REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4373 OF 2009
Saraswati Devi (D) By LR. …… Appellant
Vs.
Delhi Devt. Authority & Ors. …… Respondents
JUDGMENT
R.M. LODHA, J.
This is an appeal by the appellant against the decision of
the Division Bench of the Delhi High Court on 31.05.2007, in allowing the
Letters Patent Appeal (LPA) preferred by the Delhi Development Authority
(DDA) against the decision of the Single Judge dated 09.08.2002. Leave to
appeal was granted by this Court on 13.07.2009.
2. The facts which form the background of the appeal can be
briefly stated as follows :
The controversy relates to a piece of land
admeasuring 5 Bighas 19 Biswas comprised in Khasra No. 368 situate in the
revenue village Masjid Moth, New Delhi.
The above property was an evacuee
property which was acquired by the central government under Section 12 of
the Displaced Persons (Compensation and Rehabilitation) Act, 1954 (for
short, ‘1954 Act’).
On acquisition of that property under Section 12, it
became part of the compensation pool under Section 14.
By exercise of the
power conferred under Section 20, the above property was notified to be
sold by way of public auction on 21.06.1958.
3. Dev Prakash Jagwani, the appellant’s husband being a displaced person participated in the public auction for the sale of above property.
His bid of Rs. 24,500/- which was the highest bid was accepted.
4. On 31.10.1960, the office of the Assistant Settlement
Commissioner (Rural), Ministry of Rehabilitation intimated to the
appellant’s husband that it has been decided to give him provisional
possession of the auctioned property subject to the terms and conditions
stipulated in the indemnity bond and the special affidavit already executed
by him. He was also informed that the issue of the above intimation did not
constitute transfer of complete title in the property until the final
letter of adjustment of compensation was issued.
5. The appellant’s husband is said to have died in 1970. On
16.06.1980, a letter was received from the Ministry of Rehabilitation by a
friend of the appellant’s late husband requiring the deposit of a sum of
Rs. 14,992/- towards balance price of auction sale
within fifteen days. The appellant deposited the balance price.
6. On 22.08.1980, a sale certificate as contemplated by the
Displaced Persons (Compensation and Rehabilitation) Rules, 1955 (for short,
‘1955 Rules’) was issued. On 15.07.1981 the sale certificate was
registered with the Sub-Registrar.
7. Between 31.10.1960 when the appellant’s husband was intimated
that his bid had been approved in respect of the above property; the
payment of full price by the appellant pursuant to the communication dated
16.06.1980; the issuance of sale certificate dated 22.08.1980 and its
registration thereof on 15.07.1981, an important event took place. On
07.03.1962, the Delhi Administration, Delhi issued a Notification under
Section 4 read with Section 17(1)(iv) of the Land Acquisition Act, 1894
(for short, ‘LA Act’) proposing to acquire a large tract of land
admeasuring 198 Bighas and 11 Biswas which included the subject land
situate at Masjid Moth for the public purpose, namely, for the plan
development of Delhi. Since the urgency clause under Section 17(1)(iv) of
the LA Act was invoked, the provisions of Section 5A were dispensed with.
The declaration under Section 6 was made and later on award was passed on
30.06.1962.
8. It is the appellant’s case that somewhere in 1981, after the
sale certificate was registered, one Mr. Chhugani, a friend of the
appellant’s late husband, learnt about the acquisition of the subject land
and he made representations to the authorities. It is further case of the
appellant that a notice in Land Acquisition Case No. 72/85 was received
by Mr. Chhugani for 11.08.1992 which was communicated to the appellant. The
appellant initially filed a suit but later on challenged the above
acquisition before the Delhi High Court by filing a writ petition on
10.08.1993.
9. The challenge to the acquisition after more than 30 years of
the passing of the award was principally founded on the ground that at the
relevant time in 1962, the land belonged to the central government being an
evacuee land acquired under Section 12 of the 1954 Act and as such the said
land could not have been acquired under the LA Act.
10. DDA was not impleaded as party respondent initially but later
on it was impleaded as Respondent No. 4 in the writ petition. DDA filed
its written response in opposition to the writ petition and raised the plea
of delay and laches. In its reply, DDA submitted that the physical vacant
possession of the land was taken on 11.07.1962 after the award was passed
on 30.06.1962 and the subject land was placed at its disposal on
09.02.1981. It was also submitted by DDA that though the property was
conveyed to the petitioner (appellant herein) on 22.08.1980 but she was
declared purchaser of the said property with effect from 11.12.1960 and,
thus, the subject land ceased to be government land with effect from
11.12.1960 and whatever rights the appellant had could be acquired under
the LA Act.
11. In light of the rival position set up by the parties, the
Single Judge framed two questions for consideration :
(i) Whether the land in question was an evacuee land on the date of issue
of Notification under Section 4 of the LA Act on 07.03.1962?
(ii) Whether the land, if it was an evacuee property, could have been
acquired under the law?
12. The Single Judge was not persuaded by the plea of delay and
laches. He considered the provisions of the 1954 Act and the relevant
procedure of auction sale prescribed in the 1955 Rules. He referred to a
decision of this Court in Bishan Paul v. Mothu Ram[1], few decisions of his
own High Court including Nanak Chand Sharma v. Union of India and others[2]
and Sham Sunder Khanna v. Union of India[3] and a decision of the Punjab
High Court. On consideration of the above provisions and the precedents,
the Single Judge allowed the writ petition; quashed the Notification dated
07.03.1962 issued under Section 4 of the LA Act and the subsequent
proceedings in the Land Acquisition Case No. 72/85.
13. DDA challenged the decision of the Single Judge in LPA and
since it suffered from the delay of 760 days, an application was made for
condonation of delay.
