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Province of West Bengal Vs. Basant Properties Ltd. - Court Judgment

LegalCrystal Citation
CourtKolkata High Court
Decided On
Case NumberA.F.O.D. No. 35 of 1948
Reported inAIR1956Cal36,60CWN336
ActsDefence of India Rules, 1939 - Rule 75A; ;Interest Act, 1839 - Section 1; ;Code of Civil Procedure (CPC) , 1908
AppellantProvince of West Bengal
RespondentBasant Properties Ltd.
Appellant AdvocateJajnewar Majumdar and ;Nani Gopal Das, Advs.
Respondent AdvocateBhabani Prasun Chatterjee, Adv.
DispositionAppeal dismissed
Cases ReferredMaine and New Brunswick Electrical Power Co. Ltd. v. Alice M. Hart
- .....applied,11. the first argument may at once be repelled. the enigmatic expression 'there can 'be no damages on damages' which is relied on as the supporting principle is borrowed from the law of torts. that epigram, however, which has found a place in that special branch of the law, has no application to cases of statutory compensation for compulsory requisition of property by the state in the exercise of its sovereign power.these are not cases of tort. compensation, or call it by whatever name, -- payable for such requisition does not strictly arise from any breach of the law or legal duty. it is fundamentally different from damages, recoverable for torts committed. in the one case, the claim is founded on the breach of the legal duty, in the other it arises out of a perfectly legal.....

P.N. Mookerjee, J.

1. This is a compensation appeal, arising out of the requisition of a house under Rule 75A of the Defence of India Rules. There was the usual reference to arbitration under Section 19 of the Defence of India Act as the Collector's offer of Rs. 500/- p.m. as the monthly compensation was not accepted by the claimant Basant Properties Ltd., who claimed Rs. 1500/- p.m. and as, in the circumstances, no agreement could be reached under Section 19(1)(a) of the Act.

The learned Arbitrator fixed the monthly compensation at the increased figure of Rs. 800/-p.m. and the Government, being dissatisfied, has filed the present Appeal. The claimant also has filed a cross objection for a higher monthly compensation.

2. The requisitioned premises (No. 3/1 formerly No. 5 Raja Santosh Road, Alipore) comprised about 4B and 3K of land and a new two-storeyed building. The floor space was about 4200 sq. ft excluding bath rooms and narrow verandahs. The house is a decent and luxurious house, well-built and situated in a good locality, and it was practically a finished house at the time of requisition.

3. The requisition was made in April 1944 and possession was taken in or about September that year. According to the Government Surveyor (O. P. W, 1) the price of land of the requisitioned premises was between Rs. 1700/-to Rs. 1800/- per cottah at the time of requisition. He also estimated the cost of the structure at about a lakh of rupees. The claimant's figure for the building was Rs. 2,68,000/.

The land was purchased by the claimant, sometime in 1941, for the total price of Rs. 1,28000/-, roughly representing Rs. 1500/- per kattah and it was elicited in the cross examination of the Government witness (O. P. W. 1) that, between 1941 and 1944, the price of land had risen by about 20 to 25 per cent.

4. Two comparable premises were placed before the Arbitrator viz. Premises Nos. 10 and 13 Raja Santosh Road, and one of them namely, premises No. 10, was visited by the Arbitrator on 29-11-47 and we have his report or notes of inspection on the record. This premises No. 10 had a compound of about a bigha and, according to the learned Arbitrator, the requisitioned Premises No. 3/1 were more comfortable and more open than No. 10 although the latter premises were on the main road while the former were in the interior.

Premises No. 13 had a compound of about a faigha and a half. The floor area of No. 10 is not in evidence but that of No. 13 was about 4350 sq. ft.

5. The Government Surveyor (O. P. W. 1) recommended Rs. 15/- per 100 - sq. ft. of the floor space as the proper letting value of the disputed premises at the time of requisition and in this he took into consideration a four bigha compound. On this basis, the monthly compensation would come up to Rs. 630/- but the Collector offered only Rs. 500/- p.m. evidently disregarding the advantage of the very big compound. The learned Arbitrator has deducted about 2 bighas for the land underneath the structure and for a normal compound about the size of a tennis lawn and the drive and for the private lane, leading from the main road to the premises proper.

