Kerala High Court
Chief Divisional Manager, Bharat ... vs State Of Kerala, Rep. By The District ... on 4 March, 2003
Author: Koshy
Bench: J.B. Koshy
JUDGMENT Koshy, J.
1. Whether a commercial tenant who is entitled to fixity of tenure under Section 106 of the Land Reforms Act is entitled to compensation awarded wen leased premises are acquired by the Government and if so what is the ratio of compensation to be fixed while apportioning compensation are the question to be decided in this case.
2. An extent of 214.23 sq. meters of land in Thalassery Municipality was acquired by the Government for widening of the road. Award was passed on 31.10.1991 and a sum of Rs. 113758/- was awarded as compensation. Land acquired was part of a retail outlet of petroleum product Bharat Petroleum Corporation Limited, the appellant herein. The outlet was situated in the heart of the town. Therefore, they claimed that since the are having fixity of tenure, they are entitled to 75% of the compensation. Question to be considered in this case is the extent of the right to receive compensation by a commercial lessee who is entitled to fixity of tenure under Section 106 of the Land Reforms Act, when leased premises are acquired by the State. In other words, how compensation awarded should be apportioned between landlord and permanent commercial tenant. The Land Acquisition Officer did not apportion the compensation; but, reference was made to the Civil Court under Section 30 of the Land Acquisition Act.
2. Appellant/lessee has constructed and installed sales room, store room, etc. in the leased premises. The cost of the above construction was also determined by the land acquisition officer. According to the appellant, they are entitled to 75% of the compensation awarded for land as they are entitled to fixity of tenure. Even though the reference court found that the appellant has got fixity of tenure, they are only entitled to 1/8th (7 share to the land lord and one share to the appellant) share of compensation. This is questioned by the appellant herein.
3. Reference was under Section 30 of the Land Acquisition Act, 1894. Reference court found as follows:
The claimants 1 to 4 claimed the entire compensation amount in deposit accept the value of the structure put up by the 5th claimant in the acquired portion contending that the acquired property exclusively belongs to them in jenm right. The 5th claimant is the lessee, who claimed Rs. 189056/- towards the compensation. The claimants Nos. 6, 7, 10 and 11 claimed that they were running a petroleum bunk as agents of Bharath Petroleum and they claimed Rs. 5 lakhs towards the compensation. This is a reference under Section 30 of the Land Acquisition Act for apportionment of the compensation amount awarded. So the question of enhancement of compensation claimed by the claimants does not at all arise for consideration. Though the 5th claimant in their counter statement has claimed Rs. 189056/- towards the compensation, in evidence the 5th claimant has confined his claim to 75% of the amount in deposit. In support of the claim of apportionment made by the claimant Nos. 1 to 4, they examined PW1 and produced Exts. A1 to A3. PW1 is the 1st claimant. Ext. A1 is the title deed in respect of the suit property in the name of the claimants 1 to 4. Exts. A2 and A3 are the Land Assessment Receipts. It is admitted that the acquired portion exclusively belongs to the claimants Nos. 1 to 4 in jenm right. It is also an admitted fact that the 5th claimant is a lessee in respect of the portion in the property acquired. Ext. A4 is the lease agreement. It is dated 30.3.1963. Admittedly, it is a permanent lease. It is admitted that the 5th claimant has put some structures in portion of the acquired property for the purpose of running a petrol pump. Ext. A4 will makes it clear that the period of lease was from 15.4.1961 to 21.7.1974. The learned counsel for the 5th claimant would argue that the lease was a permanent lease and therefore the 5th claimant is entitled to get 75% of the amount in deposit.
It is true that Ext. A4 in the present case lease is not an ordinary lease where a house for other property is let out which has to be renewed at the end of the lease. No doubt, the lease was entered in the year 1961 and therefore the 5th claimant is not liable to be evicted. It is well settled that where the land leased in perpetuity on a fixed rent is acquired under the Land Acquisition Act the acquisition arise as to the proportion in which compensation should be divided between the lesser and the lessee, the court ought to have proceed on the principle of ascertaining what was the value of the interest of the lesser on the one hand with which he had parted and that of the lessee on the other hand and to apportion the compensation accordingly. In the present case, it is established that the lease was for a period of 16 years. Moreover it is admitted only a portion of the land covered by the lease was acquired in this case. Therefore I am of the view that a very small portion of the compensation can be paid to the tenant and the major portion had to be paid to the lesser.
