Vazhavalappil Krishnan vs Special. Tahsildar (L.A.)

G.Girish, J

The claimants in L.A.R.No.18/2005 of the Subordinate Court, Hosdurg have filed this appeal aggrieved by the refusal of the said court to award enhanced value of compensation for the structures demolished from their property in connection with the acquisition proceedings.

An extent of 0.0216 hectare of land and the structures including residential house, well etc. comprised in Sy.No.733/1A of Perole Village were acquired for the purpose of construction of railway overbridge approach road to Pallikkara gate. The Acquisition Officer awarded a total compensation of Rs.6,99,339/- as per the award dated 29.05.2004. Out of the above amount, the value of the structures was computed as Rs.4,48,105/-. In the reference, the learned Sub Judge allowed enhancement of land value @

Rs.30,000/- per cent, but declined to award any enhanced value for the structures situated in the acquired property. The present appeal is directed against the above refusal of the Reference Court to enhance the value of the structures situated in the acquired property.

In the impugned judgment dated 31.08.2010 in L.A.R.No.18/2005, the learned Sub Judge observed that the claimants failed to adduce sufficient evidence in support of their claim for enhanced compensation for the structures situated in the acquired property. Referring to the commission report and valuation statement marked as Exts.A8 and A8(a), the learned Sub Judge stated in the impugned judgment that the Advocate Commissioner who was examined as AW2 was not able to throw much light upon the details of the constructions and that the claimants failed to examine the Private Engineer who assisted the Advocate Commissioner in the preparation of Exts.A8 and A8(a). It is upon the above reasoning that the learned Sub Judge declined to accept the valuation of the structures including building, ring-well etc. situated in the acquired property as Rs.8,00,000/- as reported by the Advocate Commissioner and Private Engineer in Exts.A8 and A8(a).

Heard the learned counsel for the appellants and the learned Government Pleader representing the respondent.

The learned counsel for the appellants argued that the Acquisition Officer had fixed the value of the structures situated in the acquired property at Rs.4,48,105/- without any basis, and that no evidence was adduced in the reference proceedings in support of the above assessment. It is further pointed out that the Reference Court erroneously declined to award enhanced compensation for the aforesaid structures notwithstanding the fact that the appellants adduced evidence through Exts.A8 series that those structures fetched a value of Rs.8,00,000/-. According to the learned counsel for the appellants, the reason stated by the learned Sub Judge for not accepting the commission report and valuation statement marked as Exts.A8 and A8(a), is totally unsustainable since the respondent did not raise any objection to the above documents.

Exts.A8 and A8(a) are the commission report and valuation statement prepared by an Advocate Commissioner and a Private Engineer in O.S.No.342/2004 of Munsiff Court, Hosdurg, a suit instituted by the claimants at the time of acquisition proceedings. The above commission report and statement are seen prepared after giving notice to the counsel representing the claimants as well as the Acquisition Officer and others who were arraigned as defendants in that suit. The Advocate Commissioner who prepared Ext.A8 report was examined before the Reference Court as AW2. However, the Reference Court refused to accept Exts.A8 series stating the reason that the Advocate Commissioner was not competent to speak about the valuation made in Ext.A8(a).

A perusal of Ext.A8(a) valuation statement would reveal that the Private Engineer who prepared the said statement had assessed the value of the building by taking into consideration all the relevant parameters of cost of construction of that building. In addition to that, the Engineer had valued the ring well situated in that property at Rs.15,000/-. The amount of Rs.8,00,000/- is computed as the value of the structures by adding the various expenses of construction of the building which are enumerated in Ext.A8(a) as item Nos.1 to 44. Obviously, the aforesaid amount stated in Ext.A8(a) is the cost of construction of the structures as on the date of preparation of that document. However, the Engineer who prepared that valuation statement had not applied the depreciation value of the building for arriving at the exact value of the structures as on the date of assessment. As regards the omission to calculate the depreciation of the value of the structures, the Advocate Commissioner has stated in paragraph No.VI of Ext.A8 report that it was not calculated since there was no data available before the Commissioner as to the age of the house.

In the proforma of valuation statement which is attached to the abstract valuation statement of the structures in Appendix ‘A’, prepared by the Assistant Executive Engineer, National Highway Sub Division, Kasaragod, which forms part of the acquisition records, the age of the structures is shown as 14 years. So also, it could be seen from paragraph No.4 of the proof affidavit filed by the 1st claimant (1st appellant herein) before the Reference Court that the construction of the house in the acquired plot was completed in the year 1990 by expending Rs.10,00,000/-. The above indication in the proof affidavit of the 1st appellant would confirm the age of the structures situated in the acquired property as 14 years as on the year 2004 when Ext.A8 series were prepared.

