BRIJ BEHARI SAHAI (DEAD) THROUGH LRS. ETC. ETC.versusSTATE OF UTTAR PRADESH

A        BRIJ BEHARI SAH.AI (DEAD) THROUGH LRS. ETC. ETC.
                                         v.
                         STATE OF UTTAR PRADESH

                             NOVEMBER 28, 2003

B           [DORAISWAMY RAJU AND ARJJIT PASAYAT, JJ.]

          Land Acquisition Act, 1894-Section 18-Acquisition ofsuit property--
    State and Claimants claiming title over the suit property-Land Acqtfisition
    Officer awarding compensation to State and claimants in 10:6 ratio-
C   Reference Court granting full awarded compensation to claimants-High
    Court restoring the award of Land Acquisition Officer-Validity of-Held,
    on facts, State and claimants entitled to co;npensation in 25:75 ratio on
    account of disputed stands taken.

         Respondent State initially filed suits before trial court for recovery
D of arrears of ground rent on the suit properties against the predecessors
    in interest of appellants treating them as lessees of the lands. When the
    claim of the State was rejected, the State initiated acquisition proceedings
    of the suit land belonging to the appellants. State took a stand that the
    appellants and their predecessor-in-title were the owners of the suit
E   properties. The Land Acquisition Officer held that the appellants were
    holding lease hold rights for Qver thirty years and awarded compensation
    between the State and the appellants in the proportion of 10 : 6
    respectively. The appellants and the State sought reference under
    Section 18(1) of the Lano Acquisition Act, 1894 before Reference
F   Court, and the State took the stand that the State is the absolute owner
    of the suit properties on expiry of the lease granted to the appellants
    and their predecessor-in-interest. Reference Court dismissed the claim
    of the State and allowed the claim of the appellants. It also held that
    the whole compensation amount would go to the appellants. High
    Court allowed the appeal by the State and restored the apportionment
G   of compensation ordered by the Land Acquisition Officer.

         In appeal, the appellants contended that the suit lands were held
    on perpetual lease and was not for a specified period; that they had
    complete title on the suit land; and that the right available to the State
H   could only be to the extent of recovering ground rent assessed or its
                                        302
                        B.B. SAHA! v. STATE                       303

capitalised value and not the compensation amount on land acquisi- A
tion.

     The respondents contended that the appellants are not entitled to
any compensation amount on the suit lands since it had exclusive
rights; and that the grant was gi\'en to the appellants for a specified B
period and on expiry of the period, the lands vest with the State.

     Allowing the appeals, the Court

     HELD: 1.1. Both the parties on either side should not be allowed C
to adopt their respective extreme stands at this point of time and to
some extent, they will be precluded from doing so on the principle of
estoppel arising out of their own conduct for such long spells of time.
On the facts and circumstances of the case, there is enough justification
to hold that the Nazul character· of the land can be sustained with
corresponding rights of perpetual lessee in the appellants and their D
predecessor-in-interest subject to the payment of the periodically
revised ground rent. (318-G, HJ

      1.2. The claim of the appellants that the entire compensation was
only in respect of the totality of the rights held by the appellants as E
lessees and not of the whole inclusive of the rights and interests of the
State is not acceptable. Though as a matter of principle oflaw, the State
while invoking the provisions of the Land Acquisition Act for ac4airing
a land in which the State also had some or other of interest, need not
go for acquiring their interest as well and what is permissible as well F
as obligllted for acquisition is only of such of the private interest of
third parties other than that of the State, the Land Acquisition Officer
in this case has chosen to, while determining the market value,
indisputably proceed to determine for the whole of it and only as a
consequence thereof has chosen to apportion compensation between G
the State and the appellants in the ratio of 10:6 respe~tively. Though
the Reference Court, during the course of its judgment, adverts to the
principles relating to the need or desirability of acquiring only private
parties other than that of the Government under the Land Acquisition
Act bas ultimately chosen to adopt only the standard and rate of H
    304               SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A   market value determined by the Land Acquisition Officer. Gonse-
    quently, niceties of language apart and the purported endeavour
    attempted to have been made by the Reference Court, the Court is
    constrained to hold that the actual market value determined was that
    of the acquired properties as a whole -and, consequently the need for
B   apportionment, inevitably arise. (319-A-El

         1.3. The fixation of apportionment in the ratio of 75% in favour
    of the appellants and 25% in favour of.the State would be just and
    1·easonable. Having regard to the fact the State's interest-has been-fixed
C   at the proportion of 25%, there is no further .need or justification to
    direct the capitalisation of.the ground rent for further being deducted
    or directed to be paid by the appellants either from the compensation
    amount or otherwise .separately. The High Court has committed a
    patent error of law and misdirected itself in determining the respective
    rights of the appellants on _the one hand and the Government on the
D   other in the lands. in question. as well as in restoring the ratio of
    apportionment made by the Land Acquisition Officer without any
    objective consideration of the relevant principles in their prosper
    perspective. [319-F~H; 320-A-B]

