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Amar Nath Vs. Union of India - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtDelhi High Court
Decided On
Case NumberFirst Appeal No. 82D of 1965
Judge
Reported in11(1975)DLT142; 1975RLR38
ActsDelhi Rent Control Act, 1958 - Sections 6(B)(2); Requisition and Acquisition of Immoveable Property Act, 1952 - Sections 8(1)(2)
AppellantAmar Nath
RespondentUnion of India
Advocates: G.N. Aggarwal,; A.B. Saharia and; K.B. Soni, Advs
Cases ReferredBengal Province v. Board of Trustees Air
Excerpt:
(i) delhi rent control act (1958) - section 6(b)(2)(b) -- cost of construction and standard rent -- determination of -- cost of construction -- data available for a particular year cannot be applied for applied for determining cost of construction for other years.; that the cost of construction under section 6(b)(2)(b) of the rent act has to be proved by definitive evidence. it cannot be arrived at by guesses and conjectures. if no cost or price of the material on the date of construction is available and no cost of construction index is available to infer the cost of construction of the years in question, then from the data relating to the cost of construction available to the court for a different year, it is not possible to determine what would be the reasonable cost of construction..........award of the previous arbitrator should be ignored by me and should not be adopted as the basis to award compensation under the current requisitioning of property. i do not agree. the only substantial difference in the two legislations as would appear on a parallel study of them is this. under the old act of 1947 s. 7(e) provided : (e) the arbitrator in making his award shall have regard to the provisions of sub-section (1) of section 23 of the land acquisinon act, 1894, (i of 1894) so far as they can be made applicable.'(31) this provision is conspicuous by its absence in the new act of 1952. but that does not make any difference to the case before me. s. 23 of the land acquisition act only provides that the value of the land ought to be the market value of the land on the date of the.....
Judgment:

Avadh Behari, J.

(1) This is an appeal against the award of the arbitrator Shri G. R. Luthra dated 24th February, 1965, appointed under the Requisitioning and Acquisition of Immovable Property Act, 1952 (hereinafter called the Act), The appellants are the owners of a property known as dharamshaia. This property is situated opposite Qutab Minar, Mehrauli and bears Municipal No. H5/1 to H5/12. The respondent the Union of India, requisitioned this property on 15th of March, 1962, under the Act. On 3rd of September, 1962 the respondent derequisitioned that part of the property which bears No. H5/12. The possession of the remaining property T-15/1 to H5/11 was taken on the 19th September, 1962. The property was requisitioned for the students of Maulana Azad Medical College. The owners say that now the property is being used to house mentally retarded persons.

(2) Compensation could not be fixed by agreement of the partics. The appellants claimed Rs. 1241.66 per month as compensation. The respondent offered Rs. 380.00 per month. The matter was referred to the arbitrator appointed under S. 8 of the Act.

(3) Arbitrator estimated the cost of construction at Rs. l,40,795.00 . The cost of the land was worked out at Rs. 8 per square yard. It came to Rs. 26.344.00 . He also allowed a sum of Rs. 4238.85 on account of improvements. He determined compensation by allowing 8-5/3 per cent per annum at the total cost of the construction and the value of the land. The appellants were held to be entitled to Rs. 545.31 per month as compensation payable to them. In addition to this the arbitrator also allowed 15 per cent in the nature of solarium. This came to Rs. 81.80 nP per month. In all he awarded a sum of Rs. 621.00 per month as compensation. Aggrieved by this award the appellants appeal to this Court under S. 11 of the Act.

