Province Of Bengal v. Pran Kissen Law And Co.

Das, J.:— This appeal is by the Province of West Bengal from a decision of Mr. R.S Trivedi, Arbitrator appointed under Sec. 19 of the Defence of India Act and dated the 16th March, 1948. Premises No. 30, Ballygunj Park now numbered as No. 44, Ironside Road belonged at the relevant time to Pran Kissen Law and Co. On the 15th November, 1944, the aforesaid premises were requisitioned by the Government. The said premises were later on acquired by the Government under Sec. 75 (A) of the Defence of India Rules on the 12th April, 1945. Before the Collector the Respondents Pran Kissen Law and Co. preferred a claim on the 9th December, 1944. The petition has been marked Ext. A. In that petition the Respondents claimed a sum of Rs. 2,049 per month as compensation for the lands on account of the requisition made by the Government. No agreement was, however, reached between the Government and the claimants as regards the compensation payable for the requisition of the land. Accordingly, on the 21st November, 1946, the Respondents filed a petition before the Collector for reference of the dispute to the Arbitrator under Sec. 19 (1)(a) of the Defence of India Act hereinafter to be called the Act. In this petition the claim of the Respondents in respect of the requisition was laid at Rs. 2,750 per month. The price of the land was claimed at Rs. 4,000 per cottach. Interest was claimed at 6 per cent. per annum. On the 14th February, 1947, the Land Acquisition Collector made a reference. From this reference petition it appears that possession was taken on the 12th April, 1945, the requisition having been made on the 15th November, 1944. On the 21st February, 1947, the reference was registered as Land Acquisition Case No. 25 of 1947. On the 18th April, 1947, the Respondents filed their statement of claim. In that petition the Respondents claimed Rs. 2, 750 per month for the period during which the property was under requisition and they claimed the price of the land at Rs. 4,000 per cotta and the value of the boundary wall at Rs. 3,750. Interest was claimed at 6 per cent. per annum on the ground of unconscionable delay. On the 15th December, 1947, the Province of Bengal filed its statement. In that statement the Province of Bengal stated that the fair rent payable from the 24th November, 1944 to 11th April, 1945, would be at the rate of Rs. 2,049 per month. The value of the land acquired was stated to be at the rate of Rs. 3,325 per cotta, the total price being stated to be Rs. 4,86,627. The price of the boundary wall was stated to be Rs. 3,700. On the 14th November, 1948, the Land Acquisition Collector purports to have made an award. This has been marked as Ext. 5. As the learned Arbitrator points out, this was really an offer made by the Collector. On the 16th March, 1948, the Arbitrator made his award. The Arbitrator affirmed the Collector in so far as it concerned the compensation to be paid during the period of requisition and in respect of the acquisition of the land. He awarded interest at the rate of 6 per cent. per annum for a period of two years. His conclusions may be summarised as follows:—

Rent at Rs. 2,049 from 24-11-44 to 11-4-45 Rs. 9,425. Price of land at Rs. 3,325 Rs. 4,86,627. Interest on the second item for 2 years Rs. 58,400. Rs. 5,54,452.

2. He did not make an order for costs. Against the decision of the Arbitrator, the Province of Bengal preferred this appeal contesting the decision in so far as it awarded interest in favour of the Respondents. There was a cross-objection by the Respondents. In the grounds of cross-objection the cross-objectors claimed interest at 6 per cent. per annum. They also claimed costs before the Arbitrator. They also claimed the value of the compound wall which was refused by the Arbitrator. The memo of cross-objection was valued at Rs. 26,000. It has been stated before us that this sum represents interest at 6 per cent. per annum on the sum of Rs. 4,86,627 for a period of nine months till 14th January, 1948.

3. The principal question which arises in the appeal and in the cross-objection concerns the interest, if any, payable on the price of the land. There are two subsidiary questions, viz., if interest is payable, at what rate interest is to be paid and secondly, for what period.

4. I shall deal with the first part of the question, viz., whether interest is payable on the price of the land which was acquired. The learned Assistant Government Pleader who has appeared in support of the appeal has contended that interest is not payable at all. His argument in short is that compensation is payable under the Act on the principle embodied in Sec. 19 (I)(e) of the Act. Sec. 19 (I)(e) merely attracts Sec. 23 (I) of the Land Acquisition Act, 1894. Sec. 23 (I) of the Land Acquisition Act does not provide for payment of interest on the sum awarded as compensation. The payment of interest on the sum awarded under the Land Acquisition Act is provided for in secs. 28 and 34. These sections have not been expressly made applicable to requisitions or acquisitions under the Defence of India Rules. In support of his submission he has referred us to a decision of the Madras High Court in the case of Associated Oil Mills, Ltd., Katpadi v. Provincial Government of Madras(1). So far as this Court is concerned, there is no decision which expressly covers the point. We have, therefore, to construe Sec. 19 of the Act and to see whether that section debars the Arbitrator from awarding interest on the price of the land in case of acquisition. Sec. 229 (2) of the Government of India Act, 1935, lays down that any law authorising compulsory acquisition of land must provide “for the payment of compensation for the property acquired,” and “either fix the amount of compensation or specify the price on which, and the manner in which, it is to be determined.”

