Madras High Court
C.T. Shenthilnathan Chettiar vs Raja D.V. Appa Rao Bahadur on 25 March, 1999
Equivalent citations: (1999)2MLJ744
ORDER R. Balasubramanian, J.
1. This civil revision petition arises under the following circumstances: The lower court passed an order in I.A. No. 23780 of 1987 in O.S. No. 1448 of 1979 determining the price payable by the revision petitioner to the respondent for the purchase of his land as provided for under Section 9 of the Tamil Nadu Tenants Protection Act. Aggrieved over the quantum of the price fixed, the defendant appealed in C.M.A. No. 85 of 1997. The appeal was dismissed providing a moderate relief to the defendant. Still aggrieved, the defendant is before this Court in this revision. The respondent is the plaintiff in the suit referred to above. I heard Mr. S. Raghavan, learned Counsel for the revision petitioner and Mr. K.C. Rajappa, learned Counsel appearing for the respondent.
2. A few facts are necessary to properly understand and appreciate the dispute between the parties. In this order, the parties to the revision would hereinafter be referred to as the plaintiff and the defendant. The plaintiff filed O.S. No. 1448 of 1979 in the City Civil Court, Madras, for recovery of possession. Claiming to be a person entitled to the protection under the Tamil Nadu City Tenants Protection Act; the defendant filed I.A. No. 12518 of 1979. The learned trial Judge by a common judgment dated 31.1.1984 dismissed the suit for possession. There was a connected suit in O.S. No. 6830 of 1979, which was the suit filed for recovery of mesne profits between the parties and that was also dismissed. However, we are not concerned in this revision about the two judgments in the suits referred to abvoe. In I.A. No. 12518 of 1979, filed by the defendant for purchase of the land, the learned trial judge found that the defendant is entitled to be protected under the Tamil Nadu City Tenant's Protection Act and by the judgments referred to above, stated that on the application filed by the defendant, an advocate Commissioner would be appointed to decide the minimum extent of land required for the convenient enjoyment of the defendant and thereafter the price for the same would be fixed. The plaintiff appealed against the judgments in the two suits and they were taken on file as A.S. Nos. 101 and 102 of 1985. The miscellaneous appeal filed against the order in the application was taken on file as C.M.A. No. 42 of 1985. The appellate judge disposed of all the three matters by a common judgment. The miscellaneous appeal and the appeal arising out of the decree negativing the claim for mesne profits, were dismissed. The appeal in A.S. No. 101 of 1985 filed against the judgment dismissing the suit for possession was allowed in part and the lower court was directed to keep that suit pending till the application filed for the purchase of the land was finally adjudicated. There was second appeal before the court in S.A. No. 1097 of 1986 and a civil revision petition in C.R.P. 658 of 1986. The civil revision petition was against the order permitting the defendant to purchase. The second appeal is against the judgment in the mesne profits suit. A learned single judge dismissed both the second appeal as well as the revision. After that, the defendant filed I.A. No. 23780 of 1987 in I.A. No. 12518 of 1979 in O.S. No. 1448 of 1979 requesting the appointment of an advocate Commissioner to ascertain the price of the property described in the schedule to the plaint and for a direction to the plaintiff to sell the property. On 19.8.1988, the lower court appointed an advocate Commissioner and the scope of the warrant is shown to be "to ascertain the price of the property more fully described in the schedule thereunder." The property forming the subject matter of that warrant is showed to be an extent of 18 grounds and that property is the suit property as well as the property in respect of which the application for purchase was filed.
3. On behalf of the plaintiff, a letter was given to the advocate Commissioner by name Mr. D. Maharajan and that letter contained the following request.
Let me know the date on which you entered on the duties as advocate Commissioner, as that date will be the date of the order for fixing the average market-value by you and for subsequently fixing the 'price' by the court (Please see the D.B Judgment in Arasan Chettiar v. Narasimhalu Naidu Estate Trust ).
On this letter, the advocate Commissioner filed a memo in that proceedings before the learned trial judge containing the following request:
I respectfully submit that as the warrant issued to me does not specifically state the date for fixing the value to the property. I request this Hon'ble court to kindly enlighten me as to the exact date which should be taken as the 'date of the order' for determining the value of the property as per Section 9(l)(b) of the Tamil Nadu City Tenants Protection Act, 1921 and thus render justice.
The learned trial judge by order dated 15.3.1989 on that memo, passed the following order.
Arguments on both the sides and the decision , have been perused. It has been stated in the said decision in para 8, at para 311, as follows:
Having given our careful consideration, we are of the opinion that the expression" date of the order" occurring in the third sentence in Section 9(l)(a) must mean the date on which the court decided the minimum extent of the land which may be necessary for the convenient enjoyment by tenant.
