Haji Mohammad Ekramul Haq Vs. The
State of West Bengal  INSC 133 (16 December 1958)
IMAM, SYED JAFFER DAS, S.K.
CITATION: 1959 AIR 488 1959 SCR Supl. (1) 922
Requisition-Compensation-Potential value of
Property---Defence of India Act, s.19 -Land Acquisition Act, 1894 (1 of 1894),
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
Held, that the High Court was wrong in
ignoring the potential 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.
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 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
B.Sen, P. K. Ghose for P. K. Bose, for the
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 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
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 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
Appeal partly allowed.