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Express Newspapers Ltd. 'Club House' Mount Road, Madras vs. State of Madras represented by the Collector of Madras - Court Judgment

LegalCrystal Citation
CourtChennai High Court
Decided On
Case NumberAppeal No. 560 of 1955
Reported inAIR1961Mad59; (1960)1MLJ90
ActsLand Aquisition Act, 1894 - Sections 4(1), 24, 24(7) and 48(2)
AppellantExpress Newspapers Ltd. 'Club House' Mount Road, Madras
RespondentState of Madras represented by the Collector of Madras
Appellant AdvocateK.V. Venkatasubramania Iyer, ;M. Ranganatha Sastri and ;V. Kumaraswami, Advs.
Respondent AdvocateGovt. Pleader and ;R.G. Rajan, Adv.
Cases ReferredBrown v. Commr.
.....proceedings--compensation--section 48 (2)--principles of ; on the terms of section 48 (1) of the land acquisition act (i of 1894), the withdrawal from acquisition proceedings has to take place before possession is taken of the land. the fixation of compensation under section 48 (2) would necessarily include conjectural claims through uses to which the property could have been put and the income derived therefrom, but from which the owner was prevented by the pending acquisition. the principles applicable to compulsory acquisition such as compensation for special adaptability, etc., will apply mutatis mutandis to a case of withdrawal also. section 48 (2) cannot refer to the notification under section 4 (1) of the act. on the contrary, since the effect of section 24, sub-clause 7 of,, against the government represented by the collector ol madras under section 48(2) of the land acquisition act. the claim was rejected by the court below except for an amount of rs. 4871-4-0 allowed as compensation payable for actual costs incurred by the claimant in connection with the acquisition. in view of the importance of the subject matter, and as the research of learned counsel for the appellant (sri k. v. venkatasubramania iyer) and the learned government pleader has failed to bring to our attention any authorities directly bearing upon section 48(2), or the principles with reference to which compensation should be assessed under that section, we propose to deal with the facts and the law at some length.2. the broad facts are that the land or site bearing r. s. nos......
1. This appeal is directed against the judgment of the learned Chief Judge of the Court of Small Causes, Madras, in L. C. No. 22 of 1954, which was a claim by Express Newspapers Ltd,, against the Government represented by the Collector ol Madras under Section 48(2) of the Land Acquisition Act. The claim was rejected by the Court below except for an amount of Rs. 4871-4-0 allowed as compensation payable for actual costs incurred by the claimant in connection with the acquisition. In view of the importance of the subject matter, and as the research of learned counsel for the appellant (Sri K. V. Venkatasubramania Iyer) and the learned Government Pleader has failed to bring to our attention any authorities directly bearing upon Section 48(2), or the principles with reference to which compensation should be assessed under that section, we propose to deal with the facts and the law at some length.

2. The broad facts are that the land or site bearing R. S. Nos. 315/2 and 315/3, measuring about 8 grounds and situated on the eastern boundary of the old Madras Club premises, abutting General Patters Road, was notified for acquisition under Section 4(1) of the Act on 30-9-1948, as required for widening the Woods Road. On 4-11-1948 the appellant (Express Newspapers Ltd.) intimated to the Government (Ex. R. 2) in response to notice issued under Sections 4(1) and 5A of the Act, that there was no objection to the acquisition, provided that due compensation was allowed, including damages for severance. The declaration under Section 6 of the Act was on 25-1-19.50. Under Ex. R. 7 dated 1-4-1952, the appellant demanded damages, including Rs. 50 towards legal charges. The date of the notice under Ss. 9 and 10 of the Act is 26-4-1952. Subsequently on 22-1-1954, it was decided to drop the acquisition proceedings (Ex. G. 10) in view of the cost, and the formal notification under Section 48(1) of the Act was published in the Fort St. George Gazette dated 10-3-1954..

