Partly allowed

M/S Arihant Tiles and Marbles Pvt. Ltd. v. N.H.A.I. and Anr.

Rajasthan HC21 Aug 2018CMA/1079/2013

Case brief

AI extract

What is this about?

Cross-appeals under Section 37 of the Arbitration and Conciliation Act arising from orders on compensation for highway land acquisition. The court revised the market value of the acquired land, redetermined compensation for loss of earnings by reducing the multiplier, enhanced solatium, and allowed the appeals in part, rejecting some cross-appeals.

What did the court decide?

Market value of acquired land revised to Rs.550 per sq.ft.; loss of earnings compensation redetermined by applying multiplier of 10; solatium enhanced from 10% to 20%, all with interest at 9% per annu

M/S Arihant Tiles and Marbles Pvt. Ltd. Vs N.H.A.I. and Anr. — Arbitration | Rajasthan HC (2018)

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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(1) S.B. Civil Misc. Appeal No. 176/2016

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M/s Jain Grani Marmo Pvt. Ltd., National Highway No.8, Amberi, Udaipur, through its Director Mukesh Modi s/o Late Shri H.S. Modi, resident of 35, Polo Ground, Udaipur

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----Appellant

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Versus

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National Highway Authority of India (NHAI), through its Chairman, Plot No.G/5-6, Sector No.10, Dwarka, New Delhi.

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Project Manager, National Highway Authority of India, National Highway No.76, 10A Panchwati, Udaipur.

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----Respondents

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Connected With

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(2) S.B. Civil Misc. Appeal No. 1079/2013

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M/s Arihant Tiles & Marbles Pvt. Ltd., National Highway No.8, Amberi, Udaipur, through its Director Mukesh Modi s/o Shri H.S. Modi, resident of 9A, Polo Ground, Udaipur

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----Appellant

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Versus

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National Highway Authority of India (NHAI), through its Chairman, Plot No.G/5-6, Sector No.10, Dwarka, New Delhi.

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Project Manager, National Highway Authority of India, 10A Panchwati, Udaipur.

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----Respondents

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(3) S.B. Civil Misc. Appeal No. 1093/2013

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M/s Mahima Mines & Minerals Pvt. Ltd., Near Charak Upwan, National Highway No.8, Amberi, Udaipur, through its Director Kailash Chander Rajpurohit s/o Shri Moti Singh Rajpurohit, resident of House No.16, Sector 6, Hiran Magri, Udaipur

----Appellant

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Versus

National Highway Authority of India (NHAI), through its Chairman, Plot No.G/5-6, Sector No.10, Dwarka, New Delhi.

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Project Manager, National Highway Authority of India, National Highway No.76, 10A Panchwati, Udaipur.

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----Respondents

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(4) S.B. Civil Misc. Appeal No. 1165/2013

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National Highway Authority of India, New Delhi, through Project Director, National Highway No.76, 10, Paneri Upwan, Bedla, Tehsil Girva, Udaipur, at present 10A, Panchwati, Udaipur (Raj.)

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----Appellant

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Versus

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M/s Arihant Tiles & Marbles Pvt. Ltd., Amberi, Udaipur (Raj.)

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----Respondent

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(5) S.B. Civil Misc. Appeal No. 1166/2013

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National Highway Authority of India, through Chairman, Plot No.G/5 & 6, Sector No.10, Dwarka, New Delhi

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Project Director, National Highway Authority of India, National Highway No.76, 10, Paneri Upwan, Bedla, Tehsil Girva, Udaipur, at present 10A, Panchwati, Udaipur (Raj.)

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----Appellants

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Versus

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M/s Arihant Tiles & Marbles Pvt. Ltd., National Highway No.8, Amberi, Udaipur (Raj.)

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----Respondent

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(6) S.B. Civil Misc. Appeal No. 1167/2013

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National Highway Authority of India, through Chairman, Plot No.G/5 & 6, Sector No.10, Dwarka, New Delhi

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Project Director, National Highway Authority of India, National Highway No.76, 10, Paneri Upwan, Bedla, Tehsil Girva, Udaipur, at present 10A, Panchwati, Udaipur (Raj.)

