George Pothan v. State of Kerala

Read Judgment: https://lawyerslibrary.in/books/plka/

Citation: 2025 (4) KLR 106 : 2025 KER 27652
Court: High Court of Kerala
Judges: Dr. A.K. Jayasankaran Nambiar, J. & Easwaran S., J.
Case Numbers: L.A. App. No. 268 of 2019 & L.A. App. No. 23 of 2021
Date of Judgment: 2 April 2025
Parties: George Pothan v. State of Kerala

Land Acquisition – Market Value – Belting System – Severance Compensation – Interest Entitlement.

Acquisition of 20.25 hectares for KINFRA Industrial Estate – Land Acquisition Officer split land into two blocks using belting system and fixed market value at Rs. 3,013/- per cent for 1.5535 hectares and applied capitalization method for 18.6965 hectares – Reference court enhanced market value, rejected belting system, and awarded Rs. 500/- per cent for severance – Claimant and State appealed. 

Held

(1) State’s appeal maintainable as primary liability to pay compensation lies with State under eminent domain, per Ultra Tech Cement Ltd. v. Mast Ram [(2025) 1 SCC 798]. 

(2) Reference court’s reliance on paddy land sale deeds (Exts.A1, A3, A4) upheld; market value re-fixed at Rs. 12,140/- per cent using guesstimation and 25% escalation for garden land, per New Okhla Industrial Development Authority v. Harnand Singh [2024 SCC Online 1691]. 

(3) Belting system unsustainable for contiguous land acquired under single notification, per Besco Ltd. v. State of Haryana [2023 SCC OnLine SC 1071]. 

(4) Severance compensation enhanced to 30% of market value for remaining 67.48 acres due to loss of check dam, per Walchandnagar Industries v. State of Maharashtra [(2022) 5 SCC 71]. 

(5) Interest for 2008–2016 delay upheld as delay due to erroneous reference court order, not claimant’s fault, per actus curiae neminem gravabit. 

State’s appeal dismissed; claimant’s appeal allowed with statutory benefits and costs.

Against the Judgment and Decree dated 19.06.2019 in LAR No. 73 of 2002 of Sub Court, Sulthanbathery

For Appellant : Advs. Biju Abraham & B.G.Bhaskar 

For Respondents : Advs. N.Sudha Devi (Spl. Government Pleader) & P.U.Shailajan

Facts

An extent of 20.25 hectares (50 acres) of dry land in Kalpetta Village, Vythiri Taluk, was acquired by the State of Kerala at the instance of KINFRA for establishing an Industrial Estate. The Section 4(1) notification was issued on 27 January 2000, and the award was passed on 30 September 2000. The Land Acquisition Officer (LAO) awarded a total compensation of Rs. 2,54,31,752/-, relying on a sale deed (Ext.R4) and splitting the land into two blocks:

  • 1.5535 hectares valued at Rs. 3,013/- per cent.
  • 18.6965 hectares valued using the capitalization method, resulting in Rs. 1,85,85,251.16 for the entire land.

Aggrieved by the low compensation, the claimants sought a reference under Section 18 of the Land Acquisition Act, 1894, arguing for the comparative sales method and producing sale deeds (Exts.A1–A5). They also claimed compensation for severance and injurious affection for the remaining 67.48 acres, as a check dam within the acquired land, used for irrigating the coffee estate, was taken. The reference court enhanced the market value, rejected the belting system, and awarded Rs. 500/- per cent for severance. Both the 3rd claimant (for insufficient compensation) and the State (for excessive enhancement) appealed.

Issues

  1. Maintainability of the State’s Appeal: Whether the State’s appeal was maintainable, given that the acquisition was for KINFRA.
  2. Market Value Determination: Whether the reference court erred in relying on Exts.A1, A3, and A4 (paddy land sale deeds) and rejecting Ext.A2 (1986 sale deed) and Exts.R13–R14 (claimant’s purchase documents).
  3. Belting System: Whether the LAO’s adoption of the belting system to split the land into two blocks was legally sustainable.
  4. Severance Compensation: Whether the claimant was entitled to higher severance compensation for the remaining 67.48 acres due to the loss of the check dam.
  5. Interest Entitlement: Whether the claimant was entitled to interest for the period (2008–2016) when the reference case was stayed due to a High Court writ petition.

