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Santosh Kumar Dhar Vs. Nanda Kishore Mallick and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtKolkata High Court
Decided On
Case NumberA.F.O.D. No. 242 of 1953, with Cross-objection
Judge
Reported inAIR1958Cal56
ActsLand Acquisition Act, 1894 - Section 23; ;Calcutta Land Acquisition Improvements (Amendment) Act, 1911; ;Code of Civil Procedure (CPC) , 1908 - Order 41, Rule 22; ;Court-fees Act, 1870 - Schedule - Article 1; ;Contract Act, 1872 - Section 19A
AppellantSantosh Kumar Dhar
RespondentNanda Kishore Mallick and anr.
Appellant AdvocateAtul Chandra Gupta, ;Bankim Chandra Dutta and ;Bratendra Narayan Banerjee, Advs.
Respondent AdvocateProbodh Krishna Shome and ;Benoy Krishna Ghose, Advs.
DispositionAppeal partly allowed
Cases ReferredChina Venkata Rao v. Satyanarayanamurthy
Excerpt:
- p.n. mookerjee, j.1. this is the lessee claimant's appeal arising; out of an apportionment case of the calcutta. improvement tribunal. the parties mainly differ on the principle of apportionment to be applied in this particular case and also on the question whether the lessee is entitled to any benefit of his option of renewal, reserved in the relevant lease. there are other minor points of dispute but they do not require much discussion. the facts also are practically undisputed barring some which bear on the lessor's allegation that the appellant's lease is invalid and inoperative in law.2. premises nos. 35 and 35/1-a, lower circular road, popularly known as mallick bazaar, comprised an approximate total area of 12 bighas. these two premises belonged to three persons, namely, bholanath.....
Judgment:

P.N. Mookerjee, J.

1. This is the lessee claimant's appeal arising; out of an apportionment case of the Calcutta. Improvement Tribunal. The parties mainly differ on the principle of apportionment to be applied in this particular case and also on the question whether the lessee is entitled to any benefit of his option of renewal, reserved in the relevant lease. There are other minor points of dispute but they do not require much discussion. The facts also are practically undisputed barring some which bear on the lessor's allegation that the appellant's lease is invalid and inoperative in law.

2. Premises Nos. 35 and 35/1-A, Lower Circular Road, popularly known as Mallick Bazaar, comprised an approximate total area of 12 bighas. These two premises belonged to three persons, namely, Bholanath Mallick and his two counsin brothers Chandra Sekhar and Nanda Kishore Mallick. Bholanath owned a two-thirds share and the remaining one-third belonged to Chandra Sekhar and Nanda Kishore. The appellant Santosh Kumar Dhar claims to be the lessee in respect of Bholanath'S two-third share. The lease is Ex. K. It is dated February 12, 1947. It is a registered lease, purporting to be for 25 years in the first instance with an optian of renewal in favour of the lessee for another 25 years on the expiry of the said fixed first term of the same period. The renewal was to be on the same terms and conditions as the original letting, barring, of course, any further right of renewal. The rentreserved was Rs. 1,501 per month in the lessor Bholanath's two-thirds share which alone was the subject-matter of the lease, or, in other words, the only lease-hold property. The Bazaar had certain structures at the date of the lease and the lessee was also given the right to build additional structures and make additions and alterations to the lease-hold property with the co-operation and concurrence of the lessor's co-sharers. The lessee had also the right to assign or under-let the demised property. The liability for repairs and in respect of rates and taxes (so far, of course, as the demised property, namely, the lessor Bholanath's two-thirds share of the Bazaar, was concerned) was of the lessee. There were also the usual clauses, providing for the lessor's re-entry in case of breach of any covenant, condition, etc., on the part of the lessee or in case of non-payment of rent (for two months in this particular case), or in case of his insolvency. No other term appears to be particularly material for purposes of the present appeal, although some general reference may be necessary to the nature and trend of the lease in connection with the respondent's attack against its validity.

3. Out of the above premises, bare land, comprising an area of one bigha 13 cottahs 2 chattaks, was acquired by the Calcutta Improvement Trust under and in connection with their Alignment Scheme No. XLVIII for a projected public street to connect Lower Circular Road with Mcleod Street. This acquisition was made in pursuance of the Notification under Section 4 of the Land Acquisition Act which was published on February 12, 1943, and which was followed by the usual statutory declaration under Section 6 of the Act on March 31, 1949. The acquired land, one bigha 13 cottahs 2 chattaks prior to its acquisition as aforesaid, had been under requisition under the Defence of India Act as part of a total requisitioned area of 42 cottahs 8 chattaks. The requisition lasted from October 1943 to July 1945 and, during this requisition period, all structures, etc., standing on the acquired land, were demolished by the Requisitioning Authorities and it was converted into bare land to serve as a fire lane, connecting Lower Circular Road and Mcleod Street.

