1. The subject-matter of this appeal is a small plot of land in Calicut measuring 2 cents which has been acquired for the purpose of a telephone exchange. Notification was issued in 1935. The evidence shows that at the time of the notification a building was standing upon the site which had originally consisted of four rooms on the ground floor and three rooms in the upper storey. In 1932, however, one of the rooms on the ground floor had been destroyed, and the whole of the upper storey had also been destroyed on account, as the claimant puts it, of a portion of the Anjuman building falling upon it. The owner of this property claimed Rs. 22,000 for it. The Land Acquisition Officer awarded Rs. 2,700. He arrived at this figure by calculating the annual rental actually derived from the property (it should be mentioned here that the rooms in the lower storey were let out as shops at Rs. 15 a month). Deducting three months' rent as necessary expenditure for repairs and the payment of tax to the Municipality, the remaining nine months' rent comes to Rs. 135. This sum capitalised at 20 years' purchase amounts to Rs. 2,700. The claimant was dissatisfied with this award and the matter was referred to the learned Subordinate Judge of Calicut. The learned Judge held that by the expenditure of a small sum of money some use could have been made of the original fourth room on the ground floor and an additional rent of Re. 1 per month obtained. He calculated therefore the net rent after deducting necessary expenses at Rs. 144 and capitalised this sum at 33-1/3 years' purchase instead of 20 years, following the decision of a Bench of this Court in Collector of Kistna v. Zamindar of Challapalli : AIR1938Mad33 . The amount of Rs. 2,700 was thus increased to Rs. 4,800. Against this decision the Government has appealed and the claimant has filed a memorandum of cross objections. It should also be mentioned at this stage that under Section 27 (2) of the Act the Subordinate Judge in enhancing the award of the Collector ordered that no costs should be paid by the Collector to the claimant.
2. The first question which arises in this appeal is whether the learned Subordinate Judge was correct in adopting 33-l/3 years' purchase in capitalising the rental value of the property. We are of opinion that he was correct. It is clearly laid down in the case already cited that it has long been the practice of the Courts in this Presidency to calculate the profits from any form of landed property as equal to the profits made by investing money in gilt-edged securities. It is no doubt argued on behalf of the Government in this appeal that a purchaser of house property in a Municipality like Calicut would expect to get more for his money than if he had invested it in Government securities. But on this point there is no evidence available in the proceedings before the learned Subordinate Judge, and we have not been shown any authority in which any distinction of this kind has been drawn between sites in a Municipality and sites in the country. We are of opinion that the learned Subordinate Judge was right in following the authority of Collector of Kistna v. Zamindar of Challapalli : AIR1938Mad33 , and in view of the fact that there was evidence before him that the rate of interest obtainable on Government securities in 1935 was only 3 per cent. the method of capitalisation by taking 33-1/3 years' purchase is mathematically correct.
3. The other question raised in the appeal is one of costs. It is argued that the learned Subordinate Judge, acting under Section 27 and finding that the claimant had made an extravagant claim would have better exercised his discretion not only by refusing costs to the claimant but by ordering the claimant to pay part of the Collector's costs. We see no good reason for interfering with the discretion exercised by the learned Subordinate Judge, and particularly so in view of the manner in which we proceed to dispose of the memorandum of cross objections.
4. The main question raised in the memorandum of cross objections is an objection to the procedure of the Land Acquisition Officer and to a lesser extent the procedure of the learned Subordinate Judge in refusing to recognise that the true rental value of the property acquired might not be something higher than the rent actually received by the claimant. No doubt on this basis an additional rent of Re. 1 has been allowed by the learned Subordinate Judge in making his calculations. But we do not think that this amount is sufficient. As already stated, there is evidence that before 1932 the building was a larger one with more accommodation available. There is evidence that for a short time in 1932 a rent of Rs. 9 was actually received from the upper storey. There is evidence that the reason for the collapse of the upper storey and of one of the rooms below was not any structural defect in the building itself but the fact that a neighbouring building fell upon it and this evidence has not been subjected to any cross-examination. We think therefore that although this aspect of the case has not been dealt with in any detail in the evidence, it is reasonably certain that a purchaser by expending whatever is necessary to put the building once again into proper order, and restoring it to its original size could obtain a rental considerably higher than Rs. 15. Of course to do this he would have to incur considerable expenditure, but we feel certain that the net result would be to his advantage. It is conceded that if in fact the present owner of the property has neglected it in such a way as not to derive the true economic rent from it, he should not be penalised on this account by his not being awarded the true market price. The true market price is what a purchaser would give with all possibilities of the purchase present to his mind. It is of course difficult for us to assess this true market value in view of the paucity of the evidence. But we are of opinion that justice will be done as between both parties by assessing this rental value at Rs. 20 a month.
5. The result will be that the amount payable to the claimant should be enhanced to Rs. 180 multiplied by 33-1/3 and to this of course will be added the usual 1.5 per cent. compensation. Now that we have enhanced not only the award of the Land Acquisition Officer, but the award of the learned Subordinate Judge, we are certainly unable to regard the claimant's original claim as so extravagant as to require that he should be called upon to pay any of the Collector's costs. The result is that the appeal is dismissed with costs, and the memorandum of cross-objections allowed with proportionate costs.