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Ala-ul-haq and ors. Vs. the Secretary of State for India in Council and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata
Decided On
Judge
Reported in3Ind.Cas.277
AppellantAla-ul-haq and ors.
RespondentThe Secretary of State for India in Council and ors.
Cases ReferredGovernment of Bombay v. Karim Tar Mahomed
Excerpt:
land acquisition act (i of 1894), section 23 - valuation--present disposition of land--future utility not to be conjectural but estimated by prudent business calculations--frontage and back land, valuation of allowance for prospective rise in rental. - .....chandra bose who has apparently held it for over 40 years. the lease under which he holds the land at present was granted to him on the 30th july 1905, for a period of seven years and at an annual rental of rs. 195. the prior lease granted to him on the 30th november 1884, was at an annual rental of rs. 65 and was also for a term of seven years. the evidence shows, however, that upon the expiry of the lease of 1884, the rent was enhanced to rs. 120 a year which continued till 1905. it appears, therefore, that the land which was held in 1884 on a rental of rs. 63, was held in 1891 at rs. 120, and, since 1905, has been held at rs. 195. the learned district judge has accepted as the basis of his calculation the present rental of the land acquired. he has held that if 20 years' purchase.....
Judgment:

1. This appeal is directed against an award made by the Special Land Acquisition Judge of the 24-Per-gannahs in a proceeding under the Land Acquisition Act. The land acquired is situated in Chitla in the suburbs of Calcutta and covers an area of 6 cottahs 10 chittaks and 17 square feet. The Collector valued the land at Rs. 600 per cottah. The claimant, who is the appellant before this Court, was dissatisfied with this valuation and obtained a reference to the District Judge before whom he claimed Rs. 1,200 a cottah. The District Judge, however, accepted the valuation made by the Collector.

2. The claimant has now appealed to this Court and on his behalf the decision of the District Judge has been assailed on two grounds, namely, first, that the land ought to have been valued at Rs. 1,200, a cotiah, and secondly, that the amount which has been awarded as damages for severance and injurious affection of the other lands of the claimant is inadequate.

3. So far as the second question is concerned, it does not require minute examination. The Collector awarded Rs. 175 as damages for severance and injurious affection, and this has been accepted by the District Judge. No reasons are assigned either by the Collector or by the District Judge for his conclusion. At the same time, the claimant has not been able to place any materials before this Court which would justify a higher valuation. It is faintly suggested that the other land of the claimant has been injuriously affected, and, no doubt, that has been so to some extent. But the materials on which the damages ought to be calculated have not been laid before us, and, as a consequence we do not know to what precise extent the claimant has been damnified by the acquisition. We are, therefore, not in a position to disturb the award in this respect.

4. We shall now turn to an examination of the first ground, for, the substantial question in the appeal relates to the valuation of the land acquired. The land is situated in front of the Chitlabazar and is in the occupation of a tenant Crirish Chandra Bose who has apparently held it for over 40 years. The lease under which he holds the land at present was granted to him on the 30th July 1905, for a period of seven years and at an annual rental of Rs. 195. The prior lease granted to him on the 30th November 1884, was at an annual rental of Rs. 65 and was also for a term of seven years. The evidence shows, however, that upon the expiry of the lease of 1884, the rent was enhanced to Rs. 120 a year which continued till 1905. It appears, therefore, that the land which was held in 1884 on a rental of Rs. 63, was held in 1891 at Rs. 120, and, since 1905, has been held at Rs. 195. The learned District Judge has accepted as the basis of his calculation the present rental of the land acquired. He has held that if 20 years' purchase be allowed on the present annual rent under the lease, the valuation comes to Rs. 3,900, so that if two per cent, is deducted for collection charges, the net award ought to be Rs. 3,822 whereas the Collector has given Rs. 3,825. Before this Court, it has been argued on behalf of the claimant that the award made by the District Judge is erroneous. It has been pointed out in the first place that no allowance has been made for possible increase of rent, and in this connection, our attention has been invited to the circumstance that from 1884 to 1905 the rent has considerably increased. It has also been argued that' 20 years' purchase is too low a basis for calculation. It has further been suggested that the valuation as made by the District Judge is in respect of the landlord's interest only and. that no allowance has been made for the tenant's interest, or, for the landlord's reversion. It has finally been contended that the proper basis on which the land ought to be valued in the use to which the land might have been put by the claimant if it had not been acquired. In support of this argument, it has been pointed out that the land on the other side of the road is used for the purpose of godowns and that the rent obtainable from those lands shows that the value of the land acquired is at least Rs. 2,000 a cettah. The laarned Vakil for the appellant has on this basis suggested that the land now in dispute should be valued at Rs. 2,000, so far as the front portion is concerned, and at one-half of the above rate, so far as the back portion is concerned.

