Judgement

SHAH, J. : On April 15, 1952, the Government of Mysore granted an area of 11 acres and 38 gunthas of land situated in village Hebbyle to the respondents to this appeal. The grant was made in Form Appendix E to the Mysore Land Revenue Rules 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.

2. 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 Government 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.

3. The Government of Mysore did not purport to exercise the power reserved by the terms of the grant, and adopted the procedure 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., 1920 AC 508 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.

4. The High Court also placed reliance upon the judgment of the Madras High Court in State of Madras v. A. Y. S. Parisutha Nadar, 1961-2 Mad LJ 285. 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 not