E        Inder Pershad v. Union of India & Ors., (1994) 5 SCC 239; The
                         v.
    Collector of Bombay Nusserwanj Rattanji Mistri & Ors.; (19551'1 SCR
    1311; Dr. G.H. Grantv. StateofBihar;-[1965) 3·SCR576; State ofMadras
    v. K.N Shanmugha Mudaliar & Ors., (1976) 3 SCR 536; Chapsibhai
    Dhanjibhai Dand v. Purushottam, A1R (1971) SC 1878; Hamidullah
p   (Dead) by his LRs._ & Ors. v. Abdullah & Ors., AIR (1972) SC 410;
    Mohammed Hasnuddin v. State of Maharashtra, AIR (1979) SC 404;
    Bangharu Narasingha Rao Naidu Etc. v. The Revenue Divfsional Officer,
    Vizianagaram, AIR (1982) SC 63; Col. Sir Harinder Singh Brar Bans
    Bahadur v. Bihari Lal & Ors. Etc., [1994) 4 SCC.523 and Union of India
    through Secretary, Minislly of Home Affairs, Govt. of India, New Delhi
G   & Ors. v. A. Ajit Singh slo S. Chet Singh, Delhi, [-19871 6 SCC ,50,
    referred to.

         Kachrulal Hiralal Dhoot v. The Gurudwai·a Board, Nanded & Ors.;
    AIR (1979) Bombay 31 andShiam Lal & Ors. v. Collector of Agra, AIR
H   f1934) Allahabad 239, referred to.
                     B.B. SAHAI v. STATE [RAJU, J.]                    305

     CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 14178- A
141 84 of 1996.

     From the Judgment and Order dated 8.2.95 of the Allahabad High
Court in F.A. Nos. 74, 75, 76, 77, 78, 79, 80 of 1982.

    Harish N. Salve, Manoj Swarup, Ms. Lalita Kohli, Anubhav Kumar B
and Nikhil Mehra for Mis. Manoj Swarup & Co. for the Appellants.

     S. Wasim A. Qadri, Rajeev Kumar Dubey, Manoj K. Mishra, Sanjay
Visen and Kamlendra Misra for the Respondent.

     The Judgment of the Court was delivered by
                                                                             c
     D. RAJU, J. The above appeals, arising out of a common judgment
dated 8.2.1995 of a Division Bench of the Allahabad High Court in First
Appeal Nos. 74 to 80 of 1982, involving identical questions of law and
similar facts, are dealt with together.                                 D
        The immovable properties, land and buildings in question, which
are the subject-matter of acquisition under the Land Acquisition Act, 1864
[hereinafter referred to as "the Act"], forming part of large extent were
granted by Competent Authority on behalf of the Government of North E
Western Provinces of British Inqia by a deed dated 24.12.1862 subject only
to the conditions stipulated therein, which included, apart from the payment
of the lump sum amount spedfied therein, the rent/ground rent up to
31.7.1869 the periodical payment of on and from 31st July 1869 revised
annual ground rent that may be fixed by the Revenue Collector of F
Allahabad District, in favour of one Mr. Walter Edmond Davis, Indigo
Planter of Bengal. The same was sold to and purchased from the said
grantee by the Right Reverend Doctor Avastasins Hartmann of the Roman
Catholic Mission Lord Bishop and Vicor Apostolic of Patna under a
registered sale deed dated 7.1.1863 whose successor-in-office Right Rev-
erend Doctor Pesci sold the properties more fully described in and under G
a sale deed dated 13.5.1886, in favour of General Puddum Jung Bahadur
Rana, who hailed from Nepal but settled in Nynetal, the great grand father
of Rana Pratap Jung Bahadur, Rana Pradyuman Jung Bahadur and Rana
Rutasan Jung Rahadur. It is also claimed that Rana Paddum Jung Bahadur
also took, in additjon to these properties, on lease additional extent oflands H
    306                SUPREME COURT REPORTS (2003] SUPP. 6 S.C.R.

A measuring about 68 Bighas and 7 Biswas on different dates. It is further
    claimed that in the year 1910 the management of the lands in question was
    entrusted to the Municipal Board of Allahabad, subsequently came to be
    renamed as Nagar Mahapalika of Allahabad and the said body had these
    properties recorded in the name of the descendants of Rana Padam Jung
B   Bahadur in the Property Register of the Nazul section.

