Holding

Since the lease had expired before possession and was not renewed, the lessee is entitled only to 20% of the compensation, with the remaining 80% payable to the State, and the 20% internal‑development deduction is valid.

Summary

The Allahabad Development Authority acquired land that had been leased by the State Government to Ravindra Kumar Tandon (later Kiran Tandon). The lease expired on 8 June 1987, but the Authority took possession on 16 June 1987. The claimant sought full compensation, while the Authority and the State argued that the lease had expired and the compensation should be apportioned. The Supreme Court held that the lease had indeed expired and was not renewed, so the claimant was only a lessee and entitled to a proportionate share. A 20% deduction for internal development was justified, and the compensation was to be divided 20% to the claimant and 80% to the State. The Court also upheld the High Court’s power to transpose the State as appellant and rejected the claim of res judicata on the reference court findings.

Issues considered

Whether the lease was subsisting at the time of acquisition and the claimant’s entitlement to compensation
Whether the compensation award should be apportioned between the lessee and the State Government
Whether the High Court was justified in deducting 20% from the market value for internal development
Whether the valuation of land, building and trees was correct
Whether the State Government could be transposed as appellant under CPC Order 1 Rule 10
Whether the reference court findings were barred by res judicata

Legislation cited

Code of Civil Procedure, 1908s. Order 1 Rule 10 Sub-rule 2
Land Acquisition Act, 1894s. 11, s. 23, s. 30, s. 4(1), s. 6(1)
Transfer of Property Act, 1882s. 105, s. 108, s. 111(a)

Subjects

Land acquisitionCompensationLeasehold rightsApportionment of compensationValuation of land and buildingInternal development deductionRes judicataCPC Order 1 Rule 10Transfer of Property Act

Judgment

•
KIRAN TANDON A
v.
ALLAHABAD DEVELOPMENT AUTHORITY AND ANR.

MARCH 23, 2004

[S. RAJENDRA BABU, DR. AR. LAKSHMANAN AND B
G.P. MATHUR, JJ.]

land Acquisition Act, 1894-Seclions 4(1). 23 & 30-Civil Procedure
Code. 1908-0rder 1 Rule JO Sub-rule (2)-Premises consisting of land,
building and trees given on lease lo claimant by State Government-Notification
c
issued for acquisition-Award of compensation passed-Claimant 1ltaking
references before Reference Court claiming higher amount of compensation
and for entitlement of full compensation on ground of subsisting of lease at
the time of taking possession of the premises-Reference Court holding in
favour of the claimant-High Court reduced the amount of compensation and D
apportioned it into half between the claimanl and State Government-
Correctness of-Held, ji-om the evidence on record, the lease had expired at
Lhe time pf taking over of possession ji-om Lhe claimanl and had not been
renewed-Reduction of amount of compensalion by High Court is upheld-
Compensation apporlioned between claimant and State Government in the
ratio of 20:80-Transfer of Property Act. 1882. E
The premises in question consisting of land, building and trees, was
given on lease by State Government to claimant-appellant. At the instance
of respondent-Authority, a preliminary notification under Section 4(1) of
the Land Acquisition Act, 1894 was published for acquiring the premises. F
The Authority took possession of the premises from the claimant. Land
'j
Acquisition Officer made an award fixing market value of the land at Rs.
72.50 per square yard and for the building and the trees at Rs. 3,48,000
and Rs. 23, 100 respectively. The claimant made two references to
Reference Court being dissatisfied with the award. A third reference Under
Section 30 of the Act was also made by the claimant as to apportionment G
of the compensation between the claimant and the State Government. The
Reference Court, by separate orders, fixed the market rnlue of the land
at Rs.500 per square yard and for the building and the trees at Rs.
I 0,96,842 and Rs. 50,000 respectively. With regard to the third reference,
467 H
468 SUPREME COURT REPORTS 12004] 3 S.C.R.

A the Reference Court held that the entire amount of compensation is
,;,,.
payable to the claimant.

The Authority preferred two appeals before High Court impleading '"'
the State Government as proforma respondent. The State Government
moved an application before the High Court for transposing it as appellant
B in the appeals. The High Court allowed the application of the State
Government. The High Court upheld the market value of the land fixed
by the Reference Court but with deduction of 20 per cent towards the cost
of internal development and fixed the value of the building and trees at
Rs. 60,000 and Rs. 23,000 respectively. The High Court further held that

c the amount of compensation should be apportioned equally amongst the
claimant and the State Government since the period of lease expired within
a few days of taking over possession by the Authority.

The claimant, in appeal before this Court, contended that the
Authority, being a State under Article 12 of the Constitution of India,
D could itself raise objections on behalf of the State Government and that
the High Court was in error in transposing the State Government as an
appellant; that neither the Authority nor the State Government filed an
appeal before the High Court against the Reference Court order of ,...,.
entitlement/apportionment of compensation; that the High Court was in
error in apportionment of compensation between the claimant and the
E State Government without an appeal filed by the Authority or the State
Government; that the order passed by the Reference Court, being not
challenged, has become final and thus the claimant is entitled to the entire
amount of compensation; that allowance of 20 per cent deduction on
account of internal development from the compensation awarded by the
F Reference Court is not justified; that the State Government had renewed
the lease in favour of the claimant and the lease was subsisting at the time
taking possession; that the amount of compensation fixed by the High
/.._ ..
Court for the buildings and trees is not justified; and that the award of
cost by the High Court was not justified.

G The Authority, in its appeal before the Court, contended that the
amount of compensation awarded to the claimant is highly excessive as
the market value of the land has not been correctly determined; and that
the claimant was not entitled to any compensation since the lease expired
within a short period of declaration under section 6(1) of the Act and that
the lease had not been renewed.

-
H
"'J( '
I

KIRAN TANDON 1·. ALLAHABAD DEVELOPMENT AUTHORITY 469

-..i... Dismissing the appeal of the claimant and allowing the appeal of the A
Authority, the Court

HELD: I. A Court has power under Order 1 Rule 10 Sub-Rule 2
CPC to transfer a defendant to the category of plaintiffs and where the
plaintiff agrees, such transposition should be readily made. This power
could be exercised by the High Court in appeal, if necessary, suo motu to B
do complete justice between the parties. The pleas raised by the Authority
and the State Government were identical and in order to effectuate
complete adjudication of the question involved in the appeal, it was in the
interest of justice to transpose the State Government as appellant in the
appeal. 1474-C-EI C
Bhupendra Narayan Sinha v. Rajeshwar Prmad, AIR (1931) PC 162,
relied on.

