[Cites 7, Cited by 0]
Madras High Court
D.Srihari Rao (Died) vs The Land Acquistion Officer, on 30 April, 2026
A.S. No. 886 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 21.11.2025
PRONOUNCED ON : 30.04.2026
CORAM:
THE HONOURABLE DR. JUSTICE A.D. MARIA CLETE
A.S. No. 886 of 2020
1.D.Srihari Rao (Died)
2.Mrs.D.Leela Devi
3.D.H.Sarath K Kumar
4.D.Venkatesh
5.D.N.Choudary
(sole appellant died.A2 to A5 are brought on record as
L.R.s of the deceased sole appellant (D.Srihari Rao)
vide court order dated 25.10.2025 made in C.M.P. Nos.
21494, 21495, 21456 of 2025 in A.S. No. 886 of 2020)
...Appellant/1st claimant/1st petitioner
Vs.
1.The Land Acquisition Officer
and the Special Tahsildar (RC)
Saidapet,
Chennai – 600 015 ...1st respondent/respondent/Referring officer
2.A.S.Rajagopal,
Defence Estate Officer,
Chennai – 600 009. ...2nd respondent/2nd claimant/2nd petitioner
1/15
https://www.mhc.tn.gov.in/judis
A.S. No. 886 of 2020
PRAYER:
Appeal Suit filed under Section 54 of the Land Acquisition Act
against the order and decree dated 25.03.2010 passed in L.A.O.P.No.353
of 2009, on the file of the Subordinate Judge at Tambaram.
For Appellant : Mr.W.M.Abdul Azeez for A2 to A5.
A1 – died.
For Respondents : Mr.G.Nanmaran, Special Government Pleader
for R1.
Mr.K.Subbu Ranga Bharathi for R2.
JUDGMENT
This appeal is preferred by the 1st claimant under Section 54 of the Land
Acquisition Act, 1894 challenging the order and decree passed by the
Subordinate Judge at Tambaram in L.A.O.P. No.353 of 2009 dated
25.03.2010 seeking enhancement of compensation.
2. For the sake of the convenience , the parties are referred to as they
were arrayed before the Trial court.
3. The brief facts leading to the appeal are as follows. The acquired
land measures 1.46 acres in Survey No. 432/1, situated at St. Thomas
Mount Village, Saidapet Taluk, Alandur, Chengalpattu District. The
property originally belonged to the Ministry of Defence, Government of
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India, and was leased by the Military Estates Office to one Sri Raja R.N.
Rao for a term of 30 years, renewable of the lease up to 90 years, under a
registered lease deed dated 09.01.1960 for the purpose of constructing a
cinema theatre. Thereafter, the original lessee, Raja R.N. Rao, transferred
his leasehold rights, together with the option of renewal up to 90 years, in
favor of the 1st claimant under a sale deed dated 30.11.1966 for a
consideration of Rs. 67,500/-. This transfer of leasehold rights was duly
intimated to the Ministry of Defence and was also accepted by them on
payment of annual rent of Rs.576 /-.
4. Subsequently, the land was acquired by the Government for the
formation of the Inner Ring Road. The notification under Section 4(1) of
the Land Acquisition Act was published on 17.07.1982. By Award No. 3
of 1986 dated 16.09.1986, the Land Acquisition Officer fixed market
value of Rs. 1021 per cent for the acquired land after deducting 20%.
Treating the claimant’s unexpired leasehold right as compensable and
reduced the leasehold value to Rs. 68.72 per cent by applying a formula
based on the unexpired portion of the initial 30-year lease term, and
determined the total compensation, inclusive of statutory additions and
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interest, at Rs. 20,418.10. Dissatisfied with the said award, the lessor and
the sub-lessee/1st claimant filed an appeal by way of a claim petition.
5. In the claim petition, the 1st claimant has stated that he is the
lessee of the acquired land situated at Military Estate Office for the
purpose of construction of cinema theatre and submitted that the land is
surrounded by commercial establishment railway station and Guindy
Industrial Estate and the amount fixed based on the sale deed of the
nearby land in S.Nos.501 and 602 dated 20.06.1981 is located quite
interior and away from the main road and in no way can be equated to the
acquired land and submits that the market value of the land on the date of
acquisition is not less than Rs.2,00,000/- per ground. It is further
contended that the land acquisition officer failed to take into
consideration that the claimant being a leasehold right holder for 90 years
is entitled for the full amount on the market value over the said land and
submits that till date he could not put up the construction of theatre due to
refusal to grant N.O.C., and thus submits that the claimant has incurred
various expenses for the same and thus sought for fixing the
compensation at Rs.23,00,000/- together with 30% solatium and inters
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and 50,000/- being damages for the delay and misrepresentation in
putting the land into use for the purpose for which it is acquired.
