T. Ramaprasada Rao, J.
1. The second claimant in a reference made to the City Civil Court, Madras under Sections 30 and 31(2) of the Land Acquisition Act is the appellant. On 34th April, 1963 a notification under Section 4(1) of the Land Acquisition Act was issued by the State Government to acquire an extent of about 140 grounds comprised in Survey Nos. 25/3 and 25/4 of Chinna Chembarambakkam and T.S. No. 1/2 of Ayanavaram for the public purpose of construction of a terminal station and depot for the Madras State Transport Department. The land belonged to Sri Kasi Viswanathaswami Temple administered by a body of trustees compendiously known as Tawker's Charities. The present appellant claims to be a lessee in respect of those lands. The Land Acquisition Officer, after due enquiry, fixed the market value of the acquired lands at Rs. 8,18,041.03 and on appeal to the civil Court it was enhanced to Rs. 9,04,769.81 But, as the Land Acquisition Officer could not determine the quantity and quality of lights in the property and thereafter in the compensation awarded inter se as between Tawker's Charities as the first claimant and the present appellant as the second claimant, he had to, as there was no agreement between the claimants regarding the proportion in which the compensation has to be apportioned as between them within the meaning of Section 29 of the Land Acquisition Act, refer the dispute under Section 30 to the Civil Court for a determination and settlement of the said dispute and for the ultimate ascertainment of the compensation payable to each, if both of them are entitled to it. It is in that context the reference was made to the trial Court. The trial Court apportioned the compensation in the proportion of one-fifth in the total compensation including the interest payable thereunder up to January, 1967 to the second claimant and directed that the first claimant would be entitled to the balance of four-fifths of the compensa- and the interest payable therein which amount was directed to be invested in approved securities since the first claimant was a charitable and religious institution. The second claimant is aggrieved by the manner in which the trial Court apportioned the compensation as between himself and the Trust and hence the appeal In order to contend that the second claimant was not entitled to any portion of the compensation amount and that the apportionment of 1/5 th of the compensation amount in his favour is wrong and erroneous, the first claimant has preferred the memorandum of cross-objections. The relevant facts may now be stated.
2. As early as 1912, a scheme was made by the High Court, Madras, for the proper administration of the Trust known as-Tawker's Charities, which was both religious and secular. On an application taken out by the Advocate-General of Madras and the Hindu Religious Endowments Board, the scheme was modified by an order of this Court dated 24th September, 1937 whereunder the present Trustees were appointed as Trustees of the Tawker's Charities and they were directed to perform the obligations as contained in the' scheme. In order to improve the income of the Trust the Trustees applied, in June, 1959 for laying out the properties which are the subject-matter of acquisition and applied in lay-out Application No. 94 of 1959 to the Corporation of Madras for a division of the land for purposes of laying it out as building sites. But this application for lay-out was returned to the Trustees for certain modifications as is seen from the letter to the Corporation of Madras dated 30th June, 1959. The Trustees did not pursue this matter thereafter, but took out an application in the High Court for sanction to lease out these lands on certain terms and conditions proposed by them. This Court invited offers to find out whether the sale of the properties and reinvestment of the sale proceeds thereof would be more 'beneficial to the Trust. Finding that the offers received from intending purchasers were not attractive, the Court expressed the view that the terms suggested by the Charities to lease out the properties were more beneficial to the Trust and therefore sanctioned the proposal of the Trustees to lease out the properties on terms and conditions suggested by them. This order was made by the High Court in Application No. 767 of 1960 on 1st July, 1960. Prior to the first claimant making such an offer, it obviously made discreet and private enquiries to find out the best method by which the property could be leased out. There were certain initial negotiations between the first claimant and the second claimant in which certain definite terms as to the proposed lease by Court. In fact, the second claimant while approving of the terms and stipulations under which he was prepared to take a lease of the properties, tendered a sum of Rs. 5,000 as earnest money to show his readiness and willingness to take properties on lease and which the Trustees could keep till the Court sanctioned the lease. After the Court approved of the terms and conditions of lease suggested by the first claimant and agreed to by the second claimant, the claimants entered into a lease deed Exhibit B-1 on 12th October, 1960 recording their agreement in due form and bringing out the lease deed into operation. We may at once refer to the terms and conditions of the said lease deed Exhibit B-1 which, was also renewed under Exhibit B-2.