Holdings

  1. Maintainability of the State’s Appeal: The court held that the State’s appeal was maintainable. The primary liability to pay compensation lies with the State under the doctrine of eminent domain, regardless of the requisitioning authority (KINFRA). The Supreme Court’s ruling in Ultra Tech Cement Limited v. Mast Ram [(2025) 1 SCC 798] was cited to affirm the State’s standing.
  2. Market Value Determination:
    • The court upheld the reference court’s rejection of Ext.A2 (1986 sale deed) as too remote (14 years prior to the 2000 notification), per ONGC v. Rameshbhai Jivanbhai Patel [2008 (14) SCC 745].
    • Exts.A1, A3, and A4 (paddy land sale deeds from 1998) were valid exemplars despite being paddy land, as the acquired land’s proximity to Kalpetta town (1–1.7 km) and the National Highway justified their use. The court applied the principle of guesstimation (New Okhla Industrial Development Authority v. Harnand Singh [2024 SCC Online 1691]) and escalated the value by 25% to account for the garden land’s higher value, fixing the market value at Rs. 12,140/- per cent.
    • Exts.R13 and R14 (claimant’s purchase documents) were rejected as the LAO had deemed them unreliable, and the State could not challenge the LAO’s discretion in appeal.
  3. Belting System: The court ruled that the belting system was unsustainable, as the entire 50 acres was contiguous, acquired under one notification, and for the same purpose. The Supreme Court’s decisions in Andra Pradesh Industrial Infrastructure Corporation v. G. Mohan Reddy [(2010) 15 SCC 412] and Besco Limited v. State of Haryana [2023 SCC OnLine SC 1071] were applied to hold that uniform valuation was required.
  4. Severance Compensation: The court found the reference court’s award of Rs. 500/- per cent inadequate. The acquisition of the check dam rendered the remaining 67.48 acres less viable for coffee cultivation, as evidenced by CW2 (agricultural expert). The court awarded 30% of the market value (Rs. 12,140/- per cent) as severance compensation, per Walchandnagar Industries v. State of Maharashtra [(2022) 5 SCC 71].
  5. Interest Entitlement: The court rejected the State’s contention that interest should be denied for 2008–2016 due to a stay in WP(C) No. 18484 of 2008. The stay was on reference proceedings, not acquisition proceedings, and the delay was caused by the reference court’s erroneous impleadment order, not the claimant’s fault. The principle actus curiae neminem gravabit (the act of the court shall prejudice no one) applied.

Judgment

  • L.A. App. No. 23/2021 (State’s Appeal): Dismissed.
  • L.A. App. No. 268/2019 (Claimant’s Appeal): Allowed. The market value was re-fixed at Rs. 12,140/- per cent, with 30% of this value awarded as severance compensation for the remaining 67.48 acres. The claimant was entitled to statutory benefits, including interest, and proportionate costs.

Rationale

  • The court emphasized fair compensation under the Land Acquisition Act, 1894, considering the land’s proximity to the National Highway, its commercial potential, and the loss of irrigation facilities.
  • The rejection of the belting system ensured equitable valuation for contiguous land.
  • The principle of guesstimation allowed the court to adjust the value of paddy land exemplars to reflect the garden land’s market value.
  • Severance compensation was justified due to the proven loss of utility of the remaining land, supported by uncontroverted expert evidence.
  • The interest award upheld the claimant’s right to compensation without penalty for court delays beyond their control.

Significance

This case reinforces the judiciary’s role in ensuring just compensation in land acquisition, particularly by:

  • Rejecting arbitrary valuation methods like belting for contiguous land.
  • Applying guesstimation to bridge gaps in exemplar evidence.
  • Recognizing severance compensation for indirect losses (e.g., loss of irrigation infrastructure).
  • Protecting claimants from delays caused by judicial errors through the actus curiae principle.