5. Sec. 19 of Defence of India Act accordingly made necessary provisions for specifying the price on which the compensation has to be awarded and the manner in which it has to be ascertained.

6. Sec. 19(I)(a) provides for payment of compensation in terms of an agreement which may be reached between the Government and the person whose land has been acquired.

7. Sec. 19(I)(b) provides that where no such agreement can be reached, the Central Government shall appoint an Arbitrator who possesses requisite qualifications.

8. Sec. 19(1)(c) provides for the appointment of Assessors in cases requiring expert knowledge.

9. Sec. 19(1)(d) requires that the parties may submit statements of opinion as regards the fair amount of compensation to be paid.

10. Sec. 19(1)(d) then states “the Arbitrator in making his award shall have regard to (i) the provisions of sub-sec. (1) of Sec. 23 of the Land Acquisition Act, 1894, so far as the same can be made applicable,— (ii) whether the acquisition is of a permanent or a temporary character.

11. Sec. 19 (2) confers on the Central Government the power to make rules for carrying into effect the provisions of the Act.

12. It is apparent that the fixation of the amount of compensation to be paid in case of acquisition, whether permanent or tern-porary, is a matter entirely within the jurisdiction of the Arbitrator.

13. As already pointed out, the contention of the Appellant is that the true intent of Sec. 19(1)(c) is to limit the amount of compensation payable under the Act to the amount of compensation which is payable under Sec. 23(1) of the Land Acquisition Act, 1894, so far as the same may be applicable.

14. Sec. 23(1) of the Land Acquisition Act provides for payment of compensation in respect of the market-value of the land, damages sustained by reason of severance or injurious affections of other properties of the person whose land has been acquired or on account of necessary change of residence or of business or diminution of profits.

15. It is, therefore, contended that payment of interest on the price of land acquired is not an item which can be paid under Sec. 19(1)(e) of the Act.

16. The opening words of Sec. 19(1) make it abundantly clear that Sec. 19(1)(e) merely states the principles which the Court has to consider in assessing the amount of compensation to be paid. Sec. 19(1)(e) requires the Arbitrator “to have regard” to the provisions of Sec. 23 (1) of the Land Acquisition Act. This requirement only implies that the provisions of the Land Acquisition Act must be taken into consideration. It does not mean that the Arbitrator is strictly bound by the terms of Sec. 23(1) of the Land Acquisition Act.

17. Mr. Gupta appearing for the Respondents drew our attention to the case of Ryots of Garabandho v. Zeminder of Parlakimedi(2) where a similar expression which is to be found in Sec. 168 (2) of the Madras Estates Land Act, 1908, came to be discussed. In that case under Sec. 164 of Madras Estates Land Act, 1908, record-of-rights had to be prepared and the Revenue Officer was to settle fair and equitable rent. Sec. 168 provided that in settling such rents the Collector shall presume, unless the contrary is proved, that the existing rent or rate of rent is fair and equitable and shall have regard to the provisions of the Act for determining rates of rent payable by raiyats. The Board of Revenue affirmed a decision of the Revenue Officer enhancing the rent by 37½ per cent. although Sec. 32 of the Act limited the enhancement of rent to 12½ per cent. It was contended that in fixing the fair and equitable rent, due regard to the provisions of the Act has not been paid. A question, therefore, arose as to the meaning of the expression “having regard to the provisions of the Act.” The Judicial Committee observed that the primary duty of the Revenue Officer was to fix a fair and equitable rent and though he may be guided by the provisions underlying Chapter XI of the Act in fixing the fair and equitable rent, he is not strictly bound by those provisions.

18. In my opinion, Sec. 19(1)(e) of the Act has not taken away the power of the Arbitrator to fix the fair amount of compensation to which the owner was entitled in case of acquisition under the Defence of India Rules. In the case of The Province of Bengal v. The Board of Trustees of the Improvement of Calcutta(3), it was stated that the principle of compensation to be paid under Sec. 19(1)(e) of the Act is that the amount of compensation must be tested by the loss to the owner. We have, therefore, to find out what was the loss to the owner by reason of the acquisition of the land.