14. The Division Bench of the Delhi High Court observed that there
was delay of about 760 days in filing the LPA against the decision of the
Single Judge but, at the same time, there was delay of more than 31 years
on the part of the writ petitioner in challenging the acquisition
proceedings and since there was delay on the part of both sides and the
question related to valuable rights in the land, the delay on the part of
either of the parties should not come in the way of doing justice. This is
what the Division Bench observed:
“6. There is delay of about 760 days in filing of this appeal.
The appellant has filed an application (CM No. 2093/2005) for
condonation of the said delay. This application is supported by
the affidavit of Mr. S.P. Pandey, Director, LM (HQ) DDA. The
appellant had contended in its application for condonation of
delay that the delay of 760 days in filing of the appeal was
neither willful nor due to negligence but was due to the time
consuming and unavoidable administrative procedures which have
to be gone through in cases like the preset one, where the
Government is the litigant and decisions have to be taken
collectively. It is further contended that the appellant had to
collate documents, administrative orders, judgments of the
Supreme Court and various other records for preparation of the
present appeal. The request made by the appellant for
condonation of the delay is opposed by the counsel appearing on
behalf of the respondent No. 1 on the ground that the
explanation given by the appellant for delay in filing of the
present appeal is unsatisfactory. We have given our anxious
consideration to this aspect relating to condonation of delay.
While considering the delay on the part of the appellant in
filing of the present appeal, we have also taken into account
the delay of more than 31 years on the part of respondent No. 1
in challenging the acquisition proceedings by way of writ
petition in which the impugned order which is the subject matter
or challenge in this appeal has been opposed. We are of the view
that since the question in the present proceedings relates to
valuable rights of the parties in the land in question, the
delay on the part of either of the parties cannot be allowed to
come in the way of doing justice. We are further of the view
that when substantial justice and technical consideration are
pitted against each other, cause of substantial justice deserves
to be preferred. We feel that by delay, the appellant would not
stand to gain anything and at best he would only be entitled to
get his claim adjudicated on merits instead of it being thrown
to winds on technical consideration of delay in filing of the
appeal. Having regard to the circumstances of the case, we are
inclined to condone the delay in filing of the present appeal.
The delay is accordingly condoned and the appeal is taken up for
disposal on merits.”
15. On consideration of the matter on merits, the Division Bench
was of the view that the decision of Single Judge was unsustainable in view
of the Division Bench decision of that Court in M.S. Dewan[4]. The
Division Bench also relied upon a decision of this Court in Delhi
Administration and Others v. Madan Lal Nangia and Others[5]. The
consideration of the matter by the Division Bench is reflected in
paragraphs 10,11 and 12 of the judgment which read as under:
“10. It may be seen from the above judgment in Madan Lal
Nagia’s case (Supra) that the Supreme Court has categorically
held that even if there is a finding that the property acquired
was an evacuee property on the date of Notification under
Section 4 of the Land Acquisition Act, the acquisition in
respect of the said land would still be valid.
11. The acquisition of land on similar facts, as are in the
present case, was upheld by a Division Bench of this Court in
case titled ‘M.S. Dewan v. UOI & Ors., CWP No. 1400/1986 decided
on 06.02.2003. In M.S. Dewan’s case (Supra) a Division Bench of
this Court had upheld the acquisition of evacuee property and
dismissed the writ petition of the auction purchaser. Even
S.L.P. (Civil) No. 71152/2003 filed by the auction purchaser
against the aforementioned decision of this Court was also
dismissed by the Hon’ble Supreme Court. Hence the view taken by
this Court in M.S. Dewan’s case became final. Hence it would be
relevant and necessary to refer to para 23 of the said judgment
which is extracted here-in-below:-
“We have already held above that the title in the property
passed in favour of the petitioner on 14.11.1961. Even assuming
that the title had not passed to the petitioner till 22.07.1963,
when sale certificate was issued, in that case also we do not
find any substance in the submission made on behalf of the
petitioner that the property could not have been notified for
being acquired being the property of the Government till
22.07.1963 and the Government could not have acquired its own
property. The reason in our holding so is that the property on
being put to auction on 28.12.1960, the petitioner was declared
to be the highest bidder against his verified claims of the
property left behind in Pakistan the verified claims were
surrendered by him as a part of consideration for purchase of
the property in question in public auction. The balance
consideration was paid in cash. The entire consideration stood
paid by 14.11.1961. The right of the petitioner in the property
on being declared to the highest bidder was a valuable right,
which the petitioner could enforce against the respondents in
compelling the respondent to transfer the property in his name.
Such a right could be acquired. The property on being put to
auction and on the petitioner being declared to be the highest
bidder and on receipt of entire sale consideration went out of
compensation pool. The petitioner alone had interest in the
property. This interest could definitely be acquired pursuant to
the notification issued under Section 4 of the Act. Therefore,
it cannot be said that the notification under section 4 of the
Act was non est. It was for the petitioner to have raised a
claim. Proceedings for acquisition thus cannot be challenged on
the ground that such interest could not have been acquired.
Therefore, no fault can be found in the notification under
Section 4 of the Act.”
12. The question that needs our consideration in the present
appeal is squarely covered by the above judgment of this Court
in M.S. Dewan’s case. The facts of the present case as well as
that of M.S. Dewan’s case are almost same. It has been
categorically held in M.S. Dewan’s case that the right held by
the auction purchaser can be legally acquired by way of
Notification under Section 4 of the Land Acquisition Act
notwithstanding the transfer of title in respect of land in
question in his favour. We respectfully agree with the view
already taken by this Court in the aforesaid case. Hence we have
no hesitation in holding that Learned Single Judge erred in
holding that the property in question was an evacuee property on
the date of Notification dated 07.03.1962 and in quashing the
said Notification for that reason. The view so taken by Learned
Single Judge in the impugned order thus cannot be sustained in
law particularly in view of the above referred judgment of the
Supreme Court and of this Court.”
