THE NATURE OF THE PROCEEDINGS IN COURT
It is an original proceedings the court does not prove or disprove the reasoning of the L.A.O or correct his
error or affirm, modify or reverse the conclusion reached by him. (AIR 1988 S.C. 1652; 1996(1) KLT 658).
EXAMINATION OF WITNESSES
(R.378 (7) CRP & High Court Circular No.4/80)
Witnesses examined by one claimant shall be numbered as AW1, AW2 etc. by another claimant as BW1,
BW2 etc. according to the array of the claimants. Witnesses examined by the respondents shall be numbered as
RW1, RW2 etc.
WHAT DOCUMENTS CAN BE RELIED ON
Documents not marked in the case shall not be acted upon by the court. The notes prepared by the L.A.
Officer also cannot be relied on unless they are marked.
MARKING EXHIBITS
(R.378 C.R.P. & High Court Circular No.4/80).
Documents field by the one claimant shall be marked as Exts.A1, A2 etc. Documents filed by another
claimant as B1, B2 etc. Documents filed by respondents shall be marked as R1, R2 etc. Court documents shall
be marked as Exts.X1, X2 etc. Third party documents shall be marked as T1, T2 etc.
MARKING UNDER SEC.51 (A)
A certified copy of registered document may be accepted as evidence of the transaction recorded in the
document (Sec.51A). It is not necessary to examine anyone to prove the contents. But the court is not bound to
accept it as a reliable evidence. (AIR 2001 SC 1117; 2001 (3) KLT 130; AIR 2003 SC 4382; 2004(3) KLT 737;
AIR 2005 SC 3467).
CERTIFIED COPIES RELIED ON BY THE COLLECTOR
The certified copies relied on by the Collector could be regarded acceptable as evidence by court unless
it is shown by contra evidence on behalf of the claimants that such document could not have been relied on in
making the award by the Collector. The reason is that they would only support his evidence and not establish
something independent of the award. In such a case it is not necessary to examine anyone (1995 (2) S.C.C.
305; 1996 (1) KLT 658; 2000 (3) KLT 661).
IMPLEADMENT
A party may be impleaded to the proceedings in a reference court. The impleadment is not under Order
1 Rule 10 C.P.C. But it is by virtue of the provisions in Section 50(2) L.A.Act (AIR 1996 SC 1513).
THE COURT SHOULD ANSWER ONLY REFERRED QUESTION
The court has jurisdiction only to answer the question referred to it by the Collector(2003(5) SCC 561).
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PRINCIPLE OF RES JUDICATA APPLICABLE
The principle of res judicata is applicable to proceedings under the L.A.Act (1995(2) SCC 734; AIR 2004
SC 3491).
JUDGMENT
(S.26. High Court Circular No.1/89 and O.M.No.D1-60482/96)
The statement of the grounds of every award shall be deemed to be a judgment (S.26).
High Court Circular No.1/89 directs that in the judgment the following particulars should be given.
1)
2)
3)
4)
5)
Date of S 4(1) Notification.
No. and area of land acquired
the relevant date with reference to which compensation is required to be determined.
date of taking possession.
date of Award.
The O.M. mentioned above directs the courts to attach a separate statement to the judgment showing the
following particulars.
1)
2)
3)
4)
5)
6)
Purpose of acquisition.
Date of notification u/s. 4(1)
Date on which possession was taken.
Date of Award by the L.A.O. and the rate at which it is given.
Whether the court has enhanced the compensation or not.
and
If the court has enhanced the compensation, the break up figures including the centage.
AWARD
(Sec.26)
Every Award shall be signed by the Judge and shall specify the amount awarded by it and the grounds of
awarding the amount. The Award is deemed to be a decree. The grounds of Award shall be deemed to be a
judgment.
DECREE TO BE DRAWN UP
(R.379 C.R.P. AND HIGH COURT CIRCULAR NOS. 5/71 & 4/80.)
In L.A.cases the court shall draw up a decree in the manner as in original suit. The terms of the decree
shall be given in the decretal portion.
FREE COPY
(Sec. 51 R 239(4) CRP)
A person claiming under the Award is entitled to a free copy of the award.
A copy of the judgment and decree will be supplied to the Government pleader free of cost if applied for.
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ADVOCATE FEES
(Advocate Fees Rules 14(5))
On the amount claimed in excess at the rate prescribed for suits for money minimum Rs.100/- and
maximum Rs.3,000/-.
Between rival claimants:
Fee is calculated on the amount in dispute as in original suits.
COURT SHALL NOT REDUCE COMPENSATION
(Sec.25)
The court cannot reduce the compensation awarded by the Collector. But it can award compensation
exceeding the claim (AIR 2002 SC 1045).
