1. On December 6, 1928, a notification under the Land Acquisition Act, 1894, Section 6, was issued with reference to the acquisition of three plots of land by the Municipality of Nandurbar for widening a street at Nandurbar. The present appeals refer to two out of the three plots : City Survey Nos. 2171 and 2169 having areas of 36 17|24 square feet and 22 21|24 square feet respectively. The Land Acquisition Officer valued these sites at Rs. 1 per square foot and Land awarded for them Rs. 45-10-0 and Rs. 28-2-0 respectively. On appeal the learned District Judge held that the claimants were entitled to Rs. 2-8-0 per square foot. He awarded Rs. 4 for the plinth in City Survey No. 2171, i.e., Rs. 131-11-6 in all. In respect of this plot an additional claim of Rs. 868-4-6 is made in appeal here. With reference to the other plot, viz., 2169, the net amount allowed was Rs. 96-1-6 and the claim in appeal is an additional Rs. 503-14-6.
2. The case of the two appellants stands on the same footing and the judgment under appeal has proceeded on a common footing. The two appeals may accordingly be dealt with together. The learned Judge states at the start :
The sites in question are situated at a juncture of four roads. The vegetable market meets there and there is a chance of more customers being attracted. But the shops on these sites were of very small areas. They were never used for selling attractive and valuable goods. They were used either as tailor's shops or for selling bidis (country cigarettes).
It cannot be denied that after the fire of 1924 the more important shops on this Bazzar Road, viz, shops of cloth, gold and silver shifted to other localities, viz., the Marwari Chowk at some distance towards the north of the sites in question, Some other new shops are stated to have been opened in Tup Bazzar and Mangal Bazzar towards the north-east. Though almost all the buildings which were burnt by fire have been reconstructed and used as shops there was a cry for reduction of Municipal taxes of some shops on the Bazzar Road and taxes were accordingly reduced in four cases. It is also an admitted fact that rents of buildings in the Marwari Chowk locality are increasing. These facts go to show that the Old Bazzar has been depreciating in importance after the fire.
The learned Judge then proceeds to remark;-
The Municipality wants to acquire the sites for widening the roads. With this object it was refusing permission to build over small sites abutting on the existing narrow roads after the old buildings had been destroyed by' the fire and it was perfectly within its rights in doing so. The applicants cannot expect to have buildings on these sites. The selling price of some sites during the last four to ten years, as disclosed in the evidence for the applicants, Cannot afford any test for valuation in the present case. Similarly, the old rates of rents for these sites or the present rents of the new shops near about cannot afford any basis for valuation in these changed circumstances; After the fire the sites have practically not fetched any rent and have lost all value. The claims even as reduced by applicants at the hearing are very fabulous and it is not possible to value these small sites by comparing them with the sites which could be covered over by buildings.
In a subsequent paragraph he observes in the same strain :-
It cannot be said that the methods adopted by the Municipality in refusing permission to build over such small sites were compulsive and coercive. A public body, whose object is to take care of the general sanitation and other conveniences of the whole town has to adopt measures which may seem to be harsh to individuals. On the contrary the evidence adduced goes to show that the public (whose representatives form the municipal body) have co-operated with it by accepting reasonable amounts of compensation at even rupee one per square foot for small open sites abutting on the road and therefore required for its widening.
3. In short the learned Judge proceeded on the basis that the Municipality had a right to refuse permission to build upon lands, which the Municipality intended to acquire. By this means, according to the learned Judge and the arguments addressed to us, the Municipality could prevent building sites from being used for building and apparently render them valueless. Then, subsequently, a notification could be issued for their acquisition. The sites would Acquisition in such circumstances be valued, it is said, on the basis that they could not be built upon because the Municipality refused permission to build. These proposition seem startling enough. The learned Assistant Government Pleader contended, however, that the Bombay District Municipal Act (Bom. III of 1901) permitted to the Municipality these methods of compulsory acquisition at: little or no cost. He relied for this argument on Sub-section (2) of Section 96 of the Act. Under that sub-section the Municipality could, he said, in general terms, refuse permission to the owners of land to build thereon; and could render the land incapable of being built upon and in that manner reduce its value, or indeed render the land valueless. He also argued that the Municipality was expected to do so apparently in the public interest.