4. Meanwhile, in 1944, the Calcutta Improvement Trust sanctioned and published the, aforesaid Alignment Scheme No. XLVIII and, when, in July 1945, the property was de-requisitioned and the owners got back possession, this Alignment Scheme was in operation. In March 1947, the owners applied for permission to build on the acquired land which was then under alignment, but the Chairman of the Trust refused permission as the owners did not undertake to execute the necessary agreement under Section 63(9) of the Calcutta Improvement Act. Thereupon, on April 16, 1947, the owners requested the Chairman to acquire the said land and on this request, followed the Notification under Section 4 and the Declaration under Section 6, to which reference has been made above.

5. In February 1949. on the 19th to be exact, Bholanath died leaving behind him surviving as his sole heirs and legal representatives his widow Chhabirani and minor son Go-pal Lal by a pre-deceased wife. He also left two minor daughters. On June 15, 1949, Chhabirani executed a deed of settlement (trust) in respect of the properties, inherited by her from her husband, appointing her husband's cousin brother Nanda Kishore Mallick as the trustee. This Trust Deed is Ex. B in the present case. Nanda Kishore was also appointed the guardian of the person and property of the minor Gopal Lal by this Court. In the Trust Deed (Ex. B) and also in the guardianship proceedings, the appellant's lease from Bholanath which was dated February 12, 1947, was admitted and acknowledged but, when, in pursuance of notices under Sections 9 and 10 of the Land Acquisition Act, Nanda Kishore filed his claim as trustee and guardian as aforesaid, he made no mention of the appellant's lease. A separate claim was, however, filed by the appellant as lessee in respect of the said two-thirds share of Bholanath, claiming a compensation of Rs. 75,000 for his lease-hold interest (land and structures). He made also other claims for fixtures, severance and loss of earnings, etc., with which we are not concerned in this appeal. The Collector made a joint award in favour of the appellant. Santosh Kumar Dhar as lessee and Nanda Kishore Mallick, representing as trustee and guardian respectively the deceased lessor Bholanath's heirs and legal representatives Chhabirani and minor Gopal Lal, as follows.-

'Apportionment of the amount of compensation.

Sr. No.Names and addresses of persons interested and nature of their respective interests:Amount payable to each:

1 (c) iNanda Kishore Mallick asTrustee to the Estate of Sm. Chhabirani Mallick, widow of Bhola Nath Mallickdeceased of do, owner 1/3rd share,

Jointly with

1 (c) iiSantosh Kumar Dhar, Mallick Bazar Office, Calcutta, Lessee

Rs. 96,767-11-4,1 (d) iGopal Lal Mallick, minor son of Bholanath Mallick, deceased, represented by his certificated guardianNanda Kishore Mallick of 155 D, Harrison Road, Calcutta, Owner- 1/3rd share,

Joitily with

1 (d) iiSantosh Kumar Dhar, Mallick Bazar Office Calcutta, LesseeRs. 96.767-11-4.'

6. The total award for land was Rs. 2,48,437-8-0 and for structures (including under-ground drains, etc.) Rs. 4,000, totalling Rs. 2,52,437-8-0. In Bholanath's 2/3rds share inherited equally by Chhabirani and Gopal Lal, each having l/3rd, the amount would be Rs. 1,65,625 and this was separately shown (vide award as set out above) with the relevant statutory allowance in the two component 1/3rdshares of Rs. 96,767-11-4 each, one represented by Chhabirani through her trustee Nanda Kishore as lessor and the appellant as lessee and the other by minor Gopal Lal through his certified guardian Nanda Kishore as lessor and the appellant as lessee. The lessors Chhabirani and Gopal, represented by their trustee and guardian Nanda Kishore Mallick, objected to this joint award and asked for a reference under Section 18 of the Land Acquisition Act, claiming the entire compensation money, including the statutory allowance, in the 2/3rd share, mentioned above, namely, Rs. 96.767-11-4 plus Rs. 96,767-11-4 - Rs. 1,93,535-6-8 pies, and repudiating the lessee appellant's claim to any portion of the same. The Collector also, in view of the dispute as to apportionment, had to refer the matter to Court under Section 30 of the Land Acquisition Act. Accordingly, a combined reference was made to the Tribunal on March 15, 1951, under Section 18 and Section 30 of the Land Acquisition Act, which was registered as Apportionment Case No. VII of 1951.

7. In his original written statement, filed before the Tribunal on May 28, 1951, the appellant claimed a sum of Rs. 1,25,000 as his share of the above compensation money of Rs. 1,65.625. A higher claim of Rs. 1,48,209 was,however, made by the appellant in his additional written statement, filed on May 13, 1953, when the case was actually taken up for hearing. This additional written statement was accepted by the Court subject to the objection of the referring claimants. The referring claimants Nanda Kishore Mallick as trustee to the estate of Sm. Chhabirani Dasi and minor Gopal Lal Mallick, represented by his certificated guardian, Nanda Kishore Mallick, who are the respondents before us, disputed the appellant's claim to any portion of the above compensation money and their petition of reference which was filed on September 18, 1950, contained the following two grounds:-

'A. For that the entire compensation moneyought to have been awarded solely in favour of your petitioner and not jointly in favour of your petitioner and the lessee Santosh Kumar Dhar,

B. For that the said lessee Santosh Kumar Dhar is not entitled to get any portion of the compensation money awarded for the acquisition of the portion of the above premises on the footing of the lease in his favour.'

