3 S.C.R.

SUPREME COURT REPORTS

V. R. SUBRAMANYAM

B. THAYAPPA AND OTHERS. (J. L. KAPUR and J. C. SHAH, JJ.)

B11ilding contract-Defective work-Addition•! work not covered by agreement-Compensation, when can be allowed-Indian Contract

Act, I872 (9 of I872), s. 70.

The appellant entered into an agreement with the respondent who was a building contractor entrusting him with the work of constructing a house and shops. The respondent undertook the work but before it could be completed disputes arose between them and the appellant claimed compensation for effecting repairs to rectify defective work done by the respondent, and the respondent claimed compensation at certain rates set up by him for work for which there was no express provision in the written agreement. Suits based on their respective claims were filed by the appellant and the respondent which were partly .decreed by the trial court. The High Court dismissed the appellant's suit in its entirety and remanded the respondent's suit directing the appointment of a qualified engineer for determining, according to the directions given in the judgment, the amount payable to the respondent for work done in addition to the agreed work under the contract. The appellant contended that the respondent having failed to prove the oral agreement pleaded the respondents' suit should have been dismissed and compensation quantum meruit which was not claimed should not have been awarded.

Held, that if a party to a contract rendered service to the other not intending to do so gratuitously and, the other party had obtained some benefit, the former was entitled to compensation for the value of the services rendered by him. The respondent not intending to do gratuitous work was entitled to compensation for additional work not covered by the written agreement.

Even if the respondent failed to prove his claim for compensation at the prevailing market rate under an oral agreement the court had jurisdiction to award compensation for work done under s. 70 of the Contract Act.

The appellant's suit having been dismissed by the High Court and no appeal having been preferred against it, it was not open to him to reagitate the same question of compensation in the companion suits in which no equitable set-off was claimed.

CIVIL

APPELLATE

JURISDICTION: Civil Appeals Nos. 321 and 322 of 1956.

Appeals by special leave from the judgment and decree dated September 21, 1951, of the Mysore High Court in Regular Appeals Nos. 3, 24, 13 and 25 of 1948- 49; arising out of the judgment and decree dated

February 1.

Subramanyarn v.

Thayappa

Shah ].

January 9, 1948, of the Principal District Judge, Bangalore, in Original Suits X os. 55 of 1946-4 7 and 117of1945-46 respectively.

S. K. Venkataranga Aiyangar and S. K. Aiyangar, for the appellant.

B. K. B. Naidu., for the respondents.

1961. February 1. The Judgment of the Court was delivered by SHAH, J.-V. R. Subramanyam, the appellant herein is the owner of plot No. 29, Subedar Chattram Road in the town of Bangalore. B. Thayappa respondent is a building contractor. Tho appellant entrusted the respondent with the work of constructing a house and shops on the plot, on terms and conditions set out in a written agreement dated October 1, 1942, which was slightly modified on October 6, 1942.

By the agreement the respondent WftS to construct for the itppellant on the plot six shops ft butting a public roa.d, the main building ftt the rear of the shops, an out-house and a garage according to a site plan. Thll respondent was to be remunerftled at rftte.q specified in the agreement: for constructions with R. C. C. roofing, -the ra.te stipulated was Rs. 4-2-0 per square foot anrl for" tiled construction " it was Rs. 3-2-0 per square f1JoL The :Municipality of Bangalore did nnt sanction the plan as proposed by the appellant.. The plan was altered and it was sanctioned, subject to LLosc alterations. By the alterations the shops were deleted from the plan, the area of the out-house was increased, anrl a puja room on the grnund floor and a, n extrn room on the first floor were arlr],, d to the plan.

A compound wall was also to be constructed. The respondent carrird out a subRtantial part of the construction work according to plan anrl the appellant paid to him diverse sums of money and delivered building materials. The aggregate H.monnt ac("ordingly receivrd by the respondent wa.s Rs. 20,200.

But bPfore the work could be cou1pletcd disputes arose between the appellant and the rc.-1ponuent about the work done by the latter. TLe a.ppE>!IH.nt elaimed that the work done was dfock<e

and tlrnt hP was entitled to compensMion for l"ffrcLing

, repairs necessary to rectify the defects. The respondent claimed cGmpensation at certain rates set up by him for work done for the appellant for which no express provision was made in the written agreement.

Each party set up an oral agreement about the remuneration to be paid to the respondent for the extra work which was not included in the original agreement.

The appellant filed a suit in the court of the Subordinate Judge, Bangalore, against the respondent which was later transferred to the court of the Principal District Judge, Bangalore, and numbered , O. S. 54 of 1946-4 7, for a decree for Rs. 8,515-4-0 being the amount of compensation which the appellant claimed he was entitled to receive from the respondent for defective work and for delay in completion of the construction. The respondent filed a suit against the appellant which was later transferred to the Court of the Principal District Judge, Bangalore, and numbered 55 of 1946-47. By this suit, the respondent claimed a decree for Rs. 5,988-12-0 being the remuneration due to him for the work done in constructing the house .J.ess Rs. 20,200 received from the appellant. The respondent filed another suit No. 117 of 1945-46 for a decree for Rs. 15,001-10-9 with interest and notice charges being the amount due to him, for the construction of the out-house, godown, first floor room and flight of steps and the value of some building materials which the respondent claimed he had left in the premises of the appellant and which the latter had wrongfully removed.

The trial court granted to the appellant a, decree for Rs. 3,000 in suit No. 54 of 1946-47. To the respondent, he granted a decree for Rs. 2,989-6.0 in suit No. 55of1946-47 and in suit No. 117of1945-46, he granted a decree for Rs. 13,329-10-9. Both the parties felt themselves aggrieved by the decrees passed in the three suits and six appeals were preferred to the High Court of Judicature of Mysore at Bangalore against those decrees. , T, he High Court . reversed the ' decree passed in suit No. 54 of 1946-4 7 and dismissed the appellant's claim in its entirety. '.l'he decrees

I96I

Subramanyam

Thayappa

Shah J.

z96z

Subramanyam v.

Thayappa

Shah J.

passed in suit Nos. 55 of 1946-47 and 117 of 1945-46 were also set aside and proceedings were remanded to the District Court with a direction that a qualified engineer be appointed as Commissioner to determine the amounts payable to the re8pondent for work done in addition to the work agreed to be done under the written contract. The High Court ordered that the same be determined " in accorda.nce with the directions" given in the judgment. The appellant has appealed to this court against the decrees in suits Nos. 55 of 1946-47 and 117 of 1945-46 with special leave under Art. 136 of the Constitution and he challenges the directions given in the order of remand.

The dispute between the parties related to the construction of the out-house, garage, puja room, the room on the first floor, the stair case leading to the upper floor room and the compound wall. In respect of these constructions (except for the compound wall) the District Judge awarded compensation to the respondents at the rate of Rs. 4-2-0 per square foot and in respect of the compound wall he awarded compensation at the rate of Rs. 5 per running foot, and certain additional charges. The High Court held that the respondent was entitled to receive compensation at the prevailing market rate for constructions which were not covered by the agreements dated October 1, 1942 and October 6, 1942. The High Court negatived the plea of the respondent that the appellant had agreed to pay him at "extra rates for deviations and additions not specifically contained in the original agreement. " The High Court then held that for the construction of the out-house, puja room and the upper floor room, the respondent was entitled to receive compensation at the rate of Rs. 4-2-0 and for the out-house he was entitled to receive "some extra amount for the additional constructions. " In these items, according to the High Court, there was no material deviation from the original plan. The High Court further directed that for the flight of stairs compensation be paid either "by way of a lump sum or on cubical content. whichever was more practicable or common according to the rates which they proposed to indicate for such

additional work. " The High Court however held that there was substantial variation from the original contract in the construction of the garage, and therefore the garage could "not be covered by the contracted rate" and must be paid for at the rates current at the end of the year 1943. The High Court also directed that "if the extra items not covered by Exs. VII and VII( a) have been constructed or supplied by the defendants as claimed in his bills Exs. XXI, XXII and XXIII are to be paid for in addition to the flat rate, the basis on which they should be paid for may,. ........ be fixed in accordance with the rates contained in Ex. IL "

 Counsel for the appellant submitted that as in the view of the High Court the respondent failed to prove the oral agreement pleaded by him, the suit should have been dismissed, and they should not have a.warded compensation quantum meruit which was not claimed.

It was urged that the respondent must succeed or fail on the case pleaded by him, and not on a cause of action not pleaded. In our view, there is no substance in this contention. As we have already observed, in respect of the additional work done by the respondent, both the parties set up conflicting oral agreements.

