ORDER : K. Ramaswamy and N. Venkatachala, JJ. These appeals are disposed of by this common Order since a common question of law arises in them. The admitted facts are that all the appellants were perpetual lessees under contractual leases entered into prior to the coming into force of the Punjab Security of Land Tenures Act, 1953 (for short the Act) on April 15, 1953. One of the covenants in such leases provided that in the event of acquisition of the land by the Government, the lessor shall be entitled to the entire compensation for the land and the lessees shall be entitled to the value of the standing crops, trees etc. on the land. In other words, the lessors while were given the right to get compensation for the land, the lessees were given the right to get compensation for the unufructs of the land. However, the Government exercising its power of eminent domain published in the State Gazette, notification under Section 4(1) of the Land Acquisition Act, 1894 proposing acquisition of the land for a public purpose. The Collector, thereafter determined the compensation payable for the acquired land and on reference, the Civil Court enhanced that compensation. We are not concerned in these appeals with the quantum of compensation determined by the Collector under Section 11 of the Act or the Civil Court under Section 18 of the Act. When the appellants-lessees made the claim for compensation for the acquired land and usufructs therein, the stand taken by them was that they had become absolute owners of the land as well as its unufructs by operation of the Punjab Occupancy Tenants (Vesting of Proprietary Rights) Act, 1953 and as such they were entitled to the payment of the entire compensation therefor. Alternatively, it was their stand that they were entitled to share the compensation alongwith the lessors. The High Court relying on the said covenant in the lease, concluded that the lessors were entitled to the entire compensation payable for the land and that the lessees had no right whatsoever in such compensation.
Alternatively, it was their stand that they were entitled to share the compensation alongwith the lessors. The High Court relying on the said covenant in the lease, concluded that the lessors were entitled to the entire compensation payable for the land and that the lessees had no right whatsoever in such compensation. The High Court, however, made a distinction agreeing with the Civil Court, between the lessees under written lease and the lessees under oral lease, and held that the lessees under oral lease while were entitled to obtain a share of the amount of compensation, the lessees under written lease were not entitled to obtain such share. The lessor was found entitled to the payment of 20 times capitalised value of the annual rent while the lessee was found entitled to the balance of compensation. As regards written leases, it was found that the lessor was entitled to the entire compensation. Directions for payment of the compensation purporting to be under Section 30 of the Land Acquisition Act were accordingly issued. These appeals by special leave are directed against the judgment of the High Court. 2. This Court while granting leave stated thus : "Special leave granted confining to the question of apportionment of compensation between the perpetual lessee and the landlord...." 3. The question therefore, is whether the appellants, perpetual lessees, were entitled to the apportionment in the amount of compensation payable for the acquired land, and if so, at what rate. The High Court had recorded a finding in paragraph 26 of its judgment that the lessor was entitled to the portion of compensation which was 20 times the capitalised value of annual rent. That finding has become final since it has not been questioned in these appeals. Therefore, if we find that the perpetual lessees were entitled to any payment out of compensation they would be entitled to the balance amount with solatium and interest payable thereon. 4. The important point, therefore, is whether the covenants in the contractual lease bind the perpetual lessees, after coming into force of the Act. Indisputably, the object of the Act was to confer security of tenure on the lessees of agricultural lands enumerated in Section 9 of the Act. Section 8 of the Act, however, provided for the continuity of the tenure and the right to succession.
Indisputably, the object of the Act was to confer security of tenure on the lessees of agricultural lands enumerated in Section 9 of the Act. Section 8 of the Act, however, provided for the continuity of the tenure and the right to succession. Therefore, not merely the original lessees but also his heirs became entitled to continue in perpetuity as statutory lessees subject to Section 9. It is necessary to excerpt sub-section (1) of Section 9 to consider its effect. It reads : "S. 9(1). Liability of tenant to be ejected. Notwithstanding anything contained in any other law for the time being in force, no land owner shall be competent to eject a tenant except when such tenant...." 5. Therefore, when the Act has conferred on the tenant (lessee) a right to continue in possession of agricultural lands in perpetuity subject only to ejectment under Section 9, what needs to be seen in whether the rights and liabilities of the lessor under the contractual lease entered into prior to the coming into force of the Act, continue to subsist. The parties to such contractual leases, in our considered opinion no doubt were bound by the covenants in such leases and the provisions of the Transfer of Property Act till the Act had come into force, but their possession of the lands as lessees after the coming into force of the Act made them statutory tenants (lessees) under the Act, their relationship being governed by the provisions of the Act. Although in the State of Punjab and Haryana the provisions of the Transfer of Property Act per se did not apply the principles contained therein which were consistent with justice, equity and good conscience were admittedly, applicable to the agricultural leases. But, with the coming into force of the Act the contractual relationship ceased and the covenants in the contract yielded place to the rights and liabilities created thereby. The parties therefore, became entitled to work out their rights and liabilities in accordance with the provisions of the Act. When the Act has provided for security of the tenures to tenants and made such tenures perpetual subject to liability for ejectment only it is difficult to think, how the covenant in the prior contractual lease as to right to obtain entire compensation for land in the event of its acquisition could survive.
When the Act has provided for security of the tenures to tenants and made such tenures perpetual subject to liability for ejectment only it is difficult to think, how the covenant in the prior contractual lease as to right to obtain entire compensation for land in the event of its acquisition could survive. Beside, no express provision has been made in this Act to preserve the rights of the landlord under the contractual leases entered into before coming into force of the Act. When the Legislature has given protection to the tenants by enlarging their rights under its provisions in the Act and did not save by only express provision made therein the pre-existing rights or liabilities under a contractual lease entered into between the landlord and the tenant, question of enforcing the covenants in such contractual lease cannot arise. When under Section 23 of the Land Acquisition Act compensation payable for the acquired land is determined, what is the share of tenant (lessee) in such compensation has to be decided having regard to the nature of his tenure in the land and his right to enjoy the land with least chances of ejectment. Thus, after the coming into force of the Act the pre-existing rights and liabilities contracted by the landlord and the tenants ceased to operate and they came to be governed by the statutory provisions. The pre-existing liability of the tenant under the contractual lease to give up the right to claim compensation in the demised land in favour of the lessor, in the event of acquisition of that land by the State can no longer operate. The High Court, therefore, was not right in holding that the rights and obligation of parties under the contractual lease continued to operate, despite the coming into force of the Act. 6. The matter could be viewed from another angle. The perpetual lease in an encumbrance on the land - the subject of acquisition under the Land Acquisition Act. For the State to get the absolute right, title and interest in the land under section 16 of the Act, it has to give compensation for the interest held by the perpetual lessee as well as the lessor in the acquired land. Therefore, the perpetual lessee would be entitled to payment of compensation from the State for his dominant interest in the acquired land.
Therefore, the perpetual lessee would be entitled to payment of compensation from the State for his dominant interest in the acquired land. As stated earlier, the High Court itself has determined the amount of compensation payable to the lessor out of the compensation payable for the land by the State. Therefore, the appellants would be entitled to the whole of the remaining compensation payable for the land. The appeals are accordingly allowed but in the circumstances without costs. C.A. No. of 1994 (O SLP(C) No. 3169/84): Special leave granted. Following the judgment in Civil Appeal No. 560 of 1983 and 452 of 1983, this appeal is also allowed. No costs. Appeal allowed.