The Commissioner is directed to fix the value by taking into account the date 31.3.1984, on which date the extent required by the petitioner, stated to have been decided.
This order was challenged by the plaintiff in the suit before this Court in C.R.P. No. 972 of 1989. A learned judge of this Court by order dated 25.8.1989 disposed of that revision on merits. By that order, the learned judge of this Court fixed 19.8.1988 as the crucial date for fixing the market value of the land and the Commissioner was directed to fix the market value of the property by taking into consideration the average price of the property prevailing three years prior to 19.8.1988. The defendant in the suit challenged the above referred to order before the Honourable Supreme Court of India and leave was granted in that application by the Honourable Supreme Court of India on 23.1.1990. While granting leave, the following order was passed:
Special leave granted. By consent there shall be stay of the appeal. The appellant to pay a sum of Rs. 5,000 per month on account of the use of the premises from 1st January, 1990 onwards.
Later on the said Civil Appeal No. 233 of 1990 was disposed of by the Honourable Supreme Court of India on 13.9.1994 and the order passed at that time is as follows:
The civil appeal is taken on board. Counsel seeks leave to withdraw the appeal. Leave granted. The civil appeal is dismissed as withdrawn.
On 27.3.1995 in I.A. No. 23780 of 1987 in I.A. No. 12518 of 1979 in O.S. No. 1448 of 1979, an advocate Commissioner by name Ms. P. Bhuvaneswari was appointed. The warrant of appointment shows that the Commissioner was to fix the market price of the suit property and file a report. The advocate Commissioner examined the parties, received documents, heard the counsels and filed a report on 19.10.1995. The report gave two valuation fixing the year 1988 as the crucial year for fixing the market value of the land by taking into account the average market value for three years preceding that year and another value fixing 1995 as the crucial year for fixing the market value with reference to the average market price available during the three preceding years. The Commissioner had also fixed the market value as per the guidelines available in the office of the Registrar of Assurances. Going by the year 1988 the market value was fixed at Rs. 3.30 lakhs per ground. Going by the year 1995, the market value was fixed at Rs. 15 lakhs per ground. Then adopts some guidelines found in the Income Tax Act, the market value for the year 1988 was fixed at Rs. 8.25 lakhs per ground and in respect of the year 1995, the market value was fixed at Rs. 21.75 lakhs per ground. The learned advocate Commissioner also felt that a sum of Rs. 2 lakhs should be added per ground on account of the advantages which the suit property possesses. Thus the total price was fixed for the suit property on the basis of the 1988 valuation at Rs. 1.80 crores and on the basis of the 1995 valuation at Rs. 4,27,50,000. As per the guidelines price, the price per ground was fixed at Rs. 20,92,500.00 on this basis, the total price arrived at was Rs. 3,76,65,000. Both the parties filed objections to the Commissioner's report. The learned trial judge on the materials placed before him, fixed the price of the suit land at Rs. 3,91,50,000.00 and gave time till 2.7.1997 for making the payment. The defendant appealed in C.M.A. No. 85 of 1997 and the appellate judge dismissed the appeal. However, 10% of the total price fixed by the learned trial judge was deducted for reasons given by the learned appellate judge and the appeal was dismissed fixing the total price for the land at Rs. 3,52,35,000.00. It is the correctness of this order that is being challenged in this revision.
4. Mr. S. Raghavan, learned Counsel appearing for the revision petitioner urged the following facts:
Inasmuch, as this Court by order dated 25.8.1989 in C.R.P. No. 972 of 1989 directed the Commissioner to fix the market value of the property by taking into consideration the average price of the property prevailing three years prior to 19.8.1988, the advocate Commissioner, the learned trial judge and the learned Appellate judge committed an error in having the price fixed on the average market value for three years prior to 27.3.1995. In other words, the plaintiff and the defendant being parties to the order in C.R.P. No. 972 of 1989 referred to above, it is not open to either of the parties to have the crucial date fixed as referred to earlier, either preponed or postponed. The decision rendered by the learned single judge in C.R.P. No. 972 of 1989 having become final, on the principle of res judicata as well as on the principle of estoppel, it is not open to either of the parties or for the courts below to postpone that date and refix the same as 27.3.1995. In any event, the price for the land has to be fixed only in accordance with Section 9(1)(b) of the Tamil Nadu City Tenants Protection Act and it is not open to anyone including the court to fall back upon any other provision of law in fixing the price of the land. According to him under the Act in question, the price of the land has to be necessarily fixed on the basis of the average market value of three years immediately preceding the date of the order. In the background of such statutory requirement, the advocate Commissioner and the courts below erred in adopting the cost inflation index as notified under Section 48 of the Income Tax Act. By adopting such a procedure, the authorities below had, after arriving at the price of the land on the basis of three years average market value, added to that price again a percentage equivalent to 259/100 and thus arrived at a huge sum as the price payable by the defendant to the plaintiff which not only shocks the conscience of the court but also opposed to Section 9 of the Tamil Nadu City Tenants Protection Act as well as causes an irreparable injury to the defendant. The pendency of the appeal before the Honourable Supreme Court of India by the defendant against the order in C.R.P. No. 972 of 1989 and the time taken for the disposal of that appeal by the Honourable Supreme Court of India cannot be taken to run against the defendant in having the date viz., 19.8.1988 fixed by the order in C.R.P/No. 972 of 1989 postponed. In any event, 27.3.1995 cannot be the date at all and assuming that the order of the Honourable Supreme Court of India in the civil appeal would have the effect of postponing the date as fixed by this Court for fixing the price of the land, it should be postponed only to 13.9.1994 on which date the civil appeal before the Honourable Supreme Court of India was dismissed as withdrawn.