These were not accepted by the High Court. If a party to a contract has rendered service to the other not intending to do so gratuitously and the other person has obtained some benefit, the former is entitled to compensation for the value of the services rendered by him. Evidently, the respondent made additional constrtwtions to the building and they were not done gratuitously. He was therefore entitled to receive compensation for the work done which was not covered . by the agreement. The respondent claimed under an oral agreement compensatiort at prevailing market rates for work done by him : even if he failed to prove an express agreement in that behalf, the court may still award him compensation under s. 70 of the Contract Act. By awarding a decree for compensation under the Statute and not under the oral contract pleaded, there was in the circumstances of this case no

I96I

Subramanyam v.

Thayappa

Shah ].

Sulwa1nanyam

Thayappa

Shah].

substantial departure from the claim made by the respondent.

It was then urged that the High Court was in error in directing assessment of compensation for the additional work "in accordance with the rates mentioned in Ex. II." The plaintiff's witness T. S. Narayana Rao had admitted that the rates in Ex. II were the current market rates for building construction work similar to the appellant's building. In the view of the High Court, the rates set out in that bill were not excessive. If with a view to restrict the scope of the enquiry, the learned judges of the High Court gave a direction to the Commissioner for assessing compensation on the basis of rates which were approved by the plaintiff's witness, it cannot be said that any serious error was committed in incorporating that direction which would justify our interference.

Finally it was urged that the app!Jllant was entitled to claim the loss suffered by him on account of defective work by way of an equitable set off in the claim made by the respondent in suits Nos. 55 of 1946-47 and 117 of 1945-46. But the appellant made a claim in a substantive suit fur compensation for loss suffered by him because of the a.lleged defective work done by the respondent. That suit was dismissed by the High

Court and it is not open to the appellant thereafter to seek to reagitate the same questipn in the companion suits when no appeal has been preferred against .the decree in suit No. 54of1946-47, and no plea of equitable set off has been raised in the written statements in the companion suits.

In our view, there is no substance in any of the . contentions raised. The appeals therefore fail and are - dismissed with costs. Qne hearing fee.

Appeals dismissed.

V. R. SUBRAMANYAM

B. THAYAPPA AND OTHERS

L. KAPUR

C. SHAH, JJ.

Indian Contract

s. 70

s. 70

S. K. Aiyangar

B. K. B. Naidu

B. Thayappa

October 1, 1942

October 6, 1942

Municipality of Bangalore

Subordinate Judge, Bangalore

S. 54

Shah

Art. 136

s. 70

T. S. Narayana Rao


3.S.C.R.

SUPREME COURT REPORTS 669

THE BURMAH-SHELL REFINERIES LIMITED

. "·

THEIR WORKMEN. (P. B. GAJENDRAGADKAR, K. N. WANCHOo a.nd K. C. DAS Gul'TA, JJ.) Industrial Dispute-Payment of bonus to clerical stajf-Pro.ctice prevailing in oil companies-If must be paid lower rate than labour

staff.

Payment of bonus being based on the contribution of workmen to the profits of the company, that contribution, it is well settled, has to be taken foto consideration as a whole and it is not relevant to enquire which class or section of the workmen contributed how much to the profits.

B1m• and Co., Calcutta v. Their Employees [r956] S.C.R. 78r and Baroda Borough Municipality v. Its Workmen [r957] S.C.R.

33, referred to.

Looked at from that stand-point, it is not fair, in the absence of any overriding consideration, to make a distinction as to the rate of !)onus payable to different classes of workmen such as clerks and operatives, for it is ordinarily impossible to say which class contributed more to the prosperity of the industry than another.

Nor can it be laid down as an inflexible rule that the. clerical and the labour staff must always be paid at the same rate. The Industrial Tribunals must have wide discretion in the matter, which this Court would be reluctant to interfere with unless arbitrarily exercised.

Consequently, where the Industrial Tribunal, on a full consideration of the difference in the wage scales of labour and the clerical staff, came to the conclusion that it would be improper to award lower rate of bonus to the clerical staff who belonged to the middle class and suffered more than the labour staff from the rise of price, and there was nothing to show that .this was not so, the decision of the Tribunal was reasonable and must be upheld.

CIVIL .APPELL A.TE JURISDICTION : Ci vii A ppea.l No. 250/1959.

Appeal by special lea.ve from the a.ward da.ted Ma.y 18, 1958, of the Industrial Tribunal, Bombay, in Reference (I. T.) No. 106 of 1955. ·

M. O. Set, aJ.vad., Attorney.General for India, S. D.

Vffhadalal a.nd I. N. Shroff, for the a.ppella.nts.

Janarclan Sharma, for respondent No. I.

1961. February 1. The Judgment ofthe Court was delivered by

February I.

1961 DAS GUPTA, J.-This appeal by special leave

Burmah-Shell arises out of an industrial dispute between the appel- Refineries Limited !ant company, and their clerical staff on the question v. of bonus for the year 1956.

The demand of the work- Their Workmen men was for bonus equivalent to 8 months' total

Das Gupta J. earnings of the year. The company resisted this demand mainly on the ground that there was in existence an agreement between the company and its labour employees-whereby bonus for the year 1956 had been settled at 4! months' basic wages, that the general practice in awards in the matter of bonus had in the past been to award or grant lesser amounts to clerical employees than to labour, and that in any case, to grant the same rate of bonus to clerical employees and labour employees would be "to encourage or to invite strife and discontent." The Tribunal held that such an agreement as regards bonus for 19fi6 had been voluntarily entered into on behalf of the workers and was beneficial to them ; and was of opinion that the bonus to the clerical staff ought to be on the same scale. On the one hand, it rejected the clerical staff's claim for bonus at a higher rate than what the workmen were entitled to, as this "would lead to industrial discontent and strife", and on the other held that there was no reason to grant the clerical staff hon us at a lower rate. Accordingly it awarded bonus at the rate of 9/24ths of the basic wages, to the clerical staff, for the year ending December 31, 1956.

Two contentions were raised in appeal. The first is that the Tribunal erred in awarding bonus without having recorded a conclusion as regards the existence and extent of the gap between the actual wages ( received by these workmen and the living wage. The second contention urged on behalf of the appellant is that the Tribunal erred in granting to the clerical staff bonus at the same rate as was payable to the labour staff, on the basis of the agreement, and should have granted bonus to the clerical staff, at a lower rate.

The appellant cannot however be allowed to urge the first contention in this appeal because such a contention does not appear to h11ove been seriously

raised before the Tribunal. It is true that in the first 196z parbt ohf tfhe fwritten statement filed before the Tdribuhna.tl Burmah-Sh•ll on e al o the company a statement was ma e t a Refineries Limieed "the company, craves leave to refer to and rely on, v. a.s if incorporated herein, its written statement filed Their Workm111 before this Hon'ble Tribunal in Ref. (LT.) 279of1957, and repeats and adopts all the submissions a.nd aver- Das Gupta J. ments made therein" and that in the written statement filed therein a question that in view of the high wages paid by the company no gap existed between the actual wage a.nd the living wage, was ta.ken. Not only wa.s no independent statement made in the separate written statement which was filed in the present reference, i.e., Ref. No. (I.T.) 106 of 1958 on this question but we find no reference at all in the award made by the Tribunal which heard both the references together to a.ny contention of this nature. No ground that the Tribunal ha.d granted bonus without coming to a. conclusion a.s regards the existence and extent of a. gap between the actual wage received by the workmen and the living wage wa.s ta.ken in the petition for special leave to a.ppea.l. Even in the statement of case filed on beha.lf of the appellant no such question had been raised. It is not therefore open to the appellant to urge such a. contention now ..

In support of the other contention that the Tribunal wa.s in error in granting to the clerical staff bonus a.t the same rate a.s wa.s payable to the la.hour staff, on the ha.sis of the agreement, a.nd that bonus should have been gra.nted to the clerioa.l staff a.t a. lower ra.te, it is urged that for ma.ny yea.rs now, the practice in the petroleum industry has been to ma.ke a. distinction between the clerica.l employees a.nd the operatives, giving a. lower rate of bonus to the former, tha.n what is given to the latter. It is unnecessary in the present c&se, to consider, whether, if the premise tha.t there ha.d for many years been such a practice of paying a lesser rate of bonus to clerical staff tba.n to the labour staff, that itself would preclude industrial adjudicators from a.wa.rding bonus to both classes of employees a.t the sa.me rate. For, we find that the a.hove premise has not been established. While it is true that in some

1961 years, either by &ward of Industrial Tribunal or by

B .. ..,,,.,,.54,11 agreement, clerical staff of petroleum concerns has got Rifineries Limil•d bonus at a lower rate, than the labour employees, it is v. equally true that in some years at least, clerical staff neir Work""n &nd operatives have been given bonus at the same rate.

Thus for the year 1951, we find that in disputes bet.

Das Guf>I• f. we.en the three oil companies-The Burmah Shell, the

Caltex and the Standard Vacuum, and their employees in their Calcutta office the Labour Appellate Tribunal discussed the matter in Burmah-Shell Oil Co. Ltd. v.