----Appellants

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Versus

M/s Mahima Mines & Minerals Pvt. Ltd., Near Charak Upwan, National Highway No.8, Amberi, Udaipur (Raj.).

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----Respondent

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For Appellant(s) : Mr. M.S. Singhvi, Sr. Advocate assisted by Mr. Abhishek Mehta in SBCMA No.176/2016, 1079/2013 & 1093/2013. Mr. Vinit Sanadhya in SBCMA No.1165/2013, 1166/2013 and 1167/2013 For Respondent(s) : Mr. Vinit Sanadhya in SBCMA No.176/2016, 1079/2013 & 1093/2013. Mr. M.S. Singhvi, Sr. Advocate assisted by Mr. Abhishek Mehta in SBCMA No.1165/2013, 1166/2013 and 1167/2013.

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HON'BLE MR. JUSTICE P.K. LOHRA

Judgment

Reportable

21/08/2018

All these appeals under Section 37 of the Arbitration & Conciliation Act, 1996 are arising out of different orders passed by the Courts of Additional District Judge at Udaipur on the applications of land owners, whose land is acquired by the National Highways Authority of India (NHAI), however, substantially the issues canvassed by the respective appellants relate to determination of compensation in terms of sub-section (7) of Section 3G of the National Highways Act, 1956 (for short, ‘Act of 1956’). Therefore, all are heard together and disposed of by this common judgment.

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In all, six appeals are preferred, out of which three are by land owners and three by NHAI. In case of acquisition of land of M/s Jain Grani Marmo Pvt. Ltd., it has laid solitary appeal whereas in case of M/s Arihant Tiles & Marbles Pvt. Ltd., to counter its appeal, NHAI has preferred two cross appeals. Likewise, cross appeals are filed by rival parties in case of M/s Mahima Mines & Minerals Pvt. Ltd.

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Scorning the factual matrix in detail, bare necessary facts for the purpose of disposal of all these appeals are that NHAI proceeded to acquire part of the land allotted for industrial purpose by RIICO to the land owners with issuance of Notification under Section 3A of the Act of 1956. While determining compensation, the Competent Authority (L.A.) cum Sub Divisional Officer, Girwa, determined the compensation under different heads with interest under Section 2G of the Act of 1956. The appellant land owners, being dissatisfied with the quantum of compensation determined and awarded, submitted applications under Section 3G(5) of the Act of 1956 for de novo determination of compensation by Arbitrator, to be appointed by the Central Government. The Arbitrator, thereafter, made endeavour to examine the quantum of compensation determined by competent authority under different heads and finally passed Arbitral Awards.

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The Arbitral Awards, passed by District Collector, Udaipur, too did not satisfy the land owners and as per their perception the awards were falling short of requisite considerations envisaged under sub-section (7) of Section 3G of the Act of 1956. This sort

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of situation generated yet another litigation in the matter and consequently on behalf of appellant land owners applications under Section 34 of the Act of 1956 were laid before District & Sessions Judge, Udaipur, which were subsequently transferred for disposal to the Court of Addl. District & Sessions Judge No.1, Udaipur in case of appellants M/s Arihant Tiles & Marbles Pvt. Ltd. & M/s Mahima Mines & Minerals Pvt. Ltd., and to the Court of Addl. District & Sessions Judge No.3, Udaipur in case of appellant M/s Jain Grani Marmo Pvt. Ltd. (for short, ‘learned Court below’).

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The learned Court below decided the applications of M/s Arihant Tiles & Marbles Pvt. Ltd. and M/s Mahima Mines & Minerals Pvt. Ltd. on 3^rd of April 2013, and the application of M/s Jain Grani Marmo Pvt. Ltd. was decided on 23^rd of November 2015.

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Before adverting to the afflictions of appellants against impugned orders, it would be just and appropriate to refer a judgment of this Court dated 17^th of November, 2015 in the matter of M/s. Perfect Thread Mills Limited Vs. The Competent Authority (Land Acquisition) cum SDO Girwa & Anr., wherein vital issue relating to the legal connotation of the words “market value of the land” was examined threadbare and adjudicated. The acquired lands of the appellants are in the proximate area of the land of M/s. Perfect Thread Mills Limited, and therefore, in my view, the said issue is now no more res integra . However, some of the other issues/grounds addressed by the learned counsel for the parties merit judicial scrutiny in individual matters.

