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The Special Land Acquisition Officer Vs. J.H. Katrak - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai High Court
Decided On
Case NumberO.C.J. Land Acquisition Reference Nos. 2, 3, 7, 8, 9, 13 and 14 of 1955
Judge
Reported in(1959)61BOMLR1259
AppellantThe Special Land Acquisition Officer
RespondentJ.H. Katrak
Excerpt:
.....or areas where they are first set in motion. a prudent purchaser is bound to know that the legislature had chalked out a certain line of policy, and that once it started abolition of khoti rights in one area, that policy might well be extended to other areas......the legislature had chalked out a certain line of policy, and that once it started abolition of khoti rights in one area, that policy might well be extended to other areas. but apart from such theoretical aspect, the legislature had disclosed its mind in the bill which ultimately became act vi of 1950 that it regarded the khoti tenure as an anachronism and should, therefore, be abolished. besides this act, the legislature had already passed four other enactments viz. the bombay bhagdari and narwadari tenures abolition act being act xxxii of 1.949, the bombay maleki tenure abolition act of 1949 being act lxi of 1949, the bombay taluqdari tenure abolition act of 1949 being act no. lxii of 1949 and the panch mahals meh-wassi tenure abolition act, 1949, being act no. lxiii of 1949, which.....
Judgment:

Shelat, J.

1. [His Lordship after dealing with the facts of the case and points not material to this report, proceeded.] As regards development, admittedly upto January, 1950, there was no development in Parjapur itself except for a solitary one-room structure with a verandah in S.N. 34/2-A. As one comes down south towards Marol gaothan, the Acme Bobbin & Shuttles Co., Ltd. had, by January, 1950, constructed a factory in Instance No. 3. Except for that, there were no structures on Marol-Maroshi Road until one came to S. No. 168/6 where there were three structures. Marol gaothan had, of course, about 400 houses. Going eastwards there was some development in S. Nos. 44 and 45 of Paspoli and in S. No. 31 of Tungwa where M/s. Larsen & Toubro and Khandelwal & Co. had their factories. Near Saki Naka also there were some 3 or 4 structures. But the distance between these places and Marol-Maroshi Road is as much as five furlongs and, therefore, any development in that direction cannot be considered as a development in the vicinity of the acquired land. There is next the evidence that from, the south of Marol gaothan upto Andheri-Kurla Road, a distance of about 1,200 feet, there were only 10 residential structures but not any industrial structure and all these 10 structures abutted on the main road. The position, therefore, was that there were considerable undeveloped areas, first, between Andheri-Kurla Road and Marol gaothan, and secondly between Marol gaothan and the land in Instance No. 3. Even to the south of Marol gao than, development was in a ribbon fashion. Thus, except for three structures in S. No. 168/6, the factory in the land in Instance No. 3, a bungalow on the top of a hillock in S. No. 10 and a one-room structure in S. No. 34/2-A there were no other structures in this entire locality. But Mr. Vaidya's anticipations were that all these areas, right from the north of Marol gaothan to S. No. 19/3, the northernmost part of the acquired land, would be filled up upto a depth of 900 feet on both sides of the road within a period of 25 years' 'These anticipations are not, in my view, justified by the evidence of the very scanty development that had taken place by January 19, 1950.

2. The learned Advocate General in view of Mr. Vaidya's statement that this entire area would be fully developed within 25 years asked him what development, if any, had in fact taken place since the date of the notification until today. Mr. Laud objected to that question on the ground that any evidence as to the period after the date of notification was inadmissible. For this objection reliance was placed on Sections 23 and 24 of the Act. Now, Section 23 provides that in determining compensation the Court shall consider the market-value' of the acquired property at the date of the publication of the notification. Whereas that section lays down the several things to be taken into consideration, Section 24 provides what are the things that the Court cannot consider. Thus Clause (4) of Section 24 provides that the Court shall not take into consideration any damage likely to be caused to the land acquired after the date of the declaration under Section 6 or in consequence of the use to which it would be put. Clause (5) of Section 24 provides likewise that the Court shall not take into consideration any increase in the value of the land acquired likely to accrue from the use to which it would be put when acquired. As stated by their Lordships of the Privy Council in Manmatha Nath Mitter v. The Secretary of State for India in Council I.L.R. (1897) Cal. 104 the time of awarding compensation must be construed as meaning the time of compensation, the time at which the right to compensation attaches. In other words the valuation does not depend upon the result of acquisition. To that extent, evidence as to facts which arose after the acquisition is no doubt irrelevant. But the point to consider is does Section 23 or b. 24 mean that the Court must shut its eyes on all facts which have occurred after the date of notification under Section 4. Suppose the Court is asked to determine compensation on the basis of building potentiality on the footing that the acquired land is likely to develop upto a certain distance within a certain period into either residential or industrial area and the Court is shown that between the date of the notification and the hearing of the Reference when the Court estimates the compensation payable on that footing no development, has in fact taken place, does it mean that the Court must brush aside actuality ' and proceed to determine compensation on hypothetical considerations? effect of Sections 23 and 24 is that compensation must be fixed looking to the condition of the Property and the probable use to which a purchaser would most advantageously put it at the date of the notification. The date of notification fixes the time at which the value of the Property, as it then is, is to be determined. Reliance was placed on Bradberry, In re., National Provincial Bank, Ld. v. Bradberry. Fry, In re. Tasker v. Calliford [1943] 1 Ch. 35 to show that facts, though occurring after the date at which valuation is to be determined, can be looked) at for the purpose of arriving at a correct estimate. There the testatrix, one Ellen Bradberry, by her will dated August 19, 1931, gave legacies to certain legatees and life annuities beginning from the date of her death to three other persons. The annuities were payable out of a fund sufficient by its income to answer them. She, however, directed that if the income could not answer the annuities at the date when they became payable, no annuitant should have a claim against any other part of her estate. She gave her residue to four residuary legatees. The testatrix died on July 27, 1939. Her estate was not enough to pay the legacies and also to provide, income to pay these annuities, but it was enough to pay the legacies and the capitalized values of the annuities. On July 13, 1940, Clara Jones, one of the three annuitants, died. The estate then- became the to provide the fund to meet the remaining annuities. Before her death, however, the residuary legatees had consented to the annuitants' accepting the capitalized values of their annuities, but on learning of the death of Clara Jones they withdrew their consent. In May 1941, William Edwards, another annuitant, died. The executors and trustees, the National Provincial Bank, Ltd. were prepared to pay to the executors of Clara Jones and William Edwards the values of their annuities capitalized at the date of the testatrix's death. The residuary legatees contended that the executors of Clara Jones and William Edwards were entitled to receive only sums equal to the amount of the annuities payable for the periods between the death of the testatrix and the respective deaths of the two annuitants. In that event the Bank would have been able to pay those sums and the legacies and would also have been able to set aside a fund sufficient by its income to pay the third surviving annuitant her annuity in full. The residuary legatees contended that the surviving annuitant should be paid her annuity and not its capitalized value. On behalf of the executors of the two deceased annuitants it was claimed that their right to the value of annuities capitalized as at the date of the death of the testatrix cannot be said to have ended because the two annuitants died before it was paid. The two deceased annuitants had accepted the values so capitalized and that it should be paid to their executors. Negativing this contention, Uthwatt J. said that it was the duty of the Court to take into consideration every relevant fact that is known at the date when the decision is to be made and work out the rights of the parties accordingly. The death of an annuitant before the Court's decision enabled the Court to measure what was in fact given to him.

Why should the Court,' he observed, 'neglect known facts and put itself in the position of a prophet who, when he knows all the facts, projects himself to an earlier date and predicts as the span of life of a person known to be dead the length of life of the hypothetical person who lives his actuarial life?

At p. 45 of the report the learned Judge sums as follows:

A principle is to be drawn from these authorities, namely, that where facts are available they are to be preferred to prophecies.

Thus the principle laid down in this decision is that where the question at issue is the method of working out rights, regard can be had in estimating the value of those rights to events which have happened since those rights accrued.

3. Now, it is true that compensation payable to a claimant under the Land Acquisition Act is to determined from the market value of the property at the date of the notification and not its value after that date. But while estimating that value at that date if a certain hypothetical basis is adopted, does Section 23 or Section 24 debar a Court from testing that basis by facts which are no longer speculative or m the region of estimates but are well-known and actual at the time when the Court is determining that value? There is a distinction between the value of the property at the date of notification and no 'other date and its determination by the Court at the time of hearing a Reference. There is nothing in either Section 23 or Section 24 of the Act which precludes the Court from considering facts, which, though occurring after the date 'when the right to compensation accrued, help the Court in estimating the value of the property at the relevant date. If, for instance, a claim for compensation is made on the footing that the acquired land had a certain potentiality, such as quarrying potentiality, and the Court is called upon to estimate the value of such land, does it mean that the Court should disregard facts available to it at the date when it determines such value and which show that the property had no such potentiality and yet estimate the value on theoretical and hypothetical considerations? I think not. It would, in my view, be improper to discard facts which, have actually occurred, even though after the date of notification, which throw light on the question of the value of the land in question at the relevant date and which assist the Court to a correct ascertainment of such value. Though the case Bradberry In re was not one dealing with land acquisition, the principle there laid down applies with equal force to the case before me. I held, therefore, that the evidence as to facts occurring even after the date of notification if relevant for the determination of the value at the date of the notification' would be relevant. Mr. Vaidya thereupon stated that since January 1950 only two new structures had been put up in S. No. 10 in the entire area from Instance No. 3 down to the north of Marol gao than and that too within a depth of 300 feet from the road and that no structures at all have been built in the area beyond the depth of 300 feet from that road. These facts clearly show that the period of 25 years during which Mr. Vaidya thought that the entire area from the north of Marol gaothan to S. No. 19/3 upto a depth of 900 feet on both sides of the road would be filled up was a too optimistic estimate.

4. [His Lordship, after dealing' with 'points not material to this report, continued.]

5. That takes me to the question of the loss of the right of assessment of the Khot, both agricultural and non-agricultural. Mr. Laud has accepted the Acquisition Officer's award as to the agricultural assessment which has been capitalized at 20 years' purchase and, therefore, no question remains to be determined on that item of compensation. But there is considerable controversy as regards the question of compensation for the loss of the right to levy non-agricultural assessment. At one stage the learned Advocate General sought to support the attitude of Government that the Khot had no right to levy non-agricultural assessment. But when it was pointed out to him that that question was already a matter of some judicial pronouncements, he gave up that stand at once. Shortly stated, the question before me is, what would a purchaser have paid in January, 1950 for the right of the Khot to levy non-agricultural assessment in respect of lands to which I have given building potentiality! As I have stated, Mr. Vaidya has based his calculations on the footing that within a period of 25 years the entire area from the north of Marol gaothan upto the northernmost part of the acquired area would be fully developed. On that basis he has taken a mean period of 12 years and worked out compensation due to the claimants after providing for certain charges of collection and for roads. It was, however, argued that in calculating compensation Mr. Vaidya had not taken into consideration certain facts which would govern the value that a purchaser of this right of the Khot would offer in January, 1950. The first is that though the Khot has a right to levy non-agricultural assessment as and when user of the land is converted from agricultural to non-agricultural purpose, Government has the power to direct the Collector not to change the assessment. Rule 92 of the Rules framed under the Land Revenue Code provides:

When land assessed for purposes of agriculture only is subsequently used for any purpose unconnected with agriculture, the assessment upon the land so used shall, tin-less otherwise directed by the State Government, be altered under Sub-section (2) of Section 48 by the Collector in accordance with Rules 81 to 87 inclusive.

The learned Advocate General contended from this rule that this was one of the factors which rendered the right to levy assessment insecure, for Government at any time can direct the Collector not to change the assessment. Therefore, even though a piece of land might be put to non-agricultural use, Government, by directing that no non-agricultural assessment should be levied, could defeat the right of the Khot. In The Special Land Acquisition Officer v. The Trustees of the Will of the late A. II. Wadia (1956) O.C.J. Appeal No. 60 of 1953, decided by Chagla C.J. and Desai J., on April a Division Bench of this Court, however, disregarded such a contention and held that such risk was fanciful for it must be assumed that Government would act honestly and reasonably. The next contention was that Government had always denied the right of the Khot to levy non-agricultural assessment and that, therefore, there was considerable doubt as to the Khot's right to compel Government to levy non-agricultural assessment. That question has also been finally decided by the Supreme Court in Fatma Haji Ali Mohammad v. State of Bombay : [1951]2SCR266 . No doubt this decision was delivered on February 5, 1951, after the date of the notification but, as observed by the Appeal Court in The Special Land Acquisition Officer v. The Trustees of the Will of the late A.H. Wadia, although, this decision came in February, 1951 the law always was what was finally decided by the Supreme Court and, therefore, although in 1950 the question was a matter of dispute, Government was bound in law to levy non-agricultural assessment even though the benefit of it would go to the Khot. But apart from these questions of law although under Rule 92 Government could ask the Collector not to levy such assessment if some part of the assessment was shared by the Khot with Government, there would be no reason for Government to exercise its right to direct the Collector not to levy non-agricultural assessment. There was, therefore, no such risk or insecurity as to the right of the Khot to levy the non-agricultural assessment on these grounds.

6. But a point, which was not either before Mr. Justice Tendolkar in Land Acquisition Reference No. 10 of 1947 or before the Appeal Court in The Special Land Acquisition Officer v. The Trustees of the Will of the late A.H. Wadia, which arose from the decision in that Reference has now been raised. That is that by January, 1950, a certain agrarian policy adopted by the Government of Bombay had been made manifest by certain legislative enactments. These enactments made clear that the intention of both the Government and the Legislature was to do away with the middleman, such as a Khot, standing between the State and the farmer. Thus on April 3, 1950, the Bombay Legislature passed the Bombay Khoti Abolition Act being Act VI of 1950. This Act abolished the Khoti tenure in Ratnagiri and Kolaba districts. Though the Act was passed in April 1950, the Bill was published in the Bombay Government Gazette as early as July 30, 1949. Mr. Laud, however, argued that since the Bill proposed to do away with the Khoti tenure only in Ratnagiri and Kolaba districts, a purchaser might well think that the Legislature did not intend to touch the Khoti tenures in Bombay and the areas surrounding the City. That argument, however, is not very impressive; It is well-known that when such reforms are undertaken the Legislature often starts such reforms piecemeal, taking certain districts or areas where they are first set in motion. A prudent purchaser is bound to know that the Legislature had chalked out a certain line of policy, and that once it started abolition of Khoti rights in one area, that policy might well be extended to other areas. But apart from such theoretical aspect, the Legislature had disclosed its mind in the Bill which ultimately became Act VI of 1950 that it regarded the Khoti tenure as an anachronism and should, therefore, be abolished. Besides this Act, the Legislature had already passed four other enactments viz. the Bombay Bhagdari and Narwadari Tenures Abolition Act being Act XXXII of 1.949, the Bombay Maleki Tenure Abolition Act of 1949 being Act LXI of 1949, the Bombay Taluqdari Tenure Abolition Act of 1949 being Act No. LXII of 1949 and the Panch Mahals Meh-wassi Tenure Abolition Act, 1949, being Act No. LXIII of 1949, which abundantly made clear the agrarian policy sought to be followed by it. It seems to me, therefore, that a purchaser in January 1950 was bound to feel that there was an element of risk and insecurity so far as this right to levy non-agricultural assessment was concerned. Mr. Justice Tendolkar no doubt in the Reference which I have already referred to capitalized the value of this right at 8 per cent, which was also confirmed by the Appeal Court. But, as I have said before, this aspect, which has now been presented, was not before him or the Appeal Court, probably because the acquisition before Mr. Justice Tendolkar took place long before these Acts were passed. But looking to the tenor of these Acts it is clear that the Legislature had decided to do away with the several tenures which stood between the State and the peasant.

7. On January 14, 1952, the Bombay Legislature passed the Salsette Estates (Land Revenue Exemption Abolition) Act, 1951, being Act XLVII of 1951 which abolished amongst other things the Khoti tenure in Salsette District. The Act came into force on March 1, 1952. The Bill was published on August 14, 1951. This Act obviously was passed in furtherance of the Government's agrarian policy already disclosed in the Acts previously enacted. The learned Advocate General argued that the right of the Khot to levy assessment in any event came to an end as from March 1, 1952, and therefore, the only compensation that can be awarded to the claimants in respect of the loss of this right would be for the period between January 19, 1950, and March 1, 1952, that is to say, for 2 years and 1 months only. Mr. Laud has, on the other hand, contended strenuously that the Court is not entitled to take into consideration this Act which came into force after January 19, 1950, the date on which compensation has to be determined. I am told that the present claimants and certain other parties have filed several suits in this Court which are still pending in which two contentions have been raised, first, as to the validity of this Act, and secondly that even if the Act were to be held valid it would not apply to them. Normally I would have postponed this part of the Reference till these suits are finally disposed of but the questions involved in these suits are so important that it might take considerable time before they are finally set at rest. I was, therefore, requested by both the parties that in order to avoid multiplicity of proceedings I should decide this question on two alternative footings, first, what would be the compensation if the Act is held to be valid, and secondly what would be the compensation if the Act is held to be invalid or even if the Act is held valid that it did not apply to the present Khot.