2. A finding which has attained finality operates as res-judicata. In
view of the fact that appeal had been preferred against the award made D
in other references, it was always open to the Authority or the State
Government to contend in the appeal that the claimant was not entitled
to receive the amount of compensation as held by the Reference Court
and that the State Government alone was entitled to receive the amount.
1477-D-EI
E
Badri Narayan Singh v. Kamdeo Prasad Singh and Anr., 1196213 SCR
759 and Premier Tyres ltd v. Kera/a Road Transport Corp., 119931 Supp. 2
sec 146, distinguished.
3. The Collector's award under Section 11 of the Land Acquisition
Act, 1894 is nothing more than an offer of compensation made by the F
Government to the claimants whose property is acquired. The burden of
proving that the a~ount of compensation awarded by the Collector is
inadequate lies upon the claimant and he is in a position of a plaintiff.
The Court has to treat the reference as an original proceeding before it
and determine the market value afresh on the basis of the material G
produced before it. The claimant has to show that the price offered for
his land in the award is inadequate on the basis of the materials produced

- in the court. The material produced and proved by the other side will also
be taken into account for this purpose. On the basis of the evidence, the
Reference Coul"t has held that the market value of the land at the time of
the acquisition was not less than Rs. 500 per square yard. The High Court H
470 SUPREME COURT REPORTS l2004J 3 S CR

A has accepted the value of the land determined by the Reference Court.
As the High Court has agreed with the view taken by the Reference Court,
this Court does not consider it proper to interfere with the said finding.
1478-F-G; 481-A-CI

Chiman!al Hargovind Das v. Special land Acquisition Officer, AIR
B (1988) SC 1652; Periyar Pareekwmi Rubbers v. State a/Kera/a, AIR (1990)
SC 2192; Abdullah Jan Mohammed Ganjee v. The Stale of Bihar, 119671 I
SCWR 214; State uf Kera/av. P.f'. Hassan Kaya, AIR (1968) SC 1201; 0.
Janardhan Reddy v. Sp/. Dy. Collector, 119941 6 SCC 456; State of Bihar v.
Madheshwar Prasad, 119961 6 SCC 197; State uf Bihar v. Ratan!al Sahu,
C 11996110 SCC 635 and Administrator General of West Bengal v. Collector,
Varanasi, AIR (1988) SC 943, referred to.

Principles & Practice()( Valuation by J.A. Parks (Eastern law House
1998 Edn.), referred to.

D 4. The evidence on record indicates that the acquired land is situate
in a developed area and approach road to the land and also power lines
are available. However, in construction of multi-storeyed residential flats
a considerable portion of the land has to be left out for internal roads,
sewer line, open space etc. In such circumstances the High Court was
justified in directing deduction of 20 per cent from the market value of
E the land. 1481-E-Fl

Vijay Kumar Mutilal v. State of Maharashtra, AIR (1981) SC 1632;
Sahib Singh Ka/ha v. Amritsar Improvement Trust, AIR (1982) SC 940 and
Special Tahsi/dar land Acquisition v. A. Mang/a Gowri. AIR (1992) SC 666
referred to.
F
5. The relevant documents show that when the Authority took
possession of the land, the lease in favour. of the claimant had already
expired. Further the document does not contain any renewal clause. The
plea raised by the claimant that the State Government had taken a decision
G to renew the lease in his favour is not established by the evidence on record.
1483-A; 484-BI

6. The Reference Court has lost sight of Chapter V of Transfer of
Property Act, 1882 which deals with leases of immove.able property.
Leasehold rights being limited in nature and entirely different from
H ownership right, a lessee is not entitled to the entire amount of
KIRAN TANDON" AU.AllALlAD llFVEl.OPMENT AUTHORri·y 47 J

compensation for the acquired land. The lease expired on 8.6.1987 and A
possession was taken over on 16.6.1987. However even according to the
case set up by the claimant, the possession of the land was taken over just
21 days before the expiry of the lease. In such circumstances, the claimant
should get 20 per cent of the compensation amount and the balance 80
per cent is payable to the State Government. The statutory sum under
sub-section (IA) and the solatium under sub-section (2) of Section 23 of B
the Land Acquisition Act, 1894 shall be modified accordingly.
1485-A, C; 486-D-E; 487-BI

lnder Parshad v. Union of India, 119941 5 SCC 239 and Ratan Kumar
Tandon and Ors. v. State of Ultar Pradesh, AIR (1996) SC 2710, referred
to.
c
Radha Charan v. Secretary of Stale. AIR (1943) Allahabad 238,
referred to.

7. The High Court has held that the report of the consulting Engineer
filed by the claimant shows that while assessing the value of the building D
he had also taken into consideration the land underneath the same which
was more than 400 square meters and consequently the value of the land
hat! been assessed all over again. There is another fallacy in his report.
He has assessed the age of the building from the time of its renovation.
There is no evidence that the that the foundation, walls and roof had been E
made all over again when renovation was done, nor it appears logical. So,
the whole method of calculation was faulty. The view taken by the High
Court that the value of the building which was more than 90 years old is
Rs. 60,000 is perfectly correct and calls for no interference. Similarly, no
interference is warranted with the assessment made by the High Court
regarding the value of the trees. 1486-E-GI F
8. The High Court, having accepted the appeal of the Authority and
modified the award of the Reference Court, the direction regarding the
cost made by it was perfectly justified. 1487-A]

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 6493-6494 G
of 1998.

From the Judgment and Order dated 19.12.97 of the Allahabad High
Court in F.A. Nos. 368 and 439 of 1994.
WITH
C.A. No. 1831 of 2004 @ R.P. (C) No. 408/99 in S.L.P. (C) No. 10943 H
472 SUPREMI·: COllRT REPORTS 120041 3 S.C.lt

A of 1998.
Sunil Gupta, Jatin Zaveri. Rajesh Tandon, Pramod Dayal. Rakesh U.
Upadhyay, Yishwajit Singh, Kamlendra Misra, Tripurary Ray and R.C. Verma
for the appearing Parties.