DUTY OF COURT TO ANSWER REFERENCE
Evenif the claimant remains absent or fails to adduce evidence, the court has to answer the question
referred to it. It cannot dismiss the reference for default (1998 (2) KLT 298; 1991 (2) KLT 69 ; AIR 2002 S.C.
726).
DISMISSAL FOR DEFAULT/EX-PARTE ORDER
Remedy
If a reference happens to be dismissed for default of the claimant or answered against the claimant ex-
parte, two courses are open to the claimant.
1) He may file an appeal under Sec. 54.
2) He may file an application under Order 9 Rule IX r/w Sec. 159 C.P.C. (1996 (5) SCC 701 & AIR
2002 SC 726).
BURDEN OF PROOF
The burden to prove the market value of an acquired property is always on the State (AIR 2001 S.C.
1117 ; AIR 2003 SC 4382). But the burden to prove that he is entitled to enhance compensation is on the
claimant (AIR 1994 S.C.1142).
AMENDMENT OF REFERENCE APPLICATION
Order 6 Rule 17 C.P.C. is applicable and a reference application may be amended (AIR 2003 SC 1004;
2005 (12) SCC 1).
MISTAKE IN SURVEY NUMBER
The court can decide whether the survey number given in the Award is correct (1992 (1) KLT 472).
AMENDMENT OF DECREE
If the court fails to allow the benefits u/s.23(1)A, 23(2) and 28 an application to amend the decree
incorporating those benefits is not maintainable as it is not a clerical mistake (1996(4) SCC 533 ; 1996 (2) KLT
280).
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REVIEW OF JUDGMENT
A judgment may be reviewed under O. 47 R.1 C.P.C. (2005 (1) KLT SN. 28 ; 2004(7) SCC 753).
Time barred applications referred by Collector
The court has power to decide whether the reference made by the Collector is valid and the court gets
jurisdiction to answer the reference only if it is valid. If the reference is invalid the court shall reject it. If the
Collector has referred a time barred application, it is not a valid reference (AIR 1979 SC 404; AIR 1996 SC 1513;
1997(9) SCC 710, 2002 (2) KLT 56, AIR 2003 Ker.263; AIR 2003 SC 942).
EXECUTION
Mode of Payment into Court (R.14)
All payments in the court shall be made by D Form Cheques drawn in favour of the Presiding Officer
payable by the order of the court to the credit of Civil Court Deposits.
I.T.Deductions:
If the claimant is liable to pay income tax on compensation it is for the L.A.O. to deduct it. Only balance is
to be deposited in court (1999 (1) KLJ (NOC) P.35). He should issue tax deduction certificate to the claimant
direct or produce it before the Court (Sec. 203 I.T. Act) (See 2005(1) KLT 773).
Succession Certificate
If a claimant dies his legal representatives need not produce a succession certificate as the amount
covered by the Award is not a debt (1998 (2) KLT 912).
Appropriation
The court shall not mix up the Award of the Collector and the Award of the Court. The amount due to the
claimant should be calculated only on the basis of the award of the court. The Award passed by the Collector
should not be taken into consideration.
“When the deposit is made towards the specified amounts, the claimant is not entitled to deduct from the
amount of compensation towards cost, interest, additional amount u/s.23 (1) (A) with interest and then to claim
the total balance amount with future interest”. The liability to pay interest will cease on deposit of compensation
(1996 (2) SCC 71). The claimant cannot adjust the amount deposited and received towards principal amount as
against interest. The doctrine of Sec. 60 of the Contract Act is inapplicable (1996 (4) SCC 178; 2005 (1) KLT
173).
FAILURE TO GRANT CERTAIN RELIEFS
Executing Court cannot go behind the decree. It cannot examine the correctness of the decree and grant
reliefs the Reference Court has omitted to grant (1996(4) SCC 533 ; 2005(1) KLT SN.28).
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NO ATTACHMENT OF PROPERTY OF BENEFICIARY
The obligation to pay the amount is that of the Government. The beneficiary has no obligation. Executing
court cannot order attachment of the assets of the beneficiary (1995 (2) K.L.T.320).
ISSUANCE OF CHEQUE
(High Court O.M. No.D1 – 12316/94)
Cheques in L.A. cases shall be issued by the court in the name of the party only.
MARKET VALUE
WHAT IS:
Market value is the “price a willing purchaser would pay to a willing seller having due regard to its existing
condition with all its existing advantages and its potential possibilities when laid down in the most advantageous
manner” (AIR1977 SC 1560).
POTENTIAL VALUE
Potential value is the best use one can make of one’s property. What it is actually used for is not relevant.
Potential value should be decided as on the date of Sec.4(1) notification (1997 (1) KLT S.N.58 and 1997 (4) JT
191).
A property may be used for dumping garbage. That is not relevant for deciding the potential value. It may
be used as a building site, which is its potentiality.
