Case: The State of Maharashtra Vs. The Walchandnagar Industries Limited

2. The Government of Maharashtra had published a notification under Section 4 of the Land Acquisition 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 thea) 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.Land Value Rs. 15,329.00(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) Solatiumcompany 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 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 claimantcompany has its factory at Walchandnagar and initially it was engaged in manufacturing of sugar, with a crushing capacity of about 1750 metric tons ofper 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 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 claimantcompany 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 claimantcompany 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. The claimantcompany, 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 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 claimantcompany, 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 severanceThe 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 eightpaise thirty one only). The claimantcompany was not satisfied with the said award and, therefore, submitted an application under Section 18 of the Act on 12/1/1982 to the 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 asLand in Acquisition in Kumbhargaon Village1. Lands acquired 20 H. 74 Rs. Rs. 50,325.002. Embankment Rs. 63,850.003. C.D. Works Rs. 68,200.004. Trees Rs.Rs.1,82,735.005. Solatium @ 15%) Severance1. Lands 60.38 Hectares Rs. 6,03,800.002. Dimunition in value for lands in Walchandnagar Township Rs. 8,64,000.003. Embankment, C.D. Works) Injurious Affection1. Rails Sleepers etc. Rs.48,45,000.002. Telephone Line Rs. 16,000.003. Rolling stocks Rs.22,17,600.004. Increase in transportation costs Rs.80,07,180.005. Remoddelling of Bhigwan Yard Rs. 4,72,100.006. Loss of earnings (profits) Rs.35,62,000.007. Retrechment compensation Rs.. The impugned award is in two parts. The first part of the award deals with the companys 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 submerged in the backwater. In the first part of the award, the Reference Court has allowed the claim asSeverance (Rs.)1. Diminution in value of land in Walchandnagar Township Nil2. Land (60 H. 38 R) 1,50,950.003. (a) Embankments 16,83,758.00(b) C.D. Works 2,27,597.00(c) Wells 21,000.00(d) StructuresBuildings 83,664.004. Trees Nil(B) Injurious Affection1. Retrenchment Compensation 10,000.002. Increase in Transportation Cost 8,00,718.003. Loss of Earning (Profits) Nil4. Telephone Line Nil5. Rails and Sleepers 31,21,816.006. Rolling Stock 17,79,884.007. Remodelling of Bhigwan Yard 1,30,338.00The total compensation granted by the Reference Court is Rs.80,09,725/and it rejected the claim of the remaining amount i.e.the second part of the award in respect of the trolley line running across 7 kms., the Reference Court has granted compensation asCompensation 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 Nil7. Thehas filed its appeal beingwith the award passed by the Reference Court

Court's reasoning:
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/, we agree that the companys 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.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. Jirayat superiorper hectare, Jirayat inferiorper hectare and Pot Kharaba landAs 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.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 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.Thus, as has been pointed out by the learned AGP, the total cost for laying of this alternative trolley line (11 km) could have been Rs.25 lakhs plus (3 lakhs x 11) i.e. Rs.25 lakhs + 33 lakhs. If the alternative trolley line was 18 km. in length instead of 11 km., the cost for laying of the said 18 km. distance of the trolley line would be Rs.25 lakhs + 54 lakhs, thus making a total of Rs.79 lakhs. The witness further admitted that thedid not think it profitable to invest so much for the alternative line and he claimed that the letter at Exh.105 dated 17/8/1973 was sent to the Government under hisregards to the evidence of thewe have no doubt that the company by its own choice dropped a viable proposal of laying down the alternate trolley line of about 18 km. In place of 6 km. trolley line running through the land submerged in the backwater and so as to make the entire trolley line operational and the company allowed 30 km. trolley line to become redundant by its own actions. It tried to shift the blame on the State Government under the pretext that there was no response to invoke the urgency clause so as to acquire the land. This was only an allegation which did not find any support and theof the companys witness clearly proved that it was a blatant lie before the court. Providing the alternate line of 18 km. in place of 6 km. Trolley line could have restored the transportation of the companys goods by the trolley line rather than resorting to the road transportation. The Reference Court ought to have considered this deliberate inaction on the part of therather than entertaining an application for the claim of severance and injuriousthe company claiming compensation at the rate of Rs.8250/per hectare for 60 H. and 38 R., Shri Talim himself admitted that the prevailing rate at the relevant time was Rs.6250/per hectare, but the land remained with the company and in any case it was not the land which was submerged in the backwater. Shri DhongadeDW 4 admitted that it being a narrow strip of land running across 30 km. distance, its agricultural use was not feasible. He also admitted that for digging and removal of the compact soil and to fill in the land with loose soil, to make it suitable