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IN SUPREME COURT OF INDIA Page 1 of 6

Vs.

RESPONDENT:
H.E.H., THE NIZAM, HYDERABAD.

DATE OF JUDGMENT: 22/03/1996

BENCH:
RAMASWAMY, K.
BENCH:
RAMASWAMY, K.
G.B. PATTANAIK (J)

CITATION:
1996 SCC (3) 282 JT 1996 (3) 629
1996 SCALE (3)140

ACT:

HEADNOTE:

JUDGMENT:
J U D G M E N T
K . Ramaswamy,J.
Leave granted.
This appeal by special leave arises from the judgment
and decree dated November 11, 1992 made in A.S. No.2470/86
by the High Court of Andhra Pradesh. Notification under
Section 4(1) of the Land Acquisition Act 1894 (for short,
the fact’) was published in the State Gazette on July 27,
1978 for public Purpose, namely, construction of
Residential-cum-Commercial Complex in Saroonnagar, Phase-II
in out-skirts of Hyderabad city by the Hyderabad Urban
Development Authority. The total extent of the land notified
for acquisition was 25 acres 12 gunthas. After conducting
enquiry under Section 5A declaration under Section 6 was
published on May 3, 1979. The respondent filed Writ Petition
No.2510/82 in the High Court to quash the notification under
Section 4(1). A learned single Judge by Order dated June 30,
1983 directed the Land Acquisition Officer [LAO] either to
pass an award or issue notification under Section 48
withdrawing the acquisition within a period of six weeks
from that date. In furtherance thereof, the LAO by his award
dated August 6, 1983 determined the compensation @
Rs.10,000/- per acre. On reference under Section 18, the
District Judge by his award and decree dated March 31, 1986
determined the compensation @ Rs.30/- per square yard. On
appeal it was confirmed by the Division Bench of the High
Court. Hence this appeal by special leave.
It may be relevant to notice at this stage that the
lands are within the Hyderabad Urban Agglomeration covered
by Urban Land Ceiling and Regulation Act, 1976 (for short,
the ’Ceiling Act’) which came into force on February 17,
1976. The respondent filed the statement under Section 6
thereof By notification dated November 27, 1982, the
competent authority under the Ceiling Act issued notice
under Section 9 of the Act determining excess vacant land to
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be acquired by the Government. By further State Gazette
notification dated February 23, 1983 published under Section
10(3) of the Ceiling Act the competent authority declared
the acquired land notified on November 4, 1982 in the State
Gazette under Section 10(1) of the Act as excess land with
effect from the said date to be deemed to have been acquired
by and wested in the State Government and that it stood
vested absolutely in it free from all encumbrances.
Possession of the acquired land was taken on June 2,
1984 and the compensation of a sum of Rs.8,43,778/- was paid
in Form No.C on June 7, 1984.
The first contention raised by Shri Sitharamaiah,
learned senior counsel for the appellant is that by
operation of Section 3 of the Ceiling Act which came into
force in relation to Andhra Pradesh on February 17, 1976, no
person shall be entitled "to hold" any vacant land in excess
of the ceiling limit on and from that date. Section 4
envisages ceiling limit and every holder of vacant land in
excess of the ceiling limit shall file a statement on or
before six months from February 17, 1976. By conjoint
operation of Section 6, Rule 3 and Form I, holder must
specify vacant land which he desires to retain within the
ceiling limit. A draft statement should be filed before
competent authority who, after considering the objections to
the draft statement, makes necessary alteration in the draft
statement and prepares a final statement made under Sections
8 and 9 of the Act giving particulars of the vacant land in
excess of the ceiling limit which should be published under
Section 10 [1] of the Act.. If any person interested in the
vacant land makes claimed under Section 10 [2], the
competent authority, after considering the same will
determine the nature and extent of the right. Section 10 [3]
requires the competent authority to publish a declaration
that the excess vacant land shall be deemed to have been
acquired by the Government with effect from the date
specified therein and that the same shall be deemed to have
been vested in the Government free from all encumbrances.
Under Section 10 [5], the competent authority may order any
person in possession of the vacant land to surrender or
deliver possession of the excess land within thirty days of
service of notice. If he refuses, the competent authority is
empowered under Section 10 [6] to take possession by using
such force as may be necessary . Section 11 envisages
payment of compensation for the excess land deemed to have
been acquired. By operation of the declaration under
Sections 10(3) and 10(1) referred to hereinbefore, such
land, the subject of the acquisition is deemed to have been
vested in the State free from all encumbrances. The
respondent/claimants are entitled only to the payment of
compensation as provided in Section 11 of the Ceiling Act.
The Civil Court, therefore, is devoid of jurisdiction to
determine the compensation under the Act, since the field is
already occupied by the Ceiling Act. Determination of
compensation at the enhanced rate by the Civil Court,
therefore, is clearly an error apparent on the face of the
record. The Government, therefore, does not have to acquire
land since the land already vested in it under Section 10
[3] free from all encumbrances. The vesting shall be deemed
to have taken place from February 17, 1976, the date on
which the Urban Ceiling Act came into force. Sri Sitamaraiah
also contended that the District Court and the High Court
committed grave error in determining the market value @
Rs.35/- per square yard. In Ex.A1 to A4, the market rate of
the lands sold was Rs.6/- per square yard only and the
remaining price of Rs.29/- was for development. The courts
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below, therefore, were in error in awarding the compensation
@ Rs.30/- per square yard.
Shri K. Madhava Reddy, learned senior counsel for the
respondent, contended that the appellant having proceeded to
acquire the land under the Acts has no power, unless the
acquisition is withdrawn Section 48, to contend that the
excess vacant under the Ceiling Act vests in the Government.
notification published under Section 6 of the Act is
conclusive of the public purpose which would be crystalized
by making an award under Section 11. Compensation having
been determined under Section 11, as directed by the High
Court and possession thereof having been taken, it is no
longer open to the appellant to contend that they are not
required to pay compensation under Section 23 of the Act nor
is the respondent entitled to fall back upon Section 11 of
the Ceiling Act which is contrary to the Scheme of the Act.
It cannot, therefore, be contended that the respondent is
entitled to compensation only under Section 11 of the
Ceiling Act. He also contended that the Government had
exempted the lands from the Ceiling Act.Therefore, the High
Court was right in determining the compensation under the
Act. He further contended that the Hyderabad Urban
Development Authority [for short, ’HUDA’] itself had sold
the lands in the neighborhood @ Rs.30/- per square yard and,
therefore, that would form basis for determination of the
compensation in respect of the acquired land. The reference
Court, therefore, was right in placing reliance on that
piece of evidence.
The rival contentions give rise to the primary
question: whether the excess vacant land covered by the
Ceiling Act stood vested in the State is liable to be
acquired under the Act? It is seen that Section 3 in Chapter
III of the Ceiling Act declares that except as otherwise
provided in the Act, on and from the commencement of the Act
[February 17, 1976 in relation to Andhra Pradesh) "no person
shall be entitled to hold any vacant land in excess of the
ceiling limit". The ceiling limit for Hyderabad Urban
Agglomeration is 1000 sq. meters prescribed in category ’B’
of Schedule I referred in Section 4. "Hold" means own. This
expression connotes two concepts, i.e., physical possession
or legal title to the vacant lands. Both the concepts stand
attracted to the concept ’hold’ under the Ceiling Act. The
owner or excess vacant land in excess of the ceiling limit
is required to file a statement under Section 6 and by
operation of Section 3, he ceases to hold the said vacant
land subject to the operation of the provisions of the
Ceiling Act.
Section 5 prohibits transfer of vacant land in excess
of the ceiling limit at any time between commencement of the
appointed day and the commencement of the Act. Section 6
enjoins the holder of the vacant land in excess of ceiling
limit to file a statement within the prescribed time in the
manner laid under the Act the rules and in the form
prescribed therefor. Section 8 enjoins the competent
authority to prepare a draft statement as regards vacant
land held in excess of the ceiling limit. Section 9
envisages final statement after disposal of objections, if
any, received in that behalf and service of the notice in
that behalf on the person concerned as envisaged therein.
Under Section 10(1), after service of the statement under
Section 9 on the concerned person, the competent authority