Their Workmen (1) thus:-

"In the matter for payment of bonus for 1950, both the clerical staff and the working people got bonus at the rate of 3 months' wages, though there was an observation that the working class were on calculation entitled to 4 mbnths. The effect was, however, that both the-groups got bonus at the rate of 3 months' basic wages. During the pendency of the Tribunal proceedings, all the companies made agreements with the Union of the workers that bonus would be granted on the basis of 3l months' wages for the year 1951. We feel that there would be a serious repercussion if we allowto the clerical staff anything in excess of that amount. On the other hand, as the effect of the previous decision had been that both groups got equally, paying to the clerks less than that what has been paid to the working class would give rise to a real discontent." We find also that when the same question, viz., whether the same rate of bonus should be paid to clerical staff and operatives, was raised before the Industrial Tribunal, Ernakulam, in a dispute between the Burmah-SheU Co. v. Their Workmen('), learned counsel on behalf of the company conceded that he would not press the point for making a distinction .in the matter of payment of bonus. We find therefore that there is no basis for the assumption that the uniform or nearly uniform practice in the oil c?mpanies has been to pay bonus at a lesser rate to clerical staff than to operatives. There is no substance therefore in the argument that the award of bonus at

!•I {1955) L.A.c. 1s7. 794. (i} (1959) (I) L.L.J. I?8•

9/24ths of basic wages, to the clerical staff, is likely ' 96' to cause discontent among the labour staff, which has Burm•Jo.Sh•ll entered into an agreement to receive bonus itt the R•fi•"'i" Limii.d same rate. v.

The second argument is that as the pay scale of the Th•irWorkm"' clerical staff is higher than what the labour staff receive as wages, the gap-between the living wage and DasGuptaJ. wage actually received, is less for the clerical staff, and so, it would be wrong to pay bonus, wh:ch is primarily intended to bridge this. gap, at the same rate to these two classes of workmen. This argument overlooks the important principle that the payment of bonus is based on the fact of contribution by labour to the profits of the industry, and that it has been held more than once by the court that the contribution to be taken into consideration is the contribution made by the workmen taken together as a class, and that it would not be relevant to enquire which section of the workmen has contributed to what share of profits. It was observed by this Court in Burn &: Co.,

Calcutta v. Their Employees('), in setting aside an award of the Appellate Tribunal of an additional one month's basic wages :-

" The entire profits of the company are the result of the labour of all the workmen and employees in all its units. To grant a bonus to a section of them on the basis of the total profits of the company will give them a share in profits to which they have not contributed ....•. If the order of the Appellate Tribunal is to be given effect to, some of the employees of the company would get a bonus while, others not and as observed in Karam Chand Thaper & Bros.' Workmen v. The Company (1953 L.A.C. 152), that must lead to disaffection among the workers, and to further industrial disputes. " A similar view was expressed by this Court in Barodn. Borough Municipality v. Ita Workmen(•).

It is true that in the cases mentioned above, the Court was co.nsidering the question whether one class of employees could be granted bonus, while another

ol&88 was being granted none at all ; and was not

(1) [1956] S.C.R. 781, 793,

(t) [19'7] S.C.R. 33.

r96' considering the question of propriety of different rates Burm•h-Shell of bonus being paid to different classes. But the

Refiries Limited basis of the decision that all the workmen, taken as v. a whole contribute to the profits, is relevant also for Their Workmen the consideration of the question whether different rates of bonus between two different classes of work- D•• Gwpla]. men are fair ; and it is necessary to remember that it is ordinarily not possible to say that one class or workmen, say clerks, contribute more to the prosperity of the industry than another class like operatives. In the absence of some overriding consideration it would not be fair to make a distinction in the rate of bonus between different classes of workmen.

We do not wish however to lay down an inflexible rule that clerical staff and labour staff must always be paid the same rate of bonus. It may happen in a particular industry that wages of labour staff are extremely low, while the pay scale of the clerical staff is many times higher. If a Tribunal in a case like this, being of opinion, that payment of bonus at the ea.me ra.te will not be fair, and may cause discontent amongst the workers awards bonus at a lower rate to the clerical staff, than to the labour staff, there would be no reason for disturbing the award. The industrial tribunals must have very wide discretion in deciding matters like this; and it is not for this Court to interfere with their exercise of discretion, unless it is plainly arbitrary.

In the present case, the Tribunal fully conscious of the difference in the wage scales of labour and clerical staff ha.a pointed out that the clerical staff ca.me from the middle class whose standard of living is higher, a.nd has stated that this class has suffered perhaps more than the operative class from rise in prices, and has in consideration of these factors, concluded, tha.t it would be appropriate not to award a lower rate of bonus to them. " Nothing has been shown to us to justify any doubt about the correctness of the premises mentioned by the learned Tribunal; and the conclusion seems eminenty reasonable.

It was urged by the learned Attorney-Genera.I who appeared on behalf of the appellant company that

even though it be true that the standard of living of 1961 the middle class from which the clerical staff comes is B II-Sh 11 higher than that of the operatives the difference bet- Reft::~;, Lii; d ween the higher average wage received by the clerical v. staff and that received by the operatives is much Their WorAm"' more than the difference in monetary terms between the Ii ving wage of the clerical staff and that of the Das Gupta J. operatives. From the statements furnished before us it was attempted to be shown that the starting rate of remuneration of the middle grade for operatives together with what is received in shapes other than the wages was on January 1, 1958, Rs. 188·94 while similar receipts by the middle grade for clerks is Ks. 404·45, that is, the starting remuneration of clerks taking the middle grade as the type is 113·91 % more than the starting remuneration for middle grade for labour. As against this it is suggested, the living wage fo~ clerical staff should be taken only 80% more than that for the operatives.

We may assume without further investigation the correctness of the statement a.s regards the comparative remuneration received, by middle grade of operatives and middle grade of clerical staff a.s submitted on behalf of the company. We find no basis however for the assumption that the living wage of clerical staff is only 80% more than that of operatives. It is true that in connection with the determination of wages a. formula. which appears to have been initiated first by Mr. Justice Ra.ja.dhya.ksha. when he was enquiring into the cost of living of the non-gazetted employees in the Post and Telegraph Department of multiplying the figures reached on the basis of the requirements of the lower class employees by 180% has often been accepted by the industrial tribunals. Assuming however without deciding that this coefficient of 180 % may be properly adopted for arriving at the fair wage requirements of clerical staff from the fair wage requirements of operatives it does not by any means follow that the same coefficient can be usefully applied in ca.lculating the living wage of the clerical staff from the living wage of the operatives. As has

been clearly pointed out by this Court in a recent

' 96' judgment in C. A. No. 416 of 1958 (Standard Vacuum

Burmalo-Shlll Refining Co., Ltd. versUIJ Its Workmen) the compo- R•ftneri" Limil•a nents of a living wage are largely different from those v. of a fair wage. The difference in the living wage TluirWorkm"' standards of the class to which operatives generally belong and the class to which the clerical staff belongs Das Gupta].

I96z

February :1.

may produce much greater differences in the money value in the components of the requirement of Jiving wage as between the two classes than the difference in the money value of. the components of fair wage of the two classes. There is no justification therefore for thinking that the living wage of the clerical staff is only 80% more than the living wage of the operatives and so no conclusion that the gap between the living wage and the actual wage is less in the case of clerks than in the case of operatives can be drawn from a consideration of the comparative wages received by them.

We find nothing that would justify us in interfering with the conclusion of the Tribunal that the clerical staff should be awarded bonus at the same rate as the operatives.

The appeal is accordingly dismissed with costs.

Appeal dismissed.

SATINDER SINGH AND OTHERS

AMRAO SINGH AND OTHERS. (P. B. GAJENDRA\JADKAR, K. N. WANCHOO and K. c. DAS GUPTA, JJ.)

Land Acquisition-Cis-Sutlij Jagir-Inalienable Land-Compensation, apportionment of-Interest, when payable-East Punjab

Acquisition and Requisition of Immovable Property (Temporary Powers) Act, x948 (E.--P . .¢of x948), s. s~Land Acquisition Act, x894 (I of x894), H, z3, 3z, 34-lnterest Act, x839 (3z oj.r839)

SS.I, Z.

Lands in four villages forming part of the Cis-Sutlej Jagir were compulsorily acquired under the East Punjab Acquisition and Requisition of Immovable Property (Temporary Powers} Act, 1948. At the time of the acquisition A was the holder of the jagir. Possession over one of the villages had been given to

669

THE BURMAH-SHELL REFINERIES LIMITED

THEIR WORKMEN. (P. B. GAJENDRAGADKAR

K. N. WANCHOo

CIVIL .APPELL A.TE JURISDICTION

S. D.

Vffhadalal

Janarclan Sharma

DAS GUPTA

Das Gupta

December 31, 1956

Das Guf

Caltex

Calcutta

Industrial Tribunal, Ernakulam

Das Gupta

January 1, 1958

Ra.ja.dhya.ksha.

