INDER PRASHAD vs UNION OF INDIA on 13 January, 1994

assign the land to third parties....

All urbanisable land in Delhi is covered by

the master plan which was framed under the

Delhi

Development Act, 1957.

The

total

compensation payable in respect of interest of

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lessor and lessee is not, however, arrived at

by separately calculating the interest of the

lessor and the lessee. It is necessary that

the amount should be divided between them in

such proportion as represents the value of

their respective shares."

2.

After determining the compensation the Collector, who

was not able to decide at what proportion the appellant and

the Government were entitled to receive the compensation,

made a reference under Section 30 of the Act to

the civil court.

The District Court by judgment dated

November 15, 1976 held that the Government and the appellant

were entitled to compensation at the proportion of 33% and

67% respectively. On further appeal by the appellant, while

upholding the title to the compensation by the Government

and the appellant, the High Court altered the proportion to

75% and 25% between the appellant and the Government

respectively.

The Government did not question the said

proportion at which the compensation was payable to the

appellant and the respondent. The appellant being aggrieved

for apportionment of 25% of the compensation in favour of

Government filed this appeal by special leave.

3.

Sri Kailash Vasudev, learned counsel for the appellant,

contended that the Government being the owner of the land

cannot acquire its own interest therein. What was acquired

is only of the sum total of the right and interest held by

the appellant in the perpetual lease and, therefore, the

appellant is entitled to the total compensation determined

by the award. In support thereof he placed reliance on

Collector of Bombay v. Nusserwanji Rattanji Mistri 1.

With

a view to appreciate the contention it is necessary to see

the relevant provisions of the Act.

4.

It is seen that after making the award under Section 11

and deposit of the compensation, the Land Acquisition

Collector is entitled under Section 16 of the Act to take

possession of the land for that provision says that "the

land shall thereupon vest absolutely in the Government free

from all encumbrances". Thus by exercise of the power of

eminent domain Government has divested the pre-existing

right, title and interest held by the lessee of the land

which stood vested absolutely in the Government free from

all encumbrances thereafter. But, the Land Acquisition

Officer in his award under Section 11 has fixed the

compensation payable not only for the pre-existing right,

title and interest of the lessee but also of the lessor the

Government.

5.

In this case admittedly the Government being the owner

of the land, the appellant held the demised land as lessee

with superstructure built thereon and was in possession and

enjoyment of the same on the date of acquisition.

The

contents

of the award extracted hereinbefore

clearly

indicate that the Land Acquisition Collector could not

determine

compensation payable towards

the

leasehold

interest held by the appellant.

Being an owner

the

Government is not enjoined to acquire its own interest in

the land or land alone for public purpose. When its land is

granted on lease in favour of a lessee its power to resume

the land is subject to non-fulfilment of the terms and

conditions of the lease by the lessee. So long as the

lessee acts and complies with the covenants contained in the

lease or the grant, the right to resumption in terms of the

lease or grant would not arise. But when the land is

required for public purpose, the Government should get

absolute

title

thereof free from

all

encumbrances.

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Compensation becomes payable for the leasehold right or

interest held by the lessee or grantee when the land is

1 (1955) 1 SCR 1311 : AIR 1955 SC 298

acquired.

The point becomes clear from the following

illustrations.

Take a case where the Government granted

lease of agricultural land on the annual payment of rent

with a covenant that the Government is entitled to resume

the land when needed for public purpose or as when the

Government finds that the land is required for public

purpose.

In terms of the covenants, the Government is

entitled to exercise its option to determine the lease

though the lessee has been complying with the condition of

payment of annual premium or rent and resume the land in

accordance with terms of the grant. In that event the need

to take recourse to acquisition and to make compensation

does not arise. Take a case where the Government granted

the lease of the open land with, permission to the lessee to

construct

a

building for his quiet

enjoyment

with

appropriate

covenants and the lessee with

permission

constructed the building and by complying with the covenants

of the lease was in quiet enjoyment.

The self same

property, when required for public purpose, the Government

cannot unilaterally determine the lease and call upon the

lessee to deliver the possession. Therefore, the Government

is required to exercise the power of eminent domain by

invoking the provisions under the Land Acquisition Act for

getting such land. The Collector shall have to determine

the compensation towards the leasehold interest held by the

lessee,

if

assessable separately and

determine

the

compensation.

