Maha Laxmi Saw Mills Pvt. Ltd. And ... vs Union Of India (Uoi)
2007 Latest Caselaw 1470 Del

JUDGMENT

A.K. Sikri, J.

1. Subject-matter of all these appeals is intimately inter-connected. Though the learned Trial Court on the different suits filed by the plaintiffs, passed separate judgments and decrees, common theme runs through these judgments and the course of action adopted by the learned Additional District Judge is same or similar. Due to little difference in the factual matrix in two cases, the outcome thereof is different from others as they are dismissed while others are partly decreed. We shall take note of such differences while discussing each appeal after answering the question of law in these appeals, which is identical/common.

2. For the sake of convenience, while discussing the legal position, we shall be taking cognizance of the facts as they appear in RFA No. 154/2007.

3. In order to ease out congestion of traffic on roads and also to provide effective public transport system, the idea of Metro Rail was conceived by the Government few years ago. Delhi Metro Rail Corporation (DMRC) was incorporated to translate the plan into reality. In remarkable time the DMRC has brought Mass Rapid Transit System (MRTS) on tracks. It is a soothing sight to find Metro Rail running all over Delhi-at many places it is underground and some tracks are elevated. DMRC, though a corporation owned by the Government, has proved that public sector corporation can also work with desired electricity speed and efficiency, that too without compromising on quality. Not only the deadlines fixed for the construction of different tracks were met, on many occasions the projects completed even before the stipulated time fixed in the plans. Delhi Metro Rail today is a success story talked about and appreciated all over, not only in Delhi but in India, nay world over.

4. In a city like Delhi, which is over-populated and therefore, many areas facing acute congestion, there was paucity of land from where the Metro Rail could pass. To execute the plans for construction of Metro Rail, therefore, land belonging to various citizens of this city had to be acquired. Structures standing on such land at various places had also to be demolished in the process. Many residents were affected by such an acquisition. Therefore, on the one hand, whereas there was no option but to acquire the residential as well as commercial areas, it was also the bounden duty of the Government to pay them adequate compensation without delay to enable them to rehabilitate themselves without much discomfiture. These cases concern taking away certain area in the colony called Kirti Nagar from the plaintiffs/appellants.

5. The appellant is M/s. Maha Laxmi Saw Mills Pvt. Ltd., which is having its office cum shop at 3/13, Industrial Area, Kirti Nagar, New Delhi. Some of the area of this shop was needed for public purpose, i.e. widening of the road. The land in question was allotted by the L&DO to the appellant for which conveyance/lease deed was executed. Clauses XI and XII of the lease deed provide that in case of transfer of property by the original allottee to a third party, the L&DO shall be given 50% of the unearned increase. Clause XII permitted the Lesser, i.e. the respondent to take possession of the land together with all buildings, structures and appurtenances even during the period of lease if the premises are required for a public purpose or for any administrative purpose. Further, this clause in such an eventuality entitles the lessee to get compensation in respect of the land, building and structures and for fixing the compensation and principles as laid down in the Land Acquisition Act are to be applied. It is invoking this clause that the respondent/UOI resumed part of the land. As is a normal and natural reaction of all such persons to resist these acquisitions as nobody wants to be deprived of land in ones possession, the appellant herein along with other persons in this area whose lands were sought to be taken over, filed Civil Writ Petition in this Court in the year 2002. The main argument of the appellant and others, in the said writ petitions, was that part of area from the residence/shops of these petitioners was sought to be taken over, the remaining property in their possession would become unfit for carrying out the business/residential purposes. The writ petitions were disposed of vide judgment dated 23.9.2002 directing the Union of India to pass a speaking order on the representations of the appellants and others against the notices to them for taking possession of those areas. Personal hearing was given to these persons and orders dated 7.10.2002 were passed rejecting their contentions. These orders were passed by Dy. L&DO, who also determined the amount of compensation at Rs. 6,930/- per sq. meter for all such persons, including the appellant. The land of the appellant, which was sought to be resumed, was 59.45 sq. meter and therefore, the appellant was offered compensation of Rs. 4,11,988/-. The appellant thereafter filed suit in this High Court seeking declaration and injunction which was transferred to the District Court on enhancement of its pecuniary jurisdiction. In this suit, declaration was sought to the effect that the amount of compensation to which the appellant was entitled to in lieu part of property resumed by the defendant No. 1 be increased. Compensation was demanded at the rate of Rs. 14,490/-. In addition, the appellant also demanded further sum of Rs. 2 lakhs on account of severance of part of the property from the remaining property belonging to the appellant, demolition of building structure and loss of business. On this basis, total claim sought by the appellant was Rs. 10,61,430.50P. (Rs. 8,61,430 + Rs. 2,00,000). Relief of mandatory injunction was prayed seeking direction against the defendants to pay the aforesaid amount with interest at the rate of 6% per annum.

