Rajendra Vassudev
Deshprabhu (dead) Through Lrs. & Ors. Vs. Deputy Collector (Retd.) &
Land Acquisition Officer, Panaji
J U D G M E N T
R.V.RAVEENDRAN, J.
1.
Leave
granted.
2.
An
extent of 1,06,864 sq.m. of land including 5070 sq.m. of land in Survey No. 284
(Part) in Pernem village of which the appellants are co-owners was acquired in pursuance
of preliminary notification dated 12.1.1990 (Gazetted on 1.2.1990). By award dated
27.3.1991, the Land Acquisition Officer awarded compensation for the acquired
land at the rate of Rs.17 per sq.m. As there were three tenants, namely, Krishna
Arjun Kauthankar, Keshav Bhikaji Kauthankar and Harischandra Bhikaji Kauthankar
and as the co-owners had admitted their tenancy rights, the Land Acquisition
Officer directed that the compensation to be divided between the owners and the
tenants at the rate of 50% each.
The reference court, by
judgment daed 22.11.2002, increased the compensation from Rs.17 per sq.m. to
Rs.175 per sq.m. The appeal by the State was allowed by a division bench of the
Bombay High Court, by the impugned judgment dated 14.11.2008. The High Court set
aside the judgment and award of the reference court, thereby restoring the
award of Rs.17/- per sq.m. by the Land Acquisition Officer, on the following
reasoning: "..... the Applicants' acquired portion was garden land but
tenanted and the tenants had become deemed purchasers of the same and the only interest
which the applicants had in the said land was to receive the purchase price, and
in such a case no willing purchaser would have ventured to purchase such a land
for building purposes or for that matter for any other purpose from the applicants.
The said Krishna Arjun
Kauthankar and others were in possession of the land and had become deemed
owners of the same. The learned reference court was not right in assessing the
value of the acquired land as having building potential based on several awards/sale
instances which were of land dissimilar to the acquired land."
3.
The
said judgment is challenged in this appeal by special leave. At the outset the appellants
submitted that Late Rajinder Vasdev Deshprabhu (of whom appellants are the LRs.)
and his brother late Raghuraj Vasdev Deshprabhu were the co-owners of the property,
and on their death their respective legal heirs have become the owners thereof;
that the land was tenanted and is in occupation of Krishan Arjun Kauthankar and
two others and vested in the tenants on the Tiller's day in terms of section
18A of the Goa, Daman and Diu Agricultural Tenancy Act, 1964 (`Tenancy Act' for
short).
They submitted that they
do not dispute the award of the Land Acquisition Officer apportioning 50% of
the compensation to the landlords and 50% to the tenants; and that out of 50% payable
to landlords, the appellants are entitled to one half as the LRs. of Rajendra
V.Deshprabhu and the remaining half is payable to the legal heirs of Raghuraj
V.Deshprabhu. In other words the appellants restrict their claim to 25% of the
award amount and submitted that even in regard to any increase in compensation,
they are entitled to only 25%.
4.
The
appellants contend that in regard to the remaining extent of land acquired under
the same notification, the High Court by judgment dated 14.11.2008 in FA No. 123/2003
(The Deputy Collector (Dev.) & LAO, Panaji vs. Smt. Sita Devi) had determined
the compensation as Rs.78 per sq.m. and therefore the compensation should have
been the same in regard to their land also. Therefore question for consideration
is whether the compensation for the acquired land should be increased to
Rs.78/- per sq.m.
5.
Respondents
do not dispute that in regard to the adjoining lands compensation has been
determined by the High Court at Rs. 78/- per sq.m. in Deputy Collector vs. Sita
Devi (FA No.123/2003 decided on 14.11.2008) and that order not having been
challenged, has attained finality. They also do not dispute the position that
if the acquired land had not been subject to any tenancy right, the land owners
would have been entitled to compensation at the said rate of Rs.78 per sq.m. They
however contend that the land in question was different from the other acquired
lands for which Rs.78/- per sq.m. has been awarded as compensation. They
supported the judgment of the High Court on the following grounds:
(i) As the land was in
the occupation of tenants, the appellants as owners would not have been able to
sell the said land to any willing purchaser and obtain the market value. Even the
tenants had obtained a purchase certificate under section 18H, they could not
have sold the property, as there was a restriction on transfer of the land
purchased by the tenant in section 18K of the Tenancy Act which required
previous sanction of the Mamlatdar for sale.
