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The Additional Special Land Acquisition Officer, Ports, Mangalore Vs. K.T. Alva and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKarnataka High Court
Decided On
Case NumberMisc. F.A. No. 102 of 1970
Judge
Reported inAIR1976Kant99; ILR1976KAR302; 1975(2)KarLJ484
ActsLand Acquisition Act, 1894 - Sections 4(1) and 23
AppellantThe Additional Special Land Acquisition Officer, Ports, Mangalore
RespondentK.T. Alva and ors.
Appellant AdvocateN. Venkatachala, 2nd Addl. Government Adv.
Respondent AdvocateN. Santosh Hegde, ;B.P. Karunakar, ;Tukaram S. Pai and ;V. Vishwanatha Rai, Advs.
Excerpt:
.....in abundant quantities so as to be made use of for the construction of the mangalore port. 320 of 1973 (kant) was based on definite evidence about the actual lease of the quarry, which affords a better basis to fix the market value of similar lands and can be adopted in the instant case, accordingly, we fix the market value of 4 acres and 29 cents of land in survey no......the court of the civil judge, mangalore.2. pursuant to the notification under section 4(1) of the land acquisition act published in the gazette on 27-7-1963, lands situate in mudushedde village of mangalore taluk were acquired. the lands acquired were: 2 acres 72 cents of wet-i land in s. no. 25/4-a; 1 acre 70 cents of wet-i land in s. no. 25/5-a. 36 cents of wet-iii land in s. no. 25/3-a and 7 acres 19 cents of dry land in s. no. 30/1-a. it may be mentioned here that out of 7 acres and 19 cents of dry lend, there is a quarry over an extent of 4 acres and 29 cents, and the remaining extent of 2 acres and 90 cents is only a dry land.3. the claimants claimed compensation at rs. 10,000/- an acre for wet-i land, at rs. 4,000/- an acre for wet-iii land, and at r9. 10,000/- an acre for dry.....
Judgment:

Bhat, C.J.

1. The appeal is by the Special Land Acquisition Officer, Port, Mangalore, against the award and decree dated 30-1-1969 in 0. P. No, 525 of 1965 on the file of the Court of the Civil Judge, Mangalore.

2. Pursuant to the notification under Section 4(1) of the Land Acquisition Act published in the Gazette on 27-7-1963, lands situate in Mudushedde village of Mangalore Taluk were acquired. The lands acquired were: 2 acres 72 cents of wet-I land in S. No. 25/4-A; 1 acre 70 cents of wet-I land in S. No. 25/5-A. 36 cents of wet-III land in S. No. 25/3-A and 7 acres 19 cents of dry land in S. No. 30/1-A. It may be mentioned here that out of 7 acres and 19 cents of dry lend, there is a quarry over an extent of 4 acres and 29 cents, and the remaining extent of 2 acres and 90 cents is only a dry land.

3. The claimants claimed compensation at Rs. 10,000/- an acre for wet-I land, at Rs. 4,000/- an acre for wet-III land, and at R9. 10,000/- an acre for dry land in addition to the value of granite rock at Rs. 1-50 P. per lorry load.

4. The Land Acquisition Officer determined the market value of wet-I land at Rs. 5,000/- an acre, that of wet-III land at Rs. 2,000/- and that of dry land at Rs. 2,000/- an acre. He did not award any compensation in respect of the granite rock as such. Feeling aggrieved by the award made by the Land Acquisition Officer, the claimants sought reference to the Court.

5. The learned Civil Judge determined the market value of wet-I land at Rs. 7,500/- an acre and that of the wet-III land at Rs.3,000/- an acre. So far as the dry land was concerned, he determined the market value of the entire extent of 7 acres and 19 cents at Rs. 8,000/- an acre. In addition, he made, an award of Rs. 94,000/- in respect of the granite rock comprised in the land. The enhancement made by the learned Civil Judge is challenged in this appeal.

