M/s. Mumbai Nasik Express Way Limited v. Trambak Parbat Chavan

1. Heard Mr. Chamboowala, learned Advocate for Applicant and Mr. Deshmukh, learned Advocate for Respondent.

2. The principal question for determination in the present Second Appeal raised by Appellant is:- "Whether on the date of publication of declaration / notification under Section 3-D of the National Highways Act, 1956 (for short "the said Act") the land acquired would vest in the Central Government from all encumbrances and completely extinguish the right of the owner of the said land. Once this question is answered all other consequential issues, inter alia, relating to possession, receipt of compensation will stand answered accordingly.

3. Some brief facts relevant for the purpose of adjudication of aforementioned question of law raised by Appellant are as follows:-

3.1. Appellant is the original Defendant. Respondent is the original Plaintiff. Parties shall be referred to as "Plaintiff" and "Defendant" for the sake of convenience. Plaintiff is / was owner of the suit property admeasuring 12R out of area of 48R comprised in land bearing Survey No. 217/1 situated at Village Ghoti Budruk, Tal. Igatpuri, Dist. Nashik, hereinafter referred to as the "suit property".

3.2. On 24.12.2008 Plaintiff executed a lease agreement with Defendant-Company for a period of 3 years and handed over possession of the suit property to Defendant. In lieu thereof Defendant was to pay monthly rental compensation of Rs. 18,000/- to Plaintiff. Principal terms and conditions of the lease agreement were to the effect that the suit property was leased to Defendant for construction of administrative building and other structures for operation of Toll Plaza and necessary permission and expenses were to be borne by the Defendant. In Clause (4) of the lease agreement it was stated that suit property was proposed to be acquired by the National Highway Authority of India (for short "NHAI") for construction of highway and therefore if so acquired then Plaintiff shall retain right to accept the entire compensation from the Statutory Authorities being owner of the suit property. In clause (6) it was stated that once so acquired the Plaintiff will not claim the lease rental from Defendant on and from the date he receives the compensation from NHAI for acquisition. In this background pursuant to execution of lease agreement and during its tenure Notification under Section 3- D dated 12.01.2010 was issued by Central Government for acquisition of the suit property. All steps prior to issuance of Notification under Section 3-D were admittedly complied with. There is no dispute about these facts.

3.3. According to Defendant on 12.01.2020 Plaintiff's name was deleted from the revenue record of the suit property and name of NHAI was mutated therein. Defendant has placed possession receipt dated 19.04.2010 on record wherein name of the Plaintiff is not reflected. Defendant has relied upon letter dated 21.04.2010 issued by Collector to Plaintiff notifying the above fact. Statutory Award under Section 11 of the said Land Acquisition Act, 1894 was declared on 02.12.2010 since procedure for acquisition under the Land Acquisition Act is followed. On 07.02.2011 letter was issued by NHAI to Tahsildar, Igatpuri intimating deposit of compensation amount of R.

1.10 crore (approximately) under the Award in respect of acquisition of the suit property as also other land. The tenure of the lease agreement was from 24.12.2008 to 23.11.2011. After acquisition took place, Petitioner and other land owners filed several Writ Petitions in this Court seeking solatium and interest as per law. By common order dated 08.04.2025 the Petitions were disposed of giving directions to NHAI to pay solatium and interest to the Claimants / Owners in accordance with law. Thus acquisition is completed which is clearly gathered from the above order. According to Plaintiff tenure of lease as per the lease agreement ended on 23.11.2012 and he issued notice to Defendant to handover physical possession back to Plaintiff. Defendant did not comply but addressed letter dated 22.12.2011 to Plaintiff seeking two months extension of time for handing over possession and committed to pay Rs. 50,000/- per month to Plaintiff as compensation for those two months at that time. After receiving compensation for two months, Defendant did not handover the possession, hence on 12.03.2012 Plaintiff issued second legal notice to Defendant seeking possession of suit property. Defendant did not oblige leading to Plaintiff filing suit proceeding i.e. RCS No. 172/2012 in the Court of Civil Judge (Junior Division), Igatpuri seeking possession and injunction against the Defendant. Plaintiff himself deposed whereas on behalf of Defendant two witnesses deposed, viz. Mr. Ramanamurti - employee of Defendant and Mr. Sanjay Paithankar employee of NHAI. By judgment dated 21.11.2014, Suit was dismissed. Being aggrieved, Plaintiff filed RCA No. 53/2015 which was allowed by virtue of the impugned judgment dated 16.02.2015. Appellate Court set aside judgment of Trial Court and decreed the Suit in favour of Plaintiff and Defendant was directed to handover possession of suit property to Plaintiff on or before 16.03.2018 and Plaintiff was entitled to recover compensation @ Rs. 50,000/- per month from 23.02.2012 till date of actual return of possession of the suit property from Defendant. Defendant being aggrieved with the judgment in Appeal has filed Second Appeal.

4. Mr. Chamboowala, learned Advocate for Defendant would submit that once Notification of declaration of acquisition under Section 3-D of the said Act is published which has been so done in the present case on 12.01.2010, all rights of original owner i.e. Plaintiff in the suit property stood extinguished on the premise that the acquired land / property vested in the Central Government. He would draw my attention to the provisions of Section 3-D of the said Act and more specifically sub-clause (2) thereof to contend that on publication of declaration under sub-section (1), the acquired land mandatorily vests absolutely in the Central Government free from all encumbrances. Thus he would submit that once this is the position in law and admittedly when on 12.01.2010 Notification of declaration of acquisition under Section 3-D is published qua the suit property, the suit property vests in the Central Government on and from that date. He would submit that as a consequence thereof any right that may be accrue to Plaintiff by virtue of his ownership in the suit property or by virtue of the lease agreement would automatically stand terminated on 12.01.2010. He would submit that once the owner's right no longer subsists in the acquired land on publication of Notification under Section 3-D, the owner / Plaintiff in the facts and circumstances of the present case cannot assert his right in respect of the suit property for seeking possession of the same from the Defendant under the lease deed.

4.1. He would vehemently argue that vesting of acquired property under the aforesaid provision is free from all encumbrances and in the present case it would mean that the subsisting lease between Plaintiff and Defendant, the tenure of which preceded and succeeded the date of declaration under Section 3-D would automatically come to an end on 12.11.2010 as agreed by the terms of the lease. He would submit that merely because Defendant agreed to pay enhanced rental compensation of Rs. 50,000/- for two months after the tenure of the lease ended on 23.11.2011 for the next two months extension period does not give any legal right to the Plaintiff to seek enhanced compensation either at that rate or any other rate because ownership right of Plaintiff has come to an end in the suit property and there cannot be any estoppel against the Defendant for having agreed to pay Rs. 50,000/- as compensation per month for two months after the lease period ended.

4.2. As regard to issue of possession he would submit that possession receipt dated 19.04.2010 has been placed on record. He would candidly in his usual fairness agree that name of the Plaintiff is not reflected in the possession receipt. However he would submit that in view of the legal and binding effect of the provisions of Section 3-D applicable to the suit property, the admission of Defendant to pay enhanced rental compensation of Rs. 50,000/- per month for seeking extension of two months cannot be held valid as it is against the legal provisions. He would invite my attention to the operative part of the impugned judgment and submit that direction given to the Defendant to handover possession of the suit property which has already been acquired to the Plaintiff in the facts of the present case is incorrect and illegal and has no force in law. He is particularly aggrieved with the directions contained in operative clause (5) of the impugned judgment which entitles Plaintiff to recover compensation @ Rs. 50,000/- per month from Defendant from 23.02.2012 till the date of actual recovery of possession since Plaintiff cannot be entitled to the same as he has already received compensation against acquisition of the Suit property. He would submit that such a direction cannot be given since all rights of Plaintiff in the suit property stood extinguished in view of the admission by Plaintiff about not only being aware of passing of the Award but no other material being placed on record to show that the acquisition was stayed by any competent Court. Rather he would submit that the acquisition is completed. Hence he would persuade the Court to interfere with the findings of the First Appellate Court on the basis of interpretation of Section 3-D of the said Act and its application to the suit property in the present case.