8. In their written statement, flied before the Tribunal on February 4, 1952, they specifically attacked the validity of the appellant's lease and on this ground as well, along with other grounds, they contended that the appellant was not entitled to any portion of the compensation money.

9. The issues, as finally re-cast, stood as follows:-

'1. Had the lessee Santosh Kumar Dhar got a valid and operative lease in respect of the acquired property? Was his lease vitiated by undue influence?

2. Are the owners entitled to get the whole of the compensation money even on the footing that there was a valid lease in favour of Santosh Kumar Dhar?

3. Is the lessee entitled to get the amount claimed out of the compensation money?

4. How is the compensation money to be apportioned as between the parties?'

10. The Tribunal answered issues Nos. 1 and 2 in favour of the lessee opposite party and against the referring claimants. In other words, the first part of issue No. 1 was answered in the affirmative and the second part of that issue, as also issue No. 2, were answered in the negative. Issues Nos. 3 and 4 were answered against the lessee opposite party and in favour of the referring claimants in the sense that the lessee's claim to the amount, claimed by him, was not accepted and apportionment was made, giving the lessee only a sum of Rs. 30,191-12-6 pies out of the total compensation money of Rs. 1,93,535-6-8 pies, including statutory allowance, the balance, namely, Rs. 1,63,343-10-2 pies, being awarded in equal shares to the two referring claimants Chhabirani (Trustee Nanda Kishore) and Gopal Lal. The latter's claim for costs was rejected and the lessee was given only 1/4th of his costs, hearing-fee being assessed at Rs. 102. The lessee has now come up in appeal to this Court.

11. The respondents Nanda Kishore as trustee to the estate of Chhabirani and the minor Gopal Lal through his guardian Nanda Kishore have filed a cross-objection, objecting to the appellant's right to any portio'n of the compensation money and challenging specifically the validity of the appellant's lease. But they have paid only a fixed Court-fee of Rs. 20 on their memorandum of cross-objection and, for avoiding payment of ad valorem Court-fee, they have struck out the ground which sought to attack the appellant's claim to any compensation in the present case. The effect of this will be considered by us in due course.

12. The learned President delivered his judgment on July 14, 1953. He held inter alia that the disputed lease was valid and not vitiated by undue influence as alleged by the referring claimants. He held further that there was no agreement or arrangement between the parties by which the lessor could claim the whole of the compensation money and he rejected the present respondents' contention that the lessee appellant had not suffered any loss of income and was not, therefore, entitled to any share of the compensation money. He, however, awarded the lessee only a sum of Rs. 30,191-12-6 pies out of the disputed compensation money of Rs. 1,93,535-6-8 pies including statutory allowance upon the following principle of apportionment:-

'That the net income of the lessee from the acquired property was Rs. 106 per month, or Rs. 1,272 per annum and this should be capitalised at 10 per cent security to ascertain the value of the lessee's interest, the unexpired period of the lease being taken as 21 years. On calculation this valuation was found to be Rs. 11,000.

That the lessor would be entitled only to the reversion value, there being no question of abatement of rent as the lessee had agreed before him that he would go on paying the full rent of Rs. 1,501 per month in spite of the acquisition and the lessors had accepted that position. The value of this reversion was calculated on the footing that the unexpired period of the lease at the date of the acquisition was the original term of 25 years less period (roughly 4 years), already gone, that is, an unexpired period of 21 years, the lessee not being entitled to any benefit of the optional or renewal period of 25 years. The learned President excluded this optional period from consideration, as, in his opinion, in view of the existing alignment which was unlikely to have remained in abeyance beyond the original or the first term of the lease, the lessee could not have reasonably expected to avail of the optional renewal term. He, accordingly, calculated the lessor's interest, namely, the reversion, at 5 per cent, interest for 21 years and obtained the figure of Rs. 59,450 as the value o his reversion.

The learned President then struck the proportion between the two values, the lessee's and the lessor's, namely, Rs. 11,000 and Rs. 59,450, and apportioned the compensation money in that proportion between the two parties/the lessee getting Rs. 30,191-12-6 pies and the two lessors Rs. 1,63,343-10-2 pies in equal shares. In making the apportionment as above, the learned President relied upon and applied the principle, enunciated by this Court in the case of Surendra Nath Sarkar v. Pyari Charan Law : AIR1938Cal740 .'

13. We shall take up the appeal first where the only point that requires consideration is whether the true principle of apportionment has been followed by the learned President and the correct data adopted for that purpose and whether the amount, awarded by him to the appellant should be enhanced.

14. The appellant claims Rs. 1,48,209 out of the joint award of Rs. 1,65,625 (which represents the compensation for land and structures in Bholanath's 2/3rds share, excluding, of course, the statutory allowance) in favour of himself and the two respondents, as calculated by his expert Parks in his statement Ex. O. On behalf of the appellant, Mr. Gupta has contended first that Park's method of calculation and the data, adopted by him for the purpose of apportioning the compensation between the contending parties, should not have been rejected by the learned President in the facts of the present case and the apportionment should have been made on the basis of the said Ex. O. In any event Mr. Gupta contended, the learned President followed a wrong principle of apportionment and proceeded on certain wrong premises and assumptions and incomplete and incorrect data and, in any view of the case, the appellant would be entitled to a much higher amount.