5. There can be no question that in valuing land which has been taken for public purposes under the Land Acquisition Act, the fairest and most favourable principle of compensation is to enquire 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 owner could dispose of it. This principle was recognized by this Court so far back as 1876 in the case of Prem Chand Burred v. The Collector of Calcutta 2 C. 103. With reference to this decision it may be pointed out that the most lucrative and advantageous way in which the owner can dispose of the land is to be determined with reference to its future utility, but it must not be entirely conjectural. As was observed in the case of Rajendra Nath Banerjee v. Secretary of State for India 32 C. 343 future utility is a thing that people have an eye to in buying land and the market price of the land is affected by it; such future utility must, however, be estimated by prudent business calculations and not by mere speculative and impractical imagination. See also Fink v. Secretary of State for India 34 C. 599. The same principle has also been adopted by the Bombay High Court in In re Dorabji Cursetji Shroff 10 Bom. L.R. 675, Trustees for the Improvement of the City of Bombay v. Karsondas Nathu 10 Bom. L.R. 688 : 33 B. 28 : 1 Ind. Cas. 451 In re Dhanjibhoy Bomanji 10 Bom. L.R. 701; Collector of Poona v. Kashinath Khasghuala 10 B. 585 and In re Munji Khetsey 15 B. 279 In the last case it was pointed out that 'in the neighbourhood of a town where building was going on, it would be unfair to assess the value of land upon its present income if there is a fair probability of the owner being able, owing to its situation, to sell or lease the land for building purposes.' Substantially the same principle was recognised by the Judicial Committee in The Secretary of State for Foreign Affairs v. Charles-worth Pilling, & Co. (1901) Appl. Cas 373 : 70 L.J.P. C. 25 : 84 L.T. 212 : 28 I.A. 121 : 26 B.1. If now these principles are applied to the case before us what is the result? It is pointed out that there is a row of go downs across the road and immediately opposite to the acquired land. There are also two godowns on a portion of the land acquired. The income derivable from these godowns, after allowance is made for the cost of their erection, indicates that the value of the land would be about Rs. 2,000 per cottah. This result, it is worthy of note, is obtained after very liberal deductions are allowed; for instance as the learned District Judge points out in his judgment, this figure is obtained after 10 per cent, of the gross income, has been deducted for vacancies, 10 per cent, for repairs and 19 1/2 per cent, for Municipal rates. After all these deductions have been allowed, the valuation at 20 years' purchase comes to about Rs. 8,000 for 4 cottahs of land, which shows that the value of each cottah is approximately Rs. 2,000. Here, however, one circumstance must not be overlooked. No doubt if new godowns were erected on the front portion of the land acquired, they would not necessarily fetch the same rental as the old godowns across the road, new godowns probably would have to be let out at lower rates than old godowns where shops have been already established. Another element also has to be taken into consideration, namely the possible effect of the establishment of additional godowns in the locality in the way of lowering the rent to some extent. These considerations, however, do not effect the present case as a liberal margin has been left by the District Judge in arriving at the conclusion that the land ought to be valued at Rs. 2,000 on the basis of the rent derivable from the godowns. We, therefore, accept the contention of the claimant that the front portion of the land acquired should be valued at. Rs. 2,000 per cottah. But, this necessarily leads to the two important questions, as to the extent of the front land, and, the mode of valuation of the back land. It is not disputed on behalf of the appellant that this basis of calculation is applicable only to the front portion to a depth of 16 1/12 feet as in the case of the godowns situated on the opposite side of the road. Now as the frontage of the land is stated to be 75 feet, the portion upon which the hypothetical godowns could be built, would cover an area of 1 3/4 cottahs. There would thus still remain in the back an area of 4 cottahs and 14 chittaks. How is this portion to be valued? It was suggested on behalf of the appellant that this portion ought to be valued at half the rate allowed for the front portion. In our opinion this is an unfair estimate. As observed in the case of Government of Bombay v. Karim Tar Mahomed 10 Bom. L.R. 660 : 33 B. 325 : 3 Ind. Oas. 273 it cannot be taken as a hard and fast rule that back land must be worth half the frontage land. The specially high value of the front portion in the present , case is due to the possibility of the erection of godowns which might be let out at a very profitable rate of rent. The back : portion evidently cannot be used for any such exceptionally advantageous purpose. But, although there are no materials on the record, on which we can say with absolute precision what ought to be taken as a fair value for the back land, it is manifest that if the front portion is valued at Rs. 2,000 a cottah the award which has 'been made by the District Judge for the whole is insufficient; because if Rs. 2,000 is allowed for the front portion of 11 3/4 ottahs, the remainder according to the award works out at about Rs. 65 per cottah, and there can be no possible doubt that Rs. 65 for the back land is too low a rate upon the materials before us, we are of opinion that if the front portion is valued at Rs. 2,000 a cottah, the back portion should be valued at not lower than one-fifth of that rate, namely Rs. 400, a cottah. If this is done, the total value works out to Rs. 5,450 which gives approximately a rate of Rs. 820 per cottah. In our opinion the claimant is entitled to an award at this rate.

