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G.V. Gopalacharya, Power of Attorney Agent, Uttaradhi Mutt, Madras 5 Vs. State of Tamil Nadu - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Case NumberAppl. No. 812 of 1975
Judge
Reported inAIR1978Mad334
ActsLand Acquisition Act, 1894 - Sections 23
AppellantG.V. Gopalacharya, Power of Attorney Agent, Uttaradhi Mutt, Madras 5
RespondentState of Tamil Nadu
Appellant AdvocateA. Kamala Devi and ;C. Hanumantha Rao, Advs.
Respondent AdvocateMiss Vimala, Govt. Pleader
DispositionAppeal Partly allowed
Cases ReferredManicka Chetti v. Collector of Madras
Excerpt:
.....for purposes of arriving again at the years of purchase is not always safe, each case has to be decided on its own..........to acquire its property. originally the notification for acquisition under section 4(1) of the land acquisition act was dated 11-2-1964. the land acquisition officer himself described the property as being one in the midst of a pucca residential area and is completely built up and was also occupied by the national high school for boys, triplicane. apparently the funds for acquisition were provided by the institution for whose benefit the compulsory process was undertaken. the land acquisition officer issued due notices under sections 9 and 10 of the act in the year 1965. but those proceedings were stayed till the writ proceedings above referred to concluded in 1968. the land acquisition officer rightly held the view that the value of the property had to be arrived at by capitalising.....
Judgment:

Ramaprasada Rao, J.

1. In this appeal the claimant in L. A. C. No. 34 of 1973 on the file of the City Civil Court, Madras, is the appellant. An extent of 6 grounds and 66 sq. ft. in S. Nos. 1916 and 1917 of Triplicane, Madras with a puce a superstructure thereon was acquired by the Government for the public purpose of providing additional space to the National High School for boys, Triplicane. The process of acquisition was challenged under Article 226 of the Constitution of India. But finally in W. A. No. 272 of 1968, a Division Bench of this court upheld the process and dismissed the writ petition filed by the claimant questioning the right of the State to acquire its property. Originally the notification for acquisition under Section 4(1) of the Land Acquisition Act was dated 11-2-1964. The Land Acquisition Officer himself described the property as being one in the midst of a pucca residential area and is completely built up and was also occupied by the National High School for Boys, Triplicane. Apparently the funds for acquisition were provided by the Institution for whose benefit the compulsory process was undertaken. The Land Acquisition Officer issued due notices under Sections 9 and 10 of the Act in the year 1965. But those proceedings were stayed till the writ proceedings above referred to concluded in 1968. The Land Acquisition Officer rightly held the view that the value of the property had to be arrived at by capitalising the annual net rental income at a certain number of years with reference to the market quotation of the gilt edged securities and found that such three per cent securities had a conversion value of Rs. 65-80 during the relevant time. He therefore adopted the multiple of 22 and multiplied the net annual rental yield for the property with the said multiple and arrived at the value of the acquired property at Rs. 1,09,733-80. He would not agree with the claimant that the land and the superstructure thereon have to be valued independently. He gave a nominal value of Rs. 90 for the trees in the land and after providing for solatium granted the requisite compensation. After observing that the administrators of Satyapromoddha Theertha Shripadargalvaru of Uttaradhi Mutt were not empowered to alienate the property.he directed that the entire compensation be deposited in the City Civil Court, Madras, under Section 31(2) of the Land Acquisition Act with a reference to that court under Section 30.

2. The claimant not being satisfied with the quantum of compensation awarded, sought for a reference under Section 18 of the Land Acquisition Act. The learned trial Judge, who enquired into the matter, after noticing the fair rent which was fixed for the property under the Madras Buildings (Lease and Rent Control) Act and after making the necessary deductions, adopted the multiple of 25 years' purchase and fixed the compensation accordingly. It is as against this, the present appeal has been filed.

3. We may at once state that as regards reference under Section 30 of the Land Acquisition Act made by the Land Acquisition Officer, no orders have been made, nor any such orders have been brought to our notice and we are not therefore called upon to decide on it.