15. In support of his above contentions, Mr. Gupta advanced three broad arguments.He submitted first that the learned President-was entirely wrong in excluding from consideration the lessee's option or right of renewal under the lease, Ex. K, and in limiting him to the fixed or certain term of 25 years and in calculating the unexpired period of the lease as 21 years on that basis. As we have already said, the learned President's above conclusion is primarily based upon the view that, in the face of the existing alignment, it would be unreasonable to hold that the lease would have continued beyond the original term certain of 25 years and the lessee would have got any opportunity of exercising his option of renewal. The propriety of this view has been challenged by Mr. Gupta. Mr. Gupta has further submitted that the ratio principle, applied by the learned President for apportioning the compensation money between the lessor and the lessee in the present case, is entirely unsuitable and unsupportable and he should have calculated the lessor's reversion value on the footing of the lease being for 50 years including the renewal or optional period and awarded that alone to the respondents, giving the balance to the present lessee appellant. Mr. Gupta's last submission was that, even upon the evidence of the lessee's net income from the acquired property and the valuation of his interest on that basis, the appellant would be entitled to much more than the sum of Rs. 30,000 and odd, awarded to him by the learned President, out of the compensation money (including statutory allowance) of Rs. 1,93,535-6-8. We shall examine these arguments seriatim and then calculate what, in our opinion, should be the proper amounts of compensation, payable to the two respective parties in the present case; in other words, how the above compensation money is to be apportioned as between them.

16. It cannot be seriously argued, - notwithstanding some submissions, made to the contrary by Mr. Shome, - that, in case of acquisition of a lease-hold property during the currency of the original term, the lessee would never be entitled to any benefit of the option of renewal (vide in this connection Halsbury's Laws of England, Simond's Edn. (Third Edn., 1955) Vol. 10, Article 286, citing Bogg v. Midland Rail Co., (1867) 4 Eq 310 (B) ) the lessee is to be compensated for the loss of his rights and advantages under the lease by reason of the acquisition. The option of renewal is undoubtedly one of such rights and its loss has to be taken into account in assessing the lessee's portion of the compensation money. What, of course, would be its value in a particular case would depend upon the factor and circumstances of that case.

17. The Rangoon case, W. F. Noyce v. Collector of Rangoon, AIR 1927 Rang 246 (C), cited by Mr. Shome, would not, if properly analysed, support his extreme contention. That case had certain special features which might be pleaded as sufficient justification for the refusal of the learned Judges to accord to the lessee there the benefit of his option of renewal in the matter of assessment of compensationmoney. There are undoubtedly some observations in the judgment of the learned Judges (vide AIR 1927 Rang 246 at col. 2 of that page (C) ) which might tend to support Mr. Shome's argument, but we do not think that those observations were intended to lay down the law in general, apart from the particular facts before their Lordships, and, if so intended, they would be too wide and the statement as a general proposition of law would be obviously incorrect. The case, however, as we have indicated above, is distinguishable and the decision is supportable on its own particular facts. Indeed, the learned President also did not proceed on the extreme view, urged before us by Mr. Shome, and he chose to base his decision upon the special facts of the present case.

18. On this part of the case, therefore, the relevant enquiry will be to find out whether there is anything in the present case which disentitles the appellant from getting any benefit out of his right or option of renewal. The existence of the Alignment has been held by the learned President to be a sufficient cause for this purpose. We do not agree. The existence of the Alignment, which prohibits construction except with the permission of the Chairman and upon an undertaking to remove the new structures when called upon to do so, is certainly a relevant factor in judging the income potentiality of the acquired property, but it is not so very relevant on the question of the effect of an option of renewal upon the unexpired term of the lease for purposes of determining the lessee's compensation on acquisition of the lease-hold property. At the same time it has to be remembered that it is only the present value of the lessee's option or right of renewal which will have to be taken into consideration and the effective unexpired period of the lease will have to be determined on that footing and in the light thereof. The nature of the property, including the age and condition of the structures which belonged to the lessors, will also undoubtedly be a relevant consideration in the matter. Taking all these into consideration, we would fix the effective unexpired period of the lease in the present case at 36 years; in other words, we would give the lessee the benefit of three-fifths of his optional renewal period.

19. Evidence shows that the gross actual income from the acquired land was about Rs. 300 per month. Evidence also shows that it had potentialities for a gross monthly income of Rs. 600 without construction of any structures upon it (vide the deposition of Nanda Kishore Mallick himself). The gross income from the entire Bazaar was Rs. 7,000 per month and the net income Rs. 33,000 per month. The expenses thus amounted to about 53 per cent. These expenses included taxes, collection charges, repairs, etc. The acquired land which was bare land would have practically no expense under the last head and not much on its own separate account of collection charges. We would, therefore, deduct 45 per cent from thegross income to deduce the net income of the acquired land.

