Secretary of State vs Rawat Mull Nopany

Mohamad Noor, J.—These four appeals by the Secretary of State for India in Council against the same respondent are from four decrees of the District Judge of Muzaffarpur and arise out of four land acquisition references by the Collector of Champaran.

The lands involved in these cases are in villages Bariarpur, Lauthaha and Begumpur in the vicinity of the town of Motihari and were acquired by Government for the construction of Courts and other Government buildings. The learned District Judge has attached a very useful schedule to his judgment giving complete information in respect of every one of these four cases. Case No. 30 of 1935 of his Court corresponds to F.A. No. 146 of 1936; Case No. 31 of 1935 corresponds to F.A. No. 145 of 1936; and Cases Nos. 9 and 10 of 1936 correspond to F.A. No. 144 and F.A. No. 143 of 1936. It is not necessary to give in this judgment the details for which the schedule of the judgment of the learned District Judge may be referred to.

The claim of the respondent for compensation was mainly under the following heads; (1) Value of land; (2) loss of earnings; (3) price of standing ratoon crop on the date on which the Collector took possession of it; (4) damage for loss on account of field having already been prepared for sugarcane cultivation when possession was taken; and (5) trees and fruits standing on the land.

In F.A. No. 145 of 1936 (Case No. 31 of 1935) the respondent did not claim anything separately for loss of earning, though for the value of land he claimed much more than in the other three cases. Nor there was any claim for standing crop or damages for loss on account of the field having been prepared for sugar-cane cultivation. In F.A. No. 144 of 1936 (Case No. 9 of 1936) no claim was made for items (3), (4) and (5).

In F.A. No. 143 of 1936 (Case No. 10 of 1936) in addition to the claims under the above heads, claim was made for tube well structure and pakka well. The Collector awarded compensation under all the heads claimed except that he did not allow compensation for loss of income and did not allow any compensation for pakka well in F.A. No. 143 of 1936. The learned District Judge increased the award of the Collector under the heads (1), (3) and (4) in all the cases and under head (5) only in Case No. 10 of 1936 (F.A. No. 143 of 1936) and also allowed to the respondent Rs. 100 per acre as the loss of earning in the three cases in which this claim was made. The Secretary of State has appealed. Though the appeal is directed against every one of the items in which the award of the Collector has been interfered with, it has been strenuously pressed so far as the compensation for loss of income is concerned. It is contended on behalf of the appellant that such compensation is not allowable under the law. The considerations in deter, mining the compensations under the Land Acquisition Act have been specified in Section 23, Land Acquisition Act. An attempt has been made on behalf of the respondent to bring this compensation for the loss of income under Clause fourthly of that Section, which runs thus:

The damage (if any) sustained by the person interested, at the time of the Collector''s taking possession of the land by reason of the acquisition injuriously affecting his other property, moveable or immovable, in any other manner, or his earnings.

The learned District Judge has held (and I shall oome to it in a moment) that the market value of the lands is about Rs. 300 per acre; but except in one case (land of Bariarpur) in which the respondent claimed Rs. 300 per acre and did not claim anything for loss of income, he has allowed for the value of land at the rate claimed by the respondents which was much less than Rs. 300 per acre, i. e. Rs. 150 per acre for Lauthaha land and Rs. 175 for Begumpur lands. For the lands of Bariarpur he allowed at the rate of Rs. 300 per acre as claimed by the respondent.

But in respect of the lands of the two villages Lauthaha and Begumpur, as I have said, he allowed compensation for loss of income at the rate of Rs. 100 per acre. Here it is necessary to mention some facts. It appears that a sugar mill has been established in the vicinity of these lands in the year 1932. The respondent in these cases admittedly holds a very large share in the mill which is run by a joint stock company. Apart from the mill, the respondent has acquired a very large area of land in the vicinity of the mill for the cultivation of sugar-cane and out of these lands so acquired by him about 90 acres has been acquired by Government.

The respondent contended that on account of the acquisition of these lands by Government he would have to acquire lands else where at some distance from the mill and pay cartage for bringing the sugarcane to the mill and thereby he would lose income by the amount of cartage to be paid. The learned District Judge has accepted this contention of the respondent and finding that the loss would be at the rate of Rs. 12-8-0 per acre per annum, he has allowed compensation at eight times of that amount.