15.1. The Division Bench, accordingly, set aside the order of the
Single Judge passed on 09.08.2002 and allowed the appeal of DDA with cost
throughout.
16. Before us, Mr. Ranjit Kumar, learned senior counsel for the
appellant, vehemently argued that the appellant acquired the title in the
land on the day the full sale consideration was paid in 1980 and prior to
that date the land belonged to the central government and as such it could
not have been acquired under the LA Act by the Delhi Administration. He
highlighted the facts relating to auction of the subject land which was
conducted on 21.06.1958; approval of the highest bid of the appellant’s
husband by the Settlement Commissioner on 31.10.1960, communication from
the Ministry of Rehabilitation dated 16.06.1980 requiring the deposit of
Rs. 14,992/- as balance sale consideration, deposit of that amount by the
appellant within fifteen days thereof; issuance of sale certificate on
22.08.1980 and its registration on 15.07.1981 and submitted that until the
full price was paid, the appellant (auction purchaser) acquired no right
in the land of any nature and the land remained with the central
government. In this regard, he relied upon decisions of the Punjab High
Court in Roshan Lal Goswami v. Gobind Raj & Ors.[6] and Jaimal Singh, s/o
Jawahar Singh & Anr. v. Smt. Gini Devi[7] and the decisions of this Court
in M/s. Bombay Salt & Chemical Industries v. L.J. Johnson & Ors.[8], Bishan
Paul1, Dr. Bhargava & Co. and another v. Shyam Sunder Seth by LRS.[9] and
Hans Raj Banga v. Ram Chander Aggarwal[10].
17. Mr. Ranjit Kumar heavily relied upon the decision of this Court
in Sharda Devi v. State of Bihar and another[11] in support of his argument
that so long as title vests with the central government, the land cannot be
acquired under the LA Act. He argued that under the LA Act, the
acquisition is of land and not the ‘rights in the land’ which are not even
absolute and which are subject to certain obligations.
18. Mr. P.P. Malhotra, learned Additional Solicitor General and Mr.
Amarendra Sharan, learned senior counsel for DDA conversely not only
supported the final conclusion of the Division Bench in upsetting the
judgment of the Single Judge but also vehemently argued that writ petition
filed by the appellant was liable to be dismissed on the grounds of delay
and laches of more than 30 years and suppression of material facts inasmuch
as the writ petition in the High Court was supported by an affidavit of
J.K. Jagwani claiming himself to be power of attorney holder while one Devi
Dayal Jagwani is a registered power of attorney holder of the appellant.
It was also submitted that present appeal is a proxy appeal at the instance
of J.K. Jagwani who has purchased the subject property by a registered sale
deed dated 28.02.2003.
19. Mr. P.P. Malhotra, learned Additional Solicitor General
further argued that on approval of the bid of the appellant’s husband a
binding contract came into existence between the central government and him
which amounted to ‘encumbrance’ and, therefore, there was no impediment in
acquisition of the subject land under the LA Act.
20. On behalf of the respondents, heavy reliance was placed on the
decision of this Court in Madan Lal Nangia5 .
21. Mr. Amarendra Sharan, learned senior counsel for the DDA also
submitted that the subject land was placed at the disposal of DDA way back
in 1981 and subsequently it has been allotted to All India Institute of
Medical Sciences (AIIMS) which has also taken possession of the said land.
22. In rejoinder, Mr. Ranjit Kumar and Mr. Vijay Hansaria, learned
senior counsel for the appellant submitted that there was nothing to show
that AIIMS has been allotted the above land. In the written submissions
filed by the appellant, it is stated that there is no land in Masjid Moth
ever given to AIIMS. In this regard, reference has been made to the reply
received pursuant to the query made by the appellant under Right to
Information Act. They denied that appeal was a proxy litigation. It was
submitted that J.K. Jagwani, power of attorney holder, was one of the
family members residing in Delhi; the family had purchased the property
from their verified claim and the sale certificate was issued in favour of
Smt. Saraswati Devi who under the family settlement transferred part of
land in favour of J.K. Jagwani and other family members.
23. The approach of the Division Bench of the High Court in
offsetting the delay and laches of more than 30 years in challenging the
acquisition proceedings with the delay of 760 days in filing the LPA is a
little strange and though does not commend to us but we do not intend to
disturb the finding of the Division Bench on this aspect in view of the
appropriate final conclusion in the matter.
24. The principal contention on behalf of the appellant raised
before us (which was also argued before the Single Judge and the Division
Bench of the High Court) is that on the date of the acquisition, the
subject property vested in the central government having been acquired
under Section 12 of the 1954 Act; the title in that land did not transfer
in favour of the appellant’s husband despite public auction conducted on
21.06.1958 and the approval of the highest bid given by the appellant’s
husband on 31.10.1960, as the full price had only been paid in 1980 by the
appellant (her husband had died in the meanwhile), and, therefore,
acquisition of the subject land in 1962 under the LA Act at the instance of
the Delhi Administration was bad in law. In this regard, heavy reliance
has been placed on behalf of the appellant upon the decision of this Court
in Sharda Devi11. We shall first refer to the decision of this Court in
Sharda Devi11.