B The Judgment of the Court was delivered by

G.P. MATHUR, J. I. These appeals are directed against the judgment
and decree dated 19.12.1997 of Allahabad High Court by which two First
Appeals preferred by Allahabad Development Authority were partly allowed
and the award made by the Additional District Judge was modified.
c
2. At the instance of Allahabad Development Authority (hereinafter
referred as ADA) the State Government took steps to acquire property bearing
No.2 Circular Road, in the city of Allahabad having an area of about 4
bighas. The preliminary notification under Section 4( l) of the Land Acquisition
D Act (hereinafter referred to as 'the Act') was published in the Gazette on
7.1.1987 and it was recited therein that the land is being acquired for a public
purpose namely for construction of residential flats by ADA and in view of
urgency, the provisions of Section 17 were being invoked. The Special Land
Acquisition Officer (hereinafter referred to as 'SLAO') made an award for
the acquired land on 15 .6.1987 and further directed that the compensation
E payable for the building and the trees standing thereon shall be determined
subsequently after their valuation had been ascertainedi The question of
apportionment of the compensation for the acquired land was referred for
determination by the Court in accordance with Section 30 of the Act. The
ADA thereafter took possession of the land on 16.6.1987.' It is the admittep
case of the parties that the land in dispute, namely, 2 Circular Road was
F owned by the State Government which had been given on lease. According
to the claimant Ravindra Kumar Tandon (husband of the appellant Smt.
Kiran Tandon) the lease in hjs favour was to expire on 7. 7.1987. The SLAO
gave a supplementary award with regard to the building and the trees on
4.3.1989. In the awards the market value of the land was fixed as Rs. 72.50
G per square yard, the value of the building (exclusive of land) at Rs. 3,48,000
and the value of the trees as Rs. 23, l 00. Being dissatisfied with the amount
of compensation awarded to him the claimant sought references to the Court
which were made by the SLAO and accordingly three references were
registered, namely, reference no.126 of 1987, no. 23 of 1988 and no. 34 of
1989. The references· were decided by Vlllth Additional District Judge,
H Allahabad on 8.12.1992 by separate orders. The ADA then preferred two
KIRAN TANDON v. ALLAHAilAD DEVELOPMENT AUTHORITY [GP MATHUR. J.]4 73

appeals namely, First Appeal no. 368 of 1994 and First Appeal no. 439 of A
1994 before the High Court in which the State of U.P. was impleaded as
proforma respondent no.2 but subsequently it was transposed as appellant
no.2. The Addi. District Judge had held that the market value of the land was
Rs. 500/- per square yard and that the claimant was entitled to the entire
amount even though possession of the land was taken only 21 days before
the expiry of the lease. He, further assessed the value of the building at Rs. B
: I 0,96,842 and value of the trees at Rs. 50,000/-. The High Court upheld the
finding of •he Addi. District Judge regarding the market value of the land but
directed that a deduction of 20 per cent should be made towards the cost of
internal development which would be incurred by ADA. The High Court
fu1ihcr held that in view of the fact that the claimant had only lease hold C
rights and the period of lease expired within a few days of taking over
possession, the compensation amount with regard to the same had to be
apportioned equally amongst the claimant and the State Government and
therefore claimant was entitled to only 50 per cent of the compensation
amount. lt further held that the value of the building was Rs. 60,000/- and
the value of trees was Rs. 23,000. D
>-· 3. Feeling aggrieved by the judgment and decree of the High Court the
claimant as well as the ADA preferred special leave petitions in this Court.
The special leave petition preferred by ADA was summarily dismissed without
assigning any reason. After leave was granted in the special leave petitions E
filed by the claimant, the ADA preferred a review petition in which notice
was issued on 3.8.1999. Having heard counsel for the pa1iies at some length,
we are of the opinio.1 that there is substance in the special leave petition
preferred by the ADA as discussed hereinafter. Accordingly review petition
is allowed and leave is granted.
F
4. Shri Sunil Gupta, learned senior counsel for the claimant has at the
very outset assailed the order of the High Court whereby the application
moved by the St~te of U.P. for transposing it as appellant in the appeals
preferred by ADA was allowed. In the appeals preferred by the ADA against
the judgment and award of the Addi. District Judge Smt. Kiran Tandon
(widow of the original claimant Ravindra Kumar Tandon) was arrayed as G
respondent no. I and State of U.P. was arrayed as proforma respondent no.2.
The applications for transposition were supported by the affidavit of Tehsildar
Sadar, Allahabad wherein it was averred that an objection had been raised on
behalf of State of U.P. before the Addi. District Judge that the acquired land
was State land and therefore the entire compensation amount should be H
474 SUPRErvtE COURT REPORTS [2004] 3 S.C.R.

A awarded to State of U.P. The land had bee1i acquired for construction of
residential flats by ADA which is a State within the meaning of Article 12
of the Constitution and is therefore competent to raise any or all of the
objection on behalf of the State Government. Therefore, in order to avoid any
technical objection and in the interest of justice it was expedient that the
State of U.P. may be transposed as appellant no. 2 in the appeal. The High
B Court held that as the ADA and State of U.P. were disputing the title of the
claimant to receive the entire amount of compensation and State of U.P. '
having already been impleaded as proforma respondent in the appeal, the
interest of justice required that it should be transposed as appellant in the 'I •
appeal. Sub-rule 2 of Order I Rule 10 lays down that the Court may at any
C stage of the proceedings, either upon or without the application of either
party, and on such terms as may appear to the Court to be just, order that the
name of any party improperly joined, whether as plaintiff or defendant, be
struck out, and that the name of any person who ought to have been joined,
whether as plaintiff or defendant or whose presence before the court may be
necessary in order to enable the Court effectually and completely to adjudicate
D upon and settle all the questions involved in the suit, be added. It is well
settled that the Court has power under Sub-rule (2) order I Rule I0 CPC to
transfer a defendant to the category of plaintiffs and where the plaintiff
agrees, such transposition should be readily made. This power could be
exercised by the High CoUJ1 in appeal, if necessary, suo motu to do complete
E justice between the parties. This principle was laid by the Privy Council in
Bhupendra Narayan Sinha v. Rajeshwar Prasad, Al R ( 1931) PC 162 and has
been consistently followed by all the Courts. In fact the pleas raised by the
ADA and State of U.P. were identical and in order to affectuate complete
adjudication of the question involved in the appeal it was in the interest of
justice to transpose State of U.P. as appellant no.2 in the appeal. We are,
F therefore, of the opinion that no exception can be taken to the course adopted
by the High Court in transposing the State of U.P. as appellant in both the
appeals.

