Supreme Court of India

THE GOVT. OF ANDHRA PRADESHversusH.E.H., THE NIZAM, HYDERABAD.

Citation: 1996 INSC 426
Decided: 22 March 1996
Disposal: Appeal(s) allowed
Bench: K RAMASWAMY

Holding

When vacant land is declared excess under the Urban Land Ceiling and Regulation Act, it vests in the State and need not be acquired under the Land Acquisition Act, but if the State has already permitted acquisition under that Act it must determine compensation under the Land Acquisition Act.

Summary

The Government of Andhra Pradesh appealed a judgment that had awarded compensation for urban land of the Nizam acquired under the Land Acquisition Act, 1894. The land lay within the Hyderabad Urban Agglomeration and had been declared excess under the Urban Land Ceiling and Regulation Act, 1976, which deemed such land vested in the State. The Supreme Court held that once land is declared excess, acquisition under the Land Acquisition Act is not required; however, because the State had earlier permitted acquisition under the Act, it could not claim the benefit of Section 11 of the Ceiling Act and thus compensation had to be fixed under the Land Acquisition Act. Considering development charges, the Court fixed compensation at Rs 8 per square yard, with a 30% solatium and interest of 9% for one year, then 15% thereafter, and denied any additional amount under Section 23(1‑A). The appeal was allowed, overturning the lower courts’ award.

Issues considered

Whether vacant land declared excess under the Urban Land Ceiling and Regulation Act, 1976 vests in the State and is exempt from acquisition under the Land Acquisition Act, 1894.
Whether compensation for such land should be determined under Section 11 of the Ceiling Act or under Section 23 of the Land Acquisition Act.
Whether the respondent is entitled to additional compensation under Section 23(1‑A) of the Land Acquisition Act.

Legislation cited

Land Acquisition Act, 1894s. 11, s. 23(1-A), s. 4, s. 6
Urban Land (Ceiling and Regulation) Act, 1976s. 10(3), s. 11, s. 3

Subjects

land acquisitionurban land ceilingvestingcompensationdevelopment chargesSection 11Section 23excess landHyderabad Urban Agglomeration

Judgment

'
!
I

A THE GOVT. OF ANDHRA PRADESH
v.
H.E.H., THE NJZAM, HYDERABAD.

MARCH 22, 1996

B [K. RAMASWAMY AND G.B. PATTANAIK, JJ.J

La11d Acquisitio11 Act, 1894:

Ss. 4, 6, 23( 1-A)-La111is falli11g withi11 Hyderabad Urban Agglomera-
C tion under Urban Land Ceiling a11d Regulation Act-Declared excess-Ac- ~
quisition of-Held, vacant land whe11 declared excess and vesti11g in State
under Ceiling Act 11eed not be acquired-However, having exempted excess
la11d from purview of Ceiling Act, State de11ied itself benefit of s.11 of Ceili11g
Act--Compensati011 to be detennined u11der Land Acquisition Act-La11d
owner himself havi11g delayed award of compe11sation 1101 elltitled to be11efit
D of s.23( 1-A)

Urba11 La11d Ceiling and Regulatio11 Act, 1978 :

S.3, 10(3)-La11ds falling within Hyderabad Urban Agglomeratio11-Ac-
E quisitio11 of u11der Land Acquisitio11 Act-Held, vacant land declared excess
·11eed 11ot be acquired by State--co111pe11satio11 to be awarded under s.11.

Certain urban lands belonging to the respondent were acquired
under the Land Acquisition Act in 1978. The respondent challenged the
acquisition by filing a writ petition in the High Court, and ultimately the
F Land Acquisition Officer made the award in June 1983 determining the
compensation at the rate of Rs. 10,000 per acre. The Reference Court
determined the compensation @ Rs. 30 per square yard which was con-
firmed by the High Court. Aggrieved, the State Government filed the
present appeal.

