P L D 1957 (W (PLP)

CONSTANTINE, J.

Survey No. 396 in Deb Darsano Chano in , the Karachi Taluka, together with a well therein was requisitioned on 22nd August 1941 by the Government of India under rule 75-A of the Defence of India Rules. Under section 19 of the Defence of India Act Mr. T. V. Thadani, Chief Judge, Small Causes Court, Karachi, was appointed as arbitrator to determine the compensation due, and he made his award on 16th September 1943. Against that award an appeal was lodged by the owner of the land on 18th November 1943. Notice in this matter was issued to the Custodian since the question had been raised by the respondents that the appellant was an evacuee, but this was denied by the appellant. This point has not been pursued by the respondents and the Custodian has not appeared, and it appears that there is now no dispute regard ing the status of the appellant. Both the Dominions were joined as parties in succession to the Governor-General. The first question in appeal which arises for considera tion touches the quantum of compensation. The appellant has abandoned all grounds in appeal except the ground that the arbitrator failed to take into consideration the supply of water furnished by the well for the purposes of the military. He has moreover limited his claim in this respect to 3,00000 gallons per day, which, he claims, was admitted in the written statement of the Governor-General in Council. This, however, is not the true effect of the written statement, which was to the effect that the maximum possible output was 3,89,580 gallons per day, and that the output dropped in July 1942 to just over 1,00,000 gallons per day. Upon this point the arbitrator framed issue No. 6 : "What is the potentiality of the water supply of the two kells before and after the rains?" It should be explained that one well was disused and that we are concerned only with the well which produced water. The arbitrator held that this issue was unnecessary, since he had decided under Issue 3 that the appellant had no proprietary rights in the water of the well. He said, "whether the well is capable of discharging 20,00,000 or 3,00,000 gallons per day, as contended by the respective parties, is not a consideration to be taken in determining compensation in this case." At page 23 of the paper-book, at the end of the appellant's cross-examination, the arbitrator recorded the following order :- "Mr. Jhamatmal says in case I decide to award compensa tion on the basis of the right to sell water, I should give them an opportunity to lead evidence of the capacity of the well. I have agreed to do so." Mr. Bhojwani, who was then the Chief Officer of the Municipality was examined on behalf of the appellant. He said "the military purpose to pump about 3,00,000 gallons from this well per day, out of which they propose to supply one lac fifty thousand to Dalmia Cement." I may also, at this point, mention that he said that all the tube wells we sunk in the bed of the Malir River proved a failure. So also some open wells." In cross-examination Mr. Bhojwani amended his evidence by saying that 3,00,000 referred to in his evidence referred to all the sources of supply at the command of the military and not only to the well in question. Mr. Bhide, the Secretary of the Karachi Joint Water Supply Board was called by the arbitrator as a witness. In cross-examination, on behalf of the Governor-General, he stated he was doubtful of the capacity of the well in question to yield twenty lakh gallons a day. Mr. Ghazdar who was Home Minister of the Government of Sind, and had been interested in the matter as a Municipal Councillor, gave evidence for the appellant. He had inspected the well in 1936 and, according to his observations, the yield of the water was ten lakhs gallons per day. He was a B. E. in Civil Engineering. In cross-examination, however, he said that he did not see the bottom of the well and did not examine the flow of the well, and was with the official party only for a couple of hours when they inspected this land. The Garrison Engineer was called on behalf of the Governor-General. The test on the 13th to 14th April showed a discharge of 3,89,000 gallons for twenty-four hours. He stated that there was no other report after this test of the 13th April. The Military Estates Officer similarly said that he was not certain if there was any other report received of any test after the test of the 13th April. In this state of the evidence we therefore think that the rate of 3,00,000 gallons per day, to which the appellant has restricted his claim, should be accepted. The Arbitrator proceeded on the basis that the appellant had no proprietary interest in the water ; that the water belonged to Government, and Government was, therefore, under no obligation to pay for water, which was its own property. The appellant was admittedly the occupant of Survey No. 396 which had been granted to his predecessor- in title on behalf of the Government of Bombay by the Collector in accordance with section 62 of the Bombay Land Revenue Code. Section 73 states- "An occupancy shall, subject to the provisions contained in section 56, and to any conditions lawfully annexed to the tenure and save as otherwise prescribed