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Bombay High Court
Ismailji Mahomedalli Bohori vs The District Deputy Collector on 31 March, 1932
Equivalent citations: (1932) 34 BOMLR 1457,
AIR1933Bom37,
Bench: Baker, Broomfield
Baker, J.
1. These two appeals arise from the decision of the District Judge of Nasik in two references under the Land Acquisition Act. The lands in the two references are of a similar nature and are situated together and the two references may be treated together.
2. The references arise out of the acquisition by Government of a large block of land in the village of Shinwe Bahula near Deolali for the purposes of a Rifle Range for the troops at Deolali. The bulk of the survey numbers acquired, which amount to over 200 acres, belonged to the applicant Esmailji, and only a small portion of them belonged to the applicant Nomenbhai, The land acquisition officer after taking into consideration the sales which were put forward by the applicants in the proceedings came to the conclusion that they could not be relied on to show the rate per acre at more than Rs. 195, and he ignored the rent which had been paid by the Military authorities for a short period to the claimants for these lands, and ultimately he came to the conclusion that a fair price for the lands was Rs. 200 per acre plus the usual fifteen per cent. together with a email sum for trees and, what he calls, two pits which are now claimed by the claimants to be wells. The claimants being dissatisfied applied to the District Court at Nasik, and the learned District Judge after considering the sales which were few in number came to the conclusion that they should be disregarded as affording no true index of the value of the lands, and he based his award on the rental value of the lands as determined on a mean between the agricultural rent which was paid for these lands for a short period and on the rent of Rs. 24 per acre per annum which was paid by the Military authorities from 1922 to 1928, the date of the acquisition. The mean between these two figures is Rs. 13-10-0 which works out at about Rs. 272-8-0 per acre, and the ultimate result was that he raised the compensation awarded by the land acquisition officer from Rs. 38,045 to Rs. 48,739 in the case of Esmailji and in similar proportion in the case of Nomenbhai, but he disallowed the applicants their costs on the ground that their claim of Rs. 600 per acre was extravagant. The claimants have appealed to this Court.
3. The present case is one which raises a little difficulty because the evidence regarding the lands which form the subjects of these references is extremely meagre and it is somewhat difficult to find what their market value really is. The land belonging to the claimant Esmailji, who is the principal claimant in this case, has been, according to him, in his family for a long time, but no title-deeds are produced in respect of it, and he does not give us any indication as to what it cost him to acquire it. We are, therefore, without the first basis in a case of this character, viz., the original value of the land. Secondly, it has been admitted by Esmailji's son, who represents him in these proceedings, that the land has never been put to any use. We have, therefore, no evidence whatever derived from leases of anything of the kind as to what the letting value of the laud would be until it was taken over by the Military authorities. There is no evidence as to the productive capacity of the land and no evidence as to whether it is good or bad except such inference as may be drawn from the assessment. None of these lands with the exception of one land, which is a sale to Nomenbhai, the other claimant, a matter I will deal with later on, has ever been sold, and there is only one instance of a purchase of adjoining land, So far, therefore, as evidence of the original value of the land or its productive capacity or its letting value, except in so far as it was rented to the Military authorities, is concerned, the evidence is nil.