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(A) S.B. Civil Misc. Appeal No. 176/2016 (M/s Jain Grani Marmo Pvt. Ltd. Vs. NHAI & Anr.)

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In the instant appeal, appellant Company has questioned adequacy of compensation for acquisition of its land measuring 0.33 hectare. The Land Acquisition Officer determined compensation to the tune of Rs.15,57,918 while fixing market value of the land @ Rs.55.74/Sq.ft. The learned Arbitrator cum District Collector, in the Arbitral Award, did not find any fault with the determination of compensation by the Land Acquisition Officer. Subsequently, the learned Court below also concurred with the Arbitral Award. In this situation, unquestionably, the market value of the lands acquired merits redetermination/enhancement so as to keep on par with the land of M/s. Perfect Thread Mills Limited and consequently the appellant is declared entitled for compensation at the enhanced rate of Rs.550/Sq.ft. and the NHAI shall determine the same to facilitate payment to the appellant. Learned Senior Counsel has also urged that interest on the enhanced amount of compensation is required to be paid from the date of taking possession of the land till actual payment is made in terms of sub-section (5) of Section 3H of the Act of 1956. Learned counsel for NHAI has formally contested the argument of the learned counsel for the appellant.

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There remains no quarrel that possession of the land was taken over by NHAI on 16.12.2005 and the requisite compensation amount was not deposited by the NHAI within 7 days of determination as per Rule 2(b) of the National Highways

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(Manner of Depositing the Amount by the Central Government with the Competent Authority for Acquisition of Land) Rules, 1998, therefore, while maintaining the rate of interest @9% per annum on the enhanced amount, the NHAI is directed to pay interest on the amount of compensation/enhanced amount from the date of taking possession of the land.

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Yet another issue, which is sought to be raised by the appellant, is compensation for loss of earning by reason of acquisition of part of the land and loss due to shifting, including other detriments under misc. heads. For claiming compensation under this head, appellant has precisely placed reliance on the Balance Sheet of the Company for the financial year 2005-2006 and further staked this claim by relying on clause (c) of subsection (7) of Section 3G of the Act of 1956.

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Learned counsel for NHAI, per contra, has urged that Balance Sheet of one financial year showing profits of the Company cannot be treated as a clinching evidence for quantifying the alleged loss of earning much less authentic proof in this behalf. Mr. Sanadhya would contend that the Company as such is divested of part of its land measuring 0.33 hectare out of total 1.30 hectares and therefore it is rather difficult to fathom that it has suffered loss of earning to the tune of Rs.545.42 Lakhs. Learned counsel Mr. Sanadhya has further argued that the claim of appellant for loss due to shifting and other detriments under misc. heads is not sustainable in absence of requisite material in this behalf.

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Upon bestowing my consideration to the arguments, in my opinion, prima facie, loss of earning claimed by the land owner cannot be allowed ad valorem but then acquisition of 0.33 hectare of land has obvious adverse affect on the industrial activities of the Company. The total land acquired by NHAI approximately comes to 25.38%, which has injuriously affected the remaining part of immovable property in some manner and caused loss of earning. A bare perusal of the impugned order as well as Arbitral Award and the order of Land Acquisition Officer, makes it abundantly clear that this aspect has not at all been examined. In land acquisition matters, requisite criteria need to be addressed with pragmatic approach for determining just compensation. It is quite perplexing that while examining claim of the appellant no heed is paid by the learned Court below, learned Arbitrator and the competent authority in this behalf by completely overlooking Section 3G (7)(c) of the Act of 1956.