Future potentialities shall not be considered (2000(3) KLT 130).
ORAL EVIDENCE
Oral evidence as to market value is not acceptable (AIR 1998 SC 2470).
DIFFERENT METHODS OF VALUATION
Instance method (comparable sales)
a). It must be within reasonable time before Section 4(1) notification.
b). It should be a bonafide transaction.
c). It should be a sale of the adjacent land.
d) It should possess similar advantages.(1991 (4) S.C.C. 195; AIR 2003 SC 1987).
The size also should be comparable (2002(1) KLT 381). The property should be similar and similarly
situated; but need not be identical. Two properties may be similar, but not similarly situated. They may be
similarly situated, but not similar. Comparable sale should be of property having similar potentiality and nature
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(2004(1) SCC 467). In exceptional cases sale of small properties may be relied on to determine the market value
of large plots (AIR 2003 SC 1987; 1998(1) KLJ 141; AIR 2005 SC 1136). But when they are acted upon certain
deductions are to be made towards development of the area. The deduction may range from 33% to 50% (See
2004 (2) SCC 184; AIR 1977 SC 580; AIR 1980 SC 633; AIR 1995 SC 840; 1999(3) KLT 613).
EVALUATION OF PLUS & MINUS POINTS
A balance sheet of plus and minus points of comparable sales shall be prepared and they should be
evaluated. Small size, frontage to road, proximity to developed areas, regular shape, even land and other special
advantages are plus points.
points.
Large size, remoteness from road and undeveloped area, irregular shape, uneven level etc. are minus
BELTING
This is the method of classifying lands into different categories (blocks). This is resorted to when the
acquired land is very large in extent and the entire property does not have all the advantages. This is a highly
artificial method. It should be done in a scientific and logical manner by experts. This method is not applicable to
lands used as urban lands (ILR 1995 (3) Ker.344, AIR 1998 SC 781; 2000(7) JT 77; 1997(4) JT 592; 1984 KLT
617; AIR 2003 SC 4382).
CAPITALISATION
“The capitalized value of a property is the amount of money whose annual interest at the highest
prevailing interest at any time will be its annual income. In other words, it is the amount of money that will fetch
the interest equal to the annual income from the property. The net annual income from a land is arrived at by
deducting from gross annual income all outgoing such as expenditure on cultivation, land revenue etc. The
method of valuation involves capitalizing the net income, the property can fairly be expected to produce and the
rate of capitalization is the percentage of return on his investment that willing buyer would expect from the
property during the relevant period” (Union of India Vs. Shanti Devi AIR 1983 S.C.1190). See State of Kerala
Vs. Chacko (1977 KLT 850 F.B.): State of Kerala Vs. Geevarghese (1980 KLT 880).
In Special L.A.O. Vs.Veerabhadrappa (AIR 1984 S.C.774) the Supreme Court has said “It is unrealistic
to adhere to the traditional view of capitalized value being linked with gilt edged securities when investment in
fixed deposits, N.S.C., U.T.I. etc. command much higher return”. When compensation for a land with building is
fixed adopting capitalisation method, separate compensation cannot be given for land and building (Tejumol
Bhojwani Vs.State of U.P. 2003 (10) SCC 525).
VALUATION ON THE BASIS OF RENT
The rent of a number of years purchase multiplier is capitalized in this method. It can be resorted to only
when no other method is available. If the rent is very low or very high this method is unsafe.
The method:
1.
Find out the fair rent
15
2. Deduct repair charges, insurance, bad debts, expenses for collecting rent etc.
3. Determine the return and find out the multiplier (rate per cent).
4. Using the multiplier capitalize the value of property (See AIR 1973 S.C. 701).
EXPERT’S VALUATION
When claimant produces remarks of experts regarding market value, the court may act upon it if the
materials on the basis of which the report has been prepared are produced in the court and its authenticity is
proved (AIR 1995 S.C. 840).
LAND WITH BUILDING
Definition of land
Under Sec. 3(a) of the L.A.Act ‘land’ includes benefits to arise out of land and things attached to the earth
or permanently fastened to anything attached to earth (See AIR 1978 S.C. 515; 2005(1) SCC 553). The land
with a building should be taken as a single unit. But it is difficult to get comparable sales with regard to such
properties. Also see (AIR 2002 SC 1423; AIR 1988 SC 943). Then value of land and building has to be
determined separately.
GARDEN LANDS
Separate compensation cannot be awarded for fruit bearing trees standing on the land acquired (AIR
2002 S.C. 1423; AIR 1991 S.C.2027). Either market value of the land including trees treating them as timber, or
annual net income of fruit bearing trees multiplied by a proper multiplier should be given. When market value is
determined on the basis of the yield from the trees or a plantation the multiplier shall be 8 and in the case of
agricultural properties it shall be 12 (maximum) (AIR 2002 SC 1423; 2005(3) KLT 408).
