PETITIONER: SPECIAL LAND ACQUISITION & REHABILITATION OFFICER, SAGAR Vs. RESPONDENT: M. S. SESHAGIRI RAO & ANR. DATE OF JUDGMENT: 31/01/1968 BENCH: SHAH, J.C. BENCH: SHAH, J.C. RAMASWAMI, V. CITATION: 1968 AIR 1045 1968 SCR (2) 892 CITATOR INFO : R 1972 SC2224 (1) ACT: Land Acquisition Act (1 of 1894).-Grant of land on condition to surrender without compensation-Proceedings under Land Acquisition Act-Compensation, how payable. HEADNOTE: The, Government of Mysore, granted a plot of land to the respondents with the added condition that "in the event of the Government requiring the land for any reason whatsoever. the grantee shall surrender the land to the Government without claiming any compensation". The Government acquired the land by adopting the procedure prescribed by the Land Acquisition Act but no compensation was awarded to the grantees for the land. The High Court, in appeal, held that since the Government had failed to exercise the right which it had under the terms of the grant and had acted under the Land Acquisition Act, the grantees were entitled to compensation as provided under the Act. In appeal, this Court, HELD : After obtaining possession of the land in pursuance of statutory authority under s. 17 of the Land Acquisition Act, the Government could not seek to exercise the option conferred by the terms of the grant. The grantees were entitled to Compensation for the land of which the ownership was vested in them. But in assessing compensation payable to the grantees, existence of the condition which severely restricted their right could not be ignored. [B-C] The Act is silent as to the acquisition of partial interests in land but it cannot be inferred therefrom that interest in land restricted because of the existence of rights of the State in the land cannot be acquired. When land is notified for acquisition for a public purpose and the State has no interest therein, market value of the land must be determined and apportioned among the persons entitled to the land. Where the interest of the owner is. clogged by the right of the State, the compensation payable is only the market value of that interest, subject to the clog. [895 B, C] The Collector of Bombay v. Nusserwanji Rattanji Mistri & Ors. [1955] S.C.R. 1311, followed. Attorney-General v. De Kayser's Royal Hotel Ltd., [1920] A.C. 508, referred to. Government of Bombay v. Esufali Salebhai, I.L.R. 34 Bom. 618, approved. State of Madras v. A.Y.S. Parisutha Nadar, [1961] M.L.J. 285, disapproved. JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 335 of 1966.
Appeal by special leave from the judgment and order dated
November 6, 1963 of the Mysore High Court in Misc. Appeal
No. 293 of 1961.
could not be ignored. [894 B-C] I
893
Niren De, Solicitor-General, R. Gopalakrishnan and S. P.
Nayar, for the appellant.
Naunit Lal and T. S. Ramachandran, for the respondents.
The Judgment of the Court was delivered by
Shah, J. On April 15, 1952, the Government of Mysore granted
an area of I I acres and 38 gunthas of land situate in
village Hebbyle to the respondents to this appeal. The
grant was made in Form Appendix ‘E’ to the Mysore Land
Revenue Rule.-, with the added condition that “in the event
of the Government requiring the land for any reason
whatsoever, the grantee shall surrender the land to the
Government without claiming any compensation”. On January
11, 1958, the Government of Mysore published a notification
under s. 4 of the Land Acquisition Act that the land granted
was likely to be needed for a public purpose. By a
subsequent notification made under s. 17(4) of the Land
Acquisition Act, Government dispensed with the enquiry under
s. 5-A of the Act and obtained possession of the land. In
assessing compensation, the Land Acquisition Officer did not
award any compensation for the land, and awarded Rs. 1,495/-
for improvement claimed to have been made to the land by the
grantees. In a reference under s. 18 of the Land
Acquisition Act, the District Court agreed with the Land
Acquisition Officer. In appeal, the High Court of Mysore
set aside the award and remanded the case to the District
Court with a direction to determine the compensation payable
to the grantees and to dispose of the case according to law.
The High Court observed that since the Government had failed
to exercise the right which it had under the terms of the
grant and had adopted the procedure prescribed by the Land
Acquisition Act, compensation for acquisition under -the
Land Acquisition Act and the process by which the grantees
were to be deprived of the land must be followed. Against
the order passed by the High Court, this appeal is preferred
with special leave.
Under s. 3(a) “land” is defined as including benefits to
arise out of land, and things attached to the earth or
permanently fastened to anything attached to the earth. By
s. 4 the appropriate Goverrnment is authorised to issue a
notification that land in any locality is needed or is
likely to be needed for any public purpose, and thereafter
to exercise certain powers in respect of the land for
determining its suitability for the purpose notified. The
Government may under s. 17 in cases of urgency take
possession of any waste or arable land needed for the public
purpose and the -land thereupon vests absolutely in the
Government free from all encumbrances.
The Government of Mysore did not purport to exercise the
power reserved by the terms of the grant, and adopted the
proce-
894
dure prescribed by the Land Acquisition Act. The High Court
observed, relying upon the decision of the House of Lords in
Attorney-General v. De Kayser’s Royal Hotel Ltd.(1) that the
Government could not, after adopting the procedure
prescribed by the Land Acquisition Act, seek to resort to
the conditions of the grant and claim that no compensation
for acquisition of the land was payable. It is true that
after obtaining possession of the land in pursuance of
statutory authority under S. 17, the Government of Mysore
could not seek to exercise the option conferred by the terms
of the grant. But on that account in assessing compensation
payable to the grantees, existence of the condition which
severely restricted their right could not be ignored. The
grantees were entitled to compensation for the, land of
which the ownership was vested in them. The measure of that
compensation is the market value of the land at the date of
the notification, and the measure of that market value is
what a willing purchaser may at the date of the notification
under S. 4 pay for the right to the land subject to the
option vested in the Government.