4. Then turning to the sales, the learned District Judge has rejected them all for reasons given in his judgment. Before the acquiring officer there were six sales of which three were sales on which Government relied and three on which the claimants relied, The highest price in the Government's sales was Rs. 195 per acre. The District Judge has disregarded these altogether on the ground that the parties to the transactions were not called, and he, therefore, excluded them from consideration, nor have they been relied on by the learned Government Pleader. With regard to the sales on which the claimants relied before the land acquisition officer, those were sales of Survey Nos. 244, 219 and 208. The District Judge finds that Survey No. 244 was garden land whereas the present survey number was dry crop land and he, therefore, excluded the sale of Survey No. 244. The next sale is in respect of Survey No. 219 which is only one acre and fifteen gunthas and the rate per acre is Rs. 363. The vendor has been called and he says that the land was wort double that, but that he was compelled to sell it on account of a criminal prosecution. But the District Judge, however, has disbelieved this statement. The next sale is the sale to the other claimant Nomenbhai of Survey No. 208. That was a sale on March 1, 1926, a very few months before the notification regarding the acquisition, and the price paid was Rs. 10,000, that is, Rs. 1,105 per acre. Nomenbhai has been examined and he has admitted that this sale was speculation, and, speaking for myself, I have no doubt that this land was bought at this price under the expectation that it would shortly be acquired under the Land Acquisition Act and that substantial compensation would be paid for it. It is to be noted that at the time when this sale transaction took place the land was in the possession of the Military authorities and, therefore, not available to be given into the possession of, the purchaser who had no knowledge when it was going to be returned. I do not think, therefore, that the District Judge was wrong in not relying on the sale of Survey No. 208.
5. Then, omitting the sales of Survey Nos. 15 and 39, which are garden lands and therefore of much more value than dry crop land and are also subsequent to the date of the notification, the only, other sales are the sale-deeds in favour of the Mullaji Saheb. With regard to that it is pointed out that, Survey No. 250 is on a road or close to a road leading to the Deolali camp, and has a potential value as a building site. It is stated by the District Judge to be 600 yards from the lands in dispute, which have no means of access and therefore the price paid for Survey No. 250 was largely based on the value as a building site and is of little use in estimating the value of the present lands. The price paid per acre for this land under the two sale-deeds was Rs. 1,500 and Rs. 1,288 respectively in 1918.
6. The District Judge has based his award on the rental value of the land, being the mean between the agricultural rent paid by the military authorities for this land and the rent of Rs. 24 an acre which was paid by them from 1922. The learned advocate for the applicants has argued that the compensation should be based on the rental value of Rs. 24 an acre. What actually happened was this that the land was taken over by the Military authorities apparently without any arrangement with the owners. That may be explained by the fact that Esmailji, the principal claimant, is a military contractor who probably would agree to the wishes of the Military authorities. Then after some time on the representation of Esmailji and other owners that no rent had been paid to them, a lump Bum was paid which works out at about Rs. 3-4-0 an acre. That was for a period of three years ending on March 31, 1921. Exhibit 30 is a letter from the Collector of Nasik to the Commandant, Deolali, dated February 22, 1922, in which he shows details of the rent due for three years for certain lands which had been used by the Military authorities and which include the lands in suit, We are not in possession of the basis on which the rent of the numbers other than those now in suit was calculated, but as we know that the lands in suit have never been used by the claimant or let at any time, presumably the calculation was made on the basis of the assessment, and, admittedly the payments made work out at a rate of Rs. 3-4-0 an acre. Thereafter the Military authorities took the lands in question on a lease at the rate of Rs. 2 per acre per mensem which works out at Rs. 24 per year, and on the basis of twenty years' purchase would bring the value of the lands up to nearly Rs. 500 per acre.
7. At p. 60 of the record is a letter from the A.C.R.E. Bombay, to the Collector of Nasik forwarding a copy of the Government letter conveying (sanction to the hiring of this land for the Rifle Range at Deolali for two years commencing from March. 1,1922, at an yearly rental of Rs. 24 per acre and containing an endorsement that the rental of Rs. 24 per acre per annum is recommended by the G.O.C., Bombay District, in consultation with, the Collector of Nasik and has been sanctioned by the Government of India. There is no evidence that the Collector of Nasik was consulted in the matter or that he recommended that the rate of Rs. 24 per acre, which, in view of certain other evidence in the case, appears to be very much too high, should be accepted. For three years this amount of rent was paid and the question is whether this is the basis on which compensation should be awarded ignoring the agricultural rent of Rs. 3-4-0 which was paid in the years previous to the lease. Now, in this connection it may be quoted that the Military authorities had taken certain land in Deolali Cantonment itself which was used for the Remount Depot, at the rate of Rs. 2-2-10 per acre per mensem which works out at about Rs. 528-8-0 per acre. This is at p. 111 of the record, which is a copy of the letter dated February 14, 1922, from the District Deputy Collector, Nasik Prant, to the Commandant, Deolali. Now if land in Deolali Cantonment itself fetches a rent of Rs. 2-2-10 per acre per mensem, the rent of Rs. 2 per acre for land five miles away would seem to be absurd. But it has been contended that the Military authorities having voluntarily paid this amount the compensation for the land must be based on this rental.