20. Taking into consideration the present value of the income potentiality, and bearing in mind that the lessee appellant knew about the existing alignment, we would place the gross income at Rs. 450 per month. The net income would thus be Rs. 247-8-0 and two-thirds thereof which will be the net income of the disputed share would be Rs. 165 per month, or Rs. 1,980 per annum, or roughly Rs. 2,000 p.a. Reasonable security, so far as the appellant is concerned, would be, in view of the above assessment of income, 8 per cent, and the effective unexpired period of his lease would be as already stated, 36 years. The lessor's rate of interest should be taken at 5 per cent, in valuing his reversion at the end of 36 years. Admittedly also, the lessors would not be losing any rent during the lease period as, the acquisition notwithstanding, the lessee would continue to pay the whole rent of Rs. 1,501 per month, reserved under the lease, for his occupation of the remaining part or the unacquired portion of the demised property under the lease Ex. K.

21. To value the two interests, therefore, we have the following data:-

(i) For the lessee - The net annual income of Rs. 2,000 to be capitalised at 8 p.c. security for 36 years' purchase; and

(ii) For the lessor - The reversion at the end of 36 years to be valued at 5 p.c. interest rate.

22. We take up now the vexed question of the principle of apportionment. On this point various suggestions have been made from time to time and accepted or rejected in particular cases (vide Bhageeruth Moodee v. Jabur Jummah Khan, 18 Suth WR 91 (1) (D); Rayee Kissory Dassee v. Nilcant Day, 20 Suth WR 370 (E); Shama Prasunna Bose v. Brakonda Sundari Dasi, ILR 28 Cal 146 (F); Dinendra Narain v. Tituram Mukerjee, ILR 30 Cal 801 (G); Nayan Monjuri v. Hem Lal, 32 Cal LJ 137: (AIR 1920 Cal 959) (H); Nibas Chandra v. Bipin Behary, ILR 53 Cal 407: (AIR 1926 Cal 846) (I) : AIR1938Cal740 and the unreported decision of this Court in Sitanath Paul v. K. C. Basu, F. A. No. 80 of 1948 (Cal) (J).)

23. The suggested methods may be broadly put under two heads:-

(1) Value one of the interests, - the lessor's or the lessee's; deduct it from the total valuation and award the remainder for the other interest; and

(2) Value both interests. If the total award does not reasonably correspond with the sum total of the two valuations, apply the rule of proportion, or in other words, divide the total compensation money between the two interests in proportion to their respective values. Which method is to be applied in a particular case will, of course, depend upon its circumstances and considerations of justice may sometimes usefully aid this determination.

24. Thus in 18 Suth WR 91 (1) (D), apportionment was made in the proportion of theincomes derivable by the two respective interests, or, in other words, the two interests were separately and independently valued on thebasis of income 'derivable' by them and the compensation money was apportioned between them in the ratio of those two valuations; while in 20 Suth WR 370 (E) (vide p. 371 col. 2) where the authorities were reviewed and where also apportionment was recommended 'according to the values of the interests parted with', the landlords' interest which was found capable of more or less certain or satisfactory valuation was alone independently valued and that value was awarded to the landlord out of the total compensation money, the balance or the residue going over to the tenant. Practically, the same method was followed in ILR 28 Cal 146 (P) and, in ILR 30 Cal 801 (G) also, where again the earlier authorities were reviewed in some detail, the landlord's interest having been found fairly capable of satisfactory valuation that alone was valued independently and the landlord was given the amount, so obtained, the residue being left over for the tenant. In this case, last cited, the general rule of apportionment 'according to the values of the two interests' which prima facie implies application of the ratio theory or the rule of proportion was affirmed by Maclean, C. J. (with whom Geidh, J., concurred), in the following two passages:-

(1) 'It seems to me all important with a view to apportioning the compensation money between the zamindar on the one hand and the tenure-holder on the other to ascertain what the real interest of each party is in the property and what is the interest each party parts with' (vide p. 805); and

(2) 'I think the Court ought to proceed on the principle of ascertaining what is the value of the interest of the zamindar on the one hand with which he has parted and that of the tenant on the other, and to apportion the compensation money between them in accordance with those values.' (vide p. 810)

but as apparently the tenant's interest was not found capable of as accurate a valuation independently as the landlord's, the latter's interest alone was valued and that value was awarded to the landlord and the residue was held payable to the tenant. The question again came up for consideration in 32 Cal LJ 137: (AIR 1920 Cal 959) (H), where also after pointing out that apportionment of the sum awarded between the landlord and the tenant must be based not on hypothetical grounds but on an accurate determination of the value of their respective interests his Lordship Mookerjee, A. C. J. (sitting with Panton, J.), went on to observe as follows:-

'The moment the land is acquired it ceases to be the property of both the landlord and the tenant' and 'what we have to do is to calculate the present value of the interests of the respective parties in the land acquired in which both of them have lost their interests by the action of the State.'