4. On the above basis, 7:1 ratio was fixed by the reference court. Accordingly to the appellant, if they were cultivating tenants, they would have got the right to purchase the landlord's right by paying 16 times of the rent that too in 16 instalments as provided under Sections 53, 55 and 58 of the Land Reforms Act. Here the structure in the acquired land was also constructed by the appellant. There is no dispute in this case that since lessees constructed the structures, they are entitled to compensation for the structures. Dispute is only regarding the land. Here, the appellant is not a cultivating tenant. He is entitled to fixity of tenure under Section 106 of the Kerala Land Reforms Act, being the lessee of the premises from 1961 onwards. Section 106 of the Land Reforms Act reads as follows:
"106. Special provisions relating to leases for commercial or industrial purposes: Notwithstanding anything contained in the act, or in any other law, or in any contract, or in any order or decree of court, whereon any land leased for commercial or industrial purpose, the lessee has constructed buildings for such commercial or industrial purpose before the 20th May, 1967, he shall not be liable to be evicted from such land, but shall be liable to pay rent under the contract of tenancy, and such rent shall be liable to be varied every twelve years."
5. In view of Section 106, it is not disputed that appellant is entitled to fixity of tenure. It was so held by the reference court also. Therefore, it is a permanent tenancy. In Union of India v. S. Ajit Singh (AIR 1987 Delhi 151) where the lease was for 99 years it was held that landlord is entitled to only 25% of the compensation and tenant is entitled to 75%. In Indraprastha Ice and Cold Storage Ltd., New Delhi v. The Union of India and Ors. (AIR 1987 Delhi 171) where the lease was 40 years, with right of renewal of rent every 10 years, court fixed 7:1 as the ratio. Reference court followed the same in this case. But, here in this case, even though lease was for 16 years because of the operation of law (Section 106 of the Kerala Land Reforms Act) it became a permanent lease. Rent is also liable to be raised only in an interval of 12 years. But tenant has no statutory right to purchase the lease like a cultivating tenant as it is a commercial lease and landlord will be entitled to get the rent and ownership also remains with them. Here structures were put up by lessee. Even though lease is a permanent lease and it is inheritable right, protection under Section 106 is not transferable to third parties. Considering the nature of interest in the land acquired, we are of the opinion that a tenant who was fixity of tenure is entitled to part of the compensation awarded on acquisition of leased premises. In case of apportionment of compensation between lesser or lessee it is not possible to lay down any rigid rule of universal application. In Dinendra Narain Roy v. Titurein Mukhejee (7 CWN 810) it was held that when there is a permanent lease, landlord is only entitled to capitalised value of rent he receives from the leased premises. The balance shall go to the permanent tenant. Same view was held in Thakur Govind Deo Ji Maharaj v. Thakur Rang Ji Maharaj and Ors. (AIR 1963 All. LJ 587) Bombay High Court in Bhagwan Dattatraya Budukh v. Viswanath Pandharinath Joshi and Ors. (AIR 1979 Bom. 1.). In this case only part of the tenant's premises is acquired and there is no evidence to show the exact rent for the part of the premises. Here, the entire business of the tenant is not closed due to acquisition. He can continue the business in the balance part of the leased land though with some inconveniences. Punjab & Haryana High Court in Biharilal v. Harinder Singh and Ors. (AIR 1977 P&H 165) fixed the ratio of compensation between landlord and tenant at the ratio of 3:1 (3/4 to landlord and 1/4 to tenant), when tenant has a right to purchase under Punjab Security of Land Tenancy Act. what the landlord is entitled is only to the rent. Even the rent can only be varied only in every 12 years. Since the land is acquired, the landlord will not be able to get the rent for that part of the land. Therefore there is loss to the landlord. But there is also loss to the tenant, who is entitled to fixity of tenure. In the above circumstances, we are of the view that tenant will get 1/4 of the compensation and the landlord will be entitled to 3/4 of the compensation awarded (Ratio 1:3). Award is modified accordingly. Appeal is allowed partly.