6. Before the trial court, on the claimant side CW1 and CW2 were
examined and marked Ex.C.1, award of the land acquisition officer and
Ex.C.2 to Ex.C.3, copies of the sale deeds of the nearby lands, Ex.C.4
lease deed dated 09.01.1960, Ex.C.5, sale deed dated 30.11.1996 and on
the respondent side RW1 were examined and marked Ex.B1, copy of the
sale deed dated 19.06.1981 and Ex.B2, village map.
7. On an appreciation of the oral and documentary evidence, the
reference court held that under Ex.C4 the lessee had a right of renewal up
to 90 years, and that such leasehold right was purchased by the first
claimant under Ex.C5. It therefore held that, in determining
compensation, due regard had to be given to both the claimant’s
subsisting leasehold interest and the future potential arising from the right
of renewal. The reference court further found that the lease commenced
on 25.08.1958 for 30 years at an annual rent of Rs.576/-, renewable at the
option of the lessee up to 90 years, and that the first claimant had
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purchased the leasehold right in 1966 for Rs.67,500/-. Though the title
vested with the Ministry of Defence, the reference court assessed the
compensation on the basis of the leasehold right and fixed its value for
the full 90-year period at Rs.67,500/-. Accordingly, it awarded
compensation of Rs.67,500/- together with 30% solatium and interest at
12% per annum from the date of publication of the Section 4(1)
notification till the date of payment.
8. Aggrieved the award, the 1st claimant has preferred the present
appeal contenting that the reference court had erroneously fixed the
compensation without taking into consideration of the oral and
documentary evidence adduced by the claimants and has not taken into
account, the potentiality of the land and future development and the land
situated at prime commercial area and has not taken into account the
various well settled judicial pronouncements relating to payment of
compensation in land acquisition act and thus sought for enhancement of
compensation.
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9. The learned counsel for the appellants submitted that as per the
Judgment of the High Court of Delhi in Union of India & Others v. Adil
Singh & Others reported in MANU/DE/0032/2013, it has been held that
when the land acquisition officer had determined the compensation based
on the Market value of the land, then the reference court need not to
determine the compensation based on the lease hold rights and further
relied on the Judgment of the Hon'ble Supreme Court in
MehrawalKhewaji Trust, Faridkot & others v. State of Punjab & others
reported in MANU/SC/0349/2012, wherein it has been held that when
the reference court was placed with several exemplars of sale of land
through sale statistics, this court has to consider and accept the highest of
the exemplars while fixing the fair compensation. It is further submitted
by the Judgment of the Hon'ble Supreme Court in Kapil Mehra v. Union
of India reported in MANU/SC/0947/2014, wherein it has been held as
to how a market value has to be determined while awarding
compensation and has relied on the Judgment of the Hon'ble Supreme
Court in A.Natesam Pillai v. Special Tahsildar Land Acquisition, Trichy
reported in MANU/SC/0590/2010, wherein it has been held that while
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determining the compensation, future potential of the land should also be
considered.
10. It is further submitted by the learned counsel for the appellants/ 1 st
claimant that as per the deposition of CW2, he has stated that the land is
surrounded by schools and colleges and an airport has also been situated
near 7 kms from the acquired land and the deposition of RW1 and CW1
who deposed about the potentiality of the lands and the expenses incurred
for putting up the construction of theatre and the value of the land would
be Rs.8 lakhs to Rs.10 lakhs per ground and it is submitted that since the
N.O.C., has not been given by the Collector, the fault of not completing
the construction of theatre cannot be fastened on the claimants. It is
further contended by the learned counsel for the appellants that the
formula adopted by the said officer has been wrongly adopted without
considering the fact that the entire lease period is for 90 years. Thus, the
learned counsel for the appellants has sought to enhance the
compensation by fixing the market value at Rs.2,00,000/- per ground as
on the date of notification with all usual benefits.
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11. The learned counsel for the respondents on the other hand
contended that the compensation fixed by the reference courtis just and
fair and relied on the Judgment of the Supreme Court of India in State of
Maharastra & Ors vs Reliance Industries Ltd. & Ors reported in
(2017) 10 SCC 713, wherein it has been held that land and building
together constitute one unit and the land on which it stands may not for
the purpose of the land acquisition act ordinarily be regarded as separate
units capable of being separately valued .
12. The learned counsel for the respondents also relied on the
Judgment of the High Court of Rajasthan at Jodhpur in the case of
National Highways Authority of India and Ors. v. Amar Granites Pvt.
Ltd., and Ors reported in 2019 Supreme (Raj) 235, wherein it has been
held that compensation becomes payable for the leasehold right or
interest held by the lessee or grantee when the land is acquired for the
public purpose.
