Acquisition Of Building Alone Without Underlying Land Permissible When State Has Ownership Over The Land: SC [Read Judgment]

The state can proceed to acquire only the buildings existing on the land under the Land Acquisition Act, without acquiring the underlying land, when the state otherwise has ownership rights over the land. This was held by the Supreme Court while allowing the appeals filed by Maharashtra, enabling the government to proceed to compulsorily acquire the buildings under the occupation of M/s Reliance Industries Ltd, and M/s Express Papers. In both cases, the owners of buildings were not the owners of the land; the ownership of land belonged to the state.

The acquisition proceedings initiated by the state under the Land Acquisition Act were held to be unsustainable by the Bombay High Court. The high court held that the definition of “land” under Section 3(a) of the Act is in inclusive one, including building, and hence, there could not be any acquisition proceeding only for the building, without covering the underlying land. According to the high court, the dual ownership of building and land does not permit the acquisition of a limited interest covering the building alone.

Whether definition of “land” includes “building”

The Supreme Court agreed with the high court on the proposition that the definition of ‘land’ under the Act includes benefits arising out of land, and things attached to the earth or permanently fastened to anything attached to the earth. The court embarked upon an interpretative exercise of the term “includes” in Section 3(a). It was observed that when legislatures resort to inclusive definition i.e. to enlarge the meaning of words or phrases so as to take in the ordinary, popular and natural sense of the words depending on the context by process of enlarging the definition may even become exhaustive. Hence, it was interpreted that building is also included in the definition of land, and that there can be acquisition proceedings for building.

Whether state can acquire private rights on its own land using Land Acquisition Act

While the above proposition was advanced by the high court judgment as well, the disagreement of the Supreme Court with the high court judgment emanated primarily from the particular fact situation of the case –the state itself was the owner of the land, in which the buildings of Reliance and Express Papers were situated. Should the state acquire its own right and interest in the land, in the process of acquiring other private rights created on the land? The court had to deal with this issue.  In this issue, the Supreme Court was guided by its precedent in Collector of Bombay vs Nusserwanji Rattanji Mistri and Ors, AIR 1955 SC 298.  It was held therein that if the government has itself an interest in the land it is only to acquire other interest outstanding therein, the government interest cannot be acquired under the Act though an investigation can be made of such interest, but that would not make the subject of acquisition.

The private respondents had relied upon certain decisions of the High Court which had held that the Land Acquisition Act cannot be used to acquire residue private rights on a land, when government itself was the owner of a land (Dasarath Sahu & Ors. v. Secy. of State, AIR 1916 Pat. 330; Makhan Lal & Ors. v. Secy. of State, AIR 1934 All. 260). The Supreme Court overruled those decisions in the light of the precedent in Nusserwanji Mistri (supra).

Applicability of Sec. 49 of Land Acquisition Act

Section 49 of the Land Acquisition Act attempts to provide an equitable relief to a private owner, when only a portion of his land or building is acquired. In such circumstances, the owner can demand the government to acquire the whole of the building or land, if the partial acquisition leaves the property or the building redundant, and in case of such a demand, the government is bound to acquire the whole of the building or land, regardless of the fact that it would be in excess of the requirement of the notified public purpose.

The court considered the applicability of Section 49 in the instant case. But here, the land is under the ownership of government; the ownership of private respondents was limited only to the building.  The whole of the building was notified for acquisition. Since the owners were notified for acquisition, there was no question of applicability of Section 49, especially so as their ownership did not extend to the underlying land.

The court also rejected the arguments based on violation of Article 300A of the Constitution, holding that deprivation of property in the instant case was in accordance with procedure established by law.  In that context, it was observed as follows: In case the building or portion is acquired without acquiring the underlying land, there is no question of overreach of the State’s power to the eminent domain. Article 300A interdict taking of the property for a public purpose without compensating the owner for its loss. In case, entire ownership of the land does not lie with the owner only the right, which is capable of being acquired, would be acquired, not something which is non-existent. The building or part can be acquired and there is no question of acquisition of the land in such cases. In adjudication of the compensation as per the provisions of Section 23, the State is not depriving the respondents of their property. There is acquisition of land by fair procedure along with reasonable compensation.