3. Under Exhibit B-1 150 grounds of land belonging to the first claimant were leased out to the second claimant for a period of thirty years in the first instance with an option to the lessee for renewal of the least for a further period of thirty years for the purpose of erecting buildings thereon. The second claimant was to pay to the first claimant a rent of Rs. 5 per ground per month for the first thirty years and Rs. 7-50 per ground per month for the subsequent period of thirty years. It was also agreed that as the demised property was intended to be developed by the lessee, the land required and covered by roads and pathways and not occupied by building shall be left out of account for the purpose of computing the area for levying the rent. The maximum percentage of the property which could be so left out for purpose of development, such' as roads, etc., was fixed at 25 per cent, of the total areas. In case it was found that the area so set apart for roads and development exceeds 25 per cent, then a stipulation in favour of the lessee was alternatively provided for Clause 5 of the lease deed says that the second claimant shall at his own cost prepare the necessary plans for a lay out of the area and submit the same to the Corporation of Madras and obtain its sanction for laying out the property for construction of buildings without unnecessary delay ; all charges towards laying of the roads, drainage, electricity, etc., to be incurred or payable to the Corporation authorities or otherwise relating to the above property in respect thereof shall be borne by the lessee. The sum of Rs. 5,000 tendered by the lessee even during the initial negotiations was treated as permanent deposit for the due fulfilment of the obligations under the lease Clause 7 expressly stated that at least in ten of the plots in the demised property, buildings shall be caused to be erected within a period of one year from the date of sanction of the lay out by the Corporation of Madras, and if within the period of one year the building in at least ten of the plots are not constructed as aforesaid, the first claimant shall be at liberty to demand payment of two years rent to be paid within one month of the date of notice, failing such payment the first claimant was at liberty to determine the lease and the second claimant shall forfeit the deposit of Rs. 5,000. The second claimant was at liberty to sub-lease the property or portion of the demised land. The second claimant took on the obligation to. pay all taxes, rates and assessments in respect of both the developed plots or of the structures and buildings to be raised thereon excepting the quit rent (Urban Land Tax) payble to the Government. At the end of sixty years the first claimant reserved for itself the right to purchase the superstructures on the land at the then market value. If the first claimant makes a default, then the second claimant had the option to continue for a further period of thirty years on same terms and conditions as contained in the deed. But the rate of rent, however, was altered to Rs. 9 per ground per month. There were other normal clauses with which we are not concerned in the present enquiry. The lessee exercised his option to secure the lease for a further period of thirty years and under Exhibit B-2 the agreement between the first and the second claimants regarding such renewal for a further period of thirty years was recorded and registered. The net result is that the second claimant secured a right as lessee over the properties acquired for a period of sixty years from 12th October, 1960.
4. The second claimant soon after the sanction of the lease by the High Court began to correspond with the Town Planning Section of the Corporation of Madras and sought for permission to divide the lands as building sites by laying out the same in accordance with law. He made this application in August, 1960, long before Exhibit B-1 was registered. Though his layout application was registered and, given a number, it could not be taken up for consideration by the Corporation as the necessary formalities were not complied with. On nth November, 1960 the second claimant was informed that he should pay a sum of Rs. 730 towards centage charges for the intended layout for purposes of scrutiny of plans, survey work of the layout area and preparation of estimates. The second claimant paid, the centage charges on 7th December, 1960. The Corporation, by its letter dated 7th February, 1961, informed the second claimant the nature of the amenities which should be provided for in the layout area, and also the list of conditions subject to which the layout application would be placed before the Standing Committee for sanction. They called for a definite reply from the second claimant and specifically informed him that a sum of Rs. 70,985 was to be paid by him as improvement charges. It was made, clear that the layout application would be proceeded with only an payment of the estimated improvement charges demanded as also the express consent of the second claimant--regarding the proposals made by the Corporation in. its letter dated 7th February, 1961. Except to state in his reply dated 2nd September, 1961, that he would write further on the demands made by the Corporation in their letter dated 7th February, 1961 the second claimant did not pursue the matter any further and there the matter stopped It may be of interest to note that the second claimant obtained possession of the lands only on 5th March, 1961.
5. Both the claimants appeared before the Land Acquisition Officer and placed their respective views in relation to their entitlement to the compensation to be awarded by him as a result of the acquisition of the land which obviously terminated the leasehold interest of the second claimant. As the dispute could not be adjusted as between the claimant, the compensation amount was deposited in the Civil court under Sections 30 and 31 (2) of the Land Acquisition Act. The Court on enquiry gave the findings resulting in the award of one fifth of the compensation to the second claimant and the balance to the first claimant. Hence the appeal.