SATINDER SINGH

AMRAO SINGH

P. B. GAJENDRA\JADKAR

K. N. WANCHOO

K. c. DAS GUPTA

Land Acquisition Act


SUPREME COURT REPORTS (1961]

' 96' judgment in C. A. No. 416 of 1958 (Standard Vacuum

Burmalo-Shlll Refining Co., Ltd. versUIJ Its Workmen) the compo- R•ftneri" Limil•a nents of a living wage are largely different from those v. of a fair wage. The difference in the living wage TluirWorkm"' standards of the class to which operatives generally belong and the class to which the clerical staff belongs Das Gupta].

I96z

February :1.

may produce much greater differences in the money value in the components of the requirement of Jiving wage as between the two classes than the difference in the money value of. the components of fair wage of the two classes. There is no justification therefore for thinking that the living wage of the clerical staff is only 80% more than the living wage of the operatives and so no conclusion that the gap between the living wage and the actual wage is less in the case of clerks than in the case of operatives can be drawn from a consideration of the comparative wages received by them.

We find nothing that would justify us in interfering with the conclusion of the Tribunal that the clerical staff should be awarded bonus at the same rate as the operatives.

The appeal is accordingly dismissed with costs.

Appeal dismissed.

SATINDER SINGH AND OTHERS

AMRAO SINGH AND OTHERS. (P. B. GAJENDRA\JADKAR, K. N. WANCHOO and K. c. DAS GUPTA, JJ.)

Land Acquisition-Cis-Sutlij Jagir-Inalienable Land-Compensation, apportionment of-Interest, when payable-East Punjab

Acquisition and Requisition of Immovable Property (Temporary Powers) Act, x948 (E.--P . .¢of x948), s. s~Land Acquisition Act, x894 (I of x894), H, z3, 3z, 34-lnterest Act, x839 (3z oj.r839)

SS.I, Z.

Lands in four villages forming part of the Cis-Sutlej Jagir were compulsorily acquired under the East Punjab Acquisition and Requisition of Immovable Property (Temporary Powers} Act, 1948. At the time of the acquisition A was the holder of the jagir. Possession over one of the villages had been given to

A's wife G in lieu of maintenance under a consent decree. The matter of payment of compensation was referred to an arbitrator.

A claimed that he was entitled to the entire compensation amount as he was the present holder of the Jagir. A's son S claimed that the lands acquired were inalienable, that A merely had a life interest therein and that the compensation money should be deposited out of which A should get only the interest for his life.

G claimed that she was entitled to the entire compensation in respect of the lands over which she was in possession. All the claimants claimed interest on the compensation amount from the date of taking of possession to the date of payment of compensation. The arbitrator held.:. (i) the acquired lands were inalienable and A merely had a life interest therein,_ (ii) S was entitled to a share in the compensation awarded, . (iii) the amount of compensation for the first three villages should not be deposited but should be divided between A and S in the proportion of 3/ 4th to 1/4th, (iv) the compensation for the fourth village should be deposited and the interest thereof be paid to G and after the deathof G the amount be divided between Aarn; j S half and half, and (v) the claimants were not entitled to anyi interest on the amount of compensation. On appeal the High Court confirmed the awards in toto. The claimants appealed to the Supreme Court by special leave. Held, that the acquired lands formed part of a Cis-Sutlej Jagir which was inalienable, that A was merely a limited owner thereof and was not entitled to the entire amount of compensation and that the reversioners were also entitled to a share therein. The compensation amount could not be permanently deposited leaving the parties the right to enjoy only its income. Even if the equitable principle of s. 32, Land Acqnisition Act, r&;4, was applied it would not justify the permanent investment of the compensation amount. Section 32(1)(b) was intended to be applied provisi9nally for short perigds, where other lands had to be, pnrchased out of the compensation money but were not immediately available and the money had to be invested as an interim measure till such lands were available. It was fair to divide the compensation money in respect of the first three villages half and half between A and S. In deciding the question of apportionment on equitable grounds it was relevant and material t_o take into account the facts that no part of the amount paid to A would reach the reversioners. that S himself had a son and that the reversionary interest had to be safeguarded.

Shri Somashekhar Swami v. Bapusaheb Narayanrao Patil A.I.R. 1948 Born. 176, K. C. Banerjee, Official Receiver, In re: A.I.R. 1928 Cal. 402, Mt. Gang; v. Santu A.LR. 1929 Lah. 736 and Special Deputy Collector, Ramnad v. Rajah of Ramnad A.I.R. 1935 Macj. 215, referred to.

Held, further, that the claimants were entitled to interest at 4 % per annum on the compensation amount. from the date when possession was taken by the State to the date on which it deposited

Sa1inder Singh

Amrao Singh

Satinder Singh

Amrao Singh

or paid the amount of compensation to the claimants. 'I:he provision in s. 5(e) of the. 1948 Act which made s. 23(1) of the Land Acquisition Act, 1894, applicable did not exclude the application of ss. 28 and 34 of the latter Act which dealt with the payment of interest. On grneral principles, the act of taking possession of immovable property generally implied an agreement to pay interest on the value of the property ; the right to receive interest took the place of the right to retain possession.

The application of this rule was not exclud.ed by s. 5 of the 1948 Act. Even under the Interest Act, 1839, the power to award interest on equitable grounds was expressly saved by the proviso to S, l, Swift 0- Co. v. Board of Trade [1925] A.C. 520, Birch v. Joy

(1852) 3 H.L.C. 565 and Inglewood Pulp and Paper Co. Ltd. v. New Brunswick Electric Power C0mmission [1928] A.C. 429, applied.

Surjan Singh v. Tile East Punjab Government A.LR. 1957 Punj. 265, approved.

Seth Thawardas Pherumal v. The Union of India [1955] 2 S.C.R. 48 and Nachiappa Cheltiar v. Subramaniam Chettiar [1960] 2 S.C.R. 209, referred to.

CIVIL

AI'PELLATE JURISDICTION: Civil Appeals Nos. 396 to 398 and 419 to 421 of1959, and 152of1960.

Appeals by special leave from the judgment and order dated November 5, 1958, of the Punjab High Court in First Appeals from Orders Nos. 42 to 44, 60 to 62 and 55 of 1955 respectively.

M. 0. Betalvad, Attorney-General for India, 8. N.

Andley, J.B. Dadachanji and Rameshwar Nath, for the appellants (in C. As. Nos. 396 to 398 of 59) and Respondent No. 2 (in C. As. Nos. 419 to 421 of 59 and 152 of 60).

A. V. Viswanatha Bastri and G. 0. Mathur, for the appellant (In C. As. Nos. 419 to 421of59), Respondent No. 1 (In 0. As. Nos. 396 to 398 of 59) and Respondent No. 3 (In C. A. No. 152 of 60).

G. 0. Mathur, for the appellant (In C. A. No. 152 of 60).

<iOpaJ, Singh and D. Gupta, for Respondent No. 2 (In C. As. Nos. 396 to 398 of 59) and Respondent No. 1 (In C. As. Nos. 419 of 59 and 152 of 60).

1961. Februarr 2. The Judgment of the Court was delivered by '

GAJENDRAGADKAR, J.-This is a group of seven 196r ap. peals all of which arise from the same land acquisih P . b Satinder Singh tion proceedings in respect of whic the unia Government originally issued a notification under s. 4 Amrn:singh of the Land Acquisition Act, 1894, on March 23, 1948.

By this notification the State Government declared Gajendragadkar J. its intention to acquire land in the Ambala District for t.he construction of the new Capital for East Punjab. No rtction was, however, taken in purRuance of this notificrttion . .Meanwhile the Punjab Legislature passed the East Punjab Requisition of Immovable Property (Temporary Powers) Act, 48 of 1948. Under the provisions of this Act the Government requisitioned the land in question for the purpose of resettling the persons who were likely to be evicted from their lands as a result of the construction of the new Capital.

The said land was actually acquired on May 20, 1951.

This lnd forms part of a Jagir known as "Singh Purian" and comprises the areas of villages Mataur, Dhirpur, Saneta and Giddarpur in the District of Ambala. It appears that these villages originally formed part of 1.he area covered by the Cis Sutlej States. S. Amra.o Singh was entered as owner of the htnd thus acquired. His wife is Sardarani Gurdial Kaur and his son is Satinder Singh. The estate of Amra.o Singh was at th_e relevant time being managed by the Court of Wards. Pursuant to the provisions of the Act compensation was assessed by the estate officer and was accordingly offered by the State Government to th<" Court of Wards. The Court of Wards agreed to the amount of compensation thus offered and Amra.o Singh himself did not object to it.

