Supreme Court Decides Compensation for Land Acquisition Based on Fruit-Bearing Tree Income: Ismail Hushen Ghanchi vs. National Highways Authority of India (2017)

Introduction

Date of the Judgment: 14 November 2017

Citation: (Not Available)

Judges: Kurian Joseph, J. and R. Banumathi, J.

When land is acquired for public purposes, how should the compensation be calculated, especially when the land has fruit-bearing trees? The Supreme Court of India recently addressed this question in a case involving land acquired for a highway project. The core issue revolved around whether compensation should be based on the market value of the land, the value of the crops for a particular year, or the income from the fruit-bearing trees. This judgment clarifies how compensation should be calculated when the land acquired has fruit-bearing trees and the landowners are dependent on income from those trees. The bench comprised of Justice Kurian Joseph and Justice R. Banumathi. Justice Kurian Joseph authored the judgment.

Case Background

The appellants in this case were landowners whose land was acquired for a highway project. The primary dispute arose over the compensation awarded for the acquired land, particularly concerning the valuation of the fruit-bearing trees on the land. The High Court had initially sustained the enhanced land value as determined by the Reference Court but had significantly reduced the compensation for the trees to 20%. The appellants contended that the reduction should have been by 20%, not to 20%.

Timeline

Legal Framework

The judgment references Section 28 of the Land Acquisition Act, 1984, which pertains to interest on compensation.

Section 28 of the Land Acquisition Act, 1984 states:

“Collector may be directed to pay interest on excess compensation. If the sum which, in the opinion of the Court, the Collector ought to have awarded as compensation is in excess of the sum which the Collector did award as compensation, the Court may direct that the Collector shall pay interest on such excess at the rate of nine per cent per annum from the date on which he took possession of the land to the date of payment of such excess into Court.”

Arguments

The appellants argued that the High Court erred in reducing the compensation for the fruit-bearing trees to 20% instead of reducing it by 20%. They also contended that the compensation should be calculated based on the income from the fruit-bearing trees, as they were primarily dependent on this income.

The National Highway Authority of India (NHAI) had already paid compensation based on land value.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:
✓ Whether the compensation for the acquired land should be calculated based on the market value of the land, the value of crops for a particular year, or the income from the fruit-bearing trees.

Treatment of the Issue by the Court

Authorities

The Court considered Section 28 of the Land Acquisition Act, 1984 for the interest on compensation.

Judgment

The Court directed that the compensation be calculated based on the return from the fruit-bearing trees, as determined by the Reference Court. The appellants were also entitled to additional compensation, solatium, and interest under Section 28 of the Land Acquisition Act, 1984. The court clarified that any compensation already received based on land value would be adjusted with 15% interest from the date of receipt, except if the compensation was deposited in court.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the appellants were small landholders who were dependent on the income from the fruit-bearing trees. The court emphasized the need to ensure that the compensation adequately reflected the loss of livelihood caused by the acquisition. The court also considered the fact that the High Court had reduced the compensation for trees to 20%, which was not in line with the appellants’ submission that it should be reduced by 20%.

The court’s reasoning was based on the following points:

✓ The appellants were primarily dependent on the income from the fruit-bearing trees.

✓ The land holdings of the appellants were very small.

✓ The High Court’s reduction of compensation for trees to 20% was not in line with the appellants’ submission.

The Supreme Court quoted the following from the order dated 7.11.2017:

“In a petition of compensation for the acquisition of land, the Award can be passed either on the basis of the income one would earn from the fruit bearing trees or on the basis of the market value of the land plus the value of the crops of that particular year.”

The Court also noted:

“Learned counsel for the appellants, on instruction, submits that since the holding is very small and since the people have been dependent on the income from the fruit-bearing trees they would go by the calculation on the basis of income from the fruit-bearing trees.”

Key Takeaways

✓ Compensation for land acquisition, especially when the land has fruit-bearing trees, should consider the income from those trees if the landowners are primarily dependent on that income.

✓ The court emphasized the need to ensure that compensation adequately reflects the loss of livelihood caused by the acquisition.

✓ Any compensation already received based on land value would be adjusted with 15% interest from the date of receipt, except if the compensation was deposited in court.

Directions

The Supreme Court directed that:

✓ The compensation for the land acquired should be calculated based on the return from the fruit-bearing trees, as calculated by the Reference Court.

✓ The appellants are entitled to additional compensation and solatium.

✓ The appellants are entitled to interest under Section 28 of the Land Acquisition Act, 1984.

✓ Any compensation already received based on land value should be adjusted with 15% interest from the date of receipt, except if the compensation was deposited in court.

Specific Amendments Analysis

(Not Applicable, as no specific amendments were discussed in the judgment)

Development of Law

The ratio decidendi of this case is that when land with fruit-bearing trees is acquired, and the landowners are primarily dependent on the income from those trees, the compensation should be calculated based on the income from those trees, rather than the market value of the land. This clarifies the method of compensation in such cases.

Conclusion

The Supreme Court disposed of the appeals by directing that compensation for the acquired land should be calculated based on the income from fruit-bearing trees, as determined by the Reference Court. The court also clarified that any compensation already received based on land value would be adjusted with 15% interest from the date of receipt, except if the compensation was deposited in court. This judgment provides a clear direction on how to calculate compensation in cases where the landowners are dependent on the income from fruit-bearing trees on the acquired land.