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The Trustees for the Improvement of the City of Bombay Vs. Jalbhoy Ardesir Sett - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Judge
Reported in3Ind.Cas.757
AppellantThe Trustees for the Improvement of the City of Bombay
RespondentJalbhoy Ardesir Sett
Excerpt:
.....an assumption is well founded. for the improvement act incorporates the relevant provisions of the land acquisition act, including section 23, and i can find no good reason for supposing that the improvement act intends, or operates, to effect a fundamental change in the methods of the land acquisition act. lowndes claims in his favour, appears to me to tell the other way, for, though the sub-section is not perhaps worded with perfect accuracy, we have the antithesis marked between land and an interest in land. i have considered those instances to the best of my ability, but am not prepared to concede that the difficulties suggested are inevitable under my view of the act, and in any case, if that view is right, the argument is no more than an argument ab inconvenienti, and the answer..........to us: it turns upon the meaning of the words the market value of the land' in section 23 of the land acquisition act the advocate-general has contended that the compensation to be awarded must be ascertained by reference to the value of the land itself considered, as he put it, as unencumbered freehold, that is, on the assumption that all interests combine to sell; mr. lowndes, on the other hand, has urged that the true meaning of the act is that compensation should be awarded by the valuation of the separate interests existing in the land. it appears to have been assumed at the bar that the choice between these alternative constructions must determine the result, but for my own part i am not clear that such an assumption is well founded. however that may be, i think that the point in.....
Judgment:

Betchelor, J.

1. This is an appeal from a decision of the Tribunal of Appeal appointed under Section 48 of the City of Bombay Improvement Act, 1898, and has reference to the amount of compensation to be awarded to the claimant, Jalbhai Ar-desir Sett, in respect of nine parcels of land which have been acquired by Government for the Improvement Trustees under the Improvement Act, 1898. The compensation awarded by the Special Collector was Rs. 11,803 and on appeal to the Tribunal this sum was increased to Rs. 42,364 with interest at six percent, on Rs. 30,560. Against this award the Improvement Trustees bring the present appeal, contending that the Tribunal has applied wrong principles in assessing the compensation and that an excessive sum has consequently been allowed.

2. The facts are not in dispute, and for present purposes may be shortly stated as follows: In December 1898 the nine parcels were notified in connection with a scheme under Section 27 of the Improvement Act, and at that time Jalbhai was in unencumbered ownership of only one of the parcels, No. 505, the others being let on leases. The land is such that the whole plot, consisting of the nine parcels, forms in itself a valuable quarry, but it is not profitable to quarry any small area such as a single parcel. Between the notification and the acquisition Jalbhai bought out the interest of the tenant of parcel No. 510. In acquiring the land the Special Collector dealt separately with parcels Nos. 505 and 510, to which apparently a part of No. 512 was also added, and refused Jalbhai's claim to receive compensation on a quarrying basis. Jalbhai appealed to the Tribunal, his general claim for quarrying value being included in the reference. As to the remaining parcels, the Collector made separate awards, valuing the householders' interests on a rental basis, and assessing the interest of Jalbhai as Fazan-dar at 25 years' purchase of the rents. None of the tenants claimed a compensation reference to the Tribunal, but Jalbhai did claim this reference in each case, and in each case he made it without prejudice to his general claim for quarrying value as embodied in his appeal regarding parcels Nos. 505, 510 and 512. After the Collector had made his award, and before the references to the Tribunal came on for hearing Jalbhai bought out all the remaining tenants. When the references were taken up by the Tribunal, Jalbhai applied that they should be consolidated and that his claim for compensation on a quarrying basis should be allowed.

