2010 (4) TMI 1118 - SC - Indian Laws

Summary

Issues Involved:
1. Maintainability of Appeals
2. Scope of Section 23 of the Land Acquisition Act, 1894
3. Methodology for Determining Compensation
4. Interest on Compensation from Date of Possession

Detailed Analysis:

1. Maintainability of Appeals:
The appeals were filed under Article 136 of the Constitution of India, challenging the judgments of the Karnataka High Court and the Principal Civil Judge (Senior Division) and JMFC, Srirangapatna. The court decided to address the appeals on their merits despite objections to their maintainability, emphasizing the peculiar circumstances and the need to avoid academic appeals.

2. Scope of Section 23 of the Land Acquisition Act, 1894:
The primary legal question was whether manufacturing or commercial activities carried out by agriculturists could be considered for determining the fair market value of the acquired land under Section 23 of the Act. The court concluded that only the direct agricultural crop produced and its market value are relevant considerations. The court emphasized that consequential or remote benefits from agricultural activities should not influence the determination of fair market value.

3. Methodology for Determining Compensation:
The court reviewed various methods for determining compensation, including the Sales Statistics Method, Capitalization of Net Income Method, and Agriculture Yield Basis Method. It concluded that the Reference Court and the High Court erred by treating the ultimate manufactured product (silk thread from silk cocoons) as an agricultural activity for compensation purposes. The court determined that the correct approach was to consider the direct agricultural crop (mulberry leaves) and its market value. The court awarded compensation at the rate of Rs. 2,30,000 per acre for wet land and Rs. 1,53,400 per acre for dry land, considering the special agricultural purpose and the restricted use of the mulberry crop.

4. Interest on Compensation from Date of Possession:
The court rejected the claim for interest from the date of submergence (1993) and held that interest should only be awarded from the date of the notification under Section 4 of the Act (4th April 2002). The court directed the Collector to examine the claim for rent or damages for the period prior to the notification.

Conclusion:
The appeals were partially allowed with the following directions:
1. Compensation Rates: Rs. 2,30,000 per acre for wet/garden land and Rs. 1,53,400 per acre for dry land.
2. Statutory Benefits: Claimants to receive benefits under Sections 23(1A) and 23(2) of the Act and interest under Section 28.
3. Payment of Compensation: The government to pay compensation to all affected landowners promptly.
4. Damages for Dispossession: Claimants may file applications for damages for dispossession before the notification date, to be considered sympathetically by the competent authority.
5. Interest Prior to Notification: The direction for interest payment prior to the notification date was set aside.

The court emphasized the need for the State to act fairly and promptly in compensating landowners, ensuring that small landowners are not unduly prejudiced by delays.