8. Various cases have been quoted by the learned advocate for the appellants, and amongst them are, Swarna Manjuri Dassi v. Secretary of State for India (1927) I.L.R. 55 Cal. 994, and two cases quoted in that, viz., In re Athlone Rifle Range [1902] 1 I.R. 433, 436 and Earl of Eldon v. The North-Eastern Railway Company (1899) 80 L.T.N.S. 722, and the principles in those cases have been applied in Swarna Manjuri Dassi v. Secretary of State for India. In awarding compensation based on rent actually received regard has to be had to the question whether the lease was one for a considerable period and the rent received was an amount which was likely to be received, for a lengthy period. At p. 1003 quoting from the Irish case it is stated that the circumstances are to be considered as they existed at the date of the notice, that is, immediately before its service. Earl of Eldon v. The North-Eastern Railway Company is an authority for the proposition that if the land which is being; taken is likely to continue to produce the rent which is being paid for it, the rent does afford a basis on which the value may be calculated. In the Irish case it is stated at p. 436:-
...though the service of the notice to treat makes the Secretary of State the equitable owner of the lands, the interest he takes is subject to the lease, and the assessment of compensation is not to be made as of a date subsequent to the service of the notice to treat, but the circumstances are to be considered as they existed at the date of the notice, that is immediately before its service.
9. In that case the lease was one which might last for fourteen years. In Earl of Eldon v. The North-Eastern Railway Company the defendants had erected buildings on the land and the umpire took the actual rent received by the plaintiff at the time of the notice to treat as the basis of the value of the land to him, It was held (p. 724):-
If that were a rent which could be regarded as a mere accidental figure, and as not likely to be maintained for any long period, he might well disregard it as affording no true index of the value which the plaintiff could obtain for the land if he sold it, But if the rent had been paid ever since 1839 and was likely to continue to be paid because the defendants had expended so large a sum of money on the land that they were never likely to determine their tenancy, then it seems to me that the arbitrator was justified in coming to the conclusion that, having regard to the stats of things existing at the time of the notice to treat, there was a reasonable prospect of the plaintiff continuing to receive the same rent, and that the rent was in the circumstances an index of the value of the land be the plaintiff. If the plaintiff had immediately before the notice to treat offered the land for sale, would he not have been able to obtain a price for the land based upon the rent he received in respect of it. If he could establish, as I think 'he could, that the rent was a rent which the land was likely to continue to command the rent would afford a fair index of the value of the land to him.
10. These principles were applied by the Calcutta High Court in the case of Swarna Manjuri Dassi v. Secretary of State for India, which was a case of land yielding rent under ninety-nine years' building lease, and there it was held that the lease in question should be considered and also the other circumstances which afford a basis for coming to a proper valuation of the land as indicated above.