8. Now, if the Act is held to be valid, it is obvious that the Khot would have the right to levy assessment only upto March 1, 1952. On the other hand, if the Act were to be held invalid or inapplicable to the present Khot, the Khot would have the right to levy assessment until another Act to the same effect was passed or an Act validating the Act was passed. But as to whether another such Act would be passed or not must remain a matter of considerable speculation. On the footing that the Act is valid and that it applies to the present Khot, the question is, can I take into account the fact that on January 14, 1952, this Act was passed although it was enacted after the relevant date? Mr. Laud would have me not to consider this Act at all. In other words, his contention is that although the Legislature has in fact done away with this right from March 1, 1952, I am bound to award compensation to the claimants as if the abolition of the right of the claimants to levy assessment has not taken place. Prima facie such a contention does not appear to be either right or proper. As I have said earlier, Mr. Laud loses sight of the distinction between (1) the right of compensation for the loss of the privilege of levying assessment accruing on the date of the notification and (2) the determination of the amount of that compensation. In the first case, the right to compensation accrues to the claimants as on the date of the notification. In the second case, the Court estimates that compensation when a Reference in regard to it is heard and disposed of. While arriving at that estimate, viz. the value of that right at the date of the notification, the Court, in my view, is entitled to and must look into facts which have actually occurred in preference to mere hypothetical considerations. Such a question arose in Bwllfa and Merthyr Dare Steam Collieries v. Pontypridd Waterworks Co. [1903] A.C. 426. Owners of coal mines under and near certain waterworks gave the undertakers notice under Section 22 of the Waterworks Clauses Act, 1847, that they intended to work the coal. The undertakers replied by a counter-notice requiring the mine owners not to work and stating their willingness to make compensation. In an arbitration under that Act and the Land Clauses Acts to assess the compensation the mine owners gave evidence to prove that coal rose in value after the date of the counter-notice. It was held that there was no purchase of the coal or transfer of the property in the coal; that the inquiry was not what was the value of the coal at the date of the counter-notice, but what would the coal owners, if they had not been prohibited, have made out of the coal during the time it would have taken them to get it; and that the evidence was admissible. In this connection it is pertinent to cite certain observations made by the Earl of Halsbury L.C. after stating the questions of debate before him. lie observed (p. 428) :.If it were a purchase, the rights and liabilities and profits, if there were any, would pass to the purchaser, and its value, with all its possibilities, would pass at the time notice to treat was given; but, if the question is that which I think it was, then the person who had to make the calculation of what was the compensation ought to have arrived at the sum which experience has now shewn to be the correct amount.

It is true that he probably would not have been able to arrive at that sum accurately, but he ought to have contemplated upon such material as he had what would be the true sum. He ought to have considered the possible rise or fall of prices; but, as I have said, he probably would have made a mistake. We now know what would have been the true sum, and the proposition baldly stated appears to be that, because you could not arrive at the true sum when the notice was given, you should shut your eyes to the true sum now you do know it, because you could not have guessed it then.

It is, of course, only an accident that the true sum can now be ascertained with precision; but what does that matter? It seems to me that the whole fallacy of the contention that you may not look to the facts that have occurred rests upon the false analogy of a sale.

Although this was not an acquisition case, the principle enunciated there for estimating compensation has application. The distinction there made between the case of a sale and the case of estimating compensation is also relevant. I respectfully agree with that principle and hold that in view of the Act having been passed, if the Act is held valid and applicable to the claimants, compensation payable to the claimants would be for the period between January 19, 1950, and March 1, 1952, that is to say, for 2 years and 14 months. To hold otherwise would mean that the Court would be awarding compensation for the period after the Legislature has abolished the -very right which alone entitles the aggrieved party to receive compensation. That cannot be for obvious reasons either sound or proper. If the Act, on the other hand, is held to be invalid or even if valid but not applicable to the present claimants then the fact that such an Act was passed becomes irrelevant and the question whether the Legislature would pass either another such Act or a validating Act being purely speculative, the value of the loss of right to levy non-agricultural assessment should be capitalized at 8 per cent, as was done by Mr. Justice Tendolkar in Reference No. 10 of 1947 and confirmed in The Special Land Acquisition Officer v. The Trustees of the Will of the late A.H. Wadia.

9. [The rest of the judgment is not material to this report.]


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