1994 JTR(SC) 978
1995 AIR(SC) 186 ; 1994 AIR(SCW) 4240 ; 1995 1 APLJ 26 ; 1994 3 CurCC(SC) 368 ; 1994 68 FLR 425 ; 1993 6 JT 544 ; 1994 6 JT 366 ; 1994 2 LLJ 547 ; 1994 3 RRR 724 ; 1993 4 Scale 546 ; 1994 4 Scale 360 ; 1994 6 SCC 456 ; 1994 SCC(L&S) 1429 ; 1993 Supp3 SCR 845 ; 1994 1 SCT 648 ; 1995 3 SLR 403 ; 1994 1 UJ 122
SUPREME COURT OF INDIA
K. RAMASWAMY AND N. VENKATACHALA, JJ.
O. Janardhan Reddy and others, Appellants
Versus
Spl. Dy. Collector, L.A. Unit-IV, LMD, Karimnagar, A.P. and others, Respondents.
Civil Appeal No. 5283 of 1992
Decided on 30-9-1994.
Advocates appeared
Mr. K. Madhava Reddy, Sr. Advocate Mr. D. Prakash Reddy, Advocate, for Mr. Vimal Dave, Advocate with him for Appellants; Mr. Guntur Prabhakar, Advocate and Ms. Suman Bala Rastogi, Advocate (NP), for Respondents.
(A) The Land Acquisition Act, 1894 governs the acquisition of agricultural lands for public purposes, requiring the publication of a preliminary notification in the State Gazette and fixation of compensation based on market value as of the notification date. The Act contemplates separate determination for the land and for structures or assets such as irrigation wells that are part of the land, with compensation for such attachments normally forming part of the land value itself. Where agricultural land is acquired and irrigation wells exist on the land, the wells serve as an integral component of the lands irrigation facility and their value is subsumed in the enhanced market value of the land, rather than being valued and compensated independently on the basis of construction cost. Sections 4(1), 11, 18, and 26 of the Act provide the framework for notification, determination of value by the Land Acquisition Officer, reference to Civil Courts for enhancement, and the finality of enhanced compensation awards.
(B) Compensation for irrigation wells attached to acquired agricultural land cannot be determined on the basis of construction cost estimates independently of the lands market value; such wells must be viewed as part of the lands irrigation potential and their value inherent in the enhanced market value of the land. Courts may enhance compensation for land and for fixtures under the Act, but enhancement based on construction cost of wells is not sustainable when the lands value already reflects the irrigation facility. The determination of market value must focus on the lands agricultural utility, including the water supply it commands, rather than on the cost of structures.
Facts of the case:
Agricultural lands in Nedunoor Village, Karimnagar District, Andhra Pradesh, were acquired under the Land Acquisition Act, 1894 for submergence under the Maneru Dam. The Land Acquisition Officer determined compensation for the lands and for irrigation wells separately, considering crop type and construction cost estimates. The Civil Court enhanced compensation for both lands and wells, raising the market values of lands and some wells based on a retired planners cost estimates and increasing others by 75 percent. The High Court confirmed the enhanced land values but set aside the enhanced well values based on construction cost, instead enhancing all well values by 75 percent of the LAO-determined amounts. The owners then appealed for further enhancement limited only to the irrigation wells.
Findings of Court:
The Supreme Court held that since irrigation wells are integral to the agricultural land and their benefit is reflected in the enhanced market value of the land, determining their compensation separately on construction cost estimates is unwarranted. The Court observed that the Land Acquisition Officer, the Civil Court, and the High Court had all proceeded on the correct principle that the irrigation facility commanded by the land influences its market value, and that compensation for wells paid independently of the land value was not authorized under the Act. Consequently, no further enhancement for the irrigation wells was permissible.
Issues:
Whether irrigation wells attached to acquired agricultural land can be valued and compensated for independently on the basis of construction cost estimates; whether the High Court was correct in enhancing well compensation by 75 percent over the Land Acquisition Officers valuation; and whether this Court should grant further enhanced compensation for the wells in the appeal.