G It was contended for the appellant that the land in dispute fell within
the Hyderabad Urban Agglomeration covered by Urban Land Ceiling and
Regulation Act 1976, and by operation of Section 3 and of the Ceiling Act
which came into force in respect of the land in dispute on February 17,
1976. The land would be deemed to have been vested in the State and as
H such the courts below had no jurisdiction to determine the compensation
772
\
GOVT. OF AP. v. H.E.H. THE NIZAM, HYDERABAD 773

under the Land Acquisition Act. It was also contended that the Reference A
Court and the High Court erred in determining the value of the land @
35 per sq. yard and in awarding the compensation at the rate of Rs. 30 per
sq. yard inasmuch as the market rate of the lands sold at the relevant time
was Rs. 6 per square yard only and the remaining price of Rs. 29 was for
development.
B
Allowing the appeal, this Court

HELD : 1.1. When the vacant land is declared excess under the
Urban Land Ceiling and Regulation Act, 1976 it is not necessary for the
State to acquire under the Land Acquisition Act, the excess vacant land C
vested in it. [780-F]

Maharao Sahib Sri Bhim Singhji etc. etc. v. Union of India & Ors. etc.
etc., [1985] Supp. 1 SCR 862, Union of India v. Va//uri Basavaiah Chaud-
ha1y, [1979] 3 SCR 892, State of Gujarat v. Parashottamdas Ramdas, [1988]
1 SCR 997 and Dattatraya Shankarbhat Ambalgi & Ors. v. State of D
Maharashtra & Ors., AIR (1989) SC 1796 relied on.

y 1.2. The vesting of excess land in the State takes effect from the date
of publication of notification under sub-section (3) of s. 10 of the Ceiling
Act in the State Gazette' with effect from the date specified therein. The
competent authority by notification under Section 10(3) of the Ceiling Act E
published in the State Gazette may declare that the excess land published
under sub-section (1) shall be deemed to have been acquired by the State
Government with effect from the date specified in the declaration and such
land shall 'be deemed to have vested absolutely in the State Government
free from all encumbrances with effect from the date so specified". The F
word "deemed" is used to give effect to the operation of Section 3 from the
date the Act was brought into force. The deemed vesting under Section
, 10(3) would date back to 7.2.1976 and the date specified under Section
10(3). [779-C; 778-E-F]

Vattichernkurn Village Panchayat v. Nori Venkatarama Deekshithulu & G
01~., [1991] Supp. 2 SCC 228 and Consolidate Coffee Ltd. & Anr. etc. v.
Coffee Board Bangalore etc. etc., [1980] 3 SCR 625, referred to.

1.3. Ju the instant case the State acquired absolute right, title and
interest in the excess urban vacant land from the date of the publication H
774 SUPREME COURT REPORTS [1996] 3 S.C.R.

A of the notification under Section 10(3) of the Ceiling Act and from that
date viz February 28, 1983 the State Government became absolute owner
of the excess vacant land free from all encumbrances. (779-D]

1.4. However, the Government by GOMs. No. 1552/MA dated May
20, 1981, had permitted RUDA to acquire the surplus land under the
B provisions of the Land Ac11uisition Act, and as such, having exempted the
excess vacant lands from the purview of the Ceiling Act, the appellant had
denied to itself the benefit of paying compensation under section 11 of the
Ceiling Act. Resultantly, the appellant would determine the compensation
under the Land Acquisition Act. (780-F·G]
c State of M.P. v. Surendra Kumar & Anr., (1995] 2 SCC 627, referred to.

2.1. Since the lands required development and there is evidence show·
ing tentative developmental charges of Rs. 29 per sq. yd. incurred in 1975·
76, the respondent is entitled to compensation @ Rs. 8 per sq. yd. with a
D statutory rate of solatium on the enhanced compensation @ 30% and 9%
interest for one year from the date of taking possession, i.e. June 2, 1984 and
after expiry of one year@ 15% till the date of deposit. (781-D-E]

2.2. The respondent is not entitled to additional amount under
Section 23(1-A) as he had filed the writ petition in the High Court and kept
E the matter pending till the Amendment Act became operative. (781 ·E·F]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5083 of
1996.

From the Judgment and Order dated 11.11.92 of the Andhra Pradesh
F High Court in AS. No. 2470 of 1986. *
G. Prabhakar for the Appellants.