for agricultural, an amount of Rs.2000/er hectare would be required to be spent. The Reference Court has accepted this opinion of the State Governments expert but without recording a finding, whether the land could be used for agricultural or for any other purpose, when the said expert witness had stated that its agricultural use would not be feasible. However, if the compact soil was removed and loose soil was filled in, there would be a possibility of the company using the land for horticulture like plantation of mango trees or guava trees or even tamarind trees and, therefore, the decision of the Reference Court to grant compensation at the rate of Rs.2500/per hectare should be maintained. The compensation amount would come to 60.38 x 2500 i.e. Rs.1,50,950/for restoration of the land to use. The demand made by the Company for higher compensation for the land has been rightly turned down by the Reference Court and we are not impressed by the companys case before us for enhancement of the compensation for the land, more so when the land remained with the company.16. The Reference Court has considered the claim of the Company for embankment and CD works and the same has been allowed partly. As per the Company the embankment and CD works covering 28 to 30 kms. trolley line had become useless and, therefore, the company was injuriously affected as the embankment as well as CD works remained of no use to the company. The company, therefore, asked for Rs.23,96,250/for embankment and Rs.5,07,128/for CD works. This was opposed by the learned Government Pleader on the ground that the embankment or the CD works were not a property generating income and they were justfar as CD works is concerned, DW 2Mahajan admitted that there were in all 83 CD works and the total cost worked out at Rs.Mr. Mahajan stated that the depreciated value would come to Rs.No reason has been given by the Reference Court in rejecting the valuation of Rs.If for the embankment the valuation made by the State Governments expert witness was accepted, there is no reason in discarding the testimony of the said witness in respect of the valuation of the CD works and this was done by theformula and not on the basis of Y.P. formula. It would be, therefore, appropriate that 25% depreciation amount is reduced from Rs.1,63,512/for grating compensation for CD works and if so done, the amount would come to Rs.We accordingly modify the impugned award to that extent in respect of the compensation granted for CD works i.e. Rs.1,22,634/So far as the compensation granted for wells and structures and buildings is concerned, the amount awarded by the Reference Court is based on the evidence of DW 2Mahajan and no interference is called for in the said amount. The Reference Court has rightly turned down the claim for compensation in respect of the trees. The company had claimedbut there was noour opinion there is no justification to grant any token amount by way of compensation, more so when the company did not place on record any evidence to suggest that either the employees, on absorption, were required to be retrained for which the company incurred an additional cost or by way of redeployment of these 52 employees formerly engaged on the trolley line, the company was required to spend an additional amount of Rs.10,000/over and above their salary and other benefits as were payable to them in normal course. We, therefore, set aside the compensation of Rs. 10,000/granted by the Reference Court to thein lieu of retrenchment compensation or as a token amount.As per theit was entitled for Rs.43,048/towards the compensation for telephone lines and Rs.2,28,510/towards the buildings and wells. In support of the claim for telephone lines, the company had examined Shri Ramchandra Sawant (PW 11) at Exh.81. He was working as JuniorOfficer under the Central Government. In hishe admitted that when he was examined before the Reference Court on 30/9/1987 he did not have the rates prevailing for the yearHe also admitted that the rates are revised intermittently and during his service of 12 years, the rates were revised on 7 to 8 occasions. He also admitted that the estimate given by him for the yearwas on the basis of the rates prevailing in the year 1983. He also admitted that the life of the telephone line is about 20 years and the telephone line was installed for the first time in 1946. Thus in 1976 it had completed 30 years and in terms of value it had become obsolete. The Reference Court rightly turned down the demand for compensation for telephone lines.So far as the compensation for buildings is concerned, there was no dispute that there were six buildings along the trolley line. These buildings were constructed for residential purpose of the staff members who were working on the trolley line at different locations, namely, Kumbhargaon, Vadwali and Kalas Camp. There was two chawls in each place. The company claimed that on discontinuation of the trolley line, the buildings had become redundant and useless. The Government opposed this claim on the grounds that the buildings were never acquired and nothing was brought on record by the company to show that in its book the buildings had any value. In short, the Government claimed that there was no severance and, therefore, there could be no compensation granted, in as much as the buildings could be utilised by thehe report of ShriTalim, the cost of laying the rail line in the year 1976 would be Rs.2,41,053 per km. and the same was based on the estimate submitted by some of the companies like Hindustan Steels Ltd. The company claimed that by allowing 15% depreciation on the estimated cost ofthe total trolley line of 35 kms. would cost Rs.It was admitted that the rails and sleepers and other materials of the 28 kms. length from the unacquired trolley line area was