Bombay High Court
The Government Of Bombay vs Khanderao Ramchandra Talpade on 21 February, 1923
Equivalent citations: (1923)25BOMLR794, AIR 1923 BOMBAY 417
JUDGMENT Norman Macleod, Kt., C.J.
1. These are five appeals from the decision of the Tribunal of Appeal in References Nos. 29, 31 and 32 of 1920 and 78 and 79 of 1920, in which certificates have been given that they are fit cases for appeal to the High Court. Those certificates appear to have been granted on the ground that an important question of principle was involved, although as a matter of fact if there a question of principle was involved, it had already been before the High Court on two different occasions, and the High Court, as far as it could, laid down what method should be followed with regard to the apportionment of the present value of Toka lands between Government and the Toka tenants. But it seems that each party wants this Court not only to lay down some uniform method of apportionment, but to go still further and fix the rate of assessment for arriving at the apportionment in all cases. No doubt that would be very desirable, but considering the varying nature of these Toka lands, it appears to us to be out of question to attempt to rule that in every case where Toka land is acquired by Government, the rate of assessment which it is expected Government would levy in 1929 when the fifty years' period expires, is a certain percentage of the present value of the land, because the rate to be now fixed on the present value of the land must be determined in each case according to the prospects which the land has of improving or decreasing in value, and other varying circumstances.
2. On that question it may be Raid that the lands in all these references were of very much the same nature, and their value was fixed at a time when the value of land had risen by speculation considerably beyond the usual rate, while there does not seem to be much prospect of those values increasing by the year 1929. It may even be that these lands by 1929 might decrease in value. However that may be, we have to fix a rate for the assessment and another rate for the interest at which the assessment should be capitalized. As was stated in Madhavdas Gokuldas Pasta v. The Government of Bombay (1912) F.A. No. 147 of 1911, which is known as Pastas case:
In respect of lands held under the Toka tenure the right of Government to increase the Toka rent is not subject to any specific limitation. The presenb Toka rent for the land in question is Rs. 13-11-7. By a resolution of August 14, 1879, this rent was declared for a period of 50 years. The next revision will therefore take place in 1929. It is agreed that the amount of rend receivable up to that time is of a present value of Ra 213: the contest is as to the value of the subsequent interest of Government in Toka rents payable after that date. The question is one which cannot be settled with anything approaching to certainty but the claim formulated by Government and accepted by the Tribunal of Appeal is baaed upon two probabilities, first that Government will in 1929 adhere to their declared policy of demanding four per cent of the estimated value of building land as the rent or assessment payable be them and secondly that the value of the laud in question will certainly not be less thin that fixed as its present value under the proceedings which have resulted in its acquisition by the Improvement Trust. Taking then RS. 2-5-0 per square yard as the present value making a total value of Rs 18278, a four per cent rent in 1929 would produce Rs. 731 per annum. Although Rs. 731 is two-third of a six per cent, return on the capital value and would at present only leave two per cent for the tenant, the question te be determined is whether Rs. 731 is a rent charge greater than the property can reasonably be expected to bear in 1929 having regard to the prospective development of building land in the north of the Island. Upon this point the members of the Expert Tribunal entertain no doubt. They say, 'We have arrived at the view that it will be land ripe for building when that assessment comes to be levied, and land of this area and ripe for building in that locality and position will carry the assessment referred to.
3. There is no doubt the land in that case was valued as not ripe for building at a very low rate of Rs. 2-5-0 per square yard. Assuming that the land would be ripe for building in 1929 and would fetch anything between Rs. 5 to 15 per square yard, four per cent, on Rs. 2-5-0 would be a very much smaller rate on a value between Rs. 5 and Rs. 15. But it must also be remembered that the rate of Government Paper was per cent, at that time.
4. It seems to us that it is hopeless at the present moment to speculate on what the Government policy will be in 1929. An attempt was made to place before the Tribunal evidence that the present policy of Government was, in the case of Toka land which came into the possession of Government, to demand a six per cent, rate on the present value. But the letter of the Collector which was put in with the reply of Government was dated some time in 1921, and such a declaration of policy could not affect the apportionment to be made by the Court as of the date when the land was notified. It also appears to us useless to inquire into what a purchaser of Government rights in Toka land would give for such rights, or what a present owner of Toka land would put by at the present moment in order to secure his position in 1929 when the previous settlement came to an end. All such calculations are themselves purely fanciful, and do not in any way assist the Court in arriving at a conclusion which itself can only be based on pure speculation. They merely delude the Court into thinking that it has arrived at a conclusion, not on speculation, but on sound reasoning. We have to decide between the views of Government, and no doubt we have to consider that they are entitled at the end of the period to re-assess the land at a rate entirely within their discretion, and the views of the claimants, the present owners, who may consider that they have right in the nature of occupancy rights, which would entitle them to pay something less than a rack rent, which otherwise Government would charge on the basis that the lands were liable to be resumed at the end of the period.
5. Whether in 1929 there will be any Toka tenants still left in Bombay is also problematical. But if there are any, it is quite possible that they may attempt to urge their claims in this Court, and naturally it is quite impossible for any one to place any value on such claims at the present moment. Still our own view is that Toka tenants are entitled to some consideration, and they are not to be treated at the present day as if in 1929 they would be rack-rented off their lands. In these cases we have to fix the rate of assessment on the present value and the rate at which it should be capitalized ; and on a consideration of all the arguments which have been placed before us by the Advocate General for Government and Mr. Desai, we think we should fix four per cent, as the rate of assessment on the present value of the land and six per cent, as the rate for capitalization. The rate of capitalization can, we think, be laid down with absolute certainty. We have to take the present value of an annual payment to commence in 1929, six per cent, is the usual rate of interest, and has always been considered the usual rate of interest in this Court, so we see no reason why it should not be adopted in these cases, without considering whether the assessment of these lands in 1929 will be well secured or unsecured. It is certainly desirable in all these cases that we should avoid as far as possible fanciful speculation which can be of no assistance towards fixing a figure which is itself a matter of speculation. For the purpose of apportionment between the rival claims of Government and the tenants we may say that it would not be fair in 1919 to fix the prospective rate of assessment higher than four per cent., while there may be cases in which it may be equitable to allow a lower rate. Therefore calculations will be made in each of the references according to the rates which we have laid down, and the orders of the Tribunal of Appeal will be amended in accordance with our decision.