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2004(4) Supreme 495
SUPREME COURT OF INDIA
(From Delhi High Court)
V.N. Khare, CJI., S.B. Sinha & S.H. Kapadia, JJ.
Union of India and Ors. -Appellants
versus
M/s. Banwari Lal and Sons (P) Ltd. -Respondent
Civil Appeal No. 1531 of 1999
Decided on 12-4-2004
Counsel for the Parties :
For the Appellant : Dr. Rajeev Dhavan, Sr. Advocate, D.N. Goburdhan, Ms. Pinky Anand, Ms. Geeta Luthra, Rajesh Ranjan, Advocates.
For the Respondent : Ashish Bhagat, A. Chaudhary, C.K.M. Singh, Ms. Manisha Suri, Ms. Manjeet Chawla, Advocates.
Held : At the outset, we may point out that there are different methods of valuation, namely, income/profit method, cost of construction method, rent method and contractors method. In the present case, the arbitrator has applied the income/profit method. The above two issues are interconnected, as the arbitrator has assessed damages on the assumption that after 10.3.1987, the occupation and possession of the property was wrongful and illegal and in the nature of trespass. Accordingly, he has assessed damages on the footing that the respondent was entitled to mesne profits. This assumption was wrong as the appellant was given time by this Court to remain in possession up to 31.3.1993. (Para 8)
In the present case, in view of the permission granted by this Court enabling the appellant to use and occupy the property up to 31.3.1993, it cannot be said that the possession of the appellant was illegal and wrongful and in the nature of trespass. In the circumstances, damages were claimable not on the basis of mesne profits but on the basis of fair rent. Even assuming for the sake of arguments that the arbitrator was right in applying income/profit method, the arbitrator has erred in not taking into account the expenses which the appellant was required to bear for maintenance of the property (including payment of taxes). The said property was under requisition up to 10.3.1987. The fair rent of the property was Rs. 40793/- which was accepted by the respondent up to 28.2.1988, which fact has not been considered by the arbitrator. In the municipal records, the value of the building which is in dilapidated condition was shown at Rs. 27700/- which was 10% of the original cost, which fact has also not been taken into account by the arbitrator. Similarly, there was no reason for the arbitrator to assess damages for open larger spaces @ Rs. 10/- per sq. ft. per month when these open spaces form part of the main building for which damages were assessed @ Rs. 15/- per sq. ft. per month. The respondent did not submit the valuation report in support of its claim for damages. No valuer was examined on behalf of the respondent-claimant. In the present case, buildings were old and their age has not been taken into account by the arbitrator particularly when the said property is sought to be compared with the property situated at 2/10, Ansari Road, Darya Ganj, New Delhi. No sale instances have been put in evidence. The evidence of three witnesses who were examined on behalf of the respondent was not cogent and reliable for the purposes of assessing the damages. These three witnesses were laymen and they were not experts on valuation. The arbitrator has not taken into account the discounting factors, such as, the age of the building, dilapidated condition of the buildings, dilapidated condition of the flats, expenses to upgrade the buildings etc. There is no evidence to support the rate of Rs. 15/- per sq. ft. per month for built up area. There is no reason as to why the carpet area and not the built up area has been taken into account. The point which we would like to emphasize is that large number of relevant factors have not been taken into account by the arbitrator while awarding the damages to the extent of Rs. 6.5 crores (approximately). (Para 8)
JUDGMENT
Kapadia, J.-M/s. Banwari Lal & Sons (P) Ltd. - respondent herein is the owner of the property situated at 6, Ansari Road, Darya Ganj, New Delhi bearing municipal Nos. 4407-4412 admeasuring total area of 50328 square feets on which there are two bhawans named as Gopal Krishna Bhawan and Radha Krishna Bhawan along with garages, pump-house, godowns, store-room etc. The covered area is 20426.80 square feets whereas the balance area is an open area admeasuring 29901.20 square feets. (See: Legend at page 52 of the paper-book). Four flats on the first floor in Gopal Krishna Bhawan were requisitioned by Delhi Administration 27.9.1950 under Requisition and Acquisition of Immoveable Property Act, 1952 (hereinafter referred to as "the said Act"). On 13.3.1959, the remaining property was requisitioned under the said Act. Before the said Act lapsed on 10.3.1987, a notification under section 4 of the Land Acquisition Act was issued on 6.3.1987 for acquisition of the entire property. On 10.3.1987, declaration under sections 6 and 17 of the Land Acquisition Act was published. Aggrieved, the respondent herein filed CWP No. 2385 of 1988, which was allowed by the High Court by judgment dated 4.2.1991 and Shri T.V.R. Tatachari, former Chief Justice of Delhi High Court was appointed as sole arbitrator to determine the damages w.e.f. 10.3.1987, payable by Delhi Administration to the respondent in respect of the property. The SLP taken out against the said judgment by the appellant was dismissed by this Court vide order dated 21.3.1991. Appellant was, however, allowed time to vacate the property by 31.3.1993. On 18.11.1991, the arbitrator made and published the award directing the appellant to pay damages at the rate of Rs. 5,81,770/- per month w.e.f. 10.3.1987, to which objections under sections 30 and 33 of the Arbitration Act, 1940 were filed by the appellant. The said objections were dismissed by the learned single Judge on 12.7.1995. Being aggrieved, the appellant appealed to the division bench of the High Court. By the impugned judgment dated 22.1.1999, the High Court dismissed the appeal. Against that judgment, the appellant has filed this appeal by way of special leave.
2. Under the award, damages have been fixed @ Rs. 15/- per sq. ft. per month in respect of the covered area admeasuring 28518 sq. ft. whereas damages have been assessed @ Rs. 10/- per sq. ft. per month for larger open spaces shown in the sketch earmarked as X-1, X-3 and X-4 . For smaller open spaces, earmarked as X-2, X-5 , damages have been assessed at the rate of Rs. 7/- per sq. ft. per month. The property has been considered as commercial for assessing the damages at the above rates.
3. Dr. Rajeev Dhavan, learned senior counsel and Shri Goburdhan appearing on behalf of the appellant submitted that the assessed damages at Rs. 10/- per sq. ft. per month for larger open spaces was highly usurious and illegal. He submitted that the arbitrator had erred in assessing damages of Rs. 1.54 lakhs per month for open land separately vis-a-vis the built up area particularly when the open land was part of the main building. In this connection, he urged that when damages were assessed for built up portion at Rs. 15/- per sq. ft. per month, there was no question of the arbitrator once again assessing damages for open spaces at Rs. 10/- per sq. ft. per month. He pointed out that 22 flats were in a dilapidated condition which has not been taken into account. It was next contended that in the present case the respondent had accepted the rent for the said property in its entirety of Rs. 40793/- per month till February, 1988 without any objection, which fact ought to have been considered by the arbitrator while assessing damages.
4. As can be seen from the facts enumerated above, the said Act lapsed on 10.3.1987, however, a notification was issued under section 4 of the Land Acquisition Act on 6.3.1987 for acquisition of the entire property which was challenged by the respondent in the
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