            While matters stood thus, in the year 1941 the State of U.P. seems
    to have instituted proceedings to recover the arrears of ground rent due
    from the heirs of the owners and a su~t again seems to have been filed in
    the year 1959 also for the same purpose admitting the relationship between
C   patties, the Government of U.P. and the heirs of Late Rana to be Lessor
    and Lessee. The authorities of the State seem to have started asserting in
    some form or other in correspondence as well as some of these litigations
    that the heirs of Rana had only a limited leasehold interest and that the
    period of such leasehold interest also expired by efflux of time and in the
D   absence of renewal thereafter, the heirs of Rana were said to be in
    possession of the leasehold properties only ac; a 'tenant holding over and
    not as a tenant under a perpetual lease. In the year 1970, the State appears
    to have filed a suit seeking for recovery of the arrears of ground rent and
    for eviction and when the claim of the State was rejected at the appellate
E   stage the State does not appear to have pursued the matter further. It is
    in the backlog of such claims and counter claims the present acquisition
    proceedings seem to have been ·initiated to acquire portions of the land on
    23.10.1976. The stand of the State during the award proceedings .and
    thereafter even before a Reference Court initially was one admitting the
F   interest of the appellants and their predecessor-in-title, but by the time the
    Reference Court could decide the matters finally, the State appears to have
    filed additional written statements disputing the rights of the appellants and
    their· predecessor-in-interest in toto by asserting that the term of lease of
    Rana family expired and, therefore, they had no interest, title or right in
    the lands in question and that the lands have already vested absolutely with
G   the State of U.P. and, therefore, the transferees from the heirs and
    successors-in-foterest of Rana cannot claim any share in the compensation.
    While thus disputing the rights and claims of the appellants, the State
    started asserting that the State alone is the absolute owner of tfie lands in
    question with the trees standing thereon and as such entitled to the whole
H of the compensation.
                          B.B. SAHAI v. STATE [RAJU, J.]                   307

             So far as the Land Acquisition Officer is concerned, in the Award A
     passed on 9.3.1978 it was held that the appellants were the Cultivators of
     the lands and while, at the same time, evaluating the value of the leasehold
     rights as that of thirty years in the land had apportioned ten annas share
     in favour of the Government and six annas share in favour of the aprellants.
     Aggrieved, the appellants sought reference under Section 18( 1) of the Act. B
     As a consequence of which, seven references can,~ to be made. The State
     also sought for and got a reference made. as well.

            The learned Third Additional District Judge, Allahabad, exercising
     jurisdiction as.the Reference Court under the Act, by his common Award
     and Judgment dated 29.5.1981, held the reference made at the instance of C
     the State to be incompetent and did not pass any Award thereon. But so
     far as the references at the instance of the claimants are concerned, the
     learned District Judge, while affirming the rate of market value as
      determined, interfered with the apportionment by undertaking what he
      possessed to be an assessment of the market value of the totality of the D
      interest held by the claimants alone in the land and in so determining
      ultimately came to the conclusion that the amount determined in its entirety
     would go to the claimants, subject only to the right of the State Government
     to recover the value of its interest as found by the learned District Judge
      by capitalizing the quit rent due to the Government multiplied by twenty E
     years of rent. Aggrieved, the State approached the High Court by filing
     eight appeals under Section 54 of the Land Acquisition Act. The Division
      Bench of the Allahabad High Court by the judgment under challenge held
      that the claimants had no better interest than that of a tenant holding over,
     which, according to the High Court, was a precarious possession only and F
     while sustaining the market value of Rs. 33.30 per square yard, set aside
     the finding of the District Court as to the apportionment of the entire
     compensation determined to the claimants and restored the apportionment
     ordered by the Land Acquisition Officer granting six annas share in a rupee
     to the claimants. Hence, these appeals.
·,
                                                                                 G
           Shri Harish N. Salve, learned Senior Counsel appearing for the
     appellants, after inviting our attention to the relevant materials on record,
     strenuously contended that the High Court was in grave error in interfering
     with the decision of the Reference Court rendered on an exhaustive
     analysis and elaborate consideration in a~cordance with law of all the H;
    308                SUPREME COURT REPORTS (2003] SUPP. 6 S.C.R.

A materials on record placed during the course of trial of the Reference Court
   and that the ultimate decision arrived at by the High Court to restore the
   apportionment of the compensation as made by the LAO in the Award in
   the proportion of ten annas and six annas between the State atid the
   claimants without any objective consideration of the issues and even in the
B absence of recording any valid reasons therefor suffered from serious
   infirmities, warranting the interference of this Court. It was also contended
   that when the indisputable materials on record in the original grant
   disclosed no time limit or duration of period of the grant and even when
   the Government and the Mahanagar Palika subsequently treated the grant
C to be of a perpetual lease, which itself, though according to the appellants,
   was unwarranted, there was no legally acceptable material whatsoever to
   alter the nature of the grant int<? one of a lease for a specified period or
   duration to completely deprive the claimants and their predecessor-in-
   interest of any right ~nd interest in the property so as to deny their right
  ·to receive compensation. It was also asserted for the appellants that subject
D to the payment of ground rent as stipulated in the initial grant, the quantum
   of which might be subject to revision in the periodical revenue statements,
   the rights granted in favour ofRanas were total and complete in all respects
   in properties, particularly having regard to the fact that there was not even
   any clause in the grant indicating it to be either· by way of lease or that
E any right was reserved under the grai:.it for resumption of the sa~e
   unconditionally or unilaterally. So far as the question of apportionment
   of the compensation and the course adopted by the High Court in restorirg
   the proportion of apportionment made by the Land Acquisition Officer is
   concerned, it was contended that not only the Award of the Land
F Acquisition Officer was illegal and unjustified, but the Reference Court has
   rightly chosen to, as a sequel to its finding on the nature of rights held by
   the Ranas and the claimants as their successors-in-interest in the property,
   determine the market value of only the bundle of rights held by the Ranas/
   claimants and consequently there was no justification· for the High Court
   to restore the apportionment made by the Land Acquisition Officer. It was
G incidentally also urged that when the Land Acquisition Officer himself was
   convinced of the rights of the claimants to be that of a cultivator, the said
   Authority, at the same time, erred in evaluating the market value of the
   same viewing it to be a li~ited leasehold interest, which, according to the
   appellants;rightly came to be interfered with by the Reference Court. In
H substance, the claims sought to be projected on behalf of the appdlants are
                     B.B. SAHA! v. STATE [RAJU, J.]                     309