(4) This appeal came up for hearing before M. R. A. Ansari, J. The learned judge noticed a conflict of decisions on the question of award of compensation. By order dated 14th November, 1972, he referred the matter to a larger bench. A division bench of Prakash Narain and R. N. Aggarwal, JJ. took the view that the Delhi Rent Control Act 1958 will apply to the requisitioned property and it is the stand1 ard rent as determined under S. 6 of the Delhi Rent Control Act which would be the rent 'payable' as postulated by clause (a) of sub-section (2) of S. 8 of the Act. It was further held that the rent payable would be calculated on the basis of 7-1/2 per cent per annum of the aggregate of the reasonable cost of construction and the market price of the land comprised in the premises on the date of the commencement of the construction. In other words the division bench held that relevant date for the determination of the cost of construction and the cost of the land was the date of the commencement of the construction and not the date of requisition of the premises.

(5) Now I have to apply the principles enunciated by the division bench to the facts of this case. Before I do that I turn to the definition of compensation and then see how is it to be determined. Compensation is a recurring payment. S. 8(2) of the Act provides :

2. The amount of compensation payable for the requisitioning of any property shall consist of-

(A)a recurring payment, in respect of the period of requisition. of a sum equal to the rent which would have been payable for the use and occupation of the property, if it had been taken on lease for that period; and

(B)such sum or sums, if any, as may be found necessary to compensate the person interested for all or anv of the following matters, namely,-

(I)pecuniary loss due to requisitioning;

(II)expenses on account of vacating the requisitioned premises:

(III)expenses on account of reoccupying the premises upon release from requisition; and

(IV)damages (other than normal wear and tear) caused to the property during the period of requisition, including the expenses that may have to be incurred for restoring the property to the condition in which it was at the time of requisition.'

(6) The arbitrator determined the standard rent under the Delhi Rent. Control Act. 1958, under S. 6. A witness Sardar Chanan Singh was produced before him by the appellants. He proved that the cost of construction of the premises under requisition in 196? was Rs. 2,03,797.50 excluding the cost of improvements.

(7) The requisitioned premises are broadly divisible into three blocks. One block was built in the year 1916. The second block was built in the year 1935. The third block was built in 1940 or 1941. Under S. 6 of the Delhi Rent Control Act, 1958 the arbitrator proceeded to determine the cost of construction of these premises for the year 1935. He adopted a novel method for doing so. He took the cost of construction of Rs. 3,03,797.50 of 1962 as given by the witness Sardar Chanan Singh and reduced this cost by 350 per cent and held that in 1935 the cost of construction of the requisitioned premises was 45,288.00 . For adopting this method he relied upon the evidence of the architect Sardar Chanan Singh. That witness stated that in 1935 the cost of construction was 350 per cent less than what it was in the year 1962. This provided a convenient method in the view of the learned arbitrator for finding out what was the cost of construction in 1935.

(8) As regards the cost of the land there was no dispute before the arbitrator. He held that the cost of the land was Rs. 8 per square yard in 1935. The area under requisition was 3293 square yards. The value of the land, was, thereforee, computed at Rs. 26,344.00 .

(9) The arbitrator allowed Rs. 4238.85 on. account of improvements made by the appellants and another sum of 15 per cent by way of solarium. As I have said he awarded Rs. 626.00 per month as compensation.

(10) The Division Bench has held that the standard rent ought to be the basis for the determination of compensation under S. 8(2)(a) of the Act. Standard rent has to be determined under S. 6 of the Delhi Rent Control Act of 1958. The arbitrator has attempted to do that. The sole question in the appeal is: Whether the method of determining the standard rent adopted by the arbitrator is the right method.

(11) S. 6(B)(2)(b) of the Delhi Rent Control Act 1958 provides that standard rent in relation to any premises means-

(B)in any other case, the rent calculated on the basis of seven and one-half per cent, per annum of the aggregate of the reasonable cost of construction and the market price of the land comprised in the premises on the date of the commencement of the construction : Provided that where the rent so calculated exceeds twelve hundred rupees per annum, this clause shall have effect as if for the words 'seven and one-half per cent', the words 'eight and five-eighth per cent' had been substituted.'

(12) The question is : Can we determine the reasonable cost of construction of the requisitioned premises on the date of the commencement of the construction As regards the market price of the land there is no dispute. The question what is the reasonable cost of construction on the date of the commencement of the construction-has given rise to some difficulty in this case.