The remaining two bighas he has treated as free or surplus land, available for independent use. He has accepted the Collector's figure of Rs. 500/- for the house and its normal adjunct (the drive and the compound along with the private lane) and has added a further sum of Rs. 300/- p.m. for the two bighas free land on the basis of a five per cent return on its value of Rs. 70,000/- at the rough rate of Rs. 1750/-per kattah with some allowance for taxes. He has thus assessed Rs. 800/- p.m. as. the fair monthly compensation.

6. Before us the respective contentions of the parties, as urged before the learned Arbitrator, have been repeated in support of the appeal and the cross objection. The Government has sought to support the Collector's offer of Rs. 500/- p.m. and the claimant has struck to its original claim of Rs. 1500/- p.m. We are unable to accept either and, although we do not accept also the Arbitrator's figure or figures, we endorse the broad principle, upon which he was proceeded, and we reject the Government's submission to the contrary.

7. The appellant Province (now the State of West Bengal) has argued that the learned Arbitrator was wrong in splitting up the vacant land, adjoining the house, into two parts, namely, a normal compound and the drive etc. and a free area of about 2 bighas, and the learned junior Government Pleader has been at considerable pains to support the Collector's standpoint of not treating this surplus land (about 2 bighas) as available for independent use.

We are, however, unable to accept this argument. It is neither just nor proper to treat this vast surplus area merely as an adjunct to the house. It is certainly not necessary for its convenient use and, for that purpose, the normal compound and the drive etc. allowed by the learned Arbitrator, are sufficient, and the house together with the same should be treated as an independent lettable unit, leaving the surplus two bighas as a separate item.

That was the principal submission on behalf of the Government but we are unable to accept it. We are also unable to hold, on the evidence before us, that the letting value of the unit, comprising the house, should be anything less than Rs. 14/8/- per 100 sq. ft. (inclusive of taxes). That was the rate for the other Premises No. 13 which does not seem to be any better than the disputed premises.

It is also fairly supported by the rate of Rs. 15/- per 100 sq. ft. for the Premises No. 10 which stands on the main road and thus has an advantage over the disputed property but this advantage is, to some extent at least, offset by the additional comforts of the requisitioned premises and, in our opinion, Rs. 14/8/- per 100 sq. ft, (inclusive of taxes) would be a fair rate for the requisitioned house item in comparison with the said two Premises Nos. 10 and 13.

This gives us a figure of Rs. 609/- p.m. (inclusive of taxes) and to it must be added the letting value of the two bighas free land. According to O. P. W. 1 the price at the relevant time would be Rs. 1700/- to Rs. 1800/- per kattah. On this evidence of the Government witness, we feel justified in taking the price of land Rs. 1800 per kattah which is supported also by the claimant's material of Rs. 1500/- per kattah of 1941 plus a rise of 20 to 25% over it in 1944 (vide evidence of O. P. W. 1) giving us roughly the same figure of Rs. 1800/- per kattah.

On this calculation the value of this second unit or the surplus free land of 2 bighas would be Rs. 72,000/- and a five per cent return, as allowed by the learned Arbitrator which seems to us to be quite reasonable would give us Rs. 300/- p.m. To this must be added an allowance of 10% for taxes, that is, Rs. 30/- p.m. The total monthly figure would then come to about Rs 939/- and, in the circumstances, we would put the fair and reasonable monthly compensation for the entire requisitioned premises at Rs. 940/- in round figures, inclusive of taxes.

8. The above assessment is also fairly supported by the valuation theory. The price of the entire 4B-2K-11 chs of land which includes the fairly long private passage from the main road may reasonably be taken at an average rate of Rs. 1700/- per kattah which gives a total of Rs. 1,40,000/- in round figures and on the evidence before us we are inclined to put the building at Rs. 1,10,000/-. We would thus calculate the value of the entire property at Rs. 2,50,000/-.

On this valuation, a four and a half per cent return, which, on the whole, we consider fair for the requisitioned property, -- the land and the building, will yield a monthly income of about Rs. 938/- or 940/- in round figures.

9. The question of interest is somewhat intriguing but we have been able to reach an agreed and unhesitating conclusion in the matter. In our opinion in these requisition proceedings, the Court has ample power to award interest by way of damages on the compensation money although the answers to the question as to whether Interest should be awarded in a particular case as also the quantum of such interest would undoubtedly depend on the facts of such individual case and upon the Court's judicial discretion.

