INTERNATIONAL ICE AND COLD STORAGE LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) This is an appeal under the provisions of the Land Acquisition Act arising as a result of the reference made under S. 18 of the Land Acquisition Act to the Additional District Judge. The appellant before us is M/s. Indraprasthan Ice and Cold Storage, which was running its business in a large plot of land belonging to Surender Dev Gaur and another, respondents 2 and 3. A part of the land, which was leased out to the appellant, was acquired by the Government under the Land Acquisition Act which resulted in an award by the Land Acquisition Collector dated 28th Oct., 1961. The compensation was assessed at Rs. 4,625 per sq. yard. The appellant had claimed compensation for cost of boundary wall, cost of levelling the plot, taxes and damages for the remaining portion of the lease i.e. 32 years and additional claim for loss of goodwill. In any event, what the Land Acquisition Collector found was that some portion of the compensation had to be given to the appellant and he observed that the general practice was to give compensation in the ratio of 7 : 1 between the owners and the tenant. Accordingly l/8th of the compensation was directed to be paid to the appellant. A reference was taken to the Land Acquisition Court under S. 18 of the Act which resulted in the impugned judgment, which, in fact, has merely upheld the award of the Land Acquisition Collector.

(2.) The interesting fact is that against the decision, only the lessee has appealed both regarding the rate of compensation as well as the apportionment whereas the landlord has filed no appeal or cross-appeal. So, we have to consider in this appeal (a) whether there has to be an increase in the proportionate share to be given to the appellant and (b) rate of compensation has to be enhanced from that given by the learned Court and the Land Acquisition Collector. A further question is also involved inasmuch as there has been an amendment in the Land Acquisition Act, 1894 in 1984 which gives extra benefit to the person entitled to compensation.

(3.) Taking up the question of how the compensation is to be divided between the owner and the tenant, we are intrigued with the fact that there are very few cases of this type reported in the law books. The reason perhaps is that in the case of land there is an occupancy tenant or statutory tenant or a Bhumidar or some such other person who has more or less a recognised right which practically abolishes the original owner's right but in the case of urban land the right of the tenant is likely to be much more limited. In this case, the lease was for a period of 40 years which consists of four periods of ten years each renewable on an enhanced rent for a further period of ten years at a time. While the tenancy consists of a large plot of land with built up portions but the lessee has a right to demolish everything and build his own building and run his own business as he pleases. It is not an ordinary lease where a house or other property is let out which has to be renewed at the end of the lease. Also, the acquisition in this case is only of the open land and the remaining portion of the land is at the disposal of the lessee. It is just like taking away a part of the garden from a big house. Now, the question arises how the compensation of this acquired land is to be apportioned between the owner and the tenant or lessee. If we feel that the tenant is a kind of permanent fixture then perhaps he can get more compensation but if we treat him as a transitory property then a very small proportion of the compensation has to be paid to the lessee. The actual proportion will depend on the nature of the right of the lessee/tenant. The cases, which are few in number, show that in the case of a permanent lease such as that mentioned in Saraswati v. Bharatkhand Textile Mfg. Co., AIR 1967 Guj 36, the compensation was mainly payable to the lessee and the owner got a small proportion. The reason was that by creation of permanent lease, there was practically loss of all the rights of the owner. In this case. the owner gave up the right of his ten years and then it can be renewed for a further period of ten years at a time at an increased rent. So, it is difficult to say that the owner intended to give up his right. Furthermore, if we treat the case as one covered by the Rent Control Act, then we have a further difficulty in assessing the compensation payable to the tenant. By definition, a protected tenancy under the Rent Control Act prohibits the creation of transfer of sub-lease. So, the interest of a person protected by the Rent Control Act is not marketable, being not saleable, i.e. non-transferable and non-assignable. So, though the protection to the tenant makes the right a safe one, it also prevents a legal transfer giving rise to a market value. This is the result of the prohibition contained in S. 14 of the Delhi Rent Control Act. If there is any assignment, transfer or creation of small interest the tenancy is liable to be determined and protection under the Act is withdrawn. Therefore, there is no market value. On the other hand, if we treat interest of the appellant as one under the lease then it will continue for a maximum 32 years which remained at the time of acquisition and allowing for the maximum increase being permitted at the increased rent. Even the period of 32 years is a very short one compared to the perpetual lease. Therefore, it follows that a very small proportion of the compensation can be paid to the tenant and the major portion had to be paid to the owner. Another important aspect of this particular case is that the factory and the other land have remained intact even after the removal of the area taken under. acquisition. We feel that in the circumstances the amount determined is payable to the tenant lessee and the remaining to the owner seems a fair one and we have not been able to find any superior ratio or other reasoning which would help us to give a different ratio. Of course, something can always be said for saying that the entire amount should go to the owner or a bigger amount should go to the tenant but keeping in view the facts of this case, it seems difficult to reach a different conclusion. We would, therefore, not disturb the conclusion that the ratio should be 7 : 1 between the owner and the lessee.