Sa.tinder Singh, however, was not willing to accept the said compensation and he raised several objections contending that it was wholly inadequate. He also objected to the compensation being paid either to the Court of Wards or to his father Amrao Singh, and in support of this contention he urged that since the estate once formed part of Cis Sutlej States, Amra.o Singh was entitled only to its usufruct for his life and had no right to alienate or otherwise deal with its corpus. Satinder Singh's plea was that after the

'96' amount of compensation was finally determined it

Satinder Singh should be deposited in Government Securities or v. alternatively a part of it should be paid to him as Amrao Singh compensation for the land of his reversionary rights. . -- This plea applied to the three villages of Mataur, Ga; endragadkar J. Saneta and Giddarpur. In regard to the village of Dhirpur, Amrao Singh's wife Sardarani Gurdial Kaur claimed that she was in possession of the said village as it was charged for the payment of her maintenance by a compromise decree passed in her favour and against her husband Amrao Singh. She therefore claimed for herself the entire amount of compensation.

Thus the contest about the apportionment of the compensation amount took a triangulM form.

At this stage it would be convenient to refer to the relevant provisions of the statute under which the present proceedings have been taken. In 1948 the relevant Punjab statute was East Punjab Act, 48 of 1948. Section 2 of the said Act deals with the requisitioning of property, and s. 3 empowers the State Government to acquire requisitioned properties.

Section 5 prescribes the principles according to which compensation had to be paid in regard to acquired properties. Section 5(e) provides that the arbitrator, in making his a.ward, shall have regard to the provisions of sub-s. (1) of s. 23 of the Land Acquisition Act, 1894 (I of 1894) so far aB the same can be made applicable.

This Act w.as followed by the Punjab Requisitioning of Immovable Property (Amendment and Validation) Act, 1951 (President's Act No. 2 of 1951). Bys. 5 of this Act s. 5 of the earlier Act was amended, inter alia., by adding one provision. This provision provides thatwhere any property is acquired in connection with the new Capital of the State of Punjab compensation may be pa.id whether by agreement or by a.ward of the arbitrator, either in money or in kind or partly in money and partly in kind, and where there is no person competent to alienate the property, or there is a person with limited interest in such. property, o! there is any dispute as to the persons entitled to receive the compensation or a.s to the apportionment thereof, the arbitrator shall make an award in such a manner or

make an arrangement in such a way as may be equitr96r able havin0" regard to the interests of the persons Satinder Singh concerned ; in other words, the principle of equitable v, apportionment which had been recognised by s. 32 of Amrao Singh tbe Land Acquisition Act of 1894 has in effect been added by this amending Act.

Gajendragadkar ].

In 1953 the Punjab Requisitioning and Acquisition of Immovable Property Act, 1953 (XI of 1953), came into force.

Section 24 of this Act repeals the two earlier Acts of 1948 and 1951, and after this Act came into force it was the provisions of this Act that governed the proceedings relating to the requisitioning and acquisition of immovable properties in Punjab.

The equitable principle which was inserted in the Act of 1948 by the amending Act of 1951 has been retained in the present Act under s. 8 (3).

Section 23 (1) of this Act validates requisitions and acquisitions of properties there specified, while sub-s. (2) of the said section provides, inter alia, that acquisition of immovable property purporting to have been made before the commencement of this Act shall be deemed for aJI purposes to have been validly made as if the provisions of the said enactment or order had been included and enacted in this section, and this section had been in force on and from the date of the acquisition. It has been held by a Full Bench of the Punjab High Court in Colonel His Highness Raja Sir Harindar Singh Brar Bans Bahadur, Ruler, F'aridkot State v. The State of Punjah (1) that compensation for property acquired under the Land Acquisition Act, 1894 or under the Punjab Act ofl948 must be paid in accordance with the principles set out in those Acts and not in accordance with the principles set out in the later Act of 1953. This position is not disputed by either party in the' present proceedings. Thus it is common ground that for determining the amount of compensation and its apportionment amongst the rival claimants the provisions of the relevant Act of 1948 are applicable though the proceedings were held under the relevant provisions of the later Act of 1953. In fact, the appointment of the arbitrator who conducted the proceedings

(i) (r957) 59 Punj. L.R. 386.

z96z in the preRent case was made by the State Government under s. 8(l)(b) of the Act of 1953.

We have Satinder Singh

v. already noticed that the provisions of s. 8 (3) of this Amrao Singh Act were included by an amendment in the earlier Act of 1948 by the amending Act of 1951.

Gaj•ndragadkar J.

Befora the arbitrator the acquisition proceedings were dealt with in four different cases, each one being related to the lands in one of the four villages in question. On the contentions raised by the parties the arbitrator .first considered two preliminary issues.

They wgre: (1) Is Satinder Singh competent to object to the amount of compensation awarded in the nase, and (2) Is the appointment of the arbitrator invalid on account of the agreement between the State and the Court of Wards about the amount of compensation payable by the State to the Court of Wards. It appears that Amrao Singh contended tha.t his son Satinder Singh had no locus standi in the matter, and that since he and the pourt of wards had agreed to the amount of compensation offered by the State the arbitrator had no jurisdiction to hold any enquiry on the claim put forward by Satinder Singh.

The arbitrator, however, rejected Amrao Singh's pleas, and held that he was entitled and bound to hold the proceedings and to consider the merits of the pleas raised by Satinder Singh.

The arbitrator then proceeded to examine the merits of the rival contentions. He found that the property in suit was a part of Cis Sutlej States a.rid so Amrao Singh had only a limited interest in it and had no right to alienate it.

As a result of this conclusion the arbitrator held that Satinder Singh, who was the next heir, was entitled to contest the amount of compensation and was also entitled to claim a share in the distribution of the amount. In regard to Dhirpur land he hetd that :Sardarani Gurdial Kaur was entitled to retain the possession of the village for her maintenance under a compromise decree and that both Amrao Singh and Satinder Singh were bound by the said decree. In the result the arbitrator determined tho amount of compensation and directed that the entire amount of compensation in regard to Dhirpur

should be invested in Government Securities in the name of the holder of Manauli Estate with a charge

z961

Salinder Singh in favour ofGurdial Kaur which would entitle her to v. its annual profits in lieu of maintenance. He also Am•ao Singh directed that on the death of Gurdial Kaur the amount should be divided half and half between the then Gajendragadkar J. holder of the Estate and the next heir or heirs taken togeth1>r. In regard to the lands in the three other villages the arbitrator directed that the amount of compensat.ion determined by him should be paid in cash, 3/4thR to Amrao Singh and l/4th to the next sole heir Satinder Singh.

The amount originally offered by the Government and ultimately awarded by the arbitrator were as follows :

V iUage Govt. Off er Mataur (Plus Rs. 93,309·00 15% acquisi-

Award Rs. 1,82,813·00

tion charges) Saneta Rs. 42,179·00 Rs. 55,377·00 Giddarpur Rs. 15,726·00 Rs. 27,640·00 Dhirpur Rs.1,17,912·00 Rs. 2,27,860·00 It would thus be seen that the contest made by Sa.tinder Singh in respect of the amount of compensation originally offered by the Government substantially succeeded inasmuch as the total amount offered was increased by the a.rbitrator by Rs. 2,24,564/-. . The order thus passed by the arbitrator was recorded by him in the four cases tried before him in respect of the four villages. These orders became the subject matter of several appeals in the Punjab High Court. The State of Punjab preferred four appeals 67 to 70 of 1955; Satinder Singh preferred three appeals 42 to 44 of 1955; Amrao Singh preferred four appeals 59 to 62 of 1955; and Sardarani Gurdial Kaur preferred Appeal No. 55 of 1955. In its appeal the State urged before the High Court that Satinder Singh was.not competent to object to the compensation offered by the State and so the proceedings held before the arbitrator were invalid. It was also urged alternatively that Amrao Singh and Sardarani Gurdial Kaur were not entitled to compensation at the higher rates directed by the arbitrator, and. that the benefit

r96i of the award should be available only to Satinder Singh, and it was contended that the amount of com- Satinder Singh

v. pensation fixed by the arbitrator was excessive. All ""''"''Singh these contentions have been rejected by the High Court and the appeals preferred by the State have Gajendragadkar J. been dismiRsed.

The State has not challenged the correctness of the decision of the High Court, and so we are not concerned in the present appeals with the merits of the pleas raised by the State before the High Court.

In the appeals preferred by Satinder Singh the High Court rejected his plea that the valuation fixed by the arbitrator in respect of certain properties was inadequate. It also rejected his plea that the amount of compensation ordered to be divided between him and his father Amrao Singh should be deposited in Government Securities. The High Court held that though equitable considerntions would be relevant in deciding the question of apportionment, it would be inexpedient to direct that the amount shquld be deposited in Government Securities because in that case no one will ever be absolutely entitled to it. The High Court also thought that since the State in whose favour the estate may finally lapse owing to escheat did not object to the apportionment made by the arbitrator there was no reason to interfere with the actual order as to apportionment between father and son which the arbitrator thought was reasonable. In dealing with this question the High Court took the view that the alleged reckless extravagance of the father on which the son relied was not relevant. In the result the three appeals filed by Satinder Singh were dismissed.

