Page 1 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.

1

Page 2 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

2

Page 3 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

3

Page 4 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

1

AIR 1965 SC 1994

2

29 (1986) DLT 246

3

1997 Rajdhani Law Reporter 101

4

Page 5 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

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

5

Page 6 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

6

Page 7 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

6

AIR (1963) Punjab 532

7

AIR (1964) Punjab 99

7

Page 8 Industries v. L.J. Johnson & Ors.

8

, Bishan Paul

1

, 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.

8

AIR 1958 SC 289

9

(1994) 5 SCC 471

10

(2005) 4 SCC 572

11

(2003) 3 SCC 128

8

Page 9 20. On behalf of the respondents, heavy reliance was placed on the decision

of this Court in Madan Lal Nangia

5

.

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

9

Page 10 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 Devi

11

. We shall first refer to the decision of this Court

in Sharda Devi

11

.

25. In Sharda Devi

11

, 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

1

Page 11 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

1

Page 12 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 Devi

11

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

1

Page 13 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

1

Page 14 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

1

Page 15 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 Industries

8

, 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

1

Page 16 granted no transfer with effect from any date whatsoever takes place and

none has yet been granted.”

29. In Bishan Paul

1

, a two-Judge Bench of this Court observed that in Bombay

Salt & Chemical Industries

8

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 Goswami

6

, 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. . . . . . . . . .”

1

Page 17 31. In Jaimal Singh

7

, 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

1

Page 18 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.

1

Page 19 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

12

AIR 1924 Patna 362

13

AIR 1955 SC 298

14

AIR 1964 Madras 209

1

Page 20 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 Goswami

6

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

2

Page 21 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 Mistri

13

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 Devi

11

does not hold to the

contrary. It is so because what Sharda Devi

11

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 Nangia

5

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 Nangia

5

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 Nangia

5

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:

2

Page 22 “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 Nangia

5

, 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.

2

Page 23 (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 Devi

11

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.

2

Page 24 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.

2