1. A question of some complexity relating to the valuation of land held by a tenant who has become a deemed purchaser in respect of the land in question under Section 32 of the Bombay Tenancy and Agricultural Lands Act, 1948, (hereafter referred to as the 'Tenancy Act'), in the even of the event of the acquisition of such lad has raised its head in the present matter.
2. Pursuant to a notification under Section 4 of the Land Acquisition Act published on May 21. 1962, lands comprised in S. Nos. 437/1 to 437/5, 437/7, 437/8 & 368 situated in village Tarsali in the Baroda District were notified for acquisition for a public purpose. Before the Land Acquisition Officer compensation was claimed by the landlady in respect of her interest in the land and by respondent No. 2 Himat Mohmad in respect of tenant's interest in the land held by him. By reason of the fact that the tenant had become a deemed purchaser under Section 32 of the Act, the Land Acquisition Officer came to the conclusion that the landlady was entitled only to 200 times the assessment and nothing more. With regard to the valuation of the interest of Himat, the Land Acquisition Officer awarded him, compensation by adopting the following formula. He made the valuation of the land as if it was held on old tenure to which restrictions engrafted by Section 43(1) of Tenancy Act were not applicable. Thereafter he valued the interest of Himat at 2/3 of the valuation of old tenure land on the ground that so far as Himat was concerned, his land was held on the new tenure created by Section 43(1) of the Tenancy Act which imposed restrictions in regard to sale, gift, exchange, mortgage, lease, assignment or partition without payment of such amount as the State Government may by general or special order determine. It may also be realized that so far as Section 32 of the Tenancy Act is concerned, a tenant holding the land under a tenancy from his landlord on April 1, 1957 (Subject to the other provisions of the section and of the Tenancy Act) is deemed to have purchased from his landlord the land free from all encumbrances on certain conditions. 1st April 1957 is know as the 'tillers' day' and on that day by operation of Section 32 the tenant is deemed to have purchased the land on specified conditions. It is not in dispute that the land in question to which the present dispute relates was acquired by tenant Himat from his landlady by embodied in Section 32 of the Tenancy Act. And in respect of the erstwhile tenant who acquired lands under Section 32 under the deemed purchase clause the Legislature imposed a restriction on transfer of such lands under Section 43(1) of the Tenancy Act. The said provision in so far as is material is in the following terms:-
'43. (1) No land purchased by a tenant under Sections 32, 32-F, 32-I, 32-O, of 32-U or 43-ID or sold to any person under Section 32-P or 64 shall be transferred by sale, gift, exchange, mortgage, lease or assignment or partitioned without the previous sanction of the Collector and except on payment of such amount as the State Government may by general or special order determine.'
3-4. Popularly lands held by erstwhile tenants under the 'deemed purchase' provision of the Tenancy Act are known to be held on the new tenure. The expression 'old tenure' is popularly employed in regard to lands held by persons in their own right without their having acquired the benefit under Section 32 by reason of their being tenants. The question, therefore, naturally arose before the Land Acquisition Officer as to what amount of compensation should be offered to Himat, the erstwhile tenant, and the 'deemed purchaser' at the point of time of notification under Section 4, in respect of the land held by him under the new tenure. The question was whether he should be awarded the same compensation at par with an owner holding similar land on old tenure which was not burdened by any such restriction as the one engrafted by Section 43 of the Tenancy Act. What the land Acquisition Officer did was that he first valued the land as if it was old tenure land, Having valued the old tenancy land at 'X', he embarked upon the valuation of the new tenure land and this he did by recourse to the formula that new tenure land could be valued at 2/3rd the valuation of the old tenure land. The learned counsel for the erstwhile tenant (Himat) has then contended that even if it be so, the Land Acquisition Officer was not right in valuing the new tenure land held by Himat at 2/3rd of the notional valuation of the old tenure land. The validity of this submission we now propose to examine. The problem may be brought under spotlight by formulating the question before us in a different form, Would the owner of a land held on new tenure be entitled to the same compensation as the owner of an old tenure land? It will be recalled that so far as the new tenure is concerned, he Legislature has engrafted a restriction in the matter of transfer under Section 43(1) of the Tenancy Act. It takes away something from the bundle of rights of ownership in the matter of alienation. In regard to the owner of land held on old tenure, the restriction envisaged by S. 43(1) would not be applicable. And it must be realized that the restriction imposed by Section 43(1) carries with it an obligation not only to secure the permission of the State Government before alienation but also to pay to the Government such amount as may be determined by the State Government in this behalf. In other words, the obligation carries with it a money content. It is an onerous condition. Would the holder of a property saddled with such an onerous condition be entitled to claim the same amount by way of compensation as the owner of the property which is not burdened with a similar handicap? The answer to this poser is obvious. If we value the new tenure land at par with the old tenure land in fact we would be awarding to the owner of the new tenure land something more than the money equivalent of his property. An illustration will make the point clear. Suppose the old tenure land is being acquired and the trial Court value it at Rs.100/-. If the owner of the new tenure land is also awarded Rs.100/- in respect of the extinguishment of his right, the claimant will be able to exchange the compensation of Rs.100/- awarded to him by purchasing a similar plot of land. But purchasing a similar plot of land. But the newly acquired land will not carry with it the statutory restriction imposed by Section 43. By this process of exchange, he will get a property which