urgency clause. I again say that letters were sent.....