WALCHANDNAGAR INDUSTRIES LTD vs STATE OF MAHARASHTRA

WALCHANDNAGAR INDUSTRIES LTD vs STATE OF MAHARASHTRA - Supreme Court Case 2022

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 2671­2672 of 2016
WALCHANDNAGAR INDUSTRIES LTD.          ... APPELLANT (S)
VERSUS
THE STATE OF MAHARASHTRA & ANR.         ... RESPONDENT(S)
J U D G M E N T
V. Ramasubramanian, J.
1. Challenging a common Judgment rendered by the High Court
of Judicature at Bombay in two appeals, modifying the award of
the   Reference   Court   passed   under   Section   18   of   the   Land
Acquisition Act,1894, the claimant­landowner has come up with
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these civil appeals.
2. We have heard Mr. Gopal Sankaranarayanan, learned senior
advocate appearing for the appellant; Mr. Sachin Patil, learned
advocate appearing for the first respondent­State and Mr. Deepak
Nargolkar,   learned   senior   advocate   appearing   for   the   second
respondent­beneficiary.
3. The   appellant   is   a   company   incorporated   under   the
Companies Act.   It has established a township in a vast area
measuring about 16000 acres of land, located 136 kms. away from
Pune. The nearest railway station to the township is at Bhigwan,
located 36 kms. away from Walchandnagar Township.
4. For the purpose of transporting sugarcane and other goods,
the appellant had laid trolley lines covering a distance of 50 kms.
inside its estate. The appellant has also set up a 36 km. narrow
gauge   trolley   line   from   Walchandnagar   to   Bhigwan   for
transportation of heavy engineering goods.
5. In the year 1967, the Government of Maharashtra approved
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the BHIMA (Ujjani) Irrigation Project.  As part of the project, a 18
feet   height   dam   across   the   Bhima   River   was   proposed   to   be
constructed at Ujjani about 1½ kms. upstream from Hingangaon
bridge on Pune­Sholapur National Highway. Before undertaking
the construction of the dam, a general survey was carried out,
which revealed that a section of the trolley line may get submerged.
Therefore,   a   spate   of   correspondence   and   personal   discussions
ensued   between   the   officials   of   the   Government   and   the
representatives   of   the   appellant   for   exploring   the   possibility   of
diverting the trolley line.
6. It   is   the   case   of   the   appellant   that   they   wanted   the
Government to invoke the urgency clause for the acquisition of
some other land for diverting the trolley line. But it is the case of
the   respondents   that   the   appellant   had   by   then   abandoned
transportation   through   trolley   line   and   switched   over   to   road
transport.
7. Be that as it may, a notification under Section 4 of the Land
Acquisition Act, 1894 was published on 26.10.1972. The proposal
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included the land on which a section of the trolley line passed. The
extent of land covered by the trolley line that was expected to be
submerged was measured to be 6 hectares 7 ares.  Since the total
land acquired for the project, included the lands of the appellant,
which were located in different villages, a series of awards were
passed.
8. For   our   present   purpose,   it   may   be   noted   that   the   Land
Acquisition Officer passed an award on 9.12.1981. The claim of the
appellant in the Award Enquiry was not only for the market value
of   the   land,   but   also   for:  (i)  compensation   for   the   loss;   and
(ii) compensation for the injurious affection due to the trolley line
becoming obsolete. The claim of the appellant also included a claim
for   the   loss   sustained   by   the   appellant   on   account   of   the
unacquired portion being rendered useless.
9. By his Award dated 9.12.1981, the Land Acquisition Officer
awarded :
(i) Rs.15,329 for the acquired portion of land;
(ii) Rs.39032.94 for embankments, rails, bullies, sleepers; 
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(iii) Rs.43,491.12 for C.D. works; 
(iv) Rs.12,754.17 towards labour charges for removing rails
and steel sleepers; and 
(v) Rs.16,591.08 for solatium.
10. In   effect,   the   Land   Acquisition   Officer   awarded   total
compensation   of   Rs.1,27,198.31/­   and   rejected   the   claim   of
Rs.1,49,85,251/­ for the unacquired portion.
11. Not satisfied with the award, the appellant sought a reference
under Section 18 on 12.01.1982. It was referred to the District
Court, Pune, which took the same on file as Land Acquisition
Reference No.6 of 1982.
12. Before   the   Reference   Court,   the   appellant   claimed
enhancement of compensation for the land acquired. In addition,
the   appellant   also   claimed   compensation   for   severance   and
compensation   for   injurious   affection.   The   claim   under   different
heads was summarized by the Reference Court in paragraph 14 of
its award and it is reproduced for easy appreciation as follows:­
SUMMARY OF CLAIM FOR COMPENSATION
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I. Land in Acquisition in Kumbhargaon village
1 Lands acquired 50,325­00
2 Embankment 63,850­00
3 C.D. Works 68,200­00
4 Trees 360­00
1,82,735­00
5 Solatium @ 15% 27,410­00
Total 2,10,145­00
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SEVERANCE AND INJURIOUS AFFECTION
II. SEVERANCE
A Land 6,03,800­00
B Diminution in value of lands in
Walchandnagar Township
8,64,000­00
C Embankment,   C.D.   Works   and
buildings
18,85,200­00
D Trees 27,000­00
Total 33,80,000­00
III. INJURIOUS AFFECTION
E Rails Sleepers etc. 42,45,000­00
F Girders (remove) Nil
G Telephone line 16,000­00
H Rolling Stocks 22,17,600­00
I Increase in transportation costs 80,07,180­00
J Remodeling of Bhigwan Yard  4,72,100­00
K Loss of earnings (profits) 35,62,000­00
L Retrenchment compensation 1,00,000­00
Total for injurious affection 1,86,19,700­00
Total for Severance and Injurious affection II + III
(Rs.33,80,000 + 1,86,19,700 = 2,19,99,700)
IV. TOTAL COMPENSATION
I Land 2,10,145­00
II Severance 33,80,000­00
III Injurious Affection 1,86,19,700­00
Total Rs.2,22,09,845­00
IV Less   :   Compensation   as
awarded by S.L.A.O No.1, Pune
on 9th December 1981
1,27,198­00
V Net amount of enhancement  2,20,82,647­00
VI Interest on total compensation
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from the date of possession to
date   of   payment   of
compensation @ 4% per annum
under Section 34 of L.A. Act is
to   be   paid   by   Government   to
the Claimant
13. Eventually by a Judgment dated 14.03.1990, the Reference
Court, (i) enhanced the compensation for the acquired part of the
land to Rs.55,893.23; and (ii) fixed an amount of Rs.80,09,725 as
compensation on account of severance and injurious affection.