6. The arguments addressed before the trial Court were repeated before us.. Mr. T. R. Ramachandran, learned Counsel for the second claimant, hesitantly contended that as the first claimant as a charitable institution has no powers of alienation in respect of the property in question ,the entire compensation amount has to be invested and the same is not liable to be apportioned as between the first and the second claimants and that from and out of the income by such investment the second claimant is bound to pay the agreed rent as per the lease deeds Exhibits B-1 and B-2 till the expiry of the period of sixty years and it is only thereafter the first claimant would be entitled to the compensation amount. This argument is based on Section 32 of the Land Acquisition Act. Though the learned Counsel did not vehemently press this argument, it has become necessary for us to consider the import of the language of Section 32. The bone of contention of the parties in this litigation is as to what interest each of the claimants has towards the compensation awarded for the lands which were admittedly subject to a lease before the notification under Section 4 (1) was made. Section 32 is an enabling section prompting the Court to invest moneys belonging to an institution or a person who has no power to alienate the acquired lands for the purchase of other lands to be held under the like title and conditions of ownership as the land in respect of which such money shall have been deposited was held. No doubt the first claimant did not under the common and statute law have the power to- alienate the lands. But under certain circumstances the Court can intervene in its extraordinary jurisdiction, and direct them to alienate the lands if in its opinion a fair price is securable by such a process and that such an alienation is for the betterment of the institution or the person. The sole criterion which is the foundation for a Court to order alienation of inalienable property or properties having such a badge of inalienability is the benefit for the institution, the necessity thereof and the interests of the institution as a whole. In that sense the language in Section 32(1) ' any person who had no power to alienate the same' bad to be understood and applied. The mandate in Section 32 to the Court to direct investment of the compensation awarded is in a. case where the Court finds as a fact that the person had no power at all and at all times to alienate the same. If there is however a sanction of a competent Court which enables the administrative body of an institution or a person to sell or alienate the same, then the mandate therein has to be understood to be so limited. The discussion therefore leads to the prima facie but reasonable conclusion that the prescription in Section 32 ought not to be applied in accordance with the facts and circumstances of each case. This conclusion can also be arrived at by comparing the language of Section 31 with that of Section 32, Section 31(1) refers to the obligation on the part of the Collector or the Land Acquisition Officer to tender payment of the compensation awarded to the persons interested and entitled thereto according to the award. Section 31 (a) thereafter says that if such persons interested shall not consent to receive it, or if there be no person competent to alienate the land....the Collector shall deposit the amount of the compensation in the Court to which a reference under Section 18 would be submitted. Section 32, no doubt uses the expression 'any person who had no power to alienate the same''. This has to be read in conjunction with Section 31 (1) and to the limitations already pointed out. In the instant case, it cannot be said that the mandate in Section 32 has to be literally applied and the vague contention of the second claimant accepted. As would be seen presently, the alternative contention of the second claimant that he should also be deemed and considered as a person interested in the land has some force. The problem therefore resolves itself into this; What is the nature of interest which the second claimant had in the property acquired and what is the quantity and quality of such interest of the second claimant in the compensation awarded by the Court and which compensation has come to Court by reason of the reference made by the Collector under Section 31 of the Land. Acquisition Act. We are therefore not impressed with the extreme contention of the second claimant that the entire compensation has to be invested and he is entitled to enjoy the income therefrom subject to his only liability to pay the rent as agreed to under the lease deeds.
7. This leads on to the question which revolves round the primary contention of Mr. T.R. Ramachandran as to what is the nature, quality and quantity of interest of the second claimant in the lands acquired. It is the contention of the learned Counsel that the second claimant not only performed but was ready and willing to perform all his obligations under the lease deed and consequent upon such readiness and willingness on his part to abide by the conditions and stipulations of the lease deed he would be entitled to such share in the compensation awarded, which according to him, should not in any event be less than 50 percent of the total compensation. On the other hand, Mr. M.S. Venkatrama Iyer, learned Counsel for the first claimant, would contend that as the second claimant did not hold out that he was ready and willing to undertake such responsibilities, the second claimant cannot be deemed to be a person having any interest in the lands. In the alternative it is said that if he has any such interest it should be evaluated in accordance with the accredited principles relatable to the situation. Mr. M.S. Venkatrama Iyer seriously urged that the only way to solve the problem and allocate the compensation, if its allocatable at all as between the claimants, is to evaluate the share of the second claimant on the foot that he had a leasehold interest in the acquired lands on the appropriate date and after quantifying and. reckoning the said amount, pay the entire balance to the first claimant as the sole person entitled to it in law and which corpus has to be administered by the Trust in the manner provided for under the scheme sanctioned and approved by the High Court. Lastly it was brought to our notice that the second claimant has created a Trust called Temple Charities Trust, which is a public charitable Trust, under an instrument of Trust dated 27th February, 1970. The purpose of the Trust appears to be to honour and perpetuate the memory of late Sri V.V. Srinivasa Iyengar, Advocate, Madras. We are satisfied that the second claimant along with three others who have constituted themselves as the Board of Trustees for the Temple Charities Trust, are the persons in present interested in the compensation to which the second claimant would be entitled to, and for these reasons the petitions C.M.P. -Nos. 13096 and 13097 of 1972 to implead the Temple Charities Trust represented by its Trustees as parties are allowed.
8. At this stage certain general observations are necessary before we consider the respective contentions of parties as to what compensation they are entitled to in lieu of their subsisting interest in the acquired property.