Tree growth cannot be valued with reference to its horticultural value or value of yield. Timber value
should be given (AIR 1988 S.C. 943).
Rubber
The High Court has recognized the method of conducting test tapping of rubber trees for determining the
annual income (1980 KLT 800).
Peppervine
The proper multiplier is 8 (2005(3) KLT 408)
HOUSE SITE WITH FRUIT BEARING TREES
To value a site as house site and then add to it the value of the trees is duplication. Only one of the two
has to be valued (AIR 1970 Madras 184). But the Andhra Pradesh High Court has disagreed with this view (AIR
1981 A.P.310). The view of Andhra Pradesh High Court is said to be correct.
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QUARRIES
See (1981 KLT 913).
LEASE
Compensation shall be apportioned between the landlord and the tenant according to the value of their
interests (1958 KLJ.613; 1994(5) SCC 239; 1997(5) JT 623; 2003(2) KLT 394; AIR 1971 SC 1253).
EASEMENT
easements:-
Easement is an interest in the property. The following criteria will arise for consideration in
1) To what extent the value of the servient tenement is reduced by the existence of easement rights.
2) To what extent is the value of the dominant tenement reduced by the extinction of the easement right
(1975 KLT 497; AIR 2001 SC 3431).
Easement of Necessity
Easement of necessity is not extinguished by acquisition (AIR 2005 SC 954).
MORTGAGE
Where a mortgaged property is acquired the mortgagee is entitled to the mortgage money out of the
compensation (Sec. 73(2) T.P. Act). That claim has preference and can be enforced though the principal amount
on the mortgage has not become due (Sec. 73(3) T.P. Act).
RELEVANCY OF SOME DOCUMENTS IN ASCERTAINING MARKET VALUE
Previous Judments and Awards:
They are relevant but not binding. See (1976 (1) SCC 973; 1976(4) SCC 9; AIR 1993 SC 225 & 227;
1980 KLT 957; 1984 KLT 822).
Valuation register maintained by Government
Valuation fixed by Government under the Stamp Act for fiscal purposes is not relevant (1995 (5) SCC
310; 2004(2) SCC 283).
DAMAGES FOR SEVERANCE
(S. 23 Clause thirdly and S.49(2)
Clause thirdly of S. 23 entitles a person to compensation for the damage caused, if any, to a part of his
land by the acquisition of another part. The claimant must prove the fact that he suffered injury as well as the
extent of the injury (1996(2) KLT 58; 1968 S.C. 1425; AIR 1975 S.C. 1097; AIR 1990 S.C. 2192).
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BUSINESS DISPLACEMENT
(Section 23 Clauses Fourthly & Fifthly).
A person who is compelled to stop his business on account of acquisition cannot claim increase in
compensation on the basis of loss of earnings till he resettled in business. Only loss caused to the claimant at
the time of taking possession is contemplated (1997 (2) SCC 640). In the case of shifting of business the
claimant is entitled to transport charges only (1997 (2) SCC 640 & 2004 (7) SCC 388).
ADDITIONAL AMOUNT
(S. 23(1)(A)
This provision entitles a claimant to an amount calculated at the rate of 12% per annum on the market
value for the period from the date of publication of Sec. 4(1) notification to the date of Award of the Collector or
taking possession of the land, whichever is earlier. This is not interest. This is an amount given in addition to the
market value. No solatium is payable on this amount (1995 (2) SCC 305). Even in cases in which possession is
taken before Section 4(1) notification benefit is available only from the date of notification (AIR 2001 SC 2951;
2004 (4) SCC 79).
SOLATIUM
(Sec. 23 (2)
A claimant is entitled to a solatium of 30 % of the market value (1992(1) KLT 402; 2002(2) SCC 605).
INTEREST ON SOLATIUM
Interest is payable on solatium also (2001 (3) KLT 489).
NO ADDITIONAL AMOUNT ON THE SOLATIUM
The additional amount payable u/s.23(1)(A) is only on market value and not on solatium (1996 (1) KLT
452 & 560; 1998(1) KLT 812).
INTERST ON EXCESS COMPENSTION
(Sec. 28)
If the court awards any amount as compensation in excess of the amount awarded by the Collector, the
claimant is entitled to get interest on such excess amount at 9% per annum from the date of possession till the
date of payment. If payment is not made within one year interest should be paid at 15% per annum from the
date of expiry of one year. The amount awarded under each sub section of Section 23 will carry interest
(2001(3) KLT 489; 2002(7) SCC 657; 2005(1) KLT 598).
Quotable Quote
“It takes considerable knowledge just to realize the extent of your own ignorance”- Thomas Sowell, Creators Syndicate.
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