Case: Ramachandraiah Etc Vs. Land Acquisition Officer, Sagar

1. These three appeals, by certificate, are by three Khatedars, whose lands were acquired for the submersion area of the Linganmakki reservoir in Mysore State. The ares so acquired were all wet lands and measured 29 acres and 37 guntas 3.32 acres and 8.20 acres respectively. The Special Land Acquisition Officer classified these lands into rain-fed and tank-fed lands, i.e., one crop and two crop lands, and adopting the method of valuation of capitalising the annual rent paid to the appellants fixed Rs. 600 per acre for the tank-fed, i.e., perennially irrigated wet lands, and Rs. 500 per acre for the rain-fed wet lands. He arrived at these figures on a finding that the average annual rent in respect of these lands was 1 1/2 pallas of paddy per acre which meant that the gross rent was Rs. 37.50 at the rate of Rs. 25 per palla. Deducting land revenue and bad debts he found that the net annual income was Rupees 30 per acre. On a reference by the appellants under Sec. 18 ofthe Land Acquisition Act, 1894, the District Judge increased the valuation to Rs. 2500 per acre for tank-fed lands and Rs. 2000 per acre for the rain-fed lands. The District Judge also adopted the method of valuation by capitalising the income by 20 years. But what he did was to take the whole of the net income arising from the lands instead of capitalising only the rent payable to the appellants by the tenants of some of the lands.2. In appeals filed by the Acquisition Officer against the awards by the District Judge, the High Court of Mysore reduced the compensation to Rs. 1250 per acre for all the lands, irrespective of whether they were tank-fed or rain-fed lands or whether they were self-cultivated or cultivated by tenants. This, the High Court did on the footing that the income from the land was represented by the rent paid by the tenants in respect of some of the lands, that such rent on an average came to 2 1/2 pallas of paddy and that at the rate of Rs. 25 per palla, by capitalising the rent by 20 years, the compensation would come to Rs. 1250 an acre. The High Court, in addition, awarded interest at 6% per annum on the amount of compensation awarded by it. In modifying the District Judges award and reducing the rate of compensation to Rs. 1250 an acre, the High Court rejected the measure adopted by the District Judge, viz., "that the geni (rent) plus the quantity which the tenant would retain for himself would be the net average income of the land". According to the High Court, the District Judge overlooked the fact the tenant who got some income by cultivating the land did so because he and the members of his family had to expend labour thereon, and that therefore, both the expenses of cultivation as also the value of such labour expended by the tenant ought to be taken into consideration. The High Court heldassessing compensation for lands acquired, on the basis of capitalisation of annual income the usual method adopted is to capitalise the annual rent on the basis of certain number of yearsHigh Court also rejected the argument that the land measuring 7 acres 10 guntas, which is the subject-matter of Civil Appeal No. 1354 of 1967 and part of the lands which are the subject-matter of C. A. No. 1353 of 1967 were not cultivated by any tenant and were in fact under the Khatedars personal cultivation and that therefore compensation in regard to them could not be fixed by capitalising the annual rent only. The High Court held that if the measure of capitalised annual rent "is good in respect of the lands leased, it is equally good in respect of the lands personally cultivated by the claimants". On this basis, the High Court allowed the Land Acquisition Officers appeals, reduced the compensation to Rs. 1250 per acre in respect of all the lands, irrespective of whether they were under tenants cultivation or under the personal cultivation of the claimants.

Court's reasoning:
It may be that resort may be had to fair rent as a true measure of income derived from a particular land by its proprietor for fixing the compensation by multiplying it by 20 years as has been done here by the High Court where no other method of valuation is possible. But where the acquired land has been under the personal cultivation of a claimant, the annual rent obtained by him from a tenant from another land may not be the correct or real income obtainable by the claimant. The rent of the land under a tenants cultivation may have been agreed upon several years ago or may not otherwise be the fair rent by reason of several factors. Quite apart from that, the two lands may not be equal in quality, situation and productivity and therefore the rent obtained for one cannot be the same for the other. Obviously, therefore, the annual rent obtained by a claimant from his tenant for one acquired piece of land cannot be applied as a measure for another piece of land which is personally cultivated by the claimant. The net return to the claimant from each of the two lands is bound to differ. Ordinarily, rent payable by a tenant would be fixed after calculating approximately the gross income less the tenants costs of cultivation, cost of labour expended by him and a certain amount of return for all the labour thrown in by him. In the case of land personally cultivated by a claimant, on the other hand, the income derived by such a claimant is arrived at by taking the gross income and deducting therefrom his expenses of cultivation, other expenses and outgoings. The net income thus arrived at is usually multiplied by 20 years purchase and the amount so calculated would be considered as equivalent to market value. In our view, the High Court was in error in equating the lands cultivated by the tenants and those under the personal cultivation of the claimants and applying to both a uniform measure, viz., the annual rent obtained from the former for fixing compensation. The two kinds of lands ought to have been separately treated and even if the rent in the case of tenant-occupied land was taken as a measure for such land, that could not properly be the measure for arriving at the market value of the land under the claimants personalresult of these provisions would appear to be that though the tenants of the lands in these appeals were inducted thereon originally as annual tenants, they got a fixed and secured tenure for additional periods and as deemed tenants they ceased to be persons entitled to possession only for one year as provided by their original leases. The point, therefore, is whether they acquired as a result of these provisions any share in the compensation.6. In view of these provisions the Special Land Acquisition Officer and the District Judge ought to have ascertained (which neither of them did) whether the tenants had any interest in the land and whether they were entitled to any share in the compensation payable in respect of lands under their cultivation. In the absence of the tenants before us, we find it difficult to go into these questions. Nonetheless, we do feel that in fairness to the tenants (if they are still on the land) their interests ought to have been ascertained and if they are entitled in law to any share, compensation according to the market value of the land should be ascertained afresh and their share, if allowable to them, should be allowed to them. If this were to be done, the annual income of the lands in question will have to be ascertained afresh from the evidence on record or otherwise and the net total income after deducting the costs of cultivation and other outgoings ascertained in order to arrive at the correct market value. If the position of the tenants as a result of the operation of the Tenancy Act has changed so as to make them entitled to a part of the compensation, that also will require to be ascertained. This is, of course, subject to the bar of limitation under S. 18 of the Act, for, it would prima facie appear that the tenants by appearing as witnesses for the claimants knew of the acquisition and the award and yet had made no application to be made parties to the reference before the District Judge. Even if it is found that the tenants are not entitled to any share in the compensation, the lands under tenants cultivation and those personally cultivated by the claimants cannot be valued on the same footing or the grounds set out earlier. A fresh calculation of compensation in any event of lands under the claimants cultivation is called for on the principles set out herein above.