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PETITIONER: HAJI MOHAMMAD EKRAMUL HAQ

       Vs.

RESPONDENT: THE STATE OF WEST BENGAL

DATE OF JUDGMENT: 16/12/1958

BENCH: KAPUR, J.L. BENCH: KAPUR, J.L. IMAM, SYED JAFFER DAS, S.K.

CITATION:  1959 AIR  488            1959 SCR  Supl. (1) 922

ACT: Requisition-Compensation-Potential  value  of   Property---- Defence of India Act, s.19 -Land Acquisition Act, 1894 (1 of 1894), S. 23.

HEADNOTE: The four storied premises in suit belonging to the appellant were requisitioned by the respondent for the purposes of the Controller  of  Army Factory Accounts who  already  had  his office in a neighbouring house.  The arbitrator, to whom the question of compensation was referred, awarded  compensation of  Rs. 2,581,-8-0 according to the rent prevailing  in  the locality  for similar buildings with  similar  accommodation and  amenities.  This included an additional award  of  10%‘ for  the  potentialities of the premises consisting  of  the special  value  of  the premises  for  the  Controller,  the indefinite  period of the requisition and additional  burden on the lift.  On appeal by the appellant the 923 High  Court  held  the compensation to be  Rs.  2,773/-  per mensem.   It  rejected  the  additional  award  of  10%  for potential value. Held,  that the High Court was wrong in ignoring the  poten- tial  value of the premises which had been evaluated at  10% by  the  arbitrator.   The  principles  for  the  award   of compensation  are the same under s. 19 Defence of India  Act as  under S. 23 Land Acquisition Act, and one of them is  to evaluate  the  potentialities of the premises  which  differ under   different  circumstances.   Such  value  is  to   be ascertained  by  the arbitrator as best as he can  from  the materials before him. Vyricherla  Narayana Gajapatiraju v. The Revenue  Divisional Officer, (1939) L.R. 66 I.A. 104, followed.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 191 of 1955. Appeal  by special leave from the judgment and decree  dated July  31, 1953, of the Calcutta High Court in  First  Appeal No. 88 of 1950, arising out of the judgment and decree dated

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May 18, 1950, of the Arbitrator, 24-Parganas, Alipore, in L. A. Case No. 71 of 1944. A.V. Viswanatha Sastri and Naunit Lal, for the appellant. B.Sen, P. K. Ghose for P. K. Bose, for the respondent. 1958.  December 16.  The Judgment of the Court was delivered by KAPUR,  J.-This  is  an appeal  pursuant  to  special  leave granted by this Court against the judgment and order of  the High  Court of Calcutta varying the order of the  arbitrator in  regard to compensation for compulsory requisitioning  of the premises in dispute. The  appellant  before us is the owner of the   premises  in dispute  which  at  the  relevant  time  consisted  of  four storeys,  the  ground floor and three upper floors  and  the respondent  is  the  State  of West  Bengal  which  was  the opposite party before the arbitrator.  This building (No.  9 Chittaranjan  Avenue) was constructed before July 28,  1940, and  was taken on a registered lease for three years by  the Bengal  Central  Public Works Division on a  rental  of  Rs. 1,950 per mensem inclusive of taxes.  On the termination  of the lease the building was requisitioned by the West  Bengal Government  and taken possession of on July 30,  1943.   The Land 924 Acquisition  Officer offered Rs. 2,200 per mensem  inclusive of  taxes  in  the form of rent  as  compensation.   As  the appellant did not agree to this compensation the matter  was referred  under  s.  19 of the Defence of India  Act  to  an arbitrator  Mr.  J. De.  He held that Rs. 2,200  per  mensem fixed   by  the  Land  Acquisition  Collector  was  a   fair compensation.   Against  this order the  appellant  took  an appeal  to  the High Court who set aside the  order  of  the arbitrator,  remanded  the case to the arbitrator  and  laid down  the  following  principle  for  the  ascertainment  of compensation :- "  therefore, in deciding upon a fair rent, for the  purpose of  section  23 of the Land Acquisition Act, it  must  be  a notional  fair  rent  of  a  hypothetical  tenant,  and  the assessment  of such notional fair rent must be based upon  a consideration which does not take into account  restrictions temporarily  imposed by any restrictive executive  order  or legislation like Rent Control Order, etc.  The assessment in practice  should be as if it was of a house of  like  nature let out for the first time to a tenant who is not  compelled to let it out.  The practical method will be to assess  rent as if it was a new house for the first time let out on  that date ". On remand the appellant who had previously claimed Rs. 3,998 as compensation plus Rs. 125 for working and maintaining the lift, increased his demand to Rs. 7,700 per mensem exclusive of  municipal  taxes, and also Rs. 125 for the  use  of  the lift.   He  stated  in  his  application  that  the   amount previously  claimed  by him " was unduly low  and  was  made through  mistake  and miscalculation  and  misconception  of things and principle and moreover it was due to the want  of proper  information  at  the time ".  After  the  remand  he examined  further evidence and the respondent also  examined some witnesses.  The new arbitrator Mr. J. C. Mazumdar  held that  the  matter  must be decided  according  to  the  rent prevailing  in  the locality in 1943 for  similar  buildings with  similar accommodation and amenities and proceeding  on this basis he awarded compensation of Rs. 2,581-8 per mensem inclusive of all taxes, cost of normal and essential 925 repair,  cost of the upkeep of the lift and potential  value