by law, be deemed as inheritable and transferable property. Section 56 states that arrears' of land revenue shall be a paramount charge on the holding, failure in payment of which shall make the occupancy liable to forfeiture. No special conditions have been annexed to the tenure. And the other relevant provision of law is section 65: An occupant of land assessed for the purpose of agriculture is entitled to erect farm buildings, construct mills or tanks or make any other improvement thereon for the better cultiva tion of the land, or its more convenient use for the purpose aforesaid. But if any occupant uses his holding or other part thereof for any other purpose, the Collector's permission shall in the first place be applied for by the occupant. The Collector may either grant or refuse permission. If he grants the permission, then he-may, subject to the general orders of the Provincial Government, require the payment of a fine in addition to any new assessment which may be leviable under the provisions of section

48. Section 48 provides that the land revenue leviable on any land shall be assessed with reference to the use of the land (a) for the purpose of agriculture, (b) for the purpose of building, and (c) for a purpose other than agriculture or building. Where land assessed for use for any purpose is used for any other, purpose, the assessment shall be liable to be altered subject to such rules as the Provincial Government may prescribe. The Collector may, subject to any rules made in this behalf, prohibit the use for certain purposes and may summarily evict any holder who uses the same for any such prohibited purpose. The effect of these pro visions is that while an occupant of land assessed for agriculture, to "Whose tenure any special provisions have not been attached, continues to use the land for agriculture and pays the assessment, he cannot be evicted by Government and can deal with this land as if he were the owner. The learned Arbitrator relied upon section 37 (1) of the Code which reads as follows :- "37 (1). All public roads, lanes and paths, the bridges, ditches, dikes, and fences, on, or beside, the same, the bed of the sea and of harbours and creeks below high-water mark, and of rivers, streams, nallas, lakes and tanks, and all canals, and water-courses and all standing and flowing water, and all lands wherever situated which are not the property of individuals, or of aggregates of persons legally capable of holding property, and except in so far as any rights of such persons may be established in or over the same, and except as may be otherwise provided in any law for the time being in force are and are hereby declared to be, with all rights in or over the same or appertaining thereto, the property of the Crown, and it shall be lawful for the Collector, subject to the orders of the Commissioner, to dispose of them in such manner as he may deem fit, or as may be authorized by general rules sanctioned by the Government concerned, subject always to the rights of way, and all other rights of the public or of individuals legally subsisting." In our opinion the question whether the Government is the owner of the land subject to certain rights of the occupant, or whether the occupant is the owner of the land subject to certain rights of Government, is academic. The appellant A had the right to construct a well for the purpose of agricul ture and Government had no right to evict him from the land so long as he used the land and well for agricultural purposes and continued to pay the assessment. The Arbitrator was bound under section 19 of the Defence of India Act to have regard (1) to the provisions of subsection (1) of section 23 of the Land Acquisition Act so far as the same can be made applicable and (2) whether the acquisition is of a permanent or temporary character. According to section 23 (1) of the Land Acquisi tion Act the first thing to be taken into consideration is the market value of the land. The appellant relies upon Gajapatiraju v. Revenue Divisional Officer (A I R 1939 P C 98). Lord Romer stated: "But sometimes it happens that the land to be valued possesses some unusual, and it may be, unique features as regards its position or its potentialities. In such a case the arbitrator in determining its value will have no market value to guide him, and he will have to ascertain as best he may from the materials before him, what a willing vendor might reasonably except to obtain from a willing purchaser, for the land in that particular position and with those particular potentialities. For it has been established by numerous authorities that the land is not to be valued merely' by reference to the use to which it is being put at the time at which its value has to be determined, but also by reference to the uses to which it is reasonably capable of being put to in the future." His Lordship, lower down, stated: "But now take the case where the owner is himself unable to turn the potentiality to account whether by promotion of a company or otherwise. In such a case there may be several other persons who would be able to do so, or there may be only one. If there are more than one it is recognised by all the authorities that have been cited to