Ratio Decidendi:
Compensation for irrigation wells attached to acquired agricultural land forms part of the market value of the land itself, which is determined by reference to the lands agricultural utility and the irrigation facility it commands, and cannot be enhanced separately on construction cost estimates; once the lands enhanced value appropriately reflects the irrigation facility, separate compensation for the wells is neither warranted nor permitted under the Land Acquisition Act, 1894.
Result:
The appeal is dismissed without costs.
(A) The Land Acquisition Act, 1894 governs the acquisition of agricultural lands for public purposes, requiring the publication of a preliminary notification in the State Gazette and fixation of compensation based on market value as of the notification date. The Act contemplates separate determination for the land and for structures or assets such as irrigation wells that are part of the land, with compensation for such attachments normally forming part of the land value itself. Where agricultural land is acquired and irrigation wells exist on the land, the wells serve as an integral component of the lands irrigation facility and their value is subsumed in the enhanced market value of the land, rather than being valued and compensated independently on the basis of construction cost. Sections 4(1), 11, 18, and 26 of the Act provide the framework for notification, determination of value by the Land Acquisition Officer, reference to Civil Courts for enhancement, and the finality of enhanced compensation awards.
(B) Compensation for irrigation wells attached to acquired agricultural land cannot be determined on the basis of construction cost estimates independently of the lands market value; such wells must be viewed as part of the lands irrigation potential and their value inherent in the enhanced market value of the land. Courts may enhance compensation for land and for fixtures under the Act, but enhancement based on construction cost of wells is not sustainable when the lands value already reflects the irrigation facility. The determination of market value must focus on the lands agricultural utility, including the water supply it commands, rather than on the cost of structures.
Facts of the case:
Agricultural lands in Nedunoor Village, Karimnagar District, Andhra Pradesh, were acquired under the Land Acquisition Act, 1894 for submergence under the Maneru Dam. The Land Acquisition Officer determined compensation for the lands and for irrigation wells separately, considering crop type and construction cost estimates. The Civil Court enhanced compensation for both lands and wells, raising the market values of lands and some wells based on a retired planners cost estimates and increasing others by 75 percent. The High Court confirmed the enhanced land values but set aside the enhanced well values based on construction cost, instead enhancing all well values by 75 percent of the LAO-determined amounts. The owners then appealed for further enhancement limited only to the irrigation wells.
Findings of Court:
The Supreme Court held that since irrigation wells are integral to the agricultural land and their benefit is reflected in the enhanced market value of the land, determining their compensation separately on construction cost estimates is unwarranted. The Court observed that the Land Acquisition Officer, the Civil Court, and the High Court had all proceeded on the correct principle that the irrigation facility commanded by the land influences its market value, and that compensation for wells paid independently of the land value was not authorized under the Act. Consequently, no further enhancement for the irrigation wells was permissible.
Issues:
Whether irrigation wells attached to acquired agricultural land can be valued and compensated for independently on the basis of construction cost estimates; whether the High Court was correct in enhancing well compensation by 75 percent over the Land Acquisition Officers valuation; and whether this Court should grant further enhanced compensation for the wells in the appeal.
Ratio Decidendi:
Compensation for irrigation wells attached to acquired agricultural land forms part of the market value of the land itself, which is determined by reference to the lands agricultural utility and the irrigation facility it commands, and cannot be enhanced separately on construction cost estimates; once the lands enhanced value appropriately reflects the irrigation facility, separate compensation for the wells is neither warranted nor permitted under the Land Acquisition Act, 1894.
Result:
The appeal is dismissed without costs.
D.PRAKASH REDDY, Guntur Prabhakar, K.Madhava Reddy, SUMAN BALA RASTOGI, VIMAL DAVE
JUDGMENT
VENKATACHALA, J.:- In this appeal by special leave, directed against the Judgment and Decree dated June 19, 1990 in Appeal No. 2234 of 1986 of the High Court of Judicature, Andhra Pradesh, enhanced compensation for irrigation wells of the agricultural lands acquired under the Land Acquisition Act, 1894 - the Act is claimed by the owners of those lands - the appellants.