The

lessee being the

owner

of

the

superstructure and the Government being the owner of the

land, if compensation is determined for both the components,

then the same has to be apportioned between them. At what

proportion the lessor and the lessee are entitled to receive

the compensation has to be determined. In the absence of

any covenant in the lease for payment and in the absence of

any specific data available to him, the Collector has to

determine the respective shares at which the compensation is

to be apportioned between the Government and the lessee, the

course open to the Land Acquisition Collector is

to

determine the total compensation, make an award and make a

reference to the civil court under Section 30 for decision

on appointment. Exactly that is the situation on the facts

of this case. Take another illustration.

The Government

grants a patta of its land subject to payment of land

revenue.

Later, the land is required for public purpose.

The payment of land revenue is at par with the payment of

land revenue payable by a private owner to the State.

By

grant of patta, the title has been vested in the grantee.

Therefore, the grantee is entitled to the full compensation

of the acquired land.

6.

The

Land

Acquisition

Collector

determined

the

compensation for the sum total of the right, title and

interest held by the lessor and the lessee together and made

a reference to the civil court under Section 30 to determine

the proportion in which the lessor and the lessee are

entitled to receive the compensation. In a given case where

it is possible to determine the compensation payable towards

leasehold

interest, it could also be done

and

the

compensation payable towards the interest held by the lessee

could be deposited in the Court and paid subject to the

provision in the Act. Since the Land Acquisition Collector

was not in a position to determine the

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proportion in which the said compensation had to be paid to

the appellant and the lessor-Government, he made a reference

to the civil court under Section 30.

7.

In Nusserwanji Rattanji Mistri case’ the facts are as

under:

8.

In the island of Bombay certain lands were held on a

tenure known as "Foras". Under Section 2 of Bombay Act VI

of 1851 the occupants were entitled to hold the lands

subject only to the payment of revenue then payable.

Between 1864 and 1867 the Government of India acquired these

lands under the provisions of the Land Acquisition Act (VI

of 1857). On November 22, 1938 the Governor-General sold

them to certain persons under whom the present respondents

claimed.

In April 1942 the appellant acting under the

Bombay City Land Revenue Act (Bombay Act 11 of 1876) issued

notices to the respondents proposing to levy assessment on

the lands at the rates mentioned therein. The respondents

thereupon instituted two suits disputing the right of the

appellant to assess the lands to revenue.

They contended

that under the Foras Land Act the occupants had acquired the

right to hold the lands on payment of revenue not exceeding

what was then payable, that the right to levy even that

assessment was extinguished when the Government acquired the

lands under the Land Acquisition Act, that the GovernorGeneral having conveyed the lands absolutely under the sale

deed dated November 22, 1938 the respondents were entitled

to hold them revenue free and that even if revenue was

payable it could not exceed what was payable under the Foras

Land Act.

On those facts this Court held that if the

Government has itself an interest in the land, it has only

to acquire the other interests outstanding therein, so that

it might be in a position to pass it on absolutely for

public user.

And the Act primarily contemplates

all

interests as held outside Government and directs that the

entire compensation based upon the market value of the whole

land must be distributed among the claimants.

When the

Government possessed an interest in land which is the

subject-matter of acquisition under the Act, that interest

is itself outside such acquisition, because there can be no

question of Government acquiring what is its own, an

investigation into the nature and value of that interest

will no doubt be necessary for determining the compensation

payable for the interest outstanding in the claimants but

that would not make it the subject of acquisition. In that

case since the claimants are entitled to pay only land

revenue and thereafter since sale of the land was made, the

pre-existing right in the land which the Government had

ceased and claimants became owners. Therefore it was held

that

the claimants alone were entitled to the

full

compensation.

But on the facts in this case, it is seen

that since the Land Acquisition Collector had determined the

compensation of the sum total of the interests held by the

lessor and the lessee in the land under acquisition but

being not able to decide on the apportionment of such

compensation between Government and the appellant reference

was made to the civil court to determine the apportionment.

The civil court decided by its award that apportionment of

compensation fixed in the award of the Land Acquisition

Collector between the lessee-claimant and the Governmentlandlord shall be

in order of 67 per cent and 33 per cent. The High Court by

its judgment and decree under the present appeal has

modified the apportionment of compensation payable for land

as 75 per cent for the lessee and 25 per cent for the

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lessor.

Under these circumstances it cannot be said that

the

Land

Acquisition Collector

had

determined

the

compensation only towards the leasehold interest held by the

appellant and that, therefore, the appellant is entitled to

the

entire compensation determined by the

Collector.

Therefore, the judgment and decree under appeal does not

call for interference and the appeal is,

accordingly

dismissed.

But in the circumstances, the parties are

directed to bear their own costs.

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