The Associated Oil Mills Ltd. vs The Provincial Government of Madras

Govindarajachari, J.—These two appeals are directed against the judgment and decree of the District Judge of North Arcot, Vellore, acting

as an arbitrator u/s 19(1)(6) of the Defence of India Act. C.M.A. No. 667 of 1945 is by the Associated Oil Mills, Ltd., Katpadi, hereinafter

referred to as the claimant and C.M.A. No. 732 of 1945 is by the Government of the Province of Madras. It is convenient to deal with the latter

appeal first.

The only point taken in this appeal on behalf of the Government is that in his award concerning the loss of income to the claimant the District

Judge should have confined it to the period from 1st June, 1942 to nth September, 1942, and should not have given any amount for loss of income

for the period between 11th September, 1942 and 15th October, 1942. About 4 acres and 15 cents of land belonging to the claimant in the village

of Ammanur in Arkonam taluk was requisitioned by the Government for military purposes with some superstructures standing thereon. The order

requisitioning those properties was passed on the 20th May, 1942 ; but possession was actually taken three days later. The superstructures

included a mill which the claimant had erected for crushing groundnuts and other oil seeds. It is common ground that the claimant would have

commenced the working of the mill and would have gone on with the manufacture of oils had it not been for the requisitioning of the properties by

the Government. After it received the order of requisition the claimant had to remove the mill from there and erect it at Katpadi. On behalf of the

claimant it was at first claimed that it should be awarded compensation by way of loss of income from the 23rd May 1942 to 1st November,

1942. At the time, however, when evidence was adduced before the arbitrator the claim was restricted to the period between the 1st June, 1942

and 24th October, 1942. There is no objection on the part of the Government to the 1st June, 1942, being regarded as the commencement of the

period ; but it is contended by the Government that the claimant should not be awarded any compensation for loss of income after the nth

September 1942 The District Judge awarded Rs. 63,259-12-0 under this head calculating as already stated for the period between 1st June, 1942

and 15th October, 1942 It would appear that the claimant applied to the proper authorities for permission to work the factory on the 6th October,

1942, and that permission was given on the 11th October, 1942. The District Judge allowed four days for the permit to reach the claimant and that

is how he fixed the 15th October, 1942, as the date up to which compensation should be awarded. On behalf of the Government the learned

Government Pleader argued that it is for the claimant to show that it could not have started the working of the factory at Katpadi at an earlier date.

The evidence on this matter is meagre; but from the evidence of the claimant''s director who was the only witness examined in the case it appears

that soon after the requisition was received the claimant purchased another site at Katpadi on the 2nd June 1942 and that with the greatest

expedition the witness constructed the buildings there and planted the machinery which he had removed from Arkonam, by the last week of

October, when according to him he actually started pressing oil after getting a permit. There was no serious challenge of this statement which was

made by the witness in his examination-in-chief. He was asked in cross-examination about the purchases made by his company on the 11th

September, 1942 and again on the 14th September. He admitted the purchases, but stated that they were for small amounts. He added that the

company carries an advance stock of 15 000 bags valued at Rs. 3,75,000. The Government called no evidence contra The mere fact that some

quantity of groundnut was purchased on the 11th September and 14th September, does not indicate that the crushing of the groundnut was started

on either of these dates. Assuming that it is for the claimant to establish that it could not have started the working of the mill at Katpadi earlier, the

evidence given by the witness examined on behalf of the claimant, in our opinion, satisfactorily establishes that the company could not have started

the working of the mill at Katpadi earlier than the date fixed by the learned District Judge. It is not denied that the mill could not be worked without

a permit which was only issued on the 11th October, 1942. All that is suggested on behalf of the Government is that the claimant could have

constructed the mill at Katpadi and obtained the permit earlier than that date but for reasons already stated not only has the Government not made

this out, but the claimant has definitely established that it could not have started the working of the mill at Katpadi earlier than 15th October. That is

the only point argued in the appeal filed by the Government. The appeal fails and is dismissed with costs.

In the appeal filed by the claimant two points were taken on its behalf One is that interest should have been awarded by the learned District

Judge on the amount which he has decreed. The second is that the learned District Judge is wrong in allowing only Rs. 100 by way of costs to the

claimant, while allowing a like amount of costs to the Government though the claimant has very substantially succeeded before him.