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of  the building in an important commercial locality  having regard  to  the  fact that the  period  of  requisition  was indefinite.  This sum was to be paid as from August 1, 1943. This  order did not satisfy the appellant and against it  he took an appeal to the High Court who fixed the  compensation at  Rs. 16 per hundred sq. ft. for the ground floor and  Rs. 13  per  hundred sq. ft. for the 1st floor and  Rs.  12  per hundred sq. ft. for the second floor and Rs. 11 per  hundred sq.  ft.  for the third floor and thus calculating  for  the total  floor  area i.e. 5333 sq. ft. per floor it  held  the compensation  to be Rs. 2,773 per mensem.  It  rejected  the additional  award of 10% on account of potential  value  but allowed Rs. 77 per mensem on account of the lift and thus it awarded  a total compensation of Rs. 2,850 per mensem.   The High Court however observed :- "  We  must make it clear further that in making  the  above calculation  of  the monthly compensation at, Rs.  2,850  we have also taken into consideration the additional advantages due to the special adaptability of the disputed premises for the purposes of the Controller of the Army Factory  Accounts and  his possible willingness to pay a somewhat higher  rent for the same (Vide 66 I.A. 104) ". Against this judgment the appellant has brought this  appeal by special leave. It  was  argued on behalf of the appellant that  the  method adopted  by  the High Court for arriving at  the  figure  of compensation  was  erroneous because it proceeded  on  wrong principles  in  that it took averages of rent paid  for  the premises   No.  5  Chittaranjan  Avenue  and  for   No.   22 Chittaranjan  Avenue  and  ignored  the  expert  opinion  of witness  U. P. Malik according to which the rent for  ground floor  should have been Rs. 23 per hundred sq. ft.  and  Rs. 17-8 per hundred sq. ft. for other floors and also that  the potentialities  of  the  building had not  been  taken  into consideration. The  High  Court  found that premises  No.  22  Chittaranjan Avenue was a little better than the premises 926 in  dispute and they (premises in dispute) were  "  somewhat better  than  the premises No. 5 Chittaranjan Avenue  ".  In these  circumstances it cannot be said that the  High  Court committed any error of principle in taking an average of the two premises No. 22 and 5 Chittaranjan Avenue.  The evidence of  U.  P. Malik was merely an opinion  unsupported  by  any reasons and in the circumstances of this base the High Court has rightly not placed any reliance upon it. It  was then urged that the High Court had erred  in  taking into consideration the rent payable for the premises No.  22 Chittaranjan Avenue, as recitals with regard to premises No. 22  in Ex.  D, which was an award for premises No.  31  were inadmissible  in  evidence.   This  document  has  not  been printed  and  we do not know what its contents  are  or  its language  is.  No objection was taken to  its  admissibility either  before the arbitrator or before the High Court.   It was  referred  to  in the evidence of the  witness  for  the respondent, Nanibhushan Sen Gupta who stated that Rs.  2,200 would be a fair rent -for the premises and in coming to this conculsion he based his calculation it on the award in L. A. Case  No. 61 of 1944 in respect of premises Nos. 22  and  31 Chittaranjan Avenue and Ex.  D was the judgment of that case ".   In   these  circumstances  no  objection  as   to   the admissibility  of this document can be allowed to be  raised at this stage. It  was then argued that the High Court in arriving  at  the amount  of compensation had ignored the potential  value  of

