STATE OF MAHARASHTRAversusBABU GOVIND GAVATE ETC.

A                         STATE OF MAHARASHTRA
                                         v.
                         BABU GOVIND GAVATE ETC.

                               NOVEMBER 1, 1995

B                  [K. RAMASWAMY AND B.N. KIRPAL, JJ.]

          Land Acquisition Act, 1894/Bombay Tenancy and Agricultural Land;
    Act, 1948:

           Sections 4( 1), 23/43-Compensation-Award of-Deduction of one-
c   third Compe11satio11 in exercise of power u11der eminent domain-Validity
    of-Held, it is ultra vires the power a11d owner entitled to full compensation
    of the market value.

            For the purpose of establishing an Electricity Sub-station, certain
D lands were acquired under the Land Ac11uisition Act. Compensation was
    awarded at Rs. 5,000 per acre, but one thirds towards interest of Govern-
    ment was deducted. Respondent challenged the Government's power to
    deduct one-third compensation, but the appellate Court confirmed the
    same.

E         On appeal, the High Court increased the compensation to Rs. 6000
    per acre and also directed payment of the deducted one third amount to ·
    the respondent.

          In this appeal, it was contended that the Government in its circular
    dated April 26, 1972 directed the deduction of one-third of the market
F   value of the land for the interest in such land held by Government and
    that there was no justification in interfering with the same; and that S.43
    of the Bombay Tenancy and Agricultural Lands Act, 1948 empowers the
    Collector to grant sanction and to fix consideration as condition to
    alienate the lands when the Collector has the power to determine the
G   compensation when the land was acquired for a public purpose.

            Dismissing the appeal and the connected appeal, this Court

          HELD : 1. Section 43 of the Bombay Tenancy and Agricultural Lands
    Act, 1948 was enacted to protect the right, title and interest of the tenant
H   who purchased the property and became owner thereof with a view to see
                                         69"
                          STATEv. ll.G.GAVATE                            695

 that he is not deprived of his ownership, right to possession and enjoyment    A
 thereof as a tiller of the soil to perpetuate the object of the Tenancy Act.
 As per its scheme previous sanction is a condition precedent for any
 transfer except \\.'hen the land is heing mortgaged to a cooperative bank or
 a lending institution envisaged in suu-section (lAA) and the Explanation
 appended there to amplifies such institutions so as to enable him to obtain
                                                                                B
 loans for improving the land for uetter cultivation and to augment
 econon1ic empo\verment. The consideration mentioned there under was
 also to protect the tiller from exploitation, indigency or compelling dire
 necessity to alienate the loans and under a fictitious and colourable
 transaction or for inadequate consideration. That, under no circumstan-
 ces, gives power to the Govern1nent, "'hen it acquires the land exercising     C
 the prl\ver of eminent domain to deduct any amount front the compensation
 1iayable to the owner of the land as determined under Section 23(1) of the
 Land Acquisition Act. [697-E-G]

         2. The sanction required under Section 43 is only when there is a D
. bilateral valid agreement beh\·een the o~er and a third party purchaser
  or a lessee or a n1ortgagee etc. as envisaged under Section 43(1). But when
  the State t!xercises its po\ver of t!lninent domain and compulsorily ac-
  <1uires the land, the <JUestion of sanction under Section 43 does not arise.
  Section 23(2) of the Land Acquisition Act off sets the unwillingness on the
  part of the owner. When the Collector exercises the power to grant sanction E
  under Section 43 (1), he does it as a statutory authority to protect right,
  title and interest of tht! t!rstwhile tenant who subsequently becan1e the
  owner to see that he ren1ains to be the owner and continues to be in
  possession and enjoyment of the same. But that condition to grant sanc-
  tion is not h~dgecl vt'ith any right to the Government to deduct 1/3 \\!hen it
  exercises its po"'er of eminent domain for a public purpose: The owner_
                                                                                 F
  under Section 23(1) of the Land Acquisition Act is entitled to the full
  compensation of the market value prevailing as on the date of' publication
  of the notification under Section 4(1). Therefore, the circular relied on is
  clear ultra vires of the power of Section 43 or any other power.
                                                           [697-H, 698-A-D]     G
       CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3009 of
 1983 Etc.

      From the Judgment and Order dated 10.9.76 of the Bombay High
 Court in F.A. No. 574 of J07n                                                  H
    696                   SUPREME COURT REPORTS (1995] SUPP. 4 S.C.R.

A         S.M. Jadhav for the Appellant.

          D.M. Nargolkar for the Respondents.

          The following Order of the Court was delivered :

8 C.A. No. 3009 OF 191!3.
         The facts are very brief. Notification under Section 4(1) of the Land
  Acquisition Act, 1894 (for short, 'the Act') acquiring land for a public
  purpose, namely, to establish Electricity Sub-section for the Maharashtra
  State Electricity Board as published in the State Gazette on April 19, 1966.
c The Land Acquisition Officer in his award determined the compensation
  at Rs. 5, 000 per acre in respect of an extent of 7 acres 9 gunthas of land
  in Survey No. 124-A situated in Airavali Village in Thane District of State
  of Maharashtra, but deducted 1/3rd towards the interest of the Govern-
  ment. The respondent had challenged the Government's power to deduct
D l/3rd compensation. The appellate court confirmed the same. On appeal,
  the High Court, while increasing the compensation to Rs. 6,000 per acre,
  had directed payment of the deducted 1/3rd amount to the respondent by
  its judgment and decree dated 10.9.1976 made in F.A. No. 574/70. Thus
  this appeal by special leave.