On the facts before them, however, their Lordships found that the landlord's interest was fairly capable of valuation apparently with much greater certainty than the tenant's and, accordingly, they valued the same and awarded that value to the landlord, leaving the residue for the tenant. In ILR 53 Cal 407: (AIR 1926 Cal 846) (I), their Lordships (Walmsley and Chak-ravarti, JJ.), found it, on the materials before them, more convenient and better conducive to justice to capitalise the tenant's interest and award him that capitalised sum leaving the rest to the landlord. In the two later cases of this Court, the one reported in : AIR1938Cal740 and the other the un-reported decision of Das and Das Gupta, JJ., in P. A. No. 80 of 1948 (Cal) (J), the entire-position was again examined in the light of the earlier authorities and relevant legal principles-and, while in 42 Cal WN 1191: (AIR 1938 Cal 740) (A) (Biswas, J., sitting with Costcllo, J.), (he two interests were separately and independently valued and the rule of proportion was applied, in the other the lessee's interest was found fairly capable of a satisfactory valuation with much greater certainty than the lessor's and so the lessee was awarded that assessed value of his interest and the residue was left over for the lessor.

25. The foregoing discussion makes it plain that, in apportioning the compensation money between the landlord and the tenant, the Court will have to bear in mind the two modes of apportionment enumerated in (1) and (2) above and will apply that which suits the particular case or the facts before it. In doing so, it will, of course, consider the possibility of valuing both the interests and, failing there, it will pay due attention to the comparative degree of certainty of the one or the other of the two valuations and then apply the suitable method of apportionment according to is finding on that question. The use of the word 'apportionment', however much it may suggest the rule of proportion, does not necessarily exclude method (1). particularly when it is not possible to value both the interests or when they cannot be valued with the same degree of certainty even approximately.

26. It is also the duty of Court to prevent obvious or gross injustice and, as already stated, that may sometimes assist in the determination of the correct method of apportionment and in checking up whether the correct method is being applied, (vide in this connection ILR 53 Cal 407: (AIR 1926 Cal 846) (I), already cited). In general, however, the first method may fairly be applied where one only of the two interests can be conveniently and reasonably valued, while the other cannot, and, where both the interests can be conveniently and reasonably valued with a fair or fairly equal amount of certainty, the second method, based on the rule of proportion, ought to be employed. To such a case the first method should not be applied as its application would be attended with obvious injustice except where the sum total of the two valuations would coincide or practically coincide with the award money or at least reasonably approximatethe same. This is almost self-evident as, in all other cases, the residue part would be either more or less than the value of the corresponding interest and the difference would not be negligible. It is eminently fair in such cases to apply the rule of proportion to distribute the difference between the total award money and the sum total of the two valuations, whether the excess or the deficiency be in the one or in the other, as between the two parties.

27. In the light of the above principles and in view of the circumstances of this case and the materials before us, which make it possible to assess fairly with more or less equal degree of certainty the value of both the lessor's and the lessee's interest, we deem it proper to apply the rule of proportion for apportioning the compensation money between the lessee appellant and the respondents, representing the lessor's interest.

28. In calculating the values, however, for applying the rule of proportion, it will be useful to remember that the potential values of the two interests (by which, of course, we mean the present values of their potentialities) should not be altogether disregarded. More is not necessary for purposes of this case, and, in our opinion, in no view, can it be reasonably contended that Section 23 of the Land Acquisition Act, even as amended by the Calcutta Improvement Act (vide Item 9 of the Schedule), which, by the way, is the relevant statute for our present purpose, prevents potentialities of the disposition of the acquired property at the relevant date (which, for convenience, we may call the present disposition) from being taken into account for purposes of valuation or apportionment. The statutory prohibition or injunction, even taking it at its worst, does not certainly go beyond ruling out contemplated changes of the present nature or character of the property or direct user, inconsistent with or impossible in its present disposition or state or condition without altering its character. Present disposition or disposition at the relevant date merely connotes the present nature or character of the property, or its nature or character at the relevant date. It does not go further to restrict the value to its present actual user without regard to the potentialities of the property as it is or the possibilities or potentialities of user of the property in its present state or condition, that is, not involving change of its character. Otherwise, of bare vacant land, lying unused and yielding no income at the relevant date, there would be no value for purposes of acquisition and the owner would not get any compensation. That certainly was not the object of the amendment and cannot reasonably be held to be the intention of the statute. It may, therefore, be fairly taken that, at least, the potentialities of the acquired property in its present state or condition, that is, without altering its present disposition (character), would be relevant even for purposes of the amended Section 23. Nothing further need be said on this point inthe present case and we prefer not to express any opinion on the broader questions, namely, whether the amendment would be altogether irrelevant in apportionment cases, as held by Das and Das Gupta JJ. in F. A. No. 80 of 1948 (Cal) (J), already cited, or whether it would affect the general rule of potentialities in matters of valuation as laid down by the Privy Council in Narayana Gajapatiraju v. Revenue Divisional Officer, Vizagapattam, 66 Ind App 104: (AIR 1939 PC 98) (K), and impliedly recognised in 32 Cal LJ 137: (AIR 1920 Cal 959) (H), supra, at p. 139 (of Cal LJ): (at p. 960 of AIR), as applying to cases of apportionment as well. It is to be noted, however, that in 66 Ind App 104: (AIR 1939 PC 98) (K), the Privy Council, in applying the rule of potentialities, took the land as it then stood (vide page 131 (of Ind App): (at p. 109 of AIR) which, prima facie at least, conveys reference to its present disposition. Thus there is considerable force in Mr, Gupta's submission that the legislature in amending Section 23 of the Land Acquisition Act for purposes of the Calcutta Improvement Act did not really intend any change in the law so as to exclude from consideration all potentialities of the acquired property, - and not merely remote possibilities or potentialities, - in cases of acquisition under the Calcutta Improvement Act. Remote possibilities must no doubt be disregarded as ruled by their Lordships in 66 Ind App 104 at p. 115: (AIR 1939 PC 98 at p. 102) (K), and possibilities only and not realised possibilities should be taken into consideration. But, subject to these restrictions, the possibilities of the acquired property, that is, their present value, should normally be taken into account in assessing or apportioning compensation and, prima facie at least, the law does not seem to be otherwise under the Calcutta Improvement Act.