3. Mr. Lowndes's first objection to the decision under appeal is that the Tribunal was wrong in allowing the references to be consolidated with the result that Jalbhai was thus permitted to advance a claim namely the claim to the quarrying value which otherwise he would not have been able to make. But, in my opinion, the consolidation had not this effect, and was rightly allowed. Mr. Lowndes concedes that Jal bhai could not be prejudiced by any par-celling out of the land which the Collector might chose to make, and, that being so, the objection seems to me to fail. For it was not by reason of the consolidation of references that Jalbhai was enabled to put forward what may be called the quarrying claim: that claim was already before the Collector and the Tribunal, and, whether good or bad, had to be decided on quite other grounds than the arbitrary division of the land made by the Collector. Moreover, it must be remembered that Jalbhai as Faz-andar owner of some of the plots and as lessor of the others with the prior right of buying out the lessee had an interest in the whole area acquired.

4. To pass now to the main argument which has been adressed to us: it turns upon the meaning of the words the market value of the land' in Section 23 of the Land Acquisition Act The Advocate-General has contended that the compensation to be awarded must be ascertained by reference to the value of the land itself considered, as he put it, as unencumbered freehold, that is, on the assumption that all interests combine to sell; Mr. Lowndes, on the other hand, has urged that the true meaning of the Act is that compensation should be awarded by the valuation of the separate interests existing in the land. It appears to have been assumed at the bar that the choice between these alternative constructions must determine the result, but for my own part I am not clear that such an assumption is well founded. However that may be, I think that the point in controversy is, so far as this Court is concerned, concluded by the case of Collector of Belgaum v. Bhimrao 10 Bom. L.R. 657 While that case stands, I can see no room for the appellant's present contention, and I did not understand Mr. liowndes to suggest that the contention could be allowed under the Land Acquisition Act so long as the case retains its authority. The decision, to which I was a party, is a decision of this Appeal Court and has the high authority of Jenkins, C. J., who, in delivering the judgment, laid down that for the purposes of ascertaining the market value of land under Section 23 of the Land Acquisition Act the Court must proceed upon the assumption that it is the particular piece of land in question that has to be valued including all interests in it.' That, as I understand it, was said in general terms upon the construction of the Act, and formed the ratio decidendi. So far as the Land Acquisition Act is concerned, I think the ruling is decisive, and it is, of course, binding upon us now. The only ground upon which Mr. Lowndes sought to avoid this decision was, if I followed his argument correctly, that here the land was acquired not under the Land Acquisition Act, but under the Bombay City Improvement Act. The distinction certainly exists, but in my opinion it is not material. For the Improvement Act incorporates the relevant provisions of the Land Acquisition Act, including Section 23, and I can find no good reason for supposing that the Improvement Act intends, or operates, to effect a fundamental change in the methods of the Land Acquisition Act. No such far reaching effect ought, I think, to he given to Section 49 (2) of the Improvement Act, which merely reproduces Section 21 (6) of the English Statute, the Housing of the Working Classes Act 1890, and which may receive ample meaning without recourse to the unlikely hypothesis that so important a change in the Acquisition Act was intended to be made by way of indirect and somewhat far-fetched inference. In my opinion, therefore, it would be enough to say that the decision in the Collector of Belgaum's case (1) is fatal to the contention that the land here should be valued on the footing of assessing the separate interests.

5. But as I am anxious to avoid any appearance of treating' unceremoniously the careful and elaborate argument we have had from Mr. Lowndes, I will notice briefly the main points which he has discussed. His chief reliance was placed upon certain particular sections of the Land Acquisition Act, such as Sections 3 (g) (iv), 9 (3) and 31 (1) (2) (4) and (4) as showing that the word land' was used in the Act as equivalent to 'interest in land.' The Advocate-General, on the other hand, has pointed to a number of other sections where the word 'land' appears to denote the physical object. It would be tedious to analyse all these sections individually, nor do I think it necessary to do so. There can be no doubt that the word ' compensation' is occasionally used to mean the particular sum awarded for the acquisition of a particular interest, but that is quite consistent with the position taken by the Advocate-General. Reading the Act as a whole, I can come to no other conclusion than that it contemplates the award of conpensation in this way: first you ascertain the market value of the land on the footing that all separate interests combine to sell; and then you apportion or distribute that sum among the various persons found to be interested: Sections 3, 11, 18, 19, 20 and especially Sections 29 and 30 are to my mind decisive upon the point. Section 31 (3), which Mr. Lowndes claims in his favour, appears to me to tell the other way, for, though the sub-section is not perhaps worded with perfect accuracy, we have the antithesis marked between land and an interest in land. That distinction is, as I understand it, preserved throughout the Act, where land 'is always used to denote the physical object, which is after all the thing that has to be acquired. Provision is made for compensation to all persons interested, but claims on this head are, I think, to be adjusted in the apportionment prescribed under Sections 29 and 30 and do not fall to be considered till after the Court has determined the market value of the land under Section 23 (1).