9. The science of evaluation of rights of affected and interested parties, under the Land Acquisition Act evades precise analysis. Neither a mathematical exactitude nor a preceise computation of values is possible, as in the nature of things a certain amount of guess work enters into it. The methodology becomes even more difficult if the related case concerns itself with the reckoning of the value of the landlord's light as against tenant's rights in the land acquired, on the date of the notification under Section 4 (11 of the Act. Whilst under Section 23 of the Act the value of the land together with its inhered potential can also be evaluated, when we come to apportionment of the compensation as between the tenant and the landlord, myriad concepts have to be borne in mind so as to reasonably assess the reversionary value of the land as against the possessory right of the tenant under the various but agreed terms of lease. A lessee pure and simple has certain defined rights and they are also normally reflected in the deed of lease entered into between the parties. But if a lease imposed certain conditions for the effectuation of the lease and there are in the instrument covenants, obligations and stipulations undertaken by the' lessee as well as the landlord, the Court is bound to take into consideration the impact of such obligations and stipulations on the net value of the lessee's interest or, landlord's interest. Thus in evaluating the tenant's interest in the property as lessee's interest, the various recitals in the deed have to be looked into and each of those objections has to be subjectively at least valued to arrive objectively at the net compensation to be awarded to such a tenant or landlord. In the process, a fair approach has to be made and the resultant figure equitably calculated. The working should not present a case of unfairness or perversity. A reduction in the quantum of compensation based on mere speculation ought not to be made. Every possible but actual deduction has to be made from the gross compensation payable either to the landlord or the tenant. One other important aspect has also to be borne in mind while dealing with cases involving computation of lessee's interest over properties. The mere nomenclature adopted by the parties creating certain rights known to law may not by itself be a safe guide for a mechanical adoption of the same for purposes of evaluating the rights created thereunder. Parties may call an instrument a lease deed. By that it should not be assumed as a matter of course that the lessee's interest under that instrument has to be evaluated without any further look or probe into the other covenants or obligations in that deed which makes an inroad into such rights and which also creates certain obligations on the part of the lessee, which if considered in their true light would have equally an impact on the total value of the leasehold interest. Each case therefore has to be considered in accordance with the facts and circumstances arising thereunder and the quality of rights of parties ascertained and ultimately such rights so ascertained be quantified in accordance with the well known principles of evaluation.
10. Mr. M. S. Venkatarama Iyer contended that the second claimant, in fact, had with him the necessary hypothesis in the matter of submission of a lay-out plan to the Corporation of Madras. The first claimant, no doubt, in June, 1959, under Exhibits A-2 and A-7, attempted to lay out their lands by submitting plans in connection thereto to the Corporation of Madras. But when they were asked to widen the road and they were confronted with certain suggestions in the matter of improvement of the land by the Corporation, they would not take any further steps. The order of the Court on 1st July, 1960, which enabled the first claimant to lease out the properties subject to certain conditions and stipulations to the lessee perhaps prompted the Charities not to pursue the matter further with the Corporation. But what is sought to be made out by Mr. M. S. Venkatarama Iyer is that even at the stage of negotiation of the lease, the second claimant approached the Corporation for a layout and when he was specifically asked by the Corporation of Madras to deposit a sum of Rs. 70,985 in its letter dated 7th February, 1961 and thereafter resubmit the revised plans, the second-claimant would only state that he had demarcated the sites and streets and that the other works such as road works, sewering work, lighting work, etc., have to be carried out and that he would write to the Corporation further in the matter. This information was conveyed by the second claimant to the Assistant Engineer, Town Planning, Corporation of Madras, on 2nd September, 1961. Thereafter, admittedly, the second claimant did not pursue the matter. Mr. M. S. Venkatarama Iyer, relying upon Sections 215 and 216 of the Madras City Municipal Corporation Act, would state that the second claimant did not take any concrete steps in the matter of improving the lands as undertaken by him under the lease deed. He would also refer to clauses 5 and 7 of the lease deed which obligates the second claimant to lay out the property for construction of buildings without unnecessary delay and put up buildings at lease on ten plots within one year from the date of sanction of the lay-out by the Corporation of Madras-In as much as the second claimant did not take any steps for obtaining sanction of the lay-out or for depositing the estimated improvement charges as called for by the Corporation, the case of the, first claimant is that such a non-performance of the conditions for the sustenance of the lease would automatically terminate the leasehold interest. Strong reliance was placed upon Section 31 of the Transfer of Property Act which reads as under:
subject to the provisions of Section 12, on a transfer of property an interest therein may be created with the condition super added that it shall cease to exist in case a specified uncertain event shell happen, or in case a specified uncertain event shall not happen.
Countering this argument Mr. T. R. Ramachandran would state that the second claimant was taking all reasonable steps at material times to perform his part of the contract and as possession was handed over to the second claimant only on 5th March, 1961 he was making efforts to comply with the requirements as called for by the Corporation, but ere long the proposal of the Government to acquire the lands cam in October, 1972. It is common ground that in the middle of 1962 the proposal of Government to acquire these very lands was made known and it was followed by a notification under, Section 4 (1) on 24th April, 1963 followed up by the Government taking possession of the lands on 7th November, 1963 pursuant to the acquisition process. Further it was contended that there is no express condition in the lease deed wherein the leasehold interest shall cease on the happening of any event or the non-performance of any condition mentioned therein. On the other hand Clause 7 provides that if within the period of one year, buildings in at least ten of the plots are not constructed as aforesaid, the first claimant shall be at liberty to demand payment of two years' rent to be paid within one month of the date of the notice, failing such payment the first claimant would be at liberty to determine the lease and the second claimant would forfeit the deposit of Rs. 5,000. It is not the case of the first claimant that any such notice was given and there was a consequential failure on the part of the second claimant to pay the payable rent which the first claimant could demand in case of default. One other factor which is ancillary to the above contention was brought to our notice by Mr. T. R. Ramachandran. He would state that the first claimant accepted the agreed rent--without demur till 31st December, 1964 and that by itself reflects the intention of the parties that the non-construction often buildings within one year from the date of sanction is not a primordial condition, a default in which would create a cessation of interest of the second claimant in the land. It was therefore said that Section 31 of the Transfer of Property Act is applicable to the facts and circumstances of this case.
