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. 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 for the appellant. 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 for the appellant. The only basis of valuation of a building apart from its site is what is familiarly known as the contractors method, that is, taking the cost of a new building as at the date of the acquisition, and allowing for depreciation and for the cost of any necessary repairs. That principle was approved by the Board in Hart Chand v. Secretary of State for India (i), in which the judgment was delivered after the date of the High Courts decision in the present case. The adoption of a basis of a rental value cannot lead in any event to a correct result. Rent is earned by three things (a) the land itself, and its amenities, that is, trees and roads, etc. ; (b) the situation of the land and the building; and (c) the amount of accommodation in the building, including its suitability to the hypothetical tenant. Therefore, in applying the rental value as a basis for valuing the building only, rent earned by the land and by the situation of the land must be taken into account, both of which are factors held by the owner of the land, and to make a guess as regards apportionment is a very unreliable method of arriving at the rent of the building. The only proper method, therefore, is to take what is the real value of the building as a building. [He was stopped.] The respondent did not appear. Mar. 19. The judgment of their Lordships was delivered by SIR MADHAVAN NAIR, who stated the facts above set out, and continued Their Lordships had occasion to consider the nature of the cantonment tenure in a land acquisition case which came before the Board recently from the Peshawar Cantonment Hart Chand v. Secretary of State for India (( 1939) L. R. 66 I. A. 258, 262). In that case their Lordships observed that (Ibid. 259.) " 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. In that case their Lordships observed that (Ibid. 259.) " 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." Their Lordships think it will be advantageous to state at the outset that though various questions were raised before the lower courts the learned counsel for the Secretary of State, the appellant, has presented for their Lordships consideration only one question, namely, what is the correct principle that should be applied in valuing under the Land Acquisition Act a building which stands on land belonging to another and not to the owner of the building, as in the present case. The respondent has not been represented, but Mr. Tucker has placed fully before their Lordships all the relevant facts and arguments. In this appeal by the Secretary of State it is contended that the basis of valuation adopted by the High Court is incorrect, and that the true principle of assessing compensation for the buildings, apart from the site, is to ascertain the cost of reproducing the buildings at the time of the compulsory acquisition, allowing for depreciation in consideration of the age and condition of the buildings, and for the cost of necessary repairs. This principle was adopted as correct by this Board in Hart Chands case, already referred to (L. R. 66 I. A. 258.), where it is enunciated as the correct principle. In that case their Lordships state it as follows (Ibid. 262.) — " The subject to be valued being a building apart from the "site, the principle of fixing value by ascertaining the cost "of reproducing the building at the present time, and then "allowing for depreciation in consideration of the age of "the building and for the cost of such repairs as might be "required apart from depreciation, is quite a well known "and recognized method of valuing buildings for the purpose "of compensation. That method was pursued here, and that "method is not, as their Lordships conceive it, affected by "the resumption notice, because the prices which would be "taken, and were taken in this case, for the purpose of "ascertaining the cost of reproducing the building would "not be affected by the resumption notice at all." Although the learned judges of the High Court agreed with the District Judge that the land was the property of the Government, and that the Secretary was entitled to resume it without paying any compensation therefor, and that the only compensation due was compensation for the buildings, which alone were compulsorily acquired, they would appear to have thought that they were entitled to assess this latter compensation on an assumed rental basis, and for that purpose to take into account the lease, which they said " should be "taken into account as Government was bound to carry "out its obligations under the registered lease." It is clear that the lease was subject to the right of resumption by the Government, unless it could be maintained that the Government were not entitled to exercise the right of resumption during the currency of the lease, but the learned judges agree that the land has been validly resumed, and it necessarily follows that, as from the date of resumption, the respondent ceased to have any right to keep the buildings on the land or to claim rent from a tenant, and there is no room for assessing upon an assumed rental basis the compensation for the value of the buildings as materials standing upon a site, but liable to be removed at any moment. In their Lordships opinion, the District Judge has applied the correct principle in valuing the buildings in this case. The result is that their Lordships will humbly advise His Majesty that the appeal should be allowed, and that the District Judges decree should be restored. The appellant will have the costs of this appeal, and also his costs in the High Court.