Appeal No 335 of 1966
Appeal by special leave from the judgment and order dated November 6 1963 of the Mysore High Court in Misc
Appeal No 293 of 1961
could not be ignored
894 B C I 893 Niren De Solicitor General R Gopalakrishnan and section P Nayar for the appellant
Naunit Lal and T section Ramachandran for the respondents
The Judgment of the Court was delivered by Shah J
On April 15 1952 the Government of Mysore granted an area of I I acres and 38 gunthas of land situate in village Hebbyle to the respondents to this appeal
The grant was made in Form Appendix E  to the Mysore Land Revenue Rule  with the added condition that in the event of the Government requiring the land for any reason whatsoever the grantee shall surrender the land to the Government without claiming any compensation
On January 11 1958 the Government of Mysore published a notification under section 4 of the Land Acquisition Act that the land granted was likely to be needed for a public purpose
By a subsequent notification made under section 174 of the Land Acquisition Act Government dispensed with the enquiry under section 5 A of the Act and obtained possession of the land
In assessing compensation the Land Acquisition Officer did not award any compensation for the land and awarded Rs 1495 for improvement claimed to have been made to the land by the grantees
In a reference under section 18 of the Land Acquisition Act the District Court agreed with the Land Acquisition Officer
In appeal the High Court of Mysore set aside the award and remanded the case to the District Court with a direction to determine the compensation payable to the grantees and to dispose of the case according to law
The High Court observed that since the Government had failed to exercise the right which it had under the terms of the grant and had adopted the procedure prescribed by the Land Acquisition Act compensation for acquisition under the Land Acquisition Act and the process by which the grantees were to be deprived of the land must be followed
Against the order passed by the High Court this appeal is preferred with special leave
Under section 3a land is defined as including benefits to arise out of land and things attached to the earth or permanently fastened to anything attached to the earth
By section 4 the appropriate Goverrnment is authorised to issue a notification that land in any locality is needed or is likely to be needed for any public purpose and thereafter to exercise certain powers in respect of the land for determining its suitability for the purpose notified
The Government may under section 17 in cases of urgency take possession of any waste or arable land needed for the public purpose and the land thereupon vests absolutely in the Government free from all encumbrances
The Government of Mysore did not purport to exercise the power reserved by the terms of the grant and adopted the proce 894 dure prescribed by the Land Acquisition Act
The High Court observed relying upon the decision of the House of Lords in Attorney General vs De Kayser s Royal Hotel Ltd1 that the Government could not after adopting the procedure prescribed by the Land Acquisition Act seek to resort to the conditions of the grant and claim that no compensation for acquisition of the land was payable
It is true that after obtaining possession of the land in pursuance of statutory authority under section 17 the Government of Mysore could not seek to exercise the option conferred by the terms of the grant
But on that account in assessing compensation payable to the grantees existence of the condition which severely restricted their right could not be ignored
The grantees were entitled to compensation for the land of which the ownership was vested in them
The measure of that compensation is the market value of the land at the date of the notification and the measure of that market value is what a willing purchaser may at the date of the notification under section 4 pay for the right to the land subject to the option vested in the Government
The High Court also placed reliance upon the judgment of the Madras High Court in The State of Madras vs A Y section Parisutha Nadar2
In that case the main question decided was whether it was open to a claimant to compensation for land under acquisition to assert title to the land notified for acquisition as against the State Government when the land had become vested in the Government by the operation of the Madras Estates Abolition and Conversion into Ryotwari Act 26 of 1948
On behalf of the State it was contended that once an estate is taken over by the State in exercise of its powers under the Estates Abolition Act the entire land in the estate so taken over vested in the State in absolute ownership and that no other claim of ownership in respect of any parcel of the land in the estate could be put forward by any other person as against the State Government without obtaining a ryotwari patta under the machinery of the Act
The High Court rejected that contention observing that the Government availing itself of the machinery under the Land Acquisition Act for compulsory acquisition and treating the subject matter of the acquisition as not belonging to itself but to others is under an obligation to pay compensation as provided in the Act and that the Government was incompetent in the proceeding under the Land Acquisition
Act to put forward its own title to the property sought to be acquired so as to defeat the rights of persons entitled to the compensation
The propositions so broadly stated are in our judgment not accurate
The Act contemplates acquisition of land for a public purpose
By acquisition of land is intended the purchase of such interest outstanding in others as clog the right of the Government to use the land for the public purpose