11. It is common ground that rent was received by the first claimant till 31st December, 1964, that is, beyond the period when the notification under Section 4 (1) was made. It cannot be said with precision that the parties intended at the time when they entered into the lease deed to effect a cessation of the lease on the second claimant not performing his obligations as reflected in clauses 5 and 7 of the lease deed. In order to attract Section 31 of the Transfer of Property Act the defeasance clause should be one which is certain and which the parties intended to enforce. The cessation of interest in immovable property on the happening of an event is in the nature of a penalty and Courts are expected to grant relief against such penalties if a strict compliance as intended is not done resulting in the forfeiture of the right. In the instant case Clause 7 of Exhibit B-1 itself provides intrinsic evidence that cessation was not behind the minds of parties when the lease was entered into, But on the other hand if buildings as agreed to are not put up within a period of one year from the date of sanction of the lay-out, the second claimant is expected to pay two years' rent when demanded. The first claimant did not exercise this option. It is only on failure of the second claimant to pay the penal rent on demand, a determination of the lease is contemplated. Before the forfeiture clause could operate there is another condition which the parties voluntarily stipulated as a step in said towards such a cessation of interest. It is not claimed that the first claimant so demanded the two years' rent and that there was a failure on the part of the second claimant in the matter of such payment of rent demanded. Therefore, we are unable to agree with Mr. M.S. Venkatarama Iyer that there is an automatic cessation of the interest of the second claimant in the demised property by reason of his failure to put up buildings within the time stipulated.
12. The next contention of the counsel on either side based on the alternative relief to which either of them would be entitled thus gains prominence in the instant case. We may at the outset reiterate our earlier dissent on the extreme contention of Mr. T. R. Ramachandran that the interest of the second claimant should be deemed to be a permanent interest and that therefore the entire compensation should be invested and the second claimant be entitled to the income therefrom subject only to the liability to pay the agreed rent to the Charities. In the various decisions cited by Mr. T. R. Ramachandran, which concern themselves with permanent leases or statutory tenants, compensation has been fixed by Courts in varied proportions ranging from one-third to the tenant and two-thirds to the landlord or three-fifths to the tenant and two-fifths to the landlord, ten annas to the tenant and six annas to the landlord, etc., In Shama Prosunna Bose Mozumdar v. Brakada Sundari Dasi I.L.R. 28 Cal. 146, the Court said:
In apportioning compensation money between landlord and a tenant, the principle to be followed is to ascertain first the amount of rent payable to the landlord and capitalize that rent at so many years' purchase, then to put a money value upon the chance (if there be any) of an enhancement of the existing rent. These two sums the landlord is entitled to get, and the tenant is entitled to get the balance.
In Dinendra Narain Roy v. Tiluram Mukerjee I.L.R. 30 Cal. 801 the Court was of the view that in apportioning such compensation the Court ought to proceed on the principle of ascertaining what the value of the interest of the landlord is on the one hand, and that of the tenant on the other, and to divide the sum awarded between them in accordance with these values and where the rent is fixed in perpetuity the landlord is not entitled to more than the capitalized value of his rent. Reference was also made to Sadasheorao Krishnarao Butt v. Collector, Nagpur A.I.R. 1943 Nag. 86, and in Collector of Dacca v. Gholam Ruddus Choudhury : AIR1936Cal688 , where the learned Judges approved of the rough and ready method of settling the matter of apportionment as between the landlord and tenant as they would have it that there can be no rule of general application applicable to such cases involving apportionment. In the case under consideration we are concerned with a lease for a fixed term, may be for an extended period beyond sixty years. Under the lease the first claimant is entitled to purchase the buildings after the expiry of the period of sixty years from the sub-lessees of the land. If is only in cases where they are unable to purchase the buildings for lack of finance or any other circumstance the second claimant would be entitled to continue in possession of the land as lessee thereof. In view of the peculiar situation that has arisen here, it would be far-fetched to assume in the instant case that by reason of such stipulation the second claimant has secured permanent lease over the property. The terms and conditions as reflected in Exhibit B-1 indicate that it is only a lease for a fixed term and it is only on that basis we should apportion the compensation in the case under consideration. We are inclined to advert to the principle laid down in V. Ponniah Nadan v. T. N. Deivanai Ammal 36 M.L.J. 463 : 9 L.W. 453 : 52 I.C. 247 : 26 M.L.T. 311, and Thirulakshmi Ammal v. Special Tahsildar for Land Acquisition : AIR1974Mad182 , as the ratio decidendi in both these decisions is more apposite in the instant case. In V. Ponniah Nadan v. T.N. Deivanai Ammal 36 M.L.J. 463 : 9 L.W. 453 : 52 I.C. 247 : 26 M.L.T. 311 Seshagiri Aiyar, J., after elaborately considering the history of the ryotwari settlements in the Madras Presidency and in the Tirunelveli District expressed the view that mere length of enjoyment in the capacity of tenants or purakudies irrespective of other circumstances does not raise a presumption of occupancy right. In that case the learned Judge said that is respect of the interest of the tenants in the land as tenants from year to year, they are entitled to have their share of the compensation apportioned ; and they fixed it at one anna in the rupee, that is, in the proportion of 1 : 16. No doubt in that case the tenancy was held to be a tenancy from year to year. But here in this case, the second claimant claims that he is in any event entitled to be a tenant for a period of sixty years, subject of course to the various obligations undertaken by him. Therefore, he would not be entitled to the interest on the entire compensation as a matter of light. Certain equities have to be found land adjustments have to be made. Even so, in Thirulakshmi Ammal V. Special Tahsildar for Land Acquisition : (1973)2MLJ317 , Palaniswamy, J. speaking for the Bench said that mere long possession, fixity of rent, etc., would not justify an inference of permanent occupancy right. Therefore the second claimant's right in the compensation awarded has to be worked out on the basis that he has interest in the property for a period of sixty years; but that interest is subject to the performance of certain obligations which he has shouldered under it.