We are unable to accede to the submission of the State's learned Counsel that, however long the payment of compensation might be delayed as withheld, law, as it stands at present does not authorise the award of any interest by way of damages for wrongful detention or withholding of the money, and we reject it without the least hesitation.

10. Two arguments are put forward in support of this submission. It is argued first that the monthly compensation itself is by way of damages and further damages on such compensation cannot, therefore, be allowed. It is urged next that, as there is no provision in law, statutory or otherwise, in that behalf and there is also no question of contract in this matter from the very nature of things -- Courts are powerless to award interest by way of damages and the principle, underlying Sections 28 and/or 34 of the Land Acquisition Act, cannot, be invoked or applied,

11. The first argument may at once be repelled. The enigmatic expression 'there can 'be no damages on damages' which is relied on as the supporting principle is borrowed from the Law of Torts. That epigram, however, which has found a place in that special branch of the law, has no application to cases of statutory compensation for compulsory requisition of property by the State in the exercise of its sovereign power.

These are not cases of tort. Compensation, or call it by whatever name, -- payable for such requisition does not strictly arise from any breach of the law or legal duty. It is fundamentally different from damages, recoverable for torts committed. In the one case, the claim is founded on the breach of the legal duty, in the other it arises out of a perfectly legal action, taken by the State on the strength of its sovereign or statutory powers and, indeed, the statute itself provides for it.

Strictly speaking, therefore, the claim for damages or interest for non-payment of withholding of this statutory compensation after the accrual of the claimants right to the same is not a claim for 'damages on damages' within the meaning of that epigram of the law of Torts. The principle, relied on by the learned Counsel, has, therefore, no application and cannot assist him in resisting the claim for interest by way of damages for wrongful detention or withholding of the compensation money.

12. The second argument is also too wide. It is true that there is no express provision of law, authorising award of interest in such cases, as in the two Sections 28 and 34 of the Land Acquisition Act. It may be possible also to distinguish the case of -- 'Province of Bengal v. Pran Kissen Law and Co.' : AIR1950Cal498 , and the authorities, relied on therein, on the ground that those were cases of acquisition where the analogy of sale, and, to that extent, the principle, underlying Sec. 55(4} of the T. P. Act, was found applicable, and to argue therefrom that the question of interest by way of damages or otherwise in those cases stood on a different footing.

That, however, would not affect the general equitable principle which is well recognised in law and which is almost a part of the law of the land that, for wrongful detention or withholding of his money a party may be relieved in damages, particularly when the other party is enjoying the equivalent or corresponding benefit. The point for consideration in each case will be when the wrongful detention began.

That may vary from case to case and the negligence of the unreasonableness of the attitude of a particular party and the nature of the claim may well be relevant factors to be taken into consideration in that connection. We do not think that this view is really opposed to the dictum of the Privy Council in the case of 'B. N. Rly. Co. Ltd. v. Ruttanji Ramji' .

On the other hand, it finds support from the observations and the decision of the Board in the case of 'Prasanna Deb Raikat v. Tanjina Khatun' . It is also supported by the recent Bench decision of this Court in the case of 'Surpat Singh v. Province of Bengal' F.A. No. 51 of 1948, decided by Das Gupta and Renupada Mookerjee JJ. on 15-3-1953 (Cal) (D). We would, therefore, accept the said principle and proceed to act upon it.

13. We are quite conscious that the Madras High Court has expressed a different view on the point (vide 'Associated Oil Mills Ltd. v. Provincial Government', Madras AIR 1948, Mad. 266 (E), and 'District Collector of Krishna v. Pulavarthi Viswanadam' : AIR1953Mad867 . We do not, however, feel persuaded to subscribe to that extreme view. We have already dealt with the inapplicability of the maxim 'no damages on damages'' to these requisition cases which, apparently, guided 'the said Madras decisions.

The other possible ground which may be urged in support of the Madras cases, namely, the nature of the proceedings, in which the claim in its original shape may be said to be for an unascertained sum, will also be examined by us in the course of this judgment and trie true meaning, scope and limits of the underlying rule or principle' will be duly explained by us to show how and why and to what extent these requisition claims should be kept outside the mischief of the said Rule.

It is to be noted further that the first ('AIR 1948 Mad. 256(E)') of the above two Madras cases has already been expressly dissented from by this Court in 'F. A. No. 51 of 1948', (Cal.) (D) already cited: Vide also the : AIR1950Cal498 , and, as to the second, it may be pointed out that it contains merely an observation in the nature of an obiter dictum on the present question of interest, while agreeing with this Court's dissent; 'vide : AIR1950Cal498 with the earlier Madras case 'AIR 1948 Mad 256 (E)'.