25. In Sharda Devi11, this Court was concerned with the question
whether the State could proceed to acquire land on an assumption that it
belonged to a particular person, whether in such situation the award
passed by the land acquisition officer could be called in question by the
State seeking a reference under Section 30 of the LA Act on the premise
that the land did not belong to the person from whom it was purportedly
acquired and was a land owned by the State having vested in it, consequent
upon abolition of proprietary rights, much before the acquisition. This
Court examined and analysed provisions of the LA Act and also considered
few earlier decisions of this Court and the decisions of some high courts.
Considering the question in light of the above, this Court held as under:
“27. We have entered into examining the scheme of the Act and
exploring the difference between reference under Section 18 and
the one under Section 30 of the Act as it was necessary for
finding out answer to the core question staring before us. The
power to acquire by the State the land owned by its subjects
hails from the right of eminent domain vesting in the State
which is essentially an attribute of sovereign power of the
State. So long as the public purpose subsists, the exercise of
the power by the State to acquire the land of its subjects
without regard to the wishes or willingness of the owner or
person interested in the land cannot be questioned. (See Scindia
Employees' Union v. State of Maharashtra [(1996) 10 SCC 150],
SCC para 4 and State of Maharashtra v. Sant Joginder Singh
Kishan Singh [1995 Supp (2) SCC 475], SCC para 7.) The State
does not acquire its own land for it is futile to exercise the
power of eminent domain for acquiring rights in the land, which
already vests in the State. It would be absurdity to comprehend
the provisions of the Land Acquisition Act being applicable to
such land wherein the ownership or the entirety of rights
already vests in the State. In other words, the land owned by
the State on which there are no private rights or encumbrances
is beyond the purview of the provisions of the Land Acquisition
Act. The position of law is so clear as does not stand in need
of any authority for support. Still a few decided cases in point
may be referred since available.
28. In Collector of Bombay v. Nusserwanji Rattanji Mistri [AIR
1955 SC 298] this Court held that when the Government acquires
lands under the provisions of the Land Acquisition Act, it must
be for a public purpose, and with a view to put them to that
purpose, the Government acquires the sum total of all private
interests subsisting in them. If the Government has itself an
interest in the land, it has only to acquire the other interests
outstanding thereof so that it might be in a position to pass it
on absolutely for public user. An interesting argument was
advanced before the Supreme Court. It was submitted that the
right of the Government to levy assessment on the lands is an
“encumbrance” and that encumbrance is capable of acquisition.
The Court held that the word “encumbrance” as occurring in
Section 16 can only mean interests in respect of which a
compensation was made under Section 11 or could have been
claimed. It cannot include the right of the Government to levy
assessment on the lands. The Act does not contemplate the
interest of the Government in any land being valued or
compensation being awarded therefor.
29. In Secy. of State v. Sri Narain Khanna [AIR 1942 PC 35: 44
Bom LR 788] it was held that where the Government acquires any
property consisting of land and buildings and where the land was
the subject-matter of the government grant, subject to the power
of resumption by the Government at any time on giving one
month's notice, then the compensation was payable only in
respect of such buildings as may have been authorized to be
erected and not in respect of the land.
30. In the matter of the Land Acquisition Act: Govt. of Bombay
v. Esufali Salebhai [ILR (1910) 34 Bom 618 : 12 Bom LR 34] ILR
(at p. 636) Batchelor, J. held that the Government are not
debarred from acquiring and paying for the only outstanding
interests merely because the Act, which primarily contemplates
all interests as held outside the Government, directs that the
entire compensation based upon the market value of the whole
land must be distributed among the claimants. The Government was
held liable to acquire and pay only for the superstructure as it
was already the owner of the land.
31. In Dy. Collector, Calicut Division v. Aiyavu Pillay [9 IC
341: (1911) 2 MWN 367 : 9 MLT 272] Wallis, J. observed that the
Act does not contemplate or provide for the acquisition of any
interest which already belongs to the Government in land which
is being acquired under the Act but only for the acquisition of
such interests in the land as do not already belong to the
Government.
32. In Collector of Bombay v. Nusserwanji Rattanji Mistri [AIR
1955 SC 298] the decisions in Esufali Salebhai case [ILR (1910)
34 Bom 618 : 12 Bom LR 34] and Aiyavu Pillay case [9 IC 341:
(1911) 2 MWN 367 : 9 MLT 272] were cited with approval.
Expressing its entire agreement with the said views, the Court
held that when the Government possesses an interest in land
which is the subject of acquisition under the Act, that interest
is itself outside such acquisition because there can be no
question of the Government acquiring what is its own. An
investigation into the nature and value of that interest is
necessary for determining the compensation payable for the
interest outstanding in the claimants but that would not make it
the subject of acquisition. In the land acquisition proceedings
there is no value of the right of the Government to levy
assessment on the lands and there is no award of compensation
therefor. It was, therefore, held by a Division Bench of
Judicial Commissioners in Mohd. Wajeeh Mirza v. Secy. of State
for India in Council [AIR 1921 Oudh 31: 24 Oudh Cas 197] that
the question of title arising between the Government and another
claimant cannot be settled by the Judge in a reference under
Section 18 of the Act. When the Government itself claims to be
the owner of the land, there can be no question of its
acquisition and the provisions of the Land Acquisition Act
cannot be applicable. In our opinion the statement of law so
made by the learned Judicial Commissioners is correct.”
26. This Court answered the question under consideration in the
negative and held that the acquisition of land wherein the ownership or the
entirety of rights already vested in the State on which there were no
private rights or encumbrances, such land was beyond the purview of LA Act.