4. The powers of the Municipality under the Bombay District Municipal Act are (as will appear from what I shall presently state) far from being unrestricted. But in view of the extravagant claims put forward on behalf of the Municipality it is desirable to draw attention to the observations of Mr. Justice West, who had to deal with a section (Bom. VI of 1873, Section 33) under which the power to refuse permission to carry out certain works was (unlike the provisions of the District Municipal Act) perfectly general in its terms. In Nagar Valab Narsi v. The Municipality of Dhandhuka I.L.R. (1887) 12 Bom. 490 Mr. Justice West says (pp. 494-5):-
It does not follow that the Commissioners could, therefore, exercise the authority thus given to them in a capricious, wanton, and oppressive manner. Public authorities even acting within the defined limits of their powers must not conduct themselves arbitrarily or tyrannically.... A public body must keep within its powers, and must use them considerably (see per Lord Blackburn in Geddis v. Proprietors of Bonn Reservoir (1878) 3 App. Cas. 430 but so acting it is safe-Dixon v. The Metropolitan Board of Works (1881) 7 Q.B.D. 418 There is a further principle of great importance laid down by Lord Selborne, L.C., in Clark v. School Board for London (1874) L.R. 9 Ch. App. 120. His Lordship says : 'It seems to me that the Legislature, in authorising the School Board, for important public purposes, to exercise these large powers...meant to give them a discretion suitable to the nature and importance of the duties to be discharged by them:.' The late Sir G. Jessel, M.R., citing this dictum in Duke of Bedford v. Dawson (1875) L.R. 20 Eq. 353 adds that ' the public body...are to be the judges, subject to this, that if they are manifestly abusing their powers...the Court will say it is not a fair and honest judgment, and will not allow it.' These cases define with clearness what discretion a public body may use and at what point the interference of the Courts is justifiable.
5. In the teeth of these principles supported as they are by decisions which add weight even to a pronouncement by West J., it is a bold position to take up that the Municipality may oppressively and tyrannically utilize its powers-however wide or however restricted they may be-for the purpose of rendering valueless lands which the Municipality may hereafter decide to acquire.
6. In our opinion, however, the Bombay District Municipal Act does not give any powers that can in terms be used in this manner. Section 96(2), which is primarily relied upon, gives three specified options :-
(1) The Municipality may give permission to erect, alter, add to or reconstruct the building according to the plan and information furnished [viz., the plan and information furnished under Section 96(1)(b) : under which clause the plan must show the level stated therein, and furnish information with reference to the matters particularized in the clause]; or
(2) It may impose in writing certain denned classes of conditions : these conditions must refer either :
(a) to level, drainage, sanitation, materials, or
(b) to the dimensions and cubical contents of rooms, doors, windows and apertures for ventilation, or
(c) to the number of storeys to be erected, or
(d) with reference to the location of the building in relation to any street existing or projected for the purpose for which the building is to be used; or
(3) it may direct that the work shall not be proceeded with unless and until all questions of a certain kind have been decided to their satisfaction : these questions must be connected with the respective location of the building and any such street.
7. None of these alternatives permit the Municipality to refuse in general terms permission to build. All that they permit is to impose conditions of special classes, or to direct that the work shall not be proceeded with until questions relating to the location of the building have been decided to their satisfaction.
8. Nor are these the only limitations upon the powers of the Municipality in regard to granting permission to build. There are further limitations which are illustrated by a criminal case : Emperor v. Onkardas (1933) 36 Bom. L.R. 217. It was held there that the Municipality in question had in the circumstances no authority to give permission to build with the condition imposed that the owner shall only build leaving a setback of a certain space. In that case, though it was intended to add that part of the land to the street, the regular line of street in accordance with Section 91A (1) had not been prescribed. Where such a line is prescribed, compensation for the value of the land added to the street has to be paid by the Municipality. The owner built disregarding the condition of leaving a setback and he was held not to have acted contrary to any legal orders of the Municipality, nor to have become liable to fine. The basis of the reasoning was that the Municipality could not legally impose the condition of a setback without paying compensation : Bombay District Municipal Act, Section 91A; Bai Fatma v. Rander Municipality : AIR1914Bom112 .
