The correct method for valuing a building apart from its site for compensation is the "contractors method"—calculating the cost of reproduction at the time of acquisition, minus depreciation and necessary repairs—rather than using capitalized rental value, which includes land and location factors.

JUDGEMENT

[@ Page LRIA 94] Appeal (No. 21 of 1941) from a decree of the High Court (September 12, 1938) which varied a decree of the Court of the District Judge, Meerut (February 21, 1935), which had increased an award made by the Land Acquisition Officer, Meerut (May 7, 1934), for land which had been compulsorily acquired from the respondent.

The following facts are taken from the judgment of the Judicial Committee This appeal arose out of certain land acquisition proceedings. The property concerned consisted of a house and outhouses belonging to the respondent situated within the Meerut Cantonment. The land on which they stood was held by him from the Government on what was commonly known as the cantonment tenure. Grants to

individuals of lands within cantonments were regulated by General Order of the Governor-General in Council, No. 179, dated September 12, 1836, which had been repeated in a series of subsequent regulations.

In this case the property of the respondent had been in the possession of the Secretary of State under a lease for ten years, at Rs.325 a month, with a covenant to repair on the part of the tenant. The lease began on July 1, 1931, and rent had been paid by the Government up to May 10, 1934. In the meanwhile, the Government of India gave notice of resumption to the owner, resumed the land, and instructed the Government of the United Provinces to acquire the buildings under the Land Acquisition Act (L of 1894) for the public purpose of housing Government officers.

The Land Acquisition Officer awarded to the respondent as compensation for the buildings Rs.11,605, together with Rs1659-12 for compulsory acquisition under s. 15 of the Act. Dissatisfied with that award, the respondent claimed a reference in the ordinary course.

The District Judge estimated from the evidence that the value of the buildings if newly constructed would be Rs.30,858. From that amount he deducted Rs.8042 for depreciation. Governments claim for reduction of a further amount, representing what it would have cost to bring the buildings into a reasonable state of repair, was disallowed by him for reasons which it was not now necessary to examine, as the point was not taken on appeal to the High Court by the Secretary of State. Deducting the amount of depreciation the District Judge held that the respondent was entitled to Rs.22,816, together with the usual 15 per cent, allowance for compulsory acquisition, and also interest at 6 per cent, on the excess amount from the date of the award to the date of his order.

On appeal by the respondent the value of the buildings was increased to Rs.31,426. The High Court (Bennet A.C.J. and Verma J.) arrived at the figure by capitalizing the annual rental of the buildings at eight and one-third years purchase, the court deciding that 12 per cent, per annum simple interest might be taken to be a reasonable interest to expect from house property. That principle had thus been given effect to, as stated, in the judgment " No doubt this lease was "made by the appellant under the impression that he was "the owner of the land of the compound, trees, plunge bath, "polo pit, none of which he in fact owns. But still we think "that the lease should be taken into account as Government "was bound to carry out its obligations under the registered "lease. There were seven years, one month and twenty days "of the lease to run from May 10, 1934, till June 30, 1941 "At Rs.325 per month this comes to Rs.27,843. The further "period to make up eight and one-third years purchase (at "12 per cent.) is one year, two months and ten days. For "this we think that in view of the materials of the house and "the fact that the appellant does not own the ground, etc., " a fair rent would be Rs.250 a month. At Rs.250 per month "the total rent for one year, two months and ten days comes "to Rs.3583. Adding these two sums we get Rs.31,426 "for the eight and one-third years purchase."

1942. Feb. 11. J. Millard Tucker K.C, and Wallach fo