P L D 1966 (W (PLP)

(6) That the case of the land belonging to Rahim Khan and Mst. Merjan 7 (deceased) be also taken up separately in view of certain legal objections taken by the learned counsel for these land owners. (7) That in, view of the above compromise agreed upon between the parties, except the two land owners Rahim Khan and Just. Marjan, all proceedings taken by the land owners to challenge the legality of the acquisition shall stand dismissed as withdrawn. The land owners who have initiated such proceedings shall intimate this fact to the Courts concerned for necessary action. (8) That with regard to the land owned by the late K. B. Haji Muhammad Kulli Khan the compensation payable shall be at the following increased rates in view of the fact that certain steps had been taken by him to initiate a building scheme in respect of this land. These rates shall be as follows: Rs. 1900 (nineteen hundred) per jarib for culturable land and Rs. 900 per jarib for unculturable land.

6. As no agreement could be arrived at between the parties with regard to the compensation payable for the brick‑kiln and the brick-field located on Khasra No. 1318, we heard arguments on this point. On behalf of the appellants the main contentions put forward by the learned Assistant Advocate‑General assisted by Mr. Mahmud Ali Qasuri and other learned counsel are that in the reference made at the instance of the land owners the amount of compensation claimed was only Rs. 1,00,000 and, therefore, the learned District Judge has clearly erred in awarding Rs. 2,00,000 on this account, that the brick‑kiln was in fact nothing more than an old abandoned kiln, and it had not started functioning when acquisition took place, and therefore, no question arose of awarding any compensation to the owners on account of loss of profits or earning and that in any case the learned District Judge has erred in law in awarding to the owners compensation on the basis of the profits presumed to have been made by the management of the Company after the brick‑kiln had been acquired and put to use for baking bricks for the construction of the Mill. It is submitted that the basis adopted by the learned District Judge is in clear disregard of the prohibitions mentioned in section 24 of the Act, particularly clauses fourthly and fifthly.

7. Another ground put forward on behalf of the appellants is that before the Collector no compensation at all was claimed for the brick‑kiln by one Abdul Mannan who represented himself as the mukhtar‑e‑aam of the Late K. B. Haji Kulli Khan the major owner of the Khasra in dispute, and therefore, the land owners have no right to claim more than the sum awarded by the Collector on this account.

8. It is true that in the joint statement, recorded by the Col lector, of all the land owners which is to be found on the Collector's file, Abdul Mannan is described as mukhtar‑e‑aam of the late Khan Bahadur and apart from mentioning the existence of the brick‑kiln no specific amount is mentioned as having been demanded as compensation in this behalf. The successors- in‑interest of the Late Khan Bahadur have repudiated the authority of Abdul Mannan and they have asserted that this Abdul Mannan never acted as the mukhtar‑e‑aam of their father. On the other hand, the appellants have placed on the record an uncertified copy of a registered power of attorney said to have been executed by the late Khan Bahadur in favour of this Abdul Mannan. We consider that in the present proceedings in appeal we need not take evidence to determine whether Abdul, Mannan was indeed the mukhtar‑e‑aam of the late Khan Bahadur, as it is clear that although no specific amount was mentioned as having been demanded as compensation for the brick‑kiln, the question of compensation in this behalf was considered by the Collector and while contesting the reference made at the instance of the land owners, the objection was, not taken on behalf of the Collector or the company that no compensation should at all be awarded for the brick‑kiln and the brick‑field for the reason that nothing was .demanded before the Collector. This is not a case of refusal to make a claim, as mentioned in subsection (2) of section 25 of the Act. At the most it is a case of an omission, and the reason for the omission is that neither the owners nor the Collector at that stage thought it necessary to place on record the exact amount demanded. For these reasons, we are of the view that the question of compensation was open to be considered by the Court on the reference made in this behalf at the instance of Khan Bahadur Kulli Khan, and the appellants are now estopped from objecting on this ground.