6. So far as the determination of the market value of wet-I and wet-III lands is concerned, the learned Civil Judge has adopted the rental yield from these two categories of land, as had been found 12 by the Land Acquisition Officer. Fifteen mura of rice and six mura of rice were the annual rental from these lands according to the Land Acquisition Officer. The learned Civil Judge took the market value of rice at Rs. 25/- per mura, in accordance with the rates published in the Government notifications, and adopted the multiple of 20 to arrive at the market value. We do not see anything wrong in the basis adopted by the learned Civil Judge in determining the market value of these two categories of lands. The Land Acquisition Officer, though he found the rental values at 15 mura and 6 mura of rice, proceeded to determine the market value of the lands on the basis that the market value of one acre of land whose rental value was three mura per annum, would be Rs. 1,000/-. As the learned Civil Judge has observed, there is no basis or evidence in support of such proposition. Therefore, the determination of the market value of wet-I and wet-III lands as made by the learned Civil Judge, does not call for interference in appeal and the award made, in this behalf, is confirmed.

7. The learned Civil Judge fixed the market value of the dry land at Rs. 3,000/- an acre on the basis of two awards, certified copies of which had been produced before him and marked as Exhibits C-4.and C-5. We have gone through those awards. No witness has spoken in regard to those awards or about the location of the lands concerned therein and their relative position in regard to the land acquired. The awards, Exhibits C-4 and C-5, show that the lands dealt with therein were in a residential area and surrounded by factories and, had a potentiality for building purposes and therefore they had been valued as such. There is absolutely, no evidence in the instant case that the dry land acquired was similar to the lands concerned in Exhibits C-4 and C-5. Therefore, the basis adopted by the learned Civil Judge for determining the market value of the dry land, is not correct and cannot be supported.

8. The learned civil Judge has made an award in respect of the entire area I of 7 acres and 19 cents of dry land, although 4 acres and 29 cents were coverer by granite-rock and the claimants were claiming compensation in respect of the granite content of that area. The area covered by granite rock has to be valued as one unit and not separately as land and granite rock. This was the view that this Court held in A. K. Ahmad v. Special Land Acquisition Officer, C. I. T. B. (1974) 2 Kant LJ 1. The learned Civil Judge was in error in valuing the land and the granite quarry separately.

9. The land in Survey No. 3011-A was acquired for the purpose of quarrying granite, for the construction of the Mangalore Port. This is clear from the notification issued under Section 4(1), as also the award made by the Land Acquisition Officer under Section 11 of the Land Acquisition Act. It is clear that before the I-and was decided to be acquired, the authority for whom the acquisition was being made, had inspected the place and satisfied himself that granite was available in abundant quantities so as to be made use of for the construction of the Mangalore Port. It is not as if the land acquired was containing some small stones and a claim was being made in respect of such stones. As a unit it was fit for quarrying and therefore the property had this potentiality, and its value has to be determined having regard to this potentiality.

10. Before the Court below a Commissioner was appointed to hold a local inspection and make a report in regard to the value of the granite rock. He estimated the cubical content of the granite rock at 93,51,300 cubic feet. He took into consideration the price at which the stones quarried would be delivered at Mangalore from the quarry site. He also made allowance for the expenditure for conveyance, breaking charges of the stones, loading and unloading charges, contractors profits, signora and other charges. Making allowance for wastage, breakages etc., this reported that the total quantity of stones that could be quarried from the land would be 118,67,813. On the basis that the owner's income would be one rupee per 100 stones the profit or income of the owner was computed at Rs. 1,18,678/-. The Commissioner observed that this should be the value that the owner would get if the entire; quarry was sold and disposed of immediately. Having regard to the time that would be taken for, exploiting this quarry and on the basis that the amount would be distributed over a period of 20 years, the Commissioner stated that the annual income would be about Rs. 5,934/- Capitalizing this by adopting the multiple of 16, the Commissioner fixed the total value of the granite hillock at Rs. 94,944/-. Some of the claimants filed objections to this report of the Commissioner contending that the valuation made by him was low and inadequate. The Land Acquisition Officer, however, did not file any objection statement in this behalf. He was examined as a witness; but even during his evidence, he did not contend that the report was unacceptable or should be rejected. He admitted in his evidence that he had ignored the granite content in the property altogether. It is clear that the award made by the Land Acquisition Officer, in this behalf, was wholly arbitrary. Therefore, the burden was on the Land Acquisition Officer to support his award. He has not placed any, material in that behalf. The only material available before the Court below was the report of the Commissioner.