5. Mr. K.C. Rajappa, learned Counsel appearing for the respondent, would contend as follows:
The court cannot lose sight of the fact that the value of the money has been dwindling consistently for quite some time and therefore the plaintiff should not be deprived of a lawful compensation which he would be entitled to on account of the delayed time by which the compensation actually reaches the plaintiff. If that position is accepted then the court after fixing the price for the land in question, which may not reflect the real and just price payable to the plaintiff by the lapse of time, has to necessarily fall back upon some guildelines on which the price so affixed at may be suitably enhanced. Only in that context, the cost inflation index as notified under Section 48 of the Income Tax Act will be a safe guideline to follow. By falling upon the cost inflation index, arbitrariness in fixing the price payable by the defendant to the plaintiff can be avoided to an extent. The act of the court in taking 27.3.1995 as the date which should be the base year for going backward to find out the average market value for three years so that the price for the land can be fixed, is justifiable on the facts of this case. Before the price of the land has to be fixed, the statute namely, the Tamil Nadu City Tenants Protection Act contemplates mandatorily the first step to be taken and that step is to fix the minimum extent of land. It has been held by this Court in the judgment in M. Arasan Chettiar v. Narasihalu Naidu's Estate Trust , that in dealing with an application under Section 9 of the Act, the court has to do certain things in the order in which it is mentioned in the section itself. The steps are to first decide upon the minimum extent of land; then to fix the price of such minimum extent and lastly to pass an order directing the defendant to pay the price so fixed within a period to be determined by the court. The judgment referred to above is holding the field for almost 20 years and therefore the first step for fixing the minimum extent of land is a sine qua non to proceed to the next stage of fixing the price. In this case, absolutely there is no order at all at any point of time fixing the minimum extent of land required by the defendant. Therefore, when the Commissioner came to be appointed on 27.3.1995 after the civil appeal before the Honourable Supreme Court was dismissed as withdrawn on 13.9.1994 it is that date which would be the basis working out the average market value for three years backwards. The order passed by this Court in C.R.P. No. 972 of 1989 remained stayed by the Honourable Supreme Court of India till 13.9.1994 when the civil appeal was dismissed as withdrawn. Therefore, the plaintiff was not in a position to work out his rights pursuant to the order dated 25.8.1989 in C.R.P. No. 972 of 1989 passed by this Court. Under these circumstances, as held by this Court in M. Arasan Chettiar's case, (1980) 2 M.L.J. 303 the last of the dates by which the order fixing the extent of land came to be finalised would be the date for fixing the price of the land. In the absence of any order as it is fixing the minimum extent of the land, the order dated 25.8.1989 of this Court in C.R.P. No. 972 of 1989 would have the effect of fixing the minimum extent of the land and therefore that order having become final only on 13.9.1994, when the appeal was dismissed by the Honourable Supreme Court of India, the plaintiff was at liberty to work out his rights in accordance with the Act. Under these circumstances, 27.3.1995, the date on which the Commissioner was appointed would be the date for fixing the price of the land and that is what the courts below have done. The property is situated in the most prime area in the city of Chennai and therefore it's locational advantages and the potential use to which the property may be put to in the years to come shall be necessarily taken into account in arriving at the price payable for the land. Therefore, over and above the average market value arrived at by the courts below, the court is under a legal obligation to add a reasonable sum to the market value so arrived at before fixing the price for the price for the land in question.
6. In reply, Mr. S. Raghavan, learned Counsel for the petitioner, would contend as follows: The property is already fully developed. The average market value for three years preceding the date in question takes into account the locational advantages and the potential use to which the property is likely to be put in the future and therefore there is absolutely no need to add anything to the average market value arrived at. If this is done, it would be burdening the defendant in whose favour, the Act in question acts beneficially, with a heavy and onerous responsibility. That was not the object of the Act. Sale deeds of a smaller area shall not be taken to indicate the correct market value when the price for a larger area comes for decision. The suit property is 18 grounds in extent and therefore the comparable sale deeds relied upon by the plaintiff may not be apt to decide the price for the land in question.