that the grant in favour of Ranas, from whom the appellants derived their A
rights, is absolute subject only to the payment of the ground rent assessed
and revised periodically and that the same to be also by way of a perpetual
or permanent lease in the absence of any specific period of time or any
provision for unilateral resumption. Th~ rights of the Government, if at
all, it is urged, could be only to the extent of recovering ground rent B
assessed or its capitalized value and nothing mor,. ant! consequently the
market value fixed by the Reference Court after giving due weight to large
nature of extent under acquisition and deductions necessary for the
developmental purposes, no question of any further deduction, except for
the payment or deduction of the capitalized value of the ground rent, could C
arise and the judgment of the Reference Court rendered by the learned
District Judge deserves to be upheld and restored to the appellants.

      Per contra, Shri S. Wasim A. Qadri, learned counsel for the respond-
ents, with equal vehemence, contended reiterating the same stand taken
before the Reference Comt in the light of the additional written statements D
filed asserting the exclusive rights of the State in the properties in question
reiterating the claim, that the appellants are not entitled to any compensation
whatsoever for the properties in question. It was further contended for the
respondent-State that the learned District Judge, exercising powers of the
Reference Comt, went wrong in determining the nature and character of the E
grant and as to the rights and interests held by the claimants and their
predecessor-in-interest to be that of a perpetual lessee and that, therefore,
no exception could be taken to the conclusions arrived at by the Division
Bench of the High Court. Reliance was sought to be placed on the basis
of a Draft Lease Deed said to have been signed by the successors-in-interest
of the original grantee Rana and some correspondence as well as the legal F
proceedings, which took place among the parties, noticed supra, for recovering
rent/eviction in support of the claims made for the State. According to the
learned counsel for the respondent, even six annas share ordered by the Land
Acquisition Officer and restored by the High Court, is not really due to the
claimants in law. Reliance has also been placed by the learned counsel on G
a decision reported in Inder Pershadv. Union ofIndia & Ors., [I 994] 5 SCC
239 in support of the stand that at any rate the apportionment made by the
Land Acquisition Officer, which stood restored by the judgment of the High
Court, was correct and does not call for any further interference in these
appeals.                                                                        H
    310                c;;UPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A         Before unde1taking a consideration of the respective contentions, it
    would be useful to refer broadly to some of the findings of the Land
    Acquisition Officer in the Award and of the Reference Court for a better
    and proper appreciation of the contentions of parties:

B         A. The Land Acquisition Officer, who passed the Award, seems to
    notice the very claim on behalf of the appellants to be that the owner of
    the Nazul land in the capacity of a perpetual leaseholder for the construc-
    tion of house/building, the subsequent improvements and development
    claims to have been made, and for payment of market value at Rs.50 per
    sq. yard, in addition to the claims for trees and other improvemeats, etc.
C   Thereupon, after considering the materials on record, keeping into consid-
    eration the fact that the lands in question are Nazul lands and that the
    claimants to be cultivators not only fixed the market value at Rs.3.70 per
    sq. ft., which comes to Rs. 33.30 per sq. yard, but also apportioned the
    compensation in the proportion of l 0:6 Annas between Government and
D   Claimants, respectively.

             B. So far as the Reference Court is concerned, the conclusions
    arrived at are:

             The reference at the instance of the State, notwithstanding Section
E
             18(3) inserted by the Amendment Act, is incompetent having been
             made beyond the period of limitation stipulated in the statute and
             that at any rate no reference under Section 18(3) of the Act at the
             instance of the Land Reforms Commissioner could also be
             entertained with reference to disputes as to title. The Government,
F            after admitting, at all relevant points of tim~, the rights and interest
             of the claimants and having had the apportionment got done
             through its Land Acquisition Officer by resorting to provisions
             under the Land Acquisition Act, cannot at a later stage fall back
             to· assert a claim that the claimants and their predecessors-in-
G            interest had no right or interest whatsoever in the properties to
             claim any compensation for the acquisition and that all the
             interests in the properties vested free from all encumbrances with
             the State. The records produced and admitted in evidence proved
             that the lands, buildings thereon and appurtenance thereto be-
H            longed to the family of Ranas and that the admitted status of
            B.B. SAHAI v. STATE [RAJU, J.]                    311