11. What, therefore, I think, in view of the principles laid down in those cases, the Court has to consider is this, whether the rent of Rs. 24 par acre which at the time of the acquisition was being paid to the claimant by the Military authorities should be regarded as rent which he might reasonably expect to receive and which any purchaser might expect to receive for a long period of years or permanently. Now as regards that point it will be seen that for many years in fact, so far as we know, since the date on which the claimant obtained possession of the lands in question, he derived no benefit from them whatever. Thereafter the lands were taken over by the Military authorities for the purposes of the Rifle Range without any compensation being paid or any rent, until by reason of an arrangement between the parties a rent based on agricultural rent of the property averaging about Rs. 3-4-0 per acre was paid. Thereafter the Military authorities took a short lease at Rs. 24 per annum per acre but that lease was only for two years and although the land was kept under the same terms one year more, the proceedings for acquisition terminated the arrangement, and, therefore, what we have to consider is whether this rent of Rs. 24 per acre is one which the claimant or any purchaser from him could reasonably expect to obtain for a length of period or permanently. If there had been a lease for a long term of years then I have no doubt that the compensation would have to be calculated on the rental basis of Rs. 24 a year. I have already pointed out that as a matter of fact this rent of Rs. 24 as compared with the rent which was paid for the land acquired or leased for the Remount Depot in the Deolali Cantonment itself is extraordinary, and it has been pointed out by the Land Acquisition Officer in his order that it is thirty-two times the assessment whereas the average rent is about six times the assessment. In the circumstances I do not think it can be predicated that this extremely high rent was one which might have been paid for a long period. The learned Judge of the lower Court has not disregarded this rental basis, but he has taken the mean between it and the agricultural rent of the land, as shown by the payments which have been already referred to. In the present case where really we have no other basis than these two rentals on which to proceed, I am not prepared to hold that his method is wrong. I do not for a moment believe that this land is worth Rs. 24 an acre to any purchaser, There is absolutely no evidence that this land was used for any purpose whatever or that any profit was derived from it, If as a matter of fact it can yield such high rent it is not likely that it would have been allowed to remain fallow for ever. On the other hand, inasmuch as the Military authorities have for a period of three years paid rent for it on this basis allowance must be made for that, and in the peculiar circumstances of the present case the mean arrived at by the District Judge seems to be a fair one.
12. It has been pointed out that the result of valuing the land at the rental value of Rs. 13-10-0 per acre works out at. about Rs. 272-8-0 per acre. The land which is leased for the Remount Depot works out at about Rs. 528, and if that land which is in the Cantonment itself is not worth more than that, the present land could not possibly be worth Rs. 480 per acre which is about what the value of Rs. 24 at twenty years' purchase would be.
13. As a result, therefore, I think that the appeal should be dismissed and the award of the District Judge confirmed.
14. As regards costs, the District Judge has disallowed the costs of the claimants on the ground that their claim of Rs. 600 was extravagant, But in view of the fact that the Military authorities have actually paid rent at the rate of Rs. 24 per acre, it was, I consider, open to the claimants to make what they could out of that fact when claiming increased compensation, and the District Judge himself has held that the compensation of Rs 200 per acre awarded by the Land Acquisition Officer is too low. In the circumstances there would be no order as to costs in the appeal.
Broomfield, J.
1. The acquisition officer baaed his award of Rs. 200 an acre on certain instances of sales of neighboring lands, This is one of the recognised methods of ascertaining market value, but obviously such sales are only valuable as evidence if the conditions are the same, that is to say, if they relate to similar land with similar potentialities in or near the same locality. That rules out most of the instances of sales on which the claimants have relied. Exhibits 36 and 37 are gale deeds relating to S. Nos. 250 and 251 which are quite close to the Cantonment of Deolali and practically abut on the metalled road leading thereto. The lands were bought for building purposes and clearly have building potentiality. Exhibit 41, the sale deed relating to S. No. 15, is a transaction relating to a very small portion, only thirty gunthas, of bagait land and it was also subsequent to the notification. The sale deed Exhibit 39 relating to S. No. 208 was admittedly a purely speculative transaction. The purchaser did not get possession and could not have expected to get possession, and that being so, the transaction cannot be regard ed as a criterion. There is one instance, Exhibit 22 the sale deed dated February 22, 1926, relating to S. No. 219, which is fairly free from objection. The Acquisition Officer was in error in describing this land as bagait land; it appears to he ordinary jirayat similar to the lands which have been acquired, and it is in the neat neighbourhood of those lands. The price paid was Rs. 500 for one acre and fifteen gunthas, which works out to about Rs. 363 per acre But that is an isolated instance. It is a small piece of land and although the sale took place before the final notification, it must be remembered that there was an earlier notification in 1922, and the probabilities are that people expected that this land would sooner or later be taken over by the Military authorities.
