SONAPUR TEA COMPANY PVT. LTD. & ANR. versus STATE OF ASSAM AND ANR.

Citation: [1994] 2 S.C.R. 303 · Decided: 03-03-1994 · Supreme Court of India · Bench: K. RAMASWAMY · Disposal: Appeal(s) allowed

Judgment (excerpt)

SONAPUR TEA COMPANY PVT. LTD. & ANR. 
A 
v. 
STATE OF ASSAM AND ANR. 
MARCH 3, 1994 
[K. RAMASWAMY AND N. VENKATACHALA, JJ.) 
B 
Requisitioning and Acquisition of Immovable Property Ac4 1.952-.Sec-
lion 8(2 )(a )-"Recurring payment''-Meaning of-Held, it is the annual rental 
it could have fetched, not the annual income lost-Increase or decrease of 
net annual income, maricet value of requisitioned property relevant fac- c 
tors-Requisitioning of tea estate-Section 25-Defence of India Ac4 1962-
Tea Act 1953. 
Sections 8(2)(b)(i), (ii), (iii) and (iv}-Components of compensa-
tiolt-l'ecunialy loss because of suddenly giving up possession of requisi-
tioned propetty, held, to be compensated-Claims for expenses on vacation D 
and re-occupation of premises to be made with suppotting evidence al 
-, 
appropriate stage-Damage to property during requisition arises only when 
property de-requisitioned-Determinants of compensation, held, are specified 
in the Act. 
Wordr & Phrases : ''Recurring Payment~eaning of in the context of E. 
Requisitioning and Acquisition of Immovable Property Ac4 1952. 
A tea estate, In an extent of 1617 bigbas, In the district of Kamrup, 
Assam, was requisitioned nuder the Defence of India Act 1962 for the 
Defence Department which was put In possession in 1963, Some portion or F 
• 
the tea estate was derequisitloned immediately thereafter, reducing the 
extent under continuing requisition to 1435 bigbas. The tea estate, not 
being released from requisition before January 10, 1968, became a property 
deemed to be requisitioned under Section 25 or the Requisitioning and 
Acquisition of Immovable-Property Act 1952. The question or compensa- G 
lion remaining unsettled, it was referred to an arbitrator fer determining 
the amount payable. On october 3, 1972, the arbitrator arrived at a figure 
or Rs. 49,08,786.50. The Defence Department, finding the compensation 
..., 
excessive, filed an appeal. The High Court partly allowed the appeal, While 
upholding that part of the award which provided for an Initial one-time 
award, It laid down guidelines for computing the other components of H 
303 
304 
SUPREME COURT REPORTS 
(1994] 2 S.C.R. 
A compensation. In its appeal to this Court, the appellant-tea company 
• 
contended that the guidelines were not in consonance with the Act and, 
therefore, unsustainable. The appellants also submitted that they would 
have no objection to this Court setting aside the unchallenged portion of 
the High Court Jndgment if found to be unwarranted by the provisions of 
B the Act. 
Allowing the appeal, this Court 
HELD: 1. The compensation payable for the property requisitioned 
under the Reqaisitionlng aml Acquisition of Immovable Property Act, 
C 1952 must be determined on the basis of the relevant principles or deter· 
mlnants specified In the Act itself. [308-FJ 
2.1. Section 8(2) specifies the principles o:r determinants of compen· 
satlon. 'Recurring payment' in Section 8(2)(a) is the principal sum of 
compensation payable for the requisitioned property. 'Recurring payment" , 
D Is the sum equal to the rent which. would have bren payable for the use and 
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occupation of the requisitioned property if it had been taken on lease 
,-
during that period. When a tea estate is requisitioned, the best evidence 
of the rent would be the rental fetched by the tea estate if it was the subject 
of lease earlier to requisitioning; or the rental fetched subsequently under 
E lease of a comparable ·tea estate in the surrouodiog area or io similar 
areas, after making additions or deductions deJ1eoding upon the dillereo· 
tlal plus or minus factors involved in a given situation. If this is not 
available, the net income of the tea eslate during the 3.5 years prior to 
requisitioning may be computed. [308-F; 309-H; 310-H; 311-A) 
F 
2.2. What Is to be made good by way of remrring payment is not the 
annual income lost because of such requisitioning but what is lost by way 
of annual rental. The annual rental cannot be equal to annual net income. 
A lessee, it would not be unreasonable to presume, would not pay more 
then two-third of the income as renta~ having regard to investment, 
G trou"le and risks which he as a lessee undertaki's by taking such property 
on lease. [311-E-GJ 
2.3. Annual rental correspondingly changes with increase or 
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decrease In net annual income. Either market value of the requisitioned 
tea estate or any appropriate well recongnised method of valuation of 

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