5. Shri Sunil Gupta has next submitted that there were three references
G before the Addi. District Judge and the finding recorded by him in reference
no.126 of 1987 that the claimant was entitled to entire amount of compensation
having not been challenged either by the ADA or by the State of U.P. by
filing an appeal, the said finding would operate as resjudicata and it was not
open to the High Court to apportion the compensation amount and to hold
that claimant would get only half and remaining half would go to the State
H Government. In order to examine the contention raised it is necessary to
KIRAN TANDON v. ALLAHABAD DEVELOPMENT AUTllORITY fGP MATHUR. J]4 75

mention the relevant facts. In reference no. 126 of 1987 the State Government A
was shown as applicant-plaintiff and (I) Lalji Tandon (2) Ravindra Kumar
Tandon (3) Officer lncharge Estate Institution, Allahabad and (4) Allahabad
Development Authority were shown as defendant-opposite parties. Lalji
Tandon claimed that he was the sole lessee of the land in dispute and, therefore,
he was entitled to entire amount of compensation. Ravindra Kumar Tandon B
also made a similar claim that he was entitled to entire amount of compensation
as he was the sole lessee of the plot in dispute. The State Government on the
other hand claimed that Lalji Tandon was not the lessee of the land and the
,~ lease having expired and the same having not been renewed it was entitled
to receive the entire amount of compensation. The Addi. District Judge held
that as the lease of Ravindra Kumar Tandon had been renewed, the State C
Government was not the owner of the property and was not entitled to any
compensation. Similarly, the claim of Lalji Tandon was also rejected and
Smt. Kiran Tandon was held entitled to receive the compensation amount as
her husband Ravindra Kumar Tandon. the original claimant, had died during
the pendency of the reference. In Reference no.123 of 1988 which was sought D
by Ravindra Kumar Tandon (1) State of U.P. and (2) ADA were arrayed as
opposite patties and his case was that he was the sole owner of the property
and he alone was entitled to receive the compensation amount. He further
pleaded that at the time of publication of the notification under Section 4( I)
of the Act the lease in his favour had not expired and had been subsequently
renewed and therefore the State of U.P. was not entitled to receive any E
compensation. The prayer made in the application moved under section 18
of the Act seeking reference to the comt clearly shows that he wanted
determination of his title to receive the compensation amount as against the
State of U.P. It is being reproduced below:

"It is, therefore, most respectfully prayed that your honour may be F
; ..J pleased to refer the matter to court for the determination of proper
and adequate amount of compensation for the applicant's above
property as well as the title to receive the same under law and oblige."

The State of U.P. filed written statement claiming the entire amount of G
compensation being owner of the property. It was specifically pleaded that
the lease in favour of Ravindra Kumar Tandon had expired and the same had
not been renewed and therefore he was not entitled to any compensation. It
was also pleaded that the amount of compensation determined by SLAO was
correct. The ADA filed a separllte written statement and denied the claim of
Ravindra Kumar Tandon. On the pleadings of the parties the Addi. District H
476 SUPREME COURT REPORTS [2004] 3 S.C.R

A Judge framed six issues and issue nos. I and 2 read as under :
(I) Whether the claimant is entitled to receive the compensation in
respect of the land ?
(2) Whether the awarded compensation is inadequate ? If yes, then
what is the proper compensation ?
B
6. After referring to the terms of the lease deed and some documents
regarding renewal of lease filed by the claimant, the Additional District Judge
noticed the contention raised on behalf of State of U.P. in the following
manner:
"On behalf of the State of Uttar Pradesh and Allahabad Development
c Authority it was argued that the period of lease had expired and Sri
Ravindra Kumar Tandon was not the owner of the said leased land.
They also argued that even if it may be assumed that at the time when
the property was acquired, the rights of Sri Ravindra Kumar Tandon
were existing in the property at that time, then he can get compensation
D for that period alone. For the period for which the lease was still
subsisting and not for the entire period. On the basis of the said two
arguments they argued that Sri Ravindra Kumar Tandon was not the
owner of the property and he is not entitled to receive the amount of
compensation and the Estate Department of Govt. of Uttar Pradesh
should get the said compensation. I do not find any force in the
E
aforesaid arguments of the opposite parties."
Thereafter, he observed that it is settled law that nobody can acquire
his own property and ifthe State ofU.P. was the owner there was no necessity
for it to acquire the property. He further held that the Court is not supposed
to take into consideration what will happen in future but should base its
F decision on the present state of affairs and therefore the situation which
would have happened after 7.7.1987 i.e. after expiry of the lease, cannot be ).. \
taken into consideration. The finding recorded on issue no. I reads as under:
"The evidence adduced by the parties and the evidence available on
record, leads to conclusion that the lease was still subsisting at the
G time when the property was acquired. Sri Ravindra Kumar Tandon
and after his death his wife Smt. Kiran Tandon was the owner of the
property. Even after the said period and after the expiry of the period
of lease the said lease was in fact subsisting even after the year I987
as the renewal of lease had taken place. For the said reason I hold
H that Estate Department of Government of Uttar "Pradesh or any other
person had no interest in the said property and for the said reason I
KIRAN TANDON v. ALLAHABAD DEVELOPMENT AUTHORITY [G.I'. MATHUR . .I I 4 77
hold that the referencee alone is entitled to receive the amount of A
compensation for the said propetiy. This issue is decided accordingly.''

