Multiplier
is the rate used for capitalizing the future benefits in to the present values by
discounting the benefits that can arise in future by including the expected
risk associated. Under the Land acquisition act, Government can take possession
and control of any land from any individual, even without their consent in lieu
of some compensation granted to them. It is not that easy to calculate the
amount of compensation to be awarded for the land acquired. As it involves
various issues. Since it is a forceful transaction thus it has to consider the
proper compensation, considering the future benefits to be given to the
individual Through Multiplier the amount of compensation, to be granted to the
person whose land has been acquired is decided. The multiplier is calculated
after analysing the present market value of the property and if in case it is
difficult to ascertain the present sale variable then income on the basis of
yield is considered which is multiplied by the multiplier to ascertain the
actual compensation to be awarded. But it is in dispute again how this
Multiplier is decided and what is the criteria of awarding the compensation.
*In
the case of State of Madras v. Rev.[1] It
was held that “before
dealing with the contentions raised by the learned counsel for the parties, we
would reiterate that capitalisation means the method used to convert future benefits
to present value by discounting such future benefit at an appropriate rate of
return. It is the process of converting the net income of a property into its
equivalent capital value. While capitalising the income, future income, its
duration along with risk factor is to be taken into consideration. Capitalising
rate means a designated rate of return which coverts net future benefits to
capital value.”
It
is settled law that in evaluating the market value of the acquired property,
namely, land and building or the land with fruit- bearing trees standing
thereon, value of both is to be determined not as separate units but as one
unit. Therefore, it would be open to the Land Acquisition Officer or the Court
either to assess the land with all its advantages and fix the market value
thereof on the basis of comparable sale instances. In case where comparable
sale instances are not available and where there is reliable and acceptable
evidence on record of the annual income, market value could be assessed and determined
on the basis of net annual income multiplied by appropriate multiplier for its
capitalization
For
capitalising the income, previously income from the gilt- edged securities was
the basis, but thereafter rate of interest in nationalized banks where deposits
are quite safe is taken into consideration as proper basis. If the interest
rate in a nationalized bank or other safe investments, on a long term fixed
deposit, say is 10%, and the yield from the trees p.a. is Rs.5,000/-, then for
getting the said income, deposits of Rs.50,000/- would be required to be made.
Hence, the value of the said trees along with the land can be safely assessed
as Rs.50,000/-. Hence, yield of trees multiplied by an appropriate multiplier
for its capitalization after taking into consideration all relevant factors
would be the basis for determining the compensation.
*In the case of kamala
Prasad singh vs state of Bihar, 2010
The
market value of the land is determined on the basis of the yield. Then
necessarily applying suitable multiplier, the compensation need to be awarded.
Under no circumstances the Court should allow the compensation on the basis of
the nature of the land as well as fruit bearing trees. In other words, market
value of the land is determined twice over and one on the basis of the value of
the land and again on the basis of the yield got from the fruit bearing trees.
The definition of the land includes the benefits to arise from the land as
defined in S.3(a) of the Act. After compensation is determined on the basis of
the value of the land from the income applying suitable multiplier, then the
trees would be valued only as fire- wood and necessary compensation would be
given. In this case, the High Court did not adopt this procedure. We have
looked into the figures furnished in the judgment of the High Court of the
amount awarded by the Officer himself. He too while determining the
compensation at the rate of Rs. 12,240/- per acre on the basis of the yield,
the multiplier applied is more than 8 years. Under no circumstances, the
multiplier should be more than 8 years multiplier as it is settled law of this
Court in catena of decisions that when the market
value is determined on the basis of the yield from the trees or plantation, 8
years’ multiplier shall be appropriate multiplier. For agricultural land 12 years’ multiplier shall be suitable
multiplier. The Hon'ble Supreme Court in the above decision held that the
multiplier should not be more that 8 years but in the instant case the Land
Acquisition Judge has multiplied by 15 times. Because the collector calculated
the multiplier as more than 8 years and thus Judge had to apply more multiplier
than decided by the collector, by virtue of section 25 of Land acquisition act.[2]
*In
the case of State of Haryana-vrs.
Gurcharan Singh reported in AIR 1996 SC 106
Similar
Judgement was passed “Under no
circumstances, the multiplier should be more than 8 years multiplier as sit is
settled law of this Court in catena of decisions that when the market value is
determined on the basis of the yield from the trees or plantation, 8 years
multiplier shall be appropriate multiplier. For agricultural land 12 years
multiplier shall be suitable multiplier"
The aforesaid ratio laid down in
Gurcharan Singh case[3]
was also approved by a larger Bench of the Apex Court, in the case of Airports Authority of India -v- Satya Gopal
Roy [4]
wherein it was observed as follows: "Hence, in our view, there was no
reason for the High Court not to follow the decision rendered by this Court in
Gurcharan Singh's case and determine the compensation payable to the
respondents on the basis of the yield from the trees by applying 8 years'
multiplier. In this view of the matter, in our view, the High Court committed
error apparent in awarding compensation adopting the multiplier of 18."
The ratio laid down in Gurcharan
Singh's case and in the Airports Authority of India's case has also been
followed by this Court in the case of State
of Orissa -v- Giridhari Nayak [5]where
in for acquisition of Agricultural land, this Court adopted 12 multiplier
instead of 16 for the assessment of compensation.
[1] AIR 1973 SC 2463
[2] Section
25, Land acquistition act 1894 ; Amount of compensation awarded by Court not to be lower than the amount
awarded by the Collector. - The amount of compensation awarded by the Court
shall not be less than the amount awarded by the Collector under section 11.
[3] AIR 1996 SC 106
[4]
AIR 2002 SC 1423
[5] 2006(II) OLR 329
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