7. In the light of the arguments advanced by the learned Counsel on either side, I perused the materials brought to the notice of this Court by either side.
The rights of the parties in this revision flow from Section 9(1)(b) of the Tamil Nadu City Tenants Protection Act, hereinafter referred to as the Act. A Division Bench of this Court in M. Arasan Chettiar v. Narasimhalu Naidu 's Estate Trust had categorically laid down the procedure to be followed by court when an application under Section 9 of the Act comes for decision before the court and the same is as follows:
When a tenant filed an application under Section 9, Madras City Tenants Protection Act the steps to be taken by the court one after the others are: (1) to decide the minimum extent of the land which may be necessary for the convenient enjoyment by the tenant, and (2) after having so decided, to fix the price of such minimum extent.
Third stage is to pass an order directing the tenant to pay the price so fixed within a period to be determined by the court not being less than 3 months and not more than 3 years from the date of the order.
The Division Bench in that judgment had also stated that while fixing the price of the land, average market value for three years preceding the date of the order fixing the minimum extent of the land alone should be taken into account. In other words, the date of the order fixing the minimum extent of the land would be the base year from which the average market value for three years preceding that date must be taken into account. In other words, the date on which the court decides the minimum extent of the land would be the relevant date for the purpose of fixing the price mentioned in the Act. It is also laid down in that judgment that if the decision of the court on the minimum extent is taken up further by way of appeal or revision, naturally the date of the order fixing the price of the land would be the date of the order of the appellate or the revision Therefore, the position is very clear as to what the court must do in a matter like this.
8. In the light of the law laid down by this Court I tried to find out from the materials placed before this Court as to whether there is any order at all at any point of time fixing the minimum extend of land required for the convenient enjoyment of the defendant and I found none. It also appears from the records that at no point of time, there was any dispute between the parties regarding the extent of the land, which will be required by the defendant. The plaintiff was always concentrating OB the question that the defendant would not be entitled to the protection under the Act at all. The suit property measures 18 grounds. In I.A. No. 12518 of 1979 filed by the defendant under Section 9 of the Act for purpose of the land, the request was for a direction to the plaintiff to sell the suit property namely 18 grounds. In the counter affidavit filed in this application, the plaintiff had not disputed as already stated, the extent which the defendant would be entitled to buy. The first order passed by the court between the parties is the one dated 31.1.1984 in the application referred to above along with the other suits. The court in that order, after holding that the defendant is entitled to the protection under the Act, went on to declare that the application in I.A. No. 12518 of 1979 is maintainable and on a further application by the defendant, the court would appoint an advocate Commissioner; fix the minimum extent of the land required by the defendant and the fix the price. Therefore it is clear that the minimum extent of the land that is required by the defendant was not fixed. This order was appealed against in C.M.A. No. 42 of 1985 and the same was also dismissed which was affirmed by this Court in C.R.P. No. 658 of 1986 by judgment dated 25.8.1987. Therefore, till the last of the orders referred to above, there was no fixation of the minimum extent of the land by the court. However, it may be noticed, at the risk of repetition, that there was no dispute at all between the parties about the extent which the defendant was entitled to buy.