The High Court then dealt with the appeal preferred by Amrao Singh, and it confirmed the finding of the arbitrator that the property acquired originally formed part of Cis Sutlej State~ and that in regard to the said States the rule is now well settled that the J agirs large or small in Cis Sutlej States are non-transferable and are even exempt from attachment as political pensions, the holder for the time being ha:vin~ only life interest in the estate, the corpus of whtch is to be

kept intact so that it may pass from heir to heir and z96z lapse in favour of the Government in the absence of Satindrr Singh any legal heir. The High Court also held that even ... if the character of the property was considered from Am•ao Singh the angle of the general custom of Punjab the same conclusion followed because the property in question Gajendragadk"' J. was undoubtedly ancestral immovable property iu the hands of the father qua his son and as such the father had no right to alienate it to . the prejudice of his son without legal necessity or any other compelling reason. That is how the principal point urged by the father against the claim set up by his son was rejected and his appeals were dismissed. The appeal preferred by Sardarani Gurdial Kaur also met the same fate and was dismissed.

It appears that all J; he three claimants urged before the High Court that they were entitled to interest at a reasonable rate on the amount of compensation from the time that the property was acquired and they lost possession of it. This contention was likewise rejected by the High Court, and it was held that under the relevant Act of 1948, it was not permissible to award interest on the amount of compensation . . The result was that the decision of the arbitrator was fully confirmed and all the appeals preferred before the High Court were dismissed. This decision of the High Court is challenged by special leave by the three claimants Amrao Singh, Satinder Singh and Sardarani Gurdial Kaur respectively. The appeals preferred by Sa.tinder Singh are Civil Appeals Nos. 396 to 398 of 1959; Amrao Singh's appeals are Civil Appeals Nos. 419 to 421 of 1959, whereas Sardarani Gurdial Ka.ur's appeal is Civil Appeal No. 152 of 1960. That is how this group of seven appeals arises from the same land acquisition proceedings taken by the State of Punjab in respect of the lands situated in the four villages already mentioned. We wonld hereafter refer to Sa.tinder Singh as the appellant, Amra.o Singh as respondent 1, the State of Punjab as respondent 2, and Sa.rdarani Gurdial Kaur as Sardarani.

Logically then the first point which we must consider is the nature of the property and the tit.le of

I96I respondent I in relation to it. That is the principal Point which Mr. Viswanatha Sastri sought to raise Satindtr Singh v. before us in the appeal filed by reBpondent I. This Ammo Singh question has been considered both by the arbitrator . and the High Court elaborately and they have con- Ga; end•agadkar J. curred in making a finding against respondent I. As ti1e judgment of the High Court points out the fact that the lands in question originally formed part of the domain of S. Budh Singh or of the Cis Sutlej States was not seriously dii; puted before the High Court. This implied concession naturally makes Mr. Sastri's task very difficult. Besides, we are not satisfied that there is any substance in the plea which Mr. Sastri has raised before us on this point. The history of the property has been considered by the arbitrator, and the arbitrator as well as the High Court have placed considerable reliance on the relevant statements made in the Punjab Land Administra.tion Manual compiled by Sir James McC. Douie and revised in 1931. Reliance has also been placed on the relevant statements in the compilation known aa the "Chiefs and Families of Nate in the Punjab " published by the Punjab Government in 1940. The pedigree table of the Singh Purian family given in this publication shows that the family was founded by S. Kapur Singh who held the title of Nawab. S. Budh Singh was his grandson and he was the head of the family in 1809.

Amrao Singh is a descendant of Gopal Singh who was one of the seven sons of Budh Singh. The large J agirs owned by the families are situated in Kharar and Rupar Tehsils of Ambala District and they formed part of the area formerly known as Cis Sutlej States. Paragraphs 100, 101and102 ofDouie's Land Administration Manual give a detailed account of the families and their properties. The same is also briefly mentioned in the Punjab Gazel'teer dealing with Ambala District.

It appears from this material that the Sardars in the Cis Sutlej States were independent Rulers whose ancestors ultimately came under the protection of the British Government in about 1809.

Between 1809 to 1847 the British Government tried to enforce. good

government amongst the semi-independent States; in z96z order to achieve this object the British Government d 11 Id d h d

Satindr Si11ih gra ua y strengthened its ho an tig tene the reins v. with a view to enforce good government. It appears Amrao Sin8h that the Government exercised the right of escheat very freely and whenever there was lapse of heirs it Gajendragadkar J. took up the management and government of the area in its own hands.

After 1846 Government began to introduce sweeping measures of reform and with that object Government reduced the privileges and rights of the petty chieftains. In 1849 the chieftains lost their sovereign powers and were deprived of their criminal, civil and fiscal jurisi; liction so that they became no more than Jagirdars. Their rights in the lands held by them were, however, left untoached.

Rules regarding succession to these J agirs were framed by the Central Government from time to time and family custom was respected within reasonable limits. -One of these rules is to be found in paragraph 111 of Douie's Manual. Clause (c) of this paragraph laid down "that alienations by a Jagirdar or pattid11.r of portions of his holding, whether to his relations or strangers, shall neither be officially recognised nor officially recorded." Similarly paragraph 164 emphasised the inalienable character of the J agirs and referred to the opinion expressed by the Court of Directors whereby the said character was clearly and unambiguously notified. "We should have supposed ", said the Court of Directors, " that there could be no necessity for notifying this as a rule, since it follows from the very nature of.a Jagir\ which cannot be alienated and can only be attached tor the life of the holder." There is thus no doubt that the statements in the authorised publications to which we have just referred and on which the High Court and the arbitrator have relied conclusively show that the holder of property which was a pa.rt of Cis Sutlej

States did not own the property absolutely but held it as a limited owner. The Kaifiat Ta.Iuka. of Singh Purian family which has been produced in these proceedings supports the same conclusion, 88

r961 Mr. Sastri, however, wanted to contend that the 5o1;..a., Sn•gh evidence on the record was insufficient to justify the v. conclusion that the lands under acquisition formed .dmrao Singh part of the original estate of S. Budh Singh ; but he . - fairly conceded. that respondent I had not g01Je into Ga1endragadhar J. the witness box and bad not purported to justify his plea that any of the lands in dispute have been acquired either by him or by his ancestors in such manner that they could be treated as the absolute properties of the holder. The circular issued by the Office of the Commissioner and Superintendent of Cis Sutlej States on February 26, 1857, unambiguously shows that " all prop..rietary right to any part of the lands forming a part of the Jagir which may be held by the J agirdar will be considered as pertaining to the J agir and will go to the holder of the J agir for the time being." This principle was applicable even to houses and other buildings standing on the J agir which are in the nature of forts and may be conHidered tc:> appertain to the estate. The only exception made was in regard to the. shops built or acquired by the Jagirdar in a town apart from his place of residence.

Therefore, on the material as it stands it is difficult to sustain the plea that the concurrent findings made by the arbitrator and the High Com; t on the question about the character of the property and the nature of the title held by the holder of the said property are wrong. Incidentally it may be added that the same conclusion has been reached by the High Court on the ground of the customary law prevailing in the Punjab. We must accordingly proceed to deal with the rest of the dispute between the parties on the basis that the respondent I is not the absolute owner of the property and that the appellant is entitled to represent the reversionary interest in the present proceedings.

That takes us to the pleas raised by the appellant in his appeals. On his behalf it has been urged by the learned Attorney-General that the whole amount of compensation in respect of the three villages Mataur, Suneta and Giddarpur should be appropriately invested and both he and respondent l should

be allowed to enjoy the income coming from the said r961 investment in the share which may ultimately be h Salinde, Silt fixed between them. In support of this rn; mtention e v. relies on the provisions of s. 32(l)(b) of the Land Amrao sinh Acquisition Act I of 1894. This provisioµ empowers the Court to direct that the compensation amountGajendragadhar ]. payable to the owners should be invested either in Government or approved securities and the payment of interest or other proceedings arising from such iuterest should be directed to the person or persons who would for the time being have been entitled to the possession of the lands under acquisition. The argument is that sinuu respondent 1 was not entitled to alienate the property and was under an obligation to keep the corpus in tact for the benefit of the reversioners the compem[ttion amount payable in respect of the acquisition of the said property should be similarly treated ii.nd saved for the benefit of the reversioners; in other words, it is urged that the compensation amount should be treated as a conversion of the corpus of lands and .the same should not be distributed as directed by the High Court. Section 32 deals with cases where the land acquired belonged to any person who had no power to alienate the same; and since respondent 1 was not entitled to alienate the property the principle. enunciated by s. 32(1) (b) is pressed into service as an equitable principle which should be applied to th'3 present case. In support of this argument the learned Attorney-General has relied on decisions of different High Courts. where this principle has been extended to watan property (Shri Somashekhar Swami

v. Bapusaheb Narayanrao Patil (1)), to the property belonging to an idol (K. G. Bannerjee, Ojficial Receiver, In re (')), to the property held by a widow (Mt. Gangi

v. Santu & Others (') ), or to land belonging to an impartible estate (Special Deputy Oolleetor, Ramnad v.

