' TANZIL-UR-REHMAN, J.--This is a Miscellaneous Appeal under section 18(1)(f) of the Defence of Pakistan Ordinance, 1965 (hereinafter referred to as 'the Ordinance') against the award, dated 20th June, 1972 given by the sole Arbitrator, appointed by the respondent as provided by section 18(1)(b) of the Ordinance.
2. The facts giving rise to this appeal are that the appellants had been carrying on business of ship-building, ship-repairs, construction of steel tanks and a steel re-rolling mill on a plot of land measuring 16,216.81 sq. yards at West Wharf, Karachi. The land on which the appellants had been carrying on their business had been on lease granted to them by the Karachi Port Trust under a lease deed registered on 17-3-1948 for a period of 25 years commencing from 3rd May, 1945 and they had been paying its rental at the rate of six annas per sq. yard per annum at the relevant time.
In the said lease deed there was an option for renewal of the lease of the land for a further period of 25 years on the same terms and conditions except that the rental for the renewal period of 25 years was to be paid at the rate of eight annas per sq. yard per annum. On 18-2-1966 the Commander-in-Chief, Pakistan Navy issued a requisition order whereby all the property including land, buildings, machinery, fixtures etc. belonging to the appellants was requsitioned for Pakistan Navy. It was further provided in the said order that from the date of the issue of the Requisition Order the said property would be managed and controlled by the Commodore Superintendent, Pakistan Navy, Dockyard, West Wharf, Karachi. The appellants in response to an order dated 5-3- 1966 issued by the Commodore Superintendent terminated the service of their employees on 23-3- 1966. On 13-4-1966 the appellants were permitted to remove their machinery and equipment from the premises at their request. The re-rolling mill which had stopped functioning on 18-2-1966 was also removed from the premises in June, 1966, notwithstanding the appellant's desire to continue the re-rolling work there for sometime. Thereafter, the Commander-in-Chief of Pakistan Navy by his order dated 4-8-1966 acquired the premises of the appellants alongwith all works, buildings, structures and erections standing thereon other than machinery stores and fixtures. By another order dated 4-8-1966 passed under section 20 of the Ordinance, the property other than that which was acquired was released from requisition. Negotiations for the settlement of compensation for requisition/acquisition of the property of the appellants having failed, the Central Government by its letter dated 4-11-1966 appointed Justice (Recd.) B.Z. Kaikaus, as Arbitrator under section 18(1)(b) of the Ordinance for the assessment of compensation.
3. The appellants filed their claim for requisition as well as acquisition in the total sum of Rs.2,28,77,120.26 plus 15% market value of the land as additional compensation.
4. Both the parties led their respective evidence, oral as well as documentary. The appellants produced 15 witnesses and their evidence was recorded and exhibited as AW-1 to AW-14, while the respondents produced 19 witnesses and their evidence was recorded and exhibited as RW-1 to RW-
18. After closing the side of both parties the learned arbitrator heard the arguments at length and decided the matter vide his award dated 20-6-1972 whereby a total sum of Rs.25,86,367 was awarded to the appellants against which they have preferred this appeal.
5. At the outset, we would like to mention that the scope of this appeal, though preferred against an award, will not be limited to considerations as laid down in the Arbitration Act, 1940. This is an appeal under section 18(1)(f) of the Defence of Pakistan Ordinance, 1965. Therefore, the constraints put under the Arbitration Act, 1940, while considering an award in appeal, will not be there. It will, thus, be open to this Court to substitute its own finding as all questions of fact and law can be looked into as of First Appeal to High Court. So, the scope is much wider than an appeal against an award making it a rule of the Court, under the Arbitration Act, 1940. In this respect, reliance may be placed on a decision of this Court reported as Government of Sind v. Sind Fine Textile Mills Ltd. PLD 1983 Kar.
134.
6. Learned counsel for the appellants' Mr. Mushtaq Ahmed Memon has challenged the various findings of the learned Arbitrator in respect of the various amounts of claim. However, before considering the arguments on various items of the appellants' claim, we would first like to observe that the principles for awarding compensation against acquisition of the property under the Ordinance are governed by the provisions of subsection (1) of section 23 of the Land Acquisition Act, 1894 (hereinafter referred to as 'the Act'), in so far as the same can be made applicable to the present case, as provided by section 18(1)(e)(i) of the Ordinance itself.
7. Now, adverting to the appellants' claim for compensation, which has been bifurcated by them into two parts, it may be stated that the first part relates to the claim for requisitioning the property while the second part relates to the claim for acquisitioning the property. Again, the First Part is divided into four sections whereas the Second Part of the claim is divided into eight sections. As the learned counsel for the appellants had argued the claim itemwise, we propose to deal with it accordingly.