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Loss of earning, as a recognized injurious affect in case of land acquisition whether partly or wholly, is envisaged under Section 23(1) fourthly of the Land Acquisition Act, 1894 and provision to this effect under Section 3G(7)(c) of the Act of 1956 is para materia to the same. For determining loss of earnings of the person interested in land/land owner, many factors are relevant and germane, viz.; (i) The nature of business/industrial activity, (ii) determination of the land acquired in case of partial acquisition, and (iii) the requisite concrete proof to capitalize the value. While it is true that NHAI has not preferred appeal in the

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matter, but then no compensation under this head is awarded to the appellant by the learned Court below and other forums. Therefore, at this stage, the available material can be objectively examined on the touchstone of factors mentioned hereinabove. The first criteria, i.e. nature of business/industrial activity, is very significant inasmuch as in the present scenario there is a competitive market. Globalization and many economic reforms have created a very tough situation wherein it is rather difficult to assume consistency in future prospects of business/industry much less expectation in ascending order. Moreover, the business/ industrial output is also very much important factor in this behalf.

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Any business or industry giving output of consumer products or eatables by no stretch of imagination be compared with other business or industry. The uncertainty in other class of business/industry is of higher magnitude vis-à-vis former. Therefore, no straightjacket formula can be applied in abstract sense. As the appellant is carrying on business/industrial activity of other class, viz., manufacture and export of marble, it is rather hypothetical to presume consistency in business.

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Secondly, land acquired by NHAI comes to fractionally above 25% of the total land of the appellant, therefore, considering the nature of business/industrial activity, it is presumable that acquisition has obvious injurious affects and some loss of income.

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Thirdly, in support of proof only one year balance sheet is produced by the appellant which in my opinion is not a concrete proof for applying criteria of capitalizing value by pressing into service applicable higher multiplier.

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The Division Bench of Allahabad High Court in the matter of Nagar Mahapalika, Agra Vs. Lajpat Rai Kapoor & Anr. (AIR 1985 All.345), on which reliance is placed by the appellant, is factually distinguishable inasmuch as the Court while examining the multiple applicable for capitalizing value under Section 23(1) (fourthly) of the Act of 1894, considered the nature of business and the extent of land acquired, as in that case the land owner was running a cold-storage on a land measuring 1350 Sq.yds. and out of which 637 yds. was acquired. The Court found that multiple applicable for capitalizing value should be 20. Thus, the land acquired in that matter was nearing 50% of the total land and therefore considering the nature of business, the Court has pressed into service multiple of 20.

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In the instant matter, looking to the nature of the business/industrial activities of the appellant and extent of land acquired, which is fractionally above 25%, coupled with a solitary proof about the profit earned by the industry in the financial year 2005-06, which is the year of acquisition, I feel dissuaded to apply multiple for capitalizing value as the appellant has not placed on record any material to show profit in the preceding years as well as succeeding financial year 2006-07 before the Arbitrator. Therefore, in my opinion, it is just and appropriate to award lumpsum amount of compensation to the appellant for loss of earning. In the backdrop of facts and circumstances of the case, by relying on profit earned by the appellant during the financial year 2005-06, appellant is declared entitled for

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compensation under the head of ‘Loss of Earnings’, ‘Loss Due to Shifting’ and other losses under the misc. heads, to the tune of Rs.50 Lakhs, commensurating with the extent of land acquired, which is about 25%.

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Upon consideration of the available material, I am unable to concur with the submissions of learned Senior Counsel to award compensation for loss due to shifting as well as other detriments suffered by the land owner under misc. heads. As a matter of fact, for substantiating claim under this head, appellant has not placed on record cogent material much less concrete proof.

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The upshot of foregoing discussion is that the instant appeal is partly allowed as indicated supra and the respondent NHAI is directed to redetermine compensation of the land acquired at the enhanced rate of Rs.550/Sq.ft and pay compensation/enhanced amount of compensation within a period of three months from the date of decision with interest @9% per annum payable from the date possession of the land is taken over. The respondent NHAI is further directed to pay additional amount of compensation for loss of earnings to the tune of Rs.70 Lakhs within the stipulated period with interest @9% per annum from the date of taking over possession.

