Chinubhai Nanalal and Others vs Additional Spl. Land Acquisition Officer

I.C. Bhatt, J.—This appeal arises from a Compensation Case No. 9/74 filed in the City Civil Court, Ahmedabad, against an Award dt. 14-3-1974 passed by the Additional Special Land Acquisition Officer, Ahmedabad, in respect of the land which is part of final Plot No. 11 of T. P. Scheme No. 10 of Ahmedabad. Notification u/s 4 of the Land Acquisition Act, dt. 24-7-1962 in respect of the said land came to be published in the Government of Gujarat Gazette dt. 2-8-1962 and the notification dt. 24-4-63 under S. 6 of the Land Acquisition Act hereinafter referred to as the Act came to be published in the Government of Gujarat Gazette on 6-6-1963. The said land was to be acquired for the purpose of construction of Dispensary Building and other institutions under the E.S.I. Scheme, Ahmedabad. Thereafter the acquisition of the said land was withdrawn by an order dt. 1-9-70 under S. 48(l) of the said Act and thereafter notice under S. 48(2) of the Act was issued to the concerned parties. The said Notice was served on the claimants. The claimants filed claims statement before the Land Acquisition Officer claiming Rs. 4,25,000/- by way of damages because the land remained unused on account of the acquisition. They also claimed an amount of Rs. 2,500/- as and by way of costs incurred by them on account of the acquisition proceedings. An amount of Rs. 63,825/- was also claimed by way of solatium at the rate of 15%. The Additional Special Land Acquisition Officer after considering the case on merits, awarded an amount of Rs. 10,955/60 as the total amount of damages (Rs. 9,705/60 for, damages on non-user of the land and R& 1250/- for the expenses incurred. It may be mentioned here that the claimants confined their claim at Rs. 5,10,995/- out of which an amount of Rs. 10,955/- awarded by the Addl. Special Land Acquisition Officer were deducted and therefore additional claim of R& 2,00,000/- was made in the Reference before the City Civil Court, Ahmedabad. Against the Award of the Addl. Special Land Acquisition Officer Compensation Case No. 9 of 1974 was filed by the claimants in the City Civil Court, Ahmedabad, which was heard and disposed of by the learned Judge,Civil Court, Court No. 6, Ahmedabad, by judgment dt. 28-9-1976, holding that the claimants are not entitled to any enhanced compensation and disallowed their claim for additional amount of Rs. 2,00,000/-. The original claimants have therefore, filed this First Appeal against the said judgment of the trial Court.

In order to appreciate the controversy involved in this case a few relevant facts may be stated. Chinubhai Nanalal and Kamlesh Chinubhai (Claimants I and 3) had entered into an agreement to purchase on 1-4-1959, the land of sub-plots Nos. 1 to 11and measuring 23498 sq. yds. of final plot No. 11 of T. Pt Scheme No. 10 and had paid the earnest money. It appears that in 1960 the claimant 1 got prepared plan for developing the said property as Nanalal Industrial Estate and according to his deposition, he had to invest about Rs. 13 lacs and the net estimated income from the said Estate would have been about Rs. 2,45,000/-. The acquired land was only one sixth portion thereof and therefore, the income thereof was also one sixth of the estimated income and he has claimed that the same income is to be capitalized at the rate of 8% interest. In the mean time, since the vendor did not execute the sale deed in pursuance of the aforesaid agreement, the claimant I filed Civil Suit No. 63/60 for specific performance of the agreement for sale. The said suit was decreed in his favour and hence the vendor filed First Appeal No. 818/61 in this Court wherein there was compromise on 19-8-69 and according to the compromise the First Appeal was withdrawn. Another fact which is relevant for the purpose of present Appeal may be stated. After the notification under S. 6 of the Act was issued Special Civil Application No. 819/63 was filed by the claimants and stay order was obtained from this Court on 24-9-1963, restraining the Government to make or declare the award and from taking over the possession. The injunction was operative for a period from 24-9-1963 to 24-11-1967. Thereafter it appears that the sale deed was executed between the parties, which is produced at Ex. 45, and possessor was thereafter received by the claimants. As stated above, the acquisition was withdrawn on 1-9-1970. Thereafter, as mentioned above Award was declared on 14-3-1974 for Rs. 10,955/60 Ps.