6. We may add that our conclusion is confirmed by other considerations, for the case maybe examined from other points of view to some of which we shall now refer. The present rental of the land is Rs. 195 per year. If we assume that the rent will never vary, in other words that the maximum possible rent has been reached, and if the claimant is awarded a sum which if invested in Government security would bring him that income he will require Rs. 5,570, which would work out at the rate of Rs. 840 a cottah, and at the present depreciated value of Government securities, the rate would be somewhat lower. A somewhat higher rate is reached if we turn our attention to a document which was produced in the Court below on behalf of the Secretary of State, namely, the estimate prepared on the 5th November 1903 with a view to the possible acquisition of this land. There the rate was assumed to be Rs. 600 a cottah. The rent payable to the landlord at the time was Rs. 120 a year; that is to say, the estimated value of a cottah at that time was five times the annual rental for the whole land. If we assume that the same proportion is applicable now, the rate would work out at Rs. 975 a cottah. This, however, obviously is too high a rate, for as is pointed out on behalf of the respondent, the estimate of Rs. 600 a cottah may legitimately be assumed to have included at least a fair allowance for the prospective rise in the rental. If so, it would not be fair to adopt the proportion indicated by the estimate of 1903, as applicable without any deduction to the present circumstances. But if we assume that the estimate of 1903 included allowance for a possible rise of rental by, say 25 per cent., that is, is taken to have been leased on a possible rental of Rs. 150, the proportion would be four to one, instead of five to one, and, if we take that proportion as the basis calculation upon the present actual rental, the rate works out at Rs. 780 a cottah. Let us next take another possible point of view from which the case may be considered. The present rental is as we have already stated Rs. 195. The rent increased from Rs. 63 to Rs. 120 in 7 years, and from Rs. 120 to 195 in 14 years. For the first period, this increase works out at Rs. 8 a year, and, for the second period, at the rate of Rs. 5 a year. We have, therefore, some basis upon which to form an estimate of the possible rise of rental in the immediate future. It we take the rate at which rent has increased during the last period of 14 years and consider the possible rental during the next 21 years, the rental payable during the seven years terminating the period of 21 years will be Rs. 265, and if we take the average of the rental for the 21 years, it would work out at the rate of Rs. 230. If we capitalize this rental of Rs. 230 at 25 years' purchase, it works out at Rs. 885 a cottah; on the other hand, at 20 years' purchase, it works out at Rs. 708 a cottah. But, if we accept the present rental, allow for no possible increase, and work it out at 25 years' purchase we obtain an intermediate result, namely, Rs. 736 a cottah. All these figures indicate that the rate at which the award has been made by the District Judge is too low and the error which vitiates his judgment is that he does not make any allowance for possible increase in the present rental which has been fixed by the lease for a term of seven years only. But when regard is had to the purpose for which the land could, in ordinary course, be used, as also to the fact that the land in the neighbourhood has been increasing in value, there can be no question that some allowance ought to be made for possible increase in the rental in the near future. Upon all these grounds we hold that the award made by the District Judge must be varied and the land acquired valued at Rs. 820 a cottah, for the area now ascertained on measurement. Subject to this variation, the award will be confirmed.

7. So far as the costs are concerned, we direct that each party do pay and receive cosls, both here and below, according to his failure and success in this Court. We assess the hearing fee at Rs. 150.

8. Claimant No. 4, who is one of the respondents in this appeal, will neither pay nor receive any costs.


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