Cases Referred

  1. V.N. Krishna Murthy and Another v. Ravikumar and Others [(2020) 9 SCC 501]
    • Cited by the claimant to argue that the State’s appeal was not maintainable, as the acquisition was for KINFRA, and only an aggrieved person can file an appeal. The court rejected this, holding that the principle does not apply to land acquisition proceedings where the State has primary liability under eminent domain.
  2. Ultra Tech Cement Limited v. Mast Ram and Others [(2025) 1 SCC 798]
    • Relied upon to affirm that the primary liability to pay compensation in land acquisition lies with the State, supporting the court’s finding that the State’s appeal was maintainable despite the acquisition being for KINFRA.
  3. Special Deputy Collector v. Kurra Sambasiva Rao [(1997) 6 SCC 41]
    • Cited by the State to argue that the reference court should have relied on Exts.R13 and R14 (claimant’s purchase documents) as the best evidence for market value. The court rejected this, noting that the Land Acquisition Officer (LAO) had discarded these documents, and the State could not challenge the LAO’s discretion in appeal.
  4. General Manager, Oil and Natural Gas Corporation (ONGC) Limited v. Rameshbhai Jivanbhai Patel and Another [2008 (14) SCC 745]
    • Applied to uphold the reference court’s rejection of Ext.A2 (1986 sale deed) as an exemplar, as it was executed 14 years before the 2000 notification. The Supreme Court held that exemplars beyond five years are not suitable for determining market value.
  5. New Okhla Industrial Development Authority v. Harnand Singh (deceased) Through L.R’s [2024 SCC Online 1691]
    • Provided the basis for applying the principle of guesstimation to determine market value when direct evidence or comparable exemplars are unavailable. The court used this to justify relying on Exts.A1, A3, and A4 (paddy land sale deeds) and escalating their value by 25% for garden land.
  6. Madhukar v. Vidarbha Irrigation Development Corporation & Ors [(2022) 13 SCC 344]
    • Supported the court’s approach to market value determination, emphasizing that the nature of the land is not determinative; proximity to roads and development in the area are key factors. This justified considering the acquired land’s proximity to the National Highway.
  7. Shabia Muhammed Yusuf Abdul Hamid Mulla (dead) by L.R’s and Others v. Special Land Acquisition Officer and Others [(2012) 7 SCC 595]
    • Provided criteria for determining market value, including geographical situation, existing use, proximity to highways, and market value of nearby land. The court applied these to assess the suitability of Exts.A1, A3, and A4 as exemplars.
  8. Lalchand v. Union of India & Anr [AIR 2010 SC 170]
    • Established that the value of agricultural land can be determined using garden land exemplars with a deduction of 25–40%. The court applied this principle conversely, escalating the value of paddy land exemplars (Exts.A1, A3, A4) by 25% to determine the garden land’s market value.
  9. Andra Pradesh Industrial Infrastructure Corporation Ltd v. G. Mohan Reddy [(2010) 15 SCC 412]
    • Held that the belting system is permissible only when land in different survey numbers, locations, or belonging to different owners is acquired. The court relied on this to rule that the LAO’s belting system was unsustainable for contiguous land acquired under one notification.
  10. Besco Limited v. State of Haryana [2023 SCC OnLine SC 1071]
    • Reinforced that belting is incorrect for land acquired under a single notification with similar characteristics. The court applied this to reject the LAO’s division of the 50 acres into two blocks, mandating uniform valuation.
  11. State of Kerala and Others v. Sarasamma and Others [L.A. App. Nos. 558/2022 & conn., 2025 KLT OnLine 1308]
    • Followed Supreme Court precedents to hold that belting is discriminatory for contiguous land acquired for the same purpose under one notification. This supported the court’s finding that the belting system was legally unsustainable.
  12. Walchandnagar Industries v. State of Maharashtra and Another [(2022) 5 SCC 71]
    • Clarified that severance compensation under Section 23(1) of the Land Acquisition Act, 1894, must consider both severance and injurious affection together. The court relied on this to award 30% of the market value as severance compensation for the loss of irrigation facilities affecting the remaining 67.48 acres.

Multiple Choice Questions (MCQs)

  1. What was the primary reason the court held that the State’s appeal was maintainable in George Pothan v. State of Kerala?
    a) The acquisition was for a public purpose.
    b) The State has primary liability to pay compensation under eminent domain.
    c) KINFRA, the requisitioning authority, was a private entity.
    d) The claimant failed to prove severance damages.
    Answer: b) The State has primary liability to pay compensation under eminent domain.
    Explanation: The court relied on Ultra Tech Cement Ltd. v. Mast Ram [(2025) 1 SCC 798] to hold that the State’s liability under eminent domain makes its appeal maintainable, regardless of the requisitioning authority.
  2. Why did the court reject the use of Ext.A2 (1986 sale deed) as an exemplar for determining market value?
    a) It was executed in favor of a private individual.
    b) It was too remote, being 14 years before the 2000 notification.
    c) It involved paddy land, unlike the acquired garden land.
    d) It was not supported by the Advocate Commissioner’s report.
    Answer: b) It was too remote, being 14 years before the 2000 notification.
    Explanation: Per ONGC v. Rameshbhai Jivanbhai Patel [2008 (14) SCC 745], exemplars beyond five years are not suitable, leading to the rejection of Ext.A2.
  3. What principle did the court apply to determine the market value using paddy land exemplars (Exts.A1, A3, A4) for garden land?
    a) Capitalization method
    b) Guesstimation with 25% escalation
    c) Belting system
    d) Deduction of 40% for development costs
    Answer: b) Guesstimation with 25% escalation
    Explanation: The court used New Okhla Industrial Development Authority v. Harnand Singh [2024 SCC Online 1691] to apply guesstimation and escalated the paddy land value by 25%, per Lalchand v. Union of India [AIR 2010 SC 170].
  4. Why was the belting system adopted by the Land Acquisition Officer deemed unsustainable?
    a) It was applied to non-contiguous land.
    b) The land was acquired under a single notification for the same purpose.
    c) The reference court lacked jurisdiction to review it.
    d) The claimant failed to provide comparable exemplars.
    Answer: b) The land was acquired under a single notification for the same purpose.
    Explanation: Citing Besco Ltd. v. State of Haryana [2023 SCC OnLine SC 1071] and Andra Pradesh Industrial Infrastructure Corporation v. G. Mohan Reddy [(2010) 15 SCC 412], the court held that belting is impermissible for contiguous land acquired under one notification.
  5. What was the basis for awarding 30% of the market value as severance compensation?
    a) Loss of standing crops on the acquired land.
    b) Loss of irrigation facilities due to the acquisition of the check dam.
    c) Proximity of the land to the National Highway.
    d) Development costs incurred by the claimant.
    Answer: b) Loss of irrigation facilities due to the acquisition of the check dam.
    Explanation: Per Walchandnagar Industries v. State of Maharashtra [(2022) 5 SCC 71], the court awarded 30% for severance/injurious affection due to the check dam’s loss, affecting the remaining 67.48 acres.
  6. Why was the claimant entitled to interest for the period 2008–2016 despite the stay in reference proceedings?
    a) The stay was on acquisition proceedings.
    b) The delay was due to the claimant’s writ petition.
    c) The principle of actus curiae neminem gravabit applied.
    d) The State failed to deposit compensation.
    Answer: c) The principle of actus curiae neminem gravabit applied.
    Explanation: The court held that the delay was due to the reference court’s erroneous impleadment order, not the claimant’s fault, and applied actus curiae neminem gravabit to ensure no prejudice from court actions.