(13) The arbitrator accepted the evidence of the architect regarding the cost of construction of the year 1962 and reduced that cost by 350 per cent and thereby arrived at the cost of construction in the year 1935.

(14) I cannot accept this method of determining the cost of construction of the year 1935. This is no rule of law. This is a rule of thumb. In fact it is all thumbs. The cost of construction under S. 6(B)(2)(b) of the Rent Act has to be proved by definitive evidence. It cannot be arrived at by guesses and conjectures. If no cost or price of the material prevalent on the date of the construction is available and no cost of construction index is available to infer the cost of construction of the years in question i.e. 1916, 1935 and 1940 from the data relating to the cost of construction available to us of the year 1962 then it was not possible for the arbitrator to determine what would be the reasonable cost of construction and for that matter standard rent under S. 6 of the Rent Act.

(15) Sardar Chanan Singh is an architect. The architect has given his opinion as to cost of construction of the premises of the year 1935. He has not given any opinion as to what was the cost of construction in 1916 and in 1940. An architect may be expert for the purpose of designing and building a house but he is not an expert for the purpose of giving his opinion as to what would be the cost of construction in a particular year without any data of the price of the material and wages prevailing in that particular year. The architect did not. have primary evidence before him about the prices of materials and wages prevalent in 1916, 1935 and 1940 and, thereforee, his opinion regarding the cost of construction of those years is not acceptable. I do not think that evidence is at all admissible. The cost of construction is a fact which has to be proved like any other fact. It consists of the actual prices of building materials and the rates of wages payable for the construction of a building on a particular date or during a period of time. Without the maintenance of a reliable, trustworthy and tested construction index it will be highly speculative and conjectural to predicate that the prices of 1935 were less by 350 per cent of the prices of 1962. In Diwan Chami v. Tiralh Ram, : AIR1972Delhi41 , Deshpande, J. took the view which I am advocating in this case. I am in respectful agreement with the view expressed in that case.

(16) The next question is: if standard rent cannot be determined under S. 6 of the Rent Act what is a court to do The Court cannot decline to determine compensation. That has to be done. S. 8(e) of the Act provides :

(E)the arbitrator shall, after hearing the dispute, makp an award determining the amount of compensation which appears to him to be just and specifying the person or persons to whom such compensation shall be paid; and in making the award, he shall have regard to the circumstances of each case and the provisions of sub-sections (2) and (3), so far as they are applicable ... ... ... ... ... ... ... ... ... ... ... ...'

(17) Now comes the important fact determinative of this appeal. This very property consisting of H5/1 to H5/12 was requisitioned by the respondent Union of India in February 1948. Compensation could not be determined by agreement even then. The matter was referred to the arbitrator under S. 7 of the Delhi Premises (Requisition and Eviction) Act, 1947 (called the old Act). That was the Act in force then. The new Act-Requisition and Acquisition of Immovable Property Act-was enacted in 1952. The arbitrator made his award on 11th of April, 1951, under the old Act. He awarded Rs. 1571 per month on account of compensation less Rs. 78 for portion in occupation of the owners. The previous arbitrator Was Shri Sunder Lal then Commercial Sub-Judge.

(18) An appeal was preferred by the Union of India against the award of the arbitrator. The owners filed cross-objection. The District Judge by his order dated 18th February, 1952, dismissed both the appeal and the cross-objections. The property was released in the year 1952 and remained with the owners till 1962 when it was requisitioned again.

(19) During the period of 1948 to 1952 this property comprising of H5/1 to H5/12 was being used as a school by the Government. The property requisitioned in 1962 consisted of the entire property except the portion bearing No. H5/12.

(20) The solid fact remains that this very property in its entirety was requisitioned in 1948 and the compensation was determined at Rs. 1,571 per mensum.