The High Court also placed reliance upon the judgment of the
Madras High Court in The State of Madras v. A. Y. S.
Parisutha Nadar(2). In that case the main question decided
was whether it was open to a claimant to compensation for
land under acquisition to assert title to the land notified
for acquisition as against the State Government when the
land had become vested in the Government by the operation of
the Madras Estates (Abolition and Conversion into Ryotwari)
Act 26 of 1948. On behalf of the State it was contended
that once an estate is taken over by the State in exercise
of its powers under the Estates Abolition Act, the entire
land in the estate so taken over vested in the State ‘in
absolute ownership, and that no other claim of ownership in
respect of any parcel of the land in the estate could be put
forward by any other person as against the State Government
without obtaining a ryotwari patta under the machinery of
the Act. The High Court rejected that contention observing
that the Government availing itself of the machinery under
the Land Acquisition Act for compulsory acquisition and
treating the subject-matter of the acquisition as not
belonging to itself but to others, is under an obligation to
pay compensation as provided in the Act, and that the
Government was incompetent in the proceeding under the Land
Acquisition. Act to put forward its own title to the
property sought to be acquired so as to defeat the rights of
persons entitled to the compensation. The propositions so
broadly stated are, in our judgment, not accurate. The Act
contemplates acquisition of land for a public purpose. By
acquisition of land is intended the purchase of such
interest outstanding in others as clog the right of the
Government to use the land for the public purpose. Where
(1) [1920] A.C. 508.
(2) [1961] 2 M.L.J. 285.
895
the land is owned by a single person, the entire market
value payable for deprivation of the ownership is payable to
that person : if the interest is divided, for instance,
where it belongs to several persons, or where there is a
mortgage or a lease outstanding on the land, or the land
belongs to one and a house thereon to another, or limited
interests in the land are vested in different persons,
apportionment of the compensation is contemplated. The Act
is, it is true, silent as to the acquisition of partial
interests in the land, but it cannot be inferred therefrom
that interest in land restricted because of the existence of
rights of the State in the land cannot be acquired. When
land is notified for acquisition for a public purpose and
the State has no interest therein, market value of the land
must be determined and apportioned among the persons
entitled to the land. Where the interest of the owner is
clogged by the right of the State, the compensation payable
is only the market value of that interest, subject to the
clog.
We are unable to agree with the High Court of Madras that
when land is notified for acquisition, and in the land the
State has an interest, or the ownership of the land is
subject to a restrictive covenant in favour of the State,
the State is estopped from setting up its interest or right
in the proceedings for acquisition. The State in a
proceeding for acquisition does not acquire its own interest
in the land, and the Collector offers and the Civil Court
assesses compensation for acquisition of the interest of the
private persons which gets extinguished by compulsory
acquisition and pays compensation equivalent to the market
value of that interest. There is nothing in the Act which
prevents the State from claiming in the proceeding for
acquisition of land notified for acquisition that the
interest proposed to be acquired is a restrictive interest.
We agree with the observations made by Batchelor, J.,
Government of Bombay v. Esufali Salebhai(1) at p. 636 :
” The procedure laid down in the Act is so
laid down as being appropriate to the special
case which is considered in the Act, i.e., the
case where the complete interests are owned
privately. But that special case is, as I
understand it, singled out by the legislature
as the norm or type with the intent that in
other cases which only partially conform to
the type the procedure should be followed in
so far as it is appropriate, nor that such
cases should be excluded from the Act because
they do not wholly conform to the type. In
other words, Government . . . are not debarred
from acquiring and paying for the only
outstanding interests merely because the Act,
which primarily contemplates all interests as
I.L.R. 34 Bom. 618.
896
held outside Government, directs that the,
entire compensation based upon the market
value of the whole land, must be distributed
among the claimants. In such circumstances,
as it appears to me, there is no insuperable
objection to adapting the procedure to the
case on the footing that the outstanding
interests, which are the only things to be
acquired, are the only things to be paid for.”
The principle of Esufali Salebhai’s case(1) was it may be
observed, approved by this Court in The Collector of Bombay
v. Nusserwanji Rattanji Mistri & Others(1).
But the view expressed by the District Court that the
grantees are not entitled to any compensation for the land
cannot be sustained. The District Court was bound to
determine the market value, at the date of the notification
under s. 4 of the Land Acquisition Act, of the interest of
the grantees in the land.
The order passed by he High Court is maintained subject to
the modification that the market value of the interest of
the grantees in the land (of the nature hereinbefore
mentioned) at the date of the notification under s. 4 of the
Land Acquisition Act shall be determined and paid to the
grantees in addition to the compensation paid for the
improvement in the land. There will be no order as to costs
in this appeal.
Y.P. Order of the High Court modified.
(1) I.L.R. 34 Bom. 618.
(2) [1955] S. C. R . 111 I.
897