should cause publication of a notification in the State
Gazette with particulars of the vacant land in excess of the
ceiling limit, for information of the general public. After
considering claims, if any laid under sub-Section (2) and
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disposal thereof, the competent authority shall determine
the nature and extent of such claim and pass such orders as
it deems fit. Thereafter the competent authority by
notification under Section 10(3) published in the State
Gazette may declare that the excess land published under
sub-Section (1) shall he deemed to have been acquired by the
State Government with effect from the date specified in the
declaration and such land shall "be deemed to have vested
absolutely in the State Government free from all
encumbrances with effect from the date so specified". The
word "deemed" is used to give effect to the operation of
Section 3 from the date the Act was brought into force. In
other words, the deemed vesting under Section 10(3) would
date back to February 17, 1976 and the date specified under
Section 10 [3]. In Vatticherukuru Village Panchayat vs. Nori
Venkatarama Deekshithulu & Ors. [(1991) Supp. 2 SCC 228 at
239] this Court in para 10 had held that the word ’vest’
takes varied colors from the context and situation in which
the word came to be used in the statute. It is common
knowledge that under the Act, the acquired lands vest in the
State from the date of taking possession under Section 16
of 17 [2]. Under the land reforms like abolition of estate
and taking over thereof the vesting takes effect from the
date of publication of the notification in the official
gazette. In Consolidated Coffee Ltd. & Anr. etc. vs. Coffee
Board, Bangalore etc. etc. [1980) 3 SCR 625 at 645] this
Court had held that the word ’deemed’ is used a great deal
in modern legislation in different senses and it is not that
a deeming provision is every time made for the purpose of
creating a fiction. A deeming provision is made to include
what is obvious or what is uncertain or to impose for the
purpose of a statute an artificial construction of a word or
phrase that would not otherwise prevail, but in each case it
would be a question as to with what object the Legislature
has made such a deeming provision. It would thus be seen
that determination of the excess ceiling land pursuant to
the statement filed under Section 6 becomes conclusive by
publication of the notification under sub-Section (3) of
Section 10 and the excess lands were prohibited to be held
under sub-Section 3 on and from the date of the commencement
of the Act. Such excess and shall vest in the State only
from a date specified in the notification. The vesting under
Section 10 [3] takes effect from the date of publication of
the notification under sub-Section (3) of Section 10 in the
State Gazette with effect from the date specified therein.
It would thus be apparent that the State acquired absolute
right, title and interest in the excess urban vacant land in
the State from the date of the publication of the
notification under Section 10 [3] of the Ceiling Act and
from February 28, 1983 that date the State Government became
absolute owner of the excess vacant land free from all
encumbrances.
The question, therefore, is: whether it is necessary
for the Government to determine compensation under Section
23 of the Ceiling Act for the land which already vested in
it under the Ceiling Act. In Maharao Sahib Sri Bhim Singhli
etc. etc. vs. Union of India & Ors. etc. etc. [(1985) Supp.1
SCR 862], where the constitutionality of the Ceiling Act was
questioned, the Constitution Bench had held that the primary
object and purpose of the Ceiling Act is to acquire such
land as may be in excess of the ceiling limit with a view to
prevent concentration of urban land in the hands of a few
persons and speculation and profiteering therein and also to
bring about an equitable distribution of land in urban
agglomerations to subserve the common good in furtherance of
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Article 39(c) and (b) respectively of the Constitution. this
view was reiterated in Union of India vs. Valluri Basavaiah
Chaudhary [(1979) 3 SCR 802] and State of Gujarat vs.
Parshottamdas Ramdas [(1988) 1 SCR 997]. In Dattatrava
Shankarbhat Ambalgi & Ors. vs. State of Maharashtra & Ors.
[AIR 1989 SC 1796], a Bench of two Judges of this Court had
held that the land to the extent which falls within the
ceiling area stands as a class different from the land which
is in excess of the ceiling area. It is liable to be
declared surplus to give effect to the purpose and object