3. The claim of the appellant before the Land Acquisition Officer was for Rs. 810,871-4-0 made up of the following items (1) damages for loss of income from the property, upon the most favourable outlay, during the pendency of acquisition Rs. 7,12,500, (2) damages for construction of temporary accommodation, as building plans were held up due to the intended acquisition Rs. 87500, (3) damages for actual expenses incurred Rs. 10871-4-0. The total claim in court was for Rs. 8,74,481-12-5, item (2) having swelled up to Rs. 1,50,110-8-5.

The learned Judge negatived items 1 and 2, holding that the building plans appear to have been abandoned even prior to the Section 4(1) notification, and that there was no credible evidence to substantiate the alleged loss of revenue. Upon item (2) the learned Judge held that the intended acquisition could not possibly have interfered with the construction for which the temporary building was substituted, and that the claim was unacceptable. With regard to the loss-claimed for expenses (Rs. 10871-4-0) an actual sum of Rs. 4871-4-0 was allowed, as already stated. We shall hereafter refer, in due context, to certain particulars of the oral evidence and the documents-which appellant was able to make available to court, in support of the claim.

4. For the time being, we are concerned with the far more important question of principle. The crux of the question argued before us was whether, with reference to the language of Section 48(2) of the Act, the principles governing the assessment of compensation of compulsory acquisition should be applied, mutatis mutandis, to cases o withdrawal from such acquisition. If those principles were applicable, how far could they be pressed into service in an assessment of compensation which would have to be inevitably and largely conjectural was another question.

The argument of learned counsel for the appellant (Sri K. V. Venkatasubramania Aiyar) was briefly, that by virtue of Section 4(3) Notification, a certain deprivation of the possible use of the land hung over the owner of the property. This was because, under Section 24 Sub-clause 7 of the Act, no outlay or improvements could be effected on the land acquired, without the sanction of the Collector, after the date of the notification under Section 4(1). In the instant case, the appellant had elaborate plans for constructing the buildings upon this valuable property within the City, for being rented as shopfronts, or for commercial purposes.

But, since the property was to be acquired for widening a road, no such buildings could be put up for the period of the acquisition, which was from 30-9-1943 to 10-3-1954, upon the admitted facts. The sanction of the Collector could not be procured, as it was most unlikely that any such sanction would have been accorded. Hence, the damages resulting from this loss of revenue, arc claimed to be a very legitimate part of the compensation payable under Section 48(2). Learned counsel also makes reference to the report of the Select Committee (dated 2-2-1893) when this section was enacted in 1894, wherein they stated.

"We think, therefore, that the power to withdraw should be given after as well as before, the award, but that if so exercised, it should only be on terms of the most liberal ccmpensation to the owner, and that, if he is not satisfied with the Collector's offer, he should have the same rights of reference to the judge as in case of acquisition."

We shall refer, in due course to the very elaborate arguments of learned counsel in explanation of this core of his thesis, illustrated by numerous citations from Indian, English and American au thorities.

5. But the learned Government Pleader contends, per contra, (1) that the ''notice" referred to in Section 48(2) of the Act, can apply only to the notice under Section 9 of the Act, and not to the notification under Section 4(1), (2). That the words in Section 48(2) "compensation due for the damages suffered by the owner in consequence of She notice or of any proceedings thereunder" must be strictly construed, both with reference to common law, and the connotation of expression such as "damages suffered in consequence of occurring in the case law upon compulsory acquisition. In other words, the argument is that "damages" must he limited to actual costs incurred, or to reparation for actual and specific injury.

According to the learned Government Pleader, nothing conjectural is relevant here, and the principles relating to compensation for special adaptability of land, special market value injurious affection or severance, have no ilace here. Again, the words "in consequence of the notice" must be strictly construed, to include within their scope only direct and tangible consequences in costs or expenses; all indirect results, or anything which is of the nature of an hypothetical loss must be excluded. Since no authority upon this section has been brought to our notice, and the arguments appear to us to be of great importance, both to Government and to private parties whose properties may be proposed for acquisition in future, we shall first deal with the arguments of the learned Government Pleader as submitted before us.