29. In the course of arguments, our attention was drawn by Mr. Shome to the two decisions of this Court in the cases of Harlsh Chunder Neogy v. Secretary of State, 11 Cal WN 875 (L), and Manindra Chandra Nandy v. Secretary of State, 18 Cal WN 884: (AIR 1914 Cal 198) (M), which construed a similar section (Section 557) of the Calcutta Municipal Act, 1899 (Act 3 of 1899) and it was contended by; him that the cases cited were authorities in his favour in support of his extreme proposition that under Section 23 of the Land Acquisition Act as amended by the Calcutta Improvement Act no potentiality or possibility can or should be taken into consideration in valuing the interests involved and that the same should be evaluated on actualities alone. We are unable to accept this contention. The decisions cited do not, in our opinion, really preclude consideration of potentialities - not remote - attached to the property in its present disposition which, as already explained, means its present state or character. Rather, they seem' to support such consideration when they speak of 'market value of the property as it is' which at least includes its reasonable potentialities in the present state or condition, Allthat the two decisions seem to exclude is possibilities or potentialities on a contemplated change of character of the property, e.g. bustee land considered as valuable building site. We are not prepared to read them as imposing any further restriction on potentiality consideration. We have also given our own views on the amendment and we have held that they do not exclude all potentialities from consideration. It is permissible, therefore, to take into consideration potentialities of the acquired property as it is which alone properly arise in the present case and, in calculating the values of the two interests involved herein, we have actually confined ourselves only to such potentialities. That is sufficient for our present purpose and we need not go further. In the facts and circumstances before us, there is no scope for any other potentiality and no contemplated change of the nature or condition of the property or what we may technically call its present disposition as distinguished from the manner and extent of its present actual user appears to be within a reasonable range of possibility in the present case so as to need consideration in this appeal. We have thus kept strictly within the bounds of law. Further discussion is unnecessary and we leave out the bigger question or questions for consideration on an appropriate occasion.

30. Bearing in mind what we have said above, the relevant calculation in the present case would be as follows :

(i) Value of the lessee's interest. Net rental of Rs. 2,000/- to be capitalised at 8 per cent, security at 36 years purchase. That gives us Rs. 2,000/- 11,717 Rs. 23,434/-

(ii) Value of the lessors' reversions : Award for land and building .. Rs. 1,65,625/-

Present value of Re. 1/- in 36 years at 5 per cent. .17,266 :

Therefore, value of the lessors' reversion is Rs. 1,65,625/- ,17,266 Rs. 28,597/-

The proportion then would roughly be 23434/28597 23434/28597 which means that the lessee's share would be 23434/52031 23434/52031 and the lessors' 28597/52031 28597/52031 .

31. The total award money including statutory allowance is Rs. 1,93,535-10-8 pies. The distribution in the above proportion would give us the figures of Rs. 87,165-8-3 pies in the lessee's 23434/52031 23434/52031 share and the remainder, namely, Rs. 1,06,369-14-5 pies which corresponds roughly to the other proportion 28597/52031 28597/52031 in the lessors' share. Unless therefore, the respondents' cross-objection succeeds, this appeal will have to be allowed and the learned President's award will have to be varied by awarding Rs. 87,165-8-3 pies to the lessee appellant and the balance of Rs. 1,06,369-14-5 pies to the respondents.

32. Turning now to the cross-objection, one position should be made clear at once. In the memorandum of cross-objection there was originally a ground taken that the lessee appellant was not entitled to any portion of the compensation money. That was GroundNo. XIV. Ground No. XV related to costs. The other grounds merely attacked the validity of the lease. There was a note appended to the memorandum of cross-objection, immediately after the names, addresses and description of the parties, that the cross-objection was simply for a declaration that the appellant's lease was void and a fixed court-fee of Rs. 20/- only was paid accordingly. It appears further that, on objection by the Stamp Reporter, the respondents refused inter alia to pay ad valorem court-fee on the amount, awarded by the President to the appellant, and ultimately struck out the only ground (Ground No. XIV) challenging that award when the Registrar as Taxing Officer upheld the Stamp Reporter's objection. Ground No. XV also appears to have been deleted. In the circumstances, the respondent cannot be permitted to challenge the award (including the order for costs) in favour of the appellant and the utmost that they can do is to support the President's award in their favour by proving the invalidity of the appellant's lease vide case of Shailesh Chandra Gope v. Bechai Gope, 40 Cal LJ 67 at p. 69: (AIR 1925 Cal 94 at p. 95) (N), and the case of China Venkata Rao v. Satyanarayanamurthy, ILR 1944 Mad 147: AIR 1943 Mad 698 at pp. 699-700 (FB) (O).

33. To the entertainment of the respondents' challenge to the appellant's lease again, there is one preliminary difficulty. The challenge is to the effect that the appellant's lease is vitiated by undue influence. That, however, would make the lease voidable at the worst, which means that the lease will have to be avoided or set aside before the I Court can disregard it. It is at least doubtful if the Land Acquisition Court is competent to set aside a lease. Possibly, if the respondents wanted the lease to be disregarded in the present proceedings, they ought to have taken appropriate steps for having it set aside in appropriate proceedings and, meanwhile, they ought to have applied for stay of the present proceedings. It is, however, unnecessary to discuss tin's question as Mr. Gupta, in resisting the cross-objection, did not rely upon this technical objection but preferred to support his lease on the merits and as, in our opinion the cross-objectors' challenge to the validity of the appellant's lease must fail on the merits. We proceed, therefore, to discuss the question of undue influence as raised by the respondents in relation to the appellant's lease. We propose, however, to be as brief on this point as possible.

34. The document of lease (Ex. K) is a registered document. The lessor executant Bholanath was a literate adult male. The onus of proving undue influence is on the respondents. All that they have succeeded in proving is that the lessee Santosh was the younger sister's husband of lessor Bholanath and that the two were somewhat intimate friends. We do think, however, that by such proof, sufficient foundation has been laid for a finding that they were in fiduciary relationship or that Santosh was in a position of commanding in-fluence to control Bholanath's volition of action. The terms again were not unusual. They were on the other hand, quite natural from the lessor's point of view, having regard particularly to the circumstances prevailing at the time of the lease. Only a few months before the execution of the lease the locality had been the scene of great communal disturbance during the riot period of August 1946. The aftereffect had not yet ceased. It was, indeed, a very difficult time and everything was uncertain. The rent reserved bore a fair proportion to the actual nett collections. The liability for taxes, maintenance and repairs was upon the lessee. On the whole, the lease was quite a fair one and the bargain was not unfair or improvident from the lessor's point of view and the option of renewal did not in thecircumstances of the case affect the fairness of that bargain. Even apart from this, the materials on record sufficiently show that the execution of the lease was Bholanath's own independent action and not due to any undueinfluence of Santosh. The evidence has been fully discussed by the learned President and we agree with him in holding that the lease (Ext. K) was not vitiated by undue influence. The cross-objection must, therefore, fail.

35. In the result, the appeal succeeds in part and it is allowed by varying the learned President's award in the following manner:

36. The lessee appellant would get Rs. 87,165-8-3 pies out of the compensation money of Rs. 1,93,535-6-8 pies and the respondents (lessors) would get the remainder, namely, Rs. 1,06,369-14-5 pies, in place of the amounts of Rs. 30,191-12-6 pies and Rs. 1,63,343-10-2 pies respectively, awarded to them by the learned President. The cross-objection is dismissed.

37. In view of the divided success of the parties, there will be no order as to costs either in the appeal or in the cross-objection. The order for costs, as made by the learned President in the Court below will, however, stand,

Renupada Mukherjee, J.

38. I agree.

P.N. Mukherjee and Renupada Mukerjee, JJ.

39. After the delivery of the above judgment, we were informed by Mr. Shome that the amount actually lying in deposit with the learned President was Rs. 1,91,421-12 as and not the original amount of Rs. 1,93,535-6-8 pies mentioned in our judgment, and that, accordingly, some modification was necessary of the sum or sums directed to be paid to the parties. On verification from records Mr. Shome's information was found to be correct. We, accordingly, directed the appeal to be placed on the list as 'to be mentioned'.

40. We have now heard the learned Advocates on both sides on this particular question. It appears that, out of the gross compensation money of Rs. 1,93,535-6-8 pies payable to the present parties, the Collector paid out a sum of Rs. 2,113-10-8 pies to the Corporation of Calcutta 'on account of taxesdue' in respect of their share of the acquired property and sent the balance only, namely, Rs. 1,91,421-12 as. to the learned President. Admittedly also under the lease Ext. K, the liability for the said taxes which, as it is admitted before us, were for a period covered by the said lease, is of the lessee. The deduction, therefore, should be made from the lessee appellant's share of the compensation money. We, accordingly, direct that the lessee's award of Rs. 87,165-8-3 pies should be reduced by Rs. 2,113-10-8 pies, or, in other words, the lessee appellant will get a sum of Rs. 85,051-13-7 pies and the respondents representing the original lessor Bholanath's interest, the balance, namely, Rs. 1,06,369-14-5 pies, making up the total sum of Rs. 1,91 421-12 as, lying with the Tribunal and available for distribution. Our judgment, dated September 10, 1956, is modified accordingly. This order is to be read as part of our said judgment.


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