K. Madhava Reddy, Prakash Reddy and Mrs. D. Bharathi for the
Respondents.
G
The Judgment of the Court was delivered by

K. RAMASWAMY, J. Leave granted.

This appeal by special leave arises from the judgment and decree
H dated November 11, 1992 made in AS. No. 2470/86 by the High Court of
GOVf. OF A.P. v. H.E.H. THE NIZAM, HYDERABAD [K. RAMASWAMY, J.] 775

Andhra Pradesh. Notification under Section 4(1) of the Land Acquisition A
Act 1894 (for short, the 'Act') was published in the State Gazette on July
27, 1978 for public purpose, namely, construction of Residential-cum-Com-
mercial Complex in Saroonnagar, Phase-II in out-skirts of Hyderabad city
by the Hyderabad Urban Development Authority. The total extent of the
land notified for acquisition was 25 acres 12 gunthas. After conducting B
enquiry under Section 5A declaration under Section 6 was published on
May 1979. The respondent filed Writ Petition No. 2510/82 in the High
Court to quash the notification under Section 4(1). A learned single Judge
by Order dated June 30, 1983 directed the Land Acquisition Officer
(LAO) dther to pass an award or issue notification under Section 48
withdrawing the acquisition within a period of six weeks from that date. In C
furtherance thereof, the LAO by his award dated August 6, 1983 deter-
mined the compensation @ Rs. 10,000 per acre. On reference under
Section 18, the District Judge by his award and decree dated March 31,
· 1986 determined the compensation @ Rs. 30 per square yard: On appeal
it was confirmed by the Division Bench of the High Court. Hence this D
appeal by special leave.

It may be relevant to notice at this stage that the lands are within the
Hyderabad Urban Agglomeration covered by Urban Land Ceiling and
Regulation Act, 1976 (for short, the 'Ceiling Act') which came into force
on February 17, 1976. The respondent filed the statement under Section 6 E
thereof. By notification dated November 27, 1982, the competent authority
under the Ceiling Act issued notice under Section 9 of the Act determining
excess vacant land to be acquired by the Government. By further State
Gazette notification dated February 23, 1983 published under Section 10(3)
of the Ceiling Act the competent authority declared the acquired land F
notified on November 4, 1982 in the State Gazette under Section 10(1) of
the Act as excess land with effect from the said date to be deemed to have
acquired by and vested in the State Government and that it stood vested
absolutely in it free from all encumbrances.

Possession of the acquired land was taken on June 2, 1984 and the G
compensation of a sum of Rs. 8,43,778 was paid in From No. Con June 7,
1984.

The first contention raised by Shri Sitharamaiah, learned senior
counsel for the appellant is that by operation of Section 3 of the Ceiling H
,
r

776 SUPREME COURT REPORTS [1996] 3 S.C.R.

A Act which came into force in relation to Andhra Pradesh on February 17,
1976, no person shall be entitled "to hold" any vacant land in excess of the
ceiling limit on and and from that date. Section 4 envisages ceiling limit
and every holder of vacant land in excess of the ceiling limit shall file a
statement on or before six months from February 17, 1976, By conjoint
B operation of Section 6, Rule 3 and Form I, holder must specify vacant land
which he desires to retain within the ceiling limit. A draft statement should
be filed before competent authority who, after considering the objections
to the draft statement, makes necessary alteration in the draft statement
and prepares a final statement made under Sections 8 and 9 of the Act
giving particulars of the vacant land in excess of the ceiling limit which
C should be published under Section 10(1) of the Act. If any person inter-
ested in the vacant land makes claim under Section 10(2), the competent
authority, after considering the same will determine the nature and extent
of the right. Section 10(3) requires the competent authority to publish a
declaration that the excess vacant land shall be deemed to have been
D acquired by the Government with effect from the date specified therein
and that the same shall be deemed to have been vested in the Government
free from all encumbrances. Under Section 10(5), the competent authority
may order any person in possession of the vacant land to surrender or
deliver possession of the excess land within thirty days of service of notice.
E If he refuses, the competent authority is empowered under Section 10(6)
.to take possession by using such force as may be necessary. Section 11
envisages payment of compensation for the excess land deemed to have
been acquired. By operation of the declaration under Sections 10(3) and
10(1) referred to hereinbefore, such !arid, the subject of the acquisition is
deemed to have been vested in the State free from all encumbrances. The
F respondent/claimants are entitled only to the payment of compensation as
provided in Section 11 of the Ceiling Act. The Civil Conrt, therefore, is
devoid of jurisdiction to determine the compensation under the Act, since
the field is already occupied by the Ceiling Act. Determination of compen-
sation at the enhanced rate by the Civil Court, therefore, is clearly an error
G apparent on the face of the record. The Government, therefore, does not
have to acquire land since the land already vested in it under Section 10(3)
free from all encumbrances. The vesting shall be deemed to have taken
place from February 17, 1976, the date on which the Urban Ceiling Act
came into force. Sri Sitamaraiah also contended that the District Court and
H the High Court committed grave error in determining the market value @
GOVT. OFA.P.v. H.E.H. THENIZAM, HYDERABAD (K.RAMASWAMY,J.j 777

