Skip to content


Mohini Mohan Banerjee and ors. Vs. Secretary of State for India in Council and ors. - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported inAIR1921Cal193,67Ind.Cas.25
AppellantMohini Mohan Banerjee and ors.
RespondentSecretary of State for India in Council and ors.
Cases ReferredGovernment of Bombay v. Merwanji Muneherji
Excerpt:
land acquisition - principle of assessing compensation--potential value--operative effect of special adaptability or future utility--test. - .....to the award of the collector in these terms; 'the land acquired is locate just by the side of a brick-field; it could have been a brick-field in future and the value of the land should consequently be assessed at not less than rs. 1,500 per bigha.' thus the substantial question for consideration on the reference was, whether the land should be valued on the basis of its actual condition at the time of the declaration or whether its special adaptability for possible use as a brick field should be deemed a relevant element in the determination of its market value. the district judge gave effect to the contention of the claimants that as the lands adjoined brick-fields and might at any time have been converted into brick-field lands, their special adaptability for the purpose was a.....
Judgment:

Asutosh Mookerjee, J.

1. There ten appeals are directed against five awards made by the Land Acquisition Judge of Howrah in five references under Section 18 of the Land Acquisition Act, 1894. The Collector made his award in each case on the basis of the condition of the land at the time of the declaration, He adopted a three-fold classification, namely, homestead land at Rs. 400 per bigha, garden land at Rs. 100 per bigha and tank at Rs. 40 per bigha. The claimants applied in each case for a reference to the Court under Sub-section (1) of Section 18 and formulated the ground of their objection to the award of the Collector in these terms; 'The land acquired is locate just by the side of a brick-field; it could have been a brick-field in future and the value of the land should consequently be assessed at not less than Rs. 1,500 per bigha.' Thus the substantial question for consideration on the reference was, whether the land should be valued on the basis of its actual condition at the time of the declaration or whether its special adaptability for possible use as a brick field should be deemed a relevant element in the determination of its market value. The District Judge gave effect to the contention of the claimants that as the lands adjoined brick-fields and might at any time have been converted into brick-field lands, their special adaptability for the purpose was a material factor in the assessment of their market value. But as the situation and condition of the lands would render necessary an appreciable expenditure of money to convert them for use as brick-fields, he assessed their value at Rs. 800 per bigha, The Secretary of State for India in Council has appealed against the five awards on the ground that the District Judge should have valued the lands to their present disposition and should not have valued them on the conjectural ground that they were capable of conversion into brick-field lands or even as lands which might be absorbed into neighbouring brick-fields. The claimants, on the other hand, have preferred five appeals against the awards on the ground that although the District Judge had adopted the principle of special adaptability, the market value of the lands as assessed by him was inadequate, as he had allowed for cost of conversion on too liberal a basis. The ten appeals consequently re-open all the important questions in controversy before the District Judge.