4. In this appeal, we are concerned only with the valuation of the acquired property. It is common ground that a fair rent of Rs. 694 per month has been fixed as the fair rent payable by the tenants in occupation as is seen from Ex. C-6 dated 29-7-1964. This order, as to the fixing of fair rent, it is common ground, has become final. Learned counsel for the appellant raised two contentions. One is that as the award enquiry was really taken up for consideration only in the year 1968 because of the pendency of the writ proceedings, the date of the final order made by the Division Bench in W. A. No. 272 of 1968 is the relevant date for valuation. Secondly it is said that the multiple adopted by the court below is incorrect and as the Land Acquisition Officer himself took the value of 3 per cent gilt edged securities for valuation, the multiple should automatically be 33-1/3 times. Miss Vimala, the learned counsel for the Government pointed out that such an adoption of the multiple is not automatic, but would depend upon the circumstances of each case. She would point out that the building is 60 years old and that there are several cracks in it and therefore the mechanical adoption of multiplying the net annual value by 33-1/3 years of purchase is not possible. The only question for consideration in this case is whether the learned trial Judge was right in having adopted the multiple of 25 in arriving at the capitalised value of the building. We may at once point out that there is no dispute in this case regarding the net annual rental value which was arrived at by the learned trial Judge as Rs. 4,987-90, The question is with what should this figure be multiplied to arrive at the capital value. Mrs. A. Kamala Devi appearing for the appellant relied upon the decision in Collector of Kistna v. Sivarama Prasad, AIR 1938 Mad 33. After ascertaining the net annual revenue of the zamindar from the land acquired, the Division Bench in the above case went on to observe that the said net annual rent must be capitalised by computing the number of years' purchase. 20 times the net revenue from property has in the past been commonly taken to be the capital value of any property or interest in property, and the true justification for this was that approximately 5 per cent was the prevalent rate of interest. Thus it is clear that the number of years' purchase must depend on the rate of interest prevailing on gilt edged securities at the time of the acquisition i.e., on the date of the notification under Section 4 of the Land Acquisition Act. The higher the rate of interest on that date, the fewer will be the number of years' purchase. Relying on this, it is stated that the net annual value should be multiplied by by 33-1/3 as the rate of interest on the gilt edged securities at or about that time was admitted by the Land Acquisition Officer as 3 per cent. Even in the Land Acquisition Manual, a similar procedure for capitalisation is indicated. The Supreme Court in State of Kerala v. P. P. Hassan Koya AIR 1968 SC 1201, while deprecating the practice of determining the compensation payable to composite properties consisting of land with building by assessing the value of the land and the break-up value of the building observed that the land and the building constitute one unit and the value of the acquired unit must be determined with all its advantages and its potentialities. They also said that the method of capitalisation of the return actually received or which might reasonably be received from the land is the general method which is resorted to in valuing composite properties. But it should be noted as pointed out by the learned Judges of the Supreme Court in that case, that it cannot be laid down as a universal rule applicable to all situations and circumstances that a multiple approximatelyequal to the return from gilt edged securities prevailing at the relevant time forms an adequate basis for finding out the market value of the land. In M. N. Khan v. Collector : [1975]2SCR184 , it would appear that the Supreme Court would refer only to the rate per cent of the interest allowed on gilt edged securities at the relevant time and not to the conversion rate of such securities for purposes of arriving at the multiple. But the counsel for the Government would refer to a decision of a Division Bench of this court in Manicka Chetti v. Collector of Madras, (1975) 88 Mad LW 747, in which a reference was made by this court to the market quotations given by the Reserve Bank of India in connection with gilt edged securities. Ultimately, in that case to which one of us was a party, the Bench had to take judicial notice of the fact that the interest rate on satisfactory investments in the year 1961 could easily be 5 per cent and the multiple of 20 was adopted having regard to the nature of the property acquired and its situation.

5. On a review of the authorities, we are satisfied that no hard and fast rule could be laid down in the matter of arrival of the multiple for purpose of capitalisation of the net annual rental value of a composite property subjected to compulsory acquisition. The situation of the property, the age of the building, its potential and all other surrounding circumstances have to be borne in mind before a multiple is thought of for capitalisation. A mechanical adoption of the rate per cent on gilt edged securities as the guide for fixing the multiple or an adherence to the conversion value of such gilt edged securities for purposes of arriving again at the years of purchase is not always safe, Each case has to be decided on its own merits. The court below noticed that in the year 1964 on gilt edged securities 3 per cent interest was payable and that the conversion value of the same was Rs. 65-80. In the absence of any other evidence regarding the rate per cent of interest referred to can be taken as a base for calculation of the number of years' purchase. The lower court adopted the multiple of 25. The learned counsel for the appellant expects that the multiple should be 33-1/3. Having regard to the age of the building and the cracks found thereon, we are unable to accept that the net annual yield should be multiplied by 33-1/3. We agree with Miss Vimala the learned counsel for the Government that a deduction has to be made towards the location of the property, its age etc. We fix this multiple at 27 1/2 times the net yield. We are constrained to fix this multiple because the Land Acquisition Officer himself thought that the multiple of 22 was reasonable basing his conclusion on the conversion value of the securities in 1964. But as we are of the view that the conversion value of such securities can only furnish additional hypothesis to arrive at the number of years of purchase and ought not to form the sole guide for evaluation and as the method of valuation in all such cases is not totally bereft of guess work, we adopt the multiple of 27 1/2 times having regard to the circumstances of the case. The net annual rental yield of Rs. 4967-90 would be multiplied by 27 1/2 times and that amount shall be awarded to the claimant. The claimant would also be entitled to 15 per cent solatium on the additional compensation given by us. The claimant is also entitled to interest at 4 per cent on the additional compensation awarded from the date of possession i.e. 18-6-1973 till the date of deposit. The compensation shall be worked out as stated above. The excess compensation shall be deposited in court to the credit of the land acquisition case. The appeal is allowed to the extent indicated above. There will be no order as to costs.


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