E       Learned counsel appearing for the State has contended that the
  Government in its circular dated April 26, 1972 issued by Revenue and
  Forests Department in letter No. LON-4767-H, directed deduction of 1/3rd
  of the market value of the land for the interest in such land held by the
  Government and that, therefore, the High Court was not justified in
F interfering with the order. He also contended that Section 43 of the
  Bombay Tenancy and Agricultural Lands Act, 1948 (for short, 'the Tenancy
  Act') empowers the Collector to grant sanction. It is also empowered
  thereunaer to fix consideration, as condition to alienate the lands when the
  Collector has the power to determine the compensation when the land was
  acquired for a public purpose. We are wholly unable to appreciate the
G stand taken by the Government. The object of the Tenancy Act, is to
  protect the "rights of the tiller of the soil", namely, the tenant or who later
  became owner so as to remain in possession and enjoyment of the land as
  part of economic justice assured in the preamble and the directive prin-
  ciples of the Constitution. Under the tenancy Act the tenant has been
H given right to purchase the lands from the erstwhile owner as provided in
                         STATEv. B.G. GAV ATE                           697

different sections of the said Act. Sections 43(1) and 43(1A) provide that:    A

        "43(1) No land or any interest therein purchased by a tenant under
        Sections 17(B), 32, 32F, 32-1, 32-0, 32U, 43-!D or 88E or sold to
        any person under Section 32P or 64 shall be transferred or shall
        be agreed by an instrument in writing to be transferred, by sale,
        gift exchange, n1ortgage, lease or assignment, without th.c previous   B
           1

        sanction of the Collector and except in consideration of payment
        of such amount as the State Government may be general or special
        order determine; and no such land or any interest therein shall be
        partitioned without the previous sanction of the Collector.

        (lA) The sanction under sub-section (1) shall be given by the
                                                                               c
        Collector in such circumstances and subject to such conditions, as
        may be prescribed by the State Government."

Other sub-sections are not relevant for the purpose of this case. Hence
omitted.                                                                       D

      A reading thereof clearly indicates that Section 43 was enacted to
protect the right, title and interest of the tenant who purchased the
property and became owner thereof with a view to see that he is not
deprived of his ownership, right to possession and enjoyment thereof as a
tiller of the soil to perpetuate the object of the Tenancy Act. As per its
                                                                               E
scheme previous sanction is a condition ·precedent for any transfer except
when the land is being mortgaged to a cooperative bank or a landing
institution envisaged in sub-section (lAA) and the Explanation appended
there to amplifies such institution so as to enable him to obtain loans for
improving the land for better cultivation and to augment cconon1ic em-         F
powerment. The consideration mentioned thereunder was also to protect
the tiller from exploitation, indigency or compelling dire necessity to
alienate the loans and under a fictitious and colourable transaction or for
inadequate consider~ion. That, under no circumstances, gives power to
the Government, when it acquires the land exercising the power of eminent      G
domain to deduct any amount from the compensation payable to the owner
of the land as determined under section 23(1) of the Act.

      The sanction required    under Section 43 is only when there is a
bilateral valid agreement bet\vccn the owner and a third party purchaser
or a lessee or a mortgagee etc. as envisaged under Section 43(1). But when H
    698                     SUPREME COURT REPORTS [1995] SUPP. 4 S.C.R.

A   the State exercises its power of eminent domain and compulsorily acquires
    the land, the question of sanction under Section 43 does not arise. Section
    23(2) of the Act off sets the unwillingness on the part of the owner paying
    tin1e schen1e. l'he question, therefore, is whether the Governn1ent under
    the aforestated notification is entitled to deduct l/3rd from the compen-
    sation determined under Section 23(1) of the Act. We have seen the
B   notification and we are unable to accept the validity of the said notification.
    When the Collector exercises the power to grant sanction under Section
    43(1), he ·does it as a statutory authority to protect right, title and interest
    of the erstwhile tenant who subsequently became the owner to see that he
    remains to be the owner and continues lo be in possession and enjoyment
c   of the same. But that condition to grant sanction is not hedged with any
    right to the Government to deduct 1/3 when it exercises its power of
    eminent domain for a public purpose. The owner under Section 23 (1) is
    entitled to the full compensation of the market value prevailing as on the
    date of publication of the notification under Section 4(1). Therefore, the
D   circular relied on is clearly ultra vires of the power of Section 43 or any
    other power.

             The appeal is accordingly dismissed and the order of the High court
    is sustained. Since the respondent is not appearing, there is no order as to
    costs.
E   C.A. No. 10421195 @ SLP (C) No. 3746/79.

             Leave granted. The appeal dismissed. No costs.

    G.N.                                                        Appeal dismissed.




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