The reason why he allowed eight times of the annual loss, though not clearly mentioned in the judgment, can be easily inferred from the earlier part of his judgment where he has mentioned that eight sugar, cane crops could be had from a field in the course of 20 years and as he fixed the market value of the land at twenty times of annual income he capitalized the loss of income by payment of cartage also on the same basis.

There is no doubt that in allowing this compensation the learned District Judge has erred inasmuch as the loss of income which is contemplated in Clause fourthly of Section 23, Land Acquisition Act, is the loss of personal income to the owner of the land. It contemplates a case which on account of the acquisition of a certain land the value of other properties of the owner has deteriorated or the owner has suffered loss of his own income not derived from the land itself: for instance if a portion of a person''s land is acquired and thereby the frontage of his other property not acquired is destroyed and their value is thus decreased, he is entitled to get compensation for this deterioration of their value: or, if a man is holding his own shop in His own house or is carrying on any professional business, say of a physician or a dentist in his own house, for the loss of income which he will suffer on account of shifting his business elsewhere, he is entitled to get compensation over and above what he is to get as the price of the house which has been acquired. But this clause has not application in case the loss of income complained of is the loss of the income of the property itself which is being acquired.

That loss of income is a factor to be taken into consideration in fixing the market value of the land itself which the owner is, to get under Clause firstly of Section 23. No authority has been placed before us to show that the owner of a land can get over and above'' the market value of the land and the statutory compensation, anything for the loss of income of the land itself. The price of land is fixed on the basis that the owner should get full compensation for the loss of the income which he was getting from'' the land and this compensation is the market value of the land acquired. There, fore, for the land itself the respondent is not entitled to get anything more than the market value of the land and the statutory compensation payable to him under the law. He cannot get the market value of the land and then compensation for the loss of income from the land itself. The cases relied upon by the learned District Judge have no application.

The next question for consideration is the market value of the land. I have said before that the learned District Judge has held that this value is at least Rs. 300 per acre. He has taken three factors into consideration. One is the cost incurred by the respondent in acquiring the land and in making it suitable for sugarcane cultivation. This figure comes to Rs. 192,per acre and is made up of these items:

Average price paid for the pur- chase of the land itself ... Rs. 75 per acre,

Cost of levelling and clearing of the land ... ... Rs. 32 do

Cost of manuring and preparing soil for sugarcane cultivat ion ... ... ... Rs. 85 do _________ Total ... Rs. 192 per acre.

It has been urged on behalf of the appellant that the learned District Judge ought, not to have taken into consideration Rs. 85, the cost of manuring, as it is an annual recurring expenditure in producing sugarcane.

In my opinion this contention is well founded. There is nothing to show that this was a capital outlay on the land and was independent of the annual expenditure on manuring the land. Therefore, the result is that the cost of the land itself on the face of it comes to Rs. 107 per acre, and this is not disputed by the appellant. The next item which has been considered by the learned District Judge is the award for the land in the neighbourhood (to the flast of the railway line) which were acquired in 1921 for the construction of a railway siding. This was at the rate of Rs. 250 per acre. It is however conceded that the price of the land was then higher and that the lands then acquired were of superior quality. The third factor considered by the learned District Judge is the probable income from the land in 20 years. He calculated the income on the evidence which seems to have been accepted by both the parties that eight crops can be had in the course of 20 years and after deducting the cost of cultivation and taking into consideration the price of sugarcane, as I have said, he came to the conclusion that the value of the land was Rs. 300 per acre.

The learned Government Pleader contended that the cost of acquisition of the lands and their improvement, i.e. Rs. 107 per acre, should be market value. The expression "market value" has not been defined in the Act. In some judicial decisions an attempt has been made to define it by saying that it is a price which a willing purchaser will give to a willing seller. Such a definition is very easy to be put down on paper; but difficulties arise in giving effect to it when one finds, as in this case, no evidence of the price which has been paid or which is likely to be paid by a willing purchaser to a willing seller of lands of equal quality.

As has been pointed out in some cases one cannot find a market for land where lands can be bought or sold like goods. Lands are bought and sold by bargaining. Land acquisition operations are carried on at places where for generations there has not been any sale of land whatsoever. The place is such where no one wants to buy land. In these cases market value must be ascertained by finding out the income which the land was bringing to the owner and then capitalizing it on the principle of reinstatement. If there have been transactions and lands are being freely sold and freely bought, different considerations may arise. There a prevailing price will be a suitable guide in fixing the market value, though consideration will have to be given to the special features of the land.

