RAMACHANDRAIAH ETC v. LAND ACQUISITION OFFICER, SAGAR

Appeals by certificate from the judgment and Awan'. dated 15th September 1966 of the Mysore High Court at Bangalore in Misc. First Appeals Nos. 199 to 201 of 1963. R. B. Datar, for the appellants. M. Veerappa, for the respondent. The Judgment of the Court was delivered by SHELAT, J. rain-fed and Thes~. three appeals, by certificate. are by three Khatedars, whose land.s were acquired for the submersion area of the Linganmakki reservoir ii;i Mysore State. The areas so ac quired were all wet lands and measured 29 acres and 3 7 guntas, 3.32 acres and 8.20 acres respectively. The Special Land Acqui sition Officer classified these lands into 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., perertially irrjgated 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 H pallas of paddy per acre which meant that the gross rent was Rs. 37.50 at the rate of Rs. 25 per pa1Ja. Deducting land revenue and bad debts he found that. the net annual income was Rs. 30 per acre. On a reference by the appel!ants under sec. 18 of the Land Acquisition Act, I 894, 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 capitalis ing the income by 20 years. But what he did was to take the whole of the net income arisin~ from the lands instead of capita lising only the rent payable to the appellants by the tenants of some of the lands. In appeals filed by the Acquisition Officer against the awards by the District Judge, the High Court of Mysore reduced the com pensation to Rs.

1250 oer ac're for alI the ]ands, irrespective of whether they wer.e tank-fed or rain-fed lands or whether they were self-cultivated or cultivated by tenants. This. the High Court did on the footinj! that the income from the land was represented by the rent paid bv the tenants iii resnect of some of the lands, that such rent on aii average came to 2J pallas of paddy and that at the rate of Rs. 25 per onlla. by capitalisin!! the rent by 20 years. the com1Jensation would come to Rs. 1250 an acre. The Hi~h Court. in addition. awarded interest at 63 oer annum on the amount of compensation awarded by it. In modifving the District Judge's award and reducin!! the rate of comoensation- to Rs. 1250 an acre. the High Court rejected the measure adopted bv the nis trict Jud2e. vi: .. "that the genT (rent) nlu". the quantitv which the tenant would r~tain· fnr himself would be the net averng~ in· 264 SUPREME COURT REPORTS [1973) 3 S.C.R. come of the land''.

According to the High Court, the District . Jud~ overlooked the fact that the tenant who get 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 t-xpenses of cultivation as also the value of such labour expended L)' the tenant ought to be taken into consideration. The High Cou_·t held : A B "In assessing 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 years purchase. " c The High Court also rejected the argument that the land measur- ing 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 1957 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 D 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 per sonally cultivated by the claimants". On this basis, the High Court allowed the Land Acquisition Officer's appeals, reduced the com pensation to Rs. 1250 per acre in respect of all the lands, irres pective of whether they were under tenants' cultivation or under the pernonal cultivation of the claimants. E The question raised before us is whether the High Court followed a correct principle whil·e awarding an uniform rate of It may be that resort comoensation for all. the acquired lands. , may be had to fair rent as a true measure of income derived from · a particular land bv its proprietor for fixing the compensation bv multiolving it by 20 years ·as has been done here by the High Court where no other method of valuation is oossible.

But where the acquired land has been under the oersonal cultivation of a claimant. the annual rent obtained by him from a tenant from another land mav not be the correct or real income obtainable by the claimant. The rent of the land under a tenant's cultivation may have been agreed uoon several vears ago or mav not other wise be the fair rent bv reason of several factors. Ouite apart from that, the two lands mav not be equal in oualitv, situation and productivitv and therefore the rent obtained for one cannot be the same for the other. Obviouslv. therefore. the annual rent obtain- ed bv a claimAnt from his tenant for one acouired niece Of land cannot be annlierl as " measure for another niece of land which is nersonallv cultivated bv the claimant. The net return to the claimant from each of the two land< is bound to differ. Ordinarilv, rent payable by a tenant would he fi11ed after calculating apprmd- F G H A B c D E F G H RAMACHANDRAIAH v.

LAND ACQUISITION OFFICER (She/at, J.) 265 mately the gross income less the tenant's costs of cultivation, cost of labour expended by him and a certain amount of retum 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 thu~ arrived at is usually multi plied by 20 years purchase and the amount so calculated would In our view, the be considered as equivalent to market value. 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 cases 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 claimant's personal cultivation.

