State of Kerala v. Thomas — 1984 DIGILAW 202 (KER)

JUDGMENT Varghese Kalliath, J. 1. The Judgment of the court was delivered by Varghese Kalliath, J.- This is an appeal by the State. A piece of land measuring 1.620 Hectares in Sy. No. 1/30 of Kandalad Village was acquired by the Government. The Land Acquisition Officer passed an Award fixing the compensation. The claimant (respondent in this appeal) was not satisfied with the compensation fixed by the Land Acquisition Officer. He caused a reference under S.20 of the Land Acquisition Act to the Subordinate Judge's Court, Badagara. 2. The respondent in this appeal raised before the Trial Court several grounds for enhancement of compensation. The Trial Court passed a decree on 6th March 1973 granting substantial enhancement of compensation. The State filed an appeal as A. S. 333/1973 before this court against the decree of the Subordinate Judge, dated 6th March 1973. This court decided A. S. 333/1973 by a common judgment, dated 10th March 1975. On many matters of controversy the findings of the Trial Court were upheld by this court. This court found that the valuation in regard to certain items was not satisfactory and the decree of the Trial Court was set aside in regard to these specific items and directed a fresh disposal of the case on these points in the light of the observations in the judgment. On 3 items this court directed fresh valuation. 3. In regard to fixing the value of the rubber trees, this court directed the Trial Court to adopt 3 kgms. of rubber as the yield per tree. In regard to fixing the price of rubber the direction in the judgment in A. S. 333/73 was that it should be consistent with Ext. A-2 notification. The Trial Court was asked to fix afresh the compensation for arecanut trees yielding and non yielding. 4. The Trial Court considered the points directed to be decided by the Trial Court and passed a decree fixing an enhanced compensation of Rs. 74,952.80. The State is not satisfied with the decree. The State challenges the decfce in this appeal. 5. The learned Advocate General who argued the case formulated three points. He contended that the respondent is not entitled to a separate land value when the valuation of the property is based on capitalisation of the income of the property. 74,952.80. The State is not satisfied with the decree. The State challenges the decfce in this appeal. 5. The learned Advocate General who argued the case formulated three points. He contended that the respondent is not entitled to a separate land value when the valuation of the property is based on capitalisation of the income of the property. The second point raised is that the multiplier applied namely 16 for capitalisation is unsustainable in law in view of the recent decision reported in The Special Land Acquisition Officer, Davangere v. P. Veerabhadrappa etc. (1984) 1 SCWR 3. The third point argued by the learned Advocate General is in respect of the quantum of income from the rubber trees. He contended that the income determined by the lower court from the rubber trees is excessive and against the specific direction of this court in the judgment in A.S. 333/1973. 6. The Land Acquisition Officer has awarded an amount of Rs. 5523 as land value. A reading of the operative portion of the judgment under appeal would show that the learned Judge has not granted land value separately. The learned Judge held that the total compensation the respondent is entitled to is only Rs. 1,53,394-69 and the solatium thereon. The total compensation referred to above takes in only compensation for improvements without the land value. The learned Judge directed deduction of the amount awarded by the Land Acquisition Officer from the amount fixed by the court and a decree for the balance amount alone has been granted. So, it is clear that no separate compensation for land has been given by the Trial Court. We are passing a fresh decree in this case and we are not granting separate compensation for the land apart from the compensation fixed on the basis of income from the property. 7. The court below has taken the multiplier for capitalisation as 16. The learned Advocate General submitted that the multiplier 16 is unsustainable. He submitted that the multiple that can be adopted is only 10 times. He submitted that the rule as to number of years purchase is not a theoretical or legal rule but, this rule is geared to various economic factors particularly the prevailing rate of interest on money investments. The learned Advocate General submitted that the multiplier 16 is unsustainable. He submitted that the multiple that can be adopted is only 10 times. He submitted that the rule as to number of years purchase is not a theoretical or legal rule but, this rule is geared to various economic factors