We agree with the position of law highlighted in Sharda Devi11 but the
question is of its applicability on the factual situation of the present
case. Before we consider this aspect, we may also deal with the statutory
provisions and the decisions of this Court and the two decisions of the
Punjab High Court upon which strong reliance has been placed on behalf of
the appellant in support of the argument that acceptance of the highest bid
in public auction under Rule 90 of the 1955 Rules for sale of the property
forming part of the compensation pool does not create any title or right in
favour of the auction-purchaser unless the full auction price is
paid/deposited.
27. By virtue of Section 14 of the 1954 Act, an evacuee property
acquired under Section 12 becomes part of the compensation pool. The
compensation pool vests in the central government free from all
encumbrances. Section 20 empowers the managing officer or managing
corporation to transfer any property out of the compensation pool subject
to the 1955 Rules. Chapter XIV of the 1955 Rules provides for the procedure
for sale of property in the compensation pool. Rule 87 provides that the
property forming part of compensation pool may be sold by public auction or
by inviting tenders. Rule 90 provides for the procedure for sale of
property by public auction. The said rule, to the extent it is relevant,
reads as under:
“90. Procedure for sale of property by public auction—(1) Where
any property is to be sold by public auction—
(a) The property shall be sold through firms of repute
who have been approved as auctioneer by the Chief
Settlement Commissioner or through the officers
appointed by the Central Government in this behalf;
(b) the terms and conditions on which auctioneers may be
appointed shall, from time to time, be determined by
the Chief Settlement Commissioner.
(2) to (7) xxx xxx xxx
xxx
(8) The person declared to be the highest bidder for the
property at the public auction shall pay in cash or by a cheque
drawn on a scheduled bank and endorsed “good for payment upto
six months” or in such other form as may be required by the
Settlement Commissioner, immediately on the fall of the hammer a
deposit not exceeding 20 per cent of the amount of his bid to
the officer conducting the sale and in default of such deposit
the property may be resold:
Provided that where the highest bidder is a displaced
person having a verified claim, the compensation in respect of
which exceeds the amount of the deposit required under this sub-
rule, he may, instead of making a deposit, execute an indemnity
bond in the form specified in Appendix XXI-A.
(9) xxx xxx xxx xxx
(9)(A) xxx xxx xxx xxx
(9) (B). xxx xxx xxx xxx
(10) The bid in respect of which the initial deposit has
been accepted shall be subject to the approval of the Settlement
Commissioner or an officer appointed by him for the purpose.
Provided that no bid shall be approved until after the
expiry of a period of seven days from the date of the auction.
(11) Intimation of the approval of a bid or its rejection
shall be given to the highest bidder (hereinafter referred to as
the auction purchaser) by registered post acknowledgement due
and the auction purchaser shall where the bid has been accepted
be required within fifteen days of the receipt of such
intimation to send by registered post acknowledgement due or to
produce before the Settlement Commissioner or any other officer
appointed by him for the purpose a treasury challan in respect
of the deposit of the balance of the purchase money :
Provided that the Settlement Commissioner or other officer
appointed by him in this behalf may, for reasons to be recorded
in writing, extend the aforesaid period of fifteen days by such
period, not exceeding fifteen days, as the Settlement
Commissioner or such other officer may think fit.
Provided further that the period extended under the
preceding proviso may further be extended (without any limit of
time) by the Chief Settlement Commissioner.
(12) The balance of the purchase money may, subject to
the other provisions of these rules be adjusted against the
compensation payable to the auction purchaser in respect of any
verified claim held by him. In any such case the auction
purchaser shall be required to furnish within seven days of the
receipt of intimation about the approval of the bid, particulars
of the compensation application filed by him :
Provided that the Settlement Commissioner or any officer
appointed by him in this behalf may, for reasons to be recorded
in writing, extend the aforesaid period of seven days by such
further period not exceeding fifteen days as the Settlement
Commissioner or such other officer may deem fit:
Provided further that the period extended under the
preceding proviso may further be extended (without any limit of
time) by the Chief Settlement Commissioner.
(13) If the Regional Settlement Commissioner, on scrutiny
of the compensation application of the auction purchaser finds
that further sum is due to make up the purchase price, he shall
send an intimation to that effect to the auction purchaser
calling upon him to deposit the balance in cash within fifteen
days of the receipt of such intimation.
(14) If the auction purchaser does not deposit the
balance of the purchase money within the period specified in sub-
rule (11) or does not furnish particulars of his compensation
application as specified in sub-rule (12), or if that net
compensation admissible to the auction purchaser is found to be
less than the balance of the purchase money and the auction
purchaser does not make up the deficiency as provided in sub-
rule (13), the initial deposit made by the auction purchaser
under sub-rule (8) shall be liable to forfeiture and he shall
not have any claim to the property.
(15) When the purchase price has been realised in full
from the auction purchaser, the Managing Officer shall issue to
him a sale certificate in the form specified in Appendix XXII or
XXIII, as the case may be. A certified copy of the sale
certificate shall be sent by him to the Registering Officer
within the local limits of whose jurisdiction the whole or any
part of the property to which the certificate relates is
situated. If the auction purchaser has associated with himself
any other displaced person having a verified claim whose net
compensation is to be adjusted in whole or in part against the
purchase price, the sale certificate shall be made out jointly
in the name of all such persons, and shall specify the extent of
interest of each in the property.
Provided that if every such displaced person who has
associated himself with the auction-purchaser sends an
intimation in writing to the Regional Settlement Commissioner
that the sale certificate may be made out in the name of the
auction-purchaser, the sale certificate may be made out in the
name of the auction-purchaser.”