With these remarks on the two Madras cases, we shall proceed to the other decisions, cited in argument.

14. In the Judicial Committee at least recognised that, in a case, coming under the Interest Act (32 of 1839), interest may be awarded. Section 1 of that Act contains a proviso which runs as follows:

'Provided that interest shall be payable in all cases in which it is now payable in law.' This obviously includes cases where interest is payable by way of damages under some recognised principle of equity and, in our opinion, such equity arises when money is wrongfully withheld or detained. This is supported by Lord Westbury's celebrated dictum in the case of 'Caledonian Railway Co. v. William Carmichael' (1870) L.R. 2 H. L. Sc. 56 (G) often quoted in text books and judicial pronouncements, that 'interest can be demanded by virtue of the principal sum of money having been withheld and not paid on the day when it ought to have been paid'.

Interest was, no doubt, refused in that case '(1870) 2 H. L. Sc. 56(G)', but that was because the claimant was found guilty of unreasonable delay in applying for ascertainment of its claim: Vide in this connection 'Fletcher v, Lancashire arid Yorkshire Railway Co.' (1902) 1 Ch. 901 at p. 910(H) (per Buckley J.).

We do not think that the equity, underlying Lord Westbury's dictum, was in any way affected by anything said in the judgments of any of the other Law Lords in that case '(1870) 2 H. L. Sc. 56(G)', or that it was intended to be affected by the Privy Council in '. In this latter case, the Judicial Committee was merely laying stress on the nature of the claim, namely, that the principal sum was unascertained at the date of the suit, and they purported to lay down that, until the said sum has been ascertained or the time for its ascertainment has arrived, no question of wrongful withholding or detention to justify claim for interest would arise.

This may rule out any claim for payment of interest or the obligation or liability therefor prior to the arbitrator's award but it would certainly not tie down the hands of the Court in the matter of ordering payment of interest in appropriate cases from the date of the award, subject to such adjustment as the Court might deem proper in the exercise of its discretion in the facts of a particular case.

This is on the assumption that the ruling cited , applies to cases of statutory compensation for State requisition and, in making such assumption, we have proceeded on the barest principles of minimum justice to a person who is deprived of the use and enjoyment of his property by an act of the State.

The assumption, however, is open to question, as a fundamental distinction may well exist between cases of ordinary debts or money claims and such claims, arising out of a State requisition and under a Statute. It may also be pointed out that in the case before the Judicial Committee, the claim arose out of a contract and the relationship between the parties was more akin to that of a debtor and a creditor and, from that point of view, there was some justification for applying the tests, laid down in the 'London Chatham and Dover Railway Co. v. S. E. Rly. Co.' (1893) A.C. 429(1) and 'Maine and New Brunswick Electrical Power Co. Ltd. v. Alice M. Hart' AIR 1929 PC 185 (J).

Claims for interest by way of damages on statutory compensation fall rather within the principles, discussed in '(1870) 2 H. L. Sc. 56(G)', from which we have already quoted the relevant dictum of Lord Westbury, and that', in our opinion, supports the view we have expressed on this Question of interest. That view, as we have already said! is also supported by the later Privy Council case of , to which reference has already been made by us.

15. Courts in this country have often been called upon -- and,' indeed, their powers in this respect have seldom been questioned to decide cases according to principles of justice, equity and good conscience. Normally, no doubt English decisions and the principles, underlying them or derived from English Equity cases, have served and do serve as useful guides in this matter, but we are reluctant to Introduce English principles which are admittedly unjust and inequitable into our system of justice, equity and good conscience in the absence of compelling authority or to extend their application beyond the rigid limits of such authority.

We have listened with the utmost patience to the extreme argument that for wrongful detention of money, no damages or interest in lieu thereof, can be awarded and the cases of and 'AIR (1929) PC 185 (J)', have been cited as authorities in support thereof. We have already discussed , and explained the limits of that authority.

The same or almost similar remarks would also apply to the other two cases which were both cases of contract and debts, arising therefrom. In the latter of these two authorities 'AIR 1929 PC 185 (J)', the case was treated as exclusively one of contract, which having been executed, the equitable jurisdiction was held excluded, and, in the other '1893 AC 429 (I)', the matter was held concluded by practice.

