M.U. Shah, J.
1. These are two companion appeals, which involve a common question of law of some importance and are directed against a common judgment delivered by the learned Judge, 5th Court of the City Civil Court, Ahmedabad, on January 16, 1962, in Compensation Cases Nos. 143 and 144 of 1961, which were references made to the Court under Section 18 of the Land Acquisition Act (Act I of 1894) which will hereinafter be referred to as the Act. References before the learned trial Judge were made against the orders of compensation passed by the Special Land Acquisition Officer, Ahmedabad, awarding inadequate compensation to the present appellants, who were the claimants before him for their interest in compensation as tenants of the premises on the lands which were compulsorily acquired. The question that seems to have been principally agitated before the learned trial Judge in the compensation cases related to the claimants' right to compensation in relation to the premises which were earlier leased out to them by the owners and in so far as they had incurred liability to an increased rental in taking equally convenient new premises for the purpose of carrying on their business, as a result of the Collector's taking possession of the lands including the premises in consequence of the acquisition. The learned Judge has awarded compensation for the increase in rent on the basis of four months' increased rental. In the memo of the appeals before us, the appellants have claimed the increased rental for a period of five years. They have also claimed enhanced compensation on account of items Nos. 2 to 6 of their claims relating to dismantling of the plant, machinery and equipment and on other counts. At the hearing before us, however, Mr. C. T. Desai, the learned advocate appearing on behalf of the appellants has confined his arguments to the claimants' right to increased rental for a period of three years, he has not urged any other ground and has given up the other claims, in the appeals before us; therefore, we will be concerned only with the case of the appellants for the compensation for change of place of business as a result of taking over of the premises by the Collector. The appeals, which raise a common question, will be conveniently disposed of by a common judgment.
2. The relevant facts, shortly stated, are that the premises involved in the two appeals were situated in the compound of Madhubhai Ranchhodbhai Colony, known as Madhubhai Mills, situated near the Ahmedabad Railway Station and owned by a trust in the name of Sir Chinubhai Madhavlal Ranchhodlal Baronetcy Trust Corporation. Messrs. Shashikant Gopaldas and Co. of Ahmedabad, a registered partnership firm, were the tenants in the premises situated in a part of the said mill compound ever since March, 1948. They are the appellants in First Appeal No. 241 of 1962. Therein, they were running a factory manufacturing cotton tapes with 64 tape looms worked with electricity. They were in occupation of the area admeasuring 990 square yards of land and paid a monthly rental of Rs. 246/- per month, inclusive of taxes. In the same compound were situated another premises covering an area of 1025 square yards, which were occupied by one Mulchand Pannalal Thakore, appellant in First Appeal No. 242 of 1962, on a monthly rental of Rs. 211/- and municipal taxes at Rs. 619-18 per annum. Mulchand Pannalal Thakore is the proprietor of a Printing Works known as Nathura Dyeing and Printing Works. Thus, the respective appellants in First Appeals Nos. 241 of 1962 and 242 of 1962 occupied, as tenants, premises covering respectively 990 square yards and 1025 square yards of land respectively. The whole of the Madhubhai Mill compound including the premises wherein the present appellants were carrying on their business at all material times was notified for acquisition for the purpose of remodelling the railway yard at Ahmedabad. The relevant notifications under Section 4 of the Act covering the entire area comprised in the Madhubhai Mill compound were duly published on May 28, 1957, and March 22, 1958. The notification under Section 6 of the Act in respect of the entire area of land comprised in the Madhubhai Mill compound was thereafter issued on September 12, 1959. The possession of the lands including the concerned premises was taken by the Collector some time in July, 1961. It appears that by the time of the taking over of the land, Town Planning Scheme had been introduced in the city of Ahmedabad and industrial zones were created. The Ahmedabad Municipal Corporation had constructed in these zones tenements known as 'Sheds', which were being allotted for the use by the industries. The appellants appear to have at first tried to get some alternative convenient accommodation in the vicinity of the Madhubhai Mill's compound, but they could not get any such accommodation. The Municipal Corporation then appears to have accommodated the two appellants by allotting to them suitable blocks in their industrial zone known as Municipal Industrial Estate. Messrs. Shashikant Gopaldas and Co., the appellants in First Appeal No. 241 of 1962, have rented five blocks in the municipal industrial estate, covering a total area of 840 square yards, which is now in their possession, on a monthly rental of Rupees 2454-87 P. inclusive of taxes. Mulchand Pannalal Thakore, appellant in First Appeal No. 242 of 1962, has rented three blocks in the municipal industrial estate at a monthly rental of Rs. 1,215/- and Rs. 425/- as municipal taxes, in aggregate Rs. 1640/- per month. Thus the increase in the rent in the case of Messrs. Shashikant Gopaldas and