The Regional Settlement Commissioner vs Sunderdas Bhasin

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 294 of 1960

Decision Date: 27 April, 1962

Coram: K.N. Wanchoo, Bhuvneshwar P. Sinha, P.B. Gajendragadkar, N. Rajagopala Ayyangar

In this case the Supreme Court of India delivered a judgment on 27 April 1962 in the matter titled The Regional Settlement Commissioner versus Sunderdas Bhasin. The opinion was authored by Justice K.N. Wanchoo and the bench comprised Justices Bhuvneshwar P. Sinha, P.B. Gajendragadkar, and N. Rajagopala Ayyangar. The petitioner was the Regional Settlement Commissioner and the respondent was Sunderdas Bhasin, a displaced person who had migrated from an area now forming part of West Pakistan. The citation for this decision appears in the 1963 All India Reporter at page 181 and in the 1963 Supreme Court Reports (second volume) at page 534. The dispute concerned the application of the Rehabilitation of Displaced Persons – Compensation for Rural Buildings provision under the Displaced Persons (Compensation and Rehabilitation) Act, 1954. Specifically the issue was whether compensation could be claimed when each rural house was valued at less than Rs 10,000 but the aggregate value of all houses exceeded that amount. The factual background showed that the respondent originally possessed agricultural land together with several rural houses in the locality he left. The authority allotted him two and a half acres of agricultural land in India as replacement for the land he lost. He sought monetary compensation for the rural houses that remained in Pakistan, noting that each house had an assessed value below Rs 10,000 while the combined assessed value of all houses amounted to Rs 10,600. The claim was rejected on the basis of Rule 65 of the Displaced Persons (Compensation and Rehabilitation) Rules. Paragraph (2) of that rule stipulated that any person allotted less than four acres of agricultural land was ineligible to receive separate compensation for any rural building whose assessed value was less than Rs 10,000. The respondent contended that the Rs 10,000 threshold should be interpreted by aggregating the values of all his rural buildings, thereby qualifying him for compensation. The Court examined the language of Rule 65(2) and held that the provision applied to each individual building, meaning that the assessed value of each building must be at least Rs 10,000. The rule did not contemplate adding together the values of multiple buildings. Consequently the Court concluded that the respondent was not entitled to compensation for the rural houses left in Pakistan. The Court further observed that for buildings valued below Rs 10,000 Rule 57 provided for the allotment of a house or a site together with a building grant. Such grant was given in addition to the agricultural land. Under the Inter‑Dominion Agreement, buildings of a certain monetary value were treated as substantial. Buildings of lower value were considered mere appendages to agricultural land, and the Rules gave effect to that agreement. The judgment cited the decision in Chanapdas Mukhi v. Union of India reported in the 1960 Indian Law Reports (Punjab) at page 153 as approved authority. It noted that Totaram Teckchand v. H. K. Choudhary reported in the 1960 All India Reporter at page 528 was not approved, and the Court also referred to Makhanlal Malhotra v. Union of India reported in the 1961 Supreme Court Reports at page 120 for comparative purposes. The appeal, designated as Civil Appeal No. 294 of 1960, was filed by special leave against the order dated 3 October 1958 of the Rajasthan High Court in Civil Writ Case No. 39 of 1957.

Accordingly the Supreme Court dismissed the appeal, affirmed the Rajasthan High Court’s order, and held that no compensation was payable to the respondent for the rural houses. The judgment clarified that Rule 65(2) applies to each individual building and does not permit aggregation of values of multiple structures to meet the Rs 10,000 threshold. It further explained that Rule 57 provides an alternative benefit of a house or site with a building grant when the assessed value of a rural building falls below Rs 10,000. The Court therefore affirmed the order of the Rajasthan High Court and dismissed the petition for special leave. It directed that the respondent could not receive any monetary award for the rural structures he had left behind. By confirming that Rule 65(2) applies per building, the judgment eliminated the possibility of aggregating values to meet the compensation threshold. The Court also emphasized that Rule 57 remains available for claimants whose buildings fall below the Rs 10,000 limit, providing a separate form of assistance. Consequently this decision serves as authoritative guidance for the interpretation of the Displaced Persons (Compensation and Rehabilitation) Rules in future litigation involving displaced persons and rural property compensation. The ruling thus upholds the legislative intent to distinguish substantial rural buildings from ancillary structures and ensures consistent application of the compensation scheme established under the 1954 Act.