But, as I have said in the present case, the only evidence of the sale or purchase of land is that of acquisition of the land for the railway siding and the price paid for the land under acquisition by the respondent and expenses incurred by him in making it fit for sugarcane cultivation. The land of railway siding is admittedly of superior quality and was acquired at the time when the prices were high. Therefore, we have in this case no evidence whatsoever of the prevailing price except the price paid by the respondent himself for the purchase of these lands. There is no evidence of the sale and purchase of lands in which sugarcane is being produced.

Now, I have shown that these lands were acquired and improved for the cultivation of sugarcane. The price of the lands now cannot be only the cost incurred in acquiring and improving them. The price of a finished product is more than the price of the material used in producing it. Then the figure Rs. 107 does not take into consideration the labour and attention which must have been bestowed by the owner in improving the land not to speak of the loss of income during the period when the land was under improvement.

Therefore, the factor of the income which the owner was deriving from the land has to be taken into consideration in fixing the market value. I have said before that the learned District Judge has held that the income from the land in twenty years is at least Rs. 300 per acre. In this connexion, in my opinion, he has erred inasmuch as he has not considered the fact that the sugarcane crops in spite of all human efforts are not likely to be full in each of the eight years he has considered. There is something as vicissitudes of climate, seasonal variation and other factors which govern the produce. Then the market price of sugarcane may vary. Therefore, giving a margin for these factors and circumstances over which one has no control, we must take it that some of these eight years will not be as good as the others and taking into consideration the fact that the cost of acquiring and preparing the land for cultivation of sugarcane on the figures supplied by the respondent himself came to Rs. 107 per acre and also taking into consideration the fact that when the price of land was high a superior land was acquired at the rate of Rs. 250 per acre, I think it will be safe to fix the market value of the land at Rs. 200 per acre in all the cases.

Now, the question is whether in the two cases i. e. the lands of Lauthaha and Begumpur in which according to the manager of the claimant himself the market value was Rs. 175 and Rs. 150 per acre respectively we shall be justified in allowing the respondent more than what he claimed himself, i. e. Rs. 200 per acre. In this particular case it seems to me perfectly clear that under some misapprehension of law what the respondent ought to have asked to be taken into consideration in fixing the market value of the land, he asked separately as compensation for loss of income, which, as I have shown, is a factor to be taken into consideration in fixing the market value. I do not think that on account of the fact that the respondent or his manager under a misapprehension of law claimed under two separate heads what they could have reasonably asked as market value of the land, I should penalize them. It seems to me from the deposition of the manager taken as a whole that what the respondent asked for market value was what he thought was the value of the land independent of the fact that it was being used for sugarcane cultivation, and for the loss of income from sugarcane crop he wanted to get compensation separately. This confusion of thought is not such to which very serious exception can be taken.

To illustrate my point of view, take the case of a land on which a market is held. Strictly speaking, the market value of that land is its value after taking into consideration the particular purpose for which the land was being used. If the owner of the land wants compensation under two heads, making a separate claim for the value of the land independent of the fact that a market was held upon it and claiming separate compensation for the market, he cannot be deprived of full value, because he placed his claim under two heads. Take another instance of an orchard. The market value of an orchard is something more than the value of the land and the value of timber of trees standing thereon taken together. If the owner wants compensation for the land irrespective of the consideration that it is an orchard land and then separately claims compensation for the loss of income from the orchard, he cannot be penalized simply because he claimed'' under two heads what he ought to have claimed in the head of market value. The fact that the claim under one head was placed some what low and a higher claim was made under another head, should not stand in the way of giving full market value to the respondents, i. e. Rs. 200 per acre which I have held to be fair market value in respect of Lauthaha and Begumpur lands alsa for which the respondent has claimed less as market value.

Regarding other items, i. e. the value of trees, fruits, wells, etc. for which the learned District Judge has increased the award) of the Collector, nothing has been urged which can justify any interference. Stress was laid on the price of the ratoon crop standing on the land. But I think the learned District Judge has taken the correct view.

I would therefore modify the decrees of the learned District Judge by disallowing the compensation of loss of income and allow the respondent the market value of the land at the uniform rate of Rs. 200 per acre in all the cases. He will get the statutory compensation of 15 per cent, on this amount.

He is also allowed interest u/s 28, Land Acquisition Act, on the amount found due to him in excess of the award of the Collector. Taking into consideration the success and failure of the parties in the two Courts, I would direct that the parties bear their own costs in both the Courts.

Chatterji, J.

I agree.