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13. Points for consideration:
1. Whether the appellant/ 1st claimant is entitled to compensation for only
the unexpired lease period or for the entire 90-year period claimed by
him?
2. Whether the claimant is entitled to enhancement on the basis of the sale
instances relied on by him?
3. To what relief ?
Point No.1:
14. The Ministry of Defence, Government of India, through its
Military Estates Office leased the subject property to one Sri Raja R.N.
Rao for a period of 30 years, with an option of renewal up to 90 years, for
the purpose of constructing a cinema theatre. The said original lessee,
transferred his leasehold rights, together with the option of renewal up to
90 years, in favour of the first claimant under a sale deed dated
30.11.1966 for a consideration of Rs.67,500/- under due intimation to the
authorities who also accepted the same on payment of annual rent of
Rs.576/-.
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15. On acquisition of the subject property by the government , the
Land Acquisition Officer fixed the market value of the acquired land at
Rs.1,021/- per cent and, after deducting 20%, treated the claimant’s
unexpired leasehold interest of 6 years and 23 days as compensable. By
applying a formula based on the unexpired portion of the initial 30-year
lease term, the leasehold value was reduced to Rs.68.72 per cent, and the
total compensation, inclusive of statutory additions and interest, was
determined at Rs.20,418.10. However, the Reference Court fixed the
compensation at Rs.67,500/- by taking the sale consideration paid by the
first claimant for purchase of the leasehold rights as the value of
compensation for the entire 90-year lease period.
16. A perusal of Exs.C4 and C5 makes it clear that the original lease
was granted only for a period of 30 years, with a clause for renewal
thereafter. As on the date of acquisition, even the initial lease period had
not expired, and only 6 years and 23 days remained unexpired. Therefore,
the question of taking into account the renewed period, which had not
even commenced, does not arise. It is no doubt true that, upon acquisition
of land, every person interested is entitled to claim compensation. In the
present case, the first claimant, being a sub-lessee, is certainly a person
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interested in the acquired land and is entitled to compensation. However,
such entitlement is only to the extent of his unexpired leasehold interest
and not on the footing of absolute ownership, the owner of the land
admittedly being the Defence Department. The claimant cannot seek
compensation as though he had an accrued right over the entire 90-year
period. In that view, the reference court was not right in proceeding on
the basis that the claimant was entitled to compensation for the whole 90
years without deducting the period already expired.
17. Therefore, determination of compensation with reference to the
claimant’s unexpired leasehold interest alone is legally justified.
Accordingly, this point is answered.
Point No.2 & 3:
18. The contention of the 1st claimant is that compensation ought to
have been determined on the basis of the market value of the land and not
on the basis of the leasehold rights.
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19. On a perusal of Ex.C2, the sale deed dated 11.05.1982 relied on by
the claimant, this Court finds that the same is a pre-notification document
and Ex.C3, the subsequent sale deed dated 24.07.1982 at the Rs.6,060.60
per cent , being a post-notification document as on the date of the Section
4(1) notification dated 17.07.1982. Since Ex.C2 reflects a higher value,
namely Rs.6,540/- per cent, this Court is inclined to take Ex.C2 into
consideration. If the market value is taken at Rs.6,540/- per cent, after
deducting 20% and applying the formula for the unexpired lease period,
the compensation payable works out to Rs.352/- per cent, and for 146
cents, the total compensation comes to Rs.51,413/-.
20. Thus, even if the sale data relied on by the claimant is taken into
account, the result would not justify enhancement of compensation and,
on the contrary, would indicate a lesser figure than that awarded by the
reference court. Though this Court is of the view that the reference court
was not correct in valuing the leasehold right for the entire 90-year period
and fixing compensation at Rs.67,500/-, the fact remains that the
Government has not preferred any appeal or cross-objection challenging
the said award. In such circumstances, this Court is not inclined to
interfere with the judgment of the reference court to the prejudice of the
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claimant in an appeal filed by him seeking enhancement. Accordingly,
these points are answered against the claimant, and the judgment of the
reference court is confirmed.
21. In the result, the appeal is dismissed. Consequently, the order and
decree passed by the Subordinate Judge at Tambaram in L.A.O.P. No.353
of 2009 dated 25.03.2010 is confirmed. There shall be no order as to
costs. Consequently, connected miscellaneous petitions, if any, stand
closed.
30.04.2026
ay
Index:Yes/No
Speaking Order /Non-speaking order
Neutral citation:Yes/No
To
1.The Subordinate Judge at Tambaram.
2. The Section Officer,
V.R.Records,
Madras High Court.
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DR. A.D. MARIA CLETE, J
ay
PRE DELIVERY JUDGMENT
30.04.2026
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