The appellants were represented by H. N. Sanglal, who held the position of Additional Solicitor General of India, together with M. S. Bindra and P. D. Menon. The respondent was represented by counsel Naunit LaL, while intervenor N. N. Keswani appeared on behalf of the intervening party. The judgment was delivered on 27 April 1962 by Justice WANCHOOO. The principal issue presented for determination on special leave was whether the value of more than one rural building, each individually valued below either Rs 10,000 or Rs 20,000, could be aggregated so that the combined amount reached the threshold of Rs 10,000 or Rs 20,000. Such aggregation would be necessary to bring the claim for compensation for rural buildings outside the scope of rule 65 of the Rules made under the Displaced Persons (Compensation and Rehabilitation) Act, 1954 (Act 44 of 1954).

The respondent was a displaced person who had migrated from territory that after partition became part of West Pakistan to India. He owned agricultural land as well as a house and a shop in the rural area from which he migrated. As part of the resettlement scheme, he received an allotment of two and a half acres of land in Punjab in substitution for the agricultural land he left behind. He also left behind a residential house and a shop, for which he claimed compensation of Rs 12,000 for the house and Rs 8,000 for the shop. The Additional Settlement Commissioner allowed a portion of these claims, specifically Rs 6,674 for the house and Rs 6,120 for the shop, bringing the total awarded amount to Rs 12,796. This award was pronounced in March 1955. Subsequently, in March 1956, the respondent applied to the Settlement Officer in Jaipur for compensation under the Act. The Assistant Settlement Officer in Jaipur rejected the application, holding that rule 65 of the Rules barred any compensation because the respondent had already been allotted two and a half acres of agricultural land. The respondent appealed this decision to the Regional Settlement Commissioner, who affirmed the Assistant Settlement Officer’s order. Thereafter, the respondent filed a writ petition before the Rajasthan High Court, contending that, for the purpose of determining the Rs 10,000 limit in rule 65(2), the values of all rural buildings left by him should be added together, and that if the aggregate exceeded Rs 10,000 he was entitled to compensation. The Rajasthan High Court accepted this argument and ordered that the respondent receive compensation for the rural buildings whose collective value was above Rs 10,000. The present appeal challenges that High Court order. It is noted that the same question has arisen before three High Courts; the Punjab High Court, in a full‑bench decision in Chanapdas Mukhi v. Union of India, held that a person may obtain compensation only if each individual rural building is valued at Rs 10,000 or Rs 20,000, and that the aggregate value of several lower‑valued buildings does not qualify. By contrast, the Bombay High Court, in Totaram Teckchand v. H. K. Choudhari, adopted the view expressed by the Rajasthan High Court. The matter for determination, therefore, is which of these two conflicting interpretations of rule 65 is correct. Rule 65 provides, in relevant part, that separate compensation for rural buildings shall not be paid in certain cases."/>