9. Thereafter the defendant filed I.A. No. 23780 of 1987 for the appointment of an Advocate Commissioner to ascertain the price for the property namely the entire extent of 18 grounds. In the affidavit filed in support of this application, the defendant had stated that the entire 18 grounds is necessary for him and therefore the court was requested to fix the entire extent of land namely 18 grounds as required by him. On this application on 19.8.1988, an advocate Commissioner by name D. Maharajan came to be appointed and he was directed to ascertain the price of the property, namely 18 grounds. Even at that stage, there appears to be no dispute about the defendant's right to buy the entire 18 grounds. It is seen that the plaintiff's counsel by a memo dated 9.12.1988, given to the advocate Commissioner, requested him to let the plaintiff know the date on which the advocate Commissioner entered on the duties in that capacity so that it will be taken as the date of the order for fixing the market value by him and for subsequently fixing the "price" by the court. Even from this, it is clear that the plaintiff was not interested in disputing the defendant's right to buy the entire 18 grounds but was only keen to have "the date of the order" for fixing the average market value. On this letter, the advocate Commissioner moved the court by a memo for clarification on that aspect and the court by order dated 15.3.1989 directed the Commissioner to fix the value by taking into account the dated 31.3.1984 on which date the extent required by the petitioner was stated to have been decided. This appears to be obviously wrong. There is only one order dated 31.3.1984 and that is the order passed by the learned trial Judge while he disposed of the suits for possession; for mesne profits and the application in I.A. No. 12518 of 1979 about which a reference is already made earlier. There was no other order dated 31.3.84 on file. This order fixing 31.3.1984 as the relevant date was challenged by the plaintiff in C.R.P. No. 972 of 1989. The order in C.R.P. No. 972 of 1989 reflects that the plaintiff suggested to this Court that the minimum extent of land required by the tenant was determined on 19.8,1988, the date on which the advocate Commissioner was first appointed in I.A. No. 23780 of 1987 and the said dated alone is to be taken as the basis for determining the market value. The learned Judge, applying his mind to the materials placed before him, agreed with the submission made on behalf of the plaintiff and directed to fix the price of the property by taking into consideration the average market value prevailing three years prior to 19.8.1988. On 19.8.1988, there was no order by any court in this proceeding fixing the minimum extent of land. On that date, only the advocate Commissioner by name D. Maharajan came to be appointed to fix the price of the property. In any event, Mr. Justice, K.M. Natarajan's order in C.R.P. No. 972 of 1989 will have the effect that the minimum extent of the land was determined only on 19.8.1988. It is not open to anyone of the parties to it to get rid of that date unless that order is affirmed or varied by a superior court. When Mr. Justice K.M.Natarajan in C.R.P. No. 972 of 1989 directed the fixing of the price of the land with reference to the date 19.8.1988, it must be taken as an order to mean that the extent of the land required for the defendant was only fixed on that date. As already declared by this Court in the judgment in M. Aransan Chettiar v. Narasimhalu's Estate Trust, that fixing the minimum extent of the land is the sine qua non for fixing the price of the land. In the absence of any order in the case on hand as it is fixing the minimum extent of the land and there being no dispute at all at any point of time that the defendant is entitled to buy the entire 18 grounds. I have to necessarily hold by implication that the minimum extent of land came to be fixed on 19.8.1988 as decided by Mr. Justice K.M. Natrajan in C.R.P. No. 972 of 1989. This Court in M. Arasan Chettiar v. Narasimhalu Naidu's Estate Trust , held that the date of the order fixing the minimum extent of the land will be the relevant date for fixing the price of the land and that date will get postponed if that original order is challenged either in an appeal or revision. In other words, if the order fixing the minimum extent of land is challenged by any party, then the order of the appellate or revisional court would be the relevant date to be taken into account for fixing the price of the land. It is on record that the order in C.R.P. No. 972 of 1989 was challenged by the defendant before the Honourable Supreme Court of India and on 23.1.1990, the Honourable Supreme Court of India stayed the operation of the order. Ultimately, the appeal came to be dismissed as withdrawn by the Honourable Supreme Court only on 13.9.1994. This means that the relevant date namely 19.8.1988 fixed by the learned single judge of this Court in C.R.P. No. 972 of 1989 was affirmed by the Honourable Supreme Court of India only on 13.9.1994. Applying the ratio laid down by this Court in M. Arasan Chettiar v. Narasimhalu Naidu's Estate, there cannot be any doubt to hold that 13.9.1994 would be the relevant date for fixing the price of the land. In other words, the average market value of the land for three years preceding 13.9.1994 alone should enter into the mind of the court while fixing the price of the land. Therefore, I am of the opinion that the courts below had erred in fixing 27.3.1995 as the relevant date for fixing the price of the land. It could be remembered that on 27.3.1995, an advocate Commissioner came to be appointed to fix the price of the land. This date, for the reasons stated above, by me cannot be sustained. Accordingly the price of the land has to be necessarily fixed with reference to the average market value for three years prior to 13.9.1994 only.