Co., is Rs. 2208-25 per month, and that in the case of Mulchand Pannalal Thakore is Rs. 1378-42 P. per month. At the date of the Collector's taking possession of the notified land, they were occupying their respective premises in the Madhubhai Mill's compound. At first, they were tenants for a fixed period of time. The period having expired, they continued to occupy the premises and the rent was being accepted by the trustee from them. At the date of the publication of the notification under S. 4 of the Act, as also on the date of taking over possession of the lands, the appellants were occupying their respective premises as tenants holding over. It is not the case of the appellants that the landlord, meaning the trustee, had entered into a fresh contract of tenancy with them and their contractual tenancy had not expired earlier by efflux of time. Nonetheless, the appellants were entitled to the protection under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (Act LVII of 1947), which will hereinafter be referred to as 'the Rent Act'. These relevant facts clearly appear from the record and are not in dispute before us. Having regard to these facts, we will now proceed to consider the question as to whether the appellants are entitled to claim compensation for the change of place of their business as a result of the compulsory acquisition of the land, on a part whereof, at the date of the Collector's taking over, the appellants were sitting tenants of the premises.
3. The matters to be considered by the Court in a reference in determining the compensation to be awarded to the persons interested are laid down in Section 23 of the Act. Sub-section (1) of Section 23 provides that in determining the amount of compensation to be awarded for land acquired under the Act, the Court shall take into consideration the factors enumerated in clauses first to sixthly. The only clauses with which we are concerned here are clauses 'fourthly' and 'fifthly'. We are here not concerned with the other clauses, as also with sub-section (2) which provides for an award of 15 per cent, solatium on the market value of the land. Clause 'fourthly' deals with the case of the damage for loss of earnings. It provides for a case where damage is sustained by the person interested, at the time of the Collector's taking possession of the land, by reason of the acquisition injuriously affecting his other property, movable or immovable, in any other manner, or his earnings. In such a case, the damage, if any, sustained must be taken into consideration while determining the amount of compensation to be awarded for property acquired under the Act. Clause 'fifthly' deals with the case of damages for removal. It provides that if, in consequence of the acquisition of the land by the Collector, the person interested is compelled to change his residence or place of business, in such a case, the reasonable expenses (if any) incidental to such change must be taken into consideration in determining the compensation. Clause 'fifthly' is connected with the principle of compensation for loss of 'damages' which is provided for in the clause 'fourthly', for the one is frequently dependent on the other. Damages for removal include increased rental and other expenses. Now, the appellants do not claim compensation for injurious affection to their other parties at the time of the Collector's taking possession of the lands. The first part of clause 'fourthly' will have, therefore, no play in the matter. The appellants' case is that as a result of the Collector's taking possession of the land, by reason of the acquisition, their earnings are injuriously affected. The case is that as a result of the taking of the possession of the acquired premises, the appellants had to change their place of business and to acquire an equally convenient premises, which they have obtained at a distance of about a mile from Madhubhai Mill's compound in the Municipal Industrial Estate at an increased rental. As a direct consequence of the acquisition, the appellants who were pursuing their lawful trade in the acquired premises have been compelled to give up these business premises and to remove their going concerns to new premises at a much higher rental. This will have a necessary direct impact on their earnings or profits in business. Their reasonable expenses, incidental to such change, will increase and ordinarily, this would injuriously affect their earnings. When the claimants are forced to remove their going concerns from the acquired premises and change to new business premises, the excess rent, if any, which they have to pay of equally convenient site and premises, is the direct and natural consequence of the removal. The question that then arises is: Whether such increase can form part of the damages, to be taken into consideration for determining the amount of compensation awardable under Section 23 of the Act. We may here, with benefit, refer to a passage from Cripps on Compulsory Acquisition of Land, 11th Edition, at page 923, on the point which reads as under: -
'Where the claimant incurs a liability to an increased rental or other reasonable expenses in taking equally convenient new premises for the purpose of carrying on his business, such increased rental and other expenses have been taken into account in the assessment of compensation, although the business was not being carried on at a profit. Bowen L.J. said in the case of R.V. Borrow: The company forced the claimants to remove, and assuming that the extra expense was the natural and reasonable consequence of the removal, why should it not be part of the damages given?'