The trial Court has framed the following issues at Ex. 26 :

Whether the claimants are entitled to compensation for a period from 24-9-1963 to 24-11-1967?

Whether the claimants are entitled to enhanced compensation? if yes what amount?

On appreciation of evidence, the trial Court held that the claimants are not entitled to compensation for a period from 24-9-1963 to 24-11-1967 and that they are not entitled to the enhanced compensation.

The learned Counsel for the appellants in this Appeal has made the following submissions :

(1) The claimants would be entitled to get compensation for a period from 24-9-1963 to 24-11-1967, even though there was a stay from this Court in Special Civil Application No. 819/63, in view of the fact that the injunction order granted by this Court was only with regard to the declaration of the Award and/or taking possession of the suit land, namely, 4044 sq.yds. which was taken under acquisition as per the Notification mentioned above.

(2) The claimants would be entitled to damages by way of compensation as per section 48 of the Act at the rate of Re. 0.40 ps. per sq.yd. for 4044 sq.yds. and for solatium and interest. The claimants had based claims in the capacity as purchasers and the owner''s right to claim compensation under the sale deed, Ex. 45.

Learned Counsel appearing for the State has submitted that the appellants are not entitled to any compensation for the period from 24-9-1963 to 24-11-67 as the injunction granted by this Court was operating and that the appellants are not entitled to any damages prior to sale deed Ex. 45. According to him the Award made by the Addl. Special Land Acquisition Officer is quite legal and proper.

Now, so far as the first point is concerned, as stated earlier, the stay order granted by this Court in Special Civil Application No. 819/63, was only with regard to making or declaring the Award and against taking possession from the petitioners therein. There was no injunction or stay order with regard to the withdrawal of the acquisition proceedings. The acquisition proceedings were withdrawn on 1-9-1970. Before the withdrawal of the acquisition proceedings, Civil Suit No. 63/60 filed for the specific performance of the agreement for sale, was decreed and possession was also received in 1969 and even sale deed was also executed on 19-8-1969. There is no dispute with regard to the fact that there was no stay order for the withdrawal of the acquisition proceedings. Therefore, if the Government wanted to withdraw the acquisition proceedings earlier, it could have very well done so. There was no order operating against the Government for the withdrawal of the acquisition proceedings at all. S. 48 of the Land Acquisition Act provides as under :

48(l). Except in the case provided for in S. 36, the Government shall be at liberty to withdraw from the acquisition of any land of which possession has not been taken.

(2) Whenever the Government withdraws from any such acquisition the collector shall determine the amount of compensation due for the damage suffered by the owner in consequence of the notice or of any proceedings there under, and shall pay such amount to the person interested, together with all costs reasonably incurred by him in the prosecution of the proceedings under this Act relating to the said land.

(3) The provisions of Part III of this Act shall apply, so far as may be, to the determination of the compensation payable under this section.

Therefore, if the acquisition is not complete and has been withdrawn, compensation due for damage suffered by the owner in consequence of the acquisition proceedings has to be paid. In the present case the decision was not taken by the Land Acquisition Officer and therefore, there was no ban against the withdrawal of the land acquisition proceedings. In view of these facts it is difficult to conic to the conclusion that the claimants would not be entitled to compensation for a period from 24-9-1963 to 24-11-1967, during which period the stay order as aforesaid was operating. Merely because the stay was granted against making or declaring the Award and against taking possession of the suit land, cannot take away the rights of thick claimants to claim the present case the land acquisition proceedings had started and thereafter the parties were prevented from using the land or developing the same in the manner they liked and they could not put the said land to any use in view of the provisions of the Land Acquisition Act and the acquisition proceedings. Therefore, we do not find any merit in the contention raised by the learned Counsel for the respondents that the claimants are not entitled 9-1963 to 24-11-1967 when there was stay order granted by this Court against making or declaring the Award and against taking possession of the said land from the claimants. The learned Counsel for the respondents has not been able to satisfy us on any ground that the claimants are not entitled to claim compensation in respect of the said land for the aforesaid period. In the facts and circumstance of this case, we hold that the claimants would be entitled to compensation for a period from 24-9-1963 to 24-11-1967 and hold the issue No.1 in the affirmative. The decision of the trial Court holding the said issue No. I in the negative is set aside and the same is held in affirmative.

