Compensation Arithmetic in a Canal-Side Acquisition
A canal minor extension requires 4.5 hectares from a village in Punjab. The acquisition includes 0.6 hectares of shamlat deh, whose compensation is payable to the village panchayat; the remaining 3.9 hectares is owned by three co-sharers in the jamabandi: A holds 1/3, B holds 1/4 and C holds the remainder. The notified rate is ₹18,50,000 per acre, and 1 hectare equals 2.47 acres. The acquiring body applies a 20 per cent development deduction to the compensation for the co-sharers’ land only. A bank has a charge of ₹6,20,000 against A’s share. A clerk has prepared a note saying that C is entitled to 5/12 of the compensation for the entire 4.5 hectares, before deduction, which he puts at ₹85,67,813, and that the total payable to the co-sharers after deduction is about ₹1.64 crore. Payment is expected 18 months after the award, and the award provides simple interest at 6 per cent per annum for delay. The Patwari must check the note before the award is announced.
1. Compute the total compensation, the net pool for the co-sharers, and each co-sharer’s share, showing the bank charge separately.
Read the worked answer
Co-sharer land = 4.5 − 0.6 = 3.9 ha = 3.9 × 2.47 = 9.633 acres.
Gross at ₹18,50,000/acre = 9.633 × 18,50,000 = ₹1,78,21,050.
Development deduction 20% = ₹35,64,210, so the net co-sharer pool = ₹1,42,56,840.
Shares of the net pool:
- A, 1/3 = ₹47,52,280;
- B, 1/4 = ₹35,64,210;
- C, 5/12 = ₹59,40,350.
Check: 47,52,280 + 35,64,210 + 59,40,350 = 1,42,56,840. Correct.
The bank charge of ₹6,20,000 is paid out of A’s share, so A receives ₹41,32,280 (or the bank is paid that amount and A receives the balance). It is not deducted from the pool before shares are calculated.
Shamlat: 0.6 ha = 1.482 acres × ₹18,50,000 = ₹27,41,700 to the panchayat, with no development deduction on that component as stated. Total award = 1,78,21,050 + 27,41,700 − 35,64,210 = ₹1,69,98,540.
2. The clerk’s figure for C is ₹85,67,813. Identify the two errors behind it and state the correct approach.
Read the worked answer
The clerk has calculated 5/12 × (4.5 × 2.47 × 18,50,000) = 5/12 × ₹2,05,62,750 = ₹85,67,812.5. That is wrong twice:
- He included the 0.6 ha shamlat. Shamlat compensation belongs to the panchayat, not to the co-sharers. C’s fraction can apply only to the co-sharers’ 3.9 ha.
- He ignored the 20% development deduction. The award applies the deduction to the co-sharers’ compensation before distribution.
Correct C share = 5/12 of ₹1,42,56,840 = ₹59,40,350.
The clerk’s “about ₹1.64 crore to co-sharers” is also wrong; the correct net pool is ₹1,42,56,840, i.e. about ₹1.43 crore. The order of operations matters: separate the compensation pool by ownership, apply the deduction to the correct pool, then apply shares. Do not apply a co-sharer’s fraction to the whole acquisition.
3. Calculate the simple interest on B’s net share for the 18-month delay. What assumption about the interest base should be checked?
Read the worked answer
B’s net share is ₹35,64,210. Simple interest = P × R × T = 35,64,210 × 0.06 × 1.5 = ₹3,20,778.90.
B would therefore receive ₹35,64,210 + ₹3,20,778.90 = ₹38,84,988.90, subject to the award’s wording.
The assumption to check is the interest base. The award says simple interest on delay; it must be clear whether interest runs on the gross compensation, on the net amount after the development deduction, or on the amount actually payable to each claimant. Here the deduction has already reduced the pool, so using B’s net share is consistent with the stated facts. Also check whether interest is payable to the panchayat on the shamlat component and whether the 18 months run from the award date or from the date of taking possession. A different start date changes T, not the arithmetic method.