LAND ACQUISITION OFFICER Vs. JAMNABAI

JUDGEMENT

(1.) The only question in this appeal is as regards the claimant's right to receive compensation for the loss of prospective earnings. The land involved in this case is the southern half of survey No. 176 of Juhu, which belonged to one Narsi Monjee. The land was notified for acquisition on June 15, 1937, and the notification under Section 6 of the Land Acquisition Act, 1894, was published on December 2, 1937. The land was actually taken possession of by the authorities on October 5, 1938.

(2.) The contention of the claimant was that he owned a cigarette factory at Santa Cruz, and in order to expand his business he had purchased the land in question in 1935 with the object of building thereon a factory for manufacturing cigarettes. This factory was intended to be capable of manufacturing three times the quantity of cigarettes manufactured in the Santa Cruz factory. For this purpose the claimant had obtained a license from the Collector of Bombay and had also got certain plans prepared and sanctioned by the authorities concerned. The work of building the factory had proceeded up to three feet above the plinth level when the land was notified for acquisition. By reason of that notification the work of erecting the factory could not be proceeded with, and ultimately owing to the land being finally acquired, the project of building a factory thereon had to be given up. For this reason the claimant contended that he should be compensated for the loss of his prospective earnings for a period of one year on the basis of the profits which he made on the Santa Cruz factory. He, therefore, claimed, on the estimate made by his experts, Rs. 1,84,500 for the loss of earnings.

(3.) The Land Acquisition Officer considered that the claim made by the owner was fantastic and grossly exaggerated, He thought that the claim was purely hypothetical, based as it was on so many uncertain factors such as the probable cost of constructing the buildings, the cost of erecting machinery which would turn out three times the product of the Santa Cruz factory, the difficulty of getting sufficient labour in these days of labour unrest, and, lastly, the difficulty of raising enough capital at a reasonable rate of interest. He considered that if the factory had been a going concern, the claimant would have been justified in basing his claim for loss of earnings. Even so he thought that the claimant had suffered some damage and was entitled to be compensated therefor. He, therefore, allowed six per cent, interest on the capital invested in the land, the incomplete building and the materials which had been locked up in this business, and he awarded compensation at this rate of interest from June 17, 1937, up to the date of payment as damages due to the acquisition against the claim for loss of earnings. This amount came to Rs. 4,610. Against this award the claimant applied to the District Court of Thana, and the learned Assistant Judge who heard the reference was of opinion that the provisions of the Land Acquisition Act should be liberally construed in favour of the claimant and that the claimant was entitled to the damages which he had suffered owing to the land being acquired, even though the buildings had not been completed and the business had not been started. He thought that if the land had not been acquired, the buildings would have been constructed and the factory would have been started, and that as the claimant was prevented by reason of the acquisition from making profits out of the business, he was entitled to be compensated for the loss of his prospective earnings. Having come to this conclusion, the learned Assistant Judge examined the profits which the claimant made from the Santa Cruz factory, and after making due allowance for the various items of expenditure, he thought that the claimant might have been expected to make a net profit of Rs. 18,600 per year. On this basis he made an award for the loss of earnings for a period of eight months. This amount came to Rs. 12,400, and allowing for interest on the extra amount awarded he increased the award made by the Land Acquisition Officer by Rs. 8,240. It is against that order that the Land Acquisition Officer has filed the present appeal.