1. The matter here concerns the house known as 'Ajit Villa' on College Road; Civil Lines; Ludhiaho.
2. On May 18, 1959 'Ajit Villa' was requisitioned under sub-section (2) o! Section S of the Punjab Requisitioning and Acquisition of Immovable Property. Act; 1953 (hereinafter referred to. as `the Ar Yl. It' had been requisitioned for Government Girls High School which functioned in this building thereafter until January 5, 1978, when possession r there was handed back to the owners' concerned upon its requisition by the: order of the District Magistrate, Ludhiana of December 17, 1977.
3. The controversy now raised is with referred to the compensation payable in contract the damage caused to the building of 'Ajit Villa' during the period of is requisition.
4. According to the owners of 'Ajit Villa' the building had been rendered beyond repair by the damage caused to it. d.: i.a the period that it remained under requisition consequently it required. to the reconstructed anew to restore it to it original state. The cost of such reconstruction was said to be Rs. 10 lacs and the, was thus the amount claimed as compensation.
5. The respondent-State of Punjab on the other hand while conceding that there had been some damage to the building. did not accept the claim that it required construction. The damage to the. building was assessed by it to be to !he tune of 'Rs. 53,000/- and.
6. In order to determine the compensation payable in this case, the Senior Subordinate Judge, Ludhiana Sh. P. K. Garr;. was appointed the Arbitrator by a notification issued by the Punjab ' Government on July 18, 1978 "for the purpose of making an award determining the amount of compensation payable under sub-clause (iv) of Clause (b) of sub-section (2) of Section 8 of the d Ac!.." This provision of law reads as 1 under:-j
"damages (other than normal wear and tear) caused to the property during the period of requisition, including the. expenses that may have to be incurred In-restoring the property to the condition in which it was at the time of requisition."
7. The Arbitrator found that building. was of 'A' Class construction and in a very good condition when it was requisitioned but on account of the damage caused in it during the period of its. requisition only the reconstruction thereof could restore it in its original condition. The amount awarded as compensation however, was calculated on the basis of double the price of the building on the date of its requisition which worked out to Rs. 2,76,9341-. This was thus the amount awarded as compensation.
8. In appeal, there was no serious challenge to the finding of the Arbitrator regarding the condition of building at the time when it was requisitioned in 1959 and then in 1978 when it was derequisitioned. There is indeed overwhelming evidence on record to sustain these findings.
9. As regards the condition of the building at the time ',when it was requisitioned, it is pertinent to note at thc very ;outset that it was never the stand of thc respondent-State that the condition of the building was in any manner sub-standard or defective. The only evidence with regard to damage to this building was the order of the District Magistrate, Ludhiana under Section 5(2) of the Act (Exhibit P/27), calling upon the owner to carry out some repairs as mentioned in the schedule thereto. These repairs were of a very minor nature which can by no means to be construed to suggest any flaw or defect in the building as such. In 1960 when Sh. B. L. Mago, the Senior Subordinate Judge, Ludhiana, had inspected this building as Arbitrator, recorded in his inspection report that the house was.well built. The owners placed on record the affidavits of a number of persons who had occasion to sec the building in or around 7959. The deposition in all these affidavits supports the stand of the owners that the building was indeed in a very good condition at that time. There is no evidence forthcoming from the side of the respondent State to controvert this.. Indeed D.W. 1 Mr Gutnam Singh, Executive Engineer himself deposed that the building was of 'A' Class construction. There can thus be no manner of doubt that the building was in a very. good condition at the time when it was requisitioned.
10. Turning next to the condition of the building at the time when it was derequisitioned. we have it,m record that no amount was pertinent on this building by the: respondent State despite. The fact that the remained with it almost 18 years. What is more other than the minor repairs that the owners were required to carry out by the order P. 27 there is no material on record to suggest that the owners were even intimated any defect in the building or that they were called upon to make any repairs inspect thereof. There is, on the other hand, across of evidence to show the poor state of building when it was handed over to the owners. The most important item here is the inspection report of the Arbitrator himself. This report of his inspection is of March 27, 1979. There are then the reports of the two assessors appointed by the parties to assist tae Arbitrator in the matter., These reports too bring out the nature and extent of the damage caused to the building, leaving no doubt that the damage caused to it was of a permanent nature which no amount of repairs could rectify and thus reconstruction was the only manner in which it could be restored to its original state.
11. Next to note is the report of the Sub-Divisional Engineer (Exhibit P/39) listing out the causes of the damage to the building. These being:
(i) Blocking of rain water spout (Parnalas) as a result of which the rain water seeped into the roof and walls causing damage to them.
(ii) Peepal Plants (4' to 6' height) growing in the walls and roofs causing damage to them.
(iii) The 'movement of heavy articles like furniture etc. on the floors of rooms end varandahs.
(iv) Fixing of gutties for hanging of blackboards and Charts etc."