8. Mr. Mushtaq Ahmed Memon, to begin with item (4) of section I of the First Part of the claim, challenged the finding of the learned arbitrator regarding the claim of retrenchment benefits and gratuity paid by the appellants to the employees whose services were of less than 8 years and who had to be paid on account of termination of their services under orders of the requisitioning authority. The amount claimed under this item is Rs.2,526. The learned Arbitrator has not granted any amount for want of proper evidence. To prove the claim under this item and items of similar nature the appellants are required first to establish that there is a liability to pay the said amount to their employees and then to furnish proof that the amount has, in fact, been paid to the employees. We find that neither any agreement between the appellants and the employees has been produced nor the period of service of the said employees has been proved to establish the liability, nor any proof has been furnished that the said liability, if any, has been discharged by paying the amount to the employees. These two requirements having not been proved, the learned counsel failed to persuade us to accept this claim of the appellants. The learned counsel, however, relied on the Standing Order 12 of the Industrial and Commercial Employment (Standing Orders)
Ordinance, 1960 (Ordinance No. III of 1960). It is correct that under Standing Order 12, if the service of a permanent monthly-rated workman is terminated, he is entitled to one month's notice or one month's pay in lieu thereof. The fact, however, remains that the appellants have failed to prove that they have made any such payments to the permanent workmen. As such the learned Arbitrator, in our view, is justified in not awarding any amount with respect to the retreichmht benefits and gratuity as claimed in item 4 of section 1(a) of the First Part of the claim.
9. The appellants have also claimed a sum of Rs.90,000, under item 1 of section 1(b) of the First Part of their claim towards the loss of profit for the period of about five and a half months from 18-2- 1966 to 4-8-1966, as all activities of the re-rolling mills remained stopped during this period. In the facts and circumstances of the case, the appellant would be entitled to the loss of profits for the period in question. The learned arbitrator has, therefore, rightly held that the appellants are entitled to the profits they would have earned, had the Mills not been requisitioned. The learned arbitrator, however, did not find it necessary to record a separate finding in respect thereof and considered it alongwith the loss in section IV for requisitioning the entire concern. We would also consider it accordingly.
10. The appellants have further claimed a sum of Rs.1,63,310.57 towards expenditure incurred in connection with the shifting and re installation of re-rolling mills on its being ordered to be removed from the premises acquisitioned. They have also claimed a sum of Rs.13,675 towards salaries paid for supervision of the said shifting and re-installa tion. The learned Arbitrator has awarded a total sum of Rs.75,000 in respect of both these items. The learned counsel for the appellants has invited our attention to the evidence produced by them Exhs. AW-1/5, AW-1/6, AW-1/13 and AW-2. AW-1/5 is a certificate issued by Messrs Nariman Haider Bheemjee and Co., Chartered Accountants, certifying the amount of expenditure incurred on the item under review as Rs.2,62,971.54. Exh. AW- 1/6 is another certificate of the same firm of Chartered Accountants certifying an expenditure of Rs.13,673 towards the salaries paid for supervision of the erection of the re-rolling Mills at the new site. Exh. AW-1/13 is, again, a certificate issued by the same firm of Chartered Accountants certifying an expenditure of Rs.25,528.75 having been incurred in connection with the shifting of stores. AW-2 is the Manager, Re-rolling mills who has stated about the cost of dismantling and removal of the mills to be Rs.9,841 and the cost of installation of two furnaces to be Rs.27,833.08 each. In addition, the witness has stated to have spent Rs.97,635.92 for electric and gas fittings including the construction of sub-stations, besides the salaries for the purpose of re-installation paid to the employees in the sum of Rs.13,673 only.
The appellants, in proof of their claim, have relied on the above-said certificates issued by the Chartered Accountants. No other document has been produced by the appellants to substantiate their claim towards the expenditure of shifting and re-installation such as the vouchers and receipts of expenditure incurred, or the persons to whom the payments were made. The appellants have, no doubt, produced Mr. Aziz H. Ibrahim, Senior Assistant in Nariman Hyder Bhimji (Exh. AW-1), but his evidence does not inspire confidence as he himself having not carried out the audit was not in a position to say inter alia, that the original vouchers of the various amounts were available on the record of the appellants' company. We, therefore, do not feel inclined to accept the amount claimed by the appellants and uphold the award of Rs.75,000 as proper compensation under these items.
