1. Lease of government land — Termination of tenancy — Acquisition under Land Acquisition Act, 1894 — Dispute over compensation amount and apportionment between landlord and tenant. (Para 3 )
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1997 Supreme(SC) 768
1997(6) Supreme 39
SUPREME COURT OF INDIA
K. Ramaswamy S. Saghir Ahmad & G.B. Pattanaik, JJ.
Union of India through Secretary, Ministry of Home Affairs, Govt. of India & Ors. -Appellants
versus
A. Ajit Singh -Respondent
Civil Appeal No. 3695 of 1997
(Arising out of SLP (C) No. 839 of 1987)
With
Civil Appeal No. 3696 of 1997
(Arising out of SLP (C) No. 885 of 1987)
Decided on 29-4-1997
Counsel for the Parties :
For the Appellants : V.C. Mahajan, Sr. Advocate. Ms. Sushma Suri, Ms. Shashi Kiran, and D.S. Mehra, Advocates.
For the Respondent : N. Ganpathy, Advocate.
Important Points
IMPORTANT POINT
For apportionment of compensation between the landlord and tenant in land acquisition case, Court is required to take into consideration relevant factors viz, duration of lease, nature of right to enjoyment of lease hold interest and improvements the tenant made one the land.
For apportionment of compensation between the landlord and tenant in land acquisition case, Court is required to take into consideration relevant factors viz, duration of lease, nature of right to enjoyment of lease hold interest and improvements the tenant made one the land.
Subject
Land Acquisition - Compensation and Apportionment
Act Referred
Headnote
(i) Land Acquisition Act, 1894-Assessment of compensation-Lands situated in developed area and was near to developed localities-If possessed potential value for use for building purposes-Determination of market value at Rs. 28.387 per bigha could not be said vitiated by any error of principle. (Para 4)
(ii) Land Acquisition Act, 1894-Apportionment of award between landlord and tenant-Relevant factors required to be taken into consideration-Respondent was in occupation of land on lease for 99 years-Part of lease had been enjoyed for 18 years-Apportionment of compensation in ratio of 60% to the tenant and 40% to landlord would be reasonable.
Held : The Court is required to take into consideration relevant factors, viz., the duration of the lease, the nature of the right to enjoyment of the lease-hold interest and the improvements the tenant made on the land etc. It is equally settled law that if the Government is the owner of the land, before initiating the acquisition, it is entitled to terminate the lease and take possession of the lands in terms of the lease. Necessarily, in the above case tenant cannot have any right to compensation as he is bound by the terms of the lease. In a case where the Government in spite of the covenant contained in the sale (Sic lease) deed, chooses to acquire the land, necessarily the tenancy right of a tenant is required to be assessed and the compensation has to be awarded suitably. In view of the fact that the lease is for 99 years and the part of the lease has been enjoyed for a period of 18 years, we think that the apportionment of the compensation in the ratio of 60% to the tenant and 40% to the landlord would be reasonable ratio and payment should accordingly be made. (Para 6)
Legal Category Hierarchy
Table of Contents
2. Challenge to market value determination, applicability of Amendment Act 68 of 1984, and the ratio of compensation apportionment between the landlord and the tenant. (Para 3 , 4 , 5 , 6 )
3. Market value based on building potential is valid; Amendment Act 68/84 applies to 1973 reference awards; apportionment depends on lease duration and enjoyment. (Para 4 , 5 , 6 )
4. Compensation apportionment between landlord and tenant depends on lease duration and enjoyment, provided the lease was not validly terminated prior to the acquisition process. (Para 6 )
5. Appeals allowed to the extent of modifying compensation apportionment to 60% for the tenant and 40% for the landlord. (Para 7 )
6. How is the market value of land determined when it is near developed areas?
Market value can be determined based on the land's potential for building purposes if it is situated near developed localities belonging to private parties and the government. (Para 4 )