14. Aggrieved by such enhancement and fixation, the State of
Maharashtra filed an appeal in First Appeal No.653 of 1991. Not
satisfied with the quantum fixed, the appellant also filed an appeal
in First Appeal No.709 of 1991. Both the appeals were disposed of
by a Division Bench of the Bombay High Court by a Judgment
dated 19.11.2008. By this Judgment the High Court awarded: 
(i) a   compensation   of   Rs.20,62,006/­   towards   severance
(unacquired trolley line) payable with solatium at 30%
working   out   to   Rs.6,18,601.80,   thus   totaling   to
Rs.26,80,607.80; 
(ii) a compensation of Rs.7,39,280/­ for injurious affection,
payable together with solatium at 30% working out to
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Rs.2,21,784/­, thus, totaling to Rs.9,61,064/­; and 
(iii) a   compensation   of   Rs.1,23,231.25   towards   acquired
trolley line together with solatium at 30% working out to
Rs.36,969.37, thus, totaling to Rs.1,60,200.62. The High
Court also held that the claimant company (appellant)
will be entitled to interest under Section 28 as well as
34, on the entire amount of compensation as well as
solatium from March­1976 till the date of deposit.  
15. It is against the aforesaid Judgment dated 19.11.2008 passed
in   First   appeal   Nos.653   and   709   of   1991   that   the   claimant
(landowner) has come up with the above appeals. The State does
not appear to have filed any appeal.
16. As observed by the High Court, the award of the Reference
Court was in two parts. The first part dealt with the claim for
compensation on account of severance and injurious affection in
respect   of   the   trolley   line   running   across   28   kms.   in   the
unacquired portion of the land measuring abut 60.38 hectares.
The second part of the award was in respect of the trolley line
spread over about 7 kms. in the area submerged in water. For a
better understanding of the arithmetic, it will be useful to present in a
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tabulation, the different heads of claim, the amount claimed by the appellant, the amount
awarded by the Reference Court and the amount to which the compensation was reduced by the
High Court:-
Heads of claim Amount
claimed   by
appellant 
Amount  awarded
by   Reference
Court
Amount
granted   by
High Court
Severance
1 Land 6,03,800 1,50,950 1,50,950
2 Diminution   in
value
8,64,000 Nil Nil
3 Embankments,
C.D. Works etc.
18,85,200 20,16,019 19,11,056
4 Trees 27,000 Nil Nil
Injurious
Affection
1 Rails Sleepers etc. 48,45,000 31,21,816 6,08,942
2 Telephone Line 16,000 Nil Nil
3 Rolling stocks 22,17,600 17,79,884 Nil
4 Increase   in
transportation
costs
80,07,180 8,00,718 Nil
5 Remodelling   of
Bhigwan Yard
4,72,100 1,30,338 1,30,338
6 Loss   of   earnings
(profits)
35,62,000 Nil Nil
7 Retrenchment
compensation 
1,00,000 10,000 Nil
17. As could be seen from the above tabulation, the appellant
suffered a huge set back before the High Court, mainly under three
heads of claims, which relate to severance and injurious affection
in respect of the trolley line running in the unacquired portion of
land. These three items are (i) rails and sleepers; (ii) rolling stocks;
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and (iii) increase in transportation cost. At the cost of repetition,
we will once again present in a tabulation, the amount claimed by
the appellant, the amount awarded by the Reference Court and the
amount to which the award was reduced by the High Court under
these three heads, so that we have a better focus.
Heads Amount claimed  Awarded   by
Reference
Court
Awarded   by
High Court
Rails   &
Sleepers
48,45,000 31,21,816 6,08,942
Rolling Stocks 22,17,600 17,79,884 Nil
Increase   in
transportation
cost
80,07,180 8,00,718 Nil
Total 1,50,69,780 5,702,418 6,08,942
18. Insofar   as   rails   and   sleepers   which   became   obsolete   are
concerned, the claim of the appellant was that they could not be
sold as such, in view of the fact that the railways had switched
over to broad gauge.   Though the appellant had to spend huge
money for the removal of the rails and sleepers, they had to be sold
only as scrap. According to the appellant, the Government turned
down the proposal for a new line and hence they were entitled to
be compensated to the extent of the value of the rails and sleepers
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which became obsolete.
19. The Reference Court found as a matter of fact that the entire
track   had   become   completely   useless   and   that   the   rails   and
sleepers   had   to   be   sold   only   as   scrap.   Though   the   appellant
examined a qualified valuer by name Shri Talim, as a witness to
show the loss sustained by them, the Reference Court could not go
entirely   by   his   evidence,   as   he   admitted   to   have   no   personal
knowledge, but went by the information supplied by the appellant.
The Reference Court found that the trolley line was laid in the year
1946   and   the   valuation   was   made   as   of   the   year   1976.   The
Reference Court, therefore, applied depreciation @ 35% and arrived
at the figure of Rs.31,21,816.
20. The   High   Court   set   aside   the   compensation   awarded   in
respect of the rails and sleepers in the unacquired portion of the
land, but confirmed the compensation for the acquired portion of
the land on the ground that the appellant did not take effective
steps to lay an alternative trolley line. The High Court disbelieved
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the case set up by the appellant that the Government was not
responsive to their demand for invocation of the urgency clause to
acquire the land needed for alternative trolley line. The High Court
found, from the balance sheets that the appellant had not suffered
any loss on account of being compelled to switch over to road
transportation.
21. Insofar as rolling stock is concerned, the Reference Court
accepted the evidence of Mr. Kamat, a qualified valuer examined as
PW­13. The Reference Court took the life of locomotives to be 20
years and the life of wagons to be 35 years, on the basis of the
guidelines   issued   by   National   Council   of   Applied   Economic
Research. After accepting the evidence of PW­13 that the estimated
cost of the rolling stock would be Rs.48,49,618/­, the Reference
Court   applied   an   arithmetical   formula   with   reference   to   the
residual life and the total life of the locomotives and three wagons
and arrived at the depreciated value as Rs.22,36,424.70.   From
this amount the Reference Court deducted the scrap value and
arrived at the compensation of Rs.17,79,884/­.  
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22. However, the High Court rejected the report of Mr. Kamat
(PW­13), on the ground that he started valuation only after the
year 1983 and that his valuation was based on 1986 prices. The
High Court also found that the appellant continued to use the
rolling stocks for the trolley line to a length of 14 kms. till the year
1983 and that, therefore, the appellant was not entitled to any
compensation on this count.
23. As   regards   “increase   in   transportation   cost”,   the   Reference
Court found:
(i) that the appellant was forced to discontinue the most
convenient and economical mode of transport;
(ii) that even if the appellant had resorted to an alternative
route for the trolley line, the same would have been
longer by 12 kms, warranting an expenditure of Rs.1.50
crores;
(iii) that   the   Government   could   not   have   invoked   the
urgency clause, for  acquiring land for alternative trolley
line, as the acquisition could not have been considered
as one for public purpose but rather for the benefit of a
company.