Rs. 35 per square yard. In Ex. Al to A4, the market rate of the lands sold A
was Rs. 6 per square yard only the remaining price of Rs. 29 was for
development. The courts below, therefore, were in error in awarding the
compensation @ Rs. 30 per square yard.

Shri K. Madhava Reddy, learned senior counsel for the respondent,
contended that the appellant having proceeded to acquire the land under B
the Act, has no power, unless the acquisition is withdrawn under Section
48, to contend that the excess vacant land under the Ceiling Act vests in
the Government. The notification pubJi,hed under Section 6 of the Act is
conclusive of the public purpose which would be crystalised by making an
award under Section 11. Compensation having been determined under C
Section 11, as directed by the High Court and possession thereof having
been taken, it is no longer open to the appellant to contend that they are
not required to pay compensation under Section 23 of the Act nor is the
respondent entitled to fall back upon Section 11 of the Ceiling Act which
is contrary to the Scheme of the Act. It cannot, therefore, be contended D
that the respondent is entitled to compensation only under Section 11 of
the Ceiling Act. He also contended that the Government that the Govern-
ment had exempted the lands from the Ceiling Act. Therefore, the High
Court was right in determining the compensation under the Act. He further
contended that the Hyderabad Urban Development Authority (for short,
'HUDA') itself had sold the lands in the neighbourhood @ Rs. 30 per E
square yard and, therefore, that would from basis for determination of the
compensation in respect of the acquired land. The reference Court, there-
fore, was right in placing reliance on that piece of evidence.

x The rival contentions give rise to the primary question : whether the F
excess vacant land covered by the Ceiling Act stood vested in the State is
liable to be acquired under the Act. ? It is seen that Section 3 in Chapter
Ill of the Ceiling Act declares that except as otherwise provided in the
Act, on and from the commencement of the Act (February 17,. 1976 in
relation to Andhra Pradesh) "no person shall be entitled to hold any vacant
land in excess of the ceiling limit'. The ceiling limit for Hyderabad Urban G
Agglomaration is 1,000 sq. meters prescribed in category 'B' of Schedule I
referred in Section 4. "Hold" means own. This expression connotes two
concepts, i.e., physical possession or legal title to the vacant lands. Both
the concepts stand attracted to the concept 'hold' under the Ceiling Act.
The owner of excess vacant land in excess of the ceiling limit is required H
778 SUPREME COURT REPORTS (1996] 3 S.C.R.

A to file a statement under Section 6 and by operation of Section 3, he ceases
to hold the said vacant land subject to the operation of the provisions of
the Ceiling Act.