The Punjab High Court held that a displaced person could obtain separate compensation for rural buildings left in Pakistan only if each building left by that person had an assessed value of at least Rs 10,000 or Rs 20,000, depending on whether the land allotted to him was less than four acres or four acres and above. The Court further observed that a displaced person who left more than one building, each of which was valued below the relevant threshold, was not entitled to separate compensation even though the aggregate value of those buildings might exceed Rs 10,000 or Rs 20,000. The Bombay High Court, when confronted with a similar issue, adopted the same approach as the Rajasthan High Court in Totaram Teckchand v. H.K. Choudhari (2). Consequently, the matter before this Court was to decide which of the two conflicting views should be followed. Rule 65 of the settlement rules states: “Separate compensation for rural building not to be paid in certain cases. (1) Any person to whom four acres or more of agricultural land have been allotted shall not be entitled to receive compensation separately in respect of his verified claim for any rural building the assessed value of which is less than Rs 20,000. (2) Any person to whom less than four acres of agricultural land have been allotted shall not be entitled to receive compensation separately in respect of his verified claim for any rural building the assessed value of which is less than Rs 10,000.” (1) I.L.R. [1960] 1 Punj. 153. (2) A.T.R. [1960] Bom. 528. Although the dispute in the present appeal arises under sub‑rule 65(2), the Court noted that the reasoning applied to 65(2) would equally apply to 65(1); the only distinction between the two sub‑rules is the monetary threshold—Rs 20,000 versus Rs 10,000—and the size of land allotted—four acres or more versus less than four acres. Counsel for the appellant submitted that Rule 65 had been framed primarily to give effect to an inter‑Dominion agreement which stipulated that no compensation should be payable for a rural building valued at less than Rs 20,000. It was further argued that the purpose of the rule was to treat a building valued below Rs 20,000 as an adjunct to the agricultural land left by the displaced person, and that compensation for such buildings should be provided by alternative mechanisms rather than through separate compensation under Rule 65. The alternative mechanism cited was Rule 57 of the same set of rules, which provides that a displaced person with a verified claim to agricultural land and who settles in a rural area may be allotted a house, and in the absence of a house in the allotted village, may receive a site and a building grant of a prescribed amount, thereby furnishing compensation for a building whose value is below Rs 20,000 or Rs 10,000, as the case may be.

In this matter the Court examined the provisions of Rule 57, which stipulate that a person who has been allotted agricultural land may also receive a house in addition to that land. The rule further provides that when a house is not available in the village where the land has been allotted, the allottee may be granted a site and a building grant according to the extent of land allotted. Specifically, if the agricultural land allotted does not exceed ten standard acres, the allottee may receive a site measuring four hundred square yards together with a building grant of four hundred rupees. If the land allotted exceeds ten standard acres but does not exceed fifty standard acres, the allottee may receive a site of four hundred square yards and a building grant of six hundred rupees; the same grant applies when the land allotted exceeds ten standard acres but does not exceed fifty standard acres, the allottee may receive a site measuring six hundred square yards and a building grant of six hundred rupees. The appellant argued that Rule 57 therefore provides a form of compensation for a building left by a displaced person in Pakistan when its value is below twenty thousand rupees or ten thousand rupees, as the case may be. The appellant also pointed to Rule 97, which deals with situations where an allottee has refused the allotment of agricultural land or where such an allotment has been cancelled. According to the appellant, Rule 65 states that no compensation shall be payable for any rural building whose value is less than twenty thousand rupees or ten thousand rupees, and this reference is to the value of each individual building. Consequently, the appellant maintained that the rule cannot be taken out of its scope simply because a displaced person left more than one rural building whose combined value exceeds the stipulated limits, relying on the provision in Rule 57. Conversely, the respondent submitted that if Rule 65 is not unequivocal on this point and can be understood in two ways, it should be interpreted in favour of the displaced person so that he may obtain some compensation for the rural buildings he left in Pakistan. The respondent further argued that the phrase “any rural building” in Rule 65, although singular, may be read in the plural under Section 13 of the General Clauses Act, and that such a plural reading should be adopted to assist the displaced person in obtaining compensation. To resolve these opposing contentions, the Court noted that it is necessary to consider the background in which Rule 65 was framed, as that context will guide the proper interpretation. The Court recalled that Rule 65 had previously been examined in this Court when it was challenged as ultra vires on the ground that it created a discrimination between rural buildings, for which compensation was payable only if their value exceeded a certain threshold, and urban buildings, for which compensation was payable regardless of value. In that earlier proceeding, the constitutionality of Rule 65 was upheld by the Court in Makhanlal Malhotra v. Union of India.