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(B) S.B. Civil Misc. Appeal No. 1079/2013 (M/s Arihant Tiles & Marbles Pvt. Ltd. Vs. NHAI & Anr.) with Civil Misc. Appeals No. 1165/2013 & 1166/2013 (NHAI Vs. M/s Arihant Tiles & Marbles Pvt. Ltd.):

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In these three appeals, order dated 3^rd of April 2013 passed by Addl. District Judge No.1, Udaipur (for short, ‘learned Court

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below’) is under challenge at the behest of land owner as well as NHAI. Appellant land owner has laid challenge to the common impugned order upto the extent of Civil Misc. Case No.06/2012 whereas appellant NHAI has questioned the common impugned order vis-à-vis Civil Misc. Case No.06/2012 as well as Civil Misc. Case No.08/2012.

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At the outset, learned Senior Counsel, appearing for appellant M/s Arihant Tiles & Marbles Pvt. Ltd., has candidly submitted that the crucial question relating to market value of the land acquired is squarely covered by a decision of this Court, rendered in Civil Misc. Case No.717/2011 — M/s. Perfect Thread Mills Limited (supra), to which learned counsel for NHAI has not disputed. If the impugned order is examined in that background, then it would ipso facto reveal that the learned Court below has determined market value of the acquired land @Rs.553.50/Sq.ft., which is fractionally above the market value determined by this Court in M/s. Perfect Thread Mills Limited (supra). Therefore, I feel disinclined to interfere with the impugned order to the extent it has determined market value of the acquired land. At this stage, leaned counsel for the appellant land owner has invited attention of the Court to subsection (5) and Section 3H of the Act of 1956 as well as Rule 2(1) (b) of the Rules of 1998. As per Section 3H(5), interest to the land owner/interested persons is payable from the date of taking possession of the land. Accordingly, the impugned order to that

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extent does not warrant any interference. Consequently, appeal of land owner stands rejected.

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In Civil Misc. Appeal No.1165/2013 NHAI has questioned the impugned order on many counts, including determination of market value of the land by the learned Court below. Suffice it to state that in the considered opinion of the Court, market value of the land determined by learned Court below is just and proper and being on par with the decision in M/s. Perfect Thread Mills Limited (supra), no interference with the impugned order to that extent is warranted. It is also noteworthy that appeal of the land owner/interested person in this behalf has been rejected by the Court.

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The second question, which is sought to be raised by appellant NHAI is awarding of compensation for Loss of Earnings under Section 3G(7) of the Act of Act of 1956. Mr. Vinit Sanadhya, learned counsel for appellant NHAI, has argued that when the land owner/interested person has rest contended with the market value of the land determined by this Court in M/s. Perfect Thread Mills Limited (supra), its claim for ‘Future Loss of Profit’ is not tenable. Elaborating his submissions in this behalf, learned counsel would contend that in M/s. Perfect Thread Mills Limited (supra), the Court has not awarded any compensation under the head ‘Future Loss for Profit’. Alternatively, Mr. Sanadhya submits that multiple of 20 applied by the learned Court below for ‘Capitalizing Value’ vis-à-vis ‘Future Loss of Profit’ is highly improper and per se exorbitant in the

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backdrop of facts and circumstances of the instant case. Learned counsel has further argued that multiple applicable for capitalizing value cannot be pressed into service divorcing the facts of an individual case and therefore the learned Court below has applied the ratio of Lajpat Rai Kapoor (supra) without application of mind, which cannot be sustained.

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Learned counsel has also argued that requisite proofs furnished by the land owner/interested person were grossly inadequate yet the learned Court below has applied multiple of 20 for capitalized value. Mr. Sanadhya has further argued that some of the relevant criterion for determining injurious affect of land acquisition or future loss of earnings have not been properly evaluated by the learned Court below before applying multiple of 20 for capitalization value. Mr. Sanadhya has contended that nature of business/industrial activity of the land owner/interested person and extent of the land acquired are completely overlooked by the learned Court below while awarding compensation for Loss of Future Earnings. Learned counsel has further submitted that the learned Court below has overstepped its jurisdiction while considering the application of respondent-land owner/interested person under Section 34 of the Act of 1956.