7. After recording the aforesaid findings and fi11dings on other issues,
reference no.123 of 1988 was. decided by the judgment and order dated
8.12.1992. It is important to note here that even though an application had
been made on behalf of the claimant to consolidate all the three references B
but the Addi. District Judge, for reasons which are not understandable, decided
them by separate orders which were all passed on the same date i.e. 8.12.1992.
The ADA preferred appeals against the judgment and awards in reference
nos. 123 of 1988 and 34 of 1989. The effect of filing the appeals was that
the finding that the State of U.P. or any other person had no interest in the
property and that the claimant (Ravindra Kumar Tandon) thereafter his wife C
Smt. Kiran Tandon alone is entitled to receive the amount of compensation
became subject matter of challenge.

8. The principle of res judicata as contained in Section 11 CPC bars
any Court to try any suit or issue in which the matter directly and substantially D
in issue has been directly and substantially in issue in a former suit between
the same parties, or between parties under whom they or any of them claim,
litigating under the same title, in a Court competent to try such subsequent
suit or the suit in which such issue has been subsequently raised, and has
been heard and finally decided by such Court. A finding which has attained
finality operates as res-judicata. In view of the fact that appeal had been E
preferred against the award decree made in reference no.123 of 1988 it was
always open to ADA or the State of U.P. to contend in the appeal that the
claimant was not entitled to receive the amount of compensation as held by
the learned Addi. District Judge and that the State of U.P. alone was entitled
to receiv.e said amount. Sh. Gupta has relied upon two decisions of this Court
in Sadri Narayan Singh v. Kamdeo Prasad Singh and Am·., [1962] 3 SCR
F
759 and Premier Tyres ltd v. Kera/a Road Transport Corp., [1993] Supp.
2 sec 146 in support of his submission that no appeal having been preferred
against the judgment and award in reference no.126 of 1987, the same became
final and the issue regarding the entitlement of the claimant to receive the
entire amount of compensation could not be examined in the appeal preferred G
against the judgment and award in reference no. 123 of 1988. The authorities
cited by learned counsel are clearly distinguishable on facts. In the case of
Badri Naryan Singh an election petition was filed by the respondent wherein
a declaration was sought to declare the election of the appellant as invalid
and to declare the respondent as the elected candidate. The Tribunal granted H
478 SUPREME COURT REPORTS [2004] 3 S.C.R.

A only one relief that the election of the appellant was invalid. The appellant
and respondent both preferred appeals in the High Court. The appellant's
appeal was dismissed but that of the respondent was allowed. The appellant
challenged the order passed in favour of the respondent in his appeal. It was
held that· so long as order in the appellant's appeal confirming the order
setting aside his election on the ground that he was holder of an office of
B profit under the Bihar Government and therefore could not have been properly
nominated as a candidate stands, he cannot question the finding about his
holding an office of profit, in the present appeal. which is founded on the
contention that that finding is incorrect. In Premier Tyres Ltd. v. Kera/a State
Road Transport Corporation (supra) reliance was placed upon Badri Narayan
C Singh (supra) and similar view was taken. As shown earlier there is no such
finding here which on account of it having attained finality may debar the
High Court to examine the question regarding the right claimed by the claimant
to receive the entire amount of compensation or the right of the State of U.P.
to receive the compensation amount.

D 9. The learned counsel for the ADA has submitted that the amount of
compensation awarded to the claimant is highly excessive as the market
value of the land has not been correctly determined. Learned counsel has . "'
submitted that the SLAO had determined the market value of the land at
Rs. 72.50 per square yard and the Reference Court has erred in enhancing the
E same to Rs. 500 per square yard which finding has been erroneously upheld
by the High Court. Learned counsel has also submitted that in view of expiry
of the lease within a short period of declaration under Section 6( I) of the Act,
the claimant was not entitled to half portion of the total amount of
compensation as directed by the High Court.

F I0. Before examining the merits of the contentions raised it will be
useful to bear in mind the legal principle in the matter of determination of J... '\.
compensation. The Collector's award under Section 11 is nothing more than
an offer of compensation made by the Government to the claimants whose
property is acquired. The burden of proving that the amount of compensation
awarded by the Collector is inadequate lies upon the clai"mant and he is in a
G position of plaintiff. The Court has to treat the reference as an original
proceeding before it and determine the market value afresh on the basis of
the material produced before it. The claimant is in the position of a plaintiff
who has to show that the price offered for his land in the award is inadequate
on the basis of the materials produced in the court. The material produced
H and proved by the other side will also be taken into account for this purpose.
KIRAN TANDON "·ALLAHABAD DEVELOPMENT AUTHORITY [G.I' MATHUR. J J 479

(See Chimanlal Hargovind Das v. Special Land Acquisition Officer, AIR A
(1988) SC 1652 and Periyar Pareekanni Rubbers v. State of Kera/a, AIR
(1990) SC 2192).

11. A question which arises here is as to what method for determining
the value of the property should be adopted when the land is comprised of
buildings, trees or some other additions of like nature. In Principles & Practice B
of Valuation by J.A. Parks (published by Eastern Law House 1998 Edn.) the
following paragraph on page 332 illustrates the different aspects of the
problem:

"Land with buildings is viewed in a different perspective than bare
land as such. Land and buildings once married become one unit, and C
neither land nor building can thereafter be valued separately. A
building once erected on or married to the site, as it is technically -
often termed, takes unto itself a value which may be either greater or
less than the cost of erection depending upon the market situation. If
the building properly and economically develops the land, the total D
value of the complete entity may be worth more than the sum of the
individual valuer. In such cases, the excess of the composite value
over the sum of the individual values is ascribable as the builder's
profit. But there may also be instances to the contrary. It is generally
impossible to arrive at the true value of the whole by addition of the
parts." E
12. In Abdullah Jan Mohammad Gan;'ee v. The State of Bihar, (1967)
SCWR 214 it was observed that a building standing on the land and the
land on which it stands may not for the purposes of the Land Acquisition
Act, ordinarily be regarded as separate units capable of being separately F
valued and the Reference Court in the normal course should have valued the
} ~ land and building as composite property by the evidence furnished by the
value of similar and comparable properties in the neighbourhood .or by
capitalisation of rent or other income received out of the property.

13. This principle was reiterated in State of Kera/a v. P.P. Hassan G
Kaya, AIR (1968) SC 1201 wherein it was held as under :

"In determining compensation payable in respect of land with
buildings, compensation cannot be determined by assessing the value
of the land and the "break-up value" of the buildings se~arately. The
land and the building constitute one unit and the value of the entire H
480 SUPREME COURT REPORTS 12004] 3 S.C.R.