11. Now we take up the claim under section II of the First Part against requisitioning the property of the appellants. The learned counsel for the appellants has challenged the award of the learned Arbitrator in respect of items under Nos. (3), (4), (5), (6) and (7) of section II of the First Part of their claim, in respect of the amount of bonus, for Rs.5,370.84, retrenchment benefit for Rs.1,20,875.86, gratuity for Rs.31,543.91, Company's contribution to Provident Fund Account of workmen and employees made as a result of termination of their services before the expiry of completed 7 years service for Rs.52,177.77 and interest on the various sums disbursed by the appellants out of loan obtained at the rate of 10% per annum in the sum of Rs.58,815.89. The learned Arbitrator has not awarded any amount towards these claims.
12. The claim under the items referred to above is mainly based on the evidence of Shamsul Hach Office Superintendent of the appellants (AW-4). He has stated that the said payments were made by him to the employees and workmen. No agreement as to the payment of bonus, gratuity or provident fund has been produced in the evidence so as to bind the appellants to pay the said amounts to their employees and workmen. No person who is said to have received the said amount has been examined by the appellants except the witness named above and one Sabir Yar Khan (AW-8). AW-4 has, however, admitted that he himself received Rs.4,000 as retrenchment benefit on termination of his srvice. AW-8 has also deposed that he received Rs.19,000 as compensation on termination of his service. Besides these two amounts, no payment actually made to the employees and workmen has been proved. There is also no evidence in respect of the amount of interest paid by the appellants as alleged. Therefore, in the absence of any evidence, except to the extent stated above, in respect of two gentlemen, we see no reason to differ with the decision of the learned Arbitrator while disallowing the several claims under items 3 to 7, refered to above, except that we allow Rs.23,000 as paid to AW-4 and AW-8.
13. As regards claim for damages on account of loss of skilled workmen and trained charge-hands or mistries on account of requisition in the sum of Rs.4,75,200, as claimed in section III of the First Part, reliance has been placed by the learned counsel for the appellants on a letter issued by Lloyd's Register of Shipping (AW-8/1). There is, however, no evidence to prove that the appellants have really trained their workmen and, if so, the exact number of such workmen and the actual amount spent on them. We are afraid, general statement that the appellants trained the workmen and in all 128 workmen were in their employment at the time of requisition is not at all sufficient to prove that the appellants actually incurred the expenditure on the training of their workmen and they have suffered loss to the extent of Rs.4,75,200. The learned Arbitrator in the absence of any evidence and for the reasons given by him in the Award was justified in disallowing this claim.
14. As regards the claim under section IV of the First Part regarding rent of premises, machinery etc. and loss of profit for the period of requisition amounting to Rs.13,61,930.095, the learned Arbitrator has in all allowed a sum of Rs.2,75,000 towards loss of profit only. To deal with item (C) of section IV first, the amount of Rs.2,75,000 as awarded by the learned Arbitrator does not seem to be reasonable. The appellants claimed Rs.75,000 per month as loss of profit. Initially the amount claimed by them was Rupees two lacs and fifty thousand per month as loss of profit for the entire concern. The Government agreed to pay at the rate of Rs.75,000 per month. However, the learned Arbitrator has assessed loss of profit at the rate of Rs.50,000 per month only and has accordingly awarded Rs.2,75,000 for 5i months. The learned Arbitrator has observed that the appellants were maintaining a big workshop, constructing steel tanks, barges and moaring buoys and were running a flourishing business. Besides, they were able to sell the bonus vouchers of the value of more than nine lacs of rupees. This by itself implies a big profit for the bonus vouchers at the rate of about one hundred fifty per cent. We are, therefore, inclined to agree with the learned counsel for the appellants that the learned Arbitrator ought to have allowed Rs.75,000 per month towards loss of profits, as at one time also was agreed by the Government. We accordingly allow Rs.4,12,500 instead of Rs.2,75,000. This includes loss of profits in respect of re-rolling Mills for the requisition period.
15. Regarding the other two items as claimed under this section toward rent for the premises at the rate of Re.1 per sq. ft. and the rent for machinery at the rate of 10% of its total value for 5 1/2 months, we have already awarded Rs.75,000 per month towards loss of profit in the business which the appellants would have been able to earn by making use of the machinery and the premises in business and making profit thereon as a composite whole. We, therefore, find no justification to interfere with the finding of the learned Arbitrator in respect of these two items i.e. the rent of the premises and that of the machinery for which the appellants are not entitled to claim separately.
16. Now we come to the Second Part of the claim which is in respect of the acquisition of property.
This part of the claim has been divided into eight sections.