It is, however, significant to note that, in this case '(1893) A. C. 429(1)', last cited, at least three of the Law Lords (Lord Herschell L. C. Lord Watson and Lord Shand), including the Lord Chancellor, sufficiently indicated in their judgments that the practice was unjust and unsatisfactory, Lord 'Shand going to the length of saying that it was productive of 'gross Injustice'.

These cases however, do not, in the light of the distinctions, pointed out above, affect the present case, and, in any event, we would not be prepared to extend this English rule of inequity to our equity jurisprudence, -- not certainly beyond the limits of the case in , which dealt with the stage when the sum in question was unascertained.

16. For our present purpose, it is unnecessary to say more on this question of interest as, in the circumstances of this case, we are going to award interest only from the date of the Arbitrator's award (1st December 1947) and that, again, only upon a much lesser amount (Rs. 140/-p m.) than the compensation figure (Rs. 800/-p. m.) awarded by the Arbitrator, which figure itself has been found by us to be inadequate and has been enhanced to Rs. 940/- p. m.

There can be no doubt that, at least to the extent of Rs. 800/- p. m. the compensation became ascertained from the date of the Arbitrator's award, and, accordingly, no objection can legitimately be taken to the award of interest from that date on the lesser figure of Rs. 140/-p. m. This is fully supported by the Privy Council decision in .

17. We may add further that, in these requisition cases one other consideration may be pertinent on this question of interest. Under the law, the claimant is entitled to a 'just award' from the Arbitrator (vide Rule 15 of the Rules, framed under Section 19, Sub-sections (2) and (3) of the Defence of India Act, 1939).

That may well mean that the fullest compensation ought to be made for the loss which the claimant might suffer on account of the requisition at the Hands of the requisitioning authority. Compensation for deprivation or loss of possession or user is payable, at least from the date, the requisitioning authority takes possession of the requisitioned property.

If this compensation is assessed on a monthly basis it is payable every month, and, in case of non-payment, the owner should have interest by way of damages unless some equity stands in his way or unless the liability of the requisitioning authority in this behalf is to be excused on some considerations of equity arising from the facts and circumstances of the particular case.

Any other view would possibly militate against the making of a 'just award' which law enjoins upon the Arbitrator and, necessarily also, upon the Appellate Court or authority. This is, no doubt, an extreme view but it has certainly a good element of plausibility.

For our present purpose, however, as we have already said, it is unnecessary to go to this length or to examine its merits or full implications.

18. In the instant case before us, the State took possession of the requisitioned premises on 12-9-1944. The claimant demanded a monthly compensation of Rs. 1500/-. The Collector's offer was Rs. 500/- p. m. This may be regarded as the stage of offer and counter offer or the stage of negotiation and, for purposes of this case, we are prepared to concede that, until the stage of determination came, which may be by agreement or arbitration, no question of wrongful detention or withholding of money would arise and no liability for payment of interest by way of damages would attach to the requisiting authority.

The Arbitrator's award was for Rs. 800/-p. m. and it was made on 1-12-1947. We have now found that the award should have been for Rs. 940/- p. m. The claimant, however, persisted in its unreasonable and exorbitant demand for Rs. 1500/- p.m. There was also no ground, taken on the question of interest in the claimant's cross objection filed in this Court, and the point was allowed to be raised only at a late stage of the hearing by special leave.

In these circumstances, it seems to us that the ends of justice would be properly met and our discretion in the matter would be properly exercised, if we allow the claimant interest by way of damages only on the excess amount of Rs. 140/- p. m. over the arbitrator's award from the date thereof, namely, 1-12-1947.

We only desire to add that we are attaching no particular significance to the above description 'Excess over the arbitrator's award' but we are using it for convenience, as the said excess amount coincides with what, in our view, should be taken as the principal sum in this case for calculating the interest.

19. In the above view of the matter, we dismiss the appeal and allow the cross objection only to the extent of an enhancement of Rs. 140/-p. m. over the monthly compensation of Rs. 800/-of the Arbitrator and we modify his award accordingly. We also allow the claimant interest by way of damages at the rate of 6 per cent p. a. from 1-12-47 on Rs. 140/- p. m. out of the said monthly compensation of Rs. 940/-.

The claimant will also be entitled to proportionate costs in his cross objection. In the appeal, the parties will bear their own costs.

R.P. Mookerjee, J.

20. I agree.

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