10. The question that next come up for consideration is about the procedure to be adopted by the court while fixing the price of the land. I have already held that 13.9.1994 is the relevant date. Under Section 9(l)(b) of the Act, the average market value for three years preceding the date of the order must alone go into the mind of the court while fixing the price of the land. The date of the order as far as fixing the price of the land is concerned had been held by this Court in M. Arasan Chettiar v. Narasimhalu Naidu's Estate Trust as the date on which the minimum extent of the land was determined. I have already found that the minimum extent of the land was found to have been determined at least by implication on 19.8.1988 by the order of Mr. Justice K.M.Natarajan in C.R.P. No. 972 of 1989. However that date got postponed to 13.9.1994, on which date the appeal was dismissed by the Honourable Supreme Court of India and therefore 13.9.1994 alone will be relevant date proceedings on the basis, namely 13.9.1994 will be the relevant date, I tried to find out whether the procedure adopted by the advocate Commissioner as well as by the courts below in fixing the price of the land is in order or not. In so doing, the advocate Commissioner indicated the price of the land based on the relevant date as 19.8.1988 and based on the relevant date as 27.3.1995. On the basis of these two relevant dates, the price of the land was fixed by taking into account the average market value preceding three years the respective dates. The market value thus was arrived at. To that market value, agreeing with the arguments advanced by the counsel for the plaintiff, the advocate Commissioner proceeded to add to that a large sum of money which in the opinion of the advocate Commissioner would represent the inflation in the price. For this, the learned advocate Commissioner relied upon the indexed cost of acquisition and the cost inflation index notified under Section 48(iii) and (v) of the Income Tax Act. This sort of adding money on the basis of an alleged inflation is supported by Mr. K.C. Rajappa, learned Counsel appearing for the respondent and attacked by Mr. S. Raghavan learned Counsel appearing for the petitioner. I applied my mind carefully to the procedure adopted by the Commissioner and affirmed by the courts below. The Act directs the price of the land to be fixed which shall be the average market value for three years immediately preceding the date of the order. Therefore, the price fixed on the lines indicated above itself is the price which represents the market price on the date when the order was passed. In other words, the price not fixed under the Act is not the price at which the owner of the property would have purchased it. Lapse of time and development in the area around would definitely increase the value of the property in question. While fixing the price on the basis of the average market value for three years preceding the date of the order, the legislature was clearly aware of the fact about the escalation in prices. It is not as though the owner of the land is compelled to sell his property at a price for which he had purchased it. By fixing the price on the lines indicated above, the owner of the property definitely gets a return which is more than his investment. Therefore, according to me the price to be fixed under the Act based on the average market value for three years preceding the date of order is itself an enough safeguard for the owner of the property. To add to the price so fixed, which had already taken itself into account the inflation, any other sum, stated to be on the basis of an inflation, appears to be giving an advantage of escalation in price twice to the owner. This sort of adding the inflation price twice on the property is not warranted by the Act or by any other law in operation. The indexed cost of acquisition and the cost of inflation index provided for under Section 48 of the Income Tax Act to be taken into account to determine the liability of the person on account of capital gains, would operate in totally different circumstances, For instance, if 'x' buys a property for Rs. 5,000.00 and sells it after ten years for Rs. 50,000.00 apparently there is a profit of Rs. 45,000.00. But the legislature in making the relevant provision under Section 48 of the Income Tax Act thought it fit to provide for the increase in the value of the property on the date of the transaction namely the sale. In other words, the property purchased for the sum of Rs. 5,000.00 on the date of the transaction, ten years later would have increased in its value by lapse of time, importance of the area in which it is situated and other relevant considerations. Therefore the property purchased for Rs. 5,000 might be of the value of Rs. 30,000 on the date of the sale when it fetched the price of Rs. 50,000.00 Therefore capital gains was directed to be assessed on the basis of Rs. 20,000.00 namely Rs. 50,000 minus Rs. 30,000. In arriving at the inflated value of the property on the date of the sale under the Income Tax Act, there is an index for each years. Therefore in my opinion the indexed cost of acquisition or the cost inflation index theory provided for under Section 48 of the Income tax Act will have no application at all while the price of the property under the Tamil Nadu City Tenants Protection Act is fixed on the basis of the average market value for three years preceding the date of the order. To my mind, it is clear that the price fixed under the Tamil Nadu City Tenants Protection Act on the basis of average market value for three years preceding the date of the order itself is the price, subject to addition of a reasonable sum to it, if permissible in law, would be the price which the plaintiff would be entitled to. To make it clear, I hold that while fixing the price of the land under the Tamil Nadu City Tenants Protection Act, the court is not entitled to travel beyond the procedure prescribed under Section 9(l)(b) of the Act itself in determining that price and it is not open to them to fall back upon the material as provided for under the Income Tax Act referred to above in fixing the price of the land.