17. As regards the market value of the buildings and sheds etc., claimed under section 1 of the Second Part of the said claim for acquisition, the total amount has been claimed to be Rs.22,45,305.6 which comprises of Rs.7,73,101 as compensation for main building, Rs.11,12,112 for sheds, Rs.44,955 for ordinary type sheds, Rs.2,30,000 for slipways, Rs. 2,000 for boundary wall and Rs.83,037.60 for machinery foundation. As against these amounts of claims the learned Arbitrator has awarded a sum of Rs.2,91,050, for main building, Rs.3,67,980 for both types of sheds, Rs.29,520 for slipways, Rs.1,300 for boundary wall and Rs.2,400 for machinery foundation.
18. The main building consists of the ground floor and the first floor. The entire ground floor and half of the first floor was old construction whereas the remaining half of the first floor was a newly, built extension on the first floor. The learned Arbitrator has accordingly put the main building into two categories. The total covered area of the old construction for ground floor and the first floor, other than the newly-built extension on the first floor, is 13,285 sq. ft. The total cost of this building has been calculated by the appellants at the rate of Rs.35 per sq. ft. which comes to Rs.6,87,820. Out of this cost a sum of Rs.1,37,564 has been deducted by the appellants on account of depreciation calculated at the rate of 20$. The net cost has been arrived at Rs.5,50,256. The cost of new construction i.e. extension on the first floor, which consists of R.C.C. pillars and roof, too, has been calculated by the appellants at the rate of Rs.35 per sq. ft. but with no depreciation. Thus, the total claim of the appellants in respect of the main building comes to Rs.7,37,101. As against this, the learned Arbitrator has awarded a sum of Rs.2,91,050 only. It is stated in the Award that the appellants have not been able to produce, in spite of repeated requests made by the counsel for the Central Government, the books of accounts to disclose the actual cost of construction. The old part of construction was made in or about 1946, whereas the new construction was made in the year 1965-66.. In our view, for the purpose of awarding compensation under section 18 of the Ordinance what is required to be determined is the market value of the building on the date when it was acquisitioned, which has to be determined having due regard to the provision of section 23(1) of the Act, and not the original cost of construction incurred by the appellants. Therefore, the non-production of account books for the aforesaid purpose will not affect the proper determination of the amount of compensation. The market value as claimed by the appellants is supported by an evaluation certificate Exh. A.W.7/4 issued by Messrs Khan & Khan, Architects and Engineers, Karachi. Mr. Khan, AW-7 who produced this certificate, however, failed to substantiate the basis of his evaluation by other corroboratory evidence. On the other hand, the Government produced a number of witnesses on the point of market value of the building. RW-11 stated the cost of the newly-built structure on the first floor at the rate of Rs.40 per sq. ft. which, however, has not been relied on by the learned Arbitrator. RW-8 has assessed the value of the main building at the rate of Rs.35 per sq. ft., on the basis of M.E.S. rates relating to the time when the premises were requisitioned. He has deducted 50$ depreciation for the old construction. According to RW-10 the cost of construction of first class residence or office building in 1966 would range from Rs.16 per sq. ft. to Rs.25 per sq. ft. and if foreign material was used for bath rooms and electric fittings and the doors were of teakwood, it goes upto Rs.32 per sq. ft. R.W.-4 confirms the correctness of the report, R.W.-10/1 produced by R.W.-10.
19. The learned Arbitrator had also called one Iqbal All as Court witness (C.W-1) who is the Proprietor of Industrial Construction Company and has been in the business of construction of buildings for about 35 years. According to the statement of this witness the value of the ground floor was at Rs.18 per sq. ft. and the first floor at Rs.15 per sq. ft. The depreciation according to him should at least be 1/3rd. The learned Arbitrator, after considering all the evidence produced by the parties in this behalf, has assessed the ground floor at Rs.20 per sq. ft., and the first floor at Rs.15 per sq. ft. for the completed portion, and Rs.10 per sq. ft. for that portion in which there is only a roof of the first floor on R.C.C. pillars. So, according to the learned Arbitrator Rs.35 per sq. ft. for both the floors was the proper market value of a new building of the kind under discussion in 1966. The learned Arbitrator deducted 1/3rd out of the cost as depreciation excluding the newly-constructed portion. It seems that for valuation of the building the principles as laid down by the Privy Council in the case of Hari Chand v. Secretary of State AIR 1939 P C 235, have been kept in view by the learned Arbitrator.