A unit must be determined with all its advantages and its potentialities.

14. In 0 Janardhan Reddy v. Sp/. Dy. Collector, (1994] 6 SCC 456 it
was held that where there are irrigation wells in the land, estimated construction
cost of the wells cannot be separately assessed apart from assessment of
market value of the land and the value of the land has to be assessed having
B regard to the availability of irrigation facility on the land as a prime factor.
This view has been reiterated in State of Bihar v. Madheshwar Prasad, (1996]
6 SCC 197 and State of Bihar v. Ratanla/ Sahu, (1996] IO SCC 635. But
there is no hard and fast rule that land and building must be valued as one
unit. They can be separately assessed if the large portion of the land is lying .... '
C vacant and is capable of better use as stated by Venkatachaliah, 1. (as His
Lordship then was) in Administrator General of West Bengal v. Collector,
Varanasi, AIR (1988) SC 943 and it will be useful to extract the relevant part
para 8 of the reports:

"Usually land and building thereon constitute one unit. Land is one
D kind of property, land and building together constitute an altogether
different kind of property. They must be valued as one unit. But
where, however, the property comprises extensive land and the
structures thereon do not indicate a realisation of the full developmental
potential of the land, it might not be impermissible to value the property
estimating separately the market value of the land with reference to
E the date of the preliminary notification and to add to it the value of
the structures as at that time. In this method, building value is estimated
on the basis of the prime-cost or replacement-cost less depreciation.
The rate of depreciation is generally, arrived at by .dividing the cost
of construction (less the salvage value at the end of the period of
utility) by the number of years of utility of the building. The factors
F
that prolong the life and utility of the building, such as good
maintenance, necessarily influence and bring down the rate of
depreciation."

15. In the case in hand the value of the land, building and trees has
G been assessed separately by the SLAO, Reference Court and the High Court.
The claimant had filed a copy of the sale deed by which 3808 square feet
area in plot No.11 /3 situate at Hastings Road was sold at the rate of Rs. 425
per square yard and a certificate to show that the Collector had fixed the
circle rate of land at Circular Road at Rs. 300 per square yard. Besides this ~·
he also filed a copy of judgment of L.A. Case No. 125 of 1987 (Sri Lalji
H Tandon v. State) which shows that for plot No.81 on Hastings Road measuring
; KIRAN TANDON 1·. ALLAHABAD DEVELOPMENT AUTHORITY [G.P. MATHUR. JJ48 l

4 acres 3 bighas which had been acquired in the year 1985 compensation was A

.. r", paid at the rate of Rs.250 per square yard. The Reference Court also relied
upon the evidence of a witness examined by the claimant who deposed that
the ADA had constructed 66 flats on the acquired property and the price of
each flat was fixed between Rs. 2,73,255 and Rs. 2,82,039 depending upon
the floor. On the basis of the aforesaid evidence, the Reference Court has
held that the market value of the land at the time of the acquisition was not
B
less than Rs. 500 per square yard. The High Court has accepted tl1e value of
the land determined by the Reference Court. The exemplars reli~d upon by
the Reference Court are of Hastings Road which is the prime locality of
.. !'
Allahabad. The acquired land is situate at some distance from Hastings Road
and its market value could not be same. It, therefore, appears that the market c
value of the land has been fixed at a higher value. However, as the High
Court has agreed with the view taken by the Reference Court, we do not
consider it proper to interfere with the said finding.

16. Shri Gupta has submitted that when the Reference Court had not
made any deduction in the compensation amount on account of internal D
development, there was no justification for the High Court to allow 20 per
cent deduction on that account. According to the learned counsel the land is
~
situate in a developed area where electricity supply, road and sewer lines
were already in existence and as such there was no occasion for any further
deduction from the market value of the land. Normally, the principle is that
E
when a large area is acquired and the area is not fully developed a deduction
of about 33 per cent from the market value is made. This view has been taken
in Vijay Kumar Motilal v. State of Maharashtra, AIR (1981) SC 1632, Sahib
Singh Ka/ha v. Amritsar Improvement Trust, AIR (1982) SC 940 and Special
Tehsildar Land Acquistion v. A. Mang/a Gowri, AIR (1992) SC 666. The
evidence on record indicates that the acquired land is situate in a developed F
. } J, area and approach road to the land and also power lines are available. However,
in construction of multi-storeyed residential flats a considerable portion of
the land has to be left out for internal roads, sewer iine, open space etc. In
such circumstances the High Court was justified in directing deduction of 20
per cent from the market value of the land.
G
17. Shri Gupta has submitted that the finding recorded by the Reference
Court was perfectly correct that the claimant was entitled to entire amount of
compensation and the High Court has erred in directing that the compensation
f·~
amount shall be shared half and half by the claimant and the State Government.
Learned counsel for ADA has, on the other hand, submitted that the period H
482 SUPREME COURT REPORTS [2004] 3 S.C.R.

A of lease had already expired on 10.5.1987 prior to taking over of possession
and consequently the claimant had no legal interest left in the property and
he was not entitled to any compensation. It is stated in the Review Petition
that the State Government had on I 0.5.1887 granted leasehold rights in the
land in question in favour of one Mr. W.C. Walsh for a period of 50 years
which was upto I0.5.1937 and which could be renewed for a further period
B of 50 years i.e. upto 10.5.1987. A fresh lease deed was executed in favour
of Lalji Tandon on 20.2.1945 for a period of 42 years 2 months and 20 days
which expired on 10.5.1987. Copies of these lease deeds have also been
filed. The claimant has filed copy of a lease deed dated 20.2.1945 wherein
it is mentioned that the earlier lease had expired on 8.6.1937 and a fresh lease
...
C for 4 acres I rod and 12 poles land situate in Mauza Nasibpur Bakhitiara
Paragana Chai!, Allahabad is being granted in favour of Lalji Tandon for a
term of 42 years 3 months and 48 days. If calculated from this docum0ent the
lease expired on 7. 7. I 987. Accordingly to Ravindra Kumar Tandon this
property came into his share in a compromise which was filed in First Appeal
No. 7 of 1968 (Lalji Tandon v. Smt. Munni Bibi and Other) in Allahabad
D High Court. Learned counsel for the ADA has submitted that this document
does not relate to the property in dispute but for some other property. He has
further submitted that the period of 42 years 3 months and 48 days carries
no sense as in the event days were more than thirty, they sho.uld have been
counted in months. It is true that a perusal of this document does not show
E that it relates to the land in question namely, 2 Circular Road, Allahabad.
However, as only this deed was filed before the Reference Court and was
relied upon both by the Reference Court and also by the High Court, we
consider it proper to decide the controversy on the assumption that the copy
of the lease deed filed by the claimant relates to property in dispute.