As to the first point we do not see how interest can be awarded on an amount which is in the nature of damages. It was suggested that the

Government had agreed to pay interest. The appellant''s counsel took us through some of the letters which passed between the claimant''s solicitor

and the Government in an endeavour to establish that there was an agreement between the claimant and the Government as to the amount payable

to the former by way of compensation for loss of income. We are satisfied that at no stage during the correspondence was there any such

agreement. In his award dated 31st January, 1945, the Collector of North Arcot refers to the claims made before him on behalf of the Associated

Trading Corporation, Limited and the Associated Oil Mills, Ltd., the latter being the claimant in this proceeding. Dealing with the claim made by

the Associated Trading Corporation he stated that it was agreed between the Government and the Corporation that Rs. 3,394-o-0 should be paid

by the Government by way of compensation for requisitioning certain properties of the Corporation and in referring to this amount the Collector

says that the Government was pleased to sanction payment of interest, at 6 per cent. per annum on the amount of compensation as finally agreed

upon. In a separate paragraph he refers to the claim made by the Associated Oil Mills, Ltd. There he simply sets out the particulars of the amounts

which the Government was prepared to pay to the claimant and expressly states that there being no agreement between the Associated Mills and

the Government, there would be a reference to the arbitrator, viz., the District Judge of North Arcot. Moreover,. we are not concerned with the

question whether there was any agreement between the Government and the claimant as to the period for which compensation should be awarded

for loss of income, the point which we have to decide being merely whether the Government consented to pay interest. We have not been shown

any document from which it can be said that the Government agreed to pay interest on such compensation as may be awarded to the claimant.

It was then argued on behalf of the appellant that u/s 19(1)(e)(i) of the Defence of India Act, it would be entitled to the award of interest.

Section 19(1)(e)(i) runs as follows:

The arbitrator in making his award shall have regard to

(i) The provisions of Sub-section (1) of Section 23 of the Land Acquisition Act, 1894, so far as the same can be made applicable.

Turning to Sub-section (i) of Section 23 of the Land Acquisition Act it will be noticed, that there is no provision therein for the award of interest in

cases arising under the Land Acquisition Act, the appropriate provision being contained in Section 34, which, it will be observed, is not one of the

provisions made applicable by the Defence of India Act to claims made in regard to properties which are requisitioned. Reference was made on

behalf of the appellant to the decision of the Judicial Committee in Inglewood Pulp and. Paper Co. v. Mew Brunswick Electric, Ltd. AIR 1928

P.C. 287 of the report occur the following observations of the Privy Council:

It is now well-established that on a contract for sale and purchase of land it is the practice to require the purchaser to pay interest on his purchase

money from the date when he took possession per Lord Cave, L.C., in Swift v. The Board of Trade (1925) A.C. 520 .

The law on the point has also been extended to cases under the Lands Clauses Consolidation'' Act, 1845.

So far as the compulsory purchase of properties in this country is concerned, the law is sfatutorily laid down in the Land Acquisition Act. In the

absence of any provision in the Defence of India Act or the rules framed thereunder making Section 34 of the Land Acquisition Act applicable and

in view of the provision expressly making Sub-section (1) of Section 23 of that Act alone applicable, we are unable to see on what general

principle we can award interest to the claimant because he was kept out of the use of money which ultimately is found payable to him by way of

compensation.

It is unnecessary for us to go into the question whether any interest is awardable from and after the date of the reference to the arbitrator.

Assuming that there is power and jurisdiction in the arbitrator to award interest during the pendency of the arbitration in appropriate cases, it must

be noticed that no claim for interest from the commencement of the arbitration proceedings was made before the arbitrator. In a careful judgment

the Jearned District Judge deals with every one of the claims made before him and there is no reference anywhere to any claim for interest. In these

circumstances we must hold that the claimant is not entitled to the award of any interest on the amount which has been decreed to him.

As regards costs it must be mentioned that by the time the reference was made to the arbitrator the claimant''s total demand stood so high as Rs.

1,65,275-5-6. It is only in the statement that he subsequently filed before the arbitrator that the claim in respect of loss of income was reduced to

the figure Rs. 72,957-4-2. It is true that the District Judge has awarded Rs. 63,259-12-0 which represents a substantial portion of the amount

claimed in the respondent''s statement but if costs are to be awarded ad valorem as the appellant''s advocate claims, the Government would be

entitled to costs on the amount in respect of which the claimant''s demand was refused by the learned District Judge. If there are to be costs ad

valorem on both sides there would be very little difference indeed in the matter of the resultant costs payable by one side to the other. We are

unwilling to interfere with the discretion of the learned District Judge in his award as to costs. He fixed the sum at Rs. 100 each to the counsel

appearing for the Government and the claimant. In our opinion the award must stand. The appeal filed on behalf of the claimant also fails and is

dismissed with costs.