Compulsory acquisition compensation may cover possessory and equitable interests, with rough apportionment allowed when exact valuation is impracticable.
In compulsory acquisition, the expression "person interested" extends beyond legal title to include a transferee in possession under an agreement to lease and a sub-lessee claiming under him, where possession and rights are protected by part performance and remain unfrustrated on the relevant date. Those possessory and equitable interests are compensable and entitled to apportionment. Where the competing interests cannot be valued with precision, compensation may be divided by a practical and equitable rough apportionment that reflects the comparative value of the extinguished rights. An artificial capitalisation and reversion approach was rejected as unrealistic, and the trees were treated as a separate component for allocation.
Issues: (i) whether a transferee in possession under an agreement to lease, and a sub-lessee claiming under him, were persons interested in the compensation payable on compulsory acquisition and entitled to apportionment; (ii) how the compensation was to be apportioned among the claimants where precise valuation of their respective interests was not practicable.
Issue (i): whether a transferee in possession under an agreement to lease, and a sub-lessee claiming under him, were persons interested in the compensation payable on compulsory acquisition and entitled to apportionment
Analysis: The expression person interested in the Land Acquisition Act was held to include not only persons with a legal or proprietary estate in the land but also persons who had a right or claim to the land or to the compensation payable on acquisition. A transferee who had taken possession under an agreement to lease and who was ready and willing to perform the contract was protected by part performance under Section 53A of the Transfer of Property Act, and the protection extended to persons claiming under him. The absence of a registered lease did not defeat the right to remain in possession or the corresponding right to claim compensation when compulsory acquisition extinguished that right. The court also held that frustration or abandonment of the lease agreement was not established on the facts, and the rights existing on the date of notification attached to the compensation.
Conclusion: The second and third claimants were persons interested and were entitled to claim apportionment of the compensation.
Issue (ii): how the compensation was to be apportioned among the claimants where precise valuation of their respective interests was not practicable
Analysis: The court held that compensation must be distributed so as to reflect, as nearly as possible, the value of the interests extinguished by acquisition. Where the competing rights, restrictions, covenants, options and liabilities could not be valued with precision, the court could adopt a practical and equitable method of rough apportionment. The method based on an artificial capitalisation and reversion calculation was rejected as unrealistic. In the circumstances, the court preferred a proportionate division based on the comparative value of the interests, and also recognised that the first claimant was separately entitled to the amount attributable to the trees, with the remaining value to be shared between the derivative claimants.
Conclusion: The compensation was to be apportioned between the first and second claimants in the ratio of 10 annas to 6 annas, and the balance relating to the trees was to be shared as directed.
Final Conclusion: The judgment affirmed the compensability of equitable and possessory interests under acquisition law and applied a practical, proportionate method of apportionment where exact valuation was not possible.
Ratio Decidendi: For purposes of compulsory acquisition, the right to compensation is not confined to holders of legal title; any person whose possessory or equitable right in the land is extinguished and who is protected by part performance or otherwise has a legally cognisable interest entitled to apportionment, and where such interests cannot be precisely valued the court may adopt an equitable rough apportionment.
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