'perpetual lessees' in respect of them, at any rate, cannot be A
denied, inasmuch as such perpetual leasehold interest was found
to be disclosed even by the Nazul Register and that the lease also
was shown to be for purpose of dwelling houses. The purchasers
from the members of Ranas family are bona fide purchasers for
valuable consideration and even their vendors have deposed B
before the Authorities during the Award enquiry that the compen-
sation relating to the properties may be paid over to the purchasers
directly and that they do not choose to assert for any rights for
themselves in and over such transferred items. The properties in
question are part and parcel of the grant originally made in favour C
of the Walter Edmond Davies and there was no restriction of any
kind therein, including on the right to transfer by the grantee, or
that any right of unilateral resumption was reserved in the grant
by the Grantor State. The sale also by the Ranas in favour of the
 purchasers was subject to the continued payment of.ground rent,
the only condition imposed in the original grant and, therefore, D
cannot be said to be vitiated. Even assuming for purposes of
consideration that the lease period expired as claimed for the State
and that they are entitled to resume possession by having recourse
to law, inasmuch as instead of doing so the State resorted to
acquisition under the Act, the State cannot deny compensation E          '
payable to the claimants for the rights and interest held by them
 in the properties acquired, particularly when their possession of
the lands was indisputable and beyond controversy and was taken
only from them. The possession of the Ranas and their succes-
sors-in-interest cannot be said to be adverse since the relationship F
of landlord and tenant was recognized, in substance by decrees
passed for recovery of the ground rent and consequently the plea
of adverse possession cannot be countenanced. There is no
discrepancy in the area of the land acquired and taken over and
that as shown in the acquisition proceedings and the State cannot
 raise such questions at all in these proceedings. As far as the G
 quantum of compensation and the question as to whether it was
excessive or not is concerned - the Reference Court held that -
 market value of the land fixed at Rs. 33.30 per sq. yard is neither
excessive nor unwarranted in law, keeping in view the value fixed
by the Government itself in respect of Shiv Kuti Arzai Barudkhana H
    312                 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A            lands of lesser quality and other materials produced and that the
             said rate itself having been arrived at after giving due deductions
             and depreciation for carryi~g out development and also taking
             into large extent under acquisition as well as there was no need
             for any fwther deductions. As regards the question of apportion-
             ment of the compensation, it was held that the apportionment in
B
             the ratio of I 0:6 Annas respectively in favour of Government and
             claimants is unreasonable and improper having regard to the fact
             that the market value.fixed at Rs. 33.30 per sq. yard itself was only
             of the portion out of bundle of rights of the claimants and keeping
             into account their claims only as lessees.
c
          The manner and method undertaken for the ultimate determination of
    the vaJuation ofthe1property at Rs.·33.30.per sq .. yard also requires to be
    noticed; as culled, out from the Award passed. by the·Reference Court ( vide
    Intemal·Pages 139-143 ofthe·typed copy·and•Pages 189-191 ofthe Appeal
D   Paper Book), The total value ofthe·land.would be about Rs.99 and odd
    keeping in view the. preventing market rate .at the .relevant point of time
    and~even un the basis of materials placed: on record, particularly Ex. 57.
    But so far as the rights of the claimants as lessees are concerned, excluding
    the rights of the Government; the samehdeserved; in the view of the
E   Reference Court, to be valued at Rs. 66.51 per sq. yard. Further deductions
    were.found made at 25% for the land being underdeveloped and 25% for
    the land acquired being large area compared to the exemplar laod and thus
    finally, in the opinion of the Reference Court, the· resultant valuation of
    the rights and interests of the claimants as lessees only came to be arrived
F   at Rs; 33.30 per sq. yards.

            It would be appropriate to advert to some of the judicial pronounce-
    ments noticed by the· Reference Court as well as those to which our
    attention·was drawn at the time··of hearing of the appeals.

G           In Kachrulal Hiralal Dhoot v. The Gurudwara Board, Nanded &
    Ors., AIR (1979) Bombay 31, a Division Bench of the·Bombay High Court
    held that in the matter.of apportionment of compensation under the Land
    Acquisition Act, between owners ofland and permanent tenants/permanent
    licensee,.cif the right of the owners was only to receive every year a certain
H   sum, then naturally upon acquisition· of the property· including their
                     B.B. SAHAI v. ST ATE [RAJU, J.]                    313

interests in the land, they would receive the compensation which would A
be arrived at upon capitalization of twenty years' income and that the rest
has to be paid to the other claimants-permanent tenants/permanent licen-
sees. In Shiam Lal & Ors. v. Collector of Agra, AIR (1934) Allahabad
239, a Full Bench of the High Court held that where an agricultural land
of Zamindar over which tenant has occupancy right is acquired by B
Government under the Land Acquisition Act, the compensation awarded
should be apportioned in the ratio of I 0:6 annas, as between the Zamindar
and the tenant, in the absence of evidence to the contrary, though not as
a rule of law but as a rule of practice.

