Amaresh Roy, J.:— This appeal has been preferred by two referring claimants against an Award made by the Arbitrator determining compensation in respect of a property requisitioned under Rule 75-A of Defence of India Rules, 1939, which requisition was made by an order dated 25th October, 1943. The reference was made by L.A Collector on 6th February, 1959 purporting to do so under Section 19 of the Defence of India Act, 1939 to an Arbitrator appointed under G.O No. 924, dated 14-1-59 for determination of proper valuation of compensation for structures demolished in respect of C.S Plot No. 1081 of Mouza Palta P.S Noapara in 24-Parganas. Each of the appellants claim moiety share in the property and therefore same shares in the compensation. There is no dispute as to that. That reference was made in the state of facts which are not in controversy before us in the appeal. Those facts are that C.S Plot No. 1081 with structures standing thereon was requisitioned by the Government for military purposes in connection with the construction of the Barrackpore Airfield. Owner of the requisitioned property then was Sk. Abdul Aziz and his brother. An assessment of recurring compensation fixed at Rs. 15/- per month was made after requisition. The then owners did not dispute that offer of recurring compensation and compensation has been paid to them and to present owners of the property till 15th April, 1957. Three years after requisition one of the brothers sold his share of the property to Upendra Kumar Nandi who and Sk. Abdul Aziz are the present appellants.

2. When the property was still remaining under requisition, as it remains even now, in 1957 the L.A Collector made an assessment of terminal compensation for the building which was demolished soon after requisition in 1943, and made an offer to the owners of Rs. 4,600/- as compensation for the demolished building. The owners did not agree to that assessment though they received payment of Rs. 3,680/- (80% of assessed compensation) under protest on 2-9-57. They made a claim of Rs. 12,000/- as fair compensation for the demolished structures and demanded reference to Arbitration. Reference was made by L.A Collector on 6th February, 1959 when the property was still under requisition and it had neither been derequisitioned nor converted into acquisition. Both in the order of reference and Notification appointing the Arbitrator the subject of reference has been mentioned as:

“Compensation for structures demolished in respect of C.S Plot No. 1081 of Mouza Palta, P.S Noapara, 24-Parganas.”

3. That has been numbered as Arbitration Case No. 32 of 1958. The Arbitrator proceeded to try the case on evidence and has disposed it of by making an Award in which he assessed the value of structures on the basis of valuation in 1943–44 and fixed it at Rs. 6,579/-, then deducted depreciation at 10 % and determined compensation at Rs. 5,921/- allowing interest on that amount at 6% per annum from 16th April, 1957 till realisation. The referring claimants have preferred appeal against that Award. Respondent Union of India has not preferred any appeal or cross-objection.

4. Appearing for the appellants the learned Advocate Mr. Gupta sought to assail the judgment of the Arbitrator mainly on the ground that for assessing the compensation for the demolished structure, the cost of restoring the building in the condition it was in 1943 (when requisition was made) should be calculated at the rates prevailing in 1957 when notice of such demolition was given and not at the rates prevailing in 1943–44 as the L.A Collector had made for assessing for the purpose of making an offer and the Arbitrator had also accepted for making his Award on his finding that the building was demolished soon after requisition probably in 1944. In support of that contention Mr. Gupta relied on the provisions of Section 8 of Act XXX of 1952. Both parties agree that the case is governed by that Act though the Act has now been repealed by Act 48 of 1963. On behalf of the Respondent Union of India the learned Advocate Mr. Dhar also relying on the same provisions of law contended that calculation of compensation was correctly made on the basis of rates prevailing in 1943–44 when the building was demolished.

5. The provisions in Act XXX of 1952 relied on by both the Appellants and Respondents are in these terms:

“S. 8(1). Where any property is requisitioned or acquired under this Act, there shall be paid compensation the amount of which shall be determined in the manner and in accordance with the principles hereinafter set out that is to say—

(a) where the amount of compensation can be fixed by agreement, it shall be paid in accordance with such agreement;

(b) where no such agreement can be reached, the Central Government shall appoint as arbitrator a person who is, or has been, or is qualified for appointment as a Judge of a High Court;

(c) the Central Government may, in any particular case, nominate a person having expert knowledge as to the nature of the property requisitioned or acquired to assist the arbitrator and where such nomination is made the person to be compensated may also nominate an assessor for the same purpose;