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Per contra, learned Senior Counsel has vehemently argued that the compensation determined by the learned Court below for Loss of Future Earnings is just and proper warranting no interference. Mr. Singhvi would contend that upon appreciation of materials available on record, the learned Court below has rightly

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applied multiplier of 20 for capitalizing value and therefore the said finding cannot be made subject matter of judicial review in exercise of appellate jurisdiction. In support of his arguments, Mr. Singhvi, learned counsel for respondent land owner, has placed reliance on following decisions of Supreme Court:

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Ramesh Dutta Vs. State of Punjab & Ors. [(2004) 7 SCC 388]

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State of Maharashtra & Ors. Vs. Reliance Industries Limited & Ors. [(2017) 10 SCC 713]

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Upon examining the matter threadbare, it has come to the fore that in both the appeals subject matter is common but for disposal of two separate applications of the land owner under Section 34 of the Act of 1996. The land acquired is 0.33 hectare out of 1.68 hectare, which comes to 19.64% of the total land. While it is true that land acquired may be of small dimension but then its utility for the business/industry sometime acquires great significance depending on nature of business/industrial activity. At times, a small piece of land, if compulsorily acquired, may prove detrimental to the business/industrial activities of the land owner. From the materials placed on record, by the respondent/land owner, it is abundantly clear that acquisition of part of the land had its serious repercussions on its business. Factum of loss under the head ‘Loss of Earning’ is duly substantiated with the support of requisite material. The learned Court below has, therefore, taken note of the said material to quantify compensation under this head by resorting to Section 3G(7)(c) of the Act of 1956. This sort of approach by the learned Court below, in my view, cannot be construed as perverse or alien to land acquisition proceedings.

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Be that as it may, now I proceed to scrutinize the criteria applied by learned Court below in this behalf, which is assailed vociferously by NHAI. The learned Court below, upon overall analysis of available material, has assessed shortfall in production of the Unit at 15.43% and, thereafter, while considering profit before depreciation to the tune of Rs.122.99 Lakhs, worked out earnings of Rs.48.99 Lakhs. The learned Court below has allowed 15.43% loss of earnings by applying multiplier of 20.

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Supreme Court, in the matter of Ramesh Dutta (supra), while examining Section 23(1) fourthly & fifthly of the Act of 1894, recognized damages for loss of earnings and reasonable expenses for change of place of business. Similarly, in the matter of Reliance Industries Limited and Ors. (supra), the Apex Court, while acknowledging right of an owner/person interested in the land, where portion of land is sought to be acquired rendered the land of less utility by invoking Sections 49 & 23 of the Act of 1894, the Court further held that if the land is rendered valueless then also land owner can claim adequate compensation under Section 23 of the Act of 1894.

¶118

As observed supra, in case of loss of earnings, compensation can be determined by applying a suitable multiplier for capitalizing value. The approach of learned Court below in resorting to multiplier for capitalizing value of loss of earnings by no means be categorized as infirm or alien in land acquisition matters. However, in the backdrop of facts and circumstances of the case, where

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owner’s land sought to be acquired comes to 19.64% of the total land, in my view, applying multiplier of 20 on the percentage of loss of earnings of the land owner is per se excessive. There cannot be any abstract principle for applying multiplier for capitalizing value of loss of earnings and as such while applying multiplier, Court cannot shun its eyes to the nature of business/industrial activities carried out by the land owner and the dimension of the land in case portion of the land acquired. The learned Court below was essentially swayed by the materials placed on record showing earnings of the unit but then while applying multiplier of 20 it has not taken care of acquisition qua part of the land and its detrimental affect on the business/industrial activities with pragmatic approach.

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Learned Court below was quite reasonable in assessing the loss of earnings at 15.43% of the annual earnings of Rs.48.99 Lakhs but in the backdrop of facts and circumstances multiplier of 20 has not been pressed into service appropriately. Division Bench of Allahabad High Court in Lajpat Rai Kapoor (supra) applied multiplier of 20, while considering acquisition of part of land, which was approximately 50% of the total land in the backdrop of business, but strangely the ratio decidendi of this verdict is applied mutatis mutandis by the learned Court below without considering other aspects. In totality, adequate and reasonable compensation payable to the land owner for portion of the land acquired under the head “loss of earnings” can be redetermined/assessed by applying multiplier of 10 and accordingly impugned order to that extant is modified.

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With the result respondent land owner is declared entitled for 15.43% of the annual earnings of Rs.48.99 Lakhs with multiplier of 10.