28. In Bombay Salt & Chemical Industries8, this Court with
reference to the public auction of certain salt pans which were evacuee
property and formed part of the compensation pool constituted under the
1954 Act held in para 10 of the Report as under :
“10. It is clear from the rules and the conditions of sale set
out above that the declaration that a person was the highest
bidder at the auction does not amount to a complete sale and
transfer of the property to him. The fact that the bid has to be
approved by the Settlement Commissioner shows that till such
approval which the Commissioner is not bound to give, the
auction-purchaser has no right at all. It would further appear
that even the approval of the bid by the Settlement Commissioner
does not amount to a transfer of property for the purchaser has
yet to pay the balance of the purchase money and the rules
provide that if he fails to do that he shall not have any claim
to the property. The correct position is that on the approval of
the bid by the Settlement Commissioner, a binding contract for
the sale of the property to the auction-purchaser comes into
existence. Then the provision as to the sale certificate would
indicate that only upon the issue of it a transfer of the
property takes place. Condition of Sale No. 7 in this case,
furthermore, expressly stipulated that upon the payment of the
purchase price in full the ownership would be transferred and a
sale certificate issued. It is for the appellants to show that
the property had been transferred. They have not stated that the
sale certificate was issued, nor that the balance of the
purchase money had been paid. In those circumstances, it must be
held that there has as yet been no transfer of the salt pans to
Respondents 4 and 5. The appellants cannot therefore claim the
benefit of Section 29 and ask that they should not be evicted.
Mr. Purshottam Trikamdas contended that the sale certificate
will in any event be granted and that once it is granted, as the
form of this certificate shows, the transfer will relate back to
the date of the auction. It is enough to say in answer to this
contention that assuming it to be right, a point which is by no
means obvious and which we do not decide, till it is granted no
transfer with effect from any date whatsoever takes place and
none has yet been granted.”
29. In Bishan Paul1, a two-Judge Bench of this Court observed that
in Bombay Salt & Chemical Industries8 this Court did not directly decide
the question when title would pass to an auction-purchaser. It was held
that title would pass when the full price was realized. This Court
observed having regard to the time lag between acceptance of the highest
bid, payment of full price and the issuance of certificate, that title must
be deemed to have been passed when the sale became absolute and the sale
certificate must relate back to that date, i.e., when the sale became
absolute.
30. In Roshan Lal Goswami6, a Division Bench of the Punjab High
Court, on examination of the provisions of the 1954 Act and Rule 90 of the
1955 Rules, held that till a sale certificate was issued to the highest
bidder and till the balance of the purchase money had been paid, rights of
ownership would not vest in the auction-purchaser and the proprietary
rights, therefore, would not stand transferred by the mere fact that the
highest bid of the auction-purchaser has been accepted. The Division Bench
of the Punjab High Court noticed the lacuna in the 1954 Act about
transitional stage after the acceptance of the highest bid at the auction
and till the sale certificate was granted. Pertinently, with regard to the
provisional possession given to the auction-purchaser on acceptance of the
highest bid, the Division Bench of the Punjab High Court observed as under:
“8. After provisional possession has been given, the auction-
purchaser, even though he does not possess proprietary rights,
has possessory rights. He has the right of possession which can
exist independently of ownership. Possession and ownership may
co-exist but in a number of cases a person may be the owner of a
thing and not possess it; and conversely, a person may be the
possessor without being the owner. A person, who is a possessor
but not the legal owner, is entitled to certain rights by virtue
of his possession alone. . . . . . . . . .”
31. In Jaimal Singh7, the Punjab High Court, after noticing Rule
90 of the 1955 Rules, in para 16 of the Report, inter alia, held as under:
“………..In my view, title passes when the sale is confirmed,
because it is that date on which the auction-purchaser is
recognised officially as the owner and is entitled to obtain
possession of the property. The issue of the sale certificate
is invariably delayed because certain routine formalities have
to be complied with and it is in very rare cases that an office
can be so prompt as to issue the sale certificate on the very
day the sale is confirmed. But when a sale certificate is
issued, it dates back to the date when the sale was confirmed.”
32. The legal position with regard to transfer of title in respect
of the property forming part of the compensation pool put to public auction
under Rule 90 of the 1955 Rules may be summarized thus : on approval of the
highest bid by the Competent Authority, a binding contract for the sale
of the property to the auction-purchaser comes into existence. Once the
payment of the full purchase price is made, title in the property would
pass to an auction-purchaser. In other words, on the payment of the full
purchase price, the ownership in the property sold in public auction would
stand transferred but the transfer formally becomes complete on issuance
of the certificate of sale. If in the sale certificate, any particular
date is mentioned as provided in the proforma appended to Rule 90, such
date mentioned in the sale certificate may be presumed to be the date on
which the purchase has become effective but crucial date for transfer of
ownership in the property in favour of auction-purchaser is the date when
full purchase price has been paid by the auction-purchaser.
33. The above being the legal position, let us recapitulate the
facts and the effect of provisional possession given to the appellant’s
husband. The auction of the subject land was conducted on 21.06.1958. The
highest bid submitted by the appellant’s husband was approved by the
Settlement Commissioner and a communication to that effect was sent on
31.10.1960 intimating to him that it has been decided to give him
provisional possession of the auctioned property. It is an admitted case
that provisional possession was in fact given to the appellant’s husband.
On 16.06.1980, the concerned authority asked the auction-purchaser to
deposit Rs. 14,992/- as balance sale consideration which was done by the
appellant within the prescribed time (appellant’s husband had died in the
meanwhile) and sale certificate was issued in favour of the appellant on
22.08.1980. The said sale certificate was registered on 15.07.1981. It may
be noticed here that the sale certificate mentions that the appellant has
been declared purchaser of the subject property with effect from 11.12.1958
but as a matter of law as indicated above, the ownership could have
transferred in favour of the appellant only in 1980 when she paid full
purchase price. In fact no ownership was transferred in favour of the
appellant even on that date. We shall indicate the reason therefor a
little later.