their Lordships, and seems to be consistent with common sense, that the owner is entitled to be paid the value to him of the potentiality, though the ascertainment of its value may in many cases be a matter of considerable difficulty." Further down he stated: "Upon the question of the value of the potentiality where there is only one possible purchaser, there are some authori ties to which their Lordships will have to refer. But dealing with the matter apart from authority, it would seem that the value should be the sum which the arbitrator estimates a willing purchaser will pay and not what a purchaser will pay under compulsion. But if the potentiality is of value to the vendor if there happen to be two or more possible purchasers of it, it is difficult to see why he should be willing to part with it for nothing merely because there is only one purchaser . . . . . The fact is that the only possible purchaser of a potentiality is usually quite willing to pay for it." The Board then approved the statements of law of Bray, J. and, in appeal, of Vaughan Williams, L. J. The latter said: "I agree with Bray J. that the fact that no buyer for reservoir purposes can be found except a buyer who has obtained parliamentary powers does not prevent the special value being marketable." In the case before the Board the land with a spring was acquired on behalf of, the Harbour Authority, and their Lordships held that the only possible purchaser was the Harbour Authority. They held that though the Harbour Authority was the only possible purchaser yet it must pay as willing purchaser the value of the potentiality of this spring. The respondents contended that the water belonged to Government, and hence Gajapatiraju's case is to be dis tinguished since the water in that case belonged to the "willing vendor". In the hands of Government this well had the special potentiality that it could be used for supplying the needs of the military, whereas in the hands of the appellant permission to supply water for non-agricultural purposes might have been refused and, if permission had been granted, a fine might, and non-agricultural assessment would, have been levied, The case appears to us very close to the dictum of Vaughan Williams L. J., which the Board approved. There, too, the only person who could use the land for reservoir purposes was the person who had obtained parliamentary powers to do so. The claimant in that case could not have used the land for this purpose. unless he obtained powers from parliament, and parliament might have refused just as the Collector might have refused. In this case if the appellant had come to an agreement to supply water to the military, the Collector could have come down upon him to impose non-agricultural assessment and, possibly, a fine, whereas in. the other case, if the reservoir promoters and the claimant had come to an agreement, it does not appear that any fine or assessment would have been payable. In both cases there is the common factor that the requisi tioning party acquired the land in order-to secure a collateral advantage. Now, assuming as we must, that the parties were a willing vendor and a willing purchaser" in friendly negotia tion", (to use Lord Johnston's phrase, approved by the Board), one could imagine the talk to have proceeded on something like these lines. Vendor.-You are going to use the water of my well to supply military-needs. Purchaser.-That is true, we recognise that this is a special advantage attached to this well. But if you supplied water for these needs, you would have to obtain the permission of the Collector and pay non-agricultural assessment and possibly a fine, so that you are not absolute owner of the water. Vendor.-I agree. But you cannot use water for your needs without acquiring my land, and thus -this land has a g special value for you, and you ought to pay me something extra. Purchaser.-Yes, we agree that there is a special value for us, and we will pay you a' reasonable amount for it. The determination of this value has been left, as we understand, to us in appeal as was done in Gajapatiraju's case, rather than that we should remand the case for a finding on this Issue. Unfortunately, we have to proceed by guess work ; we think, taking into consideration the rate as, 3,00,000 gallons per day, and the unknown elements of fine and non-agricultural assessment, and the fact that a drought rate of six annas per thousand gallons was demanded from the Municipality and the cost of conducting the water, that we should award a lump sum of Rs. 12,000 a year as the proper value ; this being slightly under two annas per thousand gallons. The other main question in appeal is whether this liability before partition should be cast upon the Union of India or the Republic of Pakistan. In section 9 (1) of the Indian. Independence Act it was provided: "The Governor-General shall by order make such provision as appears to him to be necessary or expedient (b) for dividing between the new Dominions, and between the new Provinces to be constituted under this Act the powers, rights, property, duties and liabilities of the Governor-General in Council or, as the case may be, of the relevant Provinces which, under this Act are to cease