6. These arguments have been advanced against the background of the well known common law doctrine of damnum absque injuria namely that where "there is no jus, no legal right to demand that the act which causes the damages shall not be done, as action for damage is not maintainable" (Broom's Legal Maxims 10 edn. p. 120). The broad principle is stated in "Halsbury's Laws of England' 3rd Edn. Vol. 10 S. 1 page 5 as follows:

"A mere negative prohibition, though it involves interference with the owner's enjoyment of property, does not, merely because it is obeyed, carry with it at common law any right to compensation. A subject cannot at common Jaw claim compensation merely because he obeys a lawful order of the State."


"No owner of lands appropriated by statute for public purposes is entitled to compensation cither for value of the land taken or for damages on the ground of injurious affection to his land, unless he can establish a statutory right."

The following authorities are relied upon to support: France Fenwick and Co. v. King, 1927-1-KB 458, University Colleges, Oxford v. Secy, of State for Air, 1938-1 KB 648, East Fremantle Corporation v. Annois, 1902 AC 213 at p. 217, Attorney-General v. De Keyser's Royal Hotel Ltd., 1920 AC 508. These authorities make it explicit that, at common law, the private individual cannot recover against the State compensation even for compulsory acquisition of property, except as provided by statute, for there is no remedy against a lawful act, nor can damages be awarded for suffering anything authorised by law. This is upon stronger ground, in the case of withdrawal from contemplated acquisition even though the subject might have been affected in the enjoyment of his property during the pendency of the proceedings. The following passage occurs in Sedgwick on "Damages" 9th Edn. S. 1160;

"As a general rule it has been held that the right to discontinue is absolute, and the property may be abandoned without incurring any liability for damages..... .But there is no doubt that great injustice is often suffered in this way, for while the proceedings are pending, the land may be rendered unavailable for any meet the difficulty, the Court sometimes imposes terms, and in some cases special statutes,, provide for indemnity."

7. When we look at the law in the United States, it is abundantly clear from the passages in Nichols' 'Eminent Domain', Vol. 1, p. 66, that withdrawal from condemnation proceedings will not entitle the owner of property to damages, unless the statute makes special provision, as damnum absque injuria would otherwise apply. In "American Jurisprudence", Vol. 18 ' Eminent Domain S. 371, page 1013, the position is set forth in the following terms:

"There is a conflict of authority as to whether the property owner is entitled to recover his expenses, or the loss or damage he may have incurred, on account of the institution or prosecution of condemnation proceedings which are thereafter abandoned. A majority of the cases take the view in the absence of statute imposing liability ......(that) the damages which he suffers by reason of proceedings subsequently abandoned does not give rise to an action on his part, but in damnum absque injuria."

But it is certainly arguable that Section 48(2) was specially enacted for this purpose, realising the great disability that owners of property would otherwise suffer from, due to deprivation of enjoyment or dominion during the pendency of ac-quisition proceedings, which might be subsequently abandoned. But the learned Government Pleader presses the further argument that such damages must be concrete, and not conjectural, and must be the direct consequence of something done by authority. His stand before us is that Section 4(2) of the Act refers to various steps which the authority could take, after entering upon the land, for which payment for damages is subsequently provided for under Section 5 of the Act.

Upon this ground, he would construe the language of Section 48(2) as referring only to the language of Section 9 notice, and, would thus exclude the linking of Section 48(2) with the deprivation of enjoyment which undoubtedly results from the operation of Section 24, Sub-clause 7 of the Act after the Section 4(1) notification. In thus construing the words "damages suffered' and 'in consequence of' in a very strict fashion, to include only costs or concrete expenses directly resulting from the threatened acquisition, and nothing else, the learned Government Pleader seeks to support himself upon certain authorities, which we might immediately turn to.