13. We are inclined to follow the equitable and justifiable method of evaluation enunciated by this Court in The Raja of Pittapuram v. The Revenue Divisional Officer, Cocanada 36. M.L.J. 455 : 51 I.C. 656 : L.I.R. 42 Mad. 644, in preference to any other principle. There the learned Judges, were of the view that where lands are acquired in which tenants claim certain rights, the market value of the property has to be ascertained and thereafter the interest of the tenant has to be evaluated and then the balance has to be paid over to the landlord In the instant case the market value has been ascertained and the only thing that has to be done is to evaluate the value of the tenant's interest and subtract the same from the compensation and pay over the balance to the first claimant. We respectfully adopt the principle in the above decision which says that the difference between the market value and the value of the tenant's interest represents the landlord's interest.
14. It is in the above context the contention of Mr. M.S. Venkatrama Iyer that the tenancy has become an unprotected tenanoy in the sense that the second claimant totally lost his right to claim any compensation by reason of an open breach of his obligations and covenants under the lease deed Exhibits B-1 has to be considered. It is said that the reversionary interest of the first claimant remains intact as the second claimart's interest in the land has practically become nil because of his inactivity in not pursuing the lay out and obtaining a sanction from the Corporation of Madras. We may at once point out that the plea of frustration, which was raised in the lower Court and which also did not find favour with it, was not seriously pressed by Mr. M.S. Venkatrama Iyer. But what is sought be now argued, though not based on the doctrine of frustration is a Contention which is closely allied with it. It is no doubt true that the and claimant did not diligently follow up his application for lay-out made to the Corporation of Madras. It is also equally true that if there is really a breach of the condition of a lease, the mere acceptance of a rent beyond the date when such alleged breach is proved would not estop the landlord from relying upon it so as to make it appear that the lease has become unprotected and the reversionary interest of the first claimant is intact and the valve of the lessee's interest in the property has become nil. But what has to be noticed in this case is whether the second claimant has so conducted himself as to lose his totality of interest in the demised property for all purposes. We have already referred to the necessary facts. The anxiety of the lessee to improve the property as proposed by him in the course of negotiations with the Charities to obtain a lease over the property cannot be denied. Even before he obtained possession of the property, but being assured that he would obtain a lease of the property pursuant to the readiness and willingness of the first claimant to accept him as the lessee, he submitted an application for lay-out, ear-marked the plots in the land and the proposed roads as well and was taking such steps as were possible in the circumstances to improve the land. The Court granted leave to the first claimant to lease the lands in terms of Exhibit B-1 to the lessee by its order dated 1st July, 1960. It was this which encouraged the second claimant to approach the Corporation with the necessary plans for plotting out the land for building sites. It is equally true that he was asked in the letter dated 7th February, 1961, that he should deposit a sum of Rs. 70,985. But the significant feature in this case is that on that date he did not even obtain possession of the land from the first claimant. He could obtain it only in March, 1961. The second claimant expressed his readiness to proceed with the improvement works in his letter dated 2nd September, 1961, and was obviously making arrangements to deposit the large amount claimed by the Corporation by way of improvement expenses, But in the year 196a the Government proposed to acquire the land. It is not very difficult to imagine that if a proposal to acquire private lands is taken up by the Government, it acquires certain publicity and becomes known even before the formal proposal for the purpose is put into action by the Government. Presumably it was in those circumstances that the second claimant was delaying action on his part in the matter of the compliance of the demand made by the Corporation and in the matter of the further pursuing of his layout application. Thus the cumulative facts do not give us the impression that the second claimant created a voluntary cessation of his interest in the demised property, nor could it be said that it has become an unprotected lease for all purposes. No doubt, the second claimant was not active as it could be expected. But on that ground it cannot be said that he was inactive. Mr. T. R. Ramachandran would say that the first claimant himself did not understand such slow movement on the part of the second claimant as equatable to inactivity and that no notice of the alleged breach of the conditions of lease was given by the first claimant so as to make the leasehold interest of the second claimant in the property as an unprotected and valueless one. There is considerable force in this argument. If the first climant as lessor, who had the right to act in the situation discreetely or otherwise, kept silent about it and did not call upon the lessee to act in accordance with the lease, then we are unable to accept the extreme contention of Mr. M.S. Venkatrama Iyer that the moment the second claimant became inactive and did not press the lay-out application in a manner known to law the entire reversionary interest of the first claimant automatically sprung to the fore totally eclipsing the right of the second claimant in the property.