has higher rights and a better money value than that he held previously. It is, therefore, clear that in such a case the claimant would get something more than the value of his property inasmuch as while previously he was the owner of the property burdened with an obligation to pay such amount as directed by the State Government in case of alienation, he would not be subject to any such obligation in the case of land purchased by him in exchange with the compensation awarded to him. In our opinion, therefore, there is not the slightest doubt that the claimant would get something more than what he lost. This is contrary to the concept of compensation for what is visualized by compensation is making good to the person whose property is acquired money equivalent of what he has lost. It is however argued by the learned counsel for the erstwhile tenant that 'though ordinarily compensation must be tested no doubt by the loss to the owner', as observed by the High Court of Calcutta of Province of Bengal v. Board of Trustees for the Improvement of Calcutta, AIR 1956 Cal 416 'in estimating his loss it is legitimate to disregard the restrictions on ownership which were existing at the time of acquisition'. Reliance has been placed on the following passage from the said judgment:--
'The proposition laid down in (1870) 6 QB 37 (Stebbing v. Metropolitan Board of Works) that compensation, or which is the same thing as loss to the owner, must be tested not by what would be its value to person acquiring it is well settled. Some passages in the second reason given by Wilde, C.J. in (1850) 10 CB 827, (Hilcoat v. Archbishop of Canterbury & York) may at first sight appear to go against that test. The learned Chief Justice, however, used those expressions to emphasise the justice of the case. That observations in the later decisions which we have reviewed and in Lord Shand's award to not appear to us to militate against the aforesaid test formulated in (1870) 6 QB 37. The compensation must be tested no doubt by the loss to the owner, but in estimating his loss it is legitimate to disregard the restrictions on ownership which were existing at the time of acquisition. If restrictions on the power of the owner to alienate at the time of the acquisition be taken to be a material factor in assessing compensation payable on an acquisition under the Land Acquisition Act, the amount of compensation would be different according as the property at the time of the acquisition belonged to a Hindu widow or a full owner, for a Hindu widow has only a limited power of alienation. She can alienate only for legal necessity. But Section 82. Land Acquisition Act, Indicates otherwise. We accordingly hold that the Board is entitled to get compensation for the park on the same basis as building sites'.
5. We are unable to read into the judgment of the Calcutta High Court the ratio which counsel for the erstwhile tenant wants us to read. The problem before the Calcutta High Court was whether the property under acquisition should be valued at a discount by reason of the mere fact that the owner could not have sold the property. The question before the Calcutta High Court was not whether the owner of a property under acquisition should be awarded the same compensation regardless of the fact that the right to alienate the partition the property carried on financial obligation to pay some amount to the State under a statute. This is the vital point of distinction. The same point of distinction operates in regard to the decision of the Nagpur High Court in Shafkat Hussain v. Collector of Amraoti, AIR 1933 Nag 208, head-note (c) of which is in the following terms:--
'In determining compensation payable for any land, under the Land Acquisition Act, the element of non-transferability of the land cannot enter into consideration. The publication of declaration under Section 6 has the result of removing all restrictions on the rights of the owner. The declaration under Section 6, by necessary implication, withdraws inam land from the purview of the grant and consequently lifts the embargo on its transferability and after the declaration under Section 6, the inam land stands on the same footing as any freehold land'.
In our opinion, it would not be right to value the land under acquisition at a discount merely by reason of the fact that there is a mere restriction on its alienation. So far we are in agreement, with respect, with the view expressed by the Calcutta and the Nagpur High Courts in the aforesaid decision. But that principle will be of no avail when we are confronted with the question as regards the valuation of land where the transferability depends on an obligation to pay a sum of money to the State. When the obligation carries with it a money content, the aforesaid principle cannot apply. We are, therefore, unable to accede to the argument of the learned counsel for the erstwhile tenant.
6. It is, however, urged by the learned counsel that in the matter of valuation of a property the yield of the property is the touch-stone and the statutory obligation to pay a sum of money at the time of alienation deserves to be altogether ignored. Counsel argues that a property would be worth the same to the owner regardless of whether the restriction is there or not inasmuch as it would fetch the same income to him notwithstanding the handicap. Here again we find ourselves unable to endorse the proposition canvassed by counsel. The value of a property to its owner inter alia depends on two key factors-- (1) the right to alienate and to obtain the money equivalent of the property (2) its income. It does not depend merely on the income. If on sale of the property it would fetch less than the property of a similar nature on account of some statutory restriction, the value of the property to the owner cannot be the same. It would be contrary to principle to value the property which is burdened with the obligation to pay a portion of the sale-price to the State at par with a property which does not carry any such obligation we are unable to see any principle in awarding to the owner of a property a larger amount as compensation if acquired for public purpose under the Land Acquisition Act than he would be otherwise entitled to if he sold it in open market. The value to the owner cannot depend on whether it is sold by Private negotiations or whether he is made to part with the property in exercise of the powers of 'eminent domain'. Under the circumstances, the decision of the trial court cannot be sustained.
7. Appeal allowed.