11. Having found so on the question of the relevant date and the procedure to be adopted in fixing the prices of the land, let me now consider whether the price fixed by the courts below is in accordance with law or not. The price fixed by the authorities below must necessarily be set aside on the simple ground that the relevant date for fixing the price is preponed to 13.9.1994 and the price fixed taking into account the cost inflation index as provided for under the Income Tax Act cannot also be sustained. Even otherwise the order under challenging on the quantum of the price fixed, in view of my decision referred to above, cannot be allowed to stand. The defendant in the suit had fixed his mind as 19.8.1988 as the relevant date for fixing the price of the land. 19.8.1988 is the date fixed as the relevant date by Mr. Justice K.M. Natarajan in C.R.P. No. 972 of 1989. On that basis only, the defendant had let in evidence and the various date sale deeds produced by him before the Commissioner are for the years 1985 to 1989. However the plaintiff had his mind on 27.3.1995 (the date on which the Commissioner came to be appointed subsequent to the appeal having been dismissed by the Supreme Court) as the relevant date for fixing the price of the land. On that basis, the plaintiff had let in evidence and produced data sale deeds from the years 1985 to 1994. In view of the fact that I have already held that 13.9.1994 is the relevant date for fixing the price of the land, it is but necessary and in the interest of justice the defendant should be given an opportunity to place the necessary materials, both oral and documentary, to have the price of the land fixed with reference, to the above referred to relevant dated (i.e., 13.9.1994). Inasmuch as he had not produced any document at all for the period coming within three years preceding the relevant date fixed by this Court, the price of the land, if worked out on the basis of the documents produced by the plaintiff for the relevant period of three years preceding the date of the order, then the defendant would be irreparably injured. The documents relied upon by the plaintiff for the relevant period on the face of it, appear to show that value per ground would be in the region of Rs. 11.05 lakhs, Rs. 14.50 lakhs, Rs. 15.30 lakhs and Rs. 15.02 lakhs. The property to be conveyed is 18 grounds and going by the market value brought to the notice of this Court by the plaintiff, if the price payable by the defendant has to be worked out, in the absence of any material on his side, then it is likely to result in a huge financial commitment to the defendant. Judicial conscience pricks the mind of this Court not to allow any such fixation of price. Under these circumstances, I have decided to set aside the orders under challenge and remand the entire proceedings to the learned trial Judge with a direction to him to entrust the fixation of the price on the basis of evidence to be let in afresh by both parties either to the very same Commissioner who filed the report or to some other Commissioner as the trial court may deem fit.
12. In the light of the decision I have taken, I applied my mind to the decided case laws brought to my notice by the learned Counsel on either side. The following are the judgments brought to my notice by Mr. S. Raghavan, learned Counsel appearing for the revision petitioner.
1. Land Acquisition Officer and Collector, Gadwal v. Sreelatha Bhoopal . 2. K. Ranganathan v. B.K. Nalini Jayanthi . 3. U.P. State Road Transport Corporation, Aligrah v. State of U.P. . 4. M. Ramasamy Pillai v. Hazarath Syed Shah . 5. Arun Singh v. Mohindra Kumar . 6. M.B. Patil v. Y.L Patil (1976) 4 S.C.C. 66. 1. Balaji Singh v. Kandaswami (1993) 2 L. W. 257. 8. Ashok Kumar Srivastav v. National Insurance Company Ltd. . 9. Satyadhyan Ghosal v. Deorajin Debt . 10. Md. Ghouse v. Revenue Divisional Officer 83 LW. 62.11. E.V. Palanivelu v. M/s. Srikrishna Talkies (1991) 1 M.L.J. 214.
The judgments in the first case, third case and the tenth case are based on as to how the compensation under the Land Acquisition Act payable in respect of land acquired thereunder must be decided. Since, I have left open the compensation to be decided afresh, I am of the respectful opinion that the application of those judgments need not be considered at this stage. The judgment in the second case would state that the sale deeds cannot be relied upon unless the parties to it are examined. For this the argument of Mr. K.C. Rajappa is that the above referred to judgment, was rendered under the Tamil Nadu Rent Control Act while fixing the fair rent. However, the proceedings under the Tamil Nadu City Tenants Protection Act are covered by the Code of Civil Procedure and the Commissioner is also appointed only under Order 26 of the Code of Civil Procedure. Under Order 26, Rule 10 of the Code of Civil Procedure, the report of the Commissioner and the evidence taken by him shall be evidence in the suit and shall form part of the record. Therefore, according to Mr. K.C. Rajappa, the document marked in this case can be acted upon. I leave that question open in view of the decision I have taken in this case. The decision in the fourth case does not really apply to the facts of the case on hand. The decisions in the fifth case, sixth case, eight case and the ninth case, are under Section 11 of the Code of Civil Procedure. The decisions were pressed into service to contend that the plaintiff should not be allowed to challenge the relevant date fixed in C.R.P. No. 972 of 1989 as 19.8.1988 on the principle of res judicata. However in the light of the decision I had come to in his case, I am of the opinion that those judgment have no application to the case on hand, especially in view of the judgment of this Court in M. Arasan Chettiar v. Narasimhalu Naidu's Estate Trust , wherein it has been clearly held that the relevant date will get postponed if an appeal or revision is filed and in such an event, the relevant date would be the date of the order of the appellate or revisional court. The decision in the seventh case deals with a situation where the court has not fixed the minimum extent of the land. The learned Judge found that at no point of time, the party complaining of the same ever disputed the failure to fix the extent of the land, as causing prejudice to him. In this case on facts I have held 19.8.1988 as the date on which the extent of the land came to be fixed. In the last case, the method adopted while fixing the price of the land under the Tamil Nadu City Tenants Protection Act, came up for consideration before the Division Bench. The value adopted three methods, namely the method of comparable sales; method of adopting the value by profit, and by adopting development method. The valuer himself ignored the development method and the adoptation of the valuation by profit method was not approved by the court. On the facts of that case, the learned Judges went on to decide the price of the land on the basis of comparable sales.