The process of ascertaining the market value of a building situated in the acquired property had been a contentious issue in many litigations. A well known and recognised method of valuation of the building for the purpose of compensation is to ascertain the cost of construction of the building at the relevant time and then to apply the depreciation factor in consideration of the age of the building and for the costs of such repairs as might be required. The above principle was laid down by the Privy Council in Harichand v. Secretary of State [AIR 1939 PC 235] and Secretary of State v. Narain Khanna [AIR 1942 PC 35]. The above two decisions of the Privy Council were considered and approved by the Supreme Court in State of Kerala v. C.L.Palu [(1979) 3 SCC 780].

The above method of valuation of building in acquired properties has been followed by this Court in Bhavani Ramalakshmi v. State of Kerala [1990 KHC 433]. It has been held by this Court in the said decision that in the matter of valuation of buildings, the natural way to look at the matter would be to find out the approximate number of years and deduct the quotient as depreciation for each year. It is further held in that decision that in the case of first class buildings, no depreciation is to be deducted for the first five years, and then 5/6% has to be deducted for every subsequent year, and due allowance has to be made for the maintenance and repairs. In the case of second class buildings, it was held that 5/6% depreciation has to be deducted for each year. The above basis of calculation of depreciation has been upheld by the Division Bench decisions of this Court in State of Kerala v. Kuruvila [2005 (3) KLT 580] and State of Kerala v. Sushamma Kumari [2010 (2) KHC 834].

It may be true that the Assistant Executive Engineer of National Highway Sub-Division, Kasaragod might have ascertained the value of the structures situated in the acquired property at Rs.4,48,105/- on the basis of the PWD rates prevailing during that time. However, it is not possible to accept the published schedule of rates of PWD since it is common knowledge that those rates are not realistic and far below the actual expenses to be incurred for the constructions. In State of Kerala v. Sushamma Kumari [2010 (2) KHC 834], the Division Bench of this Court has held that the compensation fixed by the Land Acquisition Authority for the building by placing reliance solely on the valuation prepared by the Engineers of the PWD, cannot be approved. It is further held in that decision that the published schedule of rates of PWD adopted by the Engineers for the valuation of buildings, are not realistic, and that the PWD itself tenders out their civil works at rates above their own rates.

As already stated above, Ext.A8 series have been prepared by the Advocate Commissioner and a Private Engineer, assessing the value of the structures situated in the acquired property as on 26.10.2004, when they conducted the local investigation, in accordance with the order of Munsiff’s Court, Hosdurg in O.S.No.342 of 2004, a suit instituted against the Acquisition Authorities in connection with the same acquisition as that of the present case. A perusal of Ext.A8(a) valuation statement would reveal that the Engineer who assisted the Advocate Commissioner had valued the structures in a realistic way by applying the prevailing costs of materials, labour charges, conveyance expenses, etc. The above valuation has been made in the local investigation conducted by the Advocate Commissioner and the Engineer, after giving notice to both sides. The findings of the Advocate Commissioner and the Engineer in Ext.A8 series, cannot be eschewed for the sole reason that the Engineer was not examined as a witness before the Reference Court. Having regard to the settled principles of law as evolved from the judicial precedents discussed in paragraph Nos.9 to 11 hereinabove, I am of the view that the valuation of the structures in the acquired property of the present case has to be done by applying the depreciation factor of 5/6% per year, from the date of construction onwards to the date of assessment, upon the amount of Rs.8,00,000/-, which the Advocate Commissioner and Engineer had fixed in Ext.A8 series. As already stated above, the age of the structures assessed as 14 years by the Acquisition Authorities, has been affirmed in the proof affidavit filed by the 1st appellant before the Reference Court. That being so, the depreciation factor to be applied would come to 11.66% which has to be rounded to 12%. When the above depreciation, worked out at Rs.96,000/- is deducted from the amount of Rs.8,00,000/-ascertained by the Advocate Commissioner and the Engineer in Ext.A8 series, the actual amount payable to the claimants as compensation for acquisition of the structures which existed in the acquired property would come to Rs.7,04,000/-. The appellants (claimants) are entitled to have payment of the aforesaid amount along with other statutory enhancements, as compensation for the value of structures situated in the acquired property.

In the result, the appeal stands allowed as follows:

(i) The amount of compensation to which the appellants (claimants) are entitled as value of structures is fixed as Rs.7,04,000/- (Rupees Seven Lakh Four Thousand only).

(ii) The appellants (claimants) will also be entitled for all statutory benefits, which would follow the revised rate of compensation for value of structures, as stated above.

(iii) The impugned judgment of the Sub Court, Hosdurg in L.A.R.No.18/2005 stands superseded and modified to the above extent.