to exist." The Governor-General accordingly made the Indian Independence (Rights, Property and Liabilities) Order, 1947. Under section 4, all land which immediately before the appointed day is vested in His Majesty for the purposes of the Governor-General in Council shall on that day. (a) in the case of land situated in India be under the control of the Dominion of India ; (b) in the case of land situated i& Pakistan be under the control of the Dominion of Pakistan. Land, by definition, included immovable property of every kind and any rights, in, or over such property. The provisions of Article 4 applied in relation to all goods, coins, bank notes and currency notes, which immediately before the appointed day were vested in His Majesty for the purposes of the Governor-General in Council. Article 7 provided that, subject to the provisions of this Order relating to certain contractual rights, all other property should vest in His Majesty for the joint purposes of the two Dominions. Article 8 then dealt with contracts and provided that if a contract was for purposes which as from the appointed day were exclusively purposes of the Dominion of Pakistan, then it shall be deemed to have been made on behalf of the 'Dominion of Pakistan, but in other cases deemed to have been made on behalf of the Dominion of India, and all rights and liabilities which had accrued or might accrue under any such contract shall be rights or liabilities of the Dominion of Pakistan or India as the case might be. In sub-Article (6) it was stated, "The provisions of this Article shall have effect subject to the provisions of article 9 of this Order ; and bank balance and securities shall notwithstanding that they partake of the nature of contractual rights, be dealt with as property to which Article 7 of the Order applies. Article 9 dealt with all liabilities in respect of such loans, guarantees and other financial obligations of the Governor-General in Council as are outstanding immediately before the appointed day, and provided that in the case of liabilities of the Governor-General they should be liabilities of the Dominion of India. Then we have article 10 regarding any liability in respect of actionable wrong other than breach of contract, and this liability, where the cause of action arose wholly within the territories of India or Pakistan, was to be a liability of that Dominion, and in any other case was to be a joint liability of the Dominions. Article 11 dealt specifically with pensions. Article 12 provided, where immediately before the appointed day the Governor-General in Council is a party to any legal proceeding with respect to any property, rights or liabilities transferred by this Order,' the Dominion which succeeds to the property, rights or liabilities in accordance with the provisions of this Order, shall be deemed to be substituted for the Governor-General as a party to those proceedings. Finally Article 13 provided that where by virtue of the preceding provisions of this Order either of the Dominions become subject to any liability and it is just and equitable that a contribution towards that liability should be made by the other Dominion, the other Dominion shall make to the Dominion primarily subject to the liability such contribution in, respect thereof, as in default of agreement may be determined by the Arbitral Tribunal. It was argued by the Attorney General that the words in Article 9 "other financial obligations" governed this case. The argument ran that in this case for the period before the appointed day we .are concerned only with the amount of compensation. This was not a question of property, nor was it a question of contract, nor was it a question of an actionable wrong, and hence the only possible provision of the order that could apply was contained in the words "other financial obligations". The reply on behalf of the Union of India to this argument was that Article 9 is an exception , to the provisions of Article 8; secondly, that the words "other financial obligations" must be read ejusdem generis with loans and guarantees. As we read sub-Article (6) of Article 8 we consider that its purpose is to except loans, guarantees' and other financial obligations from the provisions of Article 8 in so far as they relate to contractual obligations, and to make it clear that the provisions in Article 9 are to override the provisions in Article

8. It is not decisive of the question whether loans, guarantees and other financial obligations are exclusively con tractual obligations. But on the second point we consider that Mr. Jamiatrai's argument is correct. The wording "all liabilities in respect of such loans, guarantees and other financial obligations" appears to have been taken from section 178 of the Govern ment of India Act, 1935. In section 177 of that Act it was provided, "without prejudice to the special provisions of the next succeeding section relating to loans, guarantees and other financial obligations, any contract made . . . . . on behalf of the Secretary of State shall . . . . . if it was made for purpose which will . . . be purposes of the Govern ment of a Province, have effect as if it had been made on behalf of that Province ; and (b) in any other case have effect as if it had been made on behalf of the Federation." It is true that in section 178 the loans, guarantees and other financial obligations were such as were secured on the revenues of India, but we think that Article 9 of the Governor-General's Order was dealing with the same kinds of financial obligations, namely, State borrowings, such as Indian Government securities, or promissory notes, and guarantees of private railways.' We do not think that the liability in the present case can fall under Article