2. As regards the appeals preferred by the Secretary of State for India in Council, it is manifest that the District Judge rightly declined to assess the market value of the lards solely on the basis of their actual disposition at the time of acquisition. The principle that the fairest and most favourable principle of compensation to the owners is to estimate the market value of the property, not according to its present disposition, but laid out in the most lucrative and advantageous way in which the owners could dispose of it, was regarded as well-established by Garth, C.J. in the case of Premchand Barral v. Collector of Calcutta 2 C. 103 : 1 Ind. Jur. 267 : 1 Ind. Dec. (N.S ) 863. The doctrine was applied by Sargent, C.J. in the case of Collector of Pooja v. Kashinath 10 B. 685 at p. 589 : 5 Ind, Dec, (n. S.) 778 when he formulated the question for solution as to what would be the most lucrative and advantageous way in which the owner could dispose of it and what would be its market value if so laid out. The same view was emphasized in different terms in Fink v. Secretary of State 34 C. 599 at p. 604: 'The probable use of land in the most advantageous way, in accordance with or following the use already made of neighbouring lands, leads to speculative advance in prices, and regard should be had to such advance. The utility of land is certainly an element for consideration in estimating its value, that is, the utility which may be calculated by a prudent businessman.' The limitation involved in the concluding words of this passage is of fundamental importance, for as Jenkins, C.J. observed in Kailas Chandra Mitra v. Secretary of State 18 Ind. Cas. 638 : 17 C.L.J. 34, what has to be determined is the; 'market value of the land' which may be roughly described as the price that an owner, willing and not obliged to sell, might reasonably expect to obtain from a willing purchaser with whom he was bargaining for the sale and purchase of the land. Precisely the same test was Indicated by Moulton, L.J. in Lucas and Chesterfield Gas and Water Board, In re (1909) I.K.B. 16 : 77 L.J.K.B. 1009 : 99 L.T. 767 : 72 J.P. 437 : 6 L.G.R. 1106 : 24 T.L.R. 858, when he observed that the owner is entitled to be paid the full price for his lands, and any and every element of value which they possess must be taken into consideration in so far as they in crease the value to him. This was approved by the Judicial Committee in Cedar Rapids Manufacturing and Power Co. v. Locoste (1914) A.C. 569 : 83 L.J.P.C. 162 : 1 O.L.T. 873 : 30 T.L.R. 293, and is in accordance with the opinion previously expressed by Vaughan William L. J., in Bwilfa and Merthyr Dare Steam Collieries and Pontypridd Waterworks Company, In re (1902) 2 K.B. 135 : 71 L.J.K.B. 613 : 50 W.R, 627 : 87 L T. 291 : 18 T.L.R. 601, that in assessing compensation every circumstance which is in existence as a fact at the moment when the notice to treat is given as also the probable use which might be made of the property must be taken into consideration, although we cannot take into account a contingency which cannot be anticipated and cannot be measured. That there is room for divergence of opinion in the application of the principle to the fasts of a concrete case, is illustrated by the course of events in the litigation last mentioned, where the House of Lords disagreed with the conclusion of the Court of Appeal which had reversed the decision of the primary Court; Bwilfa and Merthyr Dare Steam Collieries v. Pontypridd Water works Company (1903) App. Cas. 426 : 72 L.J.K.B. 805 : 89 L.T. 280 : 52 W.R. 193 : 19 T.L.R. 673. The substance of the matter is that tribunals assessing compensation must take into account, not only the present purpose to which the land is applied, but also any other more beneficial purpose to which, in the course of events, it might within a reasonable period be applied, just as an owner might do if he were bargaining with a purchaser in the market, The recognition of this potential value, as it has been called, may be found in a variety of cases, Reg. v. Brown (1867) 2 Q.B. 630 : 36 L.J.Q.B. 322 : 16 L.T. 827 : 15 W.R. 988 : 8 B. & Section 456(Potential value of agricultural land for building purposes); Ripley v. G.N. Ry. Co. (1875) 10 Ch. 435 : 31 L.T. 869 : 23 W.R. 685 (Contiguity of land to a reservoir making it suitable for building a mill); Brown v. Commissioner for Railways (1880) 15 A.C. 240 : 59 L.J.P.C. 62 : 62 L.T. 469 (Future profitable working of mine); Oasalinsky v. Corporation of Manchester (1883) 2 Hudson on Compensation 1546 Browns and Allen on Compensation, 659 (Contiguity of land to a lake, making it specially adaptable for USE as a reservoir); Eiddel and New Castle and Gatshsad Water Co., In re (1879) Browe and Allen on Compensation 678 : 90 L.T. 44n (Fitness of land for reservoir); Gough and Aspotnia, Silloth and District Joint Water Board, In re (1903) 1 K.B. 574 : 72 L.J.K.B. 285 : 67 J.P. 137: 51 W.R. 590 : 88 L.T. 421, affirmed on Appeal (1904) 1 K.B. 417 : 73 L.J.K.B. 228 : 68 J.P. 229 : 52 W.R. 652 : 90 L.T, 43 : 20 T.L.R. 179 (Fitness of land as base for water supply); silney v. North-Eastern Ry. Co. (1914) 3 K.B. 629 : 83 L.J.K.B. 1640 : 111 L.T. 677 (Adaptability of land for railway purposes); Ceder Rapids Manufacturing and lower Co. v. Lacoste (1914) A.C. 569 : 83 L.J.P.C. 162 : 1 O.L.T. 873 : 30 T.L.R. 293 (suitability for development of water power). The principle has also been applied where the land of the claimant, though not in itself adaptable for a reservoir, is so adaptable in conjunction with other adjacent lands belonging to other owners: Mayor of Tynemouth and Duke of, Northumbarland, In re (1903) 89 L.T. 557 : 19 T.L.R. 600 67 J.P. 425 Examples of the recognition of the doctrines of potential value and special adaptability may also be found in the cases of Hugli Mills Co. v. Secretary of State 8 Ind. Cas. 800 : 12 C.L.J. 489, Rajendra Nath Banerjee v. Secretary of State 32 C. 343 at p. 348, Mulji Khetsey, In re 15 B. 279 : 8 Ind. Dec. (N.S.) 199, Government v. Dyal Mulji 9 Bom. L.R. 99, Dhanibhoy, In re 10 Bom. L.R. 701, Dorabji Cursetji, In re 10 Bom. L.R. 675, Sorabji, Jamsetji, In re 10 Bom. L.R. 696, Daya Khushal v. Assistant Collector, Surat 21 Ind. Cas 320 : 38 B. 37 : 15 Bom. L.R. 815. The true rule was tersely stated by Lord Dunedin in pronouncing the opinion of the Judicial Committee in two recent eases. In Cedar Rapids Manufacturing and power Co. v. Lacoste (1914) A.C. 569 : 83 L.J.P.C. 162 : 1 O.L.T. 873 : 30 T.L.R. 293 he formulated the proposition that the value to be paid for is the value to the owner as it exists, at the date of the taking; such value consists in all advantages which the land possesses, present or future, but it is the present value alone of such advantages that falls to be determined. In Odlum v. City of Vancouver (1915) 85 L.J.P. C.95 : 113 L.T. 759 he added the necessary corollary that while all opportunity of employment for a certain purpose in regard to the position of the land to be acquired is to be taken into account, there must come a point where the opportunity becomes so remote as to be negligible, This brings into clear relief the fundamental importance of the test that the operative effect of special adapt ability or future utility, (expressions which have sometimes been criticised, net wholly without reason) must be estimated, not by idle speculation and unpractical imagination, but by prudent business considerations such as would weigh with an intending purchaser at the imaginary market which would have ruled, had the land been exposed for sale when it was subjected to compulsory acquisition. Let us now examine the circumstances of the case before us in view of there principles.