6. Then Mr. Lowndes urged that the theory which I am endeavouring to justify would lead to unwelcome results in its practical application, and he gave us two or three instances of such difficulty. I have considered those instances to the best of my ability, but am not prepared to concede that the difficulties suggested are inevitable under my view of the Act, and in any case, if that view is right, the argument is no more than an argument ab inconvenienti, and the answer would be that our Act is less convenient than would be an Act prescribing valuation by separate interest. I must not, of course, be taken to express an opinion that an Act drawn so as to impose as a first step the valuation of separate interests would in fact be a better or more convenient statute than that which we have: my opinion goes no further than that that is not the meaning of the Land Acquistion Act.

7. As to the argument that under the English Acts dealing with similar subjects it is the established practice to value separate interests, I can only say that the English Acts in their scheme and structure differ so materially from the Land Acquisition Act that, in my opinion, it would be unsafe to make any inference from the practice prevailing in England. I repeat that I by no means assert that the difference in procedure must necessarily lead to any substantial difference in the result; I limit myself to saying that in my judgment the method contemplated by the Land Acquisition Act is that of ascertaining first the market value of the land as if all separate interests combined and then of apportioning that value among the persons interested. It is said that that method may on occasion prove downright impracticable or unfair, but it will be time to consider such a case when it actually arises.

8. Then comes the question; does this view of the methods of the Act decide the appeal in the respondent's favour. In my opinion it does not. For, thought the market value of the land has to be ascertained on the assumption that all separate interests combine, that, I think, only means that the separate interests are taken to combine so as to give a complete title to the assumed purchaser and the acquiring body, not so as to impress upon the land a character which it did not bear, or to give to it a value which it never had in the marked; for it is still the market value of the land 'which has to be determined; and by that is meant, I think, the price which would' obtainable in the market for that concrete parcel of land with its particular advantages and its particular drawbacks, both advantages and drawbacks being estimated rather with reference to commercial value than with reference to any abstract legal rights. If that is correct, it furnishes an answer to the contention that the full quarriable value must be allowed because this land is in fact by natural formation a quarry. That may be so; but it was never a marketable quarry at the material time, and did not become so till after the Collector had made his award. At the material time the claimant could not have obtained a quarry price for the land in the market because admittedly the permanent building leases, containing no provision for re-entry, stood between him and any immediate ability to quarry; and the determining factor is the value to the owner, not the value to the acquiring body after acquirement. The case, therefore, seems to me to fall within the principles which have been applied in English cases to owners of land adaptable for use in reservoir sites, and, to use the language of Vaughan Williams L. J., in a recent case of that sort, In re Lucas v. Chesterfield Gas and Water Board (1909) 1 K.B. 16 I would say that the land here had an adaptability value on the footing of its possibility as a quarry, but that it was not a realised possibility, nor was it competent to the claimant to convert it into a realised possibility by the expedient of buying out the permanent tenants after the Collector's award had been made : see Sections 49 (2) and 50 of the Improvement Act.

9. If I am right in thinking that that is the law, there is an end of the maiter, but, since the point was taken, I may add that in my judgment there is really no particular hardship in this view. For it was the claimant himself who, in pursuance of his own financial interests, sacrificed and abandoned the quarry user of the land for the consideration of the rents obtainable from the permanent tenants; in other words, he himself put it out of his power to use the land as a quarry and he did so with his eyes open and for what he regarded as sufficient consideration. I do not think that he has any fair grievance if when the land comes to be acquired, it is acquired in the character in which alone he had the power of using it.