        In the The Collector of Bombay v. Nusserwanji Rattanji Mistri & C
Ors. (I 955] 1 SCR 1311, it was observed that when the Government
acquires lands under the provisions of the Land Acquisition Act, the
Government acquires the sum total of all private interests subsisting in
them to put them to a public purpose and that ifthe Government has itself
an interest in the land it has to only acquire the other interests outstanding D
therein, so that it might be in a position to pass it on absolutely for public
user. Approval was also accorded to the view that the Land Acquisition
Act does not contemplate or provide for the acquisition of. any interest
which already belongs to Government in land which is being acquired
under the Act, but only for the acquisition of such interests in the land as E
do not already belong to the Government, since there can be no acquisition
by the Government of what already was its own. It was also observed
therein that under the scheme of the Act, it is the interests of the occupants
which are ascertained and valued and the Government is directed to pay
the compensation fixed for them and there is no valuation of the right of F
the Government to levy assessment on the lands and there is no award of
compensation therefor. Under the Land Acquisition Act what is acquired
is only the ownership over the lands or the inferior rights comprised therein
and that the Government is not person interested within th" meaning of
Section 3(b). This Court in Dr. G.H Grant v. State of Bihar, [1965] 3
SCR 576 held as follows:                                                       G

         " ....... The Collector is not authorized to decide· finally the
         conflicting rights of the persons interested in the amount of
         compensation : he is primarily concerned with the acquisition of
         the land. In determining the amount of compensation which may H
    314               SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A           be offered, he has, it is true, to apportion the amount of compen-
            sation between the persons known or believed to be interested in
            the land, of whom, or of whose claims, he has information,
            whether or not they have appeared before him. But the scheme
            of appo11ionment by the Collector does not finally determine the
            rights of the persons interested in the amount of compensation:
B
            the award is only conclusive between the Collector and the
            persons interested and not among the persons interested. The
            Collector has no power to finally adjudicate upon the title to
            compensation, that dispute has to be decided either in a reference
            under s. 18 or under s.30 or in a separate suit. Payment of
c           compensation therefore under s.31 to the person declared by the
            award to be entitled thereto discharges the State of its liability to
            pay compensation (subject to any modification by the Court),
            leaving it open to the claimant to comp~nsation to agitate his right
            in a reference under s.30 or by a separate suit."
D
           In State of Madras v. KN Shanmugha Mudaliar &.Ors., [1976] 3
    SCR 536, this Court, while rejecting the plea on behalf of the State that
    as the land had vested in the Government under the Abolition Act, the
    respondents were not entitled to compensation under the Land Acquisition
E   Act, held as hereunder:

            " ...... We find it difficult to accede to this submission, for we are
            of the opinion that in case the State wanted to take over the land
            under the Abolition Act, it should not have proceeded to acquire
            the interest of the respondents in the land in dispute under the
F           Lar..d Acquisition Act. There were two alternative courses open
            to the State, either to proceed under the Land Acquisition Act or
            to take over the land under the Abolition Act. Although the estate
            was notified under the Abolition Act, the proceedings under ~hat
            Act were stayed and the matter proceeded under the Land
G           Acquisition Act. As the proceedings, which were continued, were
            under the Land Acquisition Act, the compensation payable had
            also to be paid in accordance with the provisions of that Act. The
            reference, which was made by the Land Acquisition Officer to the
            Subordinate Judge under Section 18 of the Land Acquisition Act,
H           was with respect to the quantum of compensation payable to the
                     B.B. SAHA! v. STATE [RAJU, J.]                     315

        respondents because the respondents had felt dissatisfied with the A
        amount awarded to them as compensation by the said Officer.
        The underlying assumption of those proceedings was that the
        respondents had an interest in the land. If it was the case of the
        appellant that the respondents had been divested of their interest
        in the land and the same had vested in the appellant-State, the B
        appellant should have taken appropriate steps to make such a
        claim in accordance with law. No such claim seems to have been
        made. The High Court expressly left open the question of the
        claim of the State Government to the amount of compensation
        deposited on the score that Melwaramdar respondents were not
        entitled to it by reason of having lost all their interest in the land C
        at the relevant point of time. We agree with the High Court that
        it was not open to the appellant-State in the particular reference
        made at the instance of the respondents to the Subordinate Judge
        to set up a claim adverse to the interest of the respondents. There
        is also we find nothing in the award of the learned Subordinate D
        Judge to show that any question was raised before him that the
        amount of compensation was not payable to the respondents in
        accordance with the provisions of the Land Acquisition Act. This
        question appears to have been agitated for the first time only in
        the app~al before the High Court. The High Court rejected the E
        contention in this behalf. We find no cogent ground to take a
        different view."