(ii) Section 3 of the
Tenancy Act provided that when a request is made by the owner of an agricultural
land to convert it to non agricultural purpose, the authority concerned can
grant conversion, or in public interest prohibit the conversion. There was thus
no absolute right to get the land converted to non agricultural use and develop
it for other non-agricultural purposes.
(iii) Section 2 of
the Goa Land Use (Regulations) Act, 1991 (`Land Use Act' for short) provides that
no land which vested in the tenant under the provisions of the Tenancy Act
shall be used or allowed to be used for any purpose other than agriculture. As
the land in question had vested in the tenants on the Tiller's Day (8.10.1976),
the land had to be used only for agricultural purposes. The land therefore did
not have the potential for development for any non- agricultural purpose and
therefore will have to be valued only as an agricultural land. Even as
agricultural land, the market value will not be the normal market value as it
was tenanted.
6.
We
are not required to decide in this appeal, either the entitlement of the landlords/owners
for compensation or the extent of share in the compensation. It is an admitted
position that the land is tenanted and vested in the tenants under section 18A
of the Tenancy Act on the Tiller's Day (that is, 8.10.1976) and the tenants are
deemed to have purchased the land.
The purchase price
under section 18D of the Tenancy Act was not however paid to the landlords and
no purchase certificate had been issued to the tenants under section 18H of the
Tenancy Act. According to the appellants, where land is acquired under the Land
Acquisition Act, 1894, before payment of the purchase price to the landlords
under section 18D of Tenancy Act and before the issue of purchase certificate
to the tenants under section 18H of the Tenancy Act, inspite of the vesting
under section 18A of the Tenancy 6Act, the compensation will be divided equally
between the landlord and tenant as per standing instructions of the government.
The appellants contend
that the said procedure had been followed by the Land Acquisition Officer in
making the award by holding that 50% of the compensation was payable to the landlords
and 50% of compensation was payable to the tenants. The appellants submitted
that neither the landlords, nor the tenants, have disputed the said apportionment
and therefore this appeal does not involve any issue relating to entitlement to
compensation or apportionment thereof. It was further submitted that the only
issue in this appeal relates to the quantum of compensation. In view of the
said submission, we have only considered the question of quantum in this
appeal, and have not examined the rights of the landlord vis-`-vis the tenants.
7.
We
may first deal with the contention of the respondents with reference to the
regulation of land use under the Land Use Act. Section 2 of the said Act provides
that no land which is vested in a tenant under the provisions of the Tenancy
Act shall be used or allowed to be used for any purpose other than agriculture.
If the Land Use Act was applicable to the land at the time of acquisition, then
the land could be used only as agricultural land and could be valued only as an
agricultural land. But the Land Use Act, came into force with effect from
2.11.1990. The relevant date for the purpose of determination of compensation
is the date of publication of preliminary notification under section 4(1) of
the Land Acquisition Act, 1894 which is 1.2.1990. On that day the Land Use Act
was not in force and consequently there was no restriction that the use land
vested in the tenant should be used only for agricultural purposes. Therefore
the market value of the land could be determined with reference to the
development potential for non agricultural purposes.
8.
The
next contention of the respondents is that a land purchased by a tenant under
Chapter IIA of the Tenancy Act, could not be sold without the previous sanction
of Mamlatdar, under section 18K of the Tenancy Act. The mere fact that the
sanction has to be obtained from Mamlatdar for sale of such land would not
depress the price of the land, nor affect its potential for being developed as
residential or industrial use.
9.
The
next contention of the respondents was based on Section 3 of the Tenancy Act. Section
3 provides that if any owner of agricultural land applies for conversion
thereof for non-agricultural use, the Government may, instead of granting
conversion, prohibit such conversion in public interest. The risk not being
permitted to convert the land should also be taken note of while assessing the
market value with reference to development potential of the land. Such a
contingency exists in regard to all agricultural lands and is not specific to the
appellants. Inspite of section 3 of Tenancy Act, compensation has been determined
as Rs.78/- per sq.m. for neighbouring agricultural lands and we see no reason
why the said rate should not apply to the land in question also.