2. The acquisition officer relied on three instances of sales relating to S. Nos. 234, 51 and 48 in the years 1924 and 1925. The prices realised give a rate per acre of Rs. 195, 181 and 185 respectively for jirayat land not far from the lands acquired. These transactions which clearly go to support the acquisition officer's award would have had considerable value as evidence if they had been adequately proved. Unfortunately although the transactions themselves have been proved, the parties were not called to show in what circumstances the sales took place, and for that reason the learned District Judge declined to take account of them, He preferred to base his valuation on the rental basis, but the difficulty in adopting that method is that, if we leave aside for a moment the. lease taken by the Military authorities for the purposes of the Rifle Range in 1922, there is practically no evidence at all available to show what was the income or potential income of this land.
3. The situation of the land has been described by the acquisition officer in his award as follows:-
The laud proposed for acquisition lies to the southwest of the village. It lies along the boundary of Nandur Bahula village and to the far end of the village Singwe and at a distance of about five miles from Deolali Camp Station. The tract is on the side of the village where there is no keen demand for building sites. N. A. development is on the eastern side of the village area. There are no buildings on the side of the village selected for Rifle Range. The nearest buildings are at a distance of about six furlongs. It is true that it abuts on one side of the Dhondi Road but nobody would like to erect any buildings on this side of the village in the vicinity of the Rifle Range and at considerable distance from the place where trade and traffic are carried on. There is therefore no N.A. activity on this side of the village and the land has therefore no value from the point of this sort of N.A. use. The mere fact that the lands are required for a Rifle Range gives them no special value as such. For all that is wanted for such a purpose is a wide stretch of country, and remoteness from human habitation is a consideration rather than otherwise; also the better the soil the worse the range as good soil gets water logged in the rain and poor soil does not). It would of course be absurd to suppose that the land possesses any special value in the open market as a Rifle Range. In default, therefore, of any value as building sites and of any special value as Rifle Range the only basis upon which the lands can be valued is on the merits as agricultural land.
4. The son of one of the claimants who gave evidence has deposed that previous to 1916, which is the year in which the Military authorities took possession of the land, the owners were making no use of it but were merely " thinking of building some bungalows there." From what the acquisition officer says as to the situation it seems very doubtful whether there was any definite intention to use the land for building purposes as it was obviously unsuitable for that purpose. Had it not been for the fact that the Military authorities required it and took possession of it and paid rent for it for the purposes of the Rifle Range, the chances are that the owners would not have been able to make any profit out of it at all.
5. The claim to enhanced compensation is based on the rent of Rs. 24 an acre which was paid by the Military authorities from the year 1922 until possession was formally taken under the Land Acquisition Act. Mr. Pradhan who appears for the claimants contends that the award ought to be based on the capitalised value of this rental, and in support of that proposition he has cited Swarna Manjuri Daasi v. Secretary of State for India (1927) I.L.R. 55 Cal. 994, and some other cases referred to in the judgment in that case. No doubt this lease is a factor which has to be taken into consideration, As a matter of fact the learned District Judge has taken it into consideration. If it had been a lease for ninety-nine years as in the Calcutta case, or a lease for any long period, or if it had been a case such as the Earl of Eldon v. The North-Eastern Railway Company (1899) 89 L.T.N.S. 722, where rent had been paid for fifty years and heavy expenditure had been incurred by the lessee and there was no likelihood of the tenancy being determined, then it would no doubt have been quite reasonable to base the valuation of the land on the lease. But the circumstances here are entirely different, As far as can be ascertained, the rental of Rs. 24 per acre per annum for this land was merely based on the rental which had been paid by the Military authorities for some land actually within the military area in the Cantoament at Deolali which was required for the Remount Depot; see Exhibit 43. It is stated no doubt in an endorsement which appears on Exhibit 20 (p. 60 of the printed book), that this rental had been recommended by the G.O.C., Bombay District, in consultation with the Collector of Nasik and had been sanctioned by the Government of India. But there is no evidence, apart from this endorsement, to show that any such consultation really took place, and in the absence of any justification for such a high rental for lands distant four or five miles from the Cantonment, it seems very doubtful indeed whether the Military authorities in fixing this rental really had the advice or recommendation of the revenue authorities. The acquisition officer referring to this matter says:-
The Military Authorities were asked to furnish me with the details of the rent, viz., the date from which it commenced, the period for which it is to continue and the basis of the rent, but no reply was received from them. There is nothing on oar record to show that the Revenue Authorities who are the experts in these matters were consulted in the matter of fixing rent, and it is pretty clear that the Military Authorities entered into the transaction on their own account. They are certainly not experts and probably paid what was asked without question thinking the total sum to be comparatively insignificant. One thing any way is certain that an enormously excessive rent of this kind cannot possibly be taken as the basis of fair valuation of these lands in open market between parties cognisant of all the conditions. The mere fact that the owners have been grossly overpaid in the past affords no reason why this scale of overpayment should be capitalized in acquiring these lands.