9. The position, then, under the Act and in accordance with principle, stands thus : the Municipality as a public body is under the necessity not to exercise its authority in a capricious, wanton, oppressive, arbitrary or tyrannical manner even when acting within the defined limits of its powers. It must use even its admitted powers considerately, with a discretion suitable to the nature and importance of the duties to be discharged, and with a fair and honest judgment. Secondly, under the Act the Municipality has been given no power to refuse in general terms permission to build. It has Only power to impose conditions with reference to the location of the building in relation to any street existing or projected. Thirdly, even such conditions cannot be so imposed as to contravene the provisions for compensation when a regular line of Acquisition street is prescribed. The result is that the Municipality may for consideration acquire the right to prevent the owners of land adjoining a street from building on such parts of the land as it desires to add to the streets; but the Municipality is not entitled as was argued before us to prevent building sites being built upon without compensating the owners. Indeed the learned Assistant Government Pleader very candidly and properly admitted that he could not in view either of the true construction of the Bombay District Municipal Act or of the authorities to which he called our attention support the argument which he felt bound to present.
10. It is nevertheless argued that though the permission to build had been wrongly refused and the Municipality could not have prevented any building being put up upon the land acquired, yet the facts were that the lands were subject to a prohibition from the Municipality to build,-a prohibition to which no exception had been taken and which was assumed to be valid. Therefore it was argued that the sites must be valued as though in the market they would have been sold only as 'lands struck with sterility' to use Lord Justice Bowen's expression. In our opinion that argument cannot be accepted. A mistaken view of the law cannot be taken as the basis of the value of the property. In a case where there was an 'admission in the plaint and upon the argument' their Lordships said, 'The plaintiff, however, is not bound by an admission of a point of law nor precluded from asserting the contrary, in order to obtain the relief to which, upon a true construction of the law, he may appear to be entitled :' Juttendromohun Tagore v. Ganendramohan Tagore (1872) L.R. 47 IndAp 71. The lands acquired were suitable for building purposes. They had been used as building sites. There was nothing in law to prevent their being used as building sites at the time when the notification for compulsory acquisition was issued. They must accordingly be valued on that footing.
11. Apart from the initial error into which the learned Judge fell, the basis on which he has valued the lands under acquisition is, in our opinion, quite erroneous. He has not considered the evidence that was before him, scanty though it was. But he has taken, as the basis of his award, the compromises into which the neighbouring owners had entered for selling their lands to-the Municipality. The Municipality had acquired lands from several owners in the vicinity at the prices of Rs. 2-8-0 and even at Rs. 1 per square foot. There were in fact no materials justifying any reliance being placed on that position. No particulars were placed before the Court from which it could be inferred that the compromises were any guide for arriving at the market value. One-reason to the contrary is evident even on the materials before us. Those owners may have been agreeable to giving their lands at low prices for widening the street in the expectation that the enhancement in the value of the rest of their land would more than compensate them for the low rate at which they parted with a portion of it.
12. Even on the erroneous basis that these sites could no more be used as building sites, the rates are in flagrant contravention of the evidence. For even in their sterile state they were let out at rents of Rs. 1 or Rs. 1-8-0 per month. On that rental basis, their capitalized value, taking the low rate of sixteen or seventeen years' purchase, would have amounted to a little more than double the sum that the learned Judge has allowed, which itself was two and a half times the compensation allowed by the Land Acquisition Officer.
13. There is evidence both of sales and of rents of shops in the neighbourhood. It is difficult to place much value on the evidence of the rents accruing from the shops because in the first place there is no sufficient evidence of the value of the buildings on those plots in respect of which the rents were realised, and, secondly, on valuing the sites on the rental basis, the prices that result are at such variance with each other and at times so extravagant, that we cannot guide ourselves by those calculations. We have, however, satisfactory evidence of the sales of two plots of land which there is no reason to think were more valuable than those under acquisition. With reference to one, No. 2179, we have the evidence of exhibit 34, and with reference to the other, No. 1140, the evidence of exhibit 19. Making allowance for certain details to which I need not refer, the price per square foot of land under each of these sales may be taken to be very nearly the same : about Rs. 12-8-0 per square foot. In view of all the evidence that rate may be considered to be fair for allowing compensation to the appellants. It is five times the amount of compensation allowed by the District Judge and twelve and a half times the compensation allowed by the Land Acquisition Officer.
14. In our opinion compensation should be allowed at the rate of Rs. 12-8-0 per square foot. This will be exclusive of Rs. 40 allowed for the plinth and the addition of fifteen per cent, under the Act. Costs in proportion throughout.