Where 1  2 895 the land is owned by a single person the entire market value payable for deprivation of the ownership is payable to that person  if the interest is divided for instance where it belongs to several persons or where there is a mortgage or a lease outstanding on the land or the land belongs to one and a house thereon to another or limited interests in the land are vested in different persons apportionment of the compensation is contemplated
The Act is it is true silent as to the acquisition of partial interests in the land but it cannot be inferred therefrom that interest in land restricted because of the existence of rights of the State in the land cannot be acquired
When land is notified for acquisition for a public purpose and the State has no interest therein market value of the land must be determined and apportioned among the persons entitled to the land
Where the interest of the owner is clogged by the right of the State the compensation payable is only the market value of that interest subject to the clog
We are unable to agree with the High Court of Madras that when land is notified for acquisition and in the land the State has an interest or the ownership of the land is subject to a restrictive covenant in favour of the State the State is estopped from setting up its interest or right in the proceedings for acquisition
The State in a proceeding for acquisition does not acquire its own interest in the land and the Collector offers and the Civil Court assesses compensation for acquisition of the interest of the private persons which gets extinguished by compulsory acquisition and pays compensation equivalent to the market value of that interest
There is nothing in the Act which prevents the State from claiming in the proceeding for acquisition of land notified for acquisition that the interest proposed to be acquired is a restrictive interest
We agree with the observations made by Batchelor J Government of Bombay vs Esufali Salebhai1 at p 636   The procedure laid down in the Act is so laid down as being appropriate to the special case which is considered in the Act ie the case where the complete interests are owned privately
But that special case is as I understand it singled out by the legislature as the norm or type with the intent that in other cases which only partially conform to the type the procedure should be followed in so far as it is appropriate nor that such cases should be excluded from the Act because they do not wholly conform to the type
In other words Government  are not debarred from acquiring and paying for the only outstanding interests merely because the Act which primarily contemplates all interests as ILR 896 held outside Government directs that the entire compensation based upon the market value of the whole land must be distributed among the claimants
In such circumstances as it appears to me there is no insuperable objection to adapting the procedure to the case on the footing that the outstanding interests which are the only things to be acquired are the only things to be paid for
 The principle of Esufali Salebhai s case1 was it may be observed approved by this Court in The Collector of Bombay vs Nusserwanji Rattanji Mistri  Others1
But the view expressed by the District Court that the grantees are not entitled to any compensation for the land cannot be sustained
The District Court was bound to determine the market value at the date of the notification under section 4 of the Land Acquisition Act of the interest of the grantees in the land
The order passed by he High Court is maintained subject to the modification that the market value of the interest of the grantees in the land of the nature hereinbefore mentioned at the date of the notification under section 4 of the Land Acquisition Act shall be determined and paid to the grantees in addition to the compensation paid for the improvement in the land
There will be no order as to costs in this appeal
YP Order of the High Court modified
1 ILR 2 1955 section C R 


Summary:
The Government of Mysore granted a plot of land to the respondents with the added condition that in the event of the Government requiring the land for any reason whatsoever
the grantee shall surrender the land to the Government without claiming any compensation
The Government acquired the land by adopting the procedure prescribed by the Land Acquisition Act but no compensation was awarded to the grantees for the land
The High Court in appeal held that since the Government had failed to exercise the right which it had under the terms of the grant and had acted under the Land Acquisition Act the grantees were entitled to compensation as provided under the Act
In appeal this Court HELD  After obtaining possession of the land in pursuance of statutory authority under section 17 of the Land Acquisition Act the Government could not seek to exercise the option conferred by the terms of the grant
The grantees were entitled to Compensation for the land of which the ownership was vested in them
But in assessing compensation payable to the grantees existence of the condition which severely restricted their right could not be ignored
B C The Act is silent as to the acquisition of partial interests in land but it cannot be inferred therefrom that interest in land restricted because of the existence of rights of the State in the land cannot be acquired
When land is notified for acquisition for a public purpose and the State has no interest therein market value of the land must be determined and apportioned among the persons entitled to the land
Where the interest of the owner is
clogged by the right of the State the compensation payable is only the market value of that interest subject to the clog
895 B C The Collector of Bombay vs Nusserwanji Rattanji Mistri  Ors   followed
Attorney General vs De Kayser s Royal Hotel Ltd   referred to
Government of Bombay vs Esufali Salebhai ILR 34 Bom
618 approved
State of Madras vs AYS Parisutha Nadar 1961 MLJ 285 disapproved