(iv) that the appellant was able to prove through credible
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evidence that the cost of transporting 35,000 tones of
goods p.a. increased from Rs.0.20 per km. to Rs.0.80
per km.
(v) that, therefore, the appellant should be compensated for
the increase in transportation cost.
24. The Reference Court agreed with the appellant that the loss of
earnings for the appellant, in this regard, was Rs.80,07,180/­, but
awarded compensation only for one year as against the claim of the
appellant for a period of 10 years. The Reference Court awarded a
sum of Rs.8,00,718/­.
25. The   High   Court   set   aside   the   amount   awarded   by   the
Reference Court under this head on  the ground that the appellant
did not suffer any loss of profit on account of the increase in the
transportation cost, as the same would have been passed on to the
customers. The High Court observed that the balance sheets for
the period 1972­78 did not show any loss. The High Court went by
the presumption that transportation cost is always factored into
the manufacturing cost of the goods.
26. In the light of the manner in which the High Court interfered
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with the award of the Reference Court, it was contended by Mr.
Gopal Sankaranarayanan, learned senior counsel for the appellant:
(i) that the appellant cannot be blamed for not finding an
alternative   route   to   lay   the   trolley   line   and   for   not
insisting   on   the   Government   to   invoke   the   urgency
clause for the acquisition of some other land for laying
trolley line, as the provisions of Section 17 could not
have been invoked for the benefit of a company;
(ii) that in any case an alternative trolley line would have
admittedly cost Rs.1.50 cores and the same would have
been 12 kms. longer than the existing line, resulting in
an increase in the operational cost;
(iii) that the appellant was able to prove by cogent evidence
that the cost of transportation by road was higher;
(iv) that the High Court failed to note that the profit of the
appellant went down from Rs.96.07 lakhs  in 1975­76 to
Rs.40.80 lakhs in 1976­77;
(v) that   there   was   neither   any   pleading   nor   evidence   to
show that the transportation cost was passed on to the
customers;
(vi) that the High Court failed to note that the acquisition of
land on which a trolley line to a distance of 6 kms.
passed, led to the investment on 28 kms. of trolley line
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in the unacquired portion being rendered useless;  
(vii) that about 3 diesel locomotives and over 100 wagons
were rendered useless due to the acquisition;
(viii) that the High Court misread the evidence of PW­13 as
though he took the price as of the year 1986;
(ix) that despite best efforts, the appellant could sell only
some of the locomotives, on account of there being no
market for them; and 
(x) that, therefore, the High Court was completely in error
in rejecting the claim of the appellant and also reducing
the amount awarded by the Reference Court.
27. In response, it is contended by Mr. Deepak Nargolkar, that
the appellant set up a bogey of a claim about the trolley line in the
unacquired portion of land becoming redundant and that having
admittedly   switched   over   to   road   transportation   way   back   in
September   1972,   the   appellant   was   not   entitled   to   claim   any
compensation for the purported increase in transportation cost.
Placing reliance upon the decision of this Court in Wazir vs. State
of Haryana1
, it was contended by Mr. Deepak Nargolkar that the
1 (2019) 13 SCC 101
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additional component of compensation in terms of clause “thirdly”
under Section 23(1) of the Act is to be granted only when the value
of the left over land is effectively diminished in terms of quality.
Therefore, it is his contention that severance charges in cases of
this nature cannot be allowed.
28. We have carefully considered the rival contentions.   As the
dispute now stands confined only to three heads of claims, namely,
(i)  rails   and   sleepers;  (ii)  rolling   stocks;   and  (iii)  increase   in
transportation cost, we shall deal with them item­wise. 
Law on compensation for severance and injurious affection
29. Before we consider the aforesaid three heads of claim itemwise, it may be useful to take note of the legal principles on the
basis of which these claims are to be tested.
30. Sections 23 and 24 of The Land Acquisition Act, 1894 provide
two   lists   of   matters   respectively,   namely  (i)  matters   to   be
considered in determining compensation; and  (ii)  matters to be
neglected in determining compensation. Section 23(1), which alone
is relevant for our present purposes, is extracted as follows:­
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“23.   Matters   to   be   considered   in   determining
compensation­  (1)   In   determining   the   amount   of
compensation to be awarded for land acquired under
this Act, the Court shall take into considerationfirst, the market­value of the
land at the date of the
publication   of   the
notification   under
section   4,   sub­section
(1);
secondly
,
the   damage   sustained
by   the   person
interested, by reason of
the   taking   of   any
standing   crops   trees
which   may   be   on   the
land at the time of the
Collector's   taking
possession thereof;
thirdly, the   damage   (if   any)
sustained by the person
interested, at the time of
the   Collector's   taking
possession of the land,
by   reason   of   severing
such   land   from   his
other land; 
fourthly, the   damage   (if   any)
sustained by the person
interested, at the time of
the   Collector's   taking
possession of the land,
by   reason   of   the
acquisition   injuriously
affecting   his   other
property,   movable   or
immovable, in any other
manner,   or   his
earnings; 
fifthly, in   consequence   of   the
acquisition   of   the   land
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by   the   Collector,   the
person   interested   is
compelled to change his
residence   or   place   of
business,   the
reasonable   expenses   (if
any) incidental to such
change; and 
sixthly, the   damage   (if   any)
bona fide resulting from
diminution of the profits
of the land between the
time  of  the  publication
of the declaration under
section 6 and the time
of the Collector's taking
possession of the land.”
31. In simple terms, the six items covered by Section 23(1), which
are to be taken into consideration by the court in determining
compensation, can be summarised as follows:­
(i) The   market   value   of   the   land   on   the   date   of
publication of notification under Section 4(1);
(ii) The damage to standing crops or trees, which are
on   the   land   at   the   time   of   the   Collector   taking
possession;
(iii) The damage sustained by reason of severing such land
from the unacquired land;
(iv) The   damage   sustained   by   reason   of   the   acquisition
injuriously   affecting   the   other   property,   movable   or
immovable, in any other manner or the earnings, of the
person interested;
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(v) The reasonable expenses incurred by the person
interested,   in   changing   his   residence   or   place   of
business, when he is compelled to do so in consequence
of the acquisition;
(vi) The damage bona fide resulting from diminution of the
profits of the land between the time of publication of the
declaration   under   Section   6   and   the   time   of   the
Collector’s taking possession.
32. The points arising for determination in these appeals revolve
around   clauses   “thirdly”   and   “fourthly”   of   Section   23(1).   These
clauses are referred to in common parlance as clauses concerning
‘severance’ and ‘injurious affection’ respectively.
33. But clauses “thirdly” and “fourthly” of Section 23(1) cannot be
considered in isolation. They have to be read together with Section
49 which reads as follows:­
“49.  Acquisition of part of house or building­.