6. The two defendants arrayed in the suit were the Union of India and Municipal Corporation of Delhi. They contested this suit taking preliminary objection about the maintainability thereof. Two preliminary issues were framed and the learned Trial Court passed order dated 3.5.2005 dismissing the suit holding that it was not maintainable. This order was challenged by the appellant by filing RFA No. 355/2005. Other similar suits filed by other persons were also dismissed in a similar manner and they also preferred the appeals. All these appeals were decided by common judgment dated 5.5.2006. The order of the learned Trial Court impugned in these appeals was set aside and the matter remanded back to the Trial Court for fresh consideration. Such consideration was, however, to be bestowed keeping in view the following directions of the Division Bench of this Court passed in its decision dated 11.5.2006:

(a) 50% of the compensation, which has determined by the respondents, shall be paid to the appellants during the pendency of the suits.

(b) The remaining 50% compensation would not be paid to the appellants at this stage and would be paid upon the decision of the suits and in terms of the decree, which may finally be passed by the trial court.

(c) The questions whether or not the respondents are entitled to deduct unearned increase charges and whether or not the appellants are entitled to any enhanced compensation shall have to be decided after the parties have been permitted to lead evidence.

Thus, the parties would be at liberty to lead documentary and oral evidence before the trial Court on this aspect.

(d) The trial Court shall also go into the question whether the plaintiffs/appellants before this Court are liable to pay any other charges as claimed by the respondents on account of misuse or any other charges, which are covered under the lease deed executed between the parties.

(e) The question of awarding higher compensation including the maintainability of such a claim would be examined by the trial Court and the present order is without prejudice to the rights and contentions of the parties and would be of no consequence for completion of the trial and the view that the trial Court may take on the basis of such adjudication.

(f) For the reasons aforestated and the common stand taken by the parties before s, we partially allow these appeals, set aside the judgment and decree of the trial court dated 3rd May, 2005 and remand the matter back to the trial court for adjudication afresh in accordance with law on the limited aspect as aforestated. The suit of the plaintiff in regard to declaration and prohibitory injunction is dismissed as not pressed while the relief of entitlement and quantum in regard to higher compensation is remitted to the trial Court for adjudication in accordance with law. The parties would be at liberty to take up such pleas and objections as may be permissible to them in accordance with law.

7. The learned Trial Court framed as many as 12 issues. As findings on many of these issues are not under challenge, we take note of those issues only on which we have to deliberate in this appeal. These are issues No. 1, 2 and 3, which are to the following effect:

Issue No. 1 Whether the Plaintiff is entitled to claim compensation. If so, at what rate and for what area? OPP

Issue No. 2 Whether the Plaintiff is entitled to the declaration that the order dated 07.10.2002 by the Deputy L&DO to the extent that it determines the compensation at the rate of Rs. 6,930/- per sq. metre is illegal. If so, its effect? OPP

Issue No. 3 Whether the Plaintiff is entitled to claim Rs. 2 lacs on account of severance of the property from the remaining part of the property, demolition of the building structure and loss of business, as prayed for? OPP

8. Issue Nos. 1 and 2 were taken up together which have relevance to the amount of compensation payable to the appellant. Compensation was assessed at Rs. 6,930/- per sq. meter by the respondents on the ground that the area in question was residential area. The appellant was claiming compensation at the rate of Rs. 14,490/- per sq. meter on the ground that area in question is commercial area and therefore, the pre-determined rates of L&DO in respect of commercial land be applied as the yardstick while fixing the compensation.

9. There is no dispute about the two rates, namely, Rs. 6,930/- per sq. meter for residential area and Rs. 14,4,90/- per sq. meter for commercial area in the said locality. Therefore, the particular rate to be awarded to the appellant depends on the question as to whether the land reclaimed by the Government is residential or commercial.