8. In Harvey v. Crawley Development Cor poration, 1957-1 All ER 504, in awarding damages of 241-10 Section 1 d. for actual expenditure, in curred in shifting premises, due to acquisition, Romer, L. J., observed:

The authorities to which our attention has been, drawn establish that any loss sustained; by a dispossessed owner (at all events one who occupied his house) which flows from a compulsory acquisition may properly be regarded as the subject of compensation for disturbance, provided, first that it is not too remote, and secondly, that it is the natural and reasonable consequence of the dispossession of the owner."

We might here also refer to Section 23, sub-clause 5, which relates to reasonable expetiscs for a change of residence compelled by acquisition. The damages must be a direct consequence of the injury (Vide Thurogood v. Van Den Berghs and Jurgens, 1851-2-KB 537). The learned Government Pleader also refers to Johnston v. Secy, of State; 42 Ind Gas 905: (AIR 1917 Lah 453), in which it was held that no compensation need be awarded for delay in acquisition proceedings.

9. With regard to the directness of causation, related to the words 'in consequence of", occurring in Section 48, reference is made to the following passages in Mayne's Treatise on "Damages" 11th Edn. page 44:

"Inadmissible grounds of damages may be classed under the general head of remoteness. Damage is said to be remote when, although arising out of the cause of action, it does not so directly flow from it that the offending party can be made responsible for it."'

The remarks of Lord Esher M. R. upon this matter in Pink v. Fleming, (1890) 59 LJ QB 559, are cited in support. Reference has also been made to 1951-2 KB 537 and 1957-1 All ER 504.

10. But, after giving our most careful consideration to this line of reasoning, we are unable to accept that it sustains the Interpretation of Section 48(2) which the learned Government pleader would seek to advance. The common law doctrine Itself of damnum absque injuria is irrefutable in its import, but the statute providing for compensation for compulsory acquisition came into existence upon this very ground, and it specifically provides for compensation for withdrawal where there has been a temporary deprivation of enjoyment by the owner in any sense.

We are unable to accede to the submission that Section 48(2) cannot refer to the notification under Section 4(1), on the contrary, since the effect of Section 24, Sub-clause 7 is undoubtedly to Inhibit the erection of buildings , etc., on the property subsequent to Section 4(1) notification, we have no doubt whatever that the loss duo to the inability to execute such plans, should be legitimately included in the term "damages" occurring in Section 48(2). We would agree upon the authorities cited, that the words "in consequence of' should be interpreted to include all effects which are clearly to be referred to the cause of pending acquisition; we would agree that remote consequences, which are not directly related to the cause should be excluded. We would further agree that fanciful plans which were never contemplated, possible uses of the property which were not practicable, and fantastic claims upon such a foundation, can have no' place in applying Section 48(2) to the facts. But, on the contrary, and as we shall show when turning to the aspect of the arguments developed by learned counsel for appellant (Sri K. V. Venkatasubramania Aiyar) to delimit Section 48(2) in a rigid fashion to actual and incidental costs incurred by the party would be to destroy the concept of compensation altogether. Though compensation for losses ought to be claimed upon a basis of realism, and adherence to fact, nevertheless, it has never been the law that such compensation cannot be conjectural in certain respects.

On the contrary, this will be inevitably so, if the factors, such as special adaptability, special market value, injurious affection, or damages for severance are taken into consideration. The authorities amply bear out that they have been taken into consideration, and we are unable to see any reason why mutatis mutandis, the principles are not applicable to the special case of Section 48(2) as well. We would certainly agree that, as far as the law in this country is concerned, purely speculative schemes, which were never capable of realisation, ought not to be considered as a basis. Vide Basavaraju Krishna Row v. Head Asst. Collector, Bezwada, 15 Ind Cas 672 (Mad), In the matter of Govt. of Bombay, ILR 34 Bom 486, Johnston v. Secretary of State for India, 42 Ind Cas 905: (AIR 1917 Lah 453) and B. N. Elias v. Secy, of State, AIR 1929 Cal 20.