F I 8. The certified copy of the lease deed executed in favour of Lalji
Tandon, which has been filed by the claimant, does not appear to be a correct
copy. The first sentence of this document mentions "this lease made the 20th
day of one thousand nine hundred and forty five between the Government of
the United Provinces.". Here the month is missing though at a later stage,
G there is a recital "to hold unto the lessee from the 20th day of Feb. I 945 for
the terms of 42 years 3 m. 48 ds." Mention of 48 days does not carry any
sense and looks wholly illogical as in the event the days were exceeding 30,
they would have been counted in month. It is mentioned in the document
itself that the earlier lease had expired on 8th June, I937. It appears that the
figure- "48" has been wrongly written for "18". If the period of 42 years 3
H months and 18 days is counted from 20th Feb. 1945, it will end on 8th June,
KIRAN TANDON r. ALLAHABAD DEVELOPMENT AlJTHORITY [G.P. MATHUR. J ]483

• 1987. As mentioned in this very document the earlier lease had expired on A
8th June. 1937 and therefore a fresh lease had been granted for a period of
50 years expiring on 8.6.1987. This shows that when ADA took possession
of the land on 16.6.1987 the lease in favour of the claimant had already
expired. Further this document does not contain any renewal clause.

19. The Reference Court has relied upon two letters in order to hold B
that the lease in favour of Ravindra Kumar Tandon had been renewed and he
continued to be the owner of the property even after 7. 7. l Q87. The first letter
•r is dated 28.7.1987 bearing no. 2877/9 Nazul-33/N/87 sent by Sri Janardan
Prasad, Joint Secretary U.P. Government to the Collector, Allahabad wherein
it is mentioned that the Government has agreed to execute a new residential
lease in place of the expired lease in favour of Sri Ravindra Kumar Tandon
c
regarding Nazul Plot No.SIM, Bungalow No.2, Circular Road, Ailahabad on
deposit of a premium of Rs. 10,03,500 and annual rent of Rs.25,087.50 for
a period of first 30 years with effect from 25th May, 1987 which shall
contain a clause for two further renewals. The second letter is dated 14.9.1987
bearing no. 4423/9-Nazul-33/N/87 sent by the same authority to the Collector, D
Allahabad and it is stated therein that in continuation of the Government
).- Order dated 28.7.1987 regarding execution of a new lease deed in favour of
Ravindra Kumar Tandon the Government had agreed that the premium amount
may be deposited in six monthly instalments. These letters were not accepted
by the ADA or by the State Government and their specific case was that the
lease had already expired before taking possession and the same had not been
E
renewed.

20. The original claimant Ravindra Kumar Tandon died during the
pendency of the reference and his wife Smt. Kiran Tandon was substituted
in his place. The claimants examined only one witness namely, Rajesh Kumar F
> -"/.
Tandon holding power of attorney on behalf of Smt. Kiran Tandon who
made an attempt to prove the aforesaid Jetter in his oral statement. The
original letters have not been filed but merely photo copies have been filed.
They do not bear seal of U.P. Government. The letters were not exhibited.
If the Government took a decision to renew the lease the same could be
established by the production of relevant records by some responsible G
government servant. No attempt at all was made by the claimant to summon
./
the relevant records of the Government. The endorsement at the efi'd of the
)') letters shows that copies thereof were sent to (I) Accountant General, Uttar
Pradesh, Allahabad (2) The Commissioner, Allahabad Division, Allahabad
(3) The Director, Board of Revenue, Uttar Pradesh (4) The Administrator, H
484 SUPREME COURT REPORTS [2004] 3 S.C.R.

A Nagar Mahapalika. Allahabad. The claimant could have easily summoned
anyone from the aforesaid departments. some of whom were in Allahabad
itself, who could produce the relevant records or even the communication
received from the Government to the effect that a decision had been taken to
renew the lease. But nothing of the sort was done. A decision taken by the
Government can only be proved by production of relevant records by some
B authority or officer of the concerned department of the Government and not
in the manner attempted to be done in the present case. The plea raised by
the claimant that the Government had taken a decision to renew the lease in
his favour is therefore not established by the evidence on record.

C 21. There are other circumstances which also throw great doubt upon
the genuineness of the aforesaid letters. In the first letter of 28.7.1987 it is
mentioned that "the Government after having due consideration had agreed
to execute a new residential lease in place of the expired lease with effect
from 25th May, 1987". According to the claimant his lease expired on 7.7.1987
or even if it treated as 8.6.1987 as discussed earlier there was no occasion for
D the Government to execute a new lease with effect from 25.5.1987 as
mentioned in the letter. That apart. the process of renewal of lease of such
a large area is an extremely complicated one. The Nazul Department and .also
the Collector in the District where the land is situate have to take various
steps like survey and measurement of the plot, preparation of map and have
E to make several reports which in turn have to be sent to the Government at
Lucknow, where the proposal is examined at various stages by different
sections. It is almost impossible to believe that even though the notification
:1
under Section 4( I) and 6 to acquire land had been published on 7.1.1987 and
6.3.1987 respectively, the said fact was not noticed by anyone dealing with
the matter and the Government took a decision to execute a fresh lease.
F Various steps which have to be taken in the matter of renewal of lease are
quite cumbersome and as the Government machinery moves, it is an unduly
long time taking process. The earlier lease which had expired in 1937 was
renewed almost after 8 years in the year 1945. Though.the lease expired in
June, 1987, the claimant wants us to believe that in his case the Government
G took the decision within a month to execute a new lease in his favour and that
too for a huge area of 10920 square yards. It is therefore not at all possible
to believe that any order was passed by the Government to renew the lease.

