Vivek Pvt Ltd & Ors vs Union Of India & Anr

* IN THE HIGH COURT OF DELHI AT NEW DELHI

Reserved on: 16.01.2026
Pronounced on: 16.04.2026


+ LA.APP. 244/2016 & CM APPL. 33145/2016
VIVEK PVT LTD & ORS .....Appellants
Through: Mr. Gaurav Sarin, Sr. Adv. with
Ms. Simran Brar, Mr. Vedanta
Varma, Mr. Shubhankar
Choudhary, Mr. Harish, Mr.
Fatehh Singh & Ms. Ruhi
Ansari, Advs.
versus

UNION OF INDIA & ANR .....Respondents
Through: Mr. Sanjay Kr. Pathak, SC with
Mrs. K. Kaomudi Kiran Pathak,
Mr. Sunil Kr. Jha, Mr. M. S.
Akhtar, Mr. Divakar Kapil &
Mr. J. Kumari, Advs. for R1
Mrs. Anubha Bhardwaj, CGSC
with Mr. Dev P. Bhardwaj, Ms.
Ananya Shamshery and Ms.
Anchal Kashyap & Mr. Vijay
Misra, Advs. for R-2


CORAM:
HON'BLE MS. JUSTICE RENU BHATNAGAR

J U D G M E N T

1. The present appeal has been preferred under Section 54 of the
Land Acquisition Act, 1894 (hereinafter “the Act”), challenging the
judgment and decree dated 11.07.2016 (hereinafter “the impugned
Signature Not Verified
LA.APP. 244/2016 Page 1 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

judgment”) passed by the learned Additional District Judge-02 (West),
Delhi/ Reference Court in LAC No. 11A/2010 (hereinafter “Reference
Court”). By the impugned judgment, the learned Reference Court
upheld the apportionment of compensation made by the Land
Acquisition Collector, whereby 20% of the total compensation
assessed in respect of the acquired property commonly known as
“Vivek Cinema”, situated at Patel Road, Delhi was awarded to
Respondent No. 2 (the Union of India through L&DO Department, in
its capacity as lessor), and the claim of the appellants to recover that
share was rejected. The appellants, aggrieved by the said
determination, have approached this Court contending that the entire
compensation, without any deduction in favour of the lessor, ought to
have been awarded to them as perpetual lessees and to hold that the
respondent no.2 is not entitled to any share in the compensation
awarded by Land Acquisition Collector and further to direct that
respondent no.2 would be entitled to Rs. 33,68,925/- i.e. the amount of
conversion charges, had the said property been converted to freehold
in terms of the Scheme for conversion from leasehold to freehold
floated by respondent no.2.
2. Before proceeding to an analysis of the legal issues, this Court
finds it appropriate to comprehensively set out the factual matrix from
which the appeal arises.
3. The subject matter of the present appeal is a parcel of land
admeasuring 2325.24 square metres, situated at Patel Road, Delhi,
Signature Not Verified
LA.APP. 244/2016 Page 2 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

which has been used as and is commonly known as “Vivek Cinema.”
The property has a long and documented history of government
disposal and private holding. In the aftermath of Partition, the
Government of India undertook large-scale rehabilitation of displaced
persons through the framework of the Displaced Persons
(Compensation and Rehabilitation) Act, 1954. It was under this
statutory scheme that the subject property was originally leased out by
the Government of India through a public auction. Pursuant to a
successful bid at the said auction, a sale certificate was issued in
favour of the original allottees, and thereafter a formal Perpetual Lease
Deed dated 31.03.1960 (hereinafter “the Lease Deed”) was executed,
by which the leasehold right in land was granted to the original
allottees for 99 years on perpetual leasehold terms. Notably, the grant
of a leasehold, rather than an outright conveyance, was a deliberate
policy choice, reflecting the intention of the Government to retain
ultimate dominion over the land while allowing the allottees to
develop and use it on a long-term basis.
4. The Lease Deed, as is characteristic of Government leases of
this vintage, imposed several conditions and restrictions upon the
lessees, including obligations to pay ground rent at prescribed rates,
restrictions on the use to which the land could be put, limitations on
the right to transfer or sublet without the prior approval of the
Government, and provisions for re-entry by the Government in the
event of breach of conditions. Significantly, the Lease Deed contained
Signature Not Verified
LA.APP. 244/2016 Page 3 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

a clause, Clause I sub-clause (xii) which provided for the entitlement
of the lessee to compensation in the event of acquisition of the land for
a public purpose.
5. As on the date of acquisition, the appellants held the property as
perpetual lessees in defined and established shares. Upon the
leasehold land, a substantial cinema hall building was constructed, and
the property operated as a cinema hall for several decades.
6. In furtherance of the national priority of developing the Delhi
Metro Rail network, the Government initiated acquisition proceedings
in respect of the subject land. A notification under Section 4 read with
Section 17 of the Act, 1894 was issued on 04.03.2003. This was
followed by a declaration under Section 6 of the Act dated
08.05.2003, confirming the intention of the Government to acquire the
land for the said public purpose. The issuance of these notifications set
in motion the statutory machinery of acquisition and brought the
entitlement of the various interested parties to compensation before
the Collector for determination.
7. Upon issuance of notices under Sections 9 and 10 of the Act,
the appellants appeared before and filed their claims with the Land
Acquisition Collector, asserting their entitlement to the entirety of the
compensation as perpetual lessees. Respondent No. 2, the Union of
India in its capacity as lessor, did not separately file a claim before the
Collector at this stage. The Land Acquisition Collector, after
considering the material before it and having regard to the nature of
Signature Not Verified
LA.APP. 244/2016 Page 4 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