        In Chapsibhai Dhanjibhai Dand v. Purushottam, AIR (1971) SC
1878, it was observed in dealing with the question as to whether a lease
was pennanent one or for the lifetime only of the lessee, even where it was F
for building structures and was transferable, that the answer depended upon
the terms of the lease and that Cou1ts must look at the substar:ce of it to
ascertain whether parties intended it to be a pennanent lease. It was also
held therein that the fact that the lease provided that the lessee could
continue in possession of the property so long as he paid the stipulated rent G
did not mean that the lease was for perpetuity and instead it would be
usually regarded as a lease for an indefinite period and, therefore, for the
Jessee'~ lifetime. In Hamidullah {Dead) by his L.Rs. & Ors. v. Abdullah
& Ors., AIR (1972) SC 410, it was observed that in every case the inference
to be drawn as to the pennanency of tenancy would be a question of fact H
    316                SUPREME COURT REPORTS (2003] SUPP. 6 S.C.R.

A   depending upon the facts of each particular case and the onus is always
    upon he who asserts such claim. While dealing with a question as to
    whether the Reference Court under the Land Acquisition Court had
    jurisdiction to decline to answer the reference on finding that the reference
    sought and made was beyond the statutorily fixed period, this Court in
B   Mohammed Hasnuddin v. State of Maharashtra, AIR ( 1979) SC 404 held
    that the Collector acting under Section 18 of the Act being a statutory
    authority exercising his own powers under the said provision and that the
    making of an application for reference within the time prescribed by
    proviso to Section 18(2) is a sine qua non for a valid reference and that
C   the Reference Court being merely a Tribunal of special jurisdiction had a
    bounden duty to see whether the reference made in a given case complied
    with the conditions laid down so as to give the court jurisdiction to hear
    the reference and decline to answer the reference when the same was found
    to have 1.ieen not properly and validly made. In Bangaru Narasingha Rao
    Naidu etc. v. The Revenue Divisional Officer, Vizianagaram, AIR (1982)
D    SC 63, it was held that the best evidence of the market value of the land
     acquired would be afforded by transactions of sale in respect of the very
     acquired land provided, there was nothing to d.oubt the authenticity of the
     transactions.

E            In Col. Sir Harinder Singh Brar Bans Bahadur v. Bihari Lal & Ors.,
    etc., [ 1994] 4 sec 523, it ha5 been held that if a tenanted land which its
    tenant was entitled to purchase under Section 18 of the Punjab Security
    of Land Tenures Act, 1953 did vest in the State by reason ofits acquisition
    under the L<ind Acquisition Act before he became its deemed owner as
    envisaged under sub-section (4) of Section 18 of the Tenure Act, the
F   landowner of that tenanted land could have made a claim for compensation
    awardable therefor under the Land Acquisition Act and his entitlement out
    of the said compensation could only be that falling in the component of
    compensation in Item (i), the market value of that land together with
    solatium and interest, though limited to the amount of purchase price of
G   which he was entitled to get for the land under Section 18 of the Tenures
    Act and nothmg more or less.

         In lnder Parshad's case (Supra), this Court, while dealing with the
    compensation payable and apportionment of the same between the lessee
H   and the owner of Nazul land owned by the Government itself but given
                     B.B. SAHAI v. STATE [RAJU, J.]                      317

on perpetual lease by the Government with right to re-entry on breach of A
covenants, when being acquired under the provisions of the Land Acqui-
sition Act, 1894, held that the fixation of the propo1tion by the High Court
at 75% and 25% respectively as payable to the lessee and the Government
was right and that does not call for interference of this Comt.

       In Union of India through Secretary, Minisfly of Home Affairs,
                                                                                B
Govt. of India, New Delhi & Ors. v. A. Ajit Singh Sia S. Chet Singh, Delhi,
[l 997] 6 SCC 50, a Bench consisting of three learned Judges, while dealing
with the apportionment of compensation between the tenant and landlord
on the land being acquired under the Land Acquisition Act, 1894 in respect
of Government land held by the tenant under a lease for thirty years with C
a right to fmther renewal up to a maximum period of 99 years, held that
the ratio of 60% to the tenant and 40% to the landlord for apportionment
of the compensation would be a reasonable ratio.