(1) The provisions of this Act shall not be put in force
for the purpose of acquiring a part only of any house,
manufactory or other building, if the owner desire that
the   whole   of   such   house,   manufactory   or   building
shall be so acquired:
Provided that the owner may, at any time before the
Collector has made his award under section 11, by notice in writing, withdraw or modify his expressed desire  that   the  whole  of  such  house,  manufactory or
building shall be so acquired:
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Provided also that, if any question shall arise as to
whether any land proposed to be taken under this Act
does or does not form part of a house, manufactory or
building within the meaning of this section, the Collector shall refer the determination of such question to
the Court and shall not take possession of such land
until after the question has been determined.
In deciding on such a reference the Court shall have
regard to the question whether the land proposed to be
taken is reasonably required for the full and unimpaired use of the house, manufactory or building.
(2) if, in the case of any claim under section 23, subsection (1), thirdly, by a person interested, on account
of the severing of the land to be acquired from his
other land, the appropriate Government is of opinion
that the claim is unreasonable or excessive, it may, at
any time before the Collector has made his award, order the acquisition of the whole of the land of which
the land first sought to be acquired forms a part.
(3) In the case last hereinbefore provided for, no fresh
declaration or other proceedings under sections 6 to
10, both inclusive, shall be necessary; but the Collector shall without delay furnish a copy of the order of
the appropriate Government to the person interested,
and shall thereafter proceed to make his award under
section 11.”
34. It may be noted that clause  thirdly  of Section 23(1) relates
only to land, as it speaks only about the severance of the acquired
land from the unacquired land and the damage sustained as a
consequence. In contrast, clause  fourthly  of Section 23(1) deals
with the damage sustained by the person interested, due to the
injurious affection, (i) of his other movable property; (ii) of his other
22
immovable property; and (iii) of his earnings. In other words what
is injuriously affected at the time of Collector’s taking possession of
the land, may either be the unacquired portion of the immovable
property or other movable property or even the earnings of the
person interested.
35. It   may   also   be   noted   that   the   expression   used   in   clause
fourthly  is “earnings”, while the expression used in clause sixthly
is “profits”. But clause sixthly is confined only to diminution of the
profits   of   the   land   between   the   time   of   publication   of   the
declaration under Section 6 and the time of the Collector taking
possession.
36. Coming to Section 49, it deals with two contingencies. They
are, (i) cases where what is sought to be acquired is only a part of
any house, manufactory or other building; and (ii) cases where a
claim for compensation under the head ‘severance’ under clause
thirdly of Section 23(1) arises.
37. In so far as the 1st  contingency is concerned there is a bar
under sub­section(1) of Section 49 for the acquisition of a part only
23
of any house, manufactory or other building, if the owner desires
that the whole of such house, manufactory or building shall be so
acquired.
38. In so far as the 2nd contingency is concerned, there is a choice
given to the appropriate Government to order the acquisition of the
whole of the land, if the appropriate Government is of the opinion
that the claim for severance compensation is un­reasonable or
excessive.  
39. The distinction between the scope of sub­section (1) and the
scope of sub­section (2) of Section 49 was brought out by this
Court in M/s Harsook Das Bal Kishan Das   vs.  The First Land
Acquisition Collector and Others2
 as follows:­
“12. The object of Section 49(1) of the Act is to give to
the owner the option whether he would like part to be
acquired. The Government cannot take the other part
under Section 49(1) of the Act unless the owner says
so. Section 49(2) of the Act has nothing to do with
Section 49(1) of the Act. Section 49(2) of the Act gives
the option to the Government only where the claim
under the third clause of Section 23(1) of the Act is
excessive.   Reference   to   the   third   clause   of   Section
23(1) of the Act makes it clear that the claim under the
third   clause   of   Section   23(1)   is   for   severance.   The
Government   in   such   a   case   of   acquisition   of   the
remaining portion of the land under Section 49(2) of
2 (1975) 2 SCC 256
24
the   Act   saves   the   public   exchequer   money   which
otherwise   will   be   the   subject­matter   of   a   claim   for
severance.”
40. In the case on hand, the provisions of Section 49(1) have no
application. This is due to the fact that the appellant never desired
that   the   whole   of   the   manufactory   shall   be   acquired   by   the
Government.   In   fact,   the   total   extent   of   land   owned   by   the
appellant was about 16000 acres, on which a township had come
up. Therefore, there was no occasion for the appellant to exercise
any   option   invoking   Section   49(1).   In   any   case,   the   appellant
actually   requested   the   Government   to   acquire   land   from   other
people, to divert the trolley line. Therefore, Section 49(1) has no
application to the case on hand.
41. Section 49(2) also may not have any application for the reason
that   the   appropriate   Government   did   not   think   fit   to   seek
acquisition of the whole of the land on which the remaining portion
of   the   trolley   line   existed,   on   the   ground   that   the   claim   for
severance   compensation   was   un­reasonable   or   excessive.
Therefore, it is enough for us to go back to clauses  thirdly  and
25
fourthly  of  Section 23(1) without the constraints of sub­section (1)
or (2) of Section 49.
42. As   we  have   indicated  earlier,  clause  thirdly  relates  to   the
damage sustained by the person interested, by reason of severance
of the acquired land from the unacquired land, at the time of
Collector’s   taking   possession   of   the   land.   In   contrast,   clause
fourthly  of   Section   23(1)   deals   with   the   damage   sustained   by
reason   of   the   acquisition   injuriously   affecting,    (i)  the   other
movable   property;  (ii)  the   other   immovable   property;   and/or
(iii) the earnings of the person interested.
43. The claim of the appellant before the Reference Court under
clauses thirdly and fourthly of Section 23(1), presented a mix­up,
with some items overlapping with others. This can be seen from
paragraph 22 of the award of the Reference Court, where the claim
of the appellant is extracted by the Reference Court as follows:­
“22. The main grievance of the Claimant Company is
that   the   Special   Land   Acquisition   Officer   has   not
considered   at   all   the   Claimant’   claim   for   damages
suffered   by   the   Claimant   Company   on   account   of
severance   and   injurious   affection.   Although   the
opponent has acquired only 6 kilometers, i.e., about
26
20.74   Hectares   of   land   under   the   trolley   line,   this
acquisition   has   rendered   the   remaining   portion   of
about 30 Kilometers, i.e., 60.38 Hectares of the land
under the trolley line totally useless.  In other words,
the contention of the Claimant Company is that the
acquisition of only 6 kilometers has not only deprived
the Claimant Company of the use of the trolley line
facility, but it has also rendered the remaining portion
of the trolley line of 30 kilometers, i.e. 60.38 hectares
of   land,   the   rolling   stock,   three   diesel   engines,
buildings, telephone line and all other items connected
with   the   trolley   line,   such   as,   civil   works,
embankments,  C.D. works, culverts, bridges,  totally
redundant and obsolete.  The claim can be divided into
two categories as follows:
i) Enhancement of compensation in respect of the
acquired portion of the land; and
ii) The compensation for the damages suffered by
the Claimant Company in respect of the unacquired portion of the trolley line on account of
severance and injurious affection under the following head:
1) Unacquired portion of the land admeasuring about 60.38 hectars.