5. PER CONTRA, Mr. Deshmukh, learned Advocate for Plaintiff who is the Respondent in the present Appeal would however contend to the contrary. He would submit that Plaintiff has not received possession pursuant to determination of the lease either after the tenure of three years got over on 23.11.2011 and even after extension period having expired on 23.01.2011. He would submit that insofar as the lease is concerned there is privity of contract with Defendant only and once the lease period is determined including the extension period of two months thereafter, Defendant has no right whatsoever in law to hold on to the suit property. He would submit that learned Appellate Court has therefore correctly decreed that Defendant is required to handover possession of the suit property to Plaintiff and has no right whatsoever to continue holding of the suit property and it has declared Defendant to be a tenant holding over and therefore liable for payment of compensation @ Rs. 50,000/- per month for possession of the suit property till date. He would therefore persuade the Court to uphold the impugned order and dismiss the Second Appeal filed by Defendant.

5.1. He would submit that the lease agreement came to an end on 23.12.2011 by efflux of time. Hence all the rights, title and interest of the lessee i.e Defendant came to an end. He would submit that the lease agreement now does not subsist. Hence Clause (6) thereof will not govern the rights of the parties. He would submit that after determination of the lease deed and its tenure the lessee i.e. Defendant is a 'tenant at sufferance' and he ought to have delivered possession to the Plaintiff after determination of the lease deed. He would submit that therefore Plaintiff filed suit for recovery of compensation and possession. He would submit that hence the substantial question of law is required to be decided in favour of the Defendant and the lis before the Court is not whether Defendant is entitled to recover the lease amount as per Clause (6) of the lease agreement but for recovery of compensation and possession of suit property. He would submit that condition No.6 reads as under, "The lessor further declares that he/she will not claim any lease rent from the date he/she receives the compensation from the National Highways Authority of India or any other concerned authorities". He would invite my attention to the 7/12 extract ( at Page Nos.39) in which it is mentioned that an area of 100 square meters only is acquired for NHAI however the area leased out is 1200 square meters. He would invite my attention on (Page No.21 Compilation) to the Mutation at Serial No.5, of Survey No.217/ 1 and the acquired area being only 100 square meters. He would submit that in the written statement ( at Page No.55) in para 16, it is specifically admitted that the entire area of the land is 1200 sq meters and the possession receipt and 7/12 extract, mutation record etc shows that acquired land for NHAI is only 100 sq meters.

5.2. He would submit that the entire leased Suit property has not been acquired and as per the lease condition compensation is not accepted by the Plaintiff till date. He would submit that if acquisition is of only 100 square meters for NHAI out of leased 1200 square meters then the Plaintiff landowner cannot be deprived of his right and enjoyment. He would submit that Defendant is a commercial company which has made profit out of its commercial activities and is utilizing the suit property and the Plaintiff is entitled for compensation as well as possession in such facts. He has placed reliance on the decision of the Supreme Court in the case of Sheela Nagori v. Kantial Baldota[1] wherein it is observed that the landlord can seek possession of the property from the tenant even after acquisition of the land. He would submit that Plaintiff has not handed over possession of acquired land to NHAI. Further he would submit that possession of other lands notified in the notification of NHAI has also not been taken over by NHAI and all other land owner are using their properties.

5.3. He would submit that the Lessee cannot take the defense for not returning possession on the ground of acquisition of the suit property. He would submit that the witness of the National Highway Authority himself has admitted and accepted that possession is not taken from Plaintiff and compensation is not paid to Plaintiff. He would submit that Defendant has not come with the case that NHAI has taken possession from Plaintiff or leasehold rights are attorned in favour of NHAI. He would submit that learned Appellate Court has taken into consideration deposition of DW-1 and DW-2 and rightly come to the conclusion in paragraph No. 20 and 21 holding that from the evidence it is not clear whether the NHAI has got possession and admittedly the Plaintiff has not accepted and received the compensation amount.

6. I have heard Mr. Chamboowala, learned Advocate for Applicant and Ms. Deshmukh, learned Advocate for Defendant and perused the record of the case with their able assistance. Submissions made by both Advocates at the bar have received due consideration of the Court.