Case Note & Summary
The Supreme Court of India dismissed an appeal by special leave against a judgment of the Punjab & Haryana High Court that had reduced compensation awarded to a landowner for loss of poultry business due to acquisition of land for extension of the Amritsar cantonment. The dispute arose from a notification under Section 4(1) of the Land Acquisition Act, 1894 published on July 11, 1977, acquiring a large tract of land including the appellant's poultry farm. The Land Acquisition Officer made an award under Section 11, and on reference under Section 18, the Additional District Judge determined compensation for loss of profits at Rs.6,54,637, applying a 15-year multiplier based on the Assistant Director of Poultry Farm's notification of a return of Rs.1.38 per bird per month for 2500 birds. In a writ petition, a learned Single Judge of the High Court reversed that finding, holding the appellant entitled to only Rs.31,050 for loss of business for a reasonable period of five to six months. The Division Bench confirmed that decision, leading to the appeal. The appellant argued that clause fourthly of Section 23(1) of the Act entitled him to compensation for damage sustained at the time of the Collector's taking possession injuriously affecting his earnings, and clause fifthly entitled him to compensation because he had to travel five kilometres from the State border to Pakistan, secure land in an insecure place, and shift his business. The Supreme Court rejected these contentions, holding that clause fourthly only compensates damage sustained at the time of possession injuriously affecting other property or earnings from the property, not loss of business until the claimant resettles. The Court further held that clause fifthly only awards reasonable incidental expenses for change of residence or place of business, such as transport charges for displacement and carrying materials, and does not cover disadvantages of a far-off or insecure alternative location. The Court observed that the learned Single Judge might be right in granting compensation only for a reasonable period of six to seven months, but declined to lay down a principle that loss of business until resettlement and associated expenses should always be a component of compensation under Section 23(1). The appeal was dismissed with no order as to costs.
Headnote
A) Land Acquisition - Compensation for Loss of Earnings - Clause fourthly of Section 23(1) of Land Acquisition Act, 1894 - Compensation for damage sustained at time of Collector's taking possession injuriously affecting other property or earnings from the property; does not extend to loss of profits until resettlement - The appellant's poultry farm was acquired, and the reference court awarded Rs.6,54,637 using a 15-year multiplier for loss of profits, but the High Court restricted compensation to loss for 5-6 months. Held that the mere fact of displacement and inability to re-establish a poultry business elsewhere cannot enlarge compensation under clause fourthly; the measure is the earnings from the acquired property at the time of possession, not future profits until resettlement (Paras 1-2) B) Land Acquisition - Compensation for Change of Residence or Place of Business - Clause fifthly of Section 23(1) of Land Acquisition Act, 1894 - Only reasonable incidental expenses for change of residence or place of business caused by acquisition - The appellant contended that he had to travel 5 km from the border and secure land in an insecure place, requiring change of business. Held that securing alternative land at a far-off or insecure place does not qualify for compensation under clause fifthly; only transport charges incurred for displacement and carrying materials are compensable (Paras 1-2)
Issue of Consideration
Whether compensation under clauses fourthly and fifthly of Section 23(1) of the Land Acquisition Act, 1894 includes loss of business earnings until the claimant resettles or re-establishes business elsewhere, and expenses or disadvantages of shifting to a far-off or insecure place.
Final Decision
The Supreme Court dismissed the appeal, upholding the High Court's decision that compensation under clauses fourthly and fifthly of Section 23(1) does not include loss of business profits until resettlement or disadvantages of a far-off insecure alternative location. No costs were awarded.
Law Points
- Section 23(1) fourthly compensates only damage sustained at time of Collector's taking possession injuriously affecting other property or earnings from the property
- clause fifthly awards only reasonable incidental expenses for change of residence or place of business
- loss of business till claimant is resettled and expenses incurred in that behalf cannot always be a component of compensation under Section 23(1)
- mere fact of displacement and inability to re-establish business cannot enlarge compensation
- securing alternative land at a far off or insecure place does not qualify under clause fifthly