11. The very conception of compensation for compulsory acquisition involves two elements (i) the value of the property and (ii) as damages for injury. As stated in Halsbury, Simonds 3rd Edn. Vol. X page 161, paragraph 280, compensation itself "is commonly determined by the otdinary rules applicable to damages in actions for tort." As laid down in Premchand v. Collector of Calcutta, ILR 2 Cal 103 at p. 108,

"The fairest and most favourable principle of compensation to the owners is that.... .what is the market value of the property, not according to its present disposition, but laid out in the most lucrative and advantageous way in which the owners could dispose oF'.

That potential value would be included goes without saying. Section 10 Halsbury, 3rd Edn. paragraph 157. Special adaptability is dealt with' indie same work at paragraph 158 (Page 95) and compensation should also be awarded Upon the basis of a special suitability to a lucrative purpose. In Ripley v. Great Northern Rly. Co., (1875) 31 LT 869, compensation was claimed for loss of prospective profits with regard to supply of water to the buildings which would have been erected, if land had not been taken, and was allowed. There is, indeed, a plethora of authorities upon this aspect, of which we think it is sufficient to refer to the following selected cases -- Cedars Rapids Manufacturing and Power Co. v. Lacoste, J.914 AC 509: (AIR 1914 PC 199), Fraser v. City of Fraser-ville, 1917 AC 187 In re, Lucas and Chesterfield Gas and Water Board, (1909) 1 KB 16, Sidney v. North Eastern Rly. Co., 1914-3 KB 629. It can easily be shown that conjectural value would be perfectly relevant, upon the following authorities.

In Victoria Laundry ^Windsor) Ltd. v. Newman Industries Coulson arid Co. Ltd., 1949-2 KB 528, compensation was allowed upon a basis of conjectural volume of business. In the two following cases relating to ship collisions namely, The Argentine, (1888) 13 PD 191 and Owners of Steamship "Mediana" v. Owners, Master and Crew of Lightship Comet, 1900 AC 113, special damages were awarded in respect of loss of profits on projected voyage, and the argument was repelled that damages should be limited to actual costs of repair. In 1914 AC 569: (AIR 1914 PC 199) damages were accorded on the basis of the agricultural value of the land acquired, while the claimant put forward the theory that he should be compensated as a partner in the projected enterprise for which the land was acquired. The Privy Council remitted the case to the Arbitrator, because conjectural elements were also permissible.

12. Brown v. Commr. for Railways, (1890) 15 AC 240 is particularly instructive, as the jury gave verdict of compensation on the basis of the supposed existence of coal under the land acquired and the Privy Council observed that the Government was under a duty to place before the jury all the evidence upon this aspect.

13. We think that we have sufficiently indicated with reference to the authorities and the discussion set forth above, the true principles which ought to apply to the fixation of compensation under Section 48(2) of the Act on withdrawal from acquisition proceedings. The very fact that, under Section 48(1) of the Act, such withdrawal has to necessarily take place before possession is taken of the land is Sufficient to dispose of the argument that the damages should really be related to concrete injuries sustained by actual acts of possession by authorities, or merely to incidental costs.

On the contrary, we have no doubt that the assessment of compensation would include con-jectural claims through uses to which the property could have been put, and income derived therefrom, but from which the owner was prevented, by the pending acquisition. The principles applicable to compulsory acquisition, such as com-pensation for special adaptability etc. will apply mutatis mutandis to a case of withdrawal also. But we would certainly emphasise the note of caution, in applying the principles to the given facts of a situation. The claim must be founded upon realism, upon the hard core of fact, though it may be inevitably conjectural to a certain extent.

If the owner claims that there was a particular income-yielding use to which he could have put the property, he must adduce the materials to prove this, and to prove that this was perfectly practicable. Even otherwise, compensation can be awarded upon the basis of a rent which the owner could have obtained, and did not obtain, due to pending acquisition proceedings. But grandiose schemes, not related to practicability or fact, ought not to be taken account of by courts in awarding such compensation. The owner must also prove the other elements necessary for substantiating, his claim, such as the demand for the property, or for buildings therein during the period covered by the proceedings etc. It is impossible to adumbrate all the relevant considerations, in what is essentially a question of fact. We can only make clear the guiding principles which, courts should bear in mind.