3. It is an admitted fact that the lands acquired are at a short distance from the Bally canal which has numerous brick fields along both its barks. Three of these brick-fields were owned at the time of the declaration by Ghose Kumar and Bull. These brick-fields adjoined one another and the acquired lands were cut off from direct access to the canal by their interposition. It appears from the evidence of the superintendent of the East Indian Railway brick-fields that bricks are made either from natural clay or from silt deposit. There is no evidence to show that there was such a depth of natural slay on the acquired lands that they could have worked as brick fields for any length of time. Consequently, it may be assumed that the acquired lands could not be profitably used as independent brisk-fields without deposit of silt. To obtain the requisite deposit of silt, a regular water supply would be necessary and as the acquired lands were cut off from the canal by intervening brick-fields, they could only have been of value for brick-field purposes if they should be acquired for and included in the neighbouring brick-fields. The claimants must accordingly show, in order to establish their proposition that the lands should have been valued on a brick-field basis, that there was reasonable probability that the lands would, but for their acquisition, have been included in those brick-fields. This assertion is not based on a mere hypothesis that as business (sic) in the adjoining brick-fields, their owners might, in the normal course of events, seek for room for expansion. The claimants have actually proved that plots of land have from time to time been added to and included in at least one adjoining brick-field. They have also proved by reliable evidence that Kumar and Bull had negotiated with them for purchase or lease of some of these lands with a view to their incorporation in their existing brick-fields. No doubt, as pointed cut by Batchelor, J. in Government of Bombay v. Merwanji Muneherji 10 Bom. L.R. 907 at p. 919 too much importance must not be attached to evidence of offers in ascertaining the market value of land; but the position is different where, as here, the question is, whether there is a market at all for a tract of land for use for a specified purpose. In the present instance, there is no room for controversy that there is trustworthy evidence to show that if the acquired lands had been thrown into the market, adjoining brick-field owners would in all probability have come forward to purchase them or to take leases of them for inclusion in their brick-fields. The District Judge has thus rightly concluded that there was a reasonable probability that the lands might have been taken up by the adjoining owners for the extension of their brick-fields and that this possibility must be taken into consideration in calculating the amount to be awarded as compensation upon compulsory acquisition. The chief ground urged in support of the appeals preferred by the Secretary of State cannot consequently be sustained.