This brings us to the question as to what amount of compensation the claimants would be entitled to. As stated earlier, the claimants have restricted their claim in this Appeal to Rs. 2,00,000/-. The Land Acquisition Officer had valued the land at Rs. 10/- per sq.yds. for 4044 sq.yds. and thus the market value would come to Rs. 40,440/and the interest at the rate of 6% on this amount, according to the Award, comes to Rs. 2426/40 per year. The period of pendency of the case is from 24-7-1962 to the date of the withdrawal i.e. 1-9-1970 from which the period from 24-9-1963 to 24-11-1967 has been deducted by the Land Acquisition Officer and according to him the net period is about 4 years and he accordingly awarded interest at 5% on the amount of Rs. 40,440/- which comes to Rs. 9705/60. An amount of Rs. 1250/- has been awarded towards the expenses incurred by the claimants in the High Court and thus, total sum of Rs. 10,955/60 has been awarded by the Addl. Special Land Acquisition Officer. The claimants claimed the enhancement of compensation at the rate of 0.40 ps. per sq.yd. as loss of rent between 2-8-1962 when S. 4 notification was published in the Govt. Gazette and 1-9-1970 when the acquisition proceedings were withdrawn. The claimants have relied upon Ex. 52, Ex. 53 and Ex. 54 and have also relied upon the plans which were submitted for the development of the land as Nanalal Industrial Estate and have claimed that on capitalization basis the suit claim should be decreed.

Ex. 52 is a letter dated 24-9-1962 received from Gesso Standard Corporation received by Chinubhai-claimant No. 1. The said letter was signed by one V.K. Khopkar, who is examined at Ex. 51. Now, the offer was made for leasing out the land at the rate of Rs. 0.40 ps. per sq.yd. The land was required for a long period for installing and service station. Ex. 53 is an agreement which is another instance cited by the claimants. It is a lease of some portion of the land from adjoining final plot No. 12, entered into by Esso Co. in 1963. Perusal of the said lease deed shows that the said plot of land is given on the monthly rent of Rs. 400/-. On the basis of the plan at Ex. 54 the plot it would be 1031 sq.yards. Shri Khopkar has stated in his evidence that according to him the rate agreed in Ex. 53 is the market rate the monthly rent per sq.yd. would be something more than 0.39 paise per yd. No doubt that the said lease Agreement Ex. 53 is dt. 1-4-1963 after Notification under S. 4 was issued in respect of the land in question.

The next instance which was relied upon by the claimants is received from one Bhanushanker Gaurishanker Mehta by letter dt. 10-6-1962, Ex. 5 1. The offer was made at the monthly rent of 1000/- for 200 sq. yards of land. Said Bhanushanker whose deposition is at Ex. 55, has stated that he was under the impression that Chinubhai was the owner of the land and that after two months of his aforesaid offer, he cancelled his offer.

Another offer which has been relied upon by the claimants is made by Vipinchandra for 4800 sq.yds. of land for the purpose of constructing the cinema on the monthly rent at the rate of 8 annas per sq.yd. The letter of offer is at Ex. 49. The evidence of Vipinchandra is at Ex. 48. He has stated that he was working as an Estate Broker and he had placed the offer on behalf of his Bombay Party. In cross-examination he has stated that he was under the impression that claimant was the owner of the said land and that his offer was open for one year. He has stated that he had to keep the land on rent as per his offer, provided the claimant brought the no objection certificate within six months from the date of the receipt of his aforesaid letter. This witness has stated that, he had written the letter in respect of the portion of the said land after seeing the Final Plot No. 11 of the T. P. Scheme No. 10, which is near Anant Mills, giving offer for the construction of the Cinema on the said land.

