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Dossibai Nanabhoy Jeejeebhoy Vs. P.M. Bharucha - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai High Court
Decided On
Case NumberFirst Appeal Nos. 143, 623 and 624 of 1954 and 46 of 1955
Judge
Reported in(1958)60BOMLR1208
AppellantDossibai Nanabhoy Jeejeebhoy
RespondentP.M. Bharucha
Excerpt:
land acquisition act (1 of 1894) section 3(b), 9, 5a, 10(1), 11, 12, 18, 30 - compensation for compulsory acquisition whether restricted to persons having legal or proprietary interest in land acquired--'person interested in the land' whether includes person claiming interest in compensation paid for acquisition of land--whether rights of persons interested in land to claim compensation awarded affected by issue of notification for acquisition--whether for purpose of apportionment of compensation the court can make distinction between case where person in possession under agreement to take lease and case where lease executed--apportionment of compensation--methods to be adopted in--application of doctrine of part performance whether restricted to cases where person entitled to claim.....j.c. shah, j.1. his lordship, after setting out the facts, proceeded : the dispute about apportionment between the three claimants has now to be decided. the learned trial judge held, that the first and the second claimants were entitled to share the amount of compensation and the third claimant was not entitled to share therein. we will presently deal with the method followed by the learned trial judge and the principles enunciated by him for apportioning the amount of compensation. but before we deal with the question of apportionment it may be necessary to refer to certain preliminary contentions raised on behalf of the first claimant. the first claimant claimed the entire amount of compensation to the exclusion of claimant no. 2 and claimant no. 3. it was urged that the entire.....
Judgment:

J.C. Shah, J.

1. His Lordship, after setting out the facts, proceeded : The dispute about apportionment between the three claimants has now to be decided. The learned trial Judge held, that the first and the second claimants were entitled to share the amount of compensation and the third claimant was not entitled to share therein. We will presently deal with the method followed by the learned trial Judge and the principles enunciated by him for apportioning the amount of compensation. But before we deal with the question of apportionment it may be necessary to refer to certain preliminary contentions raised on behalf of the first claimant. The first claimant claimed the entire amount of compensation to the exclusion of claimant No. 2 and claimant No. 3. It was urged that the entire interest in the lands as a holder thereof was vested in the first claimant and even though the first claimant had entered into two agreements to lease out the land to the nominee of the second claimant, by the mere agreements the second claimant acquired no interest in the lands under acquisition and accordingly the second claimant could not claim a share in the compensation. It was further urged that the third claimant was claiming a derivative interest, if any, from the second claimant, and if the second claimant was not entitled to any share in the compensation, the third claimant also was not entitled to any compensation.

2. In order to appreciate this argument it may be necessary to determine the legal relation between the parties on October 1, 1947, the date on which the notification for acquisition under Section 4 of the Land Acquisition Act was issued. Under the agreements, dated June 2, 1947, and June 12, 1947, respectively, exhs. 324 and 325, the first claimant had put the second claimant in possession of the lands agreed to be demisd by her, and in pursuance of the agreements claimant No. 2 was in occupation of some of the lands, and the remaining lands were in the occupation of the third claimant under agreements exhs. 326, 327 and 328. It is undisputed that the second claimant had paid the rent which was agreed to be paid by him, and the second claimant was ready and willing to carry out his part of the contract. Claimant No. 2 was, therefore, entitled to claim the benefit of part performance under Section 53A of the Transfer of Property Act and also to claim specific performance of the agreement to lease the lands in the event of the first claimant being unwilling to cary out her part of the contract. It may also be noted that on the date of the notification the first claimant was ready and willing to execute a conveyance on the terms agreed upon and the second claimant was ready and willing to take a conveyance from the first claimant. Again, there is no dispute that the third claimant remained in occupation under an agreement of lease from the second claimant. The third claimant was ready and willing to carry out its part of the contract and the second claimant was also willing to carry out his part of the contract. The third claimant was, therefore, entitled to the benefit of part performance under Section 53A of the Transfer of Property Act and also to obtain specific performance against the second claimant in the event of the second claimant being unwilling to carry out his part of the contract. It is evident that as against the first claimant the second claimant had possession of the lands agreed to be demised and that he was entitled to hold possession of the lands and the first claimant was debarred from enforcing against the second claimant and persons claiming under him any right in respect of the lands agreed to be demised other than the right expressly provided by the terms of the agreement. Similarly, as against the second claimant the third claimant was also entitled to hold possession. If the first claimant, relying upon her title, sought to obtain possession of the lands agreed to be demised to the second claimant, the latter could effectively resist the claim made by the first claimant except a claim arising out of any express terms of the agreement. Even though, therefore, the second claimant had not acquired the interest of a tenant, there being no registered lease, he was entitled to remain in possession as if he had obtained a lease in his favour. Similarly, as against the second claimant, the third claimant had a right to remain in possession as if it had obtained a lease.

3. We are unable to accept the argument of Mr. Gupte on behalf of the first claimant that the second claimant was not in 'possession', within the meaning of Section 53A of the Transfer of Property Act, as against the first claimant. It was urged by Mr. Gupte that the possession contemplated by Section 53A of the Transfer of Property Act is actual physical possession and not legal possession. In our judgment there is nothing in Section 53A of the Transfer of Property Act which either expressly or by necessary implication supports the view that the possession contemplated to be protected thereby is actual physical possession and not legal possession. Under para. 2 of Section 53A of the Transfer of Property Act, provided the transferee has taken possession of the property, or, being already in possession, has continued in possession, and the other conditions are fulfilled, he is entitled, notwithstanding that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, to remain in possession, and the transferor is debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession. The section was enacted with a view to partially introduce in India the doctrine of part-performance as understood under the English Law, and there is no reason to suppose that the application of the doctrine of part performance was intended to be restricted only to those cases where possession of the person entitled to claim protection was actual physical possession and not legal possession.

4. It was also urged by Mr. Gupte that the second claimant had not transferred the benefit of the contract which he had entered into with the first claimant, and there being covenants under the agreements of lease not to sub-let or assign the demised premises or any part thereof without the consent in writing of the lessor, the occupation by the third claimant could not be regarded as an authorized occupation. As a corollary, it was urged that the second claimant was not in actual possession and the third claimant had no right to remain in possession and, therefore, neither the second claimant nor the third claimant was entitled to claim the benefit of Section 53A of the Transfer of Property Act or even to obtain specific performance of the agreements against the first claimant. It may, however, be noted that Section 53A not only protects the transferee but all persons claiming under him, and the possession of the third claimant must be regarded as possession of a person claiming under the second claimant. In any event, the restrictive clauses, for instance in para. 6(j) in exh. 324 and in Clause 1 of exh. 325 read with para. 6(j) of exh. 324 are only intended to become operative after the lease is executed and not before.

5. It was urged by Mr. Gupte that under the Land Acquisition Act only those persons were entitled to claim compensation who had interest in the land compulsorily acquired and no others, and in support of that argument, our attention was invited to certain provisions of the Land Acquisition Act. Section 3(b) defines the expression 'person interested'. It provides that:

unless there is something repugnant in the subject or context, the expression 'person interested' includes all persons claiming an interest in compensation to be made on account of the acquisition of land under this Act; and a person shall be deemed to be interested in land if he is interested in an easement affecting the land;

It is evident from the definition that the expression 'person interested' includes persons who have an interest in compensation, even though they may have no interest in the land itself. Section 5A enables any person interested in the land notified for acquisition under Section 4(1) to object to the acquisition of the land, and by Sub-section (3) of that section it is provided that a person shall be deemed to be interested in land who would be entitled to claim an interest in compensation if the land were acquired under the Act. Section 9 by the first sub-section requires the Collector to give notice stating that the Government intends to take possession of the land and that claims to compensation for all interests in such land may be made to him. By Sub-section (2) of Section 9 the notice is required to state the particulars of the land needed and to require all persons interested in the land to appear personally or by agent before the Collector. By Sub-section (3) it is provided that the Collector shall also serve notice upon persons known or believed to be interested therein, and by Sub-section (4) it is provided that in case any person so interested resides elsewhere, and has no such agent, the notice shall be sent to him by registered post. By Section 10(1) the Collector is entitled to require any person to make or deliver to him a statement containing the name of every other person possessing an interest in the land. By Section 11 the Collector has to proceed to enquire into the objections of any person interested and thereafter to make an award inter alia apportioning the compensation amongst all the persons known or believed to be interested in the land. By Section 12 the Collector is required to give immediate notice of his award to all persons interested as are not present personally or by their representatives. Under Section 18 any person interested who has not accepted the award may make an application to the Collector to make a reference to the Court, and under Section 30 the Court is entitled to apportion the compensation, and the Collector is required to make a reference to the Court about the apportionment, if any dispute arises between the persons entitled thereto.

6. The Legislature has undoubtedly used different expressions such as 'persons interested', 'persons known or believed to be interested' and 'persons possessing an interest'. But, in our judgment, the expressions 'person interested', and 'person possessing an interest' appear to have the same meaning which the expression 'person interested' defined in Section 3(6) has. We are unable to agree with the contention of Mr. Gupte that the Legislature has used the expression 'person interested in the land' as having a connotation distinct from the connotation of 'person interested'. A 'person interested in the land' under Section 9 will, in our judgment, by the definition in Section 3(b), include a person who claims interest in compensation to be paid on account of the acquisition of land, and the interest which is contemplated by Section 9 and the other sections to which we have referred is not restricted to legal or proprietary estate or interest in the land but includes such interest as will sustain a claim to apportionment with the owner of the land. If a person has a right to remain in occupation or has a claim against the land, or some obligation or restriction is imposed upon the ownership of the land, the person in whom the right or claim is vested or who is entitled to the benefit of the obligation or restriction will, in our judgment, be entitled to compensation, even though the right, claim or the benefit may not amount to an interest or estate in the land. If a person has, without having any interest, a right to remain in occupation or possession of land of the ownership of another, compensation for extinction of that right by compulsory acquisition will be payable to the person having the right of occupation or possession. For instance, a person who has a licence which is irrevocable will be a person interested, even though the licence does not amount to an interest in the land. The owner of a dominant tenement, having an easement over a servient tenement, even though the easement does not amount to an interest in the land, is by the definition declared expressly to be a person interested in land. In our judgment, the right to receive compensation for compulsory acquisition of land is not restricted to those persons who have a legal or proprietary interest or estate in the land and is available to all persons who have a right or claim to land, even if such right or claim does not amount to legal or proprietary estate or interest in the land.

7. The view we are expressing is amply supported by authority. In Chhuttan Lal v. Mul Chand AIR [1917] Lah. 40, a Division Bench of the Lahore High Court held that a person who has entered into a valid agreement to purchase land is a 'person interested' within the meaning of Section 3(6) of the Land Acquisition Act, That was a case in which certain land was agreed to be sold and thereafter the land was compulsorily acquired, and the person to whom the land was agreed to be sold made a claim for apportionment of compensation. Mr. Justice Shadilal, who delivered the judgment of the Court, after referring to the provisions of Sections 3(b), 9(3), 10 and 25 of the Land Acquisition Act, held that a person who had agreed to purchase land was a 'person interested' and entitled to apportionment. It was urged on behalf of the owner of the land that the expression 'person interested' meant a person having a permanent and transferable interest in the property acquired and no other. In rejecting that argument the Court observed (p. 42):.The expression 'person interested' has been defined in Section 3(b) of the Land Acquisition Act as including all persons, claiming an interest in compensation to be awarded on account of the acquisition of land under the Act, and this definition, in our opinion, is wide enough to include the equitable interest that Mul Chand claimed to have in the present case.

We may observe that the case arose in the Punjab where the Transfer of Property Act was not applicable, and by an agreement to purchase property the purchaser Mul Chand had acquired an equitable interest in the land, and that interest, even though it was not a legal interest, was held by the Court sufficient to sustain a claim to apportionment of compensation.

8. In J.C. Galstaun v. Secretary of State for India in Council (1905) 10 C.W.N. 195, a Division Bench of the Calcutta High Court held that a person who had entered into an agreement to purchase land was entitled to apply under Section 18 of the Land Acquisition Act for a reference to the District Court, even though that person had not obtained, before the date of the application, a conveyance in his favour, It is clear that in the view of the Calcutta High Court a person who claims an interest in compensation is competent to make an application for reference under Section 18 of the Land Acquisition Act.

9. In Pratapa Bhattadu v. A.E.L. Mission ILR (1924) 49 Mad. 38, it was held that a creditor who had attached land in execution of a decree could, if the land was compulsorily acquired, make a claim for apportionment of compensation. Mr. Justice Phillips, who delivered the principal judgment of the Court, observed that a person may be 'interested' within the meaning of the Act without holding any legal estate in the land and that an attaching decree-holder was a person 'interested' in the land within the meaning of the Act. The learned Judge observed (p. 40):

This definition of 'person interested in Section 3(b) of the Land Acquisition Act does not seem to contemplate that a person interested need have a legal interest in the land, because it specifically alludes to interest in the compensation to be made, and it has frequently been held that a person may be interested within the meaning of the Act without holding any legal estate in the land,...

10. In In re Pestonji Jehangir (1911) 14 Bom. L.R. 507, Mr. Justice Macleod observed that a person may be interested, within the meaning of Section 3(6) of the Land Acquisition Act, in the compensation money without having an interest in the land. In that case, one Pestonji, who was in occupation of the land under acquisition, under an agreement with the Improvement Trust, with a right to obtain a lease for 99 years when certain buildings had been erected according to the terms of the agreement of lease, was held to be a person entitled to apportionment. In the view of Mr. Justice Macleod, a person may be interested in the compensation money without having an interest in the land in the legal sense of the term. It is true that in that case there was at the trial a settlement between Pestonji, who claimed apportionment of the compensation, and the Improvement Trust, and the observations made by Mr. Justice Macleod were not necessary for the decision of the case. But on that account we are unable to ignore the observations. With respect, we are of the view that the observations made by Mr. Justice Macleod correctly set out the effect of Section 3(b) and the right to apportionment of compensation which a person may be entitled to under the Land Acquisition Act.

11. Mr. Gupte invited our attention to certain cases, relying on which he contended that the interest which would sustain a claim for apportionment must be legal or proprietary interest and not merely an equitable interest or some right to land not amounting to interest therein. The first case relied upon was the judgment of their Lordships of the Privy Council : Secretary of State for India in Council v. Shanmugaraya Mudaliar . In that case, the High Court of Madras had awarded to the zamindar, whose land was compulsorily acquired, compensation for the loss of earnings of certain persons employed on the land, and the Privy Council held that the High Court was in error in so doing. Their Lordships observed that the persons who lost their earnings because they lost employment on the land could, not be regarded as having an interest in land, nor was the zamindar interested in the earnings of those employees or in the loss suffered by them. We fail to appreciate how that case can have any application to the facts of the present case. The zamindar could be awarded compensation for loss suffered by him and not for loss alleged to have been suffered by persons employed on the land. The persons who were employed on the land had no right or claim to the land nor had they any interest in the compensation, and compensation could not be awarded to the zamindar in respect of the loss suffered by those who were merely employed on the land.

12. The next case to which we were referred was The Collector of Bombay v. Nusserwanji Mistri : [1955]1SCR1311 decided by their Lordships of the Supreme Court. In that case no question directly arose about assessment or apportionment of compensation. The question which fell directly to be decided by the Court was about the prerogative right of the State to levy assessment on lands which had not been previously assessed, and the Supreme Court held that the State had such a right. It appears that in that case certain Foras lands governed by Bombay Act VI of 1951 were, between the years 1864 and 1867, compulsorily acquired under the Land Acquisition Act, 1857, for a railway. Thereafter the lands were sold by the Government of Bombay in 1938 to certain purchasers who conveyed the same in trust to the plaintiffs. In 1942, the Collector of Bombay, treating the plaintiffs as superior holders, proposed to levy assessment on the lands at the rates prescribed by the Bombay City Land Revenue Act, 1876. Thereupon the plaintiffs sued the Collector for a declaration that he had no right to levy the assessment; and it was urged in support of the claim that the Government's right to assess the land had, by reason of the acquisition between the years 1864 and 1867, been extinguished. Their Lordships of the Supreme Court observed that under the scheme of the Land Acquisition Act what was acquired was the private right of individuals and not the right of the Government and there was no valuation of the right of the Government to levy assessment of the land and no compensation was awarded therefor. It was then observed (p. 733):

We have so far assumed with the respondents that the right of the Government to levy assessment is an interest in land within the meaning of Section 8 of Act VI of 1857. But is this assumption well-founded? We think not. In its normal acceptation, 'interest' means one or more of those rights which go to make up 'ownership'. It will include, for example, mortgage, lease, charge, easement, and the like, but the right to impose a tax on land is a prerogative right of the Crown, paramount to the ownership over the land and outside it. Under the scheme of the Land Acquisition Act, what is acquired is only the ownership over the lands, or the inferior rights comprised therein.... The Government is not a 'person interested' within the definition in Section 3(b), and, as already stated, the Act does not contemplate its interest being valued or compensation being awarded therefor.

In that case, the only question which fell to be determined was whether the right of the Government to levy assessment was 'interest' within the meaning of the Land Acquisition Act, and it was held that it was not. It is true that their Lordships observed that in its normal acceptance the word 'interest' meant one or more of those rights which go to make up 'ownership' and will include, as for instance, mortgage, lease, charge, easement and the like. But that observation, in our judgment, does not lead to the inference that the expression interest within the meaning of Section 3(b) can be equated with ownership or estate in land, In our view, this case does not assist the contention raised on behalf of the first claimant.

13. Reliance was also placed upon Mohamad Abdul Jabbar v. Lalmia [1947] Nag. 328. In that case it was held that a contract for sale of immoveable property did not create any interest in or charge upon the property which was compulsorily acquired and the plaintiff suing for specific performance was not entitled to compensation money lying with the Collector. At first sight, this judgment may appear to support the contention raised on behalf of the first claimant, but when the facts are examined, it does not appear that it was intended by the Court to lay down any such proposition. The property in dispute in that case was agreed to be sold by the owner to one Mahomad Abdul Sattar for Rs. 10,000. As the owner failed to convey the property, Mahomad Abdul Sattar filed a suit for specific performance of the agreement of sale. During the pendency of the suit, the land was compulsorily acquired, and evidently the suit for specific performance became infructuous. It was contended on behalf of the plaintiff that he was entitled to the compensation money lying with the Collector, and the Court negatived his contention. But evidently if the plaintiff was entitled to the benefit of the contract, he had to make an application in acquisition proceedings, to the Collector and claim apportionment; he could not ask the civil Court to pass an order against the Collector or against the defendant whereby the amount of compensation may be paid over to him. In our judgment, this case also does not support the contention raised by Mr. Gupte.

14. We are, therefore, of the view that the second claimant was a 'person interested' in the compensation money and was entitled to apportionment. Equally, the third claimant was entitled to apportionment of the compensation money. The circumstance that neither the second claimant nor the third claimant had a registered conveyance in his favour creating a legal interest or estate in the land did not prevent them from claiming apportionment of compensation money.

15. It was then urged that the agreements to lease the lands had been abandoned and consequently the second claimant was not entitled to any compensation. It must be borne in mind that the rights and obligations of the parties in the matter of apportionment have to be adjudged in the context of circumstances existing at the date when the notification under Section 4 of the Land Acquisition Act was issued and possession was taken under Section 16, Once possession is obtained, the rights of all persons in the land are extinguished, and the land vests in the Government free from all encumbrances. It may be noted that even after possession was taken by the Government all the three claimants made a claim for compensation, and the first claimant admitted the right of claimants Nos. 2 and 3 to apportionment of compensation see exh. 59 in Reference No. 9 of 1951. Thereafter also all the three claimants preferred an amended application before the Land Acquisition Officer in which they submitted a different scheme for apportionment see exhs. 59 and 60 respectively dated February 14, 1948, and September 19, 1949. The first claimant having in terms admitted by applications exhs. 59 and 60 that the agreements were outstanding and the amount of compensation was liable to be apportioned, it is difficult to accept the contention that there was any abandonment of the right by mutual agreement or acquiescence. Similar written applications were made also in the acquisition proceedings for S. No. 148/1. It may also be observed that after the lands were notified for acquisition there was a fresh agreement between the first claimant and the third which is exh. 84, dated February 13, 1948, whereby lands which were not acquired were given by the first claimant on lease to the third claimant. It was recited in that lease:.AND WHEREAS subsequent to the handing over of such possession to the Lessee by the Lessor as aforesaid portions of the said land comprised in the said agreements dated 2nd June 1947 and 12th June 1947 and hereby agreed to be demised were acquired by the Government of Bombay for public purposes and possession thereof was taken by the Housing Commissioner on behalf of the Government of Bombay AND WHEREAS negotiations between the Lessee and the Government of Bombay for derequisitioning the said piece of land so acquired as aforesaid are still pending AND WHEREAS the said Trivedi, the said Bharucha and the Lessee have requested the Lessor to grant to the Lessee for the present a lease of the pieces of land being portions of the said land comprised in the said recited agreement to lease dated the 2nd day of June 1947 which portions are more particularly described in the schedule hereunder written which the Lessor agreed to in the manner hereinafter appearing....

It is evident from this recital that there was no abandonment, even at the time of execution of exh. 84, of the rights acquired under the original agreement of lease. In our view, there is no substance in the contention that the rights acquired under exhs. 324 and 325 were by mutual agreement abandoned. It may be noted that before the Land Acquisition Officer no plea was raised that there had been any abandonment and by mutual agreement a claim for apportionment of compensation was made.

16. It was also urged by Mr. Gupte, relying upon the judgment of their Lordships of the Supreme Court in Satyabrata Ghose v. Mugneeram Bangur and Company [1954] S.C. 310, that by the notification for acquisition the contract to lease was frustrated and, therefore, also the second and third claimants were not entitled to apportionment of the compensation. But the rights and obligations of the parties existing at the date on which the notification for acquisition was issued, have to be ascertained and on that day the second and third claimants had valuable rights in the land. By the acquisition all private rights in the lands including the rights of the first claimant have been extinguished but the rights which the claimants had in the land attached to the compensation amount. The Land Acquisition Act is intended in the public interest to extinguish private rights in land; it does not purport to affect the rights of persons interested in the land to claim a share in the compensation awarded. The frustration of the contract to lease, therefore, does not affect the rights of the second and third claimants to apportionment of compensation. In this connection we may refer to the observations made by the Calcutta High Court in Surendra Nath v. Pyari Charan AIR [1938] Cal. 70, as to the legal effect of acquisition proceedings. It was observed (p. 742):.The acquisition transforms the property into a certain sum of money, but the rights of the parties relatively to this sum ought to be the same as they were with reference to the property. Where a property is subject to a lease, theoretically speaking, the total compensation for the property should be the sum total of the compensation payable in respect of the interests of lessor and lessee.

If by compulsory acquisition land is transformed into money, we fail to appreciate why the person who had a right to the land should be denied a right to claim the equivalent of the right in the compensation money into which land is transformed. It may be observed that this contention about frustration of the contract was not raised before the learned trial Judge.

17. We are, therefore, of the view that the second and third claimants arc entitled to claim apportionment of compensation which has been awarded for the lands.

18. It was urged by Mr. Gupte that even if the second claimant is entitled to compensation, that compensation must be something less than the compensation awardable to a tenant who has obtained a registered lease in his favour. In our view, that contention also cannot be sustained. When land is compulsorily acquired, the interest of every person therein is extinguished, and the Court is required to ascertain the market value of the land and also of the interest of the parties interested therein which is extinguished by compulsory acquisition, and in so ascertaining the market value the Court must take into account the circumstance that it is only on account of the fortuitous intervention of the Government that the contract, which both the parties honestly desired to complete and which would have been completed but for such intervention, has not been completed. It is undisputed that at the date of the notification the first claimant was willing to grant the lease and the second claimant was willing to accept the lease. For the purpose of apportionment of compensation, we do not think, therefore, that any distinction can be made between a case where the person is in possession under an agreement to take a lease which he is willing to carry out and which the lessor is also willing to carry out, and a case in which the lease has, in fact, been executed.

19. Section 30 of the Land Acquisition Act merely provides that the Collector may make a reference to the District Court on a dispute as to the apportionment of the amount of compensation or any part thereof or as to the persons to whom the same or any part thereof is payable. But the Legislature has not laid down the principles by reference to which the dispute relating to apportionment has to be decided. The reason is obvious. When a dispute relating to apportionment arises, the Court is trying a dispute as to the civil rights between the parties relating to their interest in the money into which the land is transformed.

20. In apportioning the compensation the Court has to give to each claimant the value of the interest which he has lost by compulsory acquisition. So stated, the proposition may appear simple; but in its practical application numerous complicated problems arise in apportioning the compensation awarded. The difficulty experienced is due to the nature of a variety of interests, rights and claims to land which have to be valued in terms of money. The compensation awarded for compulsory acquisition is the value of all the interests which are extinguished and that compensation has to be distributed equitably amongst persons having interest therein and the Court must proceed to apportion the compensation so that the aggregate value of all interests is equal to the amount of compensation awarded. In disputes between landlords and tenants about apportionment, different methods of apportionment have been adopted. The methods which are generally adopted fall into three broad divisions. Under the first method the value of the lessor's and the lessee's interest may be separately ascertained in terms of money and then out of the total amount awarded the value of the interest of one may be taken out and the remainder awarded to the other. The second method is to value the interest of the lessor and the lessee separately, and if the aggregate of these two values does not reasonably correspond to the amount of compensation available for distribution, the amount may be distributed in the proportion of the two amounts. If reasonably precise valuation of the competing interests is not possible, the Court may proceed to evaluate the interests of the claimants in terms of fractions of the total amount of compensation regarded as a single unit. That is the third method. Theoretically the aggregate value of the interests acquired must be equal to the amount of compensation to be distributed. But in the valuation of competing interests, which from its very nature is dependant upon indefinite factors and uncertain data, considerable difficulty is encountered. Indisputably, in apportioning compensation the Court cannot proceed upon hypothetical considerations but must proceed as far as possible to make an accurate determination of the value of the respective interests which are lost. The Court must, in each case, having regard to the circumstances and the possibility of a precise determination of the value having regard to the materials available, adopt that method of valuation which equitably distributes the compensation between the persons entitled thereto. As observed by Mr. Justice Macleod in In re Pestonji Jehangir (p. 510):.Again, even if the market value of the various interests could be ascertained, their total value would not be likely to coincide with the sum to be apportioned. I think what the Collector and the Court have to do is to apportion the sum awarded amongst the persons interested as far as possible in proportion to the value of their interests and it is impossible to lay down any general rule which can be followed. The market value of an interest if ascertainable may afford some guide towards ascertaining the amount to be apportioned in respect of that interest, but that can only be considered in relation to the total sum awarded as compensation.

21. In the trial Court, the learned Judge thought that the best method to be adopted for apportionment of compensation between the persons interested was, having regard to what he conceived was inadequate compensation, to award in the first instance the capitalised value of the rental payable to the first claimant at 4 per cent. According to this method, the capitalised value of the rental exhausted the entire amount of compensation. He, therefore, thought that the second claimant should be awarded the capitalised value of the rebate for six years out of the amount awardable to the first claimant and the balance to the first claimant. In the view of the learned Judge, the interest of the third claimant was in reality not an interest but was a liability and, therefore, the third claimant was not entitled to any share in the compensation. It may be pointed out that on behalf of the second claimant in the trial Court the method of apportionment by awarding to the landlord the value of the land by capitalisation of rent at 3 per cent, was suggested as the proper method; and it was contended that if there was any balance after satisfying the first claimant, it may be awarded as compensation for the acquisition of the derivative interests of the second and third claimants. Substantially this method was adopted by the learned Judge. On behalf of the second claimant it was suggested that the apportionment should be made by assessing the market value of the interests of the first and second claimants in the land and the compensation should be distributed proportionately. In these appeals, the parties have abandoned the original stand which they had adopted in the trial Court. The first claimant has claimed that the parties should be awarded, out of the total compensation, amounts proportionate to their respective interests. The second claimant, however, claims the balance remaining after paying to the first claimant capitalised value of the annual rental at 4 per cent. But the circumstance that the parties have given up the original stand which was adopted by them in the trial Court cannot, in our judgment, have any bearing in ascertaining the method for equitable distribution. We must proceed to adopt that method which, having regard to all the circumstances, gives to each of the parties interested in the compensation a share which may be equitably regarded as equal in value to the interest lost by him in the land acquired.

22. In our judgment, it is not possible precisely to value either the interest of the first claimant or of the second claimant or the third claimant in the compensation. There are diverse rights which each has against the other, and we do not think that it is possible to devise any method by which separate valuations which may be regarded even as reasonably precise can be arrived at. If we turn to the terms of the agreement of lease exh. 324 between the first and second claimants, it is apparent that there are several rights given to the first claimant and to the second claimant which defy any attempt at precise valuation. Under exh. 324, the lease was to be granted for 99 years at an annual rental of Rs. 525 per acre for the first 99 years, and thereafter, at the option of the lessee, for another 99 years at double the rental. In ascertaining the area for fixing the rent, the area of the marshy lands and of the lands occupied by rivers, rivulets and the existing roads was to be excluded, and in consideration thereof the second claimant was to maintain a park in the name of the late Sir Byramjee Jeejeebhoy, and the rental of 1 acres was also excluded in fixing the rent. For the value of the trees the first claimant was, for a period of three years, entitled to receive Rs. 6,000 annually from June 1, 1947. The second claimant was also liable to pay a sum of Rs. 5,000 in lump being the estimated value of the other produce of the demised premises for three years from June 1, 1947. The liability to pay future taxes, charges, outgoings and assessment was imposed upon the second claimant and he was not to use the land as a factory, stable or for any other purpose which may be a nuisance to the first claimant. The second claimant was also to insure the buildings to be erected by him on the land, and he was authorized to make roads and was under an obligation to maintain the same in good repair. The second claimant was prohibited, except by way of a mortgage, from assigning, underletting or demising the premises or any part thereof without the assent of the first claimant. He was also not to claim any right of light or air or way or any easement over or upon any land adjoining, opposite or near the demised premises for the time being belonging to the first claimant. The first claimant undertook not to use or allow to be used any of the adjoining lands Survey Nos. 2, 3, 4, 5 and 148 and the Gowthan lands as factory, stable or for any other purpose which may be a nuisance to the second claimant and the occupiers of demised premises. Claimant No. 2 was given the right to cut trees, demolish existing structures belonging to the first claimant and to use for the purpose of the works on the demised premises earth, clay, gravel, sand or stones which may be excavated therein and also the right to quarry stones out of the tanks of the demised premises and to collect, carry away and dispose of the same. The second claimant was also given an option of pre-emption in respect of Survey Nos. 2, 3, 4, 5 and 148 and the Gowthan lands west of Ghodbunder Road or any part thereof in the event of the first claimant being willing to sell or give a lease of those lands. A proviso for re-entry was reserved in favour of the first claimant in the event of the second claimant failing to pay the rent agreed within three months from the date on which it was due and payable or on a breach or non-performance of any of the conditions or covenants of the lease.

23. It is evident from a resume of the important covenants, options and rights which were to be included in the proposed lease that there were numerous restrictions both on the first claimant and on the second claimant and neither in the evidence nor in the arguments at the bar has any method been suggested which would enable the Court to evaluate precisely the conditions, covenants, options and rights reserved to the respective parties. In exh. 325, which is the agreement in respect of lands in group B, similar covenants as are contained in exh. 324 are by reference incorporated. Analysing the rights and obligations of the parties, it is clear that the second claimant was in possession under an agreement of lease, that he had an equity in his favour to claim part performance and had also a right to claim specific performance of the agreement of lease and that under the lease he was entitled to the benefit of user of the property for 99 years at the rent agreed to be paid under the two agreements and for the next 99 years at double the rental and he was also entitled, besides the usual covenant of quiet enjoyment, to several other rights which we have summarised, and to the produce of the trees after the first three years.