13. The learned Counsel for the respondent brought to my notice the texts and the following judgments; Principles and Practice of Valuations by J.A. Parka:
I.B. Agwarthula v. Special Thasildar and Land Acquisition Officer, Visakhapatinam Municipality . 1. V. Pattabhiraman v. Assistant Commissioner, Urban Land Tax . 3. Dollar Company v. Collector Madras . 4. Gulabi v. State . 5. Bharat Petroleum M.S.P. v. Bharat Petroleum Corpn. Ltd. A.I.R. 1998 S.C. 1407. 6. K.S. Shivadelanna v. Assistant Commissioner and Land Acquisition Officer . 7. Collector of Nilgir is v. M/s. Mahavir Plantations (P) Ltd. 94 L. W. 685. 8. Gopal Naidu v. Thirunavukkarasu Mudaliar . 9. L.A.O. & Sub Collector, Gadwal v. Sreelatha Bhoopal . 10. E.V. Palanivelu v. M/s. Sri Krishna Talkies (1991) 1 M.L.J. 214. 11. The Land Acquisition Officer-cum-Revenue Divisional Officer (1998) 1 M.L.J. 459. 12. M. Arasan Chettiar v. Narasimhalu Naidu's Estate Trust .
The first case relates to fixation of market value under the Land Acquisition Act. In the second case, the mode of assessment of Urban Land Tax and the validity of the section came up for challenge. In the third case also, the method of arriving at the market value under the Land Acquisition Act was highlighted. So is in the fourth case. In the fifth case, while fixing the pension for Burma Shell Employees, a claim was made for adequate escalation in pension. In that case, it was held that the judicial notice would be taken of the fact of loss of purchasing power of rupee to a considerable extent. In the light of the decision which I have taken in this case, I am of the respectful opinion that the above referred to judgment is not of any help to decide the issue in question. The sixth case also relates to the procedure to be adopted in fixing the marked value while paying the compensation under the Land Acquisition Act. The seventh case relates to proceedings under the Indian Stamp Act when under-valuation of instrument came up for consideration. On facts, I am unable to draw any support from that case. The eleventh case relates to arriving at the market value of the land under the Land Acquisition Act. The twelfth case is the judgment already relied upon by the earned counsel for the revision petitioner. The eighth case relates to the construction of the date of the order regarding fixing the time for payment when a revision is filed. The tenth case relied upon by the learned Counsel for the respondent is also relied upon by the learned Counsel for the petitioner. The ninth case relates to fixation of market value of the land under the Land Acquisition Act.
14. In the result, the orders under challenges are set aside. I.A. No. 23780 of 1987 in O.S. No. 1448 of 1979 on the file of the City Civil Court, Madras will stand remitted to the learned trial Judge or fresh disposal in accordance with law, with he following directions:
(a) the trial court is directed to entrust the work of fixing the price of the land to the advocate Commissioner, who had filed her report last or to any other advocate Commissioner, who may be appointed by the court: (The parties prefer a new Commissioner);
(b) the parties are at liberty to adduce evidence afresh, both oral and documentary, in support of their respective claims:
(c) the relevant date for fixing the price is fixed as 13.9.1994;
(d) while fixing the price of the land, the average market value for three years preceding the relevant date in accordance with the Tamil Nadu City Tenants Protection Act and the Rule framed thereunder above referred to shall be taken into account;
(e) on the fixation of the price of the land on the procedure indicated above, any increase permissible in law may be added to it and it is left to the judicial discretion of the lower court; and
(f) the method of adopting the price of the land based on the indexed cost of acquisition and the cost inflation, index, as provided for under the Income Tax Act, cannot be resorted to.
Consequently, C.M.P. No. 15051 of 1998 is dismissed.
15. It is brought to my notice by Mr. S. Raghavan, learned Counsel appearing for the revision petitioner that when the appeal was pending before the lower court, the revision petitioner/defendant in O.S. No. 1448 of 1979 had deposited a sum of Rs. 45 lakhs and interest had accrued on that deposit. The amount is now in F.D.R. No. 0210693, Canara Bank, Park Town, Chennai. In view of the order in this revision in and by which the price fixed by the court below has been set aside and remitted back for a fresh disposal to fix the price which is just and right, the revision petitioner is permitted to withdraw the entire amount of Rs. 45 lakhs with accrued interest thereon as on date.