In the Union of India case, the Court examined the historical reasons that gave rise to what appeared to be a distinction between rural and urban buildings for the purpose of compensation. The examination began with a reference to an inter‑Dominion Conference that was held in Karachi from 10 to 13 January 1949, during which the Governments of India and Pakistan agreed to establish a permanent inter‑Dominion Commission. The Commission’s mandate was to deal with the administration, sale and transfer of evacuee property in both Dominions. Following that decision, the Commission met in New Delhi on 12 and 13 March 1949 to consider the status of shops and houses situated in rural areas. At that meeting the Commissioners recommended that any rural building whose value was twenty thousand rupees or more should be classified as a “substantial building”. Conversely, any building whose value was below that threshold was to be treated as an appendage to agricultural land and therefore to be regarded as part of “agricultural property”. This recommendation made clear that the criterion for determining the classification of a building was its monetary value, and that the ownership of the building was irrelevant to the assessment. The Court noted that this March 1949 agreement formed the substantive foundation of Rule 65, although the strictness of the original arrangement had been moderated. The moderation created two categories: one applicable to persons who were allotted four acres or more of land, for whom the twenty‑thousand‑rupee limit remained; and a second applicable to persons who were allotted less than four acres, for whom the limit was reduced to ten thousand rupees. Nonetheless, the March 1949 agreement unequivocally provided that compensation would be payable only for individual buildings whose value met or exceeded the applicable limit—twenty thousand rupees in the first category and ten thousand rupees in the second. Buildings valued below the respective limit were to be treated as mere extensions of the agricultural land owned by a displaced person in Pakistan and would not attract separate compensation, even if several such low‑valued buildings remained. The Court observed that this principle was reflected in the citation (1961) 2 S.C.R. 120. The underlying intention of the agreement, as explained by the Court, was to reserve compensation for buildings that were individually substantial—those exceeding the prescribed monetary threshold—while all smaller structures would be considered ancillary to the agricultural property. Rule 65 incorporated this scheme by preserving the same limitation: compensation was to be granted for each individual building that satisfied the value test, but no separate compensation was to be given for any building whose value fell below the threshold, regardless of the number of such buildings left behind by the same displaced person. This approach, the Court concluded, constituted the compensation scheme envisioned by the Act for displaced persons. The general rules governing the payment of compensation were then set out in the subsequent chapters of the Rules.

The Court explained that the provisions governing compensation are to be found in Chapters IV, V and VI of the Rules. In addition, Rule 44 of Chapter VII authorises the allotment of acquired evacuee houses in rural areas as a substitute for monetary compensation, and Rule 47 provides that payment of compensation under Chapter VII must be made subject to the conditions laid down in Rule 65. Accordingly, the scheme of compensation set out in the Rules operates as follows: when a person leaves both agricultural land and rural buildings in Pakistan, that person is entitled to be allotted agricultural land, and for any rural building left behind whose assessed value is below the threshold of Rs 10,000 or Rs 20,000, as the case may be, the person receives the benefit prescribed in Rule 57. Conversely, if any single rural building left by the person exceeds the relevant monetary threshold—Rs 20,000 where the higher limit applies or Rs 10,000 where the lower limit applies—then that building attracts separate monetary compensation. The Court observed that the argument advanced by the respondent, which had persuaded the High Court that displaced persons received no compensation for buildings valued below Rs 20,000 or Rs 10,000, is not supported by the Rules. The Court had previously referred to Rule 57, and when that rule is read together with Rule 65, it becomes apparent that, in view of the inter‑Dominion agreement, a building whose value exceeds the applicable threshold is compensated separately under Chapters IV, V and VI. Moreover, Chapter VII allows the provision of evacuee houses in rural areas in lieu of cash compensation. However, when each individual building left by a displaced person is valued below the threshold, even if the person left several such buildings, compensation is effected by granting a house or a site together with a building grant, in addition to the allotted agricultural land, as contemplated in Rule 57. Therefore, the complaint that no compensation was provided to a displaced person whose each building was valued below Rs 20,000 or Rs 10,000 is inaccurate, although the amount of compensation for lower‑valued buildings may differ from that granted for higher‑valued ones. The Court further noted that the massive migration from what is now West Pakistan to India required extraordinary effort and ingenuity on the part of the Government of Punjab and the Government of India, and the various measures adopted are recorded in Chapter 1 of the “Land Settlement Manual” by Tarlok Singh, a work of unquestioned authenticity and value. In light of this background and the inter‑Dominion agreement of March 1949, the Court affirmed that the proper approach to interpreting Rule 65 must take these circumstances into account, and it concluded that the scheme of compensation articulated in the Rules is clear.