20. As regards the sheds, they are of two types. While claiming Rs.11,12,112 for sheds, and Rs.44,955 for ordinary sheds no depreciation has been deducted by the appellants as according to the appellants' witness A.W.-7 the sheds were being renewed constantly and the roofs were being constantly replaced (for which they produced no documentary evidence). For the sheds the cost has been assessed by AW-7 at Rs.24 per sq. ft. whereas for ordinary sheds it has been assessed at the rate of Rs.15 per sq. ft. The learned Arbitrator after considering the evidence led by both the parties, assessse d the value of the sheds at Rs.18 per sq. ft. and for ordinary sheds at Rs.8 per sq. ft. and awarded a compensation of Rs.3,67,980 on account of both types of sheds. Regarding slipways, boundary wall and the machinery foundation, the learned Arbitrator has awarded amounts of compensation to be Rs.29,520, Rs.1,300 and Rs.2,400 respectively.
21. We feel that the learned Arbitrator has not determined the market value of the building etc. by direct evidence as there was no sale in the area and, perhaps, more so on account of the peculiar nature of the case. The learned Arbitrator had, therefore, no option but to fall back upon determining the cost of construction as estimated in 1966 and then deduct depreciation for the period the structure of the building remaining in existence for about twenty years. We feel that the learned Arbitrator while fixing the rate of construction of the building and sheds etc. did not take into consideration the fact that the constructions were made at the seashore 'where the costs of laying foundation is higher than the contruction made on ordinary land and so the rate of depreciation to be deducted from the cost thereof is also higher in view of the short span of life of such construction at the seashore. There was, however, no evidence before the learned Arbitrator to that aspect of the matter. It is also noticed that no cross objections have been filed by the respondent. We, therefore, maintain the various amounts of compensation as awarded by the learned Arbitrator under this section.
22. In section II of the Second Part the appellants have claimed a sum of Rs.81,26,000.60 towards market value of the land acquired. The learned Arbitrator has awarded a sum of Rs.7,00,000 therefor. Admittedly the land acquired was owned by the Karachi Port Trust who had given it on lease to the appellants which was to expire in or about 1970 renewable for further period of 25 years. So what the appellants could claim under this item was the market value of their leasehold rights for a number of years in the land which, ordinarily, should have been determined in accordance with the provisions of section 23(1) of the Act.
23. In order to prove the market value of the land in question, Mr. Mushtaq Ahmed Memon has referred to the evidence of Khawaja Saleem (AW-9/A) a Property Agent, who has stated that about 3 years ago he had brought an offer for this land at the rate of Rs.450 per sq. yard to Mr. Moula Bux but he did not agree. He has further stated that about 2 or 3 years ago he had also offered to Messrs Karachi Autos Rs.450 per sq. yard in respect of their plot of land which was also refused by them. According to him the present value of the land in that area is Rs.1,000 per sq. yard for the last 2 or 3 years. On the other hand, the respondent produced a valuation report by Messrs. Abdul Wahab & Associates, Karachi. It is, inter alia, stated in the report that the land in question consists of Part-A and Part-B. Part-A is a developed area which is measured as 5,127 sq. yards and valued at Rs.70 per sq. yard whereas Part-B has been shown as undeveloped area measuring 11,090 sq. yards valued at Rs.10 per sq. yard. The total value of the land, thus, according to that report was Rs.4,69,790.
24. The learned Arbitrator while awarding a sum of Rs.7,00,000, does not seem to have specifically relied on this evidence. He seems to have taken an overall view of a number of factors namely, the allotment of alternative land to the appellants, the loss of profit, the difference in the yearly rent of the land/acquired and allotted, and has, thus fixed an amount of compensation of Rs.7,00,000. His observations are as under:- "I have assessed profits at the rate of Rs.45,000 per month and the amount to which Carstairs would be entitled for delayed delivery of possession would in any case exceed seven lakhs which is the amount I am going to award for the difference in rent etc. I have already stated that the difference in rental is more than Rs.75,000 per year and there is also the question of access to the sea. I am of the opinion that Carstairs will be sufficiently compensated by an award to them of seven lakhs of rupees and I direct accordingly. I have assessed this amount after a consideration of what profit could be made by investment of the sum."
'The above reasoning so as to reach an award of Rs.7,00,000 to say the least, is not convincing.
What is required under law is the determination of market value of the plot acquired in terms of section 23(1) of the Act.
