1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION LAR NO. 27 OF 1991 WITH LAR NO. 3 OF 1992 WITH LAR NO. 4 OF 1992 LAR NO. 27 OF 1991 The Special Land Acquisition Officer. (MHADA). .. Petitioner. And Scindia Workshop Ltd., and others .. Claimants. And Company Secretary, Mazgaon Dock Ltd., .. Acquiring Body. Mr. S.R. Simhan with S.K. Chari i/by Parikh & Co. for Claimant No. 1. Mr. C.M. Korde with Milind Jadhav for BPT. Ms. Geeta Shastri for SLAO. WITH LAR NO. 3 OF 1992 2 The Special Land Acquisition Officer. (MHADA). .. Petitioner. And Scindia Workshop Ltd., and others .. Claimants. And Company Secretary, Mazgaon Dock Ltd., .. Acquiring Body. Mr. S.R. Simhan with S.K. Chari i/by Parikh & Co. for Claimant No. 1. Mr. C.M. Korde with Milind Jadhav for BPT. Ms. Geeta Shastri for SLAO. WITH LAR NO. 4 OF 1992 IN LAQ 362 The Special Land Acquisition Officer. (MHADA). .. Petitioner. And Scindia Workshop Ltd., and others .. Claimants. And Company Secretary, Mazgaon Dock Ltd., .. Acquiring Body. 3 Mr. S.R. Simhan with S.K. Chari i/by Parikh & Co. for Claimant No. 1. Mr. C.M. Korde with Milind Jadhav for BPT. Ms. Geeta Shastri for SLAO. CORAM : S.U. KAMDAR, J. DATE: 20TH OCTOBER, 2005. ORAL JUDGMENT : 1. These three land acquisition references are in respect of acquisition of the same land and are thus disposed of by the common judgment. 2. Some of the material facts, briefly enumerated are as under :- 3. The subject matter of the land which is under acquisition in the present case is land bearing no. 3/2, 4/2, 427, 835 and 836 of Mouze Division at Kurla. The said land has been acquired for expansion of Mazgaon Dock Limited for defence purpose. A notification was issued under section 4 of the Land Acquisition Act bearing No. LAQ DESK-1/D.1/2627/CR-161 dated 17.5.1988 which was published in the Maharashtra Government Gazette on 4 26.5.1988 inter alia proposing the acquisition of land for public purpose of expansion of Mazgaon Docks. Section 6 notification was issued by notification bearing no. LAQ/DESK/1/B 1/CR/195 dated 24.5.1989 which was published in the Maharashtra Government Gazette on 25.5.1989. 4. A proposal was forwarded on 13.4.2000 by the Acquiring Body which is Mazgaon Docks Limited to the Additional Collector, Bombay Suburban District for acquisition of the said land. The area of 22073.73 sq mts. forming part of the aforesaid four C.T.S. Nos. was proposed to be acquired. In respect of the said land, the Bombay Port Trust is claiming to be the owner whereas the claimant no. 1 i.e. Scindia Works Limited is claiming to be the lessee of the substantial part of the land and owner in respect of four small portions of the land. The State Government had also initially staked claim as an owner in respect of the said property. The Land Acquisition Officer has given his award dated 29.5.1991. Thereafter an amended award came to be passed on 25.6.1991 bifurcating therein the awarded amount between claimant no. 1 namely Scindia Works Limited as a lessee and the claim of the Bombay Port Trust as the owners of the land. The Claimant No. 1, namely Scindia Works Limited has filed a reference under section 18 of the Land Acquisition Act for enhancement of the amount. The claimant no. 5 2 namely Board of Trustees of the Port of Bombay has also filed a reference under section 18 of the Land Acquisition Act for enhancement of the amount. The State Government has filed a reference under section 30 of the Land Acquisition Act inter alia contending that the apportionment of the compensation has been wrongly shown between the claimant no. 1 and 2 and the State Government has also raised claim in the said compensation as owner thereof. Thus, the State Government’s rights are also required to be determined under section 30 of the Land Acquisition Act. 5. On behalf of claimant no. 1 two witnesses are examined. One Mr. Kirit Shyamlal Choksi and thereafter one Mr. Vinit R. Shah, the valuer in support of his claim. No witnesses are produced either by the Bombay Port Trust, State Government or the SLAO in support of their claims. The Bombay Port Trust relied upon the evidence of the same valuer for the purpose of enhancement of compensation under section 18 of the Land Acquisition Act. 6. The land which is the subject matter of acquisition had a workshop belonging to the claimant no. 1. The said workshop was situated on the open plot of land adjacent to Mazgaon Docks. The said work shop had three RCC structures, various steel 6 structures as well as plant and machineries which are situated thereon. The land is acquired along with the said RCC structures. It is the case of the acquiring body - Mazgaon Docks Limited as well as the State Government and SLAO that the plant and machinery were in fact not a subject matter of acquisition but the same were taken over at the instance of the claimant no. 1 and compensation was paid for the same. The claimant no. 1 has produced a compilation of documents being Exhibit C-1-A to C-1-F. Briefly speaking the said documents pertain to various correspondence between Mazgaon Dock and the State Government which has been exchanged prior to the acquisition. The second compilation C-1-G to C-1-M which is in the form of notification, reply of the claimant no. 1, claim lodged by the claimant no. 1 with the Land Acquisition Officer minutes and the hearing before the Collector, correspondence as well as the award and the amended award passed by the authorities. 