Section 5 prohibits transfer of vacant land in excess of the ceiling
B limit at any time between commencement of the appointed dey and the
commencement of the Act. Section 6 enjoins the holder of the vacant land
in excess of ceiling limit to file a statement within the prescribed time in
the manner laid under the Act the rules and in the form prescribed
therefore. Section 8 enjoins the competent authority to prepare a draft
statement as regards vacant land held in excess of the ceiling limit. Section
C 9 envisages final statement after disposal of objections, if any, received in
that behalf and service of the notice in that behalf on the person concerned
as envisaged therein. Under Section 10(1), after service of the statement
under Section 9 on the concerned person, the competent authority should
cause publication of a notification in the State Gazette with particulars of
D the vacant land in excess of the ceiling limit, for information of the general
public. After considering claims, if any, laid under sub-Section (2) and
disposal thereof, the competent authority shall determine the nature and
extent of such claim and pass such orders as it deems fit. Thereafter the
competent authority by notification under Section 10(3) published in the
State Gazette may declare that the excess land published under Sub-section
E (1) shall be deemed to have been acquired by the State Government with
effect from the date specified in the declaration and such land shall "be
deemed to have vested absolutely in the State Government free from all
encumbrances with effect from the date so specified". The word "deemed"
is used to give effect to the operation of Section 3 from the date the Act
F was brought into force. In other words, the deemed vesting under Section
10(3) would date back to February 17, 1976 and the date specified under
Section 10(3). In Vattichemkum Village Panchayat v. Nori Venkatarama
Deehhithulu & Ors., (1991) Supp. 2 SCC 228 at 239 this Court in para 10
had held that the word "vest" takes varied colours from the context and
situation in which the word came to be used in the Statute. It is common
G knowledge that under the Act, the acquired lands vest in the State from
the date of taking possession under Section 16 of 17 (2). Under the land
reforms like abolition of estate and taking over thereof, the vesting takes
effect from the date of publication of the notification in the official gazette.
In Consolidate Coffee Ltd. & Anr. etc. v. Coffee Board, Bangalore etc. etc.,
H [1980] 3 SCR 625 at 645 this Court had held the word 'deemed' is used a
\
GOVT. OF A.P. v. H.E.H. TIIE NIZAM, HYDERABAD IK. RAMASWAMY, J.J 779

great deal in modern legislation in different senses and it is not that a A
deeming provision is every time made for the purpose of creating a fiction.
A deeming provision is made to include what is obvious or what is uncer-
tain or to impose for the purpose. of a statute an artificial construction of
a word or phrase that would not otherwise prevail, but in each case it would
be a question as to with what object the Legislature has made such a B
deeming provision. It would thus be seen that determination of the exce;s
ceiling land pursuant to the statement filed under Section 6 becomes
conclusive by publication of the notification under sub-Section (3) of
Section 10 and the excess lands were prohibited to be held under sub-Sec,
tion 3 on and from the date of the commencement of the Act. Such excess
'(
land shall vest in the State only from a date specified in the notification. C
The vesting under Section 10(3) takes effect from the date of publication
of the notification under sub-Section (3) of Section 10 in the State Gazette
from the date specified therein. It would thus be apparent that the State
acquired absolute right, title and interest in the excess urban vacant land
in the State from the date of the publication of the notification under D
Section 10(3) of the Ceiling Act and from February 28, 1983 that date the
State Government became absolute owner of the excess vacant land free
from all encumbrances.

The question, therefore, is : whether it is necessary for the Govern-
ment to determine compensation under Section 23 of the Ceiling Act for E
the land which already vested in it under the Ceiling Act. In Maharao Sahib
Sri Bhim Singhji etc. etc. v. Union of llldia & Ors. etc. etc., (1985] Supp. 1
SCR 862, where the constitutionality of the Ceiling Act was questioned, the
Constitution Bench had held that the primary object and purpose of the
Ceiling Act is to acquire such land as may be in excess of the ceiling limit p
with a view to prevent concentration of urban land in the hands of a few
persons and speculations and profiteering therein and also to bring about
an equitable distribution of land in urban agglomerations to subserve the
common good in furtherance of Article 39(c) and (b) respectively of the
Constitution. This view was reiterated in Union of India v. Valluri
Basavaiah Chaudhary, (1979] 3 SCR 802 and Stale of Gujarat v. Pars/IOI- G
tamdas Ramdas, (1988] 1 SCR 997. In Dattatraya Shankarohat Ambalgi &
Ors. v. State of Maharashtra & Ors., AIR (1989) SC 1796, a Bench of two
Judges of this Court had held that the land to the extent which falls within
the ceiling area stands as a class different from the land which is in excess
of the ceiling area. It is liable to be declared surplus to give effect to the H
r