25. The evidence on market value of land led by the parties has been referred to above. We feel that the evidence led by the appellants is not believable, firstly, for the simple reason that it is highly improbable that in the case of a running concern any one offers for land only, and secondly, there is no independent corroboratory evidence either documentary or oral to support witness AW- 9/A. We are, however inclined to accept the evidence of valuation experts led by the respondent as Rs.70 per sq. yard for the developed area. However, his valuation at the rate of Rs.10 for the undeveloped land is extremely low. Looking to the above-said market value for the developed land we consider Rs.35 per sq. yard to be reasonable for the undeveloped land. As for potentialities and future prospects of the land, particularly the grant of permission to establish a jetty, we would like to add 50% to it, which comes to Rs.105 per sq. yard for the developed area and Rs.52.50 per sq. yard for the undeveloped area. This amounts to Rs.5,38,335 and Rs.5,82,275 respectively, thus a sum of Rs.11,20,560 for the entire-land is awarded by us instead of Rs.7,00,000.
26. As regards the claim of difference in rent in section III, Mr. Mushtaq Memon, learned counsel for the appellants, contended that the learned Arbitrator has not properly taken into consideration the difference in the amounts of rental of the land acquired by the Government and allotted to the appellants in lieu thereof. The rental of the alternative plots is Rs.6 per sq. yard per annum whereas the rental of the plot acquired was annas 6 per sq. yard per annum. Annas 12 out of Rs.6 is, however, payable for the alternative plot being rail-served. So, it can be said that the rate of rent of the alternative plot is Rs.5 and Annas 4, as against Annas 6 per sq. yard per annum which is not rail-served, for the first four years ending 1970 and Annas 8 for the period of the renewal of lease for 25 years ending 1955. The learned Arbitrator has not awarded any amount in respect of this item.
When we enquired from Mr. Mushtaq MemOn to point out to us under which clause of section 23 of the Act the claim falls he referred to clause fifthly. We are unable to agree with his contention.
Clause fifthly relates to different situation which has been taken care of while dealing with other sections pertaining to the claim. The allotment of an alternate plot to the appellants was a gesture of favour to them on account of personal efforts of the learned Arbitrator. The Karachi Port Trust was not bound to allot plot to them in the alternative. It was, however, open to the appellants not to take the alternate plot on lease. The appellants are, therefore, not entitled to the difference in the comparative rental value of the two plots as claimed under section III of their claim and more so when they have been awarded market value of the acquired plot of land, as discussed above.
27. Section IV of the claim relates to the loss of profits in business. The amount claimed by the appellants is Rs. 45,17,121 towards loss of profits from business due to acquisition, whereas the learned Arbitrator has awarded a sum of Rs. 8,10,000 on account of loss of profits estimating the loss of profits at the rate of Rs. 45,000 per month (excluding re-rolling mills) for 18 months and deducted Rs. 1,00,000 as the appellants were carrying on some other business in a shop at Queens Road. We have already noticed the volume of business including the profits earned by the appellants by the sale of bonus vouchers earned by them on export and thus making money thereon and have awarded Rs. 75,000 per month towards loss of profits, as at one time the same was also agreed by the Central Government. We think it just and proper if the loss of profits is estimated at the rate of Rs. 70,000 per month excluding the profits of the re-rolling Mills.
28. Now, the question arises as to the period for which the appellants should be held entitled to it.
The learned arbitrator seems to be conscious of the fact that "Once such a business in destroyed its rehabilitation is a difficult matter. The good-will receives a shock, the customers disappear, the routine licence from the Government will henceforth be granted only after there is a going concern.
At the same time there were great possibilities of expansion of business during the time taken in the present proceedings had there been no acquisition. Now Carstairs have to make a fresh start and expansion will be possible much later. One great difficulty in the way of rehabilitation is that capital is needed for it and the assessment and payment of compensation takes a long time. In 1966 the premises were acquired and it is difficult to say when Carstairs will be rehabilitated".
29. Learned counsel for the appellants has placed reliance on a decision of a Division Bench of erstwhile High Court of West Pakistan, Peshawar, reported as Collector, Peshawar District v. Sher Ahmad Khan PLD 1966 Pesh. 193, relevant portion whereof reads as under:- "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 Khattak, who addressed the Court, emphasised the difficulties involved in finding an equally attractive site for putting up a brick-kiln. The difficulties pointed out are indeed there and it seems to us that in the circumstances of the case a period of one 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. Muhammad Ali Qasuri himself cited two cases before us from the Indian Jurisdiction in which the learned Judges had allowed six months profits to certain shopkeepers 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."
30. It was further submitted that the learned Arbitrator ought to have allowed compensation for five years which the appellants have claimed, as establishing ship-building/repairing industry is much more time-consuming than erecting a brick-kiln, as was the nature of business in the aforesaid case. It has come in evidence that the alternative plots were ultimately offered to the appellants in the end of November 1968, whereas the land was acquired on 4-8-1966 i.e. about 28 months intervened in the acquisition of land and allotment of alternative plots. As such it will be just and proper to grant compensation for the loss of profit for 28 months, instead of 18 months, to re-establish their business. We accordingly award a sum of Rs.19,60,000 at the rate of Rs.70,000 per month (excluding re-rolling Mills) to compensate the appellants for acquisition of land, instead of Rs.8,10,000 as awarded by the learned Arbitrator, which is governed by clause fourthly of section 23(1) of the Act.