7. In the Examination-in-Chief the deponent Kirit Chokshi has deposed that he has been Director of the Company and as such being aware of the facts deposing in the present proceedings. It has been his case that Scindia Works Limited is wholly owned subsidiary company of the company known as Scindia Steam Navigation Company Limited. He has deposed that the earlier the company was known as Bombay 7 Steam Navigation Co. (1939) Ltd. and the company was inter alia engaged in the activities of shipping and ship repairs. It was deposed that the company was in business for about 52 years before the said Company was proposed to be taken over by the Government. In so far as the land is concerned, in the deposition the claimant no. 1 states that the total holding of the claimant no. 1 was 22073.73 sq. meters = 26312.53 sq. yards. According to claimant no. 1, out of the aforesaid holding 2851.46 sq. meters = approximately 3399.20 sq. yards) was free hold and remaining area admeasuring 19222.27 sq. meters = approximately 22913.33 sq. yards was lease hold land held by the claimant no. 1. It is the case of the claimant No.1 that earlier Laughton’s Survey Numbers in five City survey Numbers have been changed and details thereof are set out at page no. 169 of the compilation. It has been also the case of the claimant no. 1 that the lease was of long durations i.e. from 50 years to 99 years and all the leases were subsisting on the date of acquisition of the said land with further option of renewal for a long duration and thus the land was in the nature of a long lease hold tenures which is as good as freehold. According to the claimants, there were 19 sheds in respect of the said land and there were no permanent structures in respect of the said land. There were facilities such as under-ground fire fighting water storage 8 tank, under-ground water storage tank, well-laid-out internal roads, well built compound wall. According to claimant no. 1 at the relevant time the company was working with full force and all the 700 employees work-force was in employment. According to claimant no. 1, the company was also catering to the business of other national and international shipping companies apart from carrying on the repair in their workshop for Shipping Corporation of India and the defence. According to the claimant no. 1 there was a proposal that the claimant no. 1 may be acquired as a going concern by the Mazgaon Dock Limited and detailed negotiations were also carried on for the same. It is his case that even a valuation was also arrived at for the purpose of taking over of the company by the Mazgaon Dock Ltd., It is the claimant no.1’s case that in breach of the aforesaid understanding arrived at by and between the parties the government resorted to power of acquisition solely with a view that the full price should not be paid to the claimant no. 1 for its assets. He has also produced certain correspondence in support of his case. According to the claimant no. 1 though the valuation report was prepared, the Mazgaon Dock Limited did not forward any valuation report. The said valuation report was prepared by one Messrs J.B. Boda Offshore Surveyors and Adjusters Ltd. However, he has deposed that in breach of the aforesaid understanding, a 9 notification was issued by the Land Acquisition Officer on 5.7.1988 and land was proposed to be acquired for the aforesaid defence purpose of expanding Mazgaon Docks and ultimately an award has been passed. According to claimant no. 1, he has filed the valuation report prepared by Messrs. G.P. Engineering Services, Government approved valuer before the Land Acquisition Officer. However, he has ignored the same and awarded very ridiculously small amount of compensation and, therefore, he has filed a claim reference under section 18 of the said Act. He has also claimed solatium at the rate of 15% and interest at the rate of 12%. It is also the case of the claimant no. 1 that he is the holder of all the documents of title in respect of the said property and tenure of lease and, thus, he is entitled to a larger portion of the compensation to his share in respect of the lease hold land and entire compensation in respect of the free hold land. Thus, according to the claimant no. 1 he is entitled to higher amount of market value and also entire claim of compensation in respect of free hold land held by him. In his cross-examination the said deponent has produced a letter dated 28.10.1987. There is an objection raised by the learned Advocate appearing for the State Government. The said document Exhibit C-1-A, C-1-B, C-1-C, C-1-D are marked as exhibits however subject to the objection of Shri Rajguru that C-1-A is not proved. A 10 valuation report has been also marked subject to the proof of evidence. Two crucial letters, namely, letter dated 28.1.1991 and 31.1.1991 were produced along with annexure marked Exh. C-1-I, and C-1-J. However, when the said letters were tendered by Mr. Simhan in the course of his examination-in-chief, an objection has been raised by the Acquiring Body that the documents which are produced along with the letters are not proved. The said letters along with annexures pertain to the record of Income Tax Authorities wherein the authorities have given sanction in respect of two sale transactions in the same area under Section 269 UC of the Income Tax Act. The learned Judge while ruling on the objection has held that the said documents are taken on record tentatively and not as proved documents. The said ruling was given by relying upon a judgment of the Apex Court in the case of Bipin Shantilal Panchal vs. State of Gujarat reported in AIR 2001 S.C. 1158. However, it is clarified by the learned Judge while giving the said ruling as under :- "It is clarified that the counsel shall be entitled to cross-examine the witness on these documents without prejudice to their contentions