LexSTATE OF KERALA versus P. P. HASSAN KOYA
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B c D E p G H STATE OF KERALA v. P. P. HASSAN KOYA March 19, 1968 fJ. C. SHAH AND G. K. MITTER, JJ.) Land Acquisition Act (I of 1894)-Compensation-Jenmi holder not objecting to qucntunt of con1Pensation-Principle1 of d~termination. On the acquisition of several units of land with buildino. the Land Acquisition Officer detmnined the compensation payable to - tho persons interested at the rate of Rs. 10,000 per acre for the land, and for houses standing thereon "at their break up value". The respondent, who held Kanam rights in one of tho units of the land and te> whom the building standing thereon belonged, raised objections to the quantum of the oom· pensation. The Receiver of the Estate holding Jenmi rights in the land did not object. The trial co.urt disapproved the method adopted by the Land Acquisition Officer for determining the compensation and held that each unit had to be valued as a com!""ite property. He determined the market value by capitalising the net rent received from the unit and taking into consideration tho return fcom gilt-<ldged securities at 3!% awarded compensation fdr the respondent's unit at 35 times the net annual rental. The High Court upheld the order of the trial court but reduced the multiple to 33-1/3. Dismissing the appeal, this Court: HELD : By the compulsory acquisition of land. all outstanding inter~ ests not vested in the Government are extinguished. It is. therefore. the duty of the Land Acquisition Officer to determine in the first instance compensation v.rhich is to be paid for extinction of those interests, and then to apportion the compensation among the persons known or bc1ieved to be interested in the land. The rule could not be departed from merely because the Receiver in whom the Je111ni rights \ve'rc vested failed to raise an objection to the quantum of compensation awarded to him. The respondent being a Kane<·mdar has an interest in the land and was entitled to appaintment of compensation even in respect of the land. f461 H-462 Bl The method adopted by the ·Land Acquisition Officer for determining compensation payable for extinction of the interest of the holder of the land and of the buildings separately was unwananted. In determining compensation payable in respect of land with buildings compensation c.an· not be determined by ascertaining the value of the land and the "break up value• of the building separately. The land and the building constitute one unit, and the value of the entire unit must be determined with all its advantages and its potentialities. When the property sold is land with building, it is often difficult to secure reliable evidence of instances of sale. of similar lands with buildings proximate in time to the date of the noti· fication under s. 4. Therefore the method which is generally resorted to in dcto:rmining the value of the land 'vith buildings especially thOCie used for business purposes, is the method of capitalization of return actually received or which might reasonably be received from the land and the buildings. [462 C; 462 H-463 CJ Rr.ja Vyricherla Narayana Gajapatira}11 v, The Revenue Di1·isior:al Officer, Vitagapatnam, L.R, 66 I.A. 104, referred to. L7 Sup.C.J·/68-5 t • 460 SUPREME COURT REPORTS [1968] 3 S CR. It cannot be laid down as a general hlle applicable to all situations and circumstances that a multiple approximately equal to the return fro1n gilt-edged securities prevail,ng at the relevant time forms an adequate basis for finding out the market value of the land. But in this case the trial court and the High Court were of the view that a multiple based ·on a return from the gilt-edged securities was the appropriate multiple for determining the V<tlue of the property· under acquisition. and no ground has been sugge·sN~d fdr not accepting the basis and the rate of capitaliza- tion adopted by them. [463 E-F] CIVIL APPELLATE JURISDICTION : Civil Appeal No, 588 of 1965. Appeal from the judgment and decree dated June 21, 1962 of the Kerala High Court in Appeal Suit No. 602 of 1958. B. R. L. Iyengar and M. R. K. Pillai, for the appellant. 5. V. Gupte, Vishnu 8. Saharya, Yougindra Khushala11i, Sar- dar Baizadur Saharya and T. L. Viswanatha Iyer, for the respon- dent. The Judgment of the Court was delivered by Shah, J. On December 8, 1954, the Government of Madras issued a notification under s. 4 of the Land Acquisition Act noti- fying for a
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