PERIYAR AND PAREEKANNI RUBBERS LTD. versus STATE OF KERALA

Citation: [1990] SUPP. 1 S.C.R. 362 · Decided: 06-09-1990 · Supreme Court of India · Bench: L.M. SHARMA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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A 
B 
c 
PERIYAR AND PAREEKANNI RUBBERS LTD. 
v. 
STATE OF KERALA 
SEPTEMBER 6, 1990 
[L.M. SHARMA AND K. RAMASWAMY, JJ.] 
Kera/a Land Acquisition Regulation, 1089: Sections 22( 1), 22(2) 
and 25(3)/Land Acquisition Act, 1894: Sections 23(1), 23(2) & 28: 
Compulsory acquisition of Land-Payment of compensation-Market 
value-Determination of-Principles to be followed-Interest on 
solatium-Entitlement to. 
The respondent State had acqnired a large extent of land out of 
the appellant's estate under the Kerala Land Acquisition Regulation, 
1089 for river valley irrigation project and to establish an industrial 
project. The notification under Section 4(1) of the Regulation was pub-
0 
Iished on October 31, 1961. This was followed by the declaration under 
Section 6(1) pnblished on February 22, 1962. 
The Collector by his awards dated March 29, 1962 determined the 
market value under Section 22(1) of the Regulation at Re.0.04 per cent 
for certain lands, Re.0.12 per cent for certain other lands, and Rs.30 
E per cent for the wet lands as against the claim of Rs.40 and 50 per cent. 
Compensation for the trees at timber value was also given. The total 
compensation fixed was Rs.4.84 lakhs. 
Dissatisfied therewith the appellant sought reference under Sec-
tion 18 of the Regulation. They also claimed separate value for fruit 
F 
bearing trees on potential value and charges for severence and injurious 
effects on the remaining lands. In support of the claim they relied on 
Ex. P. 7 dated March 9, 1951 a11.d Ex. P. 9 dated April 4, 1957 which 
worked ont at Rs.52.50 and Rs.43.50 per cent respectively, and the 
acquisition forming subject matter of Ex. P. 10 pertaining to the land in 
the vicinity of the industrial project awarded at the rate of Rs.SO per 
G 
cent for paddy lands and Rs.43 for dry land. The Govermnent pleader 
stated before the civil court that Ex. P. 9 could form the basis for 
determining the market value. The court enhanced the market value @ 
Rs.40-50 per cent as claimed in addition to a sum of Rs.30 to 38 per 
cent. It awarded in all Rs.20.20 lakhs on all counts including severence 
and injurious effects, 15 per cent solatium and also 6 per cent interest 
H 
on additional compensation from the date of taking possession till date 
of payment. 
362 
PERIYAR v. STATE OF KERALA 
363 
The High Court found that the lands covered by Ex. P. 7 and 
Ex. P. 9 were paddy lands cultivated by irrigation sources and situated 
about four miles away from the acquired lands which were not irrigated 
and therefore held that these could not form the basis for determining 
market value. Similarly, it found Ex;P. 10 could not form a base to rix 
the market value. The High Court did not accept the evidence adduced 
by the State, which was rejected by the civil court as well. The state-
ment made by the State Advocate General across the bar that the 
market value could be fixed at Rs.18 per cent was also not taken into 
account. Consequently, it reversed the awards and decrees of the civil 
court. 
In these appeals by special leave it was contended for the appel-
lant that having rejected the documents produced by the State the High 
Court ought to have relied upon the documents produced by the appel-
lant as comparable sales and confirmed the compensation awarded by 
the civil court, that Ex. P. 7, 9 and 10 furnished the best material, that 
the Government pleader had conceded before the trial court that Ex. 
P. 9 could form the basis for determining the market value, that they had 
incurred huge expenditure on civil works for protection of the rest of 
the estate from injurious effects for which they should be recom-
pensated, that the potential value of the trees had to be taken into 
account in determining the market value, that' they were entitled to 
compensation for severeace due to submersion of the lands and that 
they were also entitled to payment of interest on solatium. 
Allowing the appeals partly, the Court, 
HELD: 1.1 When the Courts are called upon to fix the market 
value of the land in compulsory acquisition, the best evidence of the 
value of property is the sale of the acquired land to which the claimant 
- himself is a party, in its absence the sales of the neighbouring lands 
possessed of similar potentiality or fertility or other advantageous 
features made within a reasonable time of the date of notification in 
bona fide transactions on the hypothesis of a willing seller and a willing 
purchaser but no

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