Rajah of Ramnad (') ).

This contention, however, ignores that. the provisions ofs. 32 (1) (b) are intended to be applied only provisionally and for a short period. The scheme of

(1) A.l.R. 1948 Bom. 176•

(•) A.LR. 1928 C&I. 402.

(3) A.I.R. 1929 Lah. 736.

(4) A.I.R. 1935 Mad. 215 •.

x96x s. 32 is that in cases to which the said section applies the Court shall order the compensation amount to be Satinde, Singh d v. iuveste in the purchase of other lands which would Amrao .Singh be held under the right, title and conditions of ownership a.s the land in respect of which the compensation s•j•ndragadk•r J. amount has been deposited. That is the plain effect of a. 32(l)(a). Section 32 (l)(b) comes into operation if such purchase cannot be effected . forthwith; and it has to remain in operation until such purchase is made. In other words, if the compensation amount cannot be immediately invested in the purchase of other lands, as an interim measure the said amount may be invested in the prescribed securities and income thereof distributed to those who were entitled to it. Therefore, even if the principle underlying s. 32 i11 extended to the present case on equitable considerations it would not justify the appellant's claim that the compensation amount should itself be treated as corresponding to the corpus of lands acquired and should be permanently invested in suitable securities leaving to th.e parties concerned the right to enjoy only its income> uch a course is plainly inconsistent with the principle'recognised by s. 32(l)(a). There

fore, we are not prepai'W. to accede to the argument that the compensation ambunt should not be divided between the parties and sho.:uld be permanently deposited iii the fund set apart in'proper investments.

If the said amount must, therefore, be divided between the appellant and respondent I how should it be divided? That is the next question which calls for our decision. The appellant contends that the fairest way to distribute this amount would be to divide it half and half between him and respondent 1. We are inclined to hold that this contention is well fQunded.

As the High Court has observed, it is not at all easy to estimate the relative value of the two interests represented by the appellant and respondent 1. The High Court thought that the ratio may be 2/3 and 1/3 or 3/4 and 1/4 there being little to choose between the two; and so it confirmed the apportionment made by the arbitrator. This decision, however, suffers from one serious infirmity. The High Court thought that

the conduct of respondent 1 which was characterised 1961 by the appellant as the conduct of a reckless spendthrift and squanderer was wholly irrelevant in sa1inder Singh ·. determining the shares to which the appellant and A,,.,.:s;.,11 respondent 1 were respectively entitled. In our opinion, in deciding the question of apportionment onGajmdr•gadk•< J. equitable grounds it is relevant and material to take into account the grievance made by the appellant that the money which would be left with responent 1 would be frittered away by him and no part of it would reach the reversioner. In support of this <rontention 1; he appellant relied on the past conduct of respon dent 1. Several alienations made by him are cited and attention is invited to the fact that after respondent 1 became a major his estate has been taken over by the Court of Wards for management under s. 5(2) (b) of the Court of Wards Act, 1903, from 19~8 to 1938, 1939 to 1947, 1948 to 1954. It has also been urged that since 1954respondent1 has made several unauthorised alienations. We do not propose to consider' the validity of each one of these allegations but we have no hesitation in holding that on the material available on the record it would be difficult to reject as unfounded the apprehensions which the appellant entertains in regard to the fate of the amount which may be given to respondent 1.

Besides, we a.re also inclined to take into account the fact that the appellant himself has a son and in apportioning the amount we have to bear in mind the fact that the amount is being paid in respect of the lands which respondent 1 holds as a limited owner and the reversionary interest in respect of which has to be safeguarded. We would, therefore, direct that the amount of compensation in respect of the three villages should be divided between the appellant and respondent 1 half and half. It is significant that the amount of compensation in respect of the fourth village which is at present charged for the maintenance of Sardarani has been ordered to be divided ha.If and half. Therefore, we would uphold the contention raised by the learned Attorney-Genera.I on behalf of the appellant and

direct that the said amount should be divided not as

z96z 2/3 and 1/3 but half and half between the father and son.

Sa/i1tder Singh

The next point which the learned Attorney-General Amrao Singh wanted to urge was that the increase in the a.mount of compensation directed by the arbitrator should be ; aj••dragadkar J. pa.id to him exclusively. His case w.as that the Court of Wards and respondent l had accepted the amount offered by the State Government, and it was because he raised contentions that the proceedings were referred to the arbitrator whose award ultimately enhanced the compensation amount to a very large extent. This contention was not raised either before the arbitrator or before tlie High Court, and we have therefore not allowed the appellant to raise it before us.

That takes us to the question of interest which has been urged before us by a.11 the three claimants alike.

The,. argument is that the amount of compensation a.warded should carry a reasonable rate of interest from the date. of acquisition when the claimants lost possession of. their properties. . This. argument has been rejected':by the High Court principally on the ground that the relevant Act of 1948 makes no provision for payment of interest and omission to make such a pr-0visii>n amounts in law to an intention not to a.ward interest in regard. to compensatio1'hJamount determined .under it. In support of this condusion the High Court has referred to the fact that s. 5(e) of the Act specifically makes applicable the provisions of s. 23(1) of the Land Acquisition Act of 1894, and that, it JS said, inevitably leads to the inference that SS. 28 and 34 of the. Act whfoh deal with the payment of interest are .not intended to apply to the. proceedings under it. In our opinion, this oonC!usion is not well. founded. It would be legitimate to hold that by the application of s. 23(1) in terms the provisions of s. 23(2) a.re by necessary implication excluded. If the Legislature has . provided t.hat only one part of s. 23 should be applied it would be reasonable to hold that the other part of s. 23 was not intended to be applied ; but we do not see how it would. be l'easonable to hold

that by the application of s. 23(1) the principles under-

I96I lying the provisions of ss. 28 and 34 are also excluded. Salinder Singh Therefore, it is necessary to examine this question. on v. general grounds and principles without assuming that Amrao Singh the application of these .general considerations is . -. excluJed by any of the provisions of the Act.

Ga1endragadkar J.

What then is the contention raised by the claimants?

They contend that their immuvable property has been acquired by the State and the State has a.ken possession of it. • Thus they have been deprived of the right to receive t.he income from .the property and there is a time lag between the taking of the possession by the State and the payment of compensation by it to the claimants. During this period they have been deprived of the income of the property and t!J'ey have not been able to receive interest from the amount of compensation.

Stated broadly the act of taking possession of.immovable property generally implies an agreement to pay interest on the value of the property and it is on this principle that a claim for interest is made against the State. This . question has been considered on several occasions and the general principle on which the. contention is raised by the claimants has been upheld .. In Swift &, Co. v. Board of Trade(') it has been held 'by the House of Lords that " on .a contract for the sale and purchase 9f land it is the practice of the Court of Chancery to require the purchaser to pay interest on his purchase money from the date when he took, or might safely have taken, possession of the land." This principle has been recognised ever since the decision in Birch v.

Jay('). In his speech, Viscount Cave, L.C., added that " this practice rests upon the view that the act of taking possession is an implied agreement to pay interest ", and he points out that the said rule has been extended to cases of compulsory purchase under the Lands Clauses Coneolidaticn Act, 1845. In this connection distinction is drawn between acquisition or sales of land and requisition of goods by the State.

In regard to cases falling under the latter category this rule would not apply.

(1) (r925] A.C. 5.0, 532.

(2) (•852) 3 H.L.C. 565.

1961 In Inglewood Pulp and Paper Co. Ltd. v. New Brunswick Electric Power Commission(.'), it was held by the ,_Smind:, Singh Privy Council that "upon the expropriation of land

.: Amrao Singh un_der stattory power, whether for the purpose of - private gam or of good to the public at large, the G•jeodragadkar ]. owner is entitled to interest upon the principal sum awarded from the date when possession was taken, unless the statute clearly shows a contrary intenlion." Dea.ling with the argument that the expropriation with which the Privy Council was concerned was not effected for private gain, but for the good of the public at large, it observed "but for all that, the owner is deprived of his property in this case as much as in the other, and the rule has long been accepted in the interpretation of statutes that they are not to be held to deprive individuals of property without compensation unless the intention to do so is made quite clear. The right to receive the interest takes the place of the right to retain possession and is within the rule." It would thus be noticed that the claim for interest proceeds on the assumption that when the owner of immovable property loses possession of it he is entitled to claim interest in place of right to retain possession. The question which we have to consider is whether the application of this rule is intended to be excluded by the Act of 1948, and as we have already observed, the mere fact thats. 5(3) of the Act makes s. 23(1) of the Land Acquisition Act of 1894 applicable we cannot reasonably infer that the Act intends to exclude the application of this general rule in the matter of the payment of interest. That is the view which the Punjab High Court has taken in Surjan Singh v. The East Punjab Goi•ernment (2), and we think rightly.