7. When does the Amendment Act 68 of 1984 apply to solatium and interest?
The Amendment Act applies if the award of the reference court was made after the act's effective date, entitling claimants to 15% solatium and 6% interest on enhanced compensation. (Para 5 )
8. How is compensation apportioned between a landlord and a tenant in land acquisition?
Apportionment is determined by considering factors such as the duration of the lease, the nature of the right to enjoyment of the lease-hold interest, and improvements made by the tenant. (Para 6 )
9. What is the effect of terminating a lease before initiating land acquisition?
If the government terminates the lease and takes possession according to the lease terms before initiating acquisition, the tenant is not entitled to any compensation. (Para 6 )
ORDER
Substitution allowed.
Leave granted.
2. This appeal by special leave arises from the judgment of the Delhi High Court, made on 18.8.1996, in RFA No. 87 of 1974.
3. The undisputed facts are that on January 25, 1949, the respondent was granted a lease of the Government land for 30 years with a right to further renewal from time to time, upto a maximum period of 99 years. Since the land was required for acquisition, notice was issued on July 23, 1960 terminating the tenancy of the respondent. The respondent filed an appeal before the Additional District Judge who held that the lease still subsisted and, therefore, the respondent could not be evicted. Notification under Section 4(1) of the Land Acquisition Act, 1894 (for short, the Act ) was published on February 17, 1967 acquiring the land for planned development of the City of Delhi. The Land Acquisition Officer gave his award on June 6, 1967 determining the compensation @ Rs. 4,000/- per bigha. On reference, the Additional District Judge, by his award and decree dated 2.11.1973 enhanced the compensation to Rs. 17,000/- per bigha; apportionment was also effected. On appeal by the State and by the claimant also, the High Court while affirming the apportionment of 75% of the tenant and 25% to the landlord, has enhanced the compensation to Rs. 28,387/- per bigha. The High Court also applied the provisions of Amendment Act 68/84 and awarded the enhanced solatium, interest and additional amount. Thus, this appeal by special leave.
4. The High Court in the judgment has noted that the lands are situated in the developed area and are very near to the developed localities belonging to the private parties and Government. Therefore, it possesses the potential value for use for building purposes. Accordingly, it has determined the compensation @ Rs. 28, 387/- per bigha. We think that the determination of the market value on the basis of the above consideration is not vitiated by any error of principle.
5. The next question that arises for consideration is: whether the respondent is entitled to the benefit of the Amendment Act 68 of 1984? In view of the fact that the award of the reference Court is of November 2, 1973, the Amendment Act would apply and, therefore, the claimants are entitled to the solatium at 15% and interest at 6% on the enhanced compensation from the date of taking possession till date of deposit in the court.
6. The next question is: to what proportion the landlord that the tenant are entitled to vis-a-vis the compensation? Though the appellant had terminated the tenancy, on appeal, it was restored. Thereafter, they remained in possession as tenant. The appellant initiated the acquisition under the Land Acquisition Act, though the covenant in the lease deed provided the right of dispossession and for taking possession for public purpose. In view of the fact that the order become final and the possession was not taken, pursuant to the termination of the tenancy, and since the acquisition was initiated under the Act, the respondent is entitled to the payment of the compensation. The right of tenancy is a right under which a tenant is entitled to enjoy the possessory titleand enjoyment of the leased land subject to covenants relating to ejection after due determination of tenancy. It is seen that the lease was granted in 1949 and it was terminated in 1960 and the acquisition was initiated in 1967 on which date he continued to be in possession of the property; therefore, this Court has to consider the apportionment of the compensation on that basis. The judgment in Mangat Ram & Ors. v. State of Haryana & Ors.1, relates to the commercial premises which was acquired by the Government and the apportionment of the compensation was made at 75% and 25% to the tenant and the landlord respectively. It was challenged by the landlord for full payment. In that perspective, this Court upheld the grant of the apportionment at 75% and 25% to the tenant and the landlord respectively.