12. It is apparent, therefore, that the damage caused to the building was not attributable to normal wear and tear, but was due to the gross neglect of the building in the matter of its maintenance for which again the blame must lie wholly upon the respondent-State.
13. Having arrived at the conclusion that the building was in good condition when requisitioned and it was due to poor maintenance that it had suffered permanent damage so much so that reconstruction thereof alone could restore it to its original condition, the Arbitrator, went on to assess the cost of such reconstruction which the owners could claim. This must worked out at Rupees 6,62,000/-, but having done so the Arbitrator proceeded then to award compensation to the owners as computed under Clause (b) of sub-section (4) of Section 8 of the Act in terms of which the maximum compensation payable is twice the price of the requisitioned property at the time, when it was requisitioned, to the Present date. the Price of building in 1959 was found to he Rupees 1,38,467/- and consequently a sum of Rs. 2,76,954/- was awarded as compensation. This is where the Arbitrator fell in error. Computation of compensation on this basis can no finger be sustained. Clause (b) of sub-section (4) of Section 8 of the Act was held to be ultra vires by the Division Bench of this Court in Ganclharav Sain v. Punjab State, 1973 Pun LJ 231. To holding so, the earlier judgment of the Supreme Court in Union of India v. Kamalabai Harjiwandas Parekh, (1968) 1 SCR 463: (AIR 1968 SC 377) was followed where a similar' provision in the Central Act was held to be ultra vires. It follows, therefore, that what the owners are entitled to in the present case is just compensation for the loss suffered by them.
14. The just compensation Payable in the present case cannot, but be taken to be the amount required to restore the building to its original state, in other grounds the estimated cost of construction minus depreciation. This would be in consonance with what was stated in Hari Chand v. Secy. of State, AIR 1939 PC 235 where it was observed; "where the subject to be valued is a building apart from site, the principle of fixing value by ascertaining the cost of reproducing the building at the present time and then allowing for depreciation in consideration of the age of the building and for the costs of such repairs as might be required apart from depreciation, is quite a well-known and recognised method of valuing building for the purpose of compensation."
15. There are on record two estimates of the cost of reconstruction of the building, one by Shri S. P. Khanna. Architect and the other by Shri Malkiat Singh, Executive Engineer, The Arbitrator accepted that of Shri Malkiat Singh, according to which the estimated cost for reconstruction worked out to br Rs. 10.3,.927/-. It was the view of the assessors that this estimate was by and large correct subject to variation of 10 per cent on either aide. The Arbitrator subsequently allowed a deduction of' t0 rx r cent on this account. The amount of 20 Per cent extra labour as shown in this estimate was also questioned by the assessors appointed by the respondent-State, The Arbitrator upheld this objection too and deducted 20 per cent from the estimate on this account. Deducting these amounts the cost of construction was: taken. to. be Rs, 9,92;00P/-,. Further keeping in view the fact that the building had. been constructed in 1945: and thereby,it was over 32 years old at the 'time when.it was derequisitioned, depreciation was taken.to be 33 per cent and on this basis the cost of construction which estimated at Rupees 8,62,000/-.
16. There was no challenge in appeal by either party" to the figure of Rupees 9,92,000/- as the estimated cost of reconstruction. What was questioned was only the amount' deductible therefrom on account of depreciation. The contention of Mr: K, S. Thapar, counsel for the owners being'.that considering the class and quality of the original construction and the age of the building at the time of its derequisitioning, the depreciation should not be taken to exceed 10 per cent. He sought to emphasise in this behalf that in the case of a well constructed building, depreciation in the first few gears is negligible. It is only in its later years that the building '.,begins to depreciate. at a higher rate.
17. Depreciation; as: is well known is the gradual decrease and the loss in the value of the property due to its. else, life swear, and tear: This depreciation. is generally, calculated on a percentage rate of the total cost and also depends.. upon the lite; type of construction, its use and the manner in which it is maintained. The value of the building gets gradually reduced due to its use and continuous wear and teer.-S. P, Mahajan. in his book Civil Estimating,and Costing, and Valuation Specifications has set out a table of rates of depreciation for' well maintained building.. According to this table reasonable depreciation of a building of good construction 20 to '40 years would be 20 per cent,.In the circumstances of this case; this. would clearly be the appropriate rate of.depreciation to be adopted. After allowing depreciation at' this rate; the compensation payable to the owners for the damage caused to the building would work out to Rs. 7,93,000/-. To make it.; a round figure they must be held entitled to and are hereby awarded a sum of Rs: 8 lacs as compensation which shall be payable to. them along with interest at the rate of 6 per cent per annum from. January 5, 1998' to the date of-payment o! the amount award it;
18. In the result the appeal filed by the owners is hereby accepted; while that of the states of Punjab is hereby dismissed. The owner shall be entitled to costs in both these appeals. Counsel's fee Rs. 500/- (one set only)
19. Order accordingly.