that the documents have not been proved." The aforesaid letters have been relied upon by the 11 claimants to establish higher market value of the said land under acquisition. The witness of the claimant no. 1, Mr. Choksi was thereafter cross-examined by the various parties. The witness has in his cross-examination by the Acquiring Body deposed that the acquired land is not situated in dock area of the Bombay Port Trust. It has also been deposed that the said land is not by wall separated by the Bombay Port Trust. Claimant No. 1 has admitted in his cross-examination that the company was not the profit making company in the year 1988-89 and the company was interested in disposing of its assets as a going concern and the directors and the shareholders of the company were interested in selling their shares. It has also been deposed by the Claimant No. 1 that Mr. V.N. Parekh was appointed as a receiver by the Government of India in respect of the properties of Scindia Steam Navigation Ltd., under the Shipping Development Fund Committee (Abolition) Act, 1986. A detailed cross-examination has been conducted in respect of the negotiations which has been relied upon by the claimant no. 1. He has deposed that the property was free of encumbrances and mortgages. He has deposed that the equitable mortgage which has been mentioned in Exhibit C-H was never created in respect of the said property for which amount was borrowed by the claimant no. 1 from the Bank of Baroda and there was only an agreement to create an 12 equitable mortgage. However, the deponent has thereafter corrected himself by admitting that English mortgage is not created but an equitable mortgage was created in respect of the said property. It is also admitted that the equitable mortgage has not been redeemed as on the date of the acquisition of the said land. Thus, the land was encumbered. 8. It is also admitted that the shares of the company were listed. The issued subscribed and paid up capital of the Claimant No. 1 was Rs. 24,00,000/- comprising of 24,000 equity shares of Rs. 100/- each. It has been deposed that the claimant did not wish to sell only the property of the company but they were interested to sell the entire company as a going concerned to raise higher amount for the said properties. He has however deposed that he is not aware of the fact that permission was required to be taken from the lessor of the lands for disposing of the said land. He has denied that there was any restriction regarding user of the said land or access to the acquired lands and, therefore, valuation of the said property has to be the lesser amount than the actual market price of the said land in the open market. However, he has deposed in his cross-examination that the entire portion of land admeasuring 906.77 square yards was a free hold land and the same is forming part of the 13 acquired land. He has thereafter explained in detail that the portion of the land is a free hold land because it was forming the part of the quit and ground rent tenure. He has been thereafter further cross-examined about the different survey numbers and whether the said land forms part of the lease hold land or part of the free hold land. The learned counsel appearing for the Board has tried to suggest that in fact the entire land which is acquired is the lease hold land and not the free hold land. However, in the cross-examination, the witness categorically deposed as under :- "I do not agree that none of the acquired plots form part of free hold land and that it is only the leasehold land which is acquired." In so far as structures are concerned, in the cross-examination he has admitted that out of the 22 structures on the acquired land only three were RCC structures and others were not. The claimant no. 1 has also admitted that there was a loan advanced by the Bank of Baroda of a sum of Rs. 1,22,46,404.23. In the cross-examination which was conducted by Mr. Rajguru on behalf of the SLAO he has also admitted that out of 22, 19 structures were of steel glader. In so far as correction of survey numbers is concerned, the witness has deposed in his 14 cross-examination that he is not in a position to state when the present survey numbers were given in respect of free hold land. He has further deposed that the claimant no. 1 did not redeem the land from the quit and ground rent tenure to free hold land tenure. However, he submitted that purchase of the land by the claimant no. 1 was on the basis of the quit and ground rent tenure which means that the land is not lease hold but the free hold land. This is in gist the evidence of the claimant no. 1. 9. The valuer, Mr. Vinit R. Shah was thereafter examined. He is the valuer who has prepared the valuation report which was filed before the SLAO in respect of the land, building, plant and machinery. In his evidence-in-chief he has deposed that he is the government approved valuer and he is specialised in valuation of both movable and immovable properties. He has further deposed that he has evaluated all the assets of the acquired land and the property is evaluated on the basis of fair market value and comparable instances of sale are taken as guidelines. According to him, the value of the land was Rs.32,28,00,000/-. The said valuation was done according to the valuer on 26.5.1988 being the date of notification under section 4 of the Land Acquisition Act, 1894. The land is evaluated on the basis of sq. mtrs. and the lease hold interest is evaluated on the basis of the deed of lease 15 submitted by the claimant no. 1 and taking into consideration that the lease is for a long duration of 99 years with the renewal clause. He