2) The entire railway track of 36 kilometers
comprising  of rails, sleepers, girders, etc.
3) Rolling   stocks,   various   types   of   wagons,
tankers etc.
4) Diesel Engines three;
5) Telephone line and telephone poles, trees,
wells, etc. Embankments, C.D. works, Bridges,
Culverts   building,   non­operation   of   nearly   30
kilometers;   Diminution   in   the   value   of
Walchandnagar  Township,   due   to   discontinuance of the trolley line facility which was hitherto available to the said Industrial Complex, the
Additional cost of transport for switching over
from trolley line transport to road transport, the
cost of remodeling the yard at Bhigwan Station
in order to suit the trans­shipment of loading
27
and unloading by road transport; total retrenchment compensation for about 52 persons, specially trained and employed for the operation   of
trolley line, who had come to be  absorbed   by
the   Claimant   Company   on   humanitarian  
grounds and loss of earnings.”
44. The second category of claim indicated in paragraph 22 of the
award of the Reference Court, extracted above, contains a mix of
claims that may fall under clauses thirdly, fourthly and sixthly of
section 23(1). But fortunately the rejection of some of those claims
are not taken up now by the appellant. In the appeals on hand, the
claim is restricted only to three items namely, (i) the value of rails
and sleepers;  (ii)  the value of rolling stock; and  (iii)  increase in
transportation   costs.   These   items   are   covered   only   by   clause
fourthly of Section 23(1) and they do not fall under clause thirdly.
45. Even within clause fourthly, what we are concerned in these
appeals is the injurious affection of, (i) movable property such as
rails and sleepers and rolling stock; and  (ii)  the loss of earnings
due to increase in transportation costs. But unfortunately what the
appellant did was to claim a sum of Rs.80,07,180/­ towards increase   in   transportation   costs   and   a   separate   amount   of
28
Rs.35,62,000/­ towards loss of earnings. Even under the heading
‘loss of earnings’, what was claimed was actually loss of profits.
The appellant did not realize that the diminution of profits fell under clause sixthly of Section 23(1) and the claim under this head is
restricted to the time between the date of publication of the declaration under Section 6 and the time of Collector taking possession.
Injurious affection to earnings is covered by clause fourthly and the
statute has made a distinction between,              (i) injurious affection to earnings; and (ii) diminution of the profits between the time
of publication of the declaration under Section 6 and the time of
taking possession.
46. The Reference Court rejected the claim for compensation of
Rs.35,62,000/­ towards loss of earnings, on the ground that it
overlapped with the claim under the heading ‘increase in transportation costs’. It is perhaps after realizing such overlapping of
claim that the appellant has confined their claim in the present appeals only to injurious affection,  (i)  to rails and sleepers;  (ii)  to
29
rolling stock; and (iii) to earnings due to increase in transportation
costs, all of which fall under clause fourthly of Section 23(1).  
47. One of the earliest cases to be decided on the question of injurious affection, was a Division Bench decision of the Calcutta High
Court in R.H. Wernickle and Ors.    vs.    The Secretary of the
State for India3
 .  The said case arose out of the acquisition of
land which included a tea estate. The purpose of the acquisition
was the extension of the rifle range of the Cantonment in the Villages of Lebong and Pandan at Darjeeling. A claim for injurious affection was made by the owners of the tea estate on the ground
that they were forced to stop work in the unacquired portion of the
tea estate, during the time when firing was practiced in the rifle
range. Dealing with the claim, Doss, J. opined, “There can be no
doubt that it is extremely unsafe to work on land situate behind the
butts when firing is going on, and the consequent loss of time must
inevitably increase the cost of cultivation”. Therefore, Doss, J., held
that the owners of the tea estate were entitled to compensation for
the injurious affection of the 8 acres of tea land behind the butts.
3 2 Ind.Cas 562
30
Expressing concurrence with the view of Doss, J., Richardson, J.
observed: “ It is said that the rifle range will interfere with the working of 8 acres of land behind the butts and I think that there can be
no doubt as to this. It will not be safe to put coolies on the land
when the range is being used”.  An argument was advanced by the
Government that the contemplated injury was contingent and that
it could arise only from the negligent use of the range and that the
same would fall under the category of actionable nuisance. Rejecting the said argument, Richardson, J., opined: “But it is not clear
that the injury which the claimants contemplate will amount to an
actionable nuisance. The Government will have the right to use the
land as a rifle range and no doubt it may be presumed that it will be
so used with the greatest care and circumspection. But even so, no
prudent owner would put his coolies on the land behind the butts
while firing was going on”. 
48. In  Balammal    vs.    State   of   Madras4
,   this   Court   was
concerned   with   a   land   acquisition   under   the   provisions   of   the
4 AIR 1968 SC 1425
31
Madras   City   Improvement   Trust   Act,   Section   71   of   which
authorized   the   Board   of   Trustees   to   acquire   land   under   the
provisions of The Land Acquisition Act, 1894 with the previous
sanction   of   the   Government.   When   the   dispute   relating   to
determination of compensation ultimately landed up before this
Court, the argument of one of the land owners was that a part of
the compound of a cinema theatre was acquired compulsorily and
that it deprived the owner of the land, of the facility of providing
additional   amenities   to   the   patrons   of   the   theatre   and   also   of
making constructions on the land expanding the business. The
claim was pitched in the alternative on clauses  thirdly,   fourthly
and sixthly of Section 23(1). While agreeing on principle about the
entitlement of a person interested to compensation under these
clauses, this Court rejected the claim in that case, on the ground
that there was no evidence either to show any loss by reason of
severance   or   to   show   that   the   remaining   land   was   injuriously
affected by reason of acquisition or to show that the earnings of the
owners were affected.
32
49. Therefore, keeping in mind the above legal principles,  let us
now take up for consideration, the claim of the appellant in these
appeals.
Rails and Sleepers
50. It   was   the   claim   of   the   appellant   that   Walchandnagar
Township is situate at a distance of 36 kms. from Bhigwan Railway
Station on the Central Railway line and that with a view to provide
a direct and rapid connection from Walchandnagar to Bhigwan, the
appellant had provided its own trolley line with a private telephone
line, goods yard with transshipment siding and other facilities. The
trolley line was laid in the year 1946. According to the appellant,
35,000 tonnes of material used to get transported through this
trolley line which included heavy machinery. Part of the trolley line
got submerged  in the backwaters of Ujjani Dam and the remaining
portion of the trolley line situate in the unacquired part of the land
had become useless. According to the appellant, they had to spend
Rs.1,90,000/­   for   the   removal   and   transport   of   the   material
relating to trolley line.  The proposal for acquisition of alternative
33
land to lay a new trolley line did not materialize due to various
problems, not attributable to the appellant.  In any case, the cost
of such acquisition was estimated at Rs.1.5 crores even at that
time. The rails and sleepers forming part of the trolley line to a
length   of   28   kms.   had   thus   become   useless.   Therefore,   the
appellant claimed a sum of Rs.50,08,328/­ towards compensation
for rails and sleepers.
51. This claim was resisted by the respondents on the ground
that the trolley line was laid in the year 1946 for the purpose of
carrying material from the sugar industry and that the appellant
started   manufacturing   heavy   machinery   only   from   1956.   The
trolley line was actually a narrow gauge line, having a width of
2  feet  6  inches.  Therefore,  the  respondents  contended that  no
compensation was payable towards rails and sleepers, especially
when   the   appellant   had   also   claimed   compensation   towards
increase   in   transportation   costs   for   switching   over   from   rail
transport to road transport.
52. Before the Reference Court, the Chief Administrative Manager
34
of the appellant, who was a qualified Civil Engineer was examined
as PW­1, and a retired Director of Town Planning was examined as
PW­15. Both these witnesses referred to the quotations given by
Hindustan Steels Limited, towards estimated cost of laying the
trolley line. After allowing depreciation and the value for which the
material was sold and after adjusting transportation cost, these
witnesses   estimated   the   cost   of   rails   and   sleepers   at
Rs.50,08,288/­.
53. Though the respondents examined one Shri Mahajan, who
also   produced   independent   calculations,   the   Reference   Court
rejected   his   evidence   on   the   ground   that   it   did   not   inspire
confidence.   Interestingly   the   Reference   Court   did   two   things,
namely,  (i)  it   agreed   that   the   method   or   formula   adopted   by
Shri Mahajan was proper and recognized by the standard authors
and   yet   rejected   his   evidence;   and  (ii)  it   agreed   with   the
submissions of the Government Pleader as to why the evidence of
Shri Talim, retired Director of Town Planning should not be relied
upon, but eventually held that the evidence of Shri Talim cannot
35
be discarded totally. Thereafter, the Reference Court proceeded to
take   the   estimated   cost   of   rails   and   sleepers   at   Rs.2,41,053/­
per km., and applied a depreciation of 35% and arrived at the
depreciated value at Rs.1,56,650/­ per km. Applying this rate for
the trolley line of a distance of 35 kms. and after deducting the
actual scrap value received by the appellant, the Reference Court
arrived   at   the   compensation   for   rails   and   sleepers   at
Rs.31,21,816/­. 
54. Both the appellant as well as the State Government were
aggrieved by the compensation so fixed by the Reference Court and
both of them were on appeal before the High Court. The High Court
held that the appellant was not entitled to any compensation for
rails and sleepers lying in the trolley line for a distance of 28 kms.,
since the appellant was at fault for not taking effective steps to lay
alternative trolley line to a distance of 6 to 7 kms. which got
submerged in the backwaters. The High Court held that in any
case, the appellant did not suffer any loss, as was evident from the
balance sheets placed on record upto the year 1978. The finding
36
recorded   by   the   High   Court   in   this   regard   may   be   usefully
extracted as follows:­
“In   our   opinion,   the   company   cannot   be   granted
compensation for rails and sleepers covering 28 kms.
of the trolley line.  In the earlier part of this judgment
we have held that the company was at fault in not
taking due steps to lay the alternative trolley line for 6
to 7 kms. area submerged in the backwater.  It gave
up this proposal by its own choice and the reasons put
forward   before   the   Reference   Court   were   false   and
fabricated.  Even otherwise the company did not suffer
any   loss   after   the   trolley   line   was   discontinued   in
1976, as was evident from the balance–sheets placed
on   record   upto   the   year   1978.     The   increase   in
transport cost i.e. road transportation by trucks was
offset by increasing the manufacturing cost which is
so obvious from the fact that the company did not
incur   any   losses   after   it   resorted   to   road
transportation.   The company could not have prayed
for injurious affection on account of discontinuation of
the trolley line and claimed compensation for rails and
sleepers spread over 28 kms. of the trolley line.  We do
not find any justification that the company should be
allowed to go with this compensation amount and have
the double benefit.   It would be a premium for its
inaction for laying the alternative trolley line.”
55. After rejecting the claim with regard to the rails and sleepers
of the trolley line for a distance of 28 kms., on the basis of the
reasons   extracted   above,   the   High   Court   proceeded   to   award
compensation for the rails and sleepers in the trolley line to a
distance of 7 kms. which got submerged in the backwaters.  This
compensation, payable for the rails and sleepers in the trolley line
37
to a distance of 7 kms. which got submerged in the backwaters,
was worked out, by accepting the depreciated cost fixed by the
Reference Court at Rs.1,56,650/­ per km. For a distance of 7 kms.,
it worked out to Rs.10,96,550/­. From this amount the High Court
deducted   the   scrap   value   of   Rs.4,87,608/­   and   arrived   at   the
compensation payable under this heading at Rs.6,08,942/­
56. But as rightly contended by Shri Gopal Sankaranarayanan,
learned senior counsel for the appellant, the acquisition of land for
laying alternative trolley line was not an easy task, especially when
there were lot of land owners. The urgency clause under Section 17
of the Land Acquisition Act could not have been invoked, as the
appellant is a company.
57. The fundamental flaw in the reasoning of the High Court is
that the High Court presumed that it was enough if the land for
relocating 7 kms. of trolley line was acquired. If trolley line to a
distance of 7 kms., out of a total stretch of 35 kms. admittedly got
submerged in the backwaters, the trolley line relating to the entire
stretch would naturally become redundant. Railway line is not like
38
a roadway. Roads can take deviation easily, but not railway lines.
Therefore, if land had to be acquired for relocating the trolley line,
it should have been for the entire stretch of 35 kms. It is not
possible to retain 28 kms. of trolley line and relocate the remaining
7 kms. stretch alone. Therefore, we are of the considered view that
the High Court committed a gross error in reversing the finding of
the Reference Court under this heading.
Rolling Stocks
58. The claim of the appellant was that due to the entire trolley
line becoming useless, three diesel locomotives, about 100 four
wheeler   wagons,   few   8   wheeler   wagons   and   a   one   way   bridge
became   redundant   and   that   they   are   entitled   to   compensation
towards   the   loss   of   value/utility   of   these   rolling   stocks.   The
appellant quantified the claim under this head at Rs.22,16,044/­.  
59. This claim was resisted by the Government on the ground
that the appellant was put on notice of the proposed acquisition
way back in 1967 and that after showing inclination to lay an
alternative   trolley   line   at   the   initial   stages,   the   appellant
39
abandoned the proposal in the year 1974 and that, therefore, the
claim for compensation under this head was liable to be rejected.
60. The   appellant   examined   an   Industrial   Consultant   and   a
registered valuer by name Shri Kamat, in support of this claim. His
report containing the valuation of the rolling stock was filed as
Exhibit­93.     This   witness   testified   that   before   preparing   the
estimate, he obtained quotations from one Shahajhan Engineers
and Suyog Electricals.
61. Though   the   respondents   relied   upon   the   evidence   of   the
Executive Engineer, Mechanical Division, examined as DW­5, the
Reference Court rejected his evidence on the ground that it was of
no assistance. This witness had admitted that he never had any
occasion to value any railway wagons or locomotives.
62. In   the   light   of   the   oral   and   documentary   evidence,   the
Reference   Court   came   to   the   conclusion   that   the   life   of   the
locomotives can be taken as 20 years and the life of wagons can be
taken   as   35   years.     Applying   depreciation   on   a   straight   line
formula, the Reference Court arrived at the depreciated value of
40
rolling   stock   as   Rs.22,36,424.70/­.     After   deducting   the   scrap
value   of   Rs.4,56,540/­,   the   Reference   Court   fixed   the
compensation payable for the rolling stock at Rs. 17,79,884.70/­.
63. The High Court, on re­appreciation of evidence found that the
appellant company did not bring before the Court, the book value
of the rolling stock. But the expert witness Shri Kamat examined
as PW­13 admitted during cross­examination that as per the Asset
Register maintained by the appellant relating to the year 1986, the
value of the rolling stock was almost zero. By selling the rolling
stock   as   scrap,   the   company   had   actually   earned   a   sum   of
Rs.4,56,540/­. Moreover the High Court found from the evidence
on record that within the company premises, the trolley line to a
distance of 14 kms. was in operation till the year 1983.  This was a
clear indication that the rolling stock was used at least till the year
1983.   Therefore,   the   High   Court   reversed   the   grant   of
compensation made by the Reference Court in respect of the rolling
stock.
64. Though it is contended on behalf of the appellant that the
41
evidence of PW­13 (Shri Kamat) was misread by the High Court
and that due to good maintenance, the life of the rolling stock had
increased, we do not think that the view taken by the High Court
was completely out of sync with the evidence on record. The High
Court   has   actually   extracted   one   portion   of   the   evidence   of
Shri   Kamat   (PW­13).   He   has   clearly   admitted   that   though   he
inspected the Assets Register in 1986 before preparing the report
he did not record in his report, the book value of the asset.   He
clearly stated  “it is possible that in book value, the assets might
become zero value in the instant case.”
65. Therefore, no exception can be taken to the finding recorded
by the High Court insofar as rolling stock is concerned.
Increase in transportation cost
66. In simple terms, the claim of the appellant was that the cost
of transportation through trolley line was Rs.0.20 per km. per
tonne and that the cost of transportation by road was Rs.0.80 per
km. per tonne.  Since a portion of the trolley line got submerged in
the backwaters and as a consequence, the entire stretch of trolley
42
line became unusable, the company had to switch over to road
transport, resulting in an increased cost of Rs.8,00,718/­ per year.
Applying   a   multiplier   of   10,   the   appellant   made   a   claim   for
Rs.80,07,180/­ under this head.
67. The appellant examined the Chief Administrative Manager as
PW­1, the Planning Manager as PW­3 and a person working as a
clerk in the transport Section of the company as PW­6. The Chief
Accountant of the company was examined as PW­7 and a person
who was carrying on road transport business under the name and
style of Purohit Road Lines was examined as PW­12.  
68. The Reference Court accepted the evidence adduced on the
side of the appellant and came to a conclusion that the appellant
was transporting about 35,000 tonnes of goods per year through
the trolley line at the cost of Rs.0.20 per tonne per km and that the
cost   of   road   transport   for   the   same   quantity   of   material   was
Rs.0.80 per km. per tonne. The Reference Court thus arrived at the
increase in the cost of transportation per year at Rs.8,00,718/­.
43
However, the Reference Court rejected the claim of the appellant in
this regard for a total period of 10 years, on the ground that there
is no basis for allowing such a claim for a total period of 10 years.
Therefore   as   against   the   claim   of   the   appellant   for   a   sum   of
Rs.80,07,180/­ (increase in cost for 10 years), the Reference Court
awarded only Rs.8,00,718/­ (increase in cost for one year only).
69. The High Court reversed the finding of the Reference Court on
the short ground that the appellant had not demonstrated to have
suffered   any   loss   of   profits   on   account   of   the   increase   in   the
transportation cost and that even the balance­sheets for the years
1972 to 1978 did not disclose any loss of profit. Therefore, the High
Court opined that the increase in transportation cost, even if any,
would have been absorbed in the price charged to the customers
and that there was no case for allowing compensation under this
head even for one year, when the appellant had not suffered any
loss of profit. In fact, the appellant had made a claim separately for
a sum of Rs.35,62,000/­ towards loss of profits, but the same was
turned down by the Reference Court. Therefore, the High Court
44
held   that   the   Reference   Court   could   not   have   granted   any
compensation under this heading ‘increase in transportation cost’.
70. The objections of the appellant to the finding of the High
Court   in   this   regard   are   two­fold   namely,  (i)  that   the   profits
actually went down from Rs.96.07 lakhs in 1975­76 to Rs.40.80
lakhs in 1976­77; and (ii) that without any evidence on record the
High Court presumed that the increase in transportation cost was
off­set and recovered from the buyers of the goods manufactured
by the company.
71. Insofar as the first objection is concerned, we must point out
at the outset that the Notification for acquisition under Section 4
was   published   in   the  Government   Gazette  on   26.10.1972.   The
declaration   under   Section   6   was   published  in   the   Government
Gazette on 01.08.1974. Notices under Sections 9(1) and 9(2) were
published   in   September­1974   and   Feburary­1975.   Though   the
exact date on which possession was taken is not mentioned by
either of the parties, the appellant has stated in their synopsis that
the Government took possession of the land in 1976.
45
72. The appellant has produced before us the copy of the balancesheets and profit & loss account for the years 1975­76 and 1976­
77.   From these balance­sheets and profit & loss accounts, it is
sought   to   be   highlighted   that   the   appellant   made   a   profit   of
Rs.96.07 lakhs during the year 1975­76 and that the profit went
down to Rs.40.83 lakhs during the year 1976­77. 
73. If this claim of the appellant is taken to be true, it would
mean that the appellant suffered a reduction in profit to the tune
of about Rs.55,00,000/­in one year immediately after possession of
the land was taken. The balance sheets and profit & loss accounts
produced by the appellant before us are as on 30.09.1976 and
30.09.1977. Even according to the appellant, the reduction in the
profit   to   the   extent   of   nearly   Rs.55,00,000/­   was   not   wholly
attributable to the increase in transportation cost.  The appellant
claimed only a sum of Rs.8,00,718/­ per year towards increase in
transportation cost. This constitutes only 15% of the total amount
of reduction in profits. It is seen from the profit & loss account for
the year ended 30.09.1977 that the sales turn over itself had come
46
down from Rs.22.09 crores  to  Rs.18.17  crores.   Even the  raw
material consumed had come down from 13.47 crores to Rs.9.32
crores.   There   had   also   been   a   substantial   down   slide   in   subcontract   and   process   charges.   Therefore,   the   contention   of   the
appellant that the profits went down, may be a point in an answer
to the adverse inference drawn by the High Court with regard to
profits. But it cannot be used in support of the appellant’s case
that the increase in the transportation cost accounted at least in
part to a reduced margin of profit.   
74. The impact of the increase in transportation cost, upon the
profit margin of a seller of goods, would depend upon the terms
and conditions of the contract. It may also vary from sea transport
to  rail transport to  road transport  to air transport.  Though in
shipping   contracts   there   are   standard   covenants   such   as   FOB
(Free on Board), CIF (Cost, Insurance and Freight) etc., there are
no such standard covenants in rail and road contracts. In any
case, the trolley line of the appellant covered only a distance of 35
kms upto Bhigwan. Delivery of material had to be effected by the
47
appellant to its customers through some method of transport from
Bhigwan. Nothing is on record to show that the goods were always
dispatched to all customers through goods carriage railway line of
the   Indian   Railways   beyond   Bhigwan.   In   the   absence   of   any
evidence to show that the increase in the transportation cost due
to the submerging of a part of the trolley line, had always to be
absorbed only by the appellant, but could not have been passed on
to its customers due to specific terms and conditions of contract,
the Reference Court could not have accepted a claim in this regard.
48
75. Moreover there was a finding of fact in the Award passed on
09.12.1981   which   was   taken   note   of   by   the   High   Court.   The
relevant portion of the Award reads as follows:
“Further as per local enquiry it is told that the Trolley
line was constructed years back mainly for bringing
heavy   machinery   at   Walchandnagar.  After   this
purpose was served, they were using it for movement
of goods for some time. The process of moving the
goods on the Trolley line became uneconomical. So
they resorted to road and truck traffic which was quick
and possibly economical. Thus the whole Trolley line
was in disuse being uneconomical on the relevant date
i.e.   27­9­72.   In   these   circumstances   the   claim   for
severance and injurious affection has been rejected.”
76. Therefore, the decision of the High Court with regard to
the claim for compensation towards increase in transportation
cost appears to be reasonable and hence cannot be interfered
with.
CONCLUSION
77. The upshot of the above discussion is that the refusal of the
High Court to award any compensation for the injurious affection
to one set of movable property, namely, rolling stock cannot be
found   fault   with,   for   the   reasons   stated   above.   Similarly,   the
refusal of the High Court to award any compensation for increase
49
in   transportation   cost,   falling   under   the   category   of   “injurious
affection   to   earnings”   cannot   also   be   faulted,   for   the   reasons
indicated separately. However, the refusal of the High Court to
grant compensation for the injurious affection sustained by the
appellant   to   one   set   of   movable   property,   namely,   rails   and
sleepers forming the trolley line for a distance of 28 kms., is clearly
unsustainable especially when the grant of compensation for the
injurious affection to rails and sleepers to a stretch of 7 kms.
submerged in the backwaters, has been sustained by the High
Court. In fact, the State has not come up on appeal against the
grant of compensation for the injurious affection to the trolley line
to a distance of 7 kms which got submerged in back waters. That
the remaining portion of the trolley line to a distance of 28 kms has
been rendered useless after the acquisition, is not in dispute. 
78. A question may arise as to whether the reasoning given by us
for rejecting the claim for loss of earnings in the form of increase in
transportation  costs,   will   not   apply  ipso   facto  to   the   claim   for
compensation  for  the rails and sleepers also, since the appellant 
50
had switched over to road transport in the year 1972 itself. But our
answer   would   be   that   clause  fourthly  of   Section   23(1),   uses   a
significant   phrase   viz.,  “injuriously   affecting   his   other
property, movable or immovable, in any other manner, or his
earnings”.  Therefore, injurious affection to property, in any other
manner, may stand on a different footing from injurious affection
to earnings. While there is no evidence on record to connect the
drop in the level of profits from 1975­76 to 1976­77, with the
increase in transportation costs, there is acceptable evidence to
show that movable property became useless after the acquisition.
Therefore, both stand on different footings.
79. Therefore, the appeals are partly allowed, setting aside that
portion of the findings and conclusions reached by the High Court
in the impugned judgment (para 22), whereby the award of the
Reference Court relating to compensation for injurious affection to
rails   and   sleepers,   was   reversed   by   the   High   Court.   As   a
consequence, the award of the Reference Court granting a sum of
Rs.31,21,860/­ towards compensation for rails and sleepers shall
51
stand   restored.   In   respect   of   all   other   claims,   the   impugned
judgment is not interfered with. 
80. Before parting we are obliged to bring one important fact on
record.   It appears that at the time of filing of the First Appeal
before the High Court of Judicature at Bombay, the respondents
deposited on 17.07.1992, the award amount of Rs.2,72,25,680/­.
By virtue of an order passed subsequently, the appellant withdrew
the said amount apparently after furnishing bank guarantee.  But
by the impugned judgment dated 19.11.2008, the High Court of
Bombay allowed the appeal of the respondents and reduced the
award amount.  When the Special Leave Petitions out of which the
present appeals arise, came up for admission, this Court passed
an order dated 16.03.2009 which reads as follows:­
“Issue notice. 
If the petitioner has furnished any bank guarantee in
regard to the amount already drawn, there shall be
interim stay of enforcement of the guarantee by the
respondent subject to the petitioner extending validity
of the bank guarantee till disposal of this matter.”
We hope that the bank guarantee is kept alive as per the above
order of this Court dated 16.03.2009.  Now that the judgment of
52
the Bombay High Court is modified by us, the appellant will be
entitled to retain so much of the amount as they would be entitled
to, by virtue of this judgment and the appellant shall pay the
respondents the excess amount, within four weeks.  In case the
bank guarantee furnished by the appellant is alive, the Land
Acquisition Officer may prepare fresh calculations and enforce the
bank guarantee only to the extent of disallowed portion.   There
will be no order to costs.
…..…………....................J.
     (Hemant Gupta)
.…..………......................J.
     (V. Ramasubramanian)
New Delhi
February  4, 2022
53

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