The compensation payable to the owner of a land acquired under the Land Acquisition Act is only the market value of the interest of the owner subject to the clog or restriction.

Headnote:
LAND ACQUISITION - RESTRICTIONS ON TRANSFERABILITY AND PARTIBILITY - COMPENSATION - RELEVANCE OF RESTRICTIONS - PRINCIPLES LAID DOWN.
Fact of the Case:

The land in question was acquired for public purpose, and the claimant was awarded compensation. The claimant contended that the compensation should have been fixed at a higher amount as there was a clog on transfer of the land due to restrictions imposed under the Bombay Merged Territories Miscellaneous Alienations Abolition Act, 1955.
Finding of the Court:

The Court held that while determining the compensation payable under the Land Acquisition Act, it is necessary and incumbent to take into account any restrictions on the holding such as inalienability and impartibility. The Court further held that the compensation payable to the owner is only the market value of the interest of the owner subject to the clog.
Issues: 1. Whether while determining the compensation payable under the Land Acquisition Act, it is necessary and incumbent to take into account any restrictions on the holding such as inalienability and impartibility? 2. Whether on principle there is any difference in the restrictions which are of irrevocable nature and the restrictions which can be withdrawn by sanction of any authority either with or without payment of certain amount? 3. How the valuation under the Land Acquisition Act be made of the interest of the claimant in the property subject to clog of the nature prescribed by section 7 of the 1955-Act and the Government orders in pursuance of that section?
Ratio Decidendi: The Court relied on the decision of the Supreme Court in the case of Spl. L.A. Officer v. M.S. Seshagiri Rao, wherein it was held that the measure of market value would be what a willing purchaser would pay for the land which is subject to the Government option as mentioned above. The Court also relied on the decision of this Court in the case of Government v. Century Spinning and Mfg. Co., wherein it was held that the restrictive covenants would be relevant while determining the compensation and that the market value of the land will have to be determined after bearing in mind those restrictions.
Final Decision: The Court held that the compensation payable to the claimant should be determined after taking into account the market value of the land which had no such restriction and thereafter deducting the amount equivalent to 20 times the assessment. The assessment would be agricultural assessment, if the land is used for agricultural purposes and if the land is issued for non-agricultural purposes the assessment would be non-agricultural assessment actually levied or leviable on such non-agricultural lands.

JUDGMENT - B.C. GADGIL, J.:---This matter was initially heard by the Division Bench consisting of Waikar and Vaze, JJ., and by their order dated September 15, 1983, certain questions have been referred to the Full Bench. Though the questions have not been formulated in the referring judgment, we have, at the time of the hearing of this reference, formulated those questions. We will enumerate them in the latter part of this judgment.

2. Before considering the controversy it would be necessary to mention a few facts. Two acres and 25 gunthas from Survey No. 610, situated at lchalkaranji were acquired for public purpose viz. burial ground. This land was originally a jagir land. The said jagir along with other miscellaneons inams and watans were abolished under the Bombay Merged Territories Miscellaneous Alienations Abolition Act, 1955 (hereinafter referred to as the "1955-Act"). The scheme of the Act is to abolish all alienations or watans. Section 7 provides that the land under a watan stands resumed and that it shall be granted to the holder of the watan in accordance with the provisions mentioned in that section. Sub-section (2) provides that the watan of the type with which we are concerned shall be granted on payment of certain occupancy price within the prescribed period. That occupancy price is in multiples of the assessment of the land. Sub-section (3), which is relevant for deciding this reference, reads as follows :

"the occupancy of the land regranted under Clause (2) shall not be transferable or partible by metes and bounds without the previous sanction of the Collector and except on payment of such amount as the State Government may by general or special order determine."

It is not in dispute that the Government has issued necessary directions as to (i) the manner in which the said ban on transferability or partibility can be lifted and (ii) the amount that is to be paid for that purpose. Previously under some other enactments certain inams have been abolished. Some of the Acts have made provisions similar to section 7 of the 1955-Act. The Government has issued a Resolution No. 4089/51 dated March 28, 1955, prescribing as to how the conditions of inalienability should be relaxed, Class IV deals with the inam lands which have been granted under various acts with restrictions about the alienation, partition etc. It reads as follows:

"In regard to the lands covered by I(ii)(b) the main distinguishing feature in their case is that the conditions of inalienability and impartibility imposed at the time of the regrant of these lands are relaxable on payment by the grantees of such amounts as are specifically prescribed by Government in this behalf. Government, therefore, considers that this special or peculiar feature should be specifically mentioned in the agreements to be taken from these grantees and is pleased to direct that in the case of these grantees agreements should be taken in the form appended to this Government Resolution."

The relevant portion of the prescribed agreement form which is required to be signed by the grantee reads as follows :

"The said land has been granted to me in perpetuity.

subject (1) to the provisions of the Bombay Land Revenue Code, 1879, and of the rules, in force thereunder and to (2) the further condition that I, my heirs, legal representatives and assigns shall not at any time by partition, lease, mortgage, sale or otherwise transfer directly or indirectly the said land either in whole or in part without the previous consent of the Collector which will be granted by the Collector on payment of the amounts prescribed. If I fail to perform any of the aforesaid conditions I shall be liable without prejudice to any other penalties that I may incur under the said Code, and the rules made thereunder, to have the said land summarily forfeited by the Collector, and I shall not be entitled to claim compensation for anything done or executed by me in respect of the said land."

It is not in disput

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Judicial Analysis