11. The learned Government Advocate contended before us that a granite quarry is a wasting asset, and in the matter of valuation of such a wasting asset different principles are applicable. He cited a number of authorities on valuation. It is sufficient if we refer to C. A Gulanikar's book, 'Two Acts Gift and Wealth Tax' at page. 584 (Para II), the learned author has summarized the principles governing the valuation of wasting assets. This is what he has stated:

'The problem of valuation of wasting assets is studded with hazardous estimates. Much would, therefore, depend on the estimates of reserve, its qualities, depth, operating conditions etc.

Generally speaking, the valuation proceeds on the following lines by estimating: -

(a) Number of saleable or recoverable Units

(b) Unit price to be received over life of property.

(c) Cost of production over life of property;

(d) Rate of production,

(e) Rate of interest for return on capital and investment.

These estimates have to be framed on the basis of the available data. A short cut method would be to take into consideration the following essential factors: -

(a) Total operating profits;

(b) The rate at which this profit would be obtained.

(c) The rate of interest commensurate with the risk of the particular deposits.

'The operating profits would be balance of revenue after deducting all costs of production other than depletion. The period of extraction would depend on the annual average production and the estimated quantity of reserves. The rate of return would first depend on the rate of interest on investment plus rate for risk of business and trade; such rate of return would vary between 8% to 15%,

The essence of this method lies in discounting income expectancies based on operating profits which are purchased at the rate of interest for the period for which the reserves would lost.'

The above, in our opinion, represents the correct principle to be followed in valuing wasting assets, such as granite quarries.

12. For the claimants, reliance has been placed on an unreported judgment of this Court in Miscellaneous F. A. No. 320 of 1973 (Kant) wherein the valuation of a similar quarry in a land acquired for the same purpose, was considered. The land concerned in the said case was survey No. 7317-A of Kudupu village which is a neighboring village to the village in the instant case. In the said case, there was evidence that the granite quarry which, existed in the acquired land, had been leased out for a sum of Rs. 100/- per month. Therefore the annual rental from that quarry was Rs. 1,200/-, the land in the said case, with the quarry, was valued at Rs. 24,000/-. We placed reliance upon decision of the Privy Council in secretary of State v Sheranugaraya Mudaliar, (1593) ILR 16 Mad 369 (PC) and confirmed the award made by the learned Civil Judge, In that case also, the Land Acquisition Officer had ignored the existence of granite rock in the land acquired and had valued the land merely as a dry land as in the, instant case. The notification under Section 4(1) of the Land Acquisition Act in the said case had been published on 27-7-1963 and the notification in the Instant case has also been published on the some date, It is contended that the market value as determined in that case affords a valuable basis for determining the market value of the quarry in the instant case and that the same valuation should be adopted.

13. The Judgment of this Court in M. F. A. No. 320 of 1973 (Kant) has become final and the State, has not filed any further appeal against that decision. The market value of dry land containing granite, on the basis of that judgment, works out to Rs. 21,200/- an acre. Adopting the same basis, the market value of 4 acres and 29 cents of dry land containing granite works out to about Rs. 90,000/-. The Commissioner estimated the market value at Rs. 94,000. The determination of the market value in K F. A. No. 320 of 1973 (Kant) was based on definite evidence about the actual lease of the quarry, which affords a better basis to fix the market value of similar lands and can be adopted in the instant case, Accordingly, we fix the market value of 4 acres and 29 cents of land in Survey No. 30/1A containing granite rock at Rs. 90,000. As we stated earlier, the determination of the market value of the rest of the land, viz., 2 acres and 90 cents out of Survey No. 30/1A, by the learned Civil Judge on the basis of Exhibits C-4 and CA cannot be supported In M. F. A. No. 320 of 1973 (Kant) above referred to, this Court determined the market value of a similar dry land at B.s. 4,000/- an acre. The learned counsel on both sides submitted that the said market value may be adopted in fixing the market value of 2 acres and 90 cents out of Survey No. 30/1A.

14. In the result, the award and decree of the Court below are modified as follows: -

15. The market value of 4 acres and 29 cents out of Survey No. 30/lA is fixed at Rs. 90,000. This includes the value of the land and the granite rock. For the remaining 2 acres and 90 cents in Survey No. 30/lA, the market value is fixed at Rs. 4,000/- an acre. The market value as determined by the Court below in regard to wet-I and wet-III lands is confirmed.

16. The parties shall bear their own costs in this appeal.

17. Order accordingly.


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