34. What is the effect of provisional possession which was given to
the appellant’s husband in 1960 on approval of his highest bid? Does it
amount to creation of an encumbrance in the property? If the provisional
possession given to the appellant’s husband amounted to creation of an
encumbrance, whether the said property could have been acquired under the
LA Act although the ownership vested in the central government? The fate
of the appeal significantly will depend upon answer to these questions. 35.
Concise Oxford English Dictionary [Tenth Edition, Revised] defines
“encumbrance” – 1. a burden or impediment. 2. Law a mortgage or other
charge on property or assets.
36. Webster Comprehensive Dictionary [International Edition; Volume
I] defines “encumbrance” as follows:
“1. That which encumbers. 2. Law Any lien or liability attached
to real property. 3. One’s wife, child or dependent. Also
spelled incumbrance. See synonyms under IMPEDIMENT, LOAD [<OF
encumbrance <encombrer. See ENCUMBER.]”
37. In P. Ramanatha Aiyar’s The Law Lexicon [Second Edition Reprint
2000] with reference to a decision of the Patna High Court in Mahadeo
Prasad Sahu v. Gajadhar Prasad Sahu[12], the term “encumbrance” is
explained as follows :
“Encumbrance. Burden or property; impediment; mortgage or other
claim on property. Grant of lands rent free or the grant of the
landlords zarait land to a tenant for the purposes of
cultivation does amount to an encumbrance of the estate. Apart
from mere dealings such as mortgages which create a charge upon
the land, there are other dealings which amount to an
encumbrance. Anything which interferes with the unrestricted
rights of the proprietors as they then existed would be an
encumbrance upon the land, even the granting of a lease of
zarait lands, that is to say the lands which the landlord is
entitled to hold in direct possession and to cultivate for his
own purposes. A lease of such lands granted to an occupier in
circumstances which would give him a right of occupancy over the
land, would amount to an encumbrance.”
38. In Collector of Bombay v. Nusserwanji Rattanji Mistri and
Others[13], the term “encumbrance” as occurring in Section 16 of the LA Act
has been explained by this Court to mean interests in respect of which a
compensation was made under Section 11 or could have been claimed
thereunder.
39. In M. Ratanchand Chordia & Ors. v. Kasim Khaleeli[14], a
Division Bench of the Madras High Court had an occasion to consider the
meaning of the word “encumbrances” with reference to the 1954 Act and the
LA Act in the context of the easemantary right of way. The Division Bench
considered the word “encumbrances” thus :
“18. The word "Encumbrances" in regard to a person or an estate
denotes a burden which ordinarily consists of debts, obligations
and responsibilities. In the sphere of law it connotes a
liability attached to the property arising out of a claim or
lien subsisting in favour of a person who is not the owner of
the property. Thus a mortgage, a charge and vendor's lien are
all instances of encumbrances. The essence of an encumbrance is
that it must bear upon the property directly and in-directly and
not remotely or circuitously. It is a right in realiena
circumscribing and subtracting from the general proprietary
right of another person. An encumbered right, that is a right
subject to a limitation, is called servient while the
encumbrance itself is designated as dominant. . . . . . . .”
40. The word “encumbrance”, according to its ordinary significance,
means any right existing in another to use the land or whereby the use by
the owner is restricted. The word “encumbrance” imports within itself
every right or interest in the land, which may subsist in a person other
than the owner; it is anything which places the burden of a legal liability
upon property. The word “encumbrance” in law has to be understood in the
context of the provision under consideration but ordinarily its ambit and
scope is wide. Seen thus, it is difficult to see why a binding contract
entered into between an auction-purchaser and the government on approval of
the highest bid relating to sale of property, which is part of compensation
pool under Section 14 of the 1954 Act followed by provisional possession to
the auction-purchaser, should not come within the purview of the word
“encumbrance”.
41. It is well known in law that a person in possession of the
property – though not owner – is entitled to certain rights by virtue of
his possession alone. We are in agreement with the view of the Punjab High
Court in Roshan Lal Goswami6 that an auction-purchaser on provisional
possession being given to him possesses possessory rights, though he does
not have proprietary rights in the auctioned property. Thus, there remains
no doubt that in October, 1960 or near about encumbrance in the subject
property came to be created.
42. The next question is whether on creation of an encumbrance, the
subject property could have been acquired under the LA Act although the
ownership in the land vested in the central government. Ordinarily, when
the government possesses an interest in land, which is the subject of
acquisition under the LA Act, that interest is outside such acquisition
because there can be no question of the government acquiring what is its
own. This is what this Court said in Nusserwanji Rattanji Mistri13 but this
rule is not without an exception. There is no impediment in acquisition of
land owned by the central government by invoking the provisions of the LA
Act where such land is encumbered or where in respect of the land owned by
the government some private interest has been created. As a matter of
fact, Sharda Devi11 does not hold to the contrary. It is so because what
Sharda Devi11 holds is this : the acquisition of land wherein the
ownership or the entirety of rights already vested in the State on which
there are no private rights or encumbrance such land is beyond the purview
of the LA Act. In other words, if the government has complete ownership or
the entirety of rights in the property with it, such land cannot be
acquired by the government by invoking its power of acquisition under the
LA Act but if some private rights have been created in such property or the
property has encumbrance(s), the acquisition of such land is not beyond the
pale of the LA Act.
43. Madan Lal Nangia5 has been relied upon by the Division Bench in
the impugned order in upsetting the decision of the Single Judge. Mr.