sold at Rs.19,00,000/and at the same rate the company would fetch for the balance of 7 kms. submerged area of trolley line Rs.The labour cost for removal and transport of the rails and sleepers had come to Rs.The company, therefore, claimed the total of Rs.50,08,288/for rails and sleepers.he report of ShriMahajan, estimated cost for the sleepers and rails was Rs.83,643/per km. And depreciated cost came to Rs.52,193/per km. The learned Judge of the Reference Court discarded the evidence of Shri Mahajan though he accepted theformula adopted by Shri Mahajan. The Reference Court accepted the estimated cost of Rs.2,41,053/per km. for the sleepers and rails and fixed the depreciation at 35% and thus the depreciated cost was arrived at Rs.1,56,650/per km. From the said amount, an amount of Rs.23,89,131/was deducted and the balance depreciated cost was fixed at Rs.The Reference Court was pleased to grant the said amount of Rs.31,21,816/by way ofotherwise the company did not suffer any loss after the trolley line was discontinued in 1976, as was evident from theplaced on record upto the year 1978. The increase in transport cost i.e. road transportation by trucks was offset by increasing the manufacturing cost which is so obvious from the fact that the company did not incur any losses after it resorted to road transportation. The company could not have prayed for injurious affection on account of discontinuation of the trolley line and claimed compensation for rails and sleepers spread over 28 kms. of the trolley line. We do not find any justification that the company should be allowed to go with this compensation amount and have the double benefit. It would be a premium for its inaction for laying the alternative trolley line. However, for the area of 7 kms. which was submerged in the backwater, the company is required to be compensated. The depreciated cost as fixed by the Reference Court is Rs.1,56,650/per km. for the rails and sleepers. The rails and sleepers and other materials covering the length of 7 kms. would fetch Rs.4,87,608/as per the companys own case and this amount will have to be deducted from the estimated depreciated cost, which comes to Rs.1,56,650 x 7 =By deducting Rs.4,87,608/from the said amount ofthe balance amount payable to the company would be Rs.Hence the compensation amount of Rs.31,21,860/granted by the Reference Court is hereby set aside and instead we grant Rs.6,08,942/ny byon towards rails andper the companya new mobile crane was required to be purchased to handle the loading and unloading operations at the Bhigwan Railway yard and alterations and modifications were also required to be made to the godown, platform as well as the existing diesel and oil tanks. This claim was opposed by the State Government and it was contended that so far as purchase of new mobile crane was concerned, it was so done by the company for its convenience and not as a necessity. It was pointed out on the basis of the admissions made by PW 4 Shri Pujari that prior to the purchase of the new mobile crane, the company used to send its existing crane from Walchandnagar to Bhigwan on 3 to 4 days in a week as per its requirement and it was only on account of the increase in load and to meet the convenience of the company, the new mobile crane was purchased. It was further pointed out that there was no additional expenditure required to be made for godown, platform and the diesel as well as oilthese submissions are impressive, the fact remains that on a total sum of Rs.2,62,297/the depreciation being calculated from 30% to 50% would make a difference of only few thousands. The fact remains that the expenditure was made by theonly after the trolley line had become obsolete and, therefore, in our considered opinion no interference is called for in the amount awarded by the Reference Court for remodelling of the railway yard atnoted earlier, the notification under Section 4 of the Act was published on 26/10/1972 and the declaration under Section 6 of the Act was published on 1/8/1974. The first award was passed by the Land Acquisition Officer on 13/3/1976 but except granting some amount towards reimbursement of labour charges, the Land Acquisition Officer could not grant any compensation either for the area of the trolley line submerged in the backwater or trolley line area not acquired. It was only on 9/12/1981 the SLAO passed the second award and granted compensation in respect of the land covering about 6 to 7 kms. Of the trolley line and submerged in the backwater of Ujani Dam. The claim for severance and injurious affection was rejected. The said award proceeds on the basis that the company lost its possession over the land in March, 1976.As per thescheme of Section 23(1A) of the Act, it is clear that in theinstant case the benefit of additional component is not available to thethe instant case, the award concerning the claim of the company has been passed on 9/12/1981 by the Land Acquisition Officer and the claim under Section 18 of the Act for enhancement was submitted before the Land Acquisition Officer on 12/1/1982. The impugned award has been passed by the Reference Court onReference Court has awarded solatium on the second part only 15% and the larned AGP fairly conceded that in view of the settled position in law, the company must receive the amount of solatium at 30% on the compensation awarded inas well as In Partof the award passed by the Reference Court. To this extent the appeal filed by the company succeedsthe instant case, admittedly as on 30/4/1982 the application under Section 18 was pending before the Reference Court and the award has been passed on 14/3/1990, thewill be entitled for interest at the enhanced rate as per the Amendment of 1984 in the Act. This is one more area in which the appeal filed by the company succeeds partly.