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The upshot of the above discussion is that both the appeals of NHAI are allowed in part, as indicated supra.

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¶127

These twin cross appeals are directed against impugned order dated 03.04.2013, passed by Addl. District Judge No.1, Udaipur (for short, ‘learned Court below’). Appellant-land owner has precisely challenged the impugned order on two counts, which are viz.; (i) the assessment of market value of the land @Rs.461.25/Sq.ft. and (ii) not awarding damages under the head “loss of earnings” and pro-rata grant/enhancement of compensation towards triangular land being rendered valueless due to division of balanced land into two parts after acquisition which was not awarded by the learned Court below. Per contra, NHAI has assailed the impugned order wholesomely.

¶128

During the course of arguments, learned Senior Counsel, representing the cause of land owner, and learned counsel appearing for NHAI have submitted in unison that the issue, relating to market value of the land acquired, has already been set at rest by this Court in the matter of M/s Perfect Thread Mills Ltd. (supra), and therefore, same merits adjudication in both these appeals in the light of aforesaid judgment. As in case of M/s Perfect Thread Mills Ltd (supra), this Court has settled the issue

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for determining market value of the land acquired @Rs.550/Sq.ft. and the owner’s land acquired by NHAI in the matter is adjacent to the land of M/s Perfect Thread Mills Ltd.(supra), within proximate area, I deem it just and appropriate to revise market value of the land acquired @550/Sq.ft. on par with the M/s Perfect Thread Mills Ltd. This sort of situation ipso facto modifies the impugned order to that extent to facilitate the payment of compensation accordingly.

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Heard learned counsel for the parties on second issue at length as well as on cross appeal by NHAI.

¶133

Switching to the other ground, canvassed by learned Senior Counsel on behalf of land owner, suffice it to observe that business/industry of the land owner at the time of acquisition was in its infancy. From the bare perusal of impugned order, it is abundantly clear that production of the unit had not started, and therefore, obviously at the behest of the land owner, nothing was placed on record to substantiate the plea of loss of earnings.

¶134

While it is true that the land owner has made investments in creating infrastructure but in absence of proof about commencement of business/industrial activity, it is rather difficult to fathom that it has suffered loss much less loss of earnings. It may not be prudent in land acquisition matters to presume estimated loss of earnings in business/industrial activities. The gestation period of a business to boom, at times, takes 3-4 years and in case of industries it may take 7-8 years. Besides that, in

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the present era of globalization and competitive market, future prospects in business/industrial activities are always uncertain. The learned Court below, upon examining the afflictions of land owner in this behalf, has recorded cogent and convincing reasons. There remains no quarrel that in land acquisition matters an incumbent deprived of his land or building is required to be compensated adequately but then for assessing just and reasonable compensation Courts are not expected to rely on hypothetical considerations. An incumbent claiming compensation under the head “loss of earnings”, under Section 3G(7)(c) of the Act of 1956, cannot be allowed compensation sans requisite proof about the same inasmuch as damages for loss of trade earnings would not however include prospective earnings.

¶138

However, at this stage, it is also noteworthy that the land owner in the instant case is deprived of 0.63 hectare of land out of total land admeasuring 1.46 hectare, which approximately comes to 43.15%, therefore, its injurious affect on the remaining immovable property is quite unforeseeable. Strangely, the learned Court below has not at all cared to address on this issue, which requires judicial scrutiny with a benevolent and pragmatic approach. The major portion of the land acquired by NHAI out of the allotted to land owner, presupposes substantial diminution in the business/industrial activities. In the backdrop of business/industrial activities to be undertaken by the land owner, divesting of 43.15% of its allotted land, cannot be underplayed so as to deny compensation on the anvil of injuriously affecting its other immovable property. While it is true that there is no

¶139

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[CMA-176/2016]

¶141

material placed on record for substantiating its claim vis-à-vis loss of earnings but then this vital aspect cannot be completely eschewed. That apart, a triangular land admeasuring 16146 Sq.ft. was rendered valueless is yet another relevant consideration for grant of compensation, which the learned Court below has declined by simply awarding amount of solatium @10%.