9. We are fortified in this opinion by State of West Bengal v. Serajuddin (A I R 1954 S C 193). That was a suit for arrears of rent and the Advocate General had contended that the liability to pay rent came within the exception "other financial obligations". The Supreme Court said that to accept this argument would be to rob Article 8 of practically the whole of its content excepting claims for injunction or specific performance of the contract or the like." It continued, "This difficulty does not arise if the expression be construed "ejusdem generis", for so construed it implies an obligation in the nature of an obligation in respect of loans and guarantees incurred or undertaken by the State". They continued, "those expressions did not refer to all and sundry pecuniary obligations of the State arising out of contracts of every description. The loans and guarantees there referred to meant special kinds of contracts relating to State loans and State guarantees. In that context 'financial obligations' would mean obligations arising out of arrangement or agreements relating to State Finance such as distribution of revenue, the obligation to grant financial assistance by the Union to any State or the obliga tion of a State to make contributions and the like. In A I R 1956 S C 71 (?) this ruling was followed. The question therefore arises whether the present case can be brought under the provisions of any article. The liability was not contractual nor do we think that any actionable wrong had been committed, and we have held that Article 9 does not ' apply. The Supreme Court of India considered that the residuary Article was Article 10, namely, actionable wrong and certainly we think that these words are wide enough to embrace a breach of statutory duty. In the present case, however, all that was referred to the Arbitrator was the determination of compensation and that is the only matter in the appeal before us. This is not a suit to enforce payment of compensation withheld, and we cannot see that the determination of what amount of com pensation should be paid involves a question whether any actionable wrong has been committed. We think, however, that Article 12 of the Order provides a clue to the solution of the question. We think that this appeal is a legal proceeding with respect to property transferred by the Order. The property has automatically been transferred to the control of Pakistan. The question of the amount of com pensation whether before or after the appointed day has respect to the property, and therefore the Government of Pakistan is, according to Article 12 deemed to be substituted for the Governor-General in Council. It is of course arguable that the mere substitution of a party does not determine his liability. But Article 12 appears to postulate that the Dominion which is substituted is the Dominion which is liable. We think, however, that the question which Dominion is liable to pay the amount of compensation awarded by the Arbitrator and by us is not a Matter which it is necessary for us to decide. That matter may be decided when proceedings are taken, if necessary to enforce the award. The appellant claims interest upon the amount due. But this was not claimed in his statement of claims before the Arbitrator, nor was it claimed in the appeal. An amendment to the appeal was granted, but we do not think that the prayer should be allowed. Section 23 (1) of the Land Acquisition Act does not mention interest and the only question referred to the arbitrator and thus before us in appeal was determination of the compensation, and in determining this the Arbitrator was to have regard to the provisions of subsection (1) of section

23. We think that the, reference to one section only of the Land Acquisition Act impliedly excludes reference to other provisions of the Land Acquisition Act. Whether in proceedings to enforce the award the applicant will be entitled to claim interest either in respect of the amount originally awarded or the extra amount which we have awarded is a question on which we express no opinion. The Arbitrator had claimed fees, but the notification had said that the question of honorarium to be paid to Mr. Thadani would be decided later ; we are informed that he was in fact paid his fees. As regards costs of the appeal it is true that the appellant made an exaggerated claim, but this did not involve payment of correspondingly High Court fees : furthermore at the hearing the appellant reduced his claim practically to what we have awarded. The Government of Pakistan should pay the costs of appellant of the appeal. As between the Govern ments of Pakistan and India there will he no order as to costs. A.H. Order accordingly.