        The relevant records and documents apart, though the dealings, D
conduct and claims as to their respective status, inter se relationship
vis-a-vis the properties in question and their rights and interests therein
seem to present varying, discordant and disorientated picture on account
of a disorganised handling of such matters at different stages and points
of time, ce1tain vitally relevant aspects necessary for adjudication of the E
disputes raised in these appeals admits of no serious controversies or
disputes. To notice some such of them are - the grant made under a
document dated 24.12.1862 does not indicate that what was granted was
a lease but one in return for the lump sum paid and subject to the continued
payment initially of ground rent in relation to a portion and rent for the
other and thereafter uniformly for all lands the payment of ground rent as F
revised, periodically. Since, it was not a lease as such, no duration of time
or period seems to have been indicated and there appears to be a
conspicuous omission also of any condition or clause enabling re-entry by
resumption for one or other reason. Despite all such, for reasons beyond
comprehension, the said properties along with certain other items of garden     G
land in respect of which leases seem to have been obtained on different
occasions, appear to have been shown as having been entrusted to the
management of Mahanagar Palika, which got it entered as pa1t of the Nazul
Lands in the relevant register maintained, with no indication as to any time
limit. The claim of the heirs of Rana as well as their successors-in-interest H
    318                 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A   including the claimants appears from all such dealings to be only.that of
    a permanent lessee, subject only to the obligation to pay the ground rent
    assessed, and as revised periodically. Then comes, the draft lease said to
    have been signed by an heir and successor-in-interest of the original
    grantee, which, though provide for 30 years lease, contains a clause for
B   periodical renewal upto 90 a total of years. The fact that the suits for
    recovery of ground rent being decreed but, at the same time, one such filed
    later for eviction also by the Government though did not meet with success
    and camJ to be dismissed with no further action thereon by the State also
    are matters ofrecord. The further fact remains that, the State has not chosen
C   to take poss_ession of the properties, in exercise of their professed or alleged
    rights, apparently aware of their difficulties as well and instead have chosen
    to have resort to the provisions of the Land Acquisition Act, 1894, and took
    possession in exercise of those powers of acquisition. Thus, _the questions
    now put in issue by the pa1ties arc: (a) whether the State could completely
    deny the rights and interests of the claimants so as to deprive them of their
D   claims for compensation; (b) what are the respective interests of the parties:
    State on one hand and the claimants on the other in the properties acquired;
    and (c) how their respective interests have to be valued and whether the
    manner of determination undertaken by the authority and courts below are
    correct or that it requires interference in these appeals.
E
            Having r~gard to the settled principles of law governing the matter
    in issue necessarily flowing from the relevant decisions noticed supra, we
    are of the view that the stand taken, in extreme by both sides, requires due
    modulation and moderation to finally and effectively determine theit
F   respective claims as to their rights in the property acquired and the payrrient
    of compensation in respect of the same. Despite differences, variations and
    shifting of stands indicated above, we are of the view that both parties ori
    either side should not be allowed to adopt their respective extreme stands
    at this point of time and to some extent, they will be precluded from doing
G   so also on the principle of estoppel arising out of their own conduct· for
    such long spells of time. Consequently, we, on the facts and circumstances
    of the ca~e, find enough justification to hold that the Nazul character of
    the land can be sustained with corresponding rights of perpetual lessee In
    the appellants/claimants and their predecessor-in-interest, subject, of course,
H to the payment of the periodically revised ground rent.
                     B.B. SAHAI v. STATE {RAJU, J.]                    3\9
        The claim on behalf of the appellants that the entire compensation A
determined was only in respect of the totality of the rights held by the
appellants as lessees and not of the whole inclusive of the rights .and
interests of the Government also, though appears to be attractive, does not
appeal to us for acceptance. Though as a matter of principle of law, the
Government while invoking the provisions of the Land Acquisition Act for B
acquiring a land in which the Government also had some or other of
interest, need not go for acquiring their interest as well and what is
permissible as well as obligated for acquisition is only of such of the private
interest of third parties other than that of the Government, the Land
Acquisition Officer in this case has chosen to, while determining the C
market value, indisputably proceed to determine for the whole of it and
only as a consequence thereof has chosen to apportion compensation
between the Government and the claimants at the rate of 10 annas : 6 annas
respectively. Though the Reference Court, during the course of its
judgment, adverts to the principles relating to the need or desirability of
acquiring only private parties other than that of the Government under the D
Land Acquisition Act has ultimately chosen to adopt only the standard and
rate of market value determined by the Land Acquisition Officer. Con-
sequently, niceties of language apart and the purported endeavour at-
tempted to have been made by the Reference Court, we are constrained
to hold that the actJal market value determined was that of the acquired E
 properties as a whole and consequently the need for apportionment,
 inevitably arise.

       Applying the ratio of the decision of this Court reported in Jnder
Parshad 's case (supra), the fixation of apportionment in the ratio of 75%
in favour of the claimants and 25% in favour of the State would be just F
and reasonable. The ratio fixed therein seems to us to be more appropriate
on the facts of these cases, than the one approved in A. Ajit Singh 's case
(supra). Having regard to the fact that the Government's interest has been
fixed at the proportion of 25%, there is no further need or justification to
direct the capitalization of the ground rent for further being deducted or G
directed to be paid by the claimants either from the compensation amount
or otherwise, separately.

     For all the reasons stated above, in our view the High Court has
committed a patent error of law and misdirected itself in detennining the H
    320                SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A respective rights of the claimants/appellants on the one hand and the
    Government on the other in the lands in question as well as in restoring
    the ratio of apportionment made by the Land Acquisition Officer, without
    any objective consideration of the relevant principles in their proper
    perspective. Consequently, we set aside the same .. Resultantly, the appeal
B   shall stand allowed with the following consequences:

           That the entire compensation awarded shall be distributed among
    the claimants in the ratio of 75% and the State in the ratio of 25%. The
    claimants are not bound to pay anything further even by way of capitali-
    zation of the ground rent payable. The parties will bear their respective
c   costs.

    B.S.                                                      Appeal allowed.