10. The learned Trial Court has, in the impugned judgment, held it to be residential and therefore, opined that rate of Rs. 6,930/- per sq. meter awarded by the Government is proper. There is another ancillary issue of unearned increase. The appellant in this appeal and other appellants in the connected appeals have challenged this finding. On the issue No. 3 the learned Trial Court has held that because of severance of the property reclaimed by the Union, the truncated property left with the appellant has diminished in its value and utility and therefore, the claim of the appellant in the sum of Rs. 2 lakhs is allowed along with interest at the rate of 6% per annum from 12.3.2007 till realisation. The Union of India is not satisfied with the decision on this issue and therefore, counter appeals are filed by it challenging the finding on issue No. 3.

11. We take the aforesaid issues for discussion serial-wise.

Amount of Compensation payable:

12. The learned Trial Court relied upon the terms of lease deed (Ex. PW 1/1) to hold that the property in question was allotted for residential purposes. He opined that as per the lease deed, the lessee was to erect one building (single storeyed containing one residential flat or double storeyed consisting one or two residential flats) in all with a barsati on top as may be approved by the Chief Commissioner. He also observed that the lease deed provided that without the written consent of the Chief Commissioner, the lessee was not to carry on or permit to be carried on, on the said land and building erected thereon any trade or business whatsoever or use the same or permit the same to be used for any purpose other than that of a single storeyed building. He was, therefore, of the opinion that if the property in question was put to commercial use, that was contrary to the terms of the lease and if the original lease deed did not permit the property for commercial purposes without the permission of the Lesser (Union of India), the appellant could not take advantage of his own wrong by violating the terms of the lease deed and putting the property to commercial use and then claim compensation the compensation on the ground that it should be treated as commercial establishment.

13. Challenging these findings the learned Counsel for the appellant submitted that the aforesaid observations of the learned Trial Court were not in conformity with the terms of the lease deed which specifically provided that the land could be used both for residential and commercial purposes. He also pointed out that the entire area in question was commercial area and used as such by one and all with the approval of all government authorities and was even admitted by the respondent's own witness which fact has totally been ignored by the learned ADJ. He also pointed out that the appellant was successor-in-interest of the original allottee and when he applied for mutation in his favor, the L&DO itself had made the appellant pay the unearned increase treating the property in dispute to be commercial. Learned Counsel for the respondent, per contra, relied upon the reasoning given by the Trial Court and submitted that as per the lease deed, the property was meant for residential purposes and therefore, the appellant could not be given compensation treating the same to be commercial. He also submitted that in any case, since the Government was not going to put the land in question to commercial use, the appellant was not entitled to compensation on commercial rates.

14. After hearing the respective submissions and going through the record, we are of the opinion that the learned Trial Court has committed error in holding that the property in question is to be treated as residential property for the purpose of award of compensation to the appellant. No doubt, some portions of the lease deed, which is the basis of finding of the learned Trial Court, suggest what the ADJ has recorded. However, all the relevant clauses of the lease deed have to be kept in mind while deciding the nature of grant vide the said lease deed. It is not in dispute that the plot in question, which was given on 99 years lease vide lease deed Ex. PW 1/1 was situated in an industrial area as the plot No. 3/13, Industrial Area, Najafgarh Road, New Delhi. Para-1 of the lease deed contains certain covenants with which the lessee (allottee) agreed. It has 13 clauses/covenants. The covenant contained in clause No. (ii) deals with erection of the land for residential purpose, namely, permitting the lessee to erect one building single storeyed containing one residential flat or double storeyed consisting of one or two residential flats, as pointed out by the learned ADJ. Significantly, what was missed by the learned ADJ is that this clause is scored off and was, therefore, omitted as a covenant from the lease deed. No doubt, in Clauses V and VI, there is a provision that the lessee shall not erect more than the required construction which, inter alia, is provided in Clauses II, without the written permission of the Chief Commissioner. We are not even basing out conclusion entirely on the said Clauses II, which is scored out. There is sufficient evidence on record produced by the appellant to show that from the very beginning the property was put to commercial use, which was permitted by the respondents as well. Most relevant and decisive consideration is the treatment of this property as commercial by the respondents themselves. At the time of mutation of the property in favor of the appellant the L&DO had made demand of unearned increase at the rate of Rs. 14,4,90/- treating the property in dispute to be commercial. This was admitted by the respondent's own witness Sh.M.R. Chaudhary, who is the Dy. Land and Development Officer in the L&DO (D1W1). The specific question put to him in this behalf and reply given by him is as under:

Q. Kindly See Ex. PW 1/7 and let this Court know as to what were the basis to calculate the unearned increase and at what rate it had been calculated?