14. We cannot help observing that the evidence 'tendered by the appellant in the court below was thoroughly inadequate and unsatisfactory. The proprietor of Express Newspapers Ltd., Sri R. Goenka, who was the person best fitted to throw light upon the actual scheme and the loss, even if conjectural, which he sustained, did not examine himself. The documentary evidence is meagre and unsatisfactory, while the two witnesses actually examined for the appellant, G. Gopalaswami (C. W. 1) and T. S. Subramania lyer (C. W. 2) prove little or nothing in substantiation of item 1 of the. claim, amounting to over 7 lakhs.

But on the contrary, we are unable to accept the argument that Government had not duty in the matter, and that they could wail the proof of claim in complacency like a defendant, and without assisting the court by all the materials at their command (see ILR 34 Bom 488). Nor can we consider the disposal of this claim by the lower court as satisfactory and adequate. The mere dismissal of the claim of the appellant as unsubstantial by evidence, would certainly not imply that the court has no duty to fix the quantum of compensation payable under Section 48(2) independently and upon materials available, and by all the means in its power.

15. For these reasons, we arc setting aside the order of the lower court, and remitting the entire matter for fresh disposal, in the light of the principles and observations that we have set forth above. The claimant (appellant) is certainly 'bound to place all adequate material for a proper assessment of the claim, and the best evidence in the possession of the appellant, including the oral testimony of the proprietor, who might alone be able to throw light upon the actual basis of the claims. The Government is equally bound to adduce material for a proper assessment of the compensation, upon the declared principles.

The Government cannot merely, maintain the position that, failing the attempt by the claimant to prove a particular figure as due, there is no duty cast upon the Government to assist the court to arrive at a true valuation, We would also observe that this is a matter of importance in which the rights and interests of the subject are concerned and that Government cannot indefinitely prolong proceedings for compulsory acquisition and ultimately withdraw and then claim that the deprivation or inhibition caused by such pendency is of no account in assessing compensation. Costs to abide the result. The court-fee paid will be refunded to the appellant.

Ramaswami, J.

16. I entirely agree with the luminous exposition, if I may say so with respect, of my learned brother, and wish only to reinforce his observation regarding two matters, viz., that the compensation for damages suffered must exclude hypothetical building schemes. It has been frequently laid down in regard to acquisition, and which principles apply to compensation under Section 48 also, that while the owner is entitled to be compensated at the highest rate (or which he can sell the land for the most remunerative purposes for which it can be utilised, he is not entitled to be compensated for potential values when the opportunity for making such use of the land for purposes which might create these potential values is so remote as to be negligible.

Although land may possess certain potentialities, it does not follow that these potentialities have any present value. The value of the owner consists of the advantages which the land possesses, present or future, but it is the present value alone of such advantages, which has to be determined. The true test is to consider whether there is a demand in the locality for building sites independently of the proposed acquisition.

In short, the principles that a owner is entitled to the market value of the properly not according to its present disposition but laid out in the most lucrative way in which he can dispose of it, was applied in Bombay even to hypothetical building schemes and in the extraordinary developments which it assumed there, where future utility was not estimated merely by prudent business calculations and mere speculation was allowed to have a large influence and which was finally discredited even there, never found favour in Madras. In 15 Ind Cas 672 (Mad), it was laid down that an award cannot be made on mere speculation and hypothetical schemes regarding the future development of land. In fine it must not be a case of an Alnasker dream come true.

17. The next consideration which has to be borne in mind is that as the evidence stands at present, the evidence tendered by the appellant in the court below, was thoroughly inadequate and unsatisfactory and further investigation Las to be made by the learned City Civil Judge in the light of the observations made by my learned brother in the penultimate and last paragraph of his judgment.

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