10.
The
High Court committed an error in holding that the compensation for the land in
question should be lesser than the compensation for a land which is not subject
to tenancy. It relied upon the decision of this Court in M.B. Gopala Krishna
& Ors. v. Special Deputy Collector, Land Acquisition (1996) 3 SCC 594
wherein this Court observed : "A freehold land and one burdened with encumbrances
do make a big difference in attracting willing buyers. A free hold land normally
commands higher compensation while the land burdened with encumbrances secures lesser
price.
The fact of a tenant in
occupation would be an encumbrance and no willing purchaser would willingly
offer the same price as would be offered for a freehold land."The said
principle will apply only where a property subject to encumbrances is to be
sold to a private purchaser or is acquired subject to the tenancy. The decision
of this Court made those observations when upholding the compensation that was payable
to the landlord, without reference to the tenant's rights, where the tenant did
not claim any compensation. But in this case, the landlords have been awarded only
50% of the compensation 9amount and remaining 50% has been awarded to the
tenants. The High Court has mixed up a sale subject to encumbrances with an
acquisition free from encumbrances under the Land Acquisition Act, 1894. The two
are conceptually different.
If a property subject
to a lease and in the possession of a lessee is offered for sale by the owner to
a prospective private purchaser, the purchaser being aware that on purchase he
will get only title, but not possession and that the sale in his favour will be
subject to an encumbrance, namely the lease, will offer a price taking note of the
encumbrances. Naturally such a price would be less than the price of a property
without any encumbrances. But when a land is acquired free from encumbrances,
what is acquired is not only the landlord's right, but also the lessee's
rights. In such a case compensation awarded is for the property free from encumbrances,
which includes the lessee's rights also. We may illustrate by the following
example:
Let us assume the
value of a property which is not subject to any lease is Rs.Ten lakhs. If that
property was subject to a lease and if the possession was with the lessee, a purchaser
will offer only Rs.Five lakhs as he will be purchasing a property with an encumbrance
and will not be getting physical possession. But when the property subject to a
lease is acquired, under the Land Acquisition Act, 1894, what is acquired is not
only the landlord's right, title and interest, but also the lessee's right and interest.
In other words the property with all rights, free from encumbrances is acquired
and the compensation is determined and paid for the property as one free from
encumbrances.
The rights of lessor as
well as lessee are extinguished. Therefore compensation payable will be the entire
market value that is Rs.Ten lakhs which may be shared by the lessors and lessee
at the rate of Rs.Five lakhs each or such other ratio as may be determined with
reference to the extent of their respective rights. The Land Acquisition
Officer issue notice to all persons interested and hears them before making the
apportionment of the compensation among the persons interested. The `market value'
of the property free from encumbrances acquired by the State will not therefore
be the same as the price a purchaser may pay to buy the property subject to a
lease (encumbrances).
11.
As
the High Court has already determined Rs.78 per sq.m. as the compensation in regard
to the adjoining lands acquired under the same notification vide its judgment dated
14.10.2008 (Dy.Collector (Development) and Land Acquisition Officer, Panaji v.
Smt. Sitadevi & Ors. in FA No.123/2003) and the said judgment has attained
finality, there is no reason why the same compensation should not be awarded
for this land also. The appellants have no grievance in regard to the
apportionment made by the Land Acquisition Officer at the rate of 50% for the
landlords and 50% for the tenants. The tenants apparently have not raised any
dispute in regard to the apportionment. It is made clear that if any dispute regarding
apportionment is pending, this decision shall not be construed as determining
the percentage of entitlement of appellants or other co-owners (not before us)
or the tenants (not before us).
12.
In
view of the above, this appeal is allowed and the order of the High Court is
modified by increasing the compensation for the acquired land from Rs.17 per
sq.m. to Rs.78 per sq.m. All statutory benefits are also granted.
............................J.
(R V Raveendran)
............................J.
(A K Patnaik)
New
Delhi;
October
11, 2011.
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