9. It is, however, correct that in the reference the late Khan Bahadur claimed only Rs. 1,00,000 as compensation on this account and accordingly the learned District Judge has clearly erred in awarding Rs. 2,00,

000. For this reason alone the award made by the learned District Judge in this behalf has to be set aside.

10. The first question to be considered in this connection is regarding the factual position of the brick‑kiln. On behalf of the land owners reliance is placed on the evidence of the Late Khan Bahadur himself supported by Umra Khan and Raza Ali. The sum and substance of their statements is that the brick- kiln in question was an old abandoned kiln which had been repaired at considerable expense by the Late Khan Bahadur under the supervision of Umra Khan and it was about to start working when the acquisition took place. According to Umra Khan its manufacturing capacity was five lacs of bricks in one round and in one year it could produce between fifty to sixty lacs of bricks. Umra Khan further stated that the net profit to the owners of the brick‑kiln would have been Rs. 10 to Rs. 12 per one thousand bricks. Umra Khan also stated that there was sufficient clay available in the brick‑field for the manufacturing of bricks for twenty years. The learned District Judges inspected the site and he found that bricks had been manufactured by the Mill for construction purposes on this very brick‑kiln. On behalf of the Collector and the Company no evidence was produced to rebut the assertions made on behalf of the land owners in any of these respects. However, at the time of arguments it was stated that clay for the manufacture of bricks had been imported by the Company from outside and only the baking of the bricks had been carried out in this kiln. An application was, made for permitting , additional evidence to b9p adduced to prove these facts. We consider that it is now too late to permit the production of any such additional evidence to fill the gaps existing on the side of the appellants, and accordingly we intend to proceed on the basis that when the acquisition took place, the brick‑kiln had been put in order by the Late Khan Bahadur Kulli Khan, that it was about to go into production, that its manufacturing capacity was five lacs bricks in one round and in one year it could have manufactured between fifty to sixty lacs of bricks, yielding a , net profit of Rs. 10 to Rs. 12 per one thousand bricks. .

11. It was contended on behalf of the appellants that the brick‑kiln was intended to supply bricks to the proposed township for which a scheme had been prepared by the Late Khan Bahadur and as the township never came into existence by the time of the acquisition we should hold that the brick‑kiln would have remained idle even without the acquisition and, therefore, no question arose of compensating the land owners for any loss or earnings or profits caused by the acquisition. This argument has clearly no substance, for the reason that even if the proposed township had not came into existence, it is clear that a brick kiln, situate at about two miles from Peshawar City could not have remained idle as it could easily have been used for supplying bricks to other customers. We consider that apart from the price of the land and of the work or superstructures put up by the land owners to restore the brick‑kiln to a working condition, the land owners are also entitled to compensation on account of loss of potential earnings or profits. In this behalf reference may usefully be made to some of the authorities which were cited before us by the learned counsel for the parties. The learned Assistant Advocate‑General strongly relied upon Suresh Chandra Banarji v. Secretary of State and another (A I R 1927 Cal. 357). in which it was observed that:‑

"The market value of the land is assessed by taking every circumstance into consideration. A person is entitled to claim damages for loss of earnings if he carries on some business in the acquired premises and by virture of the acquisition he is deprived of his profits by reason of the fact that he cannot find any other place where he can carry on the business to which he was engaged on the acquired premises. He, however, cannot again ask for damages on the ground that he might have made profits by engaging in a certain trade or business on the land in question." The compensation in that case was claimed by the owners of the brick‑kiln who had leased out the same to a third party and they were claiming damages in addition to the market value of the brick‑kiln on the ground that they might have made profits if they had engaged in the business of brick‑making after the expiry of the lease in favour of the third party. It seems to us that the facts of the Calcutta case are clearly distinguish able from those of the instant case. Here, on the basis of the evidence already mentioned by us, we have come to the conclusion that the brick‑kiln was about to go into production and, therefore, by the acquisition of the brick‑kiln and the brick-field appurtenant thereto the land owners have been clearly deprived of potential earnings or profits, and the learned Collector did not take this element into account when he assessed compensa tion at Rs. 6,

000. The Collector was clearly thinking of the price of the work/superstructure which already existed at the time of the acquisition.

12. In our view the matter is clearly covered by the clause fourthly of section 23 of the Act which permits the payment of damages (if any) sustained by the person interested at the time of the Collector's taking possession of the land by reason of the acquisition injuriously affecting his other property or his earnings. In the present case the potential earnings have clearly been injuriously affected. That notice can be taken of potential earnings or the potential use to which the land under acquisition was going to be put is amply borne out by several decided cases to which our attention has been drawn by the learned counsel for the land owners. Mention may be made of Hardwari Mal arid another v. The Secretary of State for India in Council (64 I C 146), Makhan Das v. Secretary of State (A I R 1927 All. 752), Kanchumarti Venkata Krishnayya Geru v. Secretary of State (A I R 1928 Mad. 89) Abdul Rahim v. Secretary of State (A I R 1926 Lah. 618) and Rameshwar Singh Bahadur v. Secretary of State (A I R 1929 Pat. 733). These authorities have laid down that the compensation should be for the most lucrative use to which the land can be put and future potentiality should be properly allowed for.