6. As I have mentioned, it appears from Exhibit 43 that the only basis on which this rent was fixed was the rent paid for lands in the Cantonment itself. Another circumstance of great importance is that so far from this being a lease for a long term, the agreement was in the first instance for two years only, as appears from Exhibit 20, and though the Military authorities continued to occupy the land and to pay the same rent after the expiry of the two years that was done under annual leases. As was pointed out in Earl of Eldon v. The North-Eastern Railway Company the test to be applied in such a ease is whether the lessee would have been able to realise a price for his land based on the rent which he was receiving. In this present case I do not think it can be said with any confidence that the owners of this land, if they had sold it in the open market, would have been able to realise a price based on the rental of Rs. 24 per acre per annum. That being so, it would be unsafe in my opinion to accept that rental as a fair indication of the market value of the land.
7. The District Judge has taken the mean between that rent and the ordinary agricultural rent of lands in that locality, which is the rate at which the claimants were paid by the Military authorities before the lease was entered into. That is no doubt an arbitrary method, but in the absence of data no other method was available, and the claimants, in my opinion, have not succeeded in showing that the amount awarded was unreasonably low. It is to be noted that what the Court has to do in this case is to find the market value of 168 acres of land. In view of the circumstances which I have stated, there is no reason to suppose that there was any widespread demand for land in this neighbourhood either for agricultural purposes or any other purpose. So even if we were to suppose that a few plots might have been sold at a somewhat higher rate, like S. No. 219, one acre and fifteen gunthas, which was sold, at the rate of Rs. 363 per acre, that would be no ground for holding that an average flat rate of over Rs. 273 per acre would not be a perfectly fair award for the whole area.
8. One of the claimants was awarded by the acquisition officer Rs. 210 in respect of three wells or pits as they were described in the award. The District Judge refused to increase this amount. The claimant asked for Rs. 1,200 for the three wells, one of which, however, it appears had ceased to exist at the time of the acquisition. The claimant's son in his evidence, Exhibit 19, says : "There were three wells on the land acquired. One in S. No. 202 for which we received no compensation, The Military Authorities filled it in. We got that well built by Sakharam Ganpat for Rs. 700. I do not remember when the other wells were built but they were as well built as that in S. No. 202." Sakharam, Exhibit 42, was also called as a witness and his evidence is this: " I take contracts for digging. I know applicant. I had taken a contract to build a well for him in 1915 for Rs. 700. I built it. It was S. No.
192. I have not seen whether it still exists." No accounts of the expenditure on these wells have been produced, and I think it is quite clear that there is no reliable evidence before the Court to show even what the cost of construction was. Moreover the cost of construction would not necessarily be the amount to be awarded by way of compensation. There is no evidence to show that the outlay on these wells or pits, whatever it amounted to, was successful or profitable. We do not even know that any water was found and there is no evidence to show that any of the wells was ever used, That being so, it is clear that the claimant has not made out any case for further compensation in respect of these wells.
9. I agree with the order proposed by my learned brother.
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