780 SUPREME COURT REPORTS (1996[ 3 S.C.R.

A purpose and object envisages under the Act. The Ceiling Act is a self-con-
tained Code. As far as the acquisition of surplus of ceiling land and
payment of compensation is concerned, it is governed by the provisions of
the Ceiling Act. It was, therefore, held that it would not be necessary to
acquire the land under the Maharashtra Act No. 37 of 1966 resulting in
misuse of public funds by granting higher compensation, when the purpose
B
of acquisition could he achieved on payment of lesser amount of compen-
sation prescribed in Section 11 of the Ceiling Act. In Parsltottamdas's case
(supra), the same question had arisen. Another Bench of two Judges had
held therein at page 1007 that it is open to the State Government to
withdraw from acquisition under the Land Acquisition Act and when the
C lands under the Ceiling Act could be acquired "by "paying compensation as
provided thereunder, it would not be proper to compel the Government to
acquire them under the provisions of the Land Acquisition Act, 1894. As
already stated, the Act has the overriding effect on all other laws". Jn State
of M.P. v. Surendra Kumar&Anr., (1995[ 2 SCC 627; a Bench of two Judges
D (to which one of us, K. Ramaswamy, J., was a member) was to consider
whether it would be open to the Government to purchase the land pending
proceeding under the Ceiling Act and publication of the declaration under
Section 10(3). This Court at page 629 in para 3 had held that two courses
were open to the Government in that situation. The Government could
return the application for permission for sale; finalise the process in
E Chapter III or it could purchase the lands. It was held that there was no
prohibition for the State to purchase the property though the declaration
was not finalised.

It would, thus, be clear that when the vacant land is declared under
F the Ceiling Act, it is not necessary for the State acquire the excess vacant
land vested in it under the Act. But unfortunate to the appellant that
benefit of the declaration was unavailable for the reason that the Govern-
ment in GOMs No. 1552/MA dated May 20, 1981 had permitted HUDA
to acquire the surplus land under the provisions of the Act. In conse-
quence, having exempted the excess vacant land from the purview of the
G Ceiling A,ct, the appellant had cjenied itself of the benefit of Section 11 of
the Ceiling Act to pay compensation as prescribed thereunder. The result
is that the appellant would determine the compensation under the Land
Acquisition Act.

H The next question is : whether determination of market value at Rs.
\
GOVT. OF A.P. v. H.E.H. TIIE NIZAM, HYDERABAD [K RAMASWAMY, J.J 781

30 per sq. yd. is valid in law? The District Judge proceeded on the premise A
that the HUDA had acquired adjacent land under Act and had sold @
Rs. 35 per sq. yd. and that, therefore, the compensation claimed at Rs. 30
per square yard should be paid to the respondents. That found favour with
the High Court. It is stated in the evidence adduced on behalf of the
appellant that out of the sale consideration of Rs. 35 sq. yd., the cost of B
the land was Rs. 6 per sq. yd. and Rs. 29 was collected towards tentative
development charges. They were tentative prices fixed thereunder. In other
words, Rs. 29 was incurred towards developmental charges and Rs. 6 per
sq. yd. was the actual cost. The sales took place in the year 1976. It is seen
that the lands were being used as horse-stable. The respondent claimed
compensation @ Rs. 30 per sq. yd. It is seen that the notification under C
Section 4(1) of the Act was issued on July 27, 1978. The sales by the HUDA
of the plots of the neighbouring lands took place in the year 1976 after full
development. The lands required development. It is well-settled law that
deduction of developmental charges varies between 33, 1/3% to 65%,
depending on facts and circumstances in each case. In view of the fact that D
we have in evidence the tentative developmental charges of Rs. 29 per sq.
yd. incurred in 1975-76, taking a pragmatic view we hold that after deduct-
ing developmental charges, the respondent is entitled to compensation @
Rs. 8 per sq. yd. with a statutory rate of solatium on the enhanced
compensation @ 30% and 9% interest for one year from the date of taking
possession, i.e., June 2, 1984 and after expiry of one year, @ 15% till the E
date of deposit. The respondent is not entitled to additional amount under
Section 23 (1-A) for the reason that the respondent had filed W.P. No.
2510 of 1982 and kept the matter pending till the Amendment Act became
operative. The award could not be account of the pending proceedings in
the High Court and the same was made as per the directions of the High F
Court.

The appeal is accordingly allowed but, in the circumstances, without
costs.

R.P. Appeal allowed. G

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