JUDGMENT
Rama Jois, J
1. This Appeal is by the Deputy Commissioner, Hassan, against the order of the Arbitrator, nominated by the State Government under Section VI of the Karnataka Contract Carriages (Acquisition) Act, 1976, for short (the Act).
2. The brief facts of the case are these: The Act was enacted by the State Legislature providing for acquisition of Contract Carriages in the State and for matters incidental, ancillary or subsidiary thereto. The Act came into force with effect from 30-1-1976, replacing the Karnataka Contract Carriages (Acquisition) Ordinance 1976 which had been promulgated on the said date. Under Section 4 of the Act every contract carriage owned by a private operator along with its permit and Certificate of Registration stood vested in the State Government absolutely and free from all encumbrances:
(b) such contract carriage shall be freed and discharged from any trust, obligation, mortgage, charge, lien, hire, purchase, agreement or otherwise and all other encumbrances or transactions affecting such contract carriages;
(c) any attachment, injunction or decree or order of any Court restricting the use of such contract carriage in any manner shall be deemed to have been withdrawn;
(d) any person interested shall have no claim to or any relation to such contract carriage except a claim to the amount payable in respect of such contract carriage under this Act.
(2) Upon the issue of a notification under Sub-section (1) in respect of any such operator –
(i) all rights, title and interest of the contract carriage operator, in or over such lands, buildings, workshops and other places and all stores, instruments, machinery, tools, plants, apparatus and other equipments used for the maintenance repair or otherwise in connection with the service of the contract carriage as the State Government may by order, specify, in this behalf;
3. Section 6 of the Act which provided for compensation and payment of compensation for the vehicle acquired under Section 4, to its owner reads:
6. Determination of the amount:-
(1) For the vesting of the acquired property under Section 4, every person interested shall be entitled to receive such amount as may be determined in the manner hereinafter set out and as specified in the Schedule, that is to say –
(a) where the amount can be fixed by agreement shall be determined in accordance with such agreement;
(b) where no such agreement can be reached, the State Government shall appoint as arbitrator a person who is an officer not below the rank of a Divisional Commissioner or a District Judge;
(c) the State Government may, in any particular case, nominate a person having expert knowledge as to the nature of the acquired property to assist the arbitrator and where such nomination is made, the person interested may also nominate an assessor for the same purpose;
4. As can be seen from the above Section, Sub-section (1) provides for determination of the amount of compensation to be paid to the owner in respect of the acquired-property as determined in the manner provided in the said Section. According to Clause (a) the compensation could be fixed by agreement whereever possible, where no agreement is possible, Clause (b) requires the State Government to appoint an Arbitrator who is required to determine the quantum of compensation payable.
5. The principles for determination of amount of compensation payable under Section 6 have been set out in the Schedule and the relevant portion of the Schedule reads as under:
“1. (1) In respect of any contract carriage taken over by the State Government, there shall be first determined the acquisition cost of such contract carriage and for any contract carriage registered within the period mentioned in the Column (1) of the Table below prior to the notified date the amount to be paid shall be the percentage mentioned in the corresponding entry in Column (2) of that Table, of the acquisition cost:-
TABLE
Period (1)
Percentage (2)
1.
Not more than six months prior to the
notified date
…85
2.
More than six months prior to the
notified date but not exceeding one year
…75
3.
More than one year but not exceeding two
years
…70
4.
More than two years but not exceeding
three years
…68
5.
More than three years but not exceeding
four years
…67
6.
More than four years but not exceeding
five years
…66-2/3
7.
More than five years but not exceeding
six years
…59
8.
More than six years but not exceeding
seven years
…41
9.
More than seven years but not exceeding
eight years
…29
10.
More than eight years but not exceeding
nine years
…21
11.
More than nine years but not exceeding
ten years
…14
12.
More than ten years but not exceeding
eleven years
…10
13.
More than eleven years but not exceeding
twelve years
…7
14.
More than twelve years but not exceeding
thirteen years
…5
15.
More than thirteen years
…4
Explanation:- For the purpose of this paragraph “acquisition cost” shall be aggregate cost of the chasis as well as the body of the contract carriage as charged by the manufacturer of chassis and by the body builder.
(2) If, in the opinion of the authorised officer, any contract carriage taken over is not road-worthy, such amount as may be determined by him as being the cost likely to be incurred in making the contract carriage road-worthy, shall be deducted from the amount payable for such carriage.