The observations aforesaid clearly indicate that if the claimants are forced to remove themselves from the acquired premises as a result of the compulsory taking over of their property, and the claimants have to incur the liability to an increased reasonable rental for the purpose of carrying on their business, that would be the direct consequence of the removal, and in such a case, reasonable rental increase should form part of the damages to be given. Such would be the case even if the business was not being carried on at a profit.
4. It may be contended that an increased rental in respect of premises precisely equivalent could not, however, give rise to the claim, because any increased rent would mean either that the property taken was under-valued or the new premises taken over by the vendor were taken at a rent above the market rent. Furthermore, if the increased rental is in respect of larger premises or other advantages of which the claimant can make fully profitable use, there would be no loss. Such cases might have arisen in the pre-rent restriction era and may well arise in normal circumstances, where there is no Rent Restriction Act in force and where there is a free market in such accommodation, residential or business. But, not so here, where the concerned premises are situated in Ahmedabad within the limits of the Ahmedabad Municipal Corporation and were indisputably controlled by the Rent Act. The Rent Act amends and consolidates the law relating to the control of rents and repairs of certain premises, of rates of hotels and lodging houses and of evictions. It may be said that the Rent Act does not create any vested rights in the tenant to remain in occupation of the property. But it does constitute a kind of remedial legislation which gives additional protection to the tenants. Section 12 of the Rent Act protects a tenant from eviction from his rented premises so long as he is ready and willing to pay the amount of the standard rent or permitted increases, if any, and observes and performs the other conditions of the tenancy, in so far as they are consistent with the provisions of the Act. Section 12 of the Rent Act thus places an embargo on the right of a landlord to evict his tenants. It is true that the embargo is liable to be lifted in cases falling under clauses (a) to (1) of sub-section (1) of Section 13 of the Rent Act. But, it is not in dispute that the concerned premises were occupied and used by the claimants as business premises in their capacity as tenants. It may be that they were tenants holding over. Nonetheless, they were entitled to the protection of the Rent Act, in the absence of the respondent's case that the appellants were liable to be evicted under Section 13(1) of the Rent Act. They were, at the time of the Collector's taking over possession, persons remaining in occupation of the premises after the expiry of the period of the tenancy, and were, commonly, though in law not accurately, called 'statutory tenants'. As observed by their Lordships of the Supreme Court in Anand Nivas Private Ltd. v. Anandji Kalyanji's Pedhi : 4SCR892 : 'such a person * * has the protection of the statute in that he cannot be turned out so long as he pays the standard rent and permitted increases, if any, and performs the other conditions of the tenancy. His right to remain in possession after the determination of the contractual tenancy is personal xxx' The right of the appellants, although a personal right, has the protection of the statute. The rights of a contractual tenant where tenancy has not been determined or expired would of course be the higher rights under the Rent Act, as he has an estate or interest in the premises occupied by him. But even a tenant holding over or a statutory tenant has, as aforesaid, a personal right to occupy the premises and to have the protection of the Rent Act, although he has no interest or estate in the premises occupied by him. Limited though such right is, it has its own value in these days of recognised shortage of business premises in the areas where the Rent Act is made applicable. Such a right is held to be his interest in the compensation. Compensation for loss of profits or earnings as a result of his liability to pay increased rental may be awarded although he has no legal interest in the premises in which the trade was carried on; but in such a case the nature of his right which is personal would be a relevant matter in considering the amount. Again, in determining the amount of compensation to be awarded for the land acquired, the Court has to take into consideration the damage sustained by the person interested. The expression 'person interested' as defined in clause (b) of Section 3 of the Act includes all persons claiming an interest in compensation to be made an account of the acquisition of land under the Act; and a person shall be deemed to be interested in land if he is interested in an easement affecting the land. It appears to us that the expression 'person interested' has a wider import and includes the personal right of a tenant holding over to continue to occupy the premises, which is a valuable right in the obtaining circumstances. In our opinion, therefore, the appellants are entitled to claim an interest in compensation to be made on account of the acquisition of land under the Act.