The trial Court has rejected all these instances on the ground that they are hypothetical and/or conditional instances, and discarded them for the purpose of determining the compensation. The learned trial Judge has further observed that none of the aforesaid offers were pending at the time when the claimants got the possession of the land on 19-8-1969. The learned trial Judge relied upon a decree, Ex. 40, obtained by the claimants I and 3 against the vendor, wherein the purchase rate was mentioned at Rs. 3/ 10 ps per sq.yd., in the year 1959. The conveyance was executed on 19-8-1969 transferring part of the land in favour of the present claimants without any additional consideration, but the valuation for the purpose of conveyance i.e. for the purpose of stamp duty it is valued at Rs 45,000/-. The learned trial Judge ultimately came to the conclusion that the market value at the rate of Rs. 10/- put by the additional Special Land Acquisition Officer was just and fair, and considering the loss of interest at rate of 6% on the value of 4044 sq.yds. of land which comes to Rs. 40,440/-, the annual loss was counted at Rs. 2426/40 ps. The trial Court came to the conclusion that the claimants would be entitled to compensation for the period after they became owners of the land from 19-8-1969 and the claimants 1and 3 would be entitled to, as the persons interested as there was agreement of sale in their favour and the total compensation which they would be entitled to would be Rs. 350/ plus the expenses as awarded, by the Special Land Acquisition Officer. Therefore, the claimants have failed to prove to get the enhanced compensation under S. 21. Under S. 25(l) of the Land, Acquisition Act the amount of compensation awarded to the claimants by the Court shall not be less than the amount awarded by the Collector under S. 11 and in the present case it would not be less than the amount awarded under S. 48(2) of the Land Acquisition Act. The learned trial Judge came to the conclusion that the claimants failed to prove that they 4re entitled to enhanced compensation. Against the said judgment and order of the learned trial Judge, the present First Appeal came to be filed by the claimants in this Court.

In view of the fact that the land in question was acquired in the year 1962 and the acquisition proceedings were drawn on 1-9-1970 the said land could not be put to any use by the claimants and they have been made to suffer on account of the acquisition proceedings. Now, the question is as to what should -be the amount of compensation for the damage suffered by the claimants on account of the acquisition proceedings and the withdrawal thereof. In the instant case the claimant No. I has given evidence at Ext. 28 and in his evidence he has stated that he wanted to make use of the land for the purpose of industry and cinema theatre. It has been stated that the land of Final Plot No. 11 of T. P. Scheme No. 10 is situated on the main road, which is 60'' road. The land or north-west corner abutting on the 60'' road was acquired. The said plot of land is situate in industrial area where there are different textile mills. Drainage pumping station in the said area is at a distance of about a furlong. It has been stated by him that at the place of drainage pumping station, there is a junction of seven roads. Just on the north of the acquired land, there is a small strip of garden land. Anant Mills is situated in the Final Plot No. 10 which is on the eastern side of the above land. He has stated that he could not use the land on the eastern side of the land acquired, because of the acquisition of the land. The road which is passing on the northern side of the land is the road from Railway Station to Malak Saban Stadium. It is a 60 road. On the southern side of the plot, there is a road which goes from Station to Odhav. He also relies upon the offers made to him with regard to the suit land and his case was that the buyers were coming to him because the decree was passed in his favour in the Civil Suit No. 63/60. According to him, Bapunagar Industrial Estate has been approximately in 1960 constructed by Ahd. Muni. Corpn. and it is at a distance of half mile from his land.

Now, as already stated, a lease agreement of some portion of land from adjoining Final Plot No. 12 was entered into by Esso Co. in 1963. The copy of the said agreement is produced at Ex. 53 and the certified copy of the plan is at Ex. 54. Witness Kashinath Khopkar (Ex. 51), has been examined with regard to this lease-agreement and he has stated that the rate agreed in Ex. 53 is a market rate. If we peruse the said lease-agreement it is clear that the said plot of land is given on the monthly rent of Rs. 400/- and though the actual measurement of the plot is not shown, on the basis of plan at Ex. 54, the measurement of the plot would be 1031 sq.yds. as observed by the trial Court. Therefore, the monthly rent per square yard would be something more than 39 paise. No ground has been made out by the learned Counsel for the respondent State to reject this instance. However, on the ground that the lease is dt. 1-4-1963 and is in respect of a small portion of land, the rate may be reduced from 39 paise per square yard to some lesser amount. The land in question is situated on a better position than the adjoining plot of land bearing Final Plot No. 12. The land in question is on the front side and there are roads on two sides. This land has, therefore, potential value. The offers which have been relied upon are practically of the same period i.e. of the year 1962. It will not be proper to reject these offers on the ground that they are hypothetical or conditional. Considering the area and the situation of the land in question, there cannot be any doubt that the land in question would have fetched at least the same price i.e. 40 paise per sq.yds. However, the other instances are with regard to small size of plot of lands and in one case the offer was cancelled. In respect of the present land no further offers could have been made in view of the fact that the land in question was put under acquisition and the suit was also pending. Considering the entire evidence on record and the facts and circumstances of this case and considering the fact that the land in question is of a larger size i.e. 4044 sq.yds. and the fact that it is surrounded by two roads on two sides and has greater potentical value and could have been used for the construction of a Cinema or other big shopping centre, we are of the opinion that the land in question in any circumstances, would not have fetched less than 30 paise per sq.yd. We are of the view that the said land could have been given on lease at the rate of 30 paise per sq.yd. We accordingly hold that at the relevant time the lease hold value of the land in question is to be valued at Rs. 30 ps. per sq.yd. The issue No. 2 is accordingly answered.