has also deposed that he has not provided for solatium and interest as provided under the Land Acquisition Act in his valuation report. This was because, according to him, it can be ascertained only after the SLAO given his finding on the valuation report. He has further deposed that after proper consideration, the value of land according to him can be fixed at Rs. 1,59,42,000/- and he has also further considered the status of miscellaneous items and valued the same at Rs. 12,50,000/-. He has further deposed that the award passed by the SLAO is not correct. He has deposed that the SLAO has not taken into consideration the difference between the free hold land and the lease hold land and this is a serious error. He has also deposed that the SLAO has totally ignored the valuation report and has given valuation on the basis of his own ipse dixit. According to him, the instances compared by the SLAO are not at all comparable instances and the rate of Rs. 270/- per sq. meter is absolutely baseless. He has further deposed that the SLAO has not considered expert opinion and has arrived at totally unrelated figures on the facts and principles which are irrelevant. He has also deposed that the valuation of the building is also erroneous and incorrect. He has deposed that the rejection of the 16 19 valuable structures from computation of compensation is without any merit and baseless. He has ultimately deposed that the valuation of the buildings as well as the land is based on a totally erroneous principles. Even a depreciation value shown in respect of the buildings is also baseless and contrary to the well settled principles of valuation. He has deposed that he has considered the value of two RCC structures on the basis of the market value of the construction costs as on the date of the acquisition. In so far as the plant and machinery is also concerned, he has deposed that the reason given by the SLAO is totally erroneous. The said valuer has thereafter been cross-examined firstly by the Acquiring Body. In his cross-examination he has admitted that the acquired land is located towards the seaward side of Dockyard Road and there is no comparable land available on seaward side of the said road. He has also admitted that at the relevant time the land was designated for industrial development in the development plan. He has also admitted in his cross-examination that the land which is acquired was bounded by Mazgaon Dock on both the sides of the land. However, he denied the knowledge that any portion of the land was designated as a prohibited area. He admitted that if the land is in the prohibited area then the valuation could be severely affected. He has further admitted that he has not taken into 17 consideration that there is an existing jetty on the acquired land for the purpose of valuation. He has deposed that he has taken into consideration the valuation of the land on the principle of general industrial user of the said land in industrial zone. He says that as far as valuation is concerned, I have not distinguished between ship repair and general industrial user because it is the purchaser to decide what is the land he wants to use for. He has also admitted that he has submitted his valuation report to M/s. G.P. Engineering Services Limited who has in turn submitted the report to the Scindia Workshop Ltd., and to this Court in the present proceedings. He has admitted in his evidence that the SLAO directed the claimant no. 1 to remove all steel structures and sheds erected on the land including three RCC structures but inspite of the same he has taken the valuation of the said sheds into account while preparing the valuation report. He has also admitted that if the steel structures are not taken into consideration, then to that extent the valuation report will be required to be changed. He has also admitted that the steel sheds which were lying on the said land were removable and were not of the nature of permanent structures. Thereafter the witness was also cross-examined by the claimant no. 2. He has deposed in his evidence in cross-examination of the claimant no. 2 that he has taken the value of the 18 plot of land as 90% of the free hold land i.e. he has taken into account share of compensation as 90% of the total compensation for lessee and balance 10% for lessor/owner. He has deposed that he has done the said assessment after going through the documents of lease deeds. He has stated that he has taken into consideration the aforesaid ratio on the basis of the material supplied by the claimant no. 1 to him. He has also admitted that the figure of 90% and 10% of apportionment of amount of compensation between the lessee and lessor is decided on the basis of his subjective satisfaction. He has also deposed in his evidence that it is not possible for him to identify the land which is lease hold and the land which is free hold. 10. Thereafter Mr. Sayyed for G.P. Engineering Service also filed an affidavit of evidence. In his evidence he has admitted that he is the proprietor of G.P. Engineering Services and he entrusted the work of valuation to Mr. V.R. Shah. Mr. Sen has cross-examined the witness of claimant no. 2 i.e. valuer Mr. V.R. Shah. In his cross-examination of the acquiring body he has admitted that he has calculated the said claim on the basis of buildable area and its market value. He has further admitted that he has taken into account the rate of 844.40 per sq. ft. as a rate only in respect of the land an not in respect of the buildable area. The said 19 rate he has calculated on the basis of the buildable area available in respect of the said land and has arrived at the