The ordinary rule that has been adopted in England in the case of compulsory acquisition of land occupied by tenants, whose tenancies are determined by notice or efflux of time, is that they cannot claim compensation for loss of profits, even though they had reasonable expectation of continuing in possession or having the lease renewed.
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Bombay High Court
District Deputy Collector, ... vs Mansangji Mokhamsangji Naik on 19 March, 1928
Equivalent citations: (1928) 30 BOMLR 930, 113 Ind Cas 169
Bench: Fawcett, Mirza
1. This appeal relates to certain lands which were acquired under a declaration of January 8, 1921, when the area was notified as to be acquired. The main claimant was the Naik of Katwara village, in which the land lay. The Acquiring Officer in March 1923 awarded him the sum of Rs. 18-2-1 with the usual fifteen per cent, and six per cent, interest from the date of taking possession. On his application, the Acquiring Officer made a reference under Section 18 of the Land Acquisition Act to the District Court of Ahmedabad. The Assistant Judge, who dealt with the matter, raised the award to Rs. 737-8-0 that being at the rate of Rs. 50 an acre plus the usual fifteen per cent, and the six per cent interest, The Government have appealed in the name of the District Deputy Collector of Panch Mahals.
2. The award of the Acquiring Officer is based on the Naik merely being a leaseholder at the pleasure of Government, whoso lease had expired and about renewal of which nothing could be said then, He estimated the amount of profit that would have been obtainable by the Naik under the terms of the lease that was proposed by Government in 1907, and allowed four years for those profits, as if a lease on those terms had been executed on January 1, 1908, for the period of fifteen years mentioned in the offer of Government about renewal. The lease would then have expired on January 1, 1923, and as the land was acquired in May 1919 four years had remained to run for the expiry of the lease, if accepted, since the acquisition. The Assistant Judge, on the other hand, in spite of the Privy Council decision in Vajesingji v. Secretary of State by which they have been declared not to be proprietors but leaseholders at the pleasure of Government, says that they are not in the position of ordinary lessees, but practically permanent lessees on certain conditions. Again, he says: The claimant's is not a proprietary interest but for our present purposes, it may fairly be taken as quasi-proprietary. What I mean to say is that, though he is a lessee, he is certain, from the history of the lands, to be continued under Pattas renewed from time to time so long as he accepts and fulfils the customary conditions that may be imposed on him.
3. He further remarks :
Here the unexpired portion is indefinite, further renewals almost certain, chances of forfeiture negligible.
4. Accordingly, he allowed full compensation for the Naik's interest in the land acquired, as if he was a proprietor.
5. In my opinion, it is impossible to consider the Naik's interest equivalent to what it would be, if he were a proprietor, Collector, after the privy Council decision to the contrary. It is there distinctly laid down that the Naik is merely a leaseholder holding his lease at the pleasure of Government, and his interest in the land acquired can certainly not be placed on any higher footing. The lower Court has, in my opinion, not given due regard to the interest of the Naik at the date of the declaration under Section 6 of the Land Acquisition Act, which is the interest that is to be valued under Section 23, Sub-section (1), of the Act. His interest has to be taken as it was then, and not as it is now, or as it may be at a future date. The position in 1921 was as follows. Government in 1907 had laid down in very definite terms that they were prepared to renew the lease only on certain conditions, and the Naik was informed that in case of refusal to accept a lease in those terms the leasehold tenure would be terminated at once. There was, therefore, a clear threat of eviction by Government Resolution No. 7048 of July 17, 1907 (Exhibit 39). The Naiks thereupon brought suits against Government in 1908, in which they asked for a declaration as to their proprietary tenure, and also for injunctions to restrain Government from taking any steps for removing them from possession of the estate in dispute. In February 1913, the District Judge dismissed these suits, and in January 1917, the High Court confirmed his decrees and dismissed the Naiks appeals. The Naiks then made a further appeal to the Privy Council and that appeal was pending at the date of the declaration. The decision of the Privy Council was not given till June 1924, i.e., after the date of the Collector's award. What, then, was the interest of the Naik in 1921? His suit to restrain Government from evicting him, &c., had been dismissed by the District Judge and that decision had been confirmed by this Court. The appeal to the Privy Council might, of course, be decided in his favour; but as we now have to decide what is the market value of his interest in 1921, we can, of course, avail ourselves of the knowledge that, in fact, his appeal failed and that the decision of the Courts in India was confirmed. His position, therefore, was merely that of a tenant-at-will, the period of whose lease had been determined and who had been threatened with eviction; he was not a person "holding over" under Section 116 of the Transfer of Property Act; and besides that, he was fighting his landlord by litigation and therefore in the ordinary course would not be likely to get very favourable treatment the landlord, if he failed in the litigation.
6. The ordinary rule that has been adopted in England in the case of compulsory acquisition of land occupied by tenants, whose tenancies are determined by notice or efflux of time, is that they cannot claim compensation for loss of profits, even though they had reasonable expectation of continuing in possession or having the lease renewed. The leading case is Rex v. The Liverpool and Manchester Railway Company (1836) 4 Ad. and El, 650 and there are other decisions to the game effect cited at the bottom of p. 39 of Velinker's Law of Compulsory Land Acquisition and Compensation, 2nd Edition. It seems to me this principle clearly applies in the present case, and that we would be really departing from what the Act requires, viz., a determination of the market value of the Naik's interest at the date of the declaration, if having regard merely to pending negotiations or any other subsequent event or out of a spirit of generosity, we were to allow more than is properly claimable by the Naik as the market value of his interest in the land. If we were valuing his interest at the present date, and it were shown that he was going to get a renewal, then the position would be different; but taking the position as it was in 1921 it seems to me that, if anything, the award of the Collector errs on the side of liberality, and really be might have decided that the Naik, in the circumstances, was entitled to no compensation at all.
7. Therefore, in my opinion, the award of the Assistant Judge should be set aside and the award of the Collector restored.
8. The claimant must pay the coats of Government both in this Court and in the lower Court.
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