(21) In my judgment the award of Shri Sundar Lal, made in 1951 is a fair basis on which compensation ought to be awarded to the appellant for the second requisitioning of 1962. In 1948 the entire pro- perty was requisitioned but in the current requisitioning H5/1 was derequisitioned and, thereforee, we must exclude that part for purposes of compensation.

(22) Adopting the award of 1951 as the basis we can determine the cost of construction. The award of 1951 is on the record of the case. We have also on record the cost of construction of the premises as determined by the previous arbitrator. He arrived at Rs. 2,18,000 as the cost of the entire building. For this he accepted the evidence of Sardar Chanan Singh who appeared as a witness at that time also. The Union of India also submitted its estimate of cost of construction before the previous arbitrator. According to the respondent the cost was Rs. 2,16,608. The previous arbitrator found that there was no substantial difference between the two estimates regarding the cost of construction. He considered the estimate given by Sardar Chanan Singh as representing the correct cost of construction. The break up of the cost of construction is given in: C-13. If we exclude the cost of construction of H5/12 the cost of the remaining building comes to Rs. 1,42,000 only. This is clear from Ex. C-7 produced before the present arbitrator Mr. G. R. Luthra. Once the cost of construction is determined at Rs. 1,42,000 on the basis of the previous award it is not difficult to determine what ought to be the compensation in this case. The calculation will now be as under:- Cost of construction Rs. 1,42,000.00 Cost of land as admitted by both the parties: Rs. 26,348.00 Rs. 1,68,348.00 Add cost of improvements as found by the arbitrator Mr. G. R. Luthra Rs. 4,238.85 Rs. 1,72,582.85

(23) If compensation is determined at 5 per cent we arrive at the figure of Rs. 8,629.14 per annum as compensation. Compensation at the rate of 5 per cent has been held to be reasonable by the Calcutta High Court in Bengal Province v. Board of Trustees Air 1946 Cal. 416. This works out to Rs. 719.45 per mensern as the amount of compensation payable in respect of H5/1 to H5/11. To round off the figure compensation, in my opinion, should be fixed at Rs. 720 per month.

(24) Mr. A. B. Saharya, counsel for the respondent has submitted that the award of the previous arbitrator cannot be adopted as the basis for determining compensation under the Act. He urged that the previous award was given under the old Act. The principles and methods for determining the compensation, he says, have been substantially altered by the new Act. He urges that the method of determining the standard rent under S. 6 of the Delhi Rent Control Act is the only method to determine the compensation in this case and he strongly relies on the observations made by the division bench in this very case. I do not agree. In the first place I find that it is not possible to determine the standard rent under S. 6 of the Act for the reasons already given by me.

(25) Secondly, under section 8(l)(e) of the Act the Legislature has laid upon the Court the duty of determining the amount of compensation which 'appears to be just.' The judge has to have regard to the circumstances of each case. it is true that the division bench has said that the method for determining the compensation should be the standard rent under S. 6 of the Rent Act. It has said: 'find out the cost of construction on the date of the commencement of construction.' Yes it must be done under S. 8(2) of the Act as the division bench has ruled. But if the arbitrator finds that the provisions of section 6 of the Rent Act cannot be applied because there is no definitive evidence as to the actual cost of construction on the record of the case he can resort to the provisions of S. 8(l)(e) of the Act. Looking to the circumstances of this very case I find that the previous award can be a convenient basis for determining compensation for the current requisitioning of the property.

(26) Thirdly S. 9(4) of the Rent Act can also be called into aid. Sec. 9(4) provides: 'Controller to fix standard rent etc. ... ... ... ... ... ... ... (4) Where for any reason it is not possible to determine the standard rent of any premises on the principles set forth under section 6, the Controller may fix such rent as would be reasonable having regard to the situation, locality and condition of the premises and the amenities provided therein and where there are similar or nearly similarly premises in the locality, having regard also to the standard rent payable in respect of such premises.'.