22. The Reference Court taking into consideration the fact that the
Government had passed an order for renewal of the lease has held that Ravindra
H Kumar Tandon was the owner of the property even after 7. 7.1987 and he was
'
-i..

KIRAN TANDON v. ALLAHABAD DEVELOPMENT AUTHORITY [G.P. MA THUR, J.]485

entitled to receive the entire amount of compensation. The learned Addi. A
District Judge, it seems, lost sight of Chapter V of Transfer of Property Act
which deals with leases of immovable property. In view of Section 105 of the
said Act the lease of immovable property is a transfer of right to enjoy such
property, made for a certain time, in consideration of price paid or promised.
The rights and liabilities of lessor and lessee are given in Section 108. Section B
I I !(a) clearly lays down that a lease of immovable property shall determine
by efflux of the time limited thereby. Therefore, the claimant can in no
circumstances be treated to be the owner of the land and his right to receive
compensation has to be determined treating him to be the lessee of the property.

23. The question which, therefore, arises is having regard to the fact C
that the claimant was only a lessee of the acquired land, whether he would
be entitled to entire amount of compensation. Leasehold rights being limited
in nature and entirely different from ownership right, a lessee is not entitled
to the entire amount of compensation for the acquired land. The High Court
has held that claimant wouid be entitled to 50 per cent of the amount and
balance would be payable to the State Government.. D
24. Radha Charan v. Secretary a/Stale AIR (1943) Allahabad 238 is
a case from Allahabad city itself where a considerable area on the Bank Road
was acquired by the Government for Allahabad University in the year 1930.
The Division Bench held that it is a full owner of land who normally gets the
entire amount of compensation and there is no reason why a person who E
holds a lease should get compensation as an owner. It was further held that
the amount of compensation he would get would depend upon the terms of
the lease and the length of time that he might be expected to remain in
possession of the property. In lnder Parshadv. Union of India, (1994] 5 SCC
239 the appellant had obtained a perpetual lease of Nazul land from the p
Government. The High Court had apportioned the compensation as 75 per
cent for the lessee and 25 per cent for the Government. In appeal to this
Court it was contended that the Government being the owne( of the land, it
could not acquire its own interest therein and it was only the appellant's right
and interest in the perpetual lease that was acquired therefore he was entitled
to the entire amount of compensation. It was held that where the Government G
leases its land and in terms of the covenants cannot unilaterally determine the
lease and take back possession and the land is required for a public purpose,
it has to exercise the power of eminent domain by invoking the provisions
under the Act .for getting such land. It was further held that where the land
is granted on lease the Government's power to resume the land is subject to H
486 SUPREME COURT REPORTS [2004] 3 S.CR

A rron-fulfilment of the terms and conditions of the lease by the lessee and so ,..
long as the lessee acts and complies with the covenants contained in the lease
or grant, the right to resumption in terms of the lease or grant would not
arise. But when the land is required for public purpose, the Government
should get absolute title thereof free from all encumbrances and compensation
becomes payable for the lease hold right or interest held by the lessee or
B grantee. Having regard to the fact that the appellant had perpetual lease the
order made by the High Court awarding 75 per cent of the compensation
amount to the appellant was affirmed. In Ratan Kumar Tandon and Ors. v.
State of Uttar Pradesh, AIR ( 1996) SC 2710 keeping in· view the fact that .., .
. acquisition was made 7 years prior to the expiry of the lease, the High Court
c directed the apportionment of the compensation amount in the ratio of 50:50.
The State of U.P. did not challenge the apportionment of compensation by
preferring an appeal to this Court and the claimant alone preferred an appeal.
Having regard to the features of the case and also the fact the State did not
file an appeal, it was held that it was not a fit case to reverse the judgment
of the High Court.
D
25. In the present case, as per our finding, lease expired on 8.6.1987
and possession was taken over on 16.6.1987. However even according to the
case set up by the claimant, the possession of the land was taken over just
....
21 days before the expiry of the lease. In such circumstances, we are of the
opinion that the claimant should get 20 per cent of the compensation amount
E and the balance 80 per cent is payable to the State Government.

26. Shri Gupta has also assailed the finding of the High Court regarding
the amount of compensation fixed for the building. The High Court has held
that the report of the consulting engineer filed by the claimant shows that
-...
while assessing the value of the building he had also taken into consideration
F the land underneath the same which was more than 400 square meters and
consequently the value of the land had been assessed all over again. There
.,, ~
is another fallacy in his report. He has assessed the age of the building from
the time of its renovation. There is no evidence that the foundation, walls and
roof had been made all ov~r again when renovation was done, nor it appears
G logical. So, the whole method of calculation was faulty. We are of the opinion
that the view taken by the High Court that the value of the building which
was more than 90 years old is Rs. 60,000 is perfectly correct and calls for
no interference. Similarly we find no ground which may warrant interference
with the assessment made by the High _Court regarding the value of the trees. 1' '

H 27. Shri Gupta has also submitted that the award of cost to the ADA
KIRAN TANDON v. ALLAHABAD DEVELOPMENT AUTHORITY [G.P. MATHUR. JJ487

by the High Court was not justified. In our opinion, the High Court having A
accepted the appeal of the ADA and modified the award of the Reference
Court the direction regarding cost made by it was perfectly justified.

28. In view of discussion made above, the Civil Appeals preferred by
Smt. Kiran Tandon are dismissed and the Appeal filed by ADA is allowed.
The judgment and decree of the High Court is modified to the extent that the B
compensation determined for the land shall be apportioned 20 per cent for
tile claimant and 80 per cent for the State Government. The statutory sum
under sub-section (I-A) and the solatium under sub-section (2) of section 23
shall be modified accordingly.

29. Before parting with the case we want to place on record that the C
learned counsel for the State of U.P. did not argue even a single word and
only said that the. brief was entrusted to him only 2 or 3 days earlier. The
High Court has also made some comments in the impugned judgment as to
how the case was conducted on behalf of State of U.P. The office is directed
to send a copy of the judgment to the Chief Secretary, U.P. Government for D
his information and appropriate action in this regard.

B.S. Appeals dismissed/allowed.