31. We also find no justification in deducting the amount of Rs.1,00,000 from the said amount as there seems to be no basis for the same in the absence of any separate evidence of profits for some small business in a shop at Queens Road.
32. We would here like to observe that compulsory acquisition of property is confiscatory in nature.
As such the Courts, while awarding compensation should be liberal and moreso where the matter of requisition or acquisition of a commercial and industrial undertaking is involved, as it badly affects the future of the commercial/industrial concern. Sometime it may take good deal of time for its rehabilitation and restoration to its original position. The right of the State to acquire property of an individual is not absolute. It is of an exceptional nature and may in a sense be taken to directly interfere with the Individual's ordinary right of volition regarding disposal of one's property, as pointed out by the Supreme Court in Province of West Pakistan v. Salimullah and others PLD 1966 SC 547 infra. Undoubtedly, the State may acquire private property in public interest, but the rightful private interest is also to be respected within permissible limits and particularly, while awarding compensation, the doctrines of 'Adl' and 'Ihsan, as propounded by Islam, is to be adhered to in an Islamic State. Since the field of the subject is occupied by statute, the Court may not have resort to the doctrine of Ihsan, but certainly it is bound to do 'Adl' though within the framework of the statute, 'Adl, as defined by classical Muslim jurists, is ills t.3 .1M'5 the placement of the thing at its place. In this case, our an&xiety has been to see that the appellants be put in the same position, as far as possible, in which they would have been if there was no acquisition.
33. Section V deals with the expenditure incurred on the removal of stores and equipment and damage caused during transportation. An amount of Rs.62,838.57 has been claimed by the appellants whereas a sum of Rs.30,000 has been awarded by the learned Arbitrator. The learned Arbitrator also observed in this regard that he was just applying the rule of thumb for lack of reliable evidence. Equally, there is no basis for us to disagree with the said amount awarded by the learned Arbitrator .
34. Section VI relates to the toss on account of deprivation of Import licences estimated to be Rs.13,39,078. The learned Arbitrator has rightly awarded nothing towards this part of the claim. We find ourselves in agreement with the reasoning of the learned Arbitrator for the same. We have already awarded Rs.75,000 per month towards loss of profits of the concern including re-rolling Mills, which has, in fact, been claimed by the appellants themselves. They are not entitled to claim for the loss of Import Licenses separately, as it is included in the overall loss of profits.
35. Section VII relates to the compensation for machinery, equipment and accessories taken over by Pakistan Navy but not returned. We agree with the learned Arbitrator that the correctness of the list of the machinery relied on by the Appellant's counsel cannot be vouchsafed.
36. We also find that the appellants have failed to prove the extent of damage so as to substantiate the amount of Rs.6,66,830.67 allegedly caused to the fixed machinery in the process of its severance from the earth etc. as claimed under section VIII. However, some damage to the machinery might have been caused in the process of shifting. The learned Arbitrator has, therefore, awarded Rs.20,000 which having not been challenged by the respondent is maintained.
37. The last item of the claim pertains to extra compensation for compulsory acquisition of the property at the rate of Rs.15% of the market value of the property acquired. Section 23(2) of the Land Acquisition Act, 1894, provides that in addition to the market value of the land, the Court shall in every case award at the rate of Rs.15 per centum on such market value, in consideration of the compulsory nature of the acquisition. The learned Arbitrator has, however, disallowed this claim.
38. It was contended by the learned counsel for the appellants that the learned Arbitrator should have awarded additional compensation at the rate of 15% of the total amount awarded. Referring to subsection (2) of ssection 23 of the Land Acquisition Act, 1984, learned counsel submitted that the 15% is a statutory allowance which is payable to the appellants over and above market value of the land which is imperative to be awarded to the appellants in consideration of the compulsory nature of the acquisition. For this submission be referred to a decision of the Supreme Court reported as Province of West Pakistan and another v. S.Salimullah and others PLD 1966 SC 547.It was a case of acquisition under Punjab Town Improvement Act. By an amendment of the said Act it was provided that section 23(2) of the Land Acquisition Act, 1984 will not be applicable. A Full Bench of the Supreme Court held that the said provision was ultra vires. Referring to section 23(1) of the Act, it was thus observed that:- "This, however, is not exhaustive of other injuries or loss which may be suffered by an owner on account of compulsory acquisition. An important constituent of ownership is the right to deal with the property in such manner as the owner may consider it to be in his interest. The owner may, for example, like to retain the property and sell it when the market value has increased. In parting with the property he is, therefore, being deprived of a right and to compensate it, the legislature has provided a uniform rate of payment at 15 per cent on market value. The proviso to sub-section (2) of section 23 of the Land Acquisition Act was, therefore, a confiscatory measure and to that extent the Punjab Town Improvement (Amendment) Act (II of 1953) was equally ultra vires of subsection
(2) of section 299 of the Government of India Act."