5. It was contended by Mr. Desai, learned Government Pleader appearing on behalf of the State, that the life of the Rent Act was of a short duration and the restriction was likely to be reduced, that in a given case, the State or a local authority may own the property and in that event the Rent Act will cease to have any application and these possibilities must be considered. It is true that in awarding compensation, all restrictions attaching to the land in the hands of the owner, including the likelihood of their continuance must also be taken into account. Statutory restrictions on rent and the possibility of the removal of the restrictions must also be considered. The Court has also to consider what was the probability of the business being continued at the place if the land were not acquired. Now, in the instant cases, the tenants were occupying the concerned premises at the time of the publication of the notification under Section 4 of the Act. The possession thereof was taken over by the Collector in July 1961. The Rent Act was applicable to the suit premises at the date when Section 4 notification was published in May, 1957 or March 1958. At the relevant date, the Rent Act was in force and was to continue in force upto an inclusive of 31st day of March, 1961. By Gujarat Act No. III of 1961, sub-section (2) of Section 3 of the Rent Act was amended, and for the figure '1961' the figure '1963' was substituted. The life of the Rent Act was thus extended for a period of two years, that is to say upto an inclusive of 31st day of March, 1963. Further, there was a reasonable expectation of the life of the Rent Act being continued for a longer period. The appellant had thus a valuable right to protection of the Rent Act at the date of the taking over possession of the land in July, 1961. They were thus 'persons interested' in the compensation as defined in the Act. As such, they had the right to the compensation for the damage sustained by them by reason of the injurious affection to their earnings as also for the reasonable expenses, to be considered in determining the amount of compensation. In such cases, it is the commercial value of the rights and not abstract legal rights that must be looked at in determining the market value of such rights or interests.
6. It was contended by Mr. Desai that where land compulsorily acquired was occupied by tenants, whose tenancy was determined by virtue of efflux of time, they cannot ordinarily claim compensation for loss of profits, even though they may have reasonable expectation of continuing in possession or having the lease renewed. For the purpose, Mr. Desai has relied upon the observations of a Division Bench of the Bombay High Court in District Deputy Collector, Panchmahals v. Mansangji Mokhamsangji Naik : AIR1928Bom306 , and urged that the decision which is binding to us completely covers the instant cases. Now, the Bombay case arose out of a declaration of January 8, 1921, for the acquisition of some land situated in Katward village. The main claimant, one Naik, was a lease-holder at the pleasure of the Government whose lease had expired. It appears that the Government had so far back as in the year 1907 laid down in very definite terms that they were prepared to renew the lease only on certain conditions and the Naik was informed that in case of refusal of acceptance of the lease in those terms, the leasehold tenure would be terminated at once. There was, therefore, a clear threat of eviction by a Government Resolution. The Naiks thereupon brought suits against the Government in 1908 in which they had asked for a declaration as to their proprietary tenure, and also for injunctions to restrain the Government from taking any steps for removing them from possession of the estate in dispute. In February, 1913, the District Judge dismissed the suits and in January, 1917, the High Court confirmed the decrees and dismissed the appeals. The Naiks then made a further appeal to the Privy Council which was pending at the date of the declaration. The question that was considered by the Division Bench was 'what, then, was the interest of the Naik in 1921?' It appears that in the Privy Council decision in Vajesingji v. Secy. of State, : (1924)26BOMLR1143 , the Naiks had been declared not to be proprietors but lease-holders at the pleasure of the Government. Taking into consideration all these facts, the view taken by the High Court in the appeal was that the Naik's position was merely that of a tenant-at-will, the period of whose lease had been determined and who had been threatened with eviction. It was held that he was not a person holding over under Section 116 of the Transfer of Property Act, and besides that he was fighting with his landlord by litigation and therefore, in ordinary course, he would not be likely to get very favourable treatment from the landlord. The High Court then considered the ordinary rule that was adopted in England in the case of compulsory acquisition of land occupied by tenants, whose tenancies are determined by notice or efflux of time. The rule was that they cannot claim compensation for loss of profits, even though they had reasonable expectation of continuing in possession or having the lease renewed. The principle laid down in Rex v. The Liverpool and Manchester Rly. Court., (1836) 4 Ad. & El. 650, was relied upon. Fawcett, J. speaking for the Division Bench observed: -
'It seems to me this principle clearly applied in the present case, and that we would be really departing from what the Act requires, viz., a determination of the market value of the Naik's interest at the date of the declaration, if having regard merely to pending negotiations or any other subsequent event or out of a spirit of generosity, we were to allow more than is properly claimable by the Naik as the market value of his interest in the land'
It was further observed:
'If we were valuing the interest at the present date, and it were shown that he was going to get a renewal, then the position would be different; but taking the position as it was in 1921 it seems to me that, if anything, the award of the Collector errs on the side of liberality, and really he might have decided that the Naik, in the circumstances was entitled to no compensation at all.'
