STATE OF KERALA v. THARU ALIAS DAVIS — 1964 DIGILAW 165 (KER)

Judgment :- 1. This appeal by the State arises out of a land acquisition reference; and the question for consideration is whether the compensation awarded for two markets is to be reduced. The respondents, the owners of the markets, have filed a memorandum of cross-objections; and the question therein is whether they are to be awarded a higher compensation. 2. The two markets, the General Market and the Parayil Market, are within the Kunnamkulam Municipality; and they were acquired to be run by the Municipality. Possession was given on 1st April 1958 under Ex. P-6; and it shows that the Municipality agreed to pay Rs. 500/- per month, being the profits which the owners reasonably expected from the markets if the surrender-were not made, or interest at 6 per cent on the compensation amount, whichever was higher, until the amount was paid. 3. The acquisition authorities awarded land value for a portion of the sites at Rs. 100/- per cent and Rs. 50/- per cent for the rest; and they also awarded compensation for the buildings separately. The respondents claimed land value at the rate of Rs. 500/- per cent for a portion of the sites and at the rate of Rs. 300,- for the rest and they claimed Rs. 1,50,000/- as compensation for loss of earnings from the markets. Ultimately, the matter came on reference before the lower court; and the lower court considered that Rs.100/-per cent for all the lands was a fair land value. The lower court also raised the value of the buildings by some extent. But in considering the question whether the respondents were entitled to get compensation for loss of earnings from the markets, the lower court came to the conclusion that the markets formed part of the lands and that compensation should be fixed on the method of capitalising the annual net income, rather than on the principle of compensating for the loss of the lands, the buildings, etc. separately. Ultimately, the lower court fixed Rs. 4934/- as the net annual income from the markets and awarded compensation at 12 years purchase with the usual solatium and interest. The State, as already stated, questions this award. 4. The learned Government Pleader has advanced arguments, most of which are quite untenable. separately. Ultimately, the lower court fixed Rs. 4934/- as the net annual income from the markets and awarded compensation at 12 years purchase with the usual solatium and interest. The State, as already stated, questions this award. 4. The learned Government Pleader has advanced arguments, most of which are quite untenable. The first contention is that the value of the markets is the result of the license granted by the Municipality and divorced of the license, the markets are nothing but the sites and the buildings thereon. Consequently, he pleads, the lands and the buildings should be valued as lands and buildings and the owners are entitled only to such value, and nothing more on the score that the properties are markets. This argument, when further amplified, comes to this: that the Municipality could have given licenses for private markets in the vicinity of the acquired markets and thereby created competition, which would have resulted in considerable reduction of income for the acquired markets. Therefore, the owners are not entitled to any compensation for loss, which is the result of the loss of the license. In support of this the Government Pleader has even cited a passage from Halsbury's Laws of England to the effect that a licensee has no interest in the land which enables him to get a share of the compensation when the land is acquired. 5. We would observe that the analogy of a licensee to the license-holder of a market is not quite apt. It is clear that a person, who has only a license to do something on a land, cannot claim any portion of the compensation when the land is acquired; and that the owner of the land or others who have some interest therein alone can get compensation. 6. The next contention of the Government Pleader on this aspect has also no force. S.268 (3) of the Cochin Municipal Act, which admittedly applies to this case, provides that the Municipal Council shall, as regards private markets already lawfully established, grant the license applied for, subject to such regulation as to supervision and inspection and to such conditions as to sanitation, drainage, etc. The same sub-section also provides that in the case of new private markets the Council at its discretion may grant the license. The same sub-section also provides that in the case of new private markets the Council at its discretion may grant the license. Thus it is clear that in the case of markets like the acquired ones, which were already in existence on the date of passing of the Act, the Council has no choice. It has to grant the license, though the license is subject to regulation as to supervision, inspection, etc.The question whether the Municipality can grant licenses for other markets so as to stifle the existing markets and thus bring down their income considerably is not an easy one as the Government Pleader thinks; and the Municipality cannot exercise the licensing power arbitrarily or vindictively. Therefore, the argument that the value of the markets depends entirely on the license granted by the Municipality and the Municipality by exercising their right to grant new licenses cm stifle the existing markets has no meaning. 