2. In respect of instruments, machinery, tools, plants, apparatus and other equipments other than stores referred to in Clause (i) of Sub-section (2) of Section 4, the amount to be paid shall be the assessed market value.
Explanation:- For the purpose of this paragraph, “assessed market value” shall be the value of instruments, machinery, tools, plants, apparatus and other equipments other than stores referred to in Clause (i) of Sub-section (2) of Section 4, as on the notified date determined by two assessors, one each nominated in this behalf by the State Government and the person interested and in case of any disagreement between the assessors, such value as determined by the arbitrator.
3. In respect of land, the amount to be paid shall be the market value of the land fixed by the Deputy Commissioner of the district in accordance with the Land Acquisition Act, 1894 (Central Act 1 of 1894), without the element of solatium provided in that Act.
4. In respect of buildings, the amount to be paid shall be the market value of the buildings as estimated by an officer not below the rank of an Executive Engineer of the Public Works Department of the State Government.”
3. The above provisions have been the subject matter of interpretation by the Supreme Court in STATE OF KARNATAKA AND ANR. v. RANGANATHA REDDY AND ANR., . The relevant portion of the Judgment in paragraphs 21 to 24 are as follows:
Para 21. Then comes the Schedule spoken of in Section 6 which provides for principles for determination of the amount in relation to the various properties acquired under the Act. Para 1 deals with the principle and the manner of determination of the amount for the vehicles. The acquisition cost is to be determined in accordance with the Table appended to sub-para (1). The Explanation says:
For the purpose of this paragraph “acquisition cost” shall be the aggregate cost of the chassis as well as the body of the contract carriage as charged by the manufacturer of chassis and by the body builder.
In respect of almost all other properties acquired the amount to be paid is by and large the market value of the property vide paras 2, 3 and 4. Provisions have been also made for payment of the amount in respect of the workshops in para 5 and in respect of stores in para 6. Some compensation has been provided in para 7 of the Schedule for every permit acquired under the Act, although the amount so fixed may not be adequate.
22. Now by the harmonious and reasonable Rules of construction as also to save the Act from being violative of Article 31(2) of the Constitution, we proceed to discuss and accept in a large measure the interpretation put and canvassed by Mr. Sinha. If the amount is fixed by agreement, well and good. In absence of an agreement the State Government shall appoint an arbitrator who will be an officer of a high rank. Two assessors having expert knowledge as to the nature of the acquired property – one by the Government and one by the person interested, can be appointed to assist the arbitrator. Both sides will state before the arbitrator as to what should be the amount payable according to each. The arbitrator shall hear the dispute and make an award determining the amount which appears to him just and reasonable. He shall specify the person or persons to whom the amount shall be paid. In making the award, he shall have regard to the circumstances of each case and the provisions of the schedule so far they are applicable. Some difficulty at the outset arose in reconciling the expression “as specified in the schedule” occurring in Sub-section (1) of Section 6 and the (above) underlined expressions occurring in Clause (e) of that sub-section.
xxx xxx xxx
24. The arbitrator, therefore, reading Section 6(1) as a whole is not obliged to fix the amount as specified in the Schedule. But he has to fix the amount which appears to him just and reasonable on the totality of the facts and circumstances keeping primarily in mind the amount mentioned in the Schedule.”
From the above paragraphs it is clear that the basis for the determination of the compensation is what is provided in the Schedule. However, in a given case the Arbitrator has the power to award higher compensation if there is any basis to do so having due regard to the facts and circumstances of the case, at the same time having due regard to the principles set out in the Schedule.
4. Now coming to the facts of the case the vehicle acquired was a Contract Carriage bearing Registration No. MYM-5380 belonging to respondent. As the amount of compensation could not be fixed by agreement the District Judge, Hassan was appointed as Arbitrator under Section 6 of the Act. According to the statement of the respondent this vehicle was of the year 1969 TATA MERCEDES BENZ and the date of registration of the vehicle was 12th December 1969. According to the respondent he purchased it from its previous owner in the year 1975 for a sum of Rs. 80,000/-. The Contract Carriage permit in respect of the bus was valid up to 31-12-1975. According to the respondent he had spent Rs. 40,000/- for body building in T.V.S. Workshop and thereafter had spent another Rs. 15,000/- for repairs and maintenance and according to him the value of the aforesaid bus was Rs. 1,56,605-85 ps.