Ranjit Kumar, learned senior counsel for the appellant sought to
distinguish this judgment. He submitted that Madan Lal Nangia5 was a case
where this Court was concerned with the properties which vested in the
custodian and having regard to this aspect, this Court said that merely
because the properties vest in the custodian as an evacuee property it does
not mean that the same cannot be acquired for some other purpose.
44. It is true that facts in Madan Lal Nangia5 were little
different but, in our view, the legal position highlighted therein does not
become inapplicable to the present case on that ground. In paragraphs 16,
17 and 18 of the Report (Pgs. 334-335), this Court observed as follows:
“16.…………A property is a composite property because a private
party has an interest in that property. The scheme of
separation, to be framed under Section 10 of the Evacuee
Interest (Separation) Act, is for the purpose of separating the
interest of the evacuee from that of the private party.
Therefore, even if the evacuee's interest was acquired under
Section 12, the interest of the private person could have been
acquired under the Land Acquisition Act. Further, if the land
stood acquired by the notification dated 7-7-1955 then the
question would arise as to how the respondents acquired title to
these lands. If they purchased after the date of notification
dated 7-7-1955, they would get no title. They then would not be
able to maintain the writ petition. Dr Dhavan submitted that the
appellants had admitted the title of the respondents and thus
this question would not arise. We are unable to accept the
submission. It is only a person who has an interest in the land
who can challenge acquisition. When a challenge is made to an
acquisition at a belated stage, then even if the court is
inclined to allow such a belated challenge, it must first
satisfy itself that the person challenging acquisition has title
to the land. Very significantly, in their writ petition the
respondents do not state when they acquired title.
17.……Undoubtedly, the evacuee properties vested in the Custodian
for the purposes of distribution as per the provisions of the
various Acts. However, it is to be noted that under the various
Acts in lieu of properties, compensation in terms of money can
also be paid. Thus, merely because the properties vest in the
Custodian as evacuee properties does not mean that the same
cannot be acquired for some other public purpose……………
18……..It would be open to the Government to acquire evacuee
property and give to the Custodian compensation for such
acquisition. Section 4 notification dated 23-1-1965 not having
excluded evacuee properties the respondents can get no benefit
from the fact that in the 1959 notification evacuee properties
had been excluded.”
45. From the judgment in Madan Lal Nangia5 , three propositions of
law emerge:
(i) At the time of acquisition of evacuee property under
Section 12 of the 1954 Act if such property has interest of a private person, the interest of private person can be acquired under the LA Act even though the land is owned by the government.
(ii) The properties that vest in the Custodian as evacuee properties can be acquired for some other public purpose.
(iii) When a challenge is laid to the acquisition of the land at a belated stage then if the court is inclined to allow such a
belated challenge, it must first satisfy itself that the person
challenging acquisition has title to the land.
46. What follows from proposition (i) is also this that after the
acquisition of evacuee property under Section 12, if any encumbrance is
created or interest of a private person intervenes therein, such land even
if owned by the government can be acquired under the LA Act. This is in
congruity and consonance with Sharda Devi11 as well.
47. When the facts of the instant case are seen in light of the
above legal position, we are of the considered view that
the appeal must fail.
In the first place, as noticed above, by approval of the highest bid
given by the appellant’s husband followed with provisional possession, an
encumbrance was created in 1960 in the subject land which was part of the
compensation pool before the acquisition proceedings were initiated and,
therefore, it could have been acquired by the Delhi Administration under
the LA Act.
Secondly, and equally important, the acquisition which was
commenced by Section 4 read with Section 17(1)(iv) Notification issued on
07.03.1962 which ultimately culminated into an award on 30.06.1962 was
challenged for the first time after more than thirty years of the passing
of the award.
The appellant has failed to show her title or her husband’s
title in the property on the date of the acquisition.
As a matter of fact,
though the approval to the highest bid given by the appellant’s husband in
respect of the subject property was given on 31.10.1960, the payment of
full price by the appellant was made pursuant to the communication dated
16.06.1980 but by that time the subject land already stood acquired by the
Delhi Administration and, therefore, despite the payment of full price by
the appellant in 1980 and the issuance of the sale certificate, no title
came to be vested in the appellant.
The legal position that we have
summarised with regard to transfer of title in respect of the property
forming part of the compensation pool put to public auction under Rule 90
of the 1955 Rules in the earlier part of the judgment does not help the
appellant at all because of completion of acquisition proceedings in 1962
much before the payment of full purchase price by the appellant. In the
absence of any title in favour of the appellant or her husband on the date
of acquisition, the challenge to such acquisition could not have been
allowed by the Single Judge. The Division Bench rightly set aside the
erroneous order of the Single Judge.
48. In view of the above, appeal has no merit and is liable to be
dismissed and is dismissed with no order as to costs.
49. It is, however, clarified that appellant’s claim for
compensation, refund or any other monetary claim shall be considered and/or
decided on its own merits in accordance with law and the present judgment
shall have no bearing in relation to such claim.
…………………….J.
(R.M. Lodha)
.…………………….J.
(Anil R. Dave)
NEW DELHI
JANUARY 29, 2013.
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[1] AIR 1965 SC 1994
[2] 29 (1986) DLT 246
[3] 1997 Rajdhani Law Reporter 101
[4] M.S. Dewan v. Union of India & Ors. [C.W.P. No. 1400/1986]; Decided
on 06.02.2003.
[5] (2003) 10 SCC 321
[6] AIR (1963) Punjab 532
[7] AIR (1964) Punjab 99
[8] AIR 1958 SC 289
[9] (1994) 5 SCC 471
[10] (2005) 4 SCC 572
[11] (2003) 3 SCC 128
[12] AIR 1924 Patna 362
[13] AIR 1955 SC 298
[14] AIR 1964 Madras 209
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