2. Several extents of agricultural lands comprised in different survey numbers of Nedunoor Village, Karimnagar District of the State of Andhra Pradesh were required for submergence under the waters of Maneru Dam. Those agricultural lands were acquired pursuant to Notification published in the State Gazette dated February 2, 1979, as required by Section 4(1) of the Act. The agricultural lands so acquired were dry lands, single crop wet lands, and double crop wet lands. In some of those agricultural lands, there were irrigation wells, as well.
3. The Land Acquisition Officer (LAO), by an award made under Section 11 of the Act determined the market value of the said agricultural lands and the said irrigation wells separately and awarded compensation payable thereunder, to the concerned owners of the acquired lands. Nature of crops grown on the lands, that is, dry crop, wet single crop or wet double crop while formed the basis for the LAO to determine the market value of the agricultural lands, estimate of the cost of construction of each irrigation well prepared by the Public Works Department formed the basis for the LAO to determine the market value of such irrigation wells.
4. The Court of Subordinate Judge at Karimnagar, the Civil Court, which considered the question of enhanced compensation payable to the owners for their agricultural lands and irrigation wells, on references received by him under Section 18 of the Act, enhanced not only the market value of dry lands to Rs. 4,500/- per acre, single crop wet lands to Rs. 7,500/- per acre, and double crop wet lands to Rupees 10,000/- per acre as against the market value of Rs. 2,400/- per acre, Rupees 5,400/- per acre and Rs. 8,100/- per acre respectively determined for such agricultural lands by the LAO, but also enhanced the market value of some of the irrigation wells according to the cost of construction of each of them as estimated by a retired Town Planning Supervisor (P.W.3), as against their market value determined by the LAO on the basis of their estimates prepared by the Public Works Department, and of the remaining irrigation wells by increasing their market value as determined by the LAO by 75 percent. Consequently, the Civil Court made an award under Section 26 of the Act granting the enhanced market value of the acquired agricultural lands and enhanced market value of the irrigation wells, and further granting solatium on such market value at 30 per cent and interest on compensation at 9 per cent for the first year from the date of taking possession and for the successful years up to the date of payment of compensation at the rate of 15 percent per annum.
5. But the said award of the Civil Court by which compensation payable for the acquired agricultural lands and irrigation wells had been enhanced, was questioned by the LAO in an appeal filed against it before the High Court. However, the market value of the agricultural lands, as enhanced by the award of the Civil Court was not interfered with by the High Court on its view that the enhanced market value given by the Civil Court for similar lands in its earlier two awards had been confirmed by it in appeals filed therefrom and the decisions in those appeals had become final. When it came to the market value of irrigation wells enhanced by the Civil Court, the High Court found that such enhanced market value for the wells ought not to have been by the Civil Court on the basis of estimates of costs of wells prepared by a retired Town Planning Supervisor (P.W.3). Consequently, it refused to uphold the enhanced market value given for irrigation wells by the Civil Court. Yet, on its own, the High Court enhanced the market value of the irrigation wells at 75 per cent of their market value determined by the LAO, finding justification for such enhancement on the basis of another award of the Civil Court wherein such enhanced for the market value of the irrigation wells had been given. Thus by its Judgment and Decree, the High Court enhancement the compensation payable for the wells by 75 per cent of what was given for them by the LAO.
6 . The owners of the lands who were not satisfied with the enhanced compensation granted by the High Court for their agricultural lands and irrigation wells filed the present appeal by special leave against the judgment and decree of the High Court seeking from this Court grant of further enhanced compensation therof. However, we are now concerned in this appeal with enhanced compensation sought for irrigation wells, since at the time of grant of leave, the appeal is restricted to the consideration of grant of enhanced compensation to the appellants for their irrigation wells.