7. The next contention urged by the Government Pleader is that the State has not acquired the markets, but has only acquired the sites and the buildings in the markets. He draws our attention to the English analogy that the right to conduct a market could only be based on a grant and it does not form part of the land itself. In this contention also the Government Pleader is not right, because the position is quite different in India, for example, vide P. P. Kutti Keya v. State of Madras (AIR. 1954 Mad. 621). At pages 634 and 635 of the reports appears: "The tight claimed by the petitioners that they are entitled to hold a market is one unknown to Indian law, though it is well recognised in the law of England. In Halsbury's Laws of England, Vol. VI, p. 580, para 740 it is stated that the right to hold markets and fairs is a franchise which could be granted by the Crown by virtue of the Royal prerogative. One of the incidents of this franchise is that it confers on the grantee a right in the nature of a monopoly and that carries with it the right to exclude other persons from holding markets is the same area. But no such right has been recognised by the law of this country. One of the incidents of this franchise is that it confers on the grantee a right in the nature of a monopoly and that carries with it the right to exclude other persons from holding markets is the same area. But no such right has been recognised by the law of this country. The right to hold a fair or market is incidental to the ownership of the property wherein the market is held and is one of the modes in which that property can be enjoyed. It is not in the nature of a franchise as it is in the law of England: (Vide 'Hemchandra Boy Choudry v. Kristo Chandra Saha', AIR. 1920 Cal. 255 at pp. 256-257)". The Government Pleader then draws our attention to S.275 (1) of the Municipal Act, which provides that the Government may, for the purpose and at the instance, of any Municipality acquire under the Land Acquisition Act the rights of any person to hold a private market in any place and to levy fees therein; and such rights shall be deemed to be land for the purposes of the Land Acquisition Act. What is indicated by this is that if a person has a right to hold a private market in any place otherwise than as owner of the land, that right can be separately acquired by the State; and in the case of such acquisition, that right has to be treated as land for the purpose of the acquisition. This again shows that if the Government want to acquire the land and the buildings, they have to acquire them separately. This does not indicate that in an acquisition like the present one the value of the markets may be ignored. This contention, we may point out, forgets also the fact that if the markets are not acquired, they still vest in the respondents and the respondents may still claim to run them. 8. At this stage it will be instructive to consider the English case, Tull's Personal Representatives v. Secretary of State for Air (1957 A. E. R.480). A licensed house let to brewers on a lease was purchased absolutely under the Defence Acts. Romer L. J., in considering the question of compensation, quotes and follows the following observation of Scott L. J. in Horn v. Sunder* land Corpn. A licensed house let to brewers on a lease was purchased absolutely under the Defence Acts. Romer L. J., in considering the question of compensation, quotes and follows the following observation of Scott L. J. in Horn v. Sunder* land Corpn. (1941 A. E. R.480): "On a compulsory sale, however, the principle of compensation will include in the price of the land, not only its market value, but also the personal loss imposed on the owner by the forced sale, whether it be the cost of preparing the land for the best market then available or incidental loss in connection with the business he has been carrying on, or the cost of reinstatement. Otherwise, he will not be fully compensated." Romer L. J. in following this observation of Scott L. J. observes: "This passage shows, as I think, quite clearly that if a man is carrying on a business and his premises are compulsorily bought, he is entitled not only to compensation in respect of the value of the premises, but to compensation for the loss of his business, the value of the goodwill; although undoubtedly the acquiring authority would not themselves acquire the business or the goodwill." Thus it is clear that compensation for the loss of business for the loss of the markets in this case has also to be paid. 9. The result is that the mode of valuation adopted by the lower court, namely, capitalisation of the annual net income, is correct. The further question for adjudication in the appeal is whether 12 years' purchase is high; and the question in the memorandum of cross-objections is whether it has to be further raised. 