15. But reliance was placed upon the decisions of English Courts by Mr. M.S. Venkatrama Iyer to sustain his argument that if there is a breach of a condition in the lease, no notice of determination of such a lease is necessary, since the situation has to be understood as making the tenancy an unprotected tenancy resulting in the instantaneous vesting of the reversionary interest of the lessor in the property. No doubt In re in Arbitration between Morgan and the London and North Western Railway Company (1896) 2 Q.B. 469 , the Court said on the facts of that case that the land in question became free from the lease and that the owners were the only persons who can make a title to the land. But there one of the stipulation in the lease was that ' in case the demised premises or any part thereof shall be required or taken by a. railway or other public company under the power or authority of an Act of Parliament, then and in such a case it shall be lawful to the lessors to re-enter into and upon so much of the said premises hereby demised as is so required and to have such premises again and repossess as of their former estate'. In the light of this, when notice to treat was given the learned Judges came to the conclusion that such a notice put an end to the right of the parties to interfere with the land. This principle was also accepted by the House of Lords in Rubby Joint Water Board v. Shaw Fax (1972) 2 W.L.R. 757,. The learned Law Lords stated the principle thus:
In the present case the interest of the respondents as landlords, before it was affected by the scheme, was a reversion to a protected tenancy. The scheme converted it into a reversion to an unprotected tenancy and thereby enhanced its value.
16. The Board also accepted the principle that every one's interest shall be valued rebus sic stanti bus, just as it occurs at the very moment when the notice to treat was given. Any difference in the result which is due to the accident of the property being taken by a public body is not to be thrown into the compensation fund.
17. As we said, the above principles were laid down on the facts of those cases. In this case we have seen that Clause 7 does not make the protected tenancy an unprotected one within the meaning of the Law Lords in the above case. On the other hand, if there is a breach in the matter of the splitting of the property as building sites and improving the property, the first claimant is entitled to demand two years rent from one month from the date of notice, failing which only the first claimant is at liberty to determine the lease and forfeit the deposit of Rs. 5,000. It is Common ground that there was no such demand as contemplated in Clause 7, nor did at any time the first claimant give out that it intended to determine the lease. The protected lease therefore continued to be protected and there was no interruption in the right of the second claimant over the demised property.
18. Still the question remains having regard to certain peculiar features in the lease under consideration as to what is the right which the second claimant had on the date when the notification under Section 4 (1) was made. This lease is peculiar in the sense that the lessee's interest in the demised property is subject to certain obligations which the second claimant should perform as such. No doubt there has not been a pragmatic fulfilment of the obligations so undertaken by the lessee. But he has undoubtedly taken steps towards such fulfilment. If this aspect is borne in mind, then it becomes necessary for us to value the lessee's interest in this peculiar lease bearing in mind the method of valuation of the tenant's interest laid down in The Raja of Pittapuram v. The Revenue Divisional Officer, Cocanada I.L.R. 42 Mad. 644 : 36 M.L.J. 455 : 51 I.C. 656.
19. That the second claimant is not entitled automatically to the return on the entire compensation is clear from the fact that it is not an ordinary lease as is popularly understood The special features which were agreed to between the parties have certainly an impact on the value of the leasehold interest of the second claimant in the property. This has to be necessarily taken into consideration in reckoning the net or the ultimate value of such interest of the second claimant. Mr. T.R. Ramachandran placed considerable reliance on a decision of the Bombay High Court reported in Dassibai N. Jeejeebhoy v. Peslonji M. Bharucha 60 Bom. L.R. 1208 : I.L.R. 1959 .Bom. 370. A Division Bench of the Bombay High Court re-stated the well known principle that ' per on interested' and ' person interested in the land 'contemplate rot merely legal or proprietary interest of a person, but include such interest as will sustain a claim to share the compensation with the owner of the land-In : that connection it laid down three principles of apportioning compensation between the landlord and a tenant. They are:
(i) to value their interests separately, and deduct from the compensation the value of the interest of one party and award the balance to the other ; (ii) if the aggregate of the two values , does not reasonably correspond to the amount of compensation,' to value their interests separately and to distribute the compensation, in proportion to the two values; (iii) if a reasonably precise valuation is not possible, to evaluate their interests in terms of fractions of the total amount of compensation regarded as a single unit. In each case the Court must adopt that method which, having regard the circumstances and the materials available, equitably distributes the compensation.