13. On the basis of the provision of law contained in the clause fourthly of subsection (1) of section 23 of the Act and the authorities cited at the Bar, we hold that the land owners are entitled to compensation on account of loss of potential earnings or profits for a reasonable period such as would have enabled them to set up their business of brick‑making at another place. One of the respondents, namely, Muhammad Aslam Khan Kattak, who addressed the Court, emphasized the difficulties involved in finding an equally attractive site for putting up brick‑kiln. The difficulties pointed out are indeed there and it seems to us that in the circumstances of the case a period of on year would be the minimum required for finding an alternative site and erecting a brick‑kiln there. Accordingly we propose to allow under this heading loss of potential profits for a period of one year. It is interesting to observe that Mr. Muhmud Ali Qasuri himself cited two cases before us from the Indian Jurisdiction in which the learned Judges had allowed six months' profits to certain shop‑keepers who were lessees and their shops had been acquired. Now, it is clear that acquiring alternative shops and setting up business therein is clearly not as time consuming as erecting a brick‑kiln on an alternative site.

14. We have already referred to the evidence of Umra Khan to the effect that the brick‑kiln in question would have manufactured fifty to sixty lacs of bricks per year and the net profit to the owners would have been Rs. 10 or Rs. 12 per 1000 bricks. On this basis the profits earned by the land owners would have been anything between Rupees fifty to sixty thousand. At the time of announcing our short order we fixed a round sum of Rs. 60, 000 (sixty thousand) to compensate the land owners for the work and the superstructure already existing plus the loss of potential earnings for one year; and that means that we allowed Rs. 54,000 on a account of potential profits for one year as we intended allowing Rs. 6,000 for the work super structure which was existing at the spot at the time of the acquisition. Accordingly we fix the loss of potential earnings for one year at Rs. 54,000.

15. The other items regarding which there is no dispute area:‑

(1) 60 Kanals 7 Marlas of Banjar land at the rate of Rs. 700 per Jarib as already agreed upon between the parties, Rs.10,560. (2) Price of work/superstructure already existing at the time of the acquisition, as assessed by the Collector, Rs. 6,

000. We may note here that according to our reading of the award the learned Collector assessed this figure for the work which had already gone into the brick‑kiln so as to make it workable. It did not include anything on account of loss of earnings.

16. We have substantially reduced the compensation to be awarded to the land owners on account of the loss of profits as compared to that awarded by the learned District Judge, firstly for the reason that the land owners had themselves claimed only Rs. 1,00,000 in the references made under section 18 of the Act; and secondly, for the reason that the earnings or profits have to be for a reasonable period during which the land owners could establish themselves elsewhere. The learned District Judge has clearly erred in awarding loss of profits for a period of five years. As a result the total compensation which we would award for the brick‑kiln and the brick‑field is as follows:‑

(1) Price of the land Rs. 10,560 (2) Price of work/superstructure Rs. 6,000 (3) Loss of profits/earnings for a period of one year Rs. 54,000 Total Rs.70,560

17. We may now take up the question of the payment of interest to the land owners on the amount which has been finally assessed by us in excess of the award made by the Collector. The learned District Judge has awarded interest on the excess amount at the rate of 6 % per annum as contemplated by section 28 of the Act on behalf of the appellants it was urged that it is clear that the amount of compensation awarded by the learned District Judge was much too excessive, and that if the amount had been reasonable, the Company would have deposited the same at a very early state in the proceedings; and therefore, the Company should not be burdened with interest for such a long time as the delay is due not to any fault on the part of the Company but to the excessive amount awarded by the Court. In support of this contention reliance was placed on Khushal Sing and others v. Secretary of State (A I R 1931 All. 394), in which it was held that under section 28 of the Act it is within the discretion of the Court to decree interest where a larger amount of compensation has been given than was awarded by the Collector. In the circumstances of the case before the learned Judges, interest was not allowed. However, no general principle was laid down to serve as a guide in the matter of exercising discretion vested in the Court by section 28 of the Act. It appears that the learned Judges were influenced by the considera tion that the land owners had claimed compensation in regard to the `Kankar' found in the land, which was, however, the property of the Government and not of the land owners.

