SWARNAMANJURI DASSI Vs. SECYOF STATE

JUDGEMENT

(1.) This is an appeal on behalf of claimant 1 under the Calcutta Improvement (appeal) Act, against the judgment of the Calcutta Improvement Tribunal modifying to some extent the award made by the Collector for the acquisition of certain premises in Lower Chitpora Road and Chhatawalla Galee in this town under the Calcutta Improvement Act. The appellant was the owner of the premises. She as administratrix of the estate granted a lease for 99 years to one Elias of these premises under an Indenture dated 1 March 1920. The lessee paid a selami of Rs. 5,000 for the lease on 22 September, 1919. The rent reserved was the net amount of Rs. 2000 per month. There was a stipulation in the lease that the lessee was to build structures on the demised premises at a cost of one lac of rupees within a certain period, and as security for the performance of that agreement he had to deposit Rs. 50,000 with some bank. Apparently this was done. Subsequently under the Calcutta Improvement Act, a scheme for acquisition of the lands was sanctioned on 20 January 1922 and a declaration for the acquisition was made on 10 January 1923. The Collector made an award in favour of the appellant to the extent of Rs. 3,14,000 odd plus the statutory-allowance. The claimant asked for a reference, and on the reference the Tribunal varied the award of the Collector by adding to the award Rs. 19,000 odd with the usual interest and statutory allowance. The Collector made a separate award of Rs. 18,500 in favour of the lessee, claimant 2 who had also asked for a reference to the Tribunal and whose claim for the excess amount was rejected in its entirety. Claimant 2 has also appealed against that judgment and his appeal which is No. 32 of 1926 will be dealt with separately.

(2.) It is argued on behalf of the appellant that in determining the market value under Section 23, Land Acquisition Act, the learned President of the Tribunal in his judgment has not taken into consideration the lease in favour of claimant 2 under which the appellant was entitled to the net income of Rs. 2,000 per month; and it is urged that the President has not acted according to the correct principle of valuation of the property acquired under the Land Acquisition Act. What the learned President has done is, according to this contention, to ignore the lease altogether; and it is submitted for the appellant that the President has entirely gone wrong in doing so. The President has staled in the greater portion of his judgment that this lease with reference to which claimant 1 pressed him to arrive at the valuation of the property should not be taken into consideration. In enunciating the mode in which the valuation should be made, the learned President has made certain observations to which no exception can possibly be taken and to which no exception was taken in the course of the argument. What was objected to was that the learned President had, in certain, other portions, misstated the principles, which should guide him in arriving at the valuation: Par example, when he states at p. 68 that in deciding what price a purchaser will pay for a property which is under a lease, the purchaser will not be guided by the terms of the lease, because the President assumes that when the purchaser desires to purchase, the lease should be surrendered to the lessor for no considerations whatsoever. Again in another portion of his judgment, he observes that in the case of a perpetual lease at -a fixed rent the lease should not be taken into account, because if that is done, it would lead to the absurd result that the value would be the same for all time to come unless something happened to alter the security.

(3.) It is contended that the President has gone wholly wrong in his view. If the property acquired is subject to a perpetual lease bringing a fixed income and the security is not impaired, the value must be calculated upon the basis of the income derived and the fluctuation can only be with regard to the number of years purchase that the property would fetch at the time of acquisition; that is, if money is plentiful the property may be sold at 20, 30 or even 40 years purchase, if money is scarce the property may be sold at 10 or 15 years purchase; but at all times the basis of the calculation must be the income derived from the lease. It seems to me that the President; is wrong in his view that in calculating the price of a property which is subject to a lease, the rent derived by the landlord should not be taken into consideration in arriving at the value of the property. Take for instance a property which has been leased out at a very profitable rent permanently. The rent is well secured, may be as a charge upon some other property of the lessee, then the leasehold falls into decay and the income derived by the lessee amounts to nothing. If this property is sold, would it be right to say that this property should be sold for nothing and the lease should not be taken into consideration at all? If that were so, I think that would lead to an absurd result. Take another instance, if the Secretary of State happens to take a lease of a house as is often done in this city, for a particular purpose, and if the lease is taken at a time when rent rules high and the lease is taken for a period of 99 years and subsequent to that, rent falls and the value of landed properties falls consequently, can it be said that at that time if the Secretary of State seeks to acquire that property under the Land Acquisition Act, his liability to pay rent at the high rate contracted for in the lease should be ignored altogether and he can get the property at a low valuation which may be fixed at the time when it is acquired? I think that it also would be an absurd thing to say that the lease should not be taken into consideration at all.