4. As regards the appeals preferred by the claimants, the point for consideration is whether the rate fixed by the lower Court is adequate. The District Judge was plainly right when he held that documents filed on behalf of the Secretary of State were not of much assistance, They relate to transactions regarding lands at some distance from the lands acquired, and even if they relate to leases or purchases of lands contiguous to brick-fields, they are not in respect of transfer of land to brick-field owners for brick-field purposes. On the other hand, the claimants have adduced documentary evidence (conveyance?, leases and land acquisition awards) in respect of lands actually in use as brick-fields, these indicate a rate which varies from a minimum of Rs. 1,200 per bigha to a maximum of Rs. 2,250 per bigha, the majority of transactions show that the rate varies from Rs. 1,440 to Rs. 1,650 per bigha. From an analysis of the relevant evidence, the District Judge had thus correctly held that Rs. 1,600 per bigha may fairly be taken as the rate for fully prepared brick fields. He has then allowed a reduction of 50 per cent. because the lands acquired would have to be converted into lands fit for use as brick-fields at a considerable outlay. This reduction, however, is not supported by the evidence on the record. The method of brick manufacture in this country as described in standard treatises (such as the paper by Major Falconet R.E. in Volume III of the professional papers on Indian Engineering published by the Government), also does not lend any support to the view that the costs of conversion of ordinary land into land fit for use as brick fields amounts to one-half of the value of the land. On the other hand, sash evidence as there is on the record shows that the reduction allowed by the Court below is excessive. The District Judge has correctly found that the leases on the record prove that prepared brick-field lands fetch a rent of Rs. 80 per bigha. The District Judge has also accepted the statement of Mohini Mohan Banerjee, one of the claimants, as to the rent paid to him by Mr. Bull for a plot of 15 cattas incorporated in a brick-field but he has inaccurately stated this to be Rs. 50 per bigha instead of Rs. 50 as the rent fixed as a lump sum. If this statement be accepted, the rent for unprepared land works out at Rs. 200 for three bighas as against Rs. 240 for three bighas of prepared land. This gives the proportion by which the value should be reduced, namely, 6 to 5. The conclusion follows that if the rate for prepared brick-fields is Rs. 1,600 as found by the District Judge, the rate for unprepared land should be approximately Rs. 1,333. We accordingly direct that the lands acquired be valued at Rs. 1,800 instead of Rs. 800 per bigha.

5. The result is that Appeals Nos. 266, 280, 281, 282 and 233 filed by the Secretary of State must be dismissed with costs. The hearing fee in each of these cases is assessed at two gold mohurs. Appeals Nos. 251, 260, 231, 202 and 263 preferred by the claimants are allowed with costs. The land in each case will be valued at Rs. 1,300 instead of Rs. 800 per bigha. The hearing fee in each of these appeals also is assessed at two gold mohurs. The order for proportionate costs made by the lower Court will stand but the amounts will be modified on the basis of the sums awarded in this Court.

Buckland, J.

6. The principle adopted by the District Judge in assessing the compensation payable, by enquiring what is the market value of the land when laid out in the most lucrative and advantageous way in which the owner could dispose of it, is very well established and he has correctly applied it. Whether or not the particular way in which it is claimed that the land if so laid out could be disposed of to the bast advantage to the owner is one appropriate to prevailing conditions is a question of fact to be decided according to the circumstances of each case. In the case before us there can be no question that the land which has been held to be suitable for a brick field, would fetch a higher price, if sold for that purpose to the owner of an adjacent brick-field than if sold for any other purpose. The District Judge has disregarded the evidence of leases of other lands adduced by the Secretary of State and done so rightly on two grounds: (1) the lands are not contiguous to those in question, and (2) they are not leases of land to brick-field owners for the purpose of making bricks.

7. In assessing compensation the District Judge has ordered in deducting 50 per cent. as the cost of converting the land for the purposes of a brick-field.

8. In addition to the evidence referred to by my learned brother Mr. Justice Mookerjee there is the statement of Sarada Prosad Kumar that it took him 6 or 8 months to convert land into a brick-field. Applying this to a computation of the value of the land on a lease-hold basis, the reduction on account of conversion for this particular purpose is comparatively trifling. Taking this in conjunction with the reasons given by my learned brother Mr. Justice Mookhrjee I agree with him as to the rate at which compensation should be paid and I concur in the order made.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //