1. An extent of Ac. 0. 62 cent's in T.s. No. 807-2l of Anakapalle town was subject matter of land acquisition in respect of which the land acquisition officer made his award no. 81/ 76 Dt. 6-8-1976. During the award enquiry there was a dispute regarding the compensation, between the respondent (8th claimant) who is the owner of the land and the appellants (claimant 3 to 5) in whose favour the respondent and two others executed the sale agreement Ex. B-3 dated 14-5-1975 agreeing to sell the property to them for Rs. 5,800/- and the appellants have taken possesion of the property in terms of the said sale agreement Ex. B-3. The respondent disputed the truth of Ex. B-3 agreemtn. In view of the dispute regarding the entitlement of the parties to receive the compensation amount of Rs. 17,254-55 ps., the land acquisition officer made the reference to the civil Court under S. 30 of the land acquisition. Act. That reference was tried by the II addl. Subordinate Judge, visakhapatnam, in O.P. No. 40/77. The learned subordinate Judge found as of fact that Ex. B-3 agreement is true and the appellants have take possession of the land in terms thereof and were in possession of the land by the date of the acquisition. In this appeal, the correctness of this finding has not been disputed by the respondent.
2. The appellants stand with reference to the compensation amount is that they are entitled to protect their possession under S. 53-A of the T.P. Act; out of the sale consideration of Rs. 5,800/- they have paid already the sum of Rs. 5, 300/- and had to pay only the balance of Rs. 500/- at the time of the registration of the sale deed; they were always prepared to perform their part of the contract; they are therefore entitled to be paid the entire compensation amount and the right of the respondent is only to receive that balance sale price of Rs. 500/- out of the compensation amount. The case put forward on behalf of the respondent is that consequent on the acquisition of land, the agreement of sale is affected by the doctrine of frustration and the appellants are therefore entitled to receive back only the sum of Rs. 5,300/- with interest at 6% per annum thereon from the date of payment till the land was taken possession, such amount totalling to Rs. 5.650-50 ps. And she is entitled to be paid the balance amount of Rupees 11,604-05 ps. On her own behalf and on behalf of her daughter-in-law and grandson who together constituted the members of a joint family. The learned subordinate judge placing reliance upon a bench decision of the Bomby High Court in M.A. Khan v. P.J. surana : AIR1972Bom217 and that of the nagpur High Court in Mohd. Abdul Jabbar v. Lalmia (AIR 1947 Nag 254) accepted the contention of the respondent and accordingly directed payment of the amount of only Rs. 5,650-50 ps. In favour of the appellant and the balance sum of Rs. 11,604-05 ps. In favour of the respondent. Claimants 3 to 5 have accordingly preferred this appeal questioning the correctness of the said judgment.
3. The main point that arises for determination in this appeal is how in view of the truth of Ex. B-3 agreement, the compensation amount should be approtioned between the claimants and the respondent. Ex. B-3 agreement dated 14-5-1975 which was executed not only by the respondent but also by her daughter-in-law and her grandson appala Naidu, Minor represented by his mother and antural guardian Mangamma, in favour of the appellants reads in its material terms as follows:-
'With a view to discharge our sundry debts and for our family expenses, we have agreed to sell the property to you for Rs. 5,800/- you have paid us this day Rs. 3,000/- in cash. Out of the balance of Rs. 2,800/- you should pay us Rs. 2,300/- within a month from this date and get such payment duly endorsed on this agreement. The further balance of Rs. 500/- is payable to us at the time of registration. There is some restriction regarding the registration in view of the Government orders. As soon as such restriction regarding the registration of document is cancelled, we agree to register the document in your favour ..... you have been in possession of the property even earlier and there is therefore no need to give you separate possession of the property'.
Under Ex. B-4 endorsement dated 29-6-1975, the three vendors referred to above have acknowledge the receipt of Rs. 2,300/- and reiterated that the balance amount of Rs. 500/- should be paid to them at the time of registration. It is therefore, clear from the aforesaid documents that the appellants made a payment of Rs. 3,000/- on the date of Ex. B-3 and continued to be in possession of the property in terms of the agreement thereafter and paid a further sum of Rs. 2,300/- in furtherance of the contract. The balance amount of Rs. 500/- was payable at the time of registration. Under Ex. B7 dated 14-8-1976 the appellants communicated to the respondent, her daughter-in-law and her grandson theri readiness to pay the balance amount of Rs. 500/- and have informed them that the prohibition regarding the alienation of urban lands is removed and called upon them to receive the balance amount of Rs. 500/- and execute the registered document. The respondent and her daughter in law received the notices under EXs. B- 8 and B-9 and they have sent no reply.
The appellants have therefore observed all the conditions required of them to seek protection under section 53-A of the T.P. Act meanwhile however section 4(1) notification under the land acquisition Act concerning this land was published on 13-2-1976. Possession of the land under the land acquisition Act was takne by the Government on 6-8-1976, on the taking of such possession, the land vested absolutely in the Government free from all encumbrances under section 16 of the land acquisition Act.
4. One necessary consequence of section 53-a of the T.P. Act. Is
'The transferor or any person claiming under him shall be 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 other than a right expressly provided by the terms of the contract'. The only right which the respondent could enforce against the claimants was to recover the balance amount of rupees 500/- as against the appellants' the respondent cannot enforce against them any right in respect of the suit property. On the date on which the notification for acquisition was issued, the respondent was having only the right to recover the balance sale consideration Rs. 500/- the claimants were having the right to continue in undisturbed possession of the land subject only to their obligation to pay to the respondent the balance amount of Rs. 500/- which the appellants had in fact offered to pay to the respondent. As a consequence of the acquisition, all private rights in the land existing in favour of either the appellants or the respondent have been extinguished but the rights which they respectively had in the land become attached to the compensation amount In Dossibai nanabhoy Jeejeebhoy v. P. M. Bharucha 91958-60 Bom LR 1208) , a Division Bench of the bombay High Court held:
'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 calim a share in the compensation awarded the frustration of the contract to lease (it was a lease transaction in that case) 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 740) as to the legal effect of acquisition proceedings. It was observed:
'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 in the compensation money into which land is transformed'.
The aforesaid observations, in my view,lay down the law correctly in regard to the apportionment of compensation in respect of land covered by the sale agreement which is governed by the provisions of section 53-A of the Transfer of property Act. As a consequence of the acquisition, the Government have acquired the right of the respondent to recover only the balance sale consideration of Rs. 500/- and the Government have acquired in the same process the right of the appellants to continue in undisturbed possession of the land which they have contracted earlier to purchase from the respondent. The learned subordinate Judge felt that the decision of a bench of the Nagpur High Court in Mohammad Abdul Jabbar v. Lalmia (AiR 1947 Nag 254) (supra) had application to the facts of the present case. In that case, there was agreement for sale executed by one Noorumiya on 16-1-1934 is favour of Mohammad Abdul Sattar. Mohammad abdul sattar made an effort to register that agreement on 14-5-1934, but it could not be registered.
Mohammad Abdul sattar thereafter filed the suit for specific performance on 15-1-1937. Defendants 1 to 3 who were impleaded as the heirs of Noorumiya resisted the suit on the ground of fraud and the 4th defendant having executed the contract of sale. There was a notification made under the land acquisition Act on 20-4-1937. Various amounts were referred to as having formed part of the sale consideration in the contract of sale. The finding of the Court was that only Rs. 100/- was paid as earnest money on 16-1-1934, the date on which the contract of sale was entered into out of the second item of consideration of Rs. 1056/- due as khata balance, the Court found that Rs. 1000/- out of it cannot be included. On merits, the Court found that sepcific performance was not to be ordered. The claim made by Mohamad abdul jabbar, the legal representative of Mohammad abdul sattar, to get at the compensation money was rejected the Court observin gthat the said mohammad abdul sattar or his legal representative had no right or interest in that property. This case did not consider the rights of parties as Government by S. 53-A of the T.P. Act. Having regard to the facts of that case the said right was considered only as falling under S. 54 of the T.P. Act in the material terms of which a contract for the sale of immoveable property does not by itself create any interest in or charge on such property. Being so the learned subordinate Judge is not correct in holding that the decision in Abdul jabbar's case (AiR 1947 nag 2540 9supra) has any application to the facts of the present case.
5. I may advert to facts in Mohammad Ali khan v. P.j. Surana, : AIR1972Bom217 (supra). In that case, as in the present case the findings were that there was a sale agreement executed by Mohammad Ali Khan in favour of surana in respect of Ac. 30.00 of land at the rate of Rs. 4,000/- per acre. Surana paid Rs. 10,000/- and agreed to pay the balance amount of Rs. 1,10,000/- at the time of the execution of the sale deed surana was given possession of the property under the agreement. The land was notified under the land acquisition Act on 25-3-1965 and possession of the land was taken by the state of maharashtra on 9-10-1965. In respect of that land of the entire extent of ac. 30.00 the land acquisition officer awarded compensation to be paid to surana. In appeal, it was submitted for m.A. Khan that the contract of sale has become in capable of performance and the parties are, therefore relegated to their rights under the agreement as if it were a mere contract for sale and that being so, surana became entitled only to receive 1/12th of the compensation amount which, in the context would entitle surana to collect only Rs. 2,875/- as against the sum of Rs. 10,000/- paid by surana as earnest money to m.A. Khan the submission made on behalf of surana was that he was entitled to receive the entire compensation amount. A reference under S. 18 of the land acquisition Act was pending by the date the Division Bench of the Bombay High Court disposed of this dispute regarding the apportionment of compensation of Rs. 34,500/- deshmukh, j. Speaking for the Bench, held (at P. 222):-
'In our view to a situation like this the provisions of section 55 and more particularly sub-sec. (6) cl. (B). Would be attracted. Claimant No. 2 (P.J. surana) is undoubtedly a buyer and the expression 'buyer' as used in sub-sec (6) of section 55 also includes a person who has agreed to buy. So far as the buyer is concerned, sub-sec. (6) conceives of both the positions where the ownership is transferred to a buyer and where the ownership is yet to be transferred to him. Sub-cl. (A) deals with a situation where the ownership of the property is passed to a buyer. As soon as that happens that buyer is entitled to the benefit of any improvement in or increase in value of the property, and to the rents and profits thereof. In other words, he is entitled to all the attributes of full ownership of the property. However, where the agreement is yet to culminate into transfer of ownership but where the buyer is willing to perform his part of the contract, his rights are indicated in sub-cl. (B) of sub-sec. (6) of S. 55'.
It looks to me that the Court was faced with the necessity to adjust equities between the parties having regard to the peculiar circumstances of that case. By the date the reference under S. 30 was disposed of by the Bench, the reference under S. 18 of the land acquisition Act was still pending and there was no knowing about the compensation amount that would be ultimately fixed by the civil Court. If section 53-A of the T.P. civil Court. If section 53-a of the T.P. Act was to be invoked and P.J. surana was to be compensated for his right to continue in possession, he would walk away with the entire compensation amount of Rs. 34,500/- when, in terms of the contract of sale, m.A. khan had still to receive the balance amount of Rs. 1,10,000/- It looks to me that it was essentially to adjust the equities between the parties in the peculiar circumstances of that case, it was held that P.J. Surana should be paid back the amount of Rs. 10,000/- advanced by him as earnest money with interest at 6% during the relevant period and the balance amount of compensation was directed to be paid to M.A. Khan. The observations made in this case no doubt support the submission made by Mr. Subrahmanya narsu, learned counsel appearing for the respondent but those observations run counter to the observations made by another Division Bench of the same High Court in Dossibai Nanabhoy Jeejeebhoy v. P.M. Bharucha, (1958) 60 Bom LR 1208 (supra). As between these conflicting views expressed in the two decisions referred to above I feel that the law has been laid down correctly in dossibai Nanabhoy Jeejeebhoy v.P. M. Bharucha (supra) as that takes into account the extent of rights belonging to the claimants and the respondents in a case falling under S. 53-A of the T.P. Act. To direct refund only of the amounts paid by the claimants to the respondents is to deny them their right to continue in undisturbed possession under section 53-A of the T.P. Act to award the respondent any amount in excess of Rs. 500/- which alone is payable to her in terms of EX. B-3 sale agreement is to permit her to claim a right in respect of the property against the express provisions under section 53-A of the T.P. Act debarring her from making such a claim. That apart the rights of parties with reference to the compensation amount if worked out with reference to their individual rights in the land, subject matter of acquisition, will not result in any anomalies. The respondent's right is only to recover Rs. 500/- as the balance sale consideration due to her in terms of Ex. B-3 sale agreement as she still continues to be the owner of the land and as a person interested in the land she is entitled to the solatium on Rs. 500/- at 155 such solatium works out to Rupees 75/- The total compensation payable to the respondent is therefore Rs. 575/- the compensation amount was deposited into Court on 10-3-1977 which on verification is found not have included the statutory rate of interest at 4% payable on such compensation from the date of possession till date of deposit.
6. The appeal is accordingly allowed, directing the amount of Rs. 16,679-55 ps. To be paid to the appellants and Rupees 575/- to be paid to the respondent. As the appellants have substantially suceeded in the appeal, they are entitled to recovery the costs of this appeal from the respondent. If the compensation amount has been invested by the Court below and the amount secured on the amounts aforesaid may be calculated and paid to the parties accordingly.
7. Appeal allowed.