In that case it was a 99 years lease and the learned Judges divided the compensation in the proportion of ten annas in the tenant and six annas to the landlord As we noticed already, this they did after taking into consideration the circumstance in peculiar facts. Again in Bail Sarasuathi Jeshankar v. Bharatkhand Textile Manufacturing Company Limited : AIR1967Guj36 , the learned Judges quoted with approval principle in Dossibai N. Jeejeebhoy v. Pestonji M. Bharucha I.L.R. 1959 Bom. 370 : 60 Bom. L.R. 1208, and in the case of a permanent lease which was considered by them, they gave one-fourth of the compensation to the landlord and three-fourths to the tenant. In all these cases the broad principle of evaluation, which as we stated evaded precise analysis, has, to be adjudged on equitable considerations after noticing the problem which might arise in each of the cases. The interest which may be varied and different of the various parties interested in the land, has to be evaluated with reasonable precision and the compensation equitably distributed amongst them. The. fundamental sine quo non before apportionment is that every conceivable interest in the land of the various persons before the Court has to be noticed before an ultimate analytical recording of such compensation and the formula of distribution is found. The learned City Civil Judge accepted in the instant case the suggestion made by the just claimant in its written statement that in the peculiar circumstances and having regard to the problems posed the first claimant would be entitled to four-fifths of the compensation and the second claimant to the balance of one-fifth thereto; It is therefore for consideration whether in the instant case the second claimant would be entitled to anything more than one-fifth of the compensation awarded by the Court below.
20. It is by now accepted that in a layout one-fourth of the area should be left out of consideration since they have to be so provided for road-making and public amenities.' If this is taken out, then roughly 100 grounds would be the subject-matter of the demise. Under Exhibit B-1 the second claimant has assumed responsibility to lay out the entire land at his cost without unnecessary delay, bear all the charges towards laying of the roads, drainage, electricity payable to the Corporation and also simultaneously agreed that he would obtain sanction from the Corporation to field within one year from the date of sanction of the lay-out. It does not lie in the mouth of the second claimant now to say that the lay-out has not been sanctioned and the supervening acquisition prevented him from acquiring such sanction No one can predicate as to what would have happened if the Second claimant pursued the subject and complied with the demand of the Corporation as made in September, 1971. Obviously the second claimant was scared. He did not have the mind to proceed further though he was inclined to stick on to his rights and interest over the land. These factors also have to be taken into consideration. He had the right to sublease and obtain from his lessees the rent as stipulated by him subject only to his obligation to pay to the first claimant a rent of Rs. 5 per ground for the first thirty years, Rs. 7.50 per ground for the subsequent thirty years, and a sum of Rs. 9 per ground if by any chance he continues to be a lessee due to the first claimant's inability-to purchase the superstructures on the land at the end of sixty years. We have already stated that the net available area of the second claimant for purposes of leasing out to his lessees would be about 100 grounds. He has to pay taxes, rates and assessments that may become due or payable during the term of the lease in respect of the leased plots or of the structure and buildings raised. The only obligation on the part of the first claimant was to pay quit rent to Government, which is now the urban land tax. Assuming that the second claimant would be able to realise a rent of Rs. 15 per month per ground from his sub-lessees, then computing this income after deducting therefrom, the rent taxes etc. the second claimant; would only be entitled to a net income ranging between Rs. 1,000 to Rs. 1,200 a month Capitalising this amount and taking the ruling rate of interest at 6 per cent, per annum at or about the time of acquisition, the second claimant would only be entitled roughly to a sum between 1,50,000 and Rs. 2,00,000. This is what the first claimant itself was prepared to pay. As no mathematical exactitude or accuracy is possible in the evaluation of such varied and complicated interests we are not satisfied that a revision in the amount awarded as compensation to the second claimant by the Court below is called for in the instant case. We sustain the decree and judgment of the Court below. In the result the appeal is dismissed, but in the peculiar circumstances of the case, the parties will bear their own costs. As we have not accepted the case of the first claimant that an automatic termination of the lease had taken place or in the alternative, the lease in favour of; the second claimant had become an unprotected one and that therefore the second claimant is not entitled to any portion of the compensation amount, and as the first claimant has itself stated in its written statement that if the total compensation amount is to be apportioned between itself and the second claimant, it may be apportioned in the ratio of 4/5ths and 1/5th and the apportionment has been done by the IVth Assistant Judge in accordance with this request, the memorandum of cross-objections filed by the first claimant is devoid of merit. Hence we dismiss the memorandum of cross-objections also. No costs.