Ans. The unearned increase had been calculated at the rate of Rs. 14,490/- per square meter. In 1999, this was the rate per square meter for commercial properties in the area.

It is correct that in this case, the demand of unearned increase by the department for the purpose of mutation, had been made at the rate of Rs. 14,490/- treating the property in dispute to be commercial.

In 2002, the rate of unearned increase of the commercial properties in the area was the same i.e. Rs. 14,490/- per square meter. I would like to add that it was the rate per square meter in the area for commercial properties, as per the government.

15. We also note from the record that after notice dated 6.9.2002 issued by the L&DO to the appellant expressing its intention to reclaim the aforesaid part of the land, which was required for public purpose and asking him to hand over peaceful possession, the L&DO has processed the case for computing the compensation. Noting dated 20.11.2002 in this behalf was produced as Ex. PW 1/3. In this proposal, reference was made to two letters of the L&DO, one of which was dated December 1/6, 1975 as per which, unearned increase were to be calculated on residential rates fixed in the area. Other letter was dated August 8, 1986 regarding fixation of land values in respect of industrial plots for the purpose of calculation of unearned increase and damages as per which, it was to be on the basis of commercial rates in the said area. In the proposal, therefore, though reference was made to both the letters, it was mentioned that the compensation should be at residential rates not on the ground that it was residential but only because of the reason that these properties are being resumed for a public purpose. Therefore, it was never pleaded by the respondent that the property was residential. Rather, note proceeds on the basis that it was commercial. But rational given for payment of compensation at rates meant for residential property was that it was required for public purpose. That would hardly be a ground for payment of compensation, more so when while charging unearned increase from the appellant, the respondents had treated the area as commercial and applied the rates as mentioned in the letter dated August 8, 1986.

16. Learned Counsel for the Union of India could not dispute that since beginning, all these appellants are putting the land in question for commercial use. It has also come on record that the L&DO itself treated it as commercial land because of which it charged from the appellant unearned increase applying commercial rates when land was mutated in favor of the appellant. It is not to be lost sight of that we are concerned with the payment of compensation on resumption of land by the L&DO and to determine the compensation, one has to look into these aspects which amply demonstrate that even the respondents have been accepting the position that the land was meant and used for commercial purposes. The respondents cannot have different yardsticks, i.e. when it comes to claiming unearned increase, it would charge the same from the appellant at the rates prescribed for commercial purposes and when there is an obligation to pay the compensation, it would treat the land as residential and pay the compensation at the rates prescribed for residential land. We, thus, hold that the land in question resumed by the respondent was of commercial nature and the compensation should have been awarded at the rate of Rs. 14,490/-.

17. Whether on this compensation the L&DO is entitled to adjust 50% on the ground that it is unearned increase is the next question. Clauses xi and xii of the covenants in the lease deed are referred to by the learned Counsel for the appellant to contend that no such payment is to be made. These clauses provide as under:

xi) The lessee and his successors and assignees shall on the determination of the lease on the expiry of the period of 99 years yield up the demised premises with all buildings erected thereon and landlords fixtures thereto, provided that the Lesser shall pay to the lessee the value of the said buildings and fixtures at the date of determination of the tenancy, such value to be determined in the absence of agreement, by a sole arbitrator agreed upon by both the parties or in the absence of such agreement by two arbitrators, one to be appointed by each party. The provisions of the Arbitration Act, 1940, and any statutory modification thereof shall apply to any such arbitration. The Lesser may however renew the lease of the land after the expiry of 99 years on such terms and conditions as considered necessary by the Lesser;

(xii) if during the period of the lease the premises are required for a public or for any administrative purpose by the Lesser the Lesser shall at the expiry of a notice of fifteen days to the effect that the said premises are required for such purpose to be served upon the Lessee by an officer appointed by the Lesser in this behalf, be at liberty to take possession of the land together with all buildings, structures and appurtenances. The lessee shall be entitled to compensation in respect of the land, building and structures. The compensation payable under this clause shall, in case of dispute, be determined by the Lesser or by such officer as he may appoint for the purpose, as nearly as may be, in accordance with the provisions of the Land Acquisition Act or regulations for the time being in force relating to the same and the decision of the Lesser or such officer shall be final and conclusive.