10. The gross income from the markets for 1953-54 is Rs, 8, 000/-; for 1954-55 it is again Rs.8,000/-; for 1955-56 it is Rs. 8150/-; for 1956-57 it is Rs. 7,750/-; and for 1957-58 it is again Rs. 7,750/-. The Municipality appears to have obtained for the first year after it took possession (1958-59) Rs. 15,114/-. It is also relevant to remember that under Ex. P-6 the Municipality has agreed to pay Rs. 6,000/- per year to the owners until the compensation amount is paid; and this is the owners' net income. The lower court has adopted Rs. 7,500/- as the average gross income per year, from which it has made deductions for repairs, for municipal license fee, for municipal tax, etc. P-6 the Municipality has agreed to pay Rs. 6,000/- per year to the owners until the compensation amount is paid; and this is the owners' net income. The lower court has adopted Rs. 7,500/- as the average gross income per year, from which it has made deductions for repairs, for municipal license fee, for municipal tax, etc. and has estimated the net income per year at Rs. 4,934/-. The parties do not question this figure, the dispute being confined to the multiple to be used in capitalising the value. 11. The learned counsel of the respondents has drawn our attention to a few decisions like G. E. Grey v. The Secretary of State (39 I. C. 619) and Roshan Jahan Begam Sahiba v. The Secretary of State (AIR. 1935 Oudh 364). In the first of these oases 18 2/11 years' purchase was considered to be proper and fair and in the second case 16 2/3 years' purchase was adopted. It is fairly obvious that no hard and fast rule can be laid down for the multiple to be used in capitalising. That depends on several factors like the nature and age of the buildings, the possibility or otherwise of obtaining a steady income, the chances of competition, the fluctuation of the income, etc. In short, it depends on the facts and circumstances of each case. In this case the lower court has awarded 12 years' purchase and the amount so awarded is Rs. 68,089-. Even if we assume that it is possible to obtain a return of 6 per cent on this amount from a proper and secure investment, which we think is doubtful, even then the annual interest will not come to the estimated net income of Rs. 4,934'- per year. Therefore, we feel that 12 years' purchase awarded by the lower court is by no means high: and that is sufficient to dismiss the appeal. 12. Then we have the memorandum of cross-objections. The respondents have claimed 16 2/3 years' purchase; and their counsel points out that in no case he has been able to discover has the court fixed compensation for a market at a figure less than 16 2/3 years' purchase. From the cases cited that plea appears to be correct. Still, that cannot be treated as a general rule. The respondents have claimed 16 2/3 years' purchase; and their counsel points out that in no case he has been able to discover has the court fixed compensation for a market at a figure less than 16 2/3 years' purchase. From the cases cited that plea appears to be correct. Still, that cannot be treated as a general rule. The Government Pleader at this stage argues that the respondents did not file a separate appeal and they filed only a memorandum of cross-objections; and therefore, this Court need not enhance the compensation. That is not a correct approach to the question. The Government having filed the appeal, the respondents have a right in law to file a memorandum of cross-objections; and the fact that they filed a memorandum of cross-objections instead of a separate appeal does not mean that if the appeal is dismissed, the memorandum of cross-objections should also be dismissed. If the Government did not file the appeal, the respondents would not have filed a memorandum of cross-objections; and in that case they would not have obtained any additional compensation. Having filed the appeal, the Government Pleader cannot request us now to dismiss the memorandum of cross-objections because we dismiss the appeal. Considering all the circumstances of the case, the age of the markets, the nature of the buildings therein, the possibility of competition, the chances of fluctuation in the income, the probable return from the compensation money, etc., we think the lower court should have awarded at least 15 years' purchase as compensation. 13. The appeal is dismissed and the memorandum of cross-objections is allowed in part. The respondents will get three more years' purchase of the annual net income of Rs. 4,934 -. They will also get the usual solatium thereon and interest from 18th March 1959. In the appeal the State will pay the costs of the respondents; and in the memorandum of cross-objections the parties will pay and receive costs in proportion to their failure and success. Dismissed.