Thus, it was having regard to the facts that the lease of the Naik had expired, there was a clear threat of eviction by the Government, and the Naik was not a person holding over, but was a tenant-at-will, that the Division Bench took that view. It is not shown that in the year 1921, the tenancy was governed by or had the protection of any Rent Restriction Act. It does not appear from the judgment that any such protection was available to the Naik. But, in the cases before us, it is clear, as aforesaid, that even though the appellants were tenants holding over, they were entitled to the protection of the Rent Act. They had the personal right to continue to occupy the premises and were protected under the Act. With respect, the observations in the Bombay case cannot be said to have any applicability in the instant cases.
7. This will take us to the consequential question as to what should be the measure of assessment of the loss of profits or the reasonable expenses incidental to change of place of business. Now, as result of the acquisition of the appellants' business premises, which were occupied by them and for which they continued to pay rent to the owner, they were compelled to change their place of business and to move their join concerns in equally convenient Municipal premises, for which they had to pay substantially increased rental, which payment amounts to reasonable expenses incidental to such change. As observed by us earlier, the appellants, who had the protection of the Rent Act, had a valuable right. A tenant holding over, even if a fresh tenancy is not created, has a personal right to the protection of his occupancy under the Rent Act. The right was available to the appellants at all material times. The appellants were not under the threat of eviction from the owner. They knew that the life of the Act was extended upto 31st day of March 1963. They had a reasonable expectation of the life of the Rent Act being extended still further. In such a case, they had an interest in the compensation and a valuable interest. Such an interest has to be evaluated. Damages in that connection have to be assessed and compensation awarded to the appellants. Now, the instant cases are not cases of compensation for loss of claimants' goodwill of their business; nor are these cases of loss of their good-will attached to the premises where such trade or business was carried on. It is not expressly made out that these are cases of loss of profits in business as a direct consequence of the compulsory shifting to new premises and increase in the rent. The case made out is one of incurring reasonable expenses in the shape of liability to pay increased rent as incidental to change in place of business as a consequence of the acquisition of the land by the Collector. Although a case of compensation for loss of such profits may fall both in clauses 'fourthly' and 'fifthly' of Section 23(1) of the Act, the case being one of damages for removal, it would more appropriately fall within the purview of clause 'fifthly'. Damages for removal to be considered will be 'the reasonable expenses', which expression will include increase in rent. It is true that the principle of equivalence which is the root of statutory compensation in such cases is not to provide for equivalent reinstatement, by which is meant that the amount of compensation to be awarded is to be assessed according to the cost of acquiring an equally convenient site and erecting equally convenient premises. Such a method may be usefully adopted when the land is used for some particular purpose, not of a commercial nature, such as for a public park, a church or a school, as it is very difficult to estimate its value for the purpose for assessing compensation as there is no general demand or market for land for those purposes, as stated in Halsbury's Laws of England, third edition, Volume 10, page 139. But, in the cases before us, where the premises were used for commercial purposes, the persons in occupation thereof would be entitled only to a reasonable compensation sufficient to adjust their economics, to absorb the shock of acquisition and to rehabilitate. Some period of time will ordinarily be taken in this process to absorb the burden of the increased rental. Such a period, which we would call a cushioning period must be considered as an appropriate one during which such person should be paid the increased rental. This is implicit in the very nature of the rights of a tenant and of a person remaining in occupation after the determination or expiry of the tenancy and who has the protection of the statute against eviction. In the very nature of things, it is not possible to lay down an inflexible rule as to the measure of