(d) at the commencement of the proceeding before the arbitrator, the Central Government and the person to be compensated shall state what in their respective opinion is a fair amount of compensation;

(e) the arbitrator shall, after hearing the dispute, make an award determining the amount of compensation which appears to him to be just and specifying the person or persons to whom such compensation shall be paid; and in making the award he shall have regard to the circumstances of each case and the provisions of sub-secs. (2) and (3), so far as they are applicable;

(f) where there is any dispute as to the person or persons who are entitled to the compensation, the arbitrator shall decide such dispute and if the arbitrator finds that more persons than one are entitled to compensation, he shall apportion the amount thereof amongst such persons;

(g) nothing in the Arbitration Act, 1940 (X of 1940) shall apply to arbitrations under: this section.

(2) The amount of compensation payable for requisitioning of any property shall consist of

(a) a recurring payment in respect of the period of requisition, of a sum equal to the rent which would have been payable for the use and occupation of the property, if it had been taken on lease for that period; and

(b) such sum or sums, if any, as may be found necessary to compensate the person interested for all or any of the following matters, namely:—

(i) pecuniary loss due to requisitioning;

(ii) expense on account of vacating the requisitioned premises;

(iii) expenses on account of reoccupying the premises upon release from requisition; and

(iv) damages (other than normal wear and tear) caused to the property during the period of requisition, including the expenses that may have to be incurred for restoring the property to the condition in which it was at the time of requisition.

(3) The compensation payable for the acquisition of any property under Section 7 shall be—

(a) the price which the requisitioned property would have fetched in the open market, if it had remained in the same condition as it was at the time of requisitioning and been sold on the date of acquisition, or

(b) twice the price which the requisitioned property would have fetched in the open market if it had been sold on the date of requisition whichever is less.”

6. Mr. Gupta for the appellants relied on cl. (iv) of Section 8(2)(b) for contending that “expenses that may have to be incurred for restoring the property to the condition in which it was at the time of requisition” must be calculated on the basis of rates at the date when the expenses have to be estimated and on that reason claimed 1957 rates of expenses. Mr. Dhar for Respondents contended that rates of expenses should be of the date of requisition or in any event, of the date of demolition, that is 1943–44.

7. On the question raised by Mr. Gupta regarding what should be the relevant date for assessing the expenses of restoration of property under cl. (iv), we are clearly of the view that the relevant date is when the requirement to assess arises and not either the date of requisition or the date when demolition, may have been carried out. In that view we find support in the unreported judgment of a Division Bench (S.K Chakravarti and S.K Datta, JJ.) delivered on 12-6-1970 in F.A No. 264 of 1959 (Union of India v. Akbar Ali), We fully agree with the reasons appearing in that judgment, but we do not discuss those in detail in this case for the reason that we will discuss immediately.

8. While we are of the view that Mr. Gupta's contention in this respect is correct and Mr. Dhar's contention must be rejected, for proper understanding of the provisions of cl. (iv), not only the preceding cl. (iii) need be kept in view, but also provisions in Sections 6, 7 & 3 as a whole need be considered. Devoting that consideration and upon hearing both Mr. Gupta and Mr. Dhar, we have reached a conclusion that for proper disposal of this appeal a question of great importance more fundamental than the question of relevant date for calculation of expenses of restoration arises directly in this case.

9. That question is: When can the question of assessing expenses for restoration mentioned in cl. (iv) arise, either for an offer by the Collector or for making a reference by appointing an Arbitrator on failure of agreement on such offer by Collector? That question takes us to consideration of Sections 6 and 7 of Act XXX of 1952. Those provisions clearly show that question of restoration of property arises on release of property from requisition dealt with in Section 6. It may arise also as a question of terminal compensation when requisitioned property is acquired under the provisions of Section 7. In the first of these two contingencies, sub-section (2) of Section 8 is the relevant provision, while in the second contingency sub-section (3) of Section 8 is relevant. Within sub-section (2) the provisions in (a) and els. (i) and (ii) In (by are provisions for recurring compensation during the period of requisition and compensation consequent to requisition. But cls. (iii) and (iv) are provisions for compensation upon release from requisition and restoring the possession of the property upon such release. Whole of sub-section (3) is relevant only when the requisition has been converted to acquisition under Section 7.