¶142

Supreme Court in Reliance Industries Ltd. & Ors. (supra), while examining this aspect, recognized grant of adequate compensation qua the land which is rendered valueless. The Court held:

¶143

“We find no merit in the aforesaid submission. Firstly, it presupposes ownership of land also is with owner of building; if that be so, the owner can exercise the option for acquisition of the entire building and land which is available under Section 49 of the Act and besides that the owner can be compensated also in case he is having any interest in the land and in case his land is rendered of less utility, obviously he can claim compensation under the provisions of the Land Acquisition Act. If the land is rendered valueless then also adequate compensation can be claimed under the provisions of Section 23 in accordance with law. In case right is affected in land which is not acquired by severance, for that also compensation can be claimed. Thus, the submission so placed is factually incorrect and legally unsustainable.”

¶144

In overall objective analysis of the entire scenario, it has emerged out that the portion of land acquired by NHAI and the triangular land admeasuring 16146 Sq.ft. rendered valueless, has obvious ill-effects on the rights of land owner. This sort of situation has persuaded the Court to award some amount to the land owner for covering its inconvenience and distress as a consequence of compulsory acquisition of the land. A welfare

¶145

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State cannot shirk from its responsibility to provide “money comfort” as a conciliatory measure for compulsory acquisition of land of the citizen. In legal parlance, awarding such amount is called “Solatium”. Although learned Court below has awarded Solatium @10%, but in all fairness, Court feels that it is inadequate and falling short of the criteria for just and reasonable compensation. Therefore, in my considered opinion, for doing substantial justice in the matter, amount of solatium merits reasonable enhancement.

¶148

Supreme Court, in case of Narain Das Jain Vs. Agra Nagar Palika [(1994) 4 SCC 212], while highlighting significance of award of solatium, observed:

¶149

The importance of the award of solatium cannot be undermined by any procedural blockades. It follows automatically the market value of the land acquired, as a shadow would to a man. It springs up spontaneously as a part of the statutory growth on the determination and emergence of market value of the land acquired. It follows as a matter of course without any impediment. That it falls to be awarded by the court “in every case” leaves no discretion with the court in not awarding it in some cases and awarding in others. Since the award of solatium is in consideration of the compulsory nature of acquisition, it a hanging mandate for the court to award and supply the omission at any stage where the court gets occasion to amend or rectify. This is the spirit of the provision, wherever made.

¶150

Upon considering facts in entirety, in my view, it would be just and appropriate to enhance amount of solatium @20% from 10% awarded by learned Court below on the compensation amount payable to the land owner as per market value determined supra. The amount of solatium being part of

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compensation shall also carry interest @9% from the date of dispossession of land owner till date of payment.

¶154

The upshot of above discussion is that the appeal filed by land owner bearing No.1093/2013 is partly allowed as indicated hereinabove and the appeal filed by NHAI bearing No.1167/2013 is hereby rejected.

¶155

Final Conclusion:

¶156

S.B. Civil Misc. Appeal No. 176/2016 (M/s Jain Grani Marmo Pvt. Ltd. Vs. NHAI & Anr.) is partly allowed as indicated supra.

¶157

S.B. Civil Misc. Appeal No. 1079/2013 (M/s Arihant Tiles & Marbles Pvt. Ltd. Vs. NHAI & Anr.) is rejected and S.B. Civil Misc. Appeals No.1165/2013 & 1166/2013 (NHAI Vs. M/s Arihant Tiles & Marbles Pvt. Ltd.) are partly allowed as indicated hereinabove.

¶158

S.B. Civil Misc. Appeal No. 1093/2013 (M/s Mahima Mines & Minerals Pvt. Ltd. Vs. NHAI & Anr.) is partly allowed and S.B. Civil Misc. Appeal No. 1167/2013 (National Highway Authority of India Vs. M/s Mahima Mines & Minerals Pvt. Ltd.) is rejected as concluded above.

¶159

The costs are made easy.

¶160

(P.K. LOHRA),J

M/S Arihant Tiles and Marbles Pvt. Ltd. v. N.H.A.I. and Anr.

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M/S Arihant Tiles and Marbles Pvt. Ltd. v. N.H.A.I. and Anr.

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