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the premises in dispute in an important commercial  locality which the arbitrator Mr. J. C. Mazumdar had evaluated at 10% of  the amount determined by him.  This contention  is  well founded.   The  High  Court disallowed  this  award  of  10% without assigning any reason.  It said:- "  and although we are not wholly accepting  his  additional award  of 10% on account of so called potentialities,  etc., including the lift, we ’are inclined to assess this  further compensation on account of the lift at Rs. 77 per month 927 The  principles on which compensation is to  be  ascertained under  the provisions of s. 19 of the Defence of  India  Act are  the  same  as  those given in s.  23(1)  of’  the  Land Acquisition  Act,  1894,  and  one  of  the  principles   of ascertaining compensation is to evaluate the  potentialities of the land or the premises as the case may be which  differ under different circumstances.; The arbitrator in evaluating the potentialities said:- "  In 1943, when the building was first  requisitioned,  the Controller  of Army Factory Accounts had already his  office in  the neighbouring house of 5 Chittaranjan  Avenue.   This building  had, therefore, a special value to the  Controller as  it  would certainly be more advantageous to  him  if  he could  locate his office in the premises in question.   This gave   greater  bargaining  power  to  the   landlord   and, therefore,  the potential value to him was greater.  It  has also been conceded that the requisition is for an indefinite period.  The Municipal assessment valuation (Ex.  B  series) was  based  purely upon the rental which  the  building  was fetching  prior  to 1943 and did not take into  account  the potential  value, the value which will be maintained  for  a long period of lease and the additional burden on the  lift. For all these three factors, I allow an additional 10 p.  c. compensation of Rs. 234-12 As per mensem." The  value  of potentialities is to be  ascertained  by  the arbitrator as best as he can from the materials before  him. In   Vyricherla   Narayana  Gajapatiraju  v.   The   Revenue Divisional Officer (1), Lord Romer said:- "  The  truth  of  the  matter is  that  the  value  of  the potentiality  must be ascertained by the arbitrator on  such materials  as are available to him and without indulging  in feats of the imagination." Another  objection taken was in regard to  compensation  for the  lift.  The High Court awarded Rs. 77 but on what  basis it  is not clear.  In our opinion this claim of Rs. 125  per mensem was not excessive considering that two departments of the Government were using this lift, which is clear from the fact that an overhead bridge had been constructed for  going from (1)(1939) L.R. 66 I.A. 104, 118. 928 premises  No.  9 Chittaranjan Avenue to the  other  building which the Government had also requisitioned.  This will work out to Rs. 3,175.  In the circumstances Rs. 3,200 per mensem would be a fair compensation and we would therefore  enhance the  compensation  to that figure and the  appeal  would  be allowed to that extent. Although  the  appellant has not succeeded  in  getting  the whole-of his claim decreed, there is no reason for depriving him   of  his  costs  proportionate  to  his  success.    We accordingly allow proportionate costs. Appeal partly allowed.