Frequently Asked Questions (FAQs)

  1. What was the main dispute in George Pothan v. State of Kerala?
    The dispute centered on the adequacy of compensation for 20.25 hectares of land acquired for KINFRA’s Industrial Estate. The claimant challenged the Land Acquisition Officer’s (LAO) low market value, use of the belting system, and insufficient severance compensation, while the State contested the reference court’s enhancement of the market value.
  2. Why did the court allow the State to appeal the reference court’s decision?
    The court held that the State’s appeal was maintainable because, under the doctrine of eminent domain, the State has the primary liability to pay compensation in land acquisition cases, as established in Ultra Tech Cement Ltd. v. Mast Ram [(2025) 1 SCC 798], regardless of the requisitioning authority (KINFRA).
  3. How did the court determine the market value of the acquired land?
    The court relied on paddy land sale deeds (Exts.A1, A3, A4) as exemplars, applying the principle of guesstimation from New Okhla Industrial Development Authority v. Harnand Singh [2024 SCC Online 1691]. It escalated their value by 25% to account for the garden land’s higher value, fixing the market value at Rs. 12,140/- per cent.
  4. What was wrong with the belting system used by the Land Acquisition Officer?
    The belting system, which split the land into two blocks with different valuations, was deemed unsustainable because the 50 acres were contiguous, acquired under a single notification, and for the same purpose. This violated principles from Besco Ltd. v. State of Haryana [2023 SCC OnLine SC 1071], mandating uniform valuation.
  5. Why was the claimant awarded severance compensation, and how was it calculated?
    The claimant was awarded severance compensation because the acquisition of a check dam within the 50 acres rendered the remaining 67.48 acres less viable for coffee cultivation. The court, citing Walchandnagar Industries v. State of Maharashtra [(2022) 5 SCC 71], awarded 30% of the market value (Rs. 12,140/- per cent) for severance/injurious affection.
  6. Why was the claimant entitled to interest for the period when the reference case was stayed?
    The claimant was entitled to interest for 2008–2016 because the delay was caused by the reference court’s erroneous impleadment order, not the claimant’s actions. The court applied the principle of actus curiae neminem gravabit (the act of the court shall prejudice no one) to ensure the claimant was not penalized for judicial delays.
  7. What role did the proximity of the land to the National Highway play in the judgment?
    The land’s proximity to the National Highway was a key factor in determining its market value, as per Shabia Muhammed Yusuf Abdul Hamid Mulla v. Special Land Acquisition Officer [(2012) 7 SCC 595]. It supported the court’s decision to rely on Exts.A1, A3, and A4 and reject the LAO’s reliance on a distant sale deed (Ext.R4).
  8. Can exemplars of a different land type (e.g., paddy land) be used to value garden land?
    Yes, the court held that paddy land exemplars (Exts.A1, A3, A4) could be used for garden land by applying guesstimation and adjusting the value. It followed Lalchand v. Union of India [AIR 2010 SC 170], which allows such comparisons with appropriate escalation (25% in this case).
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