envisaged under the Act. The Ceiling Act is a self-contained
Code. As far as the acquisition of surplus of ceiling land
and payment of compensation is concerned, it is governed by
the provisions of the Ceiling Act. It was, therefore, held
that it would not be necessary to acquire the land under the
Maharashtra Act No.37 of 1966 resulting in misuse of public
funds by granting higher compensation, when the purpose of
acquisition could be achieved on payment of lesser amount of
compensation prescribed in Section 11 of the Ceiling Act. In
Parshottamdas’s case [supra], the same question had arisen.
Another Bench of two Judges had held therein at page 1007
that it is open to the State Government to withdraw from
acquisition under the Land Acquisition Act and when the
lands under the Ceiling Act could be acquired by paying
compensation as provided thereunder, it would not be proper
to compel the Government to acquire them under the
provisions of the Land Acquisition Act, 1894. As already
stated, the Act has the overriding effect on all other
laws". In State of M.P. vs. Surendra Kumar & Anr. [(1995) 2
SCC 627], a Bench of two Judges [to which one of us,
K.Ramaswamy, J., was a member] was to consider whether it
would be open to the Government to purchase the land pending
proceedings under the Ceiling Act and publication of the
declaration under Section 10 [3]. This Court at page 629 in
para 3 had held that two courses were open to the Government
in that situation. The Government could return the
application for permission for sale; finalize the process in
Chapter Ill or it could purchase the lands. It was held that
there was no prohibition for the State to purchase the
property though the declaration was not finalized.
It would, thus, be clear that when the vacant land is
declared under the Ceiling Act, it is not necessary for the
State to acquire the excess vacant land vested in it under
the Act. But unfortunate to the appellant that benefit of
the declaration was unavailable for the reason that the
Government in GOMs No.1552/MA dated May 20, 1981 had
permitted HUDA to acquire the surplus land under the
provisions of the Act. In consequence, having exempted the
excess vacant lands from the purview of the Ceiling Act, the
appellant had denied itself of the benefit of Section 11 of
the Ceiling Act to pay compensation as prescribed
thereunder. The result is that the appellant would determine
the compensation under the Land Acquisition Act.
The next question is: whether determination of market
value at Rs. 30/- per sq. yd. is valid in law? The District
Judge had proceeded on the premise that the HUDA had
acquired adjacent land under the Act and had sold @ Rs.35/-
per sq. yd. and that, therefore, the compensation claimed at
Rs.30 per square yard should be paid to the respondents.
That found favour with the High Court. It is stated in the
evidence adduced on behalf of the appellant that out of the
sale consideration of Rs.35/- per sq. yd., the cost of the
land was Rs.6/- per sq.yd. and Rs. 29/ was collected towards
tentative development charges. They were tentative prices
fixed thereunder. In other words, Rs.29/- was incurred
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towards developmental charges and Rs.6/- per sq.yd. was the
actual cost. The sales took place in the year 1976. It is
seen that the lands were being used as horse-stable. The
respondent claimed compensation @ Rs.30 per sq. yd. It is
seen that the notification under Section 4(1) of the Act was
issued on July 27, 1978. The sales by the HUDA of the plots
of the neighboring lands took place in the year 1976 after
full development. The lands required development. It is
well-settled law that deduction of developmental charges
varies between 33-1/3% to 65% depending on facts and
circumstances in each case. view of the fact that we have in
evidence tentative developmental charges of Rs.29 per
incurred in 1975-76, taking a pragmatic view we that after
deducting developmental charges respondent is entitled to
compensation @ Rs.8/- sq.yd. with a statutory rate of
solatium on enhanced compensation @ 30% and 9% interest for
one year from the date of taking possession, i.e., June 2,
1984 and after expiry of one year, @ 15% till the date of
deposit. The respondent is not entitled to additional amount
under Section 23 [1-A] for the reason that the respondent
had filed W.P No.2510 of 1982 and kept the matter pending
till the Amendment Act became operative. The award could not
be made on account of the pending proceedings in the High
Court and the same was made as per the directions of the
High Court.
The appeal is accordingly allowed but, in the
circumstances, without costs.