Even in respect of lands cultivated by tenants, no notices appear to have been issued to them either by the Special Acquisi tion Officer or by District Judge though some of them did appear as witnesses for the claimants for deposing to the income of the land. Presumably, no such notices were issued to them on the ground that they were annual tenants and had, therefore, no alien able interest in the lands cultivated by them. We do not know whether by the expression 'ammal tenants' we meant that their tenancy was for one year only and would lapse on the expiry of the year. Even if it were so, by the time the notifications under secs. 4 and 6 of the Act were issued, (in April and August 1960), the Mysore Tenancy Act XIII of 1952 had come into force. Sec. 4 of that Act provided that a person lawfully cultivating any land belonging to another person shall be deemed. to be a tenant if the conditions there set out are satisfied.

Under s. 5 (1), there can be no .tenancy for less than five years and all tenancies in force' on the date of the commencement of the Act shall be deemed to be tenancies for a further period of five years from such date of the commencement of the Act. Under sub-s. 2 of s. 5. no tenancy is terminable before exoiry of the oeriod of five years exceot on the grounds set out in s. 15, e.g., default by such a tenant in paying rent or the fair rent fixed under the Act as the case may be. The Mysore Tenancy Act, 13 of 1952 was amended first by Mysore Act, 16 of 1957, and again by Mvsore A~ts 24 of 1962 and 12 of 1963. Sec. 4 of Act 16 of 1957 provided that every tenancv in rei; nect of which the oeriod of five veal'lO snecified in s. S of Act 13 of 1952 was due to exoire during 1957 shall be deemed to be a tenancy for a further period of one year ~rom the date on which the said period of five years was due to e~ptre.

Sub- '" / / [1973] 3-s.c.R. I I • 266 SUPREME COURT. REPORTS sec. 3 of sec. 4 further provided that notwithstanding anything contained in any Jaw, notices given before the 1 lth day of March, 1957 by landlords to tenants terminating their tenancies at the expiry of the said period of five years referred to in sub-sec. 1 on the ground of such expiry or on the ground that the landlord re quired the land for his personal cultivation shall be deemed to have been cancelled and shall have no effect and all applications made· by landlords for possession of lands in pursuance of rent In 1961, notices shall on the 1 lth March, 1957 stand dismissed. the Mysore Legislature passed tlie Mysore Tenants (Temporary Protection From Eviction) Act, 37 of 1961. The Act was to remain in force till March 31, 1962 or such other date not later than one year after that date as the State Government may by notification specify.

Sec. 3 of the Act provided that notwith standing any thing contained in any law or agreement,· decree or order of a civil or revenue court or a tribunal, no tenant shall be evicted from the land held by him as a tenant during the period that the Act remained in force. Sec. 4 of-the Act stayed durin)! the operation of the Act al] s·uits and proceedings in execution of decree or orders and other proceedings for the eviction of tenants from the lands held by them as such. The result of these provi sions 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. . In view of these provisions the Special Land .Acquisition Offi- cer 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 compen sation payable in respect of lands under their cultivation.

In the absence cf the tenants before us, we find it difficult to go into these ouestions. Nonetheless, we do feel that in fairness to the tenants (if thev are sti11 on the land) their interests ought to have been ascertained and if thev are entitled in Jaw to any share. compen sation according to the mai'l<et value of the land should be ascer tained afresh and their share. -if allowable to them. should be allocated to them. If this were to be done. the annual income of the lands in auestion will have to be ascertained afresh from the evidence on record or otherwise and the net total income after deductinl! the costs of cultivation an<l other outgoing ascertained in or<ler to arrive at the correct market value. Tf the nosition of the tenants as a result of the oneration of the Tenancv Act has. changed so as to make them entitle<l to a part of the comnensation, that also will require to be ascertained.

This is, of-course, sub- 1 f A n c D E F G H RAMACHANDRAIAH I', LAND ACQLllSITION OFFICER (She/at, I.) 267 A B c D ject to the bar ot limitation under s. 18 of the Act, for, it would prima facie appear that the tenants by· appearing as witne; scs 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 *at the tenants are not entitled to. any share in the compensation, the lands under tenant's cultivation and those personally cultivated by the claimants can not be valued on the same footing for the grounds sot out earlier. A fresh calculation of compensation in any event of brds under the claimants' cultivation is called for on the principle.; set out hereinabove. We, therefore, allow the appeals, set aside the judgment of the High Court and remand these appeals to the High Court for a fresh calculation of compensation in the light of the ob~ervutions If for th1t pur hereinabove made and in accordance with law. pose it may become necessary in the opinion of the High Court for fresh evidence to be led, parties may be given libe.rty to adduce ~uch further evidence. Costs of these appeals will abide by the result in the High Court. V.P.S. Appeals allowed. 2-l796SuoCI ;; J