10. That clearly shows that clauses (iii) and (iv), sub-section (2) (b) of Section 8 and, for the matter of that, sub-section (3) of Section 8 are providing for compensation which is of the nature of terminal compensation which can arise only when either of the two contingencies provided in Sections 6 and 7 has happened and not before. In other words such terminal compensation can be estimated and offered by the Collector when either the property under requisition has been released or the requisition has been converted to acquisition.

11. In the present case neither has yet happened in fact. It is admitted case of both parties and also the finding of the Arbitrator that the requisition is still continuing— the property has neither been released from requisition, nor it has been converted to acquisition.

12. It follows that Collector had no jurisdiction to assess and make an offer of terminal compensation for demolished building. As there could not be legally any offer of it, there could not be failure of agreement and therefore there could not be any reference made legally for Arbitration. As no legal reference could be made an Arbitrator could not be legally appointed. Whole proceeding has therefore been illegal and without jurisdiction.

13. Encountering that great difficulty which he readily appreciated the learned Advocate for the appellant Mr. Gupta advanced a proposition that in the facts of the present case notice of demolition having been given to the claimants In 1957, that may be construed as an order derequisitioning the property which was requisitioned as land with building, and at the same time as an order of fresh requisition of the land without building. That imaginary proposition is contrary to the facts proved in the case and will not only not obviate the difficulty in law, but also entail a situation in which the procedure laid down in the provisions of Act XXX of 1952 need have to be initiated anew. We, therefore, cannot accept Mr. Gupta's suggestion of imagining something which is not the reality in fact.

14. It is true that for the reasons we have mentioned above the appeal shall succeed and the judgment and Award made by the learned Arbitrator must be set aside and as a result thereof the appellant will fail to obtain not only the Increased compensation they have contended for, but also be unable to get the amount that the learned Arbitrator has allowed in his Award. But that result cannot be avoided. At the same time we make it clear that when by the happening in fact of any of the two contingencies, that is, either of release of the property from requisition under Section 6 or the requisition being converted to acquisition under Section 7 of Act XXX of 1952, the stage will be reached, then only the Collector will have to assess the compensation for the demolished building and make offer to the claimants. For making that assessment, as we have held above, the relevant date for the basis of rates for calculation of expenses for restoration of demolished building shall be the date when that assessment will have to be made. For giving effect to the provisions in clause (iv) of Section 8(2)(b) of Act XXX of 1952 it will be proper for the Collector to ascertain the expenses for restoration of the building to the condition in which it was in 1943–44 at the rates prevailing at the relevant date above mentioned, and deduct from that amount depreciation at the usual rate for the whole period from the date of construction of the building upto the date on which the assessment shall be made. On the amount so ascertained as compensation for the demolished building the claimants shall be properly entitled to interest from the date of the demolition of the building upto the date on which the compensation will be paid at the rate of 5% per annum. But all that is future contingency winch the Land Acquisition Collector shall have in mind and have regard to, when occasion arises under the law we have discussed above.

15. In the result we allow the appeal and set aside the judgment and Award passed by the learned Arbitrator as having been made without jurisdiction.

16. A feature that appears loudly on the record is that in this case both the claimants and the Union of India filed several written statements in the proceedings before the Arbitrator. In the written statements which either party filed before the Arbitrator at the first instance the clear position in law for the reason for which we have held entire proceeding to be illegal and without jurisdiction was not mooted at all; but in one of the intermediate written statements filed on behalf of the Union of India by the Government Pleader on 22nd August, 1958 that very defect was taken as a ground. Yet, at the hearing before the learned Arbitrator that point was not pressed and no issue was raised thereon. By omitting to do so the entire proceeding has been carried on illegally and the appellants before us have been put to unnecessary costs.

17. For that reason and for the reason that the Respondents have lost this Appeal we saddle the Respondents with the entire costs before the Arbitrator and also the hearing fees only in the Appeal in this Court. The appellant though succeeded in the appeal technically, they have not succeeded in substantiating any part of their claim. We have held that at this stage they are not entitled to get even the amount awarded by the Arbitrator in their favour. For that reason they are not entitled to realise from the respondents the cost of Court-fees paid on this Memorandum of Appeal. The appeal is, therefore, allowed with costs to the extent as mentioned above.

18. S.N Bagchi, J.:— I agree.

19. Appeal allowed.