7. The learned counsel for the appellants, the owners of the acquired agricultural lands, contended that the High Court was unjustified in relying upon the estimated costs of irrigation wells in the acquired appellants lands prepared by the Public Works Department, for determining the market value of those irrigation wells, when the Civil Court had rightly refused to rely upon such estimated costs in the absence of records of such estimated costs produced before it. According to the learned counsel, when the Civil Court had determined the market value of the irrigation wells on the basis of estimate of costs of each well prepared by a private engineer (P.W.3) with reference to prevailing construction cost of the data of Public Works Department and awarded compensation therfor, the High Court ought not to have interfered with the compensation so awarded by the Civil Court for such irrigation wells. The learned counsel, therefore, pleaded for grant by us, of enhanced compensation to the appellants for their irrigation wells in their acquired agricultural lands, according to the award made by the Civil Court.
8. Since estimated construction costs of irrigation wells of agricultural lands cannot form the basis for awarding compensation for such irrigation wells independently of the compensation awardable for the agricultural lands for the benefit of which such wells existed, the contentions raised by the learned counsel in support of the appellants claim for grant of enhanced compensation for the irrigation wells with reference to estimated costs of construction of such wells prepared by engineers, do not commend acceptance.
9. Irrigation wells for which enhanced compensation is sought in the present appeal are admittedly those which existed in the acquired agricultural lands for which enhanced compensation is awarded by the Civil Court, and the High Court. Question of granting further enhanced compensation for the acquired agricultural lands by this Court in this appeal does not arise since this Court has ordered that consideration of this appeal shall be restricted to claim of the appellants for grant of enhanced compensation for their irrigation wells.
10. When agricultural lands are acquired under the Act, the owners of such lands or persons who have interest in them become entitled to payment compensation awarded for such lands under the Act. The main Component of such compensation would be the market value of acquired agricultural land. Market value of agricultural land has to be determined under the Act with reference to the date on which preliminary notification was published in the State Gazette proposing its acquisition and according to the price which a buyer interested in agriculture would have paid for it to the owner having regard to its soil, the irrigation and other facilities, it commanded for its maximum utilization for agricultural purposes. The highest factor that contributes to the market value of agricultural land, is the irrigation facility it commands, admits of no controversy. Irrigation facility commanded by the agricultural land is that water supply which it can command for crops to be grown in it. Sources of such water supply, apart from rain water, may be river water, tank water, well water etc. Where river water or tank water is unavailable or is insufficient for cultivation of agricultural lands open irrigation wells are sunk. If the soil of the land in which they are sunk is likely to cave in, the same will be prevented by raising stone of brick or cement walls or by use of cement rings. The yield of water in wells vary from well to well. Intensive cultivation of agricultural land is done where the water yield of its irrigation well/wells is high. Such irrigation wells, even if had been dug up and walled effectively, may stop yielding water because of bore wells bored in the neighbouring lands or some other natural causes such as drought. In such events, the irrigation wells will become worthless. Hence, the advantage which an agricultural land may have because of the irrigation facility it had from the irrigation well, could only enhance the value of agricultural land depending upon the water yield from the well Again when the agricultural land, the irrigation of which was possible from the water of the irrigation well, is acquired, the value of the land so acquired will have to be determined taking into consideration the irrigation facility it had from the well. In this situation the irrigation well in acquired agricultural land, cannot have a value apart from the value of the agricultural land itself. The LAO, the Civil Court and the High Court, when have determined the market value of the irrigation wells and awarded compensation to the owners of those wells, having determined the market value of the acquired agricultural lands on the basis of nature of crops grown in them obviously taking into consideration, the water facility they had from the irrigation wells situated, in them, they have proceeded on a misconception that the market value of the irrigation wells had to be determined according to their construction costs and compensation was payable for them under the Act independently of the compensation payable for the agricultural lands. As the award of compensation for the irrigation wells of the appellants by the LAO, the Civil Court and the High Court was, in itself wholly unwarranted, question of granting by us further enhanced compensation for irrigation wells of the appellants situated in their acquired agricultural lands cannot arise. Hence, this appeal of the appellants, the owners of the acquired agricultural lands, must necessarily fail.
11. In the result, we dismiss this appeal but without costs.
Appeal dismissed
For Citation: AIR 1995 SC 186