19. The question whether in case of statutory acquisition the person whose land is acquired is entitled to interest on the price of the land is dealt with in Cripps on Compensation, 7th Edition at p. 196. The learned author states that ordinary rules as to payment of interest on purchase money apply when lands are acquired under statutory powers. The Statute Law in this country as regards interest to be paid on purchase money is contained in Sec. 55 (4) (b) of the Transfer of Property Act which states that in the absence of an agreement to the contrary, interest has to be paid on the purchase money from the date on which possession has been delivered in cases where ownership has passed to the purchaser. In the case of Inglewood Pulp and Paper Company, Limited v. New Brunswick Electric Power Commission(4), it is observed as follows:—

“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 & Co. v. Board of Trade(5). The law on the point has also been extended to cases under the Lands Clauses Consolidation Act, 1845.

“Their Lordships see no good reason for distinguishing the present case from such cases. It is true that the expropriation under the Act in question is not effected for private gain, but for the good of the public at large, but for all that, the owner is deprived of his property in this case as much as in the other, and the rule has long been accepted in the interpretation of statutes that they are not to be held to deprive individuals of property without compensation unless the intention to do so is made quite clear. The statute in the present case contains nothing which indicates such an intention. The right to receive interest takes the place of the right to retain possession and is within the rule.”

20. As I have already discussed no such contrary intention can be spelled out of Sec. 19(1)(e) of the Act. The fact that secs. 28 and 34 of the Land Acquisition Act were not made expressly applicable does not also indicate a contrary intention. The Act merely laid down the principles to be observed in fixing the amount of compensation to be paid.

21. In my opinion, a person whose land has been acquired under the Act is entitled to receive the full compensation for the loss of his property. The plainest principle of justice requires that the acquirer should not retain the price of the land and the use thereof without paying to the person whose land has been acquired, compensation in the shape of interest on the price of the land. This is fully supported by the following observations of Lord Shaw in the case of Ratanlal Choonilal Pannalal v. Municipal Commissioner for the City of Bombay(6), to which our attention has been drawn by Mr. Gupta appearing for the Respondents. The observation runs thus:—

“Their Lordships are of opinion that the right to interest depends upon the following broad and clear consideration. Unless there be something in the contract of parties which necessarily imports the opposite, the date when one party enters into possession of the property of another is the proper date from which interest on the unpaid price should run. On the other hand, the new owner has possession, use and fruits; on the other, the former owner, parting with these, has interest on the price. This is sound in principle, and authority fully warrants it.”

22. The decision in Associated Oil Mills, Ltd., Katpadi cited above is distinguishable on facts. That was a case of temporary acquisition and not one of permanent acquisition. In such a case the ownership in the property does not pass. The owner merely gets compensation for the loss of income. It is no doubt true that their Lordships of the Madras High Court interpreted Sec. 19(1)(e) of the Act as limiting the power of the Arbitrator to award compensation only in accordance with the provisions of Sec. 23(1) of the Land Acquisition Act. For reasons which we have already given we respectfully dissent from the view so taken by the Madras High Court.

23. The learned Assistant Government Pleader also relied on the case of Keshab Chandra Paul v. Governor-General in Council(7). There the question arose whether under Sec. 19 of the Act the Arbitrator was justified in awarding compensation for the price of movables. Akram and Blank, JJ., overruled the claim on the short ground that Sec. 19 merely speaks of compensation for the land, the word “land” obviously not including movables. This question does not throw any light on the present question. The learned Assistant Government Pleader also referred us to the following observation of Mitter, J., in the case of Pashupaty Roy v. The Province of Bengal(8):— “Cl. (e) says that the provisions of Sec. 23 (1) of the Land Acquisition Act may only be utilised for the purpose of assessing compensation of the property.” This observation was not relevant for the purposes of the decision and has to be read in the light of the facts of that case. To me it seems that the observation is obiter.

24. The aforesaid discussion leads me to the conclusion that interest on the value of the land acquired under the Defence of India Act may be awarded by the Arbitrator.

25. The view taken by the Arbitrator in the present case awarding such interest cannot, therefore, be assailed.

26. [Their Lordships proceeded to deal with the rate of interest to be paid on the facts of the present case and concluded as follows:—]

27. Having regard to all these facts and circumstances interest at the rate of 5 per cent, per annum on the sum of Rs. 4,86,627 would be payable in this case from the 12th April, 1945 to 14th January, 1948.

28. [Their Lordships went on to consider the question of the value of the boundary wall and other matters not relevant to this report and concluded as follows:—]

29. As regards the costs of the appeal and of the cross-objection we direct that the Appellant must pay to the cross-objectors that is, the persons named in Item 1(b) to 1(i) as aforesaid, costs of the appeal.

30. There will be no order for costs in the cross-objection.

31. The sums which I have directed to be paid to the different Respondents must be paid by the end of August, 1950.

32. The appeal and the cross-objection are disposed of as above.

Guha, J.:— I agree.

N.D.R