compensation of such interests. A rough and ready measure has more often than not to be adopted and what we may call educative judicial guess has to be made. In our opinion, the proper method of calculating such a claim for loss of profits or for reasonable expenses, incidental to such change, is to take the cushioning period as of 18 months. That will be the maximum period for which the tenants or other persons having protection under the Rent Act will be entitled to as compensation in the shape of increased rental. They will be entitled to the difference between the true rent of the old premises and the true rent of the new premises which they have to pay, that is to say, the excess, if any, or the increased rental payable. Now, in the instant cases, the tenancy of each appellant was determined earlier by efflux of time and they had remained in possession of the premises and continued to pay rent. They were tenants holding over. No fresh contract of tenancy has been alleged or set up. They had thus a limited right, namely, a personal right to the protection of the Rent Act in that they cannot be turned out so long as they pay the standard rent and permitted increases, if any, and perform the other conditions of the tenancy. The possession was taken from them in July, 1961, before which date, the life of the Rent Act has come to be extended upto March 31, 1963. The personal right that they had would have therefore enured to them until that day. They have been allotted suitable and equivalent premises by the Municipal Corporation in the municipal industrial area at the obtaining rental value. Taking into account all these facts, and making reasonable deduction for the limited nature of their right and interest, in our opinion, the ends of justice will be amply met if the compensation on the basis of 12 months' increased rental is awarded to each. The appellants will, accordingly, be entitled to have an additional compensation for a period of 8 months on the basis of the increased rental that they had to pay for the period in the new premises. The appellants of First Appeal No. 241 of 1962 will be entitled to additional compensation for a period of 8 months at the rate of Rupees 2208-25 P. per month with interest and costs. The appellants of First Appeal No. 242 of 1962 will be entitled to additional compensation for the period at the excess rate of Rs. 1378-42 P. with interest and costs.
8. Before we part with the appeals, we may say that Mr. Desai had contended that the trade disturbance to the appellants must be related to the taking. He contended that in so far as the compensation is based on a similarity to damage in trespass, the ordinary principles as to remoteness of damage apply. In Mr. Desai's submission, the town planning scheme had come into operation at the time of the taking and, therefore, the appellants had necessarily to shift their business premises to the industrial zone. That appears to be so. But even then, it is difficult to see how the damages claimed under clauses 'fourthly' and 'fifthly' of Section 23(1) of the Act are remote damages. It was as a result of the taking under the compulsory acquisition, that the appellants had to hand over the possession and to change their place of business to the blocks situated in the municipal industrial area. For that purpose, they had to incur reasonable expenses by way of increased rental. This would amount to loss of profits as well. These were the direct consequences of the taking. We are, therefore, unable to see any substance in Mr. Desai's contention in this behalf. The disturbance is clearly related to the taking and so is the loss.
9. We accordingly decree and order that the appellants in First Appeal No. 241 of 1962 do recover from the respondent a sum of Rs. 17,666-00 as additional compensation with interest thereon at the rate of 4 per cent, from the date of the taking in July, 1961 till August 14, 1965 and thereafter at the rate of 4 1/2 per cent till payment or deposit and the proportionate costs of the appeal to the extent they have succeeded; they will pay the proportionate costs of the appeal to the State to the extent they have lost the appeal. The appellant in First Appeal No. 242 of 1962 do recover from the respondent a sum of Rs. 11027-36 p. as additional compensation with interest thereon at the rate of 4 per cent, from the date of the taking in July, 1961 till August 14, 1965 and thereafter at the rate of 4 1/2 per cent. till payment or deposit and proportionate costs to the extent he has succeeded in the appeal; he shall pay the proportionate costs of the appeal to the State to the extent he has lost the appeal. Decrees accordingly. The appeals are partly allowed.
10. Appeals partly allowed.