particularly the prevailing rate of interest on money investments. He pointed out that in deciding this matter, the main ingredients to be considered are security of income, fluctuation, chances of increase in the cost of collection and kindred matters. The basic factor according to him in applying the method of capitalisation of income for ascertaining the market value of the property is the rate of return that an ordinary investor would reasonably get on his investment, having due regard to all the relevant facts and circumstances. It is difficult to lay down a hard and fast rule that 20 years or 25 years purchase has to be adopted in every case. The rate of return at the relevant time namely on the date of notification should govern the matter. He also pointed out that in regard to investment in agricultural lands, there are many difficulties. There is lack of liquidity in agricultural investment. There is also lack of certainty in regard to the income. He also referred to the wet blanket created in the matter of transfer ability of agricultural holdings due to land reforms acts and ceiling laws. He has also asked us to keep in mind the danger of an easement of rights in land in regard to certain classes of land holders. It cannot be denied that so far as agricultural lands are concerned in our State, the investor runs a great risk, perhaps he runs a far greater risk than the risk involved in investment in Government securities or in banks. Considering all these aspects, the learned Advocate General points out that a multiple based on the interest rate of 6 1/2 per cent or 6 1/2 per cent cannot be accepted by this court. The learned Advocate General rightly relied on, to substantiate his points the decisions reported in Union of India v. Shanti Devi AIR 1983 SC 1190 and The Special Land Acquisition Officer, Devangere v. P. Veerabhadrappa etc. (1984) 1 SCWR 3. The learned Advocate General rightly relied on, to substantiate his points the decisions reported in Union of India v. Shanti Devi AIR 1983 SC 1190 and The Special Land Acquisition Officer, Devangere v. P. Veerabhadrappa etc. (1984) 1 SCWR 3. In the former case, the Supreme Court fixed the multiplier as 15 and in the latter case the Supreme Court fixed the multiplier as 12 1/2. 8. Counsel for the respondent submits that he was entitled to payment of the compensation as early as 1968, when he was deprived of the property on 6th May 1968 and that a final adjudication of that compensation he is entitled is done only now. The money value has substantially depreciated and what compensation he is getting now, is not at all the real market value of the property. Further, he submitted that there is no merit in the argument that 'the multiplier that has to be adopted must be based on the prevailing interest rate or bank rate when the Government is paying only 4 per cent interest on the Award amount due to the claimants. The counsel submits that the interest rate that has to be taken note of for fixing the compensation and for the purpose of arriving at the proper multiplier should be based on what has been provided for in the Land Acquisition Act itself namely 4 per cent. When the Government thinks that 4 per cent interest is a fair and reasonable interest for retaining the amount due to persons from whom the property has been acquired exercising the eminent domain power of the Government, it is not fair and equitable to adopt a different rate of interest as a reasonable and fair rate of interest. 9. Of course, in this case, we are not bound to discuss the question in great depth. The undisputed phenomina of mountanious inflation and the value of rupee dropping to cavernous depth is a matter on which the courts can mould the relief is not free from doubt. It is a question of serious semantics and impact. 10. Lord Denning said in the case of Tresber Griffin v. Cooperative Insurance Society, 1956 (2) QB 149. "In England, we have always looked upon the pound as a pound whatever its international value is. It is a question of serious semantics and impact. 10. Lord Denning said in the case of Tresber Griffin v. Cooperative Insurance Society, 1956 (2) QB 149. "In England, we have always looked upon the pound as a pound whatever its international value is. Creditors and debtors have arranged for payment in our sterling currency in the sure knowledge that the sum they fixed will be upheld by the law. A man who stipulates for a pound must take a pound whenever payment is made, whatever the pound is worth at that time." This was said in 1956, but times have changed. In 1978, Mr. Justice Brown Wilkinson substantially departed from what has been said in Tresber Griffin perhaps because of 20 years experience of continuing inflation. In Multi Service Book Binding Ltd. v. Marden (1978) 2 All. KER 489 