It is, however, urged by Mr. Gopal Singh for respondent 2 that what the claimants are entitled to receive is compensation, and since the word "compensation " is used by s. 5( 1) both in respect of requisition as well as acquisition it would not be fair to import the general rule about the payment of interest where property is acquired. Compensation, it is urged, should represent the price of the property and there is no

(I) [1928] AC. 42Q.

(2) A.LR. 1957 Punj. 265.

justification for adding to the said price any amount

I96I by way of damages.

We are not impressed by this Satinder Singh argument. When a claim for payment of interest is v. made by a person whose immovable property has been Amrao Singh acquired compulsorily he is not 'inaking claim for ·. damages properly or technically so called ; he is basing Ga1endragadkar l his claim on the general rule that if he is deprived of his land he should be put in possession of compensation immediately; if not, in lieu of possession _taken by compulsory acquisition interest should be paid to him on the said amount of compensation. In our opinion, therefore, the fact that s. 5(1) deals _with compensation both for requisition and acquisition cannot serve to exclude the application of the general rule to which we have just referred.

Mr. Gopal Singh then relied on some obseNations made by this Court in Seth Thawarilas Pherumal v. The Union of Irulia (1). Bose, J., who spoke for the Court has set out four conditions. which must be fulfilled before interest can be awarded under Interest Act of 1839, and observed that not one of those was present in the case with which the Court was concerned. That is why it was held that the arbitrator had erred in law in thinking that he had the power to allow interest simply because he thought the demand was reasonable. Having come to this conclusion the learned Judge proceeded to make certain: observations . in respect of the applicability of s. 34 of the Code of Civil Procedure. He added that s. 34 does not apply because the arbitrator is not a Court within the meaning of the Code, nor does the Code apply to arbitrators, and but for s. 34 even a Court would not have the power to give interest after the suit. These observations were considered by this Court in Nachiappa Chettiar v.

Subramaniam Chettiar ('), and it was pointed out that they were obviously not intended to lay down ariy broad and unqualified proposition like the one which is urged before us by Mr. Gopal Singh in the present appeal.

Jn this connection we may incidentally refer to Interest Act, 1839 (XXXII of 1839). Section 2 of this

(1) (1955] 2 S.C.R. 48.

8~.

(2) [196o) 2 S.C.R. '"9

r96r Act confers power on the Court to allow interest in oases specified therein, .but the proviso to the said Satinder Singh v. section makes it clear that interest shall be payable in Amrao Singh all cases in which it is now payable by law. In other words, the operative provisions of s .. 1 of the said Act Gajemlragadkar J. do not mean that where interest was otherwise payable by law Court's power to award such interest is taken away. The power to award interest on equitable grounds or under any other provisions of the Jaw is expressly saved by the proviso to s. 1. This question was considered by the Privy Council in Bengal Nagpur Railway Co. Ltd. v. Ruttanji Ramji ('). Referring to the proviso to s. I of the Act the Privy Council observed " this proviso a pp lies to cases in which the Court of equity exercises its jurisdiction to allow interest. " We have already seen that the right to receive interest in lieu of possession of immovable property taken away either by private treaty or by compulsory acquisition is generally regarded by judicial decisions as an equitable right; and so, the proviso to s. I of the Interest Act saves the said right. We must accordingly hold that the High Court was in error in rejecting the claimants' case for the payment of interest on compensation amount, and so we direct that the said amount should carry interest at 4% per annum from the date when respondent 2 took possession of the claimants' lands to the date on which it deposited or paid the amount of qompensation to them.

In the appeal preferred by the Sardarani, Mr. Mathur attempted to challenge the propriety of the order passed by the High Court directing that the amount of compensation in respect of Dhirpur lands should be invested and that the Sardarani should receive her maintenance from the interest accruing from such investment. Apart from the fact thafthe order made in that behalf is fair and just, it is clear that the learned counsel for the Sardarani himself had suggested that such an order should be passed. Therefore, we cannot allow !\Ir. Mathur to raise any contention ag, iin8t the said orrler in the prec; ent app('al.

(1) (1938) L.R. 65 I.A. 66.

Mr. Mathur further contended that if we were to z96z award interest on the amount of compensation his client would be entitled to receive the whole of the Satinder Singh v. interest on the compensation amount ordered to be Amrao Singh paid in respect of the lands in Dhirpur village. That no doubt is true, and indeed Mr. Mathur's claim in Gojendragadkar J. that behalf is not disputed either by the appellant or by respondent 1. We would accordingly modify the decree passed by the High Court by directing that the amount of compensation payable in respect of the landg in Mataur, Saneta and Giddarpur may be divided half and half between the appellant and respondent 1, and that interest should be paid on all the items of compensation determined by the High Court at 4% per annum. The interest in regard to the compensation payable for Dhirpur lands should be paid to the Sardarani, whereas the interest in regard to the lands in the three other villages should be paid half and half to the appellant and respondent 1. In making the payments of compensation amounts to the respectiv.e parties whatever amounts may have been withdrawn by or on their behalf should be taken into account and their claims should be properly adjusted in that behalf. In the circumstarrces of this case we direct that the appellant should get half his costs from respondent 1 and the other half from respondent 2 in his three appeals. There will be only one set of hearing costs.

The costs in the remaining four appeals should be borne by the parties.

C. A. Nos. 396 to 398 of 1959 and

C. A. No. 152 of 1960 allowed in parf.

C. A. Nos. 419 to 421 of 1959,

dismissed.

SATINDER SINGH AND OTHERS

AMRAO SINGH AND OTHERS

K. N. WANCHOO

Land Acquisition Act

Supreme Court

s. 32

Land Acqnisition Act

Section 32(1)(b)

K. C. Banerjee

Sa1inder Singh

Amrao Singh

Satinder Singh

s. 5(e)

s. 23(1)

Land Acquisition Act, 1894

ss. 28 and 34

s. 5

Even under the Interest Act, 1839

[1955] 2 S.C.R. 48

[1960] 2 S.C.R. 209

Betalvad

Betalvad, Attorney-General for India, 8.

N.

Andley

J.B. Dadachanji

Rameshwar Nath

A. V. Viswanatha Bastri

G. 0. Mathur

iOpaJ

<iOpaJ, Singh and D. Gupta, for Respondent No.

D. Gupta

GAJENDRAGADKAR

s. 4

Land Acquisition Act, 1894

March 23, 1948

Gajendragadkar

Ambala District

East Punjab

Punjab Legislature

May 20, 1951

The said land was actually acquired on May 20, 1951.

Mataur

Dhirpur

Saneta

Giddarpur

Ambala

S. Amra.o Singh

Sardarani Gurdial Kaur

Amra.o Singh

Sa.tinder Singh

endragadkar J. Saneta

Punjab statute was East Punjab Act

Section 2

s. 3

Section 5

Section 5(e)

s. 23

Land Acquisition Act, 1894

s. 5

s. 32

Amrao Singh tbe Land Acquisition Act

Section 24

Punjab

s. 8

Section 23

Punjab High Court

Raja Sir Harindar Singh Brar Bans Bahadur

Land Acquisition Act, 1894

s. 8(l)(b)

Satinder Singh

s. 8

Gaj•ndragadkar

Cis Sutlej States

Salinder Singh

Am•ao Singh

Gurdial Kaur

Gajendragadkar

State of Punjab

Satindrr Singh

Gajendragadk

Amrao Singh

Sardarani Gurdial Kaur

Sardarani Gurdial Ka.ur

Sa.tinder Singh

Amra.o Singh

State of Punjab

Sa.rdarani Gurdial Kaur

Viswanatha Sastri

Ammo Singh

S. Budh Singh

Sastri

James McC. Douie

Punjab Government

Singh Purian

S. Kapur Singh

Gopal Singh

Budh Singh

Kharar

British Government

Amrao Sin8h

Central Government

Douie

Cis Sutlej

.dmrao Singh

February 26, 1857

Suneta

s. 32(l)(b)

Acquisition Act I of 1894

Section 32

s. 32(1)

K. G. Bannerjee

s. 32

Section 32

s. 32

s. 32(l)(a)

sa1inder Singh

s. 5(2)

Court of Wards Act, 1903

Sardarani

s. 5(e)

s. 23(1)

SS. 28 and 34

s. 23(1)

s. 23(2)

s. 23

s. 23

s. 23(1)

ss. 28 and 34

Viscount Cave

Lands Clauses Coneolidaticn Act, 1845

s. 23(1)

s. 5( 1)

s. 5(1)

Bose

Interest Act

s. 34

the Code of Civil Procedure

s. 34

s. 34

Nachiappa Chettiar

Section 2

(1955] 2 S.C.R. 48

Gajemlragadkar

s. 1

Interest Act

Mathur

(1938) L.R. 65 I.A. 66

Dhirpur village

Gojendragadkar