Justice R.M. Lodha, and Justice Anil R. Dave of Supreme court of India in the case of Saraswati Devi (D) By Lr. vs Delhi Devt.Authority & Ors. Decided on 29 January, 2013,
In Sharda Devi, (2003) 3 SCC 128 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 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.
In Collector of Bombay v. Nusserwanji Rattanji Mistri [AIR 1955 SC 298] 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.”
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.
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.
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.
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 AIR 1924 Patna 362, 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.”
In Collector of Bombay v. Nusserwanji Rattanji Mistri and Others, AIR 1955 SC 298 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.
In M. Ratanchand Chordia & Ors. v. Kasim Khaleeli, AIR 1964 Madras 209 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 : “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 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. . . . . . . .”
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”.
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 Goswami6 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.
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 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 AIR 1955 SC 298 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 Devi11 does not hold to the contrary. It is so because what Sharda Devi (2003) 3 SCC 128 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.