Mr. Justice Brown Wilkinson observed: "Denning, L. J. prefaces the material passage by the words, and I quote, 'I am not altogether sure that it is lawful'. These are not words of decision, but of doubt. Therefore, in my opinion, Denning Lord Judge's dictum is not strictly binding on me." Times are changing and we feel that we will be forced to revise our views about the principle of nominalism as it is called. Dr. F. A. Mann in his book on the legal aspects of money, 3rd Edition at Page 100 said: "If the trend of inflation which has clouded the last few decades continues, some relief in the case of long term obligations will become unavoidable." That was written in 1971. Inflation has been more rampant than ever since that time. The point raised by the counsel is interesting and require deeper consideration of course not in this case. 11. We are not called upon to consider the question of multiplier in this case for a valid reason. The question regarding as to what is the multiplier that has to be adopted in this case was also a question which was considered by this court in A.S. 333/1973. This court held that the respondent is entitled to a capitalisation on a 16 times multiple. The parties are bound by the findings of this court in A.S. 333/1973. The question regarding as to what is the multiplier that has to be adopted in this case was also a question which was considered by this court in A.S. 333/1973. This court held that the respondent is entitled to a capitalisation on a 16 times multiple. The parties are bound by the findings of this court in A.S. 333/1973. So, the question is when this court has held in this case at an earlier stage that the multiple that has to be adopted is 16 times, whether the Trial Court was justified in adopting that multiple. We entertain no doubt about it. The Trial Court is bound by the earlier judgment of this court. This court fixed the multiple as 16 times. The Trial Court is bound to adopt that multiple and if the court departs from that, it will be committing a serious error. The learned Advocate General also agreed that the Trial Court is perfectly correct in adopting the multiple as 16 times. He agrees on this point on two reasons; first on the ground that the law was clearly laid down by the Supreme Court only after the judgment of the Trial Court. He is also prepared to accept the contention of the respondent that even if the Supreme Court had laid down the law prior to the pronouncement of the Trial Court judgment, the Trial Court is bound by the judgment of this court in A. S. 333/1973 wherein this court allowed the multiple as 16 times. The learned Advocate General further argued that even though the Trial Court has got inhibitions or limitations in considering the question of multiple afresh, this court has no such limitation and that this court is free to decide the question of multiple dehorse the judgment in A.S. 333/1973. 12. The appeal no doubt is in the nature of re-appraisal of facts and evidence. But that does not mean that it is in the nature of a fresh trial. All that an appellate power spells is the power to consider on the merits in the decision of a lower court or a tribunal. Even here ordinarily, a restriction is imposed on the exercise of the appellate power. In the decision reported in Stepney B. C. v. Jotte (1949) 1 All. All that an appellate power spells is the power to consider on the merits in the decision of a lower court or a tribunal. Even here ordinarily, a restriction is imposed on the exercise of the appellate power. In the decision reported in Stepney B. C. v. Jotte (1949) 1 All. ER 256 Lord Goddard, C. J. dealing with the appellate power said: "It is constantly said (although I am not sure that it, is always sufficiently remembered) that the function of a court of appeal is to exercise its powers where it is satisfied that the judgment below is wrong not merely because it is not satisfied that the judgment was right." Thus, usually an appellate court will not interfere with a finding of fact where it is not satisfied that it is wrong even where it is satisfied that it is not quite, right. But, in the present case, this court must proceed on the footing that the Trial Court is absolutely correct in fixing the multiplier as 16. 