The claimants, have claimed solatium and interest on the amount of Award. Now, so far as these two aspects i.e. solatium and interest are concerned, learned Counsel for both the sides have requested this Court for adjourning this matter for further arguments. The request of the learned Counsel for both the sides is granted and this matter is adjourned for hearing on the aforesaid two points.

This matter was on Board on 17-10-1987. At the end of the judgment, when we reached to the question of solatium and interest both the sides requested us to adjourn the matter for further arguments in the matter on these two aspects and hence the matter was accordingly adjourned. Thereafter there was strike of the Advocates for pretty long time and therefore, the matter could not be taken up for hearing. After the strike was over, the said Bench (Coram : I.C. Bhatt and J. P. Desai JJ. was not available for hearing this matter. However, on some occasions this matter was placed for hearing before us at 4.45 p.m. but for one reason or the other, the matter came to be adjourned from time to time. Adjournments were also sought for by the learned Counsel for the parties on some occasions. This matter was placed on Board on 18-6-1988 and the arguments of both the sides on the aforesaid two aspects were heard by us, and the judgment on the question of interest was kept C.A.V.

So far as the solatium under S. 23 of the Land, Acquisition Act is concerned, the learned counsel for the Appellants has not pressed for the same and hence we do not go into the merits of the said aspect of the case.

So far as the question of interest is concerned, the provisions of S. 48 of the Land Acquisition Act do not provide for payment of any interest on the amount of compensation to be fixed under the said section. Reliance was placed upon a decision of the Supreme court reported in Satinder Singh and Others Vs. Amrao Singh and Others, another decision of Supreme Court reported in Abhay Singh Surana and Others Vs. Secretary, Ministry of Communication and Others, and a decision of the Privy Council reported in AIR 1938 67 (Privy Council) , in support of the claim for interest. We do not propose to go into the discussion of these decisions becasue the learned Counsel Mr.S. B. Vakil for the appellants submitted that he was restricting the claim, so far as interest is concerned, from the date of the application for Reference only and not for the period prior to the filing of the said Application. Even if recourse cannot be had to S. 34, C.P.C. in the present case, interest from the date of the application can certainly be- awarded on equitable grounds. The power to award interest on equitable grounds even for the period prior to the filing of the suit is expressly saved by the proviso to S. 1 of the Interest Act XXXII of 1839.

In the aforesaid circumstances, we see no reason why the appellants should be deprived of the interest from the date of the application for no fault on their part. All that is required to establish is the existence of a state of circumstances which attract equitable jurisdiction. If a plaintiff'' in a suit can be awarded interest from the date of the suit under S. 34, C.P.C., there is no reason why the appellants who under the Land Acquisition Act made an Application for Refernece to the Collector should be deprived, of interest from the date of making the Application for reference on equitable grounds. We are, therefore, inclined to award interest to the appellants from the date of the application made to the Collector for making refernece at 6% per annum till realization.

This Appeal is accordingly allowed to the aforesaid extent i.e. the lease hold value of the land in question is to be valued at Rs. 0.30 ps. per sq. yd. and the appellants are entitled to interest at 6% per annum from the date of application to the Collector for making Reference till realisation. The parties will bear their own costs of this Appeal.

Appeal allowed.