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1939 Supreme(SC) 38
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD MACMILLAN, SIR GEORGE RANKIN, AND MR. M. R. JAYAKAR.
HARI CHAND - Appellant
Versus
SECRETARY OF STATE FOR INDIA IN COUNCIL - Respondents
On appeal from the Court of the Judicial Commissioner of the North-West Frontier Province.
Decided On : June. 30. 1939.
Solicitors for appellants :T. L. Wilson & Co. Solicitor for respondent: Solicitor, India Office.
The "contractors method" (cost of reproduction minus depreciation) is a legitimate principle for valuing buildings separate from the site. Amenities such as gardens and trees are associated with the site's enjoyment, not the building's value, and are not compensable when only buildings are acquired.
Headnote:(A) Land Acquisition Act, 1894 - Section 3(a) - Definition of "land" - The expression "land" includes benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth - A notification for the acquisition of buildings on land already owned by the Government is valid - Where parties have proceeded through the statutory procedure for the determination of compensation, an objection to the initial notification is not maintainable.
(B) Valuation of Buildings - Method of assessment - When the subject of valuation is a building apart from the site, the "contractors method"—ascertaining the cost of reproducing the building at the present time and allowing for depreciation based on age and necessary repairs—is a recognized and legitimate principle - This method is not affected by a notice of resumption of the land as the cost of reproduction remains independent of such notice.
(C) Compensation for Amenities - In cases of precarious tenure where the Government retains the power of resumption subject to paying the value of authorized buildings, amenities such as trees, gardens, and pathways are associated with the site rather than the building - If compensation is restricted to the value of the buildings, no additional allowance should be made for amenities associated with the enjoyment of the site.
Facts of the case:
The Government resumed possession of several properties held under a specific tenure that allowed for resumption on short notice, provided the value of authorized buildings was paid. The Government utilized the Land Acquisition Act to acquire the buildings on sites it claimed to own. The claimants challenged the validity of the acquisition notification, asserting that the Act only authorized the acquisition of land, not just buildings. They further claimed title to the sites and disputed the valuation method used, arguing that the resumption notice depreciated the property value and that amenities like gardens and trees should be compensated.
Findings of Court:
The notification was held to be valid as buildings fall within the definition of "land" under the Act. The claimants failed to establish affirmative title to the sites. The use of the contractors method for valuation was deemed admissible and legitimate. The court found that amenities such as gardens and trees were associated with the site and not the buildings, and thus were not compensable under the terms of the tenure.
Issues: Whether a notification to acquire only buildings on land owned by the Government is valid under the Land Acquisition Act; whether the contractors method is an appropriate principle for valuing buildings separate from the site; and whether amenities associated with the site should be included in the valuation of buildings.
Ratio Decidendi: The court ruled that under Section 3(a) of the Land Acquisition Act, buildings are included in the definition of land. The contractors method of valuation is a legitimate principle for buildings separate from the site and is not impacted by a resumption notice. Amenities are linked to the enjoyment of the site and not the value of the building, particularly under precarious tenure where only the building's value is payable.
Result: Appeals dismissed with costs.
Legal Category Hierarchy
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administrative law
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land acquisition
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compensation
- valuation methods
- appurtenances and amenities
- statutory notifications
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compensation
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land acquisition
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property law
- title and ownership
- cantonment tenure
Judgement
Consolidated Appeals (No. 39 of 1938) from twelve decrees of the Court of the Judicial Commissioner (July 28, 1936) affirming, in some instances with slight modifications, twelve decrees of the District Judge of Peshawar (February 15, 1935), which in turn had affirmed, with a modification in one instance, twelve awards made by the Land Acquisition Officer and Collector of Peshawar and Kohat for buildings erected on land held on cantonment tenure which had been acquired compulsorily from the appellants by the Government of the North-West Frontier Province under the Land Acquisition Act (I. of 1894).
This appeal raised questions (inter alia) as to the proper method of valuing the buildings on the land to be compulsorily acquired and the principle applicable, and whether an additional allowance should be made to the valuation in respect of amenities such as trees, gardens, etc, associated with the enjoyment of the buildings.
The facts appear from the judgment of the Judicial Committee.
A. M. Dunne K.C. and S. P. Khambatta for the appellants.
J. M. Tucker K.C., W. Wallach and the Hon. Quintin Hogg for the respondent.
1939. June 30. The judgment of their Lordships was delivered by Lord Macmillan. Their Lordships are invited in these twelve consolidated appeals to reconsider a number of awards made by way of compensation for the acquisition by the Government of certain bungalows in the Cantonment of Peshawar. In the Courts below a large number of questions were raised and debated in relation to the awards, but before their Lordships, Mr. Dunne, on behalf of the appellants, confined himself to two or three main issues.
As a matter of history, the cantonments are regulated, so far as regards grants to individuals, by an order of the Governor-General in Council dated so far back as 1836. That Order appears to have been carried forward to date by a series of subsequent orders, more or less identical in their terms. Where the Government grant any rights to individuals within the area of the cantonments one of the cardinal conditions of the grant is that the Government retain the power of resumption at any time on giving one months notice. If they give that notice, they are required to pay the value of such buildings as may have been authorized to be erected.
In this case the Government proposed to resume twelve or thirteen of properties originally granted out, and they issued notifications of resumption, of which there is an example in the case of the first appellant Hari Chands property. It runs as follows —
" Whereas the land comprising the site of the property " known as Bungalow No. 5, Fort Road, Peshawar Cantonment, belongs to Government and is held by you on Cantonment tenure, under which Government are entitled to "resume the said land subject to paying the value of such "buildings as may have been authorised to be erected thereon ; "And whereas Government have decided to resume possession "of the said land and to obtain possession of the buildings "standing thereon Take notice therefore that Government "will under all powers enabling them in that behalf through "their Agent on 15th October, 1932, resume possession of the "said land, and your occupation and any rights, easements "and interests you may have in the said land and the buildings "thereon shall cease as from that date."
The notification also contained an offer of compensation.
Apparently none of those to whom the notices were addressed was satisfied with the offer, and while the natural and ordinary course would have been to proceed to arbitration for the purpose of assessing the compensation, for some reason or other that course does not seem to have been pursued, or to have been acceptable to the parties, and the Government accordingly resorted to the Land Acquisition Act of 1894 for the purpose of expropriating the owners of the bungalows on the terms of that statute. Accordingly a notification was served on each of the proprietors of the bungalows, and in
