ORDER

1. The appellant admittedly was a lessee of Nazul land admeasuring 3.1 acres or thereabout situated at Block No. 160 in Delhi having had perpetual lease from the Government of India on June 14, 1934 on payment of premium of Rs 10,850 and annual rent with stipulations that "and of the land hereinafter reserved and of the covenants on the part of the lessee hereinafter contained, the lessor doth hereby demise unto the lessee all the plot of land containing...". He was also entitled to retain the demise land in perpetuity subject to the right of the lessor to enhance the rent and the right to re-entry upon the demised land on breach of the covenants. The appellant with permission of the lessor constructed a building on the demised land and was in its quiet enjoyment, complying with the covenants. By a notification dated March 5, 1967 published in the Gazette under Section 4(1) of the Land Acquisition Act, 1894, for short the Act, the demised land together with the building, along with other lands was acquired for a public purpose. The Land Acquisition Collector by an award dated March 26, 1973 awarded compensation with the following observations:

"Thus the land under acquisition is a leasehold held at present on lease by the claimant Shri Inder Parshad. The land is Nazul which was given on a perpetual lease by Chief Commissioner, Delhi on an yearly rent of Rs 542/8/- (Rs 542 and 8 annas, i.e. Rs 542.50 P) per annum. The perpetual lease is subject to the performance of certain covenants including prior permission of the lessor to 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 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{(1955) 1 SCR 1311}. 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 f