13. It cannot be disputed that the order of remand would become final if not attacked by an appeal and it cannot be challenged in the appeal from the decree after remand. So also, the propriety of an order of remand not appealed from cannot be questioned in an appeal on merits from final decree. In the decision reported in Nainsingk v. Koonwarjee, AIR 1970 SC 997 it has been held: "The High Court in our opinion, erred in holding that the correctness of the remand order was open to review by it. The order in question was made under R.23 O.41, Civil Procedure Code. That order was appealable under order 43 of that Code. As the same was not appealed against, its correctness was no more open to examination in view of S.105(2) of the Code which lays down that where any party aggrieved by an order of remand from which an appeal lies docs not appeal therefrom he shall thereafter be precluded from disputing its correctness. The High Court has misconceived the scope of its inherent powers. Under the inherent power of courts recognised by S.151 CPC. a court has no power to do that which is prohibited by the Cod. The High Court has misconceived the scope of its inherent powers. Under the inherent power of courts recognised by S.151 CPC. a court has no power to do that which is prohibited by the Cod. Inherent jurisdiction of the court must be exercised subject to the rule that if the Code does contain specific provisions which would meet the necessities of the case, such provisions should be followed and inherent jurisdiction should not be invoked. In other words the Court cannot make use of the special provisions of S.151 of the Code where a party had his remedy provided elsewhere in the Code and he neglected to avail himself of the same. Further the power under S.151 of the Code cannot be exercised as an appellate power." 14. We do not think that we can consider the question of multiplier in this case. Accordingly, we hold that the multiplier adopted by the lower court cannot be assailed in this appeal. 15. It was contended that the net income determined by the Trial Court in regard to rubber trees is not in accordance with the directions of this court in the judgment in A.S. No. 333/1973. We think that this submission is correct. The Trial Court found the net income from one rubber tree would be Rs. 9.85 and the gross income from one rubber tree would be Rs. 12.45. This figure was arrived at by the Trial Court on the basis that 3 kgms. is the yield from one tree. This yield (3 kgms.) is unquestionable since this court directed the Trial Court in the earlier judgment (A.S. No. 333/73) to adopt 3 kgms. as the yield per tree. The questions that were left to be decided by the Trial Court were in regard to the price of the rubber and also the cost of maintenance. In regard to the price of rubber, this court directed to adopt the price in the notification. The Trial Court has adopted the price as Rs. 4.15 being the notified price for R. M. A, 1 type. This court cannot interfere in the matter of yield and the price. The Trial Court has gone wrong clearly in determining the cost of maintenance and other incidental expenses. There was a clear direction by this court in the judgment in A.S. No. 333/1973 to fix the maintenance cost at 50 per cent of the gross income. This court cannot interfere in the matter of yield and the price. The Trial Court has gone wrong clearly in determining the cost of maintenance and other incidental expenses. There was a clear direction by this court in the judgment in A.S. No. 333/1973 to fix the maintenance cost at 50 per cent of the gross income. As stated earlier, the total income is Rs. 12.45 and the 50 per cent to be deducted for maintenance will come to Rs. 6.25 and so, the net income from one rubber tree would be only Rs. 6.25. The court below has found the net income at Rs. 9.85. This, we cannot accept. We fix the net income from one rubber tree as Rs. 6.25. Calculating the value on the basis of this net income, the total amount the respondent is entitled to is only Rs. 35,556 for the rubber trees. The court below has granted an amount of Rs. 56,263.21. This is wrong. The respondent is entitled to only Rs. 35,556. 16. The learned Advocate General submitted that the valuation made by the court below in respect of the arecanut trees is incorrect. The court below has adopted the valuation on the basis of the commissioner's report, No valid challenge has been made in regard to the commissioner's report. The commissioner has adopted only a 1 minimum yield. We find no ground for interference with I the award of compensation made by the court below in respect of the arecanut trees. In the result, we find that the total amount of compensation the respondent [petitioner in L. A. (O. P.) 345/68] I would be entitled to get is only Rs. 1,32,687.57 and 15 per cent solatium instead of Rs. 1,53,394.69 and solatium, The Land Acquisition Officer awarded an amount of Rs. 1,01,450.10. It is made clear that the respondent is entitled only to an amount of Rs. 1,32,687.50 with 15 per cent solatium and 4 per cent interest per annum from 6th May 1968 less what has been received by him. The respondent will be entitled to get the commission batta paid by him as part of the cost of proceedings. The appeal is allowed to the extent indicated with proportionate cost in this appeal.