5. As against the above valuation the Deputy Commissioner, stated that as on the date of its acquisition the bus was in a totally damaged condition and was only a junk and therefore, in his opinion the compensation to be paid could only be Rs. 4,000/-. There is however a Report by the Chief Mechanical Engineer of the Karnataka Road Transport Corporation, which is marked as Ext.P-2. In the said document he has given the value of the Chassis as charged by the manufacturers during the year 1969 at Rs. 49,200/- He has also stated that during 1989 the cost of the body building was Rs. 20,630/- and therefore the total cost of acquisition of the vehicle in the year 1969 was Rs. 69,630-00.
6. The learned Arbitrator took the cost of acquisition of the chassis at Rs. 80,000/- and body building at Rs. 40,000/- and on that basis he came to the conclusion that the value of the vehicle was Rs. 1,20,000/-. He found that the vehicle, counting from the date of registration, was six years, three months and 20 days old and therefore according to the Schedule to the Act the compensation to be paid was 41% of the cost of acquisition. He however, made it 45% relying on the Judgment of the Supreme Court in Ranganatha Reddy’s case, and determined the compensation payable at Rs. 54,000/- and to this he added Rs. 15,000/- said to have been spent for repairs and Rupees 6,000/- towards some extra fittings and fixed the total compensation payable at Rs. 75,000/-. Accordingly, he made an Award of Rs. 75,000/-. Aggrieved by the said Award the appellant has presented this Appeal.
7. The learned Advocate appearing for the appellant submitted as follows:- The cost of acquisition which should constitute the basis for determining the compensation payable to the owner of the vehicle under Section 6 of the Act read with Schedule to the Act was the aggregate of the price charged by the manufacturer for the chassis and the amount spent for the body building originally. It is submitted that whatever may be the amount for which according to the respondent, he had purchased the vehicle or had spent subsequent to body building for repairs, maintenance etc., could not be taken as the cost of acquisition. Even on the basis that in a case of re-body building for the purpose of converting an ordinary bus into a luxury bus, which is the claim made by the respondent, the cost of acquisition would not vary for the purpose of computation of compensation amount under Section 6 read with the Schedule. If the claimant proves that he had spent considerable amount for rebuilding the body it could be considered to decide as to whether higher compensation could be awarded. If there were extra fittings fitted to the vehicle, after body building that could also be taken into account for awarding compensation higher than the amount fixed in accordance with the Schedule. However amounts spent for repairs and maintenance cannot constitute the basis for awarding higher compensation, as such routine expenses do not enhance the value of the vehicle.
8. As against the above contention the learned Counsel for the respondent submitted that the amount spent by the respondent for rebuilding the body and for extra fittings constitute cost of acquisition. He also submitted that amount spent for repairs and maintenance should be taken into account to award higher compensation and therefore, the total compensation fixed by the Arbitrator was proper.
9. In view of the rival contentions the following questions arise for consideration:
(1) What is the true meaning of “Cost of acquisition” for the purpose of determining the compensation in terms of the Schedule to the Act?
(2) Whether any amount of compensation is payable in respect of the repairs and maintenance of the vehicle?
(3) Whether any amount of compensation is payable in respect of extra fittings found to exist in the vehicle?
(4) Whether the compensation awarded by the Arbitrator in this case is correct?
10. With regard to the first question the Explanation below Clause 1 to Schedule 6 is of considerable importance. According to the Explanation the acquisition cost shall be the cost of the chassis as charged by the manufacturer of the chassis and the cost of body building as charged by the body builder. The Explanation is clear and unambiguous. Therefore, for the purpose of determining the cost of acquisition, the cost of the Chassis as charged by the manufacturer alone has to be taken as the basis. This necessarily means, it is the price of the chassis as on the date on which it was sold by the manufacturer to the first purchaser that should be taken into account. Further the body building charges which have to be taken into account is the amount that had been spent on building the body after the purchase of the chassis from the manufacturer. In view of this clear position we answer the first question as follows:
“The cost of acquisition of a contract carriage acquired by the State under the Act for the purpose of determining compensation payable under the Act is the price charged for the chassis by the manufacturer and the cost of body building immediately after purchase of the chassis.”