In the context explained earlier, the Court observed that when rule 65 refers to any rural building whose assessed value is less than Rs 20,000 or Rs 10,000, the reference is to each individual building having that value and not to the cumulative value of several buildings that a displaced person might have left behind; the rule does not contemplate adding together the values of a number of buildings to reach the Rs 20,000 or Rs 10,000 threshold. The Full Bench of the Punjab High Court had pointed out that it is inaccurate to say that a person who owned a building in a non‑urban area valued below the minimum prescribed in the rule would receive no compensation. In fact, the Court noted that every displaced person who owned houses or buildings in a rural area had been compensated under rule 57, and the only buildings excluded from compensation were those each of which was worth Rs 20,000 or Rs 10,000, as the case may be. For a detailed explanation of this point, reference may be made to Chapter IX of the “Land Settlement Manual” by Tarlok Singh, where the matter is discussed at length. Consequently, rule 57 provides compensation for each building whose value is less than the Rs 20,000 or Rs 10,000 limits, while rule 65 expressly forbids separate compensation for such buildings. Therefore, when rule 65 speaks of any building whose assessed value is Rs 20,000 or Rs 10,000, it is again referring to each building individually, not to a total of several buildings. Regarding the respondent, the Court observed that he also would have been eligible, had he chosen to do so, for either a house or a site under rule 57 if he had decided to settle in the village where agricultural land had been allotted to him. The respondent, however, did not settle in that village and consequently could not enjoy the benefit of rule 57. The Court held that this was a matter of his own choice and that he could not complain that an allocation under rule 57 was made impossible simply because he elected not to reside in the village to which the agricultural land had been allotted. Moreover, the Court could not give a meaning to rule 65 that is inconsistent with the overall scheme designed to address the massive displacement problem merely because the respondent or persons in similar situations elected not to settle in the designated village. Any loss the respondent suffered as a result of his decision was self‑inflicted, and that does not justify interpreting rule 65 in a way that would advantage persons who, by their own choice, did not avail themselves of the benefit they could have obtained under rule 57. Reading rule 65 in the background in which it was formulated leaves no doubt that, when it speaks of any rural building whose assessed value is Rs 10,000 or Rs 20,000, it is speaking of each individual building worth that amount.

In interpreting rule 65 the Court observed that the provision refers to each individual building whose assessed value is Rs 10,000 or Rs 20,000, as the situation may require. The provision does not envisage adding together the values of several buildings that a displaced person might have left in West Pakistan. Consequently, Section 13 of the General Clauses Act was held not to be applicable in the present circumstances. Section 13 provides that a word in the singular includes the plural unless something in the subject matter or context contradicts that inclusion. The Court reasoned that, given the subject of the dispute and the context in which the term “building” is employed, the appropriate factor for applying the limits in rule 65 is the value of each building, not the ownership of the building. If a building is individually valued at Rs 20,000 or at Rs 10,000 or any amount specified, that building falls within the scope of rule 65. However, the Court found no justification in the context for requiring that ownership be considered. Therefore, when an owner possesses multiple buildings, each of which is individually valued below the statutory limit, the aggregate value of those buildings may be summed, and compensation may be claimed if the combined amount exceeds the prescribed threshold. Based on this reasoning, the Court concluded that the High Court’s interpretation was erroneous and that the appeal should be allowed. Accordingly, the appeal was allowed, the order of the High Court was set aside, and the writ petition was dismissed. The High Court had not awarded costs to the respondent; the Court considered it appropriate for each party to bear its own costs. The appeal was thus allowed.