18. Submission was that on the determination of lease, no unearned increase is payable and resumption of the part of land amounts to determination of lease of the said area of land. These clauses, however, have no direct application. The specific answer is provided by the Supreme Court in the case of Inder Prashad v. Union of India and Ors. . That was also a case where the land was given to the lessee on 99 years lease and the same was acquired by the Government. Question which arose for consideration was as to whether the compensation is to be apportioned between the Lesser and the lessee. On the premise that Government was the owner of the land which were given only on lease basis to the lessee and the lessee was owner of the superstructure, the compensation awarded had to be apportioned between the Lesser and the lessee. In that case, the High Court had apportioned the compensation payable to the lessee at 75% and to the Lesser at 25%, which was upheld by the Supreme Court. Following this yardstick, we are of the opinion that though not only ground of unearned increase but otherwise the Government shall be entitled to adjust 25% of the aforesaid compensation to be worked out at commercial rates.

Re : DAMAGES

19. Coming to the issue of damages of Rs. 2 lakhs, we find that this claim was based on three factors, namely, (a) severance of a part of land from the larger chunk thereby diminishing the utility of the remainder with the appellant; (b) damages to the property remaining in the share of the appellant because of demolition of the part property land whereof was resumed by the respondent; (c) loss of future prospects in the business because of reduced area available.

20. The learned ADJ has granted the damages of Rs. 2 lakhs in lump sum for severance of the property. The objection of the Union of India is that no basis for working out the compensation is given and there was no material produced by the appellant on the basis of which the aforesaid amount could be computed. That be so, still it cannot be disputed that because of severance of a part of land, the value of the remainder land in possession of the appellant has diminished. There may be some damage to the portion in occupation of the appellant as a result of part demolition of the property. It can also be inferred that when the structure is constructed on the land available at the particular time of construction, the architect would take into consideration the entire land available and plan out the construction on that basis keeping in view the necessity of the person, who is constructing the property. If abruptly a part thereof is taken away, it may affect the whole plan adversely, result whereof would be that the remainder may not be put to its optimum use for which the property was desired to be put as per the original plan. Once we keep the aforesaid consideration in mind, award of compensation of Rs. 2 lakhs does not appear to be unreasonable or excessive. We do not intend to interfere with the findings of the learned Trial Court on issue No. 3.

21. The upshot of the aforesaid discussion would be to dispose of these appeals by the appellants as well as the Union of India and modify the decree passed by the learned Trial Court as under:

On issues No. 1 and 2 it is held that the appellants/lessees whose lands are resumed by the Government shall be entitled to compensation at the rate of Rs. 14,490- and not Rs. 6,930/- per sq. meter. However, the L&DO shall be entitled to apportion 25% of this compensation. On the compensation payable in this manner, the appellants shall be entitled to interest at the rate of 6% per annum from 12.3.2007 till realisation. The compensation of Rs. 2 lakhs as awarded shall remain the same. Amended decrees shall be prepared accordingly.

RFA No. 152/2007

22. Amit Chand Khosla is the appellant in this case, who has filed the suit with similar reliefs as were prayed by the other plaintiffs, including the plaintiff in RFA No. 154/2007 facts whereof are taken note of in detail above. His suit, however, has been dismissed on the ground that he had no locus standi to file the suit. Issue No. 6 framed to this effect is decided against him. The learned trial court has noted that Chaman Lal and Madan Lal were the original allottees. The appellant had purchased the property in dispute in 1987, which was a constructed property. However, the appellant could not produce any sale deed of the property in dispute in his favor. He had not issued any notice to the respondents before instituting the suit. He had even sold the property in dispute on 29.9.1999 as per his own deposition which fact he had not disclosed in the plaint or affidavit. The person who purchased the property in 1999 was not before the court. After sale of the property the appellant could not have filed the suit. The submission of the learned Counsel for the appellant was that the learned trial court ignored the fact that both in the written statement and the cross-examination of D1 W1, i.e. the Deputy L&DO, it was admitted that the notice for resumption was given to the appellant and also that possession of the property in question was taken from the appellant. Further, no one else except the appellant had filed claim for compensation. This plea, however, would be of no avail to the appellant in view of the appellant's own admission that the property in question had been sold by the appellant to another person on 29.9.1999. Thus, the appellant ceased to be the owner of the property in 1999. The action for resumption of the property was taken thereafter. We are, therefore, of the opinion that the learned trial court has rightly held that the appellant has no locus standi to file the suit. This appeal is accordingly dismissed.