11. The second question for consideration is whether any amount said to have been incurred by the owner of the contract carriage, in respect of repairs and maintenance can be included in the amount of compensation payable. In our opinion when a person purchases the vehicle and runs it as a contract carriage it is quite natural that periodically he has to spend some amount towards repairs and maintenance. By such spending all that is done by the owner is to keep the vehicle in running condition and by such normal repairs and maintenance the cost of the vehicle does not increase. Therefore, we answer the second question in the negative.
12. The third question for our consideration is whether, any compensation over and above the amount determined in terms of the Schedule can be granted in a given case if extra fittings have been fitted into any given contract carriage. As seen earlier the Schedule takes note of the cost of acquisition of the Chassis and the body building only. But if in a given case, there is evidence to prove that over and above the cost of acquisition of the vehicle extra fittings have been fitted and that the acquiring authority had taken possession of the vehicle together with such extra fittings, the cost of such fittings, as on the date of acquisition could be taken into account for awarding enhanced compensation in the light of the ratio of the Judgment of the Supreme Court in Ranganatha Reddy’s case, for according to the ratio of the Judgment what is provided in the Schedule constitute the basis and not ceiling and there can be situations in which it is reasonable to grant compensation of other kind also. For these reasons we answer the third question in the affirmative,
13. In the light of our answer to the first three questions we now proceed to consider the fourth question namely – the correctness and legality of the order made by Arbitrator on this aspect (1) As regards cost of acquisition, the (earned Arbitrator has taken the cost of the chassis at Rs. 80,000/- and the cost for body building at Rs. 40,000/-. Admittedly, even according to the statement of the respondent Rs. 80,000/- was the amount which he paid for the purchase of the bus in the year 1975 to the previous owner and Rs. 40,000/- according to him, was the amount for replacing old body by a new body. Therefore, it is clear, neither the amount of Rs. 80,000/- nor Rs. 40,000/- could be taken as the basis to arrive at the cost of acquisition of the contract carriage acquired by the Government. It is also necessary to state that there is not even an iota of evidence in support of the plea that the respondent had paid Rs. 80,000/- for the purchase of bus or for having spent Rs. 40,000/- for body building. It is very difficult to believe that the respondent would have purchased the six year old bus for such a heavy amount and would have spent Rs. 40,000/- for body building. According to him he got the body built at T.V.S. Company but no receipt is produced. In view of the fact that the respondent was unable to produce any documentary evidence for the price paid to the vehicle or for the amount paid for the body building, the claim made by the respondent in this behalf has to be disbelieved. Further, as stated earlier as far as the cost of acquisition is concerned in terms of the Schedule to the Act, the value of the Chassis as on the date of purchase as charged by the manufacturer should alone be taken as the basis, and secondly, the cost of body building for the first time atone has to be taken into account. As far as this is concerned we have to accept Ext.P-2, the valuation sheet given by the Chief Mechanical Engineer, K.S.R.T.C., is correct for, being the Chief Mechanical Engineer of K.S.R.T.C. he had the information not only about the price of the Chassis but also the cost of body building. He had stated that the value of the Chassis in 1969 was Rs. 49,200/- and the cost for body building was Rs. 20,630/-. No evidence to the contrary was adduced by the claimant. Therefore, the cost of acquisition of the vehicle was Rs. 69,830/-. Further as the vehicle was 6 years 3 months and 20 days old according to the Schedule, 41 % of the cost of acquisition alone could be granted as compensation which come to Rs. 28,548-30 ps. only subject however for the granting of any extra amount on relevant basis if any.
14. In the result, as held above the cost of acquisition of the vehicle was Rs. 69,830/- and according to the Schedule to the Act as the vehicle was 6 years 3 months and 20 days old, 41% of it alone could be awarded as compensation which comes to Rs. 28,548.30. We round it off to Rs. 30,000/-.
(ii) Regarding Rs. 15,000/- awarded towards repairs and maintenance in view of our answer to the 2nd question it has to be set aside.
(iii) Regarding Rs. 6,000/- awarded towards extra fittings it is without any basis and therefore has to be set aside.
15. For the reasons aforesaid we make the following order:
(i) The Appeal is allowed.
(ii) The compensation of Rs. 75,000/- awarded by the Arbitrator in Misc. No. 34/1981, dated 16th December 1982, is reduced to Rs. 30,000/- only.
(iii) The rate of interest shall be at 6% per annum from the date of take-over of the vehicle till the date of payment of compensation to the respondent-owner.