18. In the present case, it is true that the learned District Judge awarded compensation at a rate far higher than that assesseed by the learned Collector, and it is also correct that the Company did not accept the award made by the learned District Judge and has succeeded in obtaining a substantial reduction in the present appeal. But this is only one side of the picture. The compensation awarded by the learned Collector was obviously much too low and although we have substantially reduced the amounts assessed by the learned District Judge, yet even these reduced amounts are far higher than those assessed by the learned Collector. It is interesting to remark that even the agreed compensation per Jarib of both culturable and uncultur able land is much higher than that assessed by the Collector for both these categories, and in the case of the kiln the amount found due by us is more than ten times the amount assessed by the learned Collector. In these circumstances, it is clear that the land owners were justified in agitating against the award of the Collector and there is no justification to deprive them of the interest on the excess amount now finally determined by us. It is true that section 28 of the Act does confer a discretion on the Court in the matter of allowing interest, but there should be some reasons for disallowing in a case where the land owners have been deprived of their right ful compensation for a considerable period. We think that the position is clear that section 28 is not in the nature of a penal section and, therefore, it is wrong to think that the Company should not be burdened with interest because it was not at fault, if the matter of payment of compensation has taken so long to finalize. The provision contained in section 28 regarding the payment of interest at a fixed rate is on the contrary in the nature of a recognition of the fact that either the land owners could have reaped the necessary profits from the land under acquisition, if they had not been deprived of its possession, or that they could have earned this much income by investing the money, if compensation had been paid to them at the due rate in the very first instance. Viewed in this light, we consider that in the present case, there are no circumstances justifying the refusal of interest to the land owners on the amount now fixed by us in excess of the award of the Collector. Accordingly we would allow interest on this amount at the rate of 6 % per annum from the date the Collector took possession of the land or the brick‑kiln etc ; as the case may be to the date of payment.

19. Besides the compensation agreed upon between the parties, or as fixed by us in the present appeal, the land owners are entitled to the statutory payment of 15 % on account of compulsory acquisition, both in respect of the land and the brick‑kiln etc.

20. The order of the learned District Judge in both these cases is accordingly modified in terms of the agreement between the parties and our findings as regards the compensation to be paid for the brick‑kiln and the brick‑field. The appeals are accepted to this extent and the parties are left to bear their own costs throughout, i.e., in the District Court as well as in this Court. The amount payable to the individual land owners shall now be worked out by the learned Collector in accordance with the rates indicated in this order.

21. Before we part with this order, we may place on record as request made on behalf of the heirs of Khan Bahadur Haji Kulli Khan to the effect that as there has been no agreement between the parties with regard to the compensation to be paid for the brick‑kiln and the brick‑field, they reserve their right to challenge the legality of the acquisition proceedings in so far as they concern the area comprising the brick‑kiln and the brick‑field, namely Khasra No. 1318 measuring 60 Kanals and 7 Marlas.

22. Mr. Mahmood Ali Qasuri, appearing on behalf of the Company has also made a request that it be recorded that in view of clause (7) of the agreement recorded by this Court on the 4th of May 1966, the owners of the brick‑kiln and the brick‑field are estopped from challenging the legality of the acquisition of the land on which the brick‑kiln and the brick‑field are situated. We consider that in the present proceedings we are not called upon to do more than to record the respective positions of the parties and we do so accordingly.

23. Another point which needs to be stated is that the amounts awarded by the District Court, as modified by us in appeal, will apply to the areas of these land owners only at whose instance the three references were made to the Court against the award of the Collector. The other land owners will be governed by the amount awarded by the Collector for the reason that they did not challenge that award under section 18 of the Land Acquisition Act.

24. Lastly, we may mention that the learned Assistant Advocate‑General made a prayer for the refund of the excess Court‑fee paid by the Government on these appeals, in view of the fact that the order of the learned District Judge had merely indicated a lump‑sum for all the land owners, and in separate decree‑sheets the same amount was stated. We consider that it would be appropriate if the learned Assistant Advocate- General were to present separate applications giving the details of the Court‑fee which he has paid, the amount which he should have paid on the true valuation of the appeal, and the amount which. has to be refunded in each case. Appropriate action will, no doubt, be taken by this Court when such applications are presented. K. B. A Appeal partly accepted.