24. As against these rights of the second claimant, the first claimant had the right to recover rental at the rates agreed and to re-enter the premises on failure of the second claimant to pay the rent or on breach or non-performance of the covenants or conditions. The payment of rent was to be secured by the construction of premises or buildings of the minimum value of 2 lacs of rupees. But the right of the first claimant was also not unrestricted. The first claimant was entitled to the produce of the trees for three years from the date of the agreement of lease and to prevent user of the demised premises for purposes which may constitute a nuisance.

25. The learned Judge in the trial Court, relying upon the evidence of one Dr. Parekh, capitalised the rental at 4 per cent, and then awarded one anna per square yard as the present value of the reversion and the restrictive covenants imposed upon the second claimant. He observed that the restrictive covenants had 'not much monetary value' and that the value of the reversion could not exceed one anna per square yard. He, therefore, took one anna per square yard as the value of both. The calculation which was made by the witness and accepted by the learned Judge appears from exh. 44 in First Appeal No. 143 of 1954. The learned Judge has taken an area of 1 acre and 8 gunthas as being equivalent to 5,808 square yards, of which the rental at Rs. 500 per acre plus 1/5th of Rs. 500 comes to Rs. 600. He then capitalised the rental for six years after giving partial abatement for half the amount at 4 per cent, plus 3 per cent, and arrived at a figure of Rs. 1,503, and for the balance of 93 years he arrived at a figure of Rs. 9,840. Then computing the deferred value for 99 years of the rental at Rs. 1,200 he arrived at the present value of Rs. 329 and gave for reversion after 198 years a value of Rs. 2; and the total figure of Rs. 11,674 was thus arrived at, and the value of the restrictive covenants taken at one anna per sq. yard i.e. Rs. 363 was added making thereby an aggregate of Rs. 12,037.

26. This method of calculation, in our judgment, proceeds upon numerous assumptions and must be regarded as wholly artificial. There is no justification whatever for assuming that the reversion of land value after 198 years can be calculated by finding out how much amount may be invested at present at 5 per cent, which on the expiry of 198 years will give an amount equivalent to the value of the land at Rs. 5-8-0 per square yard. There is no justification also for the assumption that the value of the land after 198 years will be Rs. 5-8-0 per square yard, nor is there any justification for the assumption that the rate of interest will continue to be 5 per cent. In assessing the value of the reversion, the Court cannot treat it as a mathematical problem, but must take a broad and practical view. The Court must ask itself the question, what is the amount which the owner may obtain if the land were to be sold subject to the rights of the second claimant? We have also some doubt as to the correctness of the calculation that if the value at the rate of Rs. 2 per square yard is invested at 5 per cent, simple interest, at the expiry of 198 years the amount would be Rs. 31,944. In our view, this computation of the value of the reversion and the value of the restrictive covenants imposed on the second claimant, must be discarded.

27. In our view, the apportionment of the compensation in the context of the rights acquired by the first and second claimants may be adequately assessed by the third method which has received judicial recognition. It was adopted by the Allahabad High Court in Shiam Lal v. Collector of Agra (1933) I.L.R. 55 All. 897 F.B. In that case, a Full Bench of the Allahabad High Court held that where agricultural land of a zamindar over whom the tenants had occupancy right was acquired by Government, the compensation awarded should be apportioned in the ratio of 10 to 6 as between the zamindar and the tenants in the absence of evidence justifying a departure from that proportion. Their Lordships observed that this 'rough and ready rule' was not accepted as any rule of law, but 'merely as a rule of practice for the purpose of forming a rough estimate of the respective rights of the zamindar and the tenants'. It is true that in that case the tenants had the right of occupancy and had not a right of limited duration as in the present case. But evidently the right of the tenants was subject to enhancement of the assessment at the new survey. The lease in this case is to be for a period of 99 years and thereafter at the option of the second claimant for another 99 years at double the rental. The land is agricultural land in the present case, as it was before the Allahabad case and the land in the Allahabad case was valuable as potential building site as in the present case. We think, having regard to the circumstances of the case, and especially having regard to the difficulty of precisely evaluating the rights, restrictions, conditions and covenants in favour of the first and second claimants, and in absence of any definite evidence led by the parties to show a more satisfactory assessment of the respective rights, apportionment of compensation between the first and second claimants in the proportion of 10 annas and 6 annas would meet the ends of justice. The same method of apportionment was also adopted by the Nagpur High Court in Laxmanrao v. Jagannath [1942] Nag. 32. We think, having regard to the circumstances, that the same method of apportionment of compensation should also be adopted in this case. There is no dispute that the first claimant is entitled to Rs. 17,489 out of the value of the trees and the balance of the values of the trees should go to the second and third claimants.

28. The rest of the judgment is not material to this report.


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