39. The learned Arbitrator, however, held the said claim of additional compensation at the rate of 15 per cent to be untenable as only the first subsection of section 23 of the Land Acquisition Act, 1894, has been made applicable to the proceedings under section 18 of the Defence of Pakistan Ordinance, 1965. The learned Arbitrator is of the view that if section 18 of the Defence of Pakistan Ordinance says that regard shall be had to subsection (1) of section 23 and deliberately excludes subsection (2), the obvious inference would be that subsection (2) is not to be applied, otherwise why could not the Ordinance provide that regard shall be had to the provision of section 23. The acquisition under Defence of Pakistan Ordinance being in the nature of emergency the ordinary right to 15 per cent. for compulsory acquisition was deliberately excluded. The learned Arbitrator also referred to clause (g) of subsection (1) of section 18 of the Ordinance which provides that: "Save as provided in this section and in any rule made thereunder, nothing in any law for the time being in force shall apply to an arbitration under this section."
40. We are in respectful agreement with the learned Arbitrator. The Supreme Court decision, referred to by the learned counsel for the appellants, is based on the provision of subsection (2) of section 299 of the Government of India Act, 1935 which was to the effect that neither the federal nor provincial legislature shall have power to make any law for the compulsory acquisition for public purposes of any land unless the law provides for the payment of compensation for the property acquired and either fixes the amount of the compensation or specifies the particulars and the manner in which it has to be determined. The Government of India Act was not in force at the time of the acquisition of the property in question. The provisions of the Constitution of Pakistan, 1962, as in force at the relevant time, will, however, govern the situation which, inter alia, provides that: "No property shall be compulsorily acquired or taken possession of save for a public purpose and save by the authority of law which provides for compensation thereof and either fixes the amount of compensation or specifies the principles on which and the manner in which compensation is to be determined and given." (Article 14).
41. Section 18(e)(i) of the Defence of Pakistan Ordinance, 1965, which governs this case, specifically provides that the provision of subsection (1) of section 23 of the Land Acquisition Act, 1894 (Act I of 1894), so far. as the same may be made applicable, shall apply to the acquisition proceedings. Since only subsection (1) of section 23 is made applicable to these proceedings, the provisions of subsection (2) whereof cannot be pressed into service. The case cited by the learned counsel is clearly distinguishable inasmuch as in the said case the relevant provision of the Punjab Improvement Trust Act was declared ultra vires and not section 18 of the Defence of Pakistan Ordinance, 1965. In fact, no plea was taken or argument was advanced before us by the learned counsel for the appellants about the ultra vires of the provision of section 18 of the Defence of Pakistan Ordinance, 1965, excluding the applicability of subsection (2) of section 23 of the Land Acquisition Act, 1894 for awarding compensation.
42. As discussed above, the award on the claim under items (1), (2), (3) of section I(A) and (1), (2) of section II of the First Part have not been challenged by the appellants. The award on the remaining items of the First Part and whole of the Second Part has, however, been challenged by the appellants. We, however, maintain the award of the learned Arbitrator for claim under items (4) of section I(A), items (2) and (3) of section I(B), items (3), (5), (6) and (7) under section II and section III and items (1) and (2) of section IV of the First Part of the claim. We, however, award a sum of Rs.23,000 under item (4) of section II of the First Part of the claim and raise the amount awarded under item (4) of section IV dealt with also item (1) of section 1(B) of the claim to Rs.4,12,500 from Rs.2,75,000. We, further, raise the amount of compensation from Rs.7,00,000 to Rs.11,20,560 under section II of the Second Part. We also raise the amount of compensation to Rs.19,60,000 from Rs.7,10,000 under section IV of the Second Part. Consequently, the total amount of compensation of Rs.25,86,367 as awarded by the learned Arbitrator is raised to the amount of Rs.44,17,427 as against the amount of Rs.2,28,77,120.26 claimed by the appellants.
43. In the result, the appeal is partly accepted to the extent stated above. The parties will, however, bear their own costs.