(27) In my view it is not possible to determine the standard rent of these premises on the principles set forth under S. 6. If it cannot be done under S. 6 sec. 9(4) lays down that the Court may have 'regard to the situation, locality and condition of the premises.' The best way to have regard to these considerations is to go to the previous award. The previous arbitrator did take into account situation, locality and condition of the premises and came to the conclusion that the compensation should be Rs. 1,571. Mr. Saharya submits that the only thing to which the previous arbitrator had regard was the cost of construction of the year 1950 and did not have regard to the situation, locality and condition of the premises. I cannot accept this argument. When cost of construction and cost of the land are to be determined it is impossible to ignore the situation, locality or the condition of the premises. These three factors must enter into any determination of fair compensation.

(28) Lastly, the method adopted by me appears to be just. The legislature asks the arbitrator to do justice. The amount of compensation must be such as appears to him to be just. I cannot think of a juster method of determining the compensation than by having recourse to the award of the previous arbitrator which was made in 1951 and was upheld in appeal.

(29) Lastly, I am of the view that any other method would be productive of injustice. Under the old Act the appellants were getting much more as compensation than what has been awarded to them by the present arbitrator. The legislature in enacting the new Act in 1952 never intended that the compensation should be much less than what was payable by the Union of India under the old Act of 1947.

(30) Mr. Saharya says that the principles for determining compensation under the old Act of 1947 and the new Act of 1952 are absolutely different and, thereforee, the award of the previous arbitrator should be ignored by me and should not be adopted as the basis to award compensation under the current requisitioning of property. I do not agree. The only substantial difference in the two legislations as would appear on a parallel study of them is this. Under the old Act of 1947 S. 7(e) provided : (e) the arbitrator in making his award shall have regard to the provisions of sub-section (1) of section 23 of the Land Acquisinon Act, 1894, (I of 1894) so far as they can be made applicable.'

(31) This provision is conspicuous by its absence in the new Act of 1952. But that does not make any difference to the case before me. S. 23 of the Land Acquisition Act only provides that the value of the land ought to be the market value of the land on the date of the acquisition. There is no dispute between the parties in this case that the value of the land was correctly determined by the present arbitrator at Rs. 26,344.00 . The difference in the two Acts on this count, thereforee, will not matter.

(32) Lastly, Mr. Sahara urges that the previous award of the arbitrator was based on the cost of construction of the year 1950 while under S. 6 of the Act I must find out the cost of construction as prevalent in 1916, 1935 and 1940. That the award of the previous arbitrator did take into consideration the cost of construction of the year 1950 is also a matter which is not of any great importance once we conclude that it is not possible to determine the standard rent of the premises in accordance with the principles laid down in S. 6 of the Rent Act.

(33) The amount of compensation determined by the previous arbitrator for the first requisitioning is certainly a recurring payment of a sum equal to the rent which would have been payable for the use and occupation of the property, if it had been taken on lease under S. 8(2)(a) of the Act. On the principles analogous to rest judicata the previous award of the compensation is binding between the parties and the appellants are right in pressing it against the respondent.

(34) The Legislature has given wide freedom to the arbitrator 'to have regard to the circumstances of each case' in order to 'determine the amount of compensation which appears to him to be just.'

(35) The counsel for the appellants has argued that on the sum of Rs. 720 per month I should award 15 per cent as solarium as was done by the present arbitrator. I do not think that the appellants are entitled to any solarium. The Act does not allow any such sum to be awarded. I, thereforee, disallow the prayer for the award of the additional 15 per cent.

(36) For these reasons I would allow the appeal and enhance the compensation from Rs. 626 as determined by the arbitrator to Rs. 720.00 per month. In the circumstances of the case the parties are left to bear their own costs.

(37) The arbitrator found that the appellant No. 1 is entitled to 1/3rd share of the compensation; appellant No. 2 is entitled to his 1/3rd and appellants 3 and 4 together are entitled to 1/3rd, that is, 1/6th each. The respondent will pay the compensation to the appellants in the proportion determined here.


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