10. The most that he can fairly claim, in my opinion, is the market value of the land in that character plus a special allowance for its adaptability as a quarry at some future date; and to that I think he is entitled. There is no evidence as to the amount at which this special allowance should be calculated. The Tribunal recognising that the full quarriable value might not be sustained in appeal, give us an alternative finding that as allowance for the special adaptability value the number of years' purchase adopted by the Collector should be increased from 14 2/7 to 18.18. The correctness of this method was at first challenged by Mr. Lowndes and defended by the Advocate-General, but subsequently Mr. Lowndes informed us that he would not dispute it, as his clients were more interested in getting this Court's decision on the questions of principle than in cutting down the allowance suggested by the Tribunal.

11. The result is that if I am right as to way in which this land should be valued, there is now no dispute as to the quantum of compensation. In these circumstances and having regard to the special knowledge and experience possessed by the Tribunal on such points, we must adopt the alternative finding, that is to say, the market value of the land, will be determined on the valuation made by the Collector subject to this modification that the number of years' purchase will be increased from 14 2/7 to 18. 18 years as allowance for the special adaptability value....

12. In the circumstances of the case we make no order as to costs.

Heaton, J.

13. I agree in the order proposed.

14. The Tribunal have given two valuations : That which they prefer is arrived at by computing the market-value of the land as a whole, Bat the computation is vitiated because they have taken the quarrying value of the land as realized and not as latent. They have, in short, given to the owners what they consider the land is worth to the acquirer after acquisition, not what they estimate it would have fetched in the market at the date of the acquisition. Because there is this defect in the computation, I agree with my learned colleague, that the valuation cannot be accepted.

15. The second and alternative valuation was arrived at by taking each plot separately and allowing some extra value in consideration of the chance of acquiring the adjoining plots so as in the end to get a large quarriable area. How precisely this was done is not explained in detail. The Honourable the Advocate-General on behalf of the claimants did not attack that valuation in particular : his argument was that the other valuation must be accepted. Mr. Lowndes for the Improvement Trust withdrew the objections to the alternative valuation which at one time he argued. That being so it seems to me we must accept the alternative valuation.

16. On the general question, which was most strenuously argued, it is necessary to say a few words.

17. Mr. Lowndes for the appellant argued that the correct method of ascertaining compensation for land taken up is to value separately each interest in it. The Honourable the Advocate-General for the respondent argued that the correct method is to value the land as a whole and then to apportion to each person interested the share to which he is entitled. Both appealed to the provisions of the Land Acquisition Act in support of their arguments; and we have had those provisions carefully read and Commented on. Taking the scope of the Land Acquisition Act and its words and giving them the best consideration I can, it seems to me that neither method is excluded and that what is intended is a fair and reasonable estimate of the compensation to be awarded and that this is to be arrived at by taking into consideration certain specified matters and excluding from consideration others. The Act seems to me to leave a great deal to the discretion of the Collector and the Court, and amongst other matters, to leave it to their discretion to ascertain the market-value of the land either by the method advocated by Mr. Lowndes or by that which receives the support of the Honourable the Advocate-General. I do not think this opinion conflicts with what was decided in Bhimrao's case (1); for in that case it was not held that valuation by computing different interests separately was universally wrong, but that it was correct to follow the other method in that case. But Mr. Lowndes argues that even if the Land Acquisition Act leaves the question open yet Section 49 Clause (2) of the Bombay Improvement Act, which Act incorporates certain portions of the Land Acquisition Act, absolutely requires that the compensation must be ascertained by valuing separately the separate interests. The argument does not convince me. I think the Bombay Improvement Act leaves the choice of method open, just as the Land Acquisition Act does. The latter part of clause 2 of Section 49, no doubt, does contemplate the valuation of a separate interest and when a case such as is contemplated there actually arises-it has not arisen before us no doubt such valuation as is required will be made.


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