the interests held by the respective parties, made Award No.
14/DC(W)/04-05 dated 07.03.2005, assessing the total compensation
payable in respect of the acquired property at ₹11,53,74,028/-. In
making this assessment, the Collector apportioned the compensation
between the two interested parties: 80% was awarded to the appellants
in recognition of their leasehold possession, improvements, and long-
standing interest, while 20% was apportioned in favour of Respondent
No. 2 in recognition of its reversionary title as the landowner. The
appellants objected to this apportionment and disputed the 20% share
awarded to Respondent No. 2.
8. Since the dispute as to apportionment could not be resolved at
the stage of the Collector’s award, a reference was made under
Sections 30 and 31 of the Land Acquisition Act, 1894 to the
Reference Court, and the entire disputed 20% sum was deposited
before the Reference Court pending adjudication. The Reference
Court, after hearing the parties and examining the legal questions
involved, passed the impugned judgment dated 11.07.2016 upholding
the apportionment as made by the Collector and dismissing the claim
of appellant for the disputed share. The Reference Court held that as
perpetual lessees, the appellants did not hold absolute ownership of
the land, and that the Union of India, as the owner of the reversionary
interest, was entitled to a proportionate share of the compensation.
Being aggrieved by this determination, the appellants have preferred
the present appeal before this Court.
Signature Not Verified
LA.APP. 244/2016 Page 5 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

9. Learned Senior Counsel appearing for the appellants submits
that the Reference Court fundamentally erred in its approach by not
recognising the controlling effect of Section 3 of the Government
Grants Act, 1895 (hereinafter “The Grants Act”) upon the terms of the
Lease Deed. Section 3 of the Grants Act mandates that any lease made
by or on behalf of the Government shall take effect according to its
tenor, and that all provisions, conditions, restrictions, and limitations
contained in such a lease shall be valid and enforceable according to
their tenor, notwithstanding any decree, order, or direction of a court
of law, or any rule of law, statute, or enactment to the contrary.
10. The learned Senior Counsel submits that Clause (xii) of the
Lease Deed dated 31.03.1960 is clear, explicit, and unambiguous in
allocating the compensation upon acquisition to the lessee. The clause
stipulates that in the event of acquisition of the land for a public
purpose, the lessee shall be entitled to compensation in respect of the
land as well as in respect of any buildings and structures standing
thereon. Learned Senior Counsel emphasises that the clause does not
carve out any share for the lessor, does not reserve any portion of
compensation to the Government, and does not contemplate any
apportionment between the lessee and the grantor. Since the clause is
unambiguous, there is no scope for the court to import any reservation
in favour of the lessor, and the entire compensation must accordingly
be paid to the appellants. The failure of the Reference Court to give
effect to this clause on its plain terms, Learned Senior Counsel
Signature Not Verified
LA.APP. 244/2016 Page 6 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

submits, constitutes a fundamental error of law. Reliance was placed
on Azim Ahmad Kazmi v. State of Uttar Pradesh , (2012) 7 SCC 278,
for the proposition that all conditions and provisions of a Government
grant must take effect according to their tenor notwithstanding any
contrary rule of law.
11. The learned Senior Counsel submits that the decision of the
learned Reference Court in placing reliance upon Inder Parshad v.
Union of India , (1994) 5 SCC 239 is challenged on grounds of
distinguishability. It is submitted that Inder Parshad (Supra) arose in
an entirely different context, namely, a lease that did not contain any
express provision allocating compensation between the lessor and the
lessee. In that case, the court was called upon to apportion
compensation in the absence of any contractual mechanism for doing
so, and therefore had recourse to general principles. In the present
case, by contrast, the parties had expressly contracted as to the
allocation of compensation through Clause (xii) of the Lease Deed.
Accordingly, the ratio of Inder Parshad is not applicable, and the
Reference Court erred in applying it without examining whether the
terms of the present Lease Deed were materially distinguishable.
Reliance was placed on Gaon Sabha Kakrola v. Sarbati , ILR (2009)
1 Delhi 695, to submit that even if any amount is payable to
Respondent No. 2, it cannot exceed the capitalised value of the ground
rent.
12. The learned Senior Counsel further submits that the Union of
Signature Not Verified
LA.APP. 244/2016 Page 7 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

India in its capacity as lessor did not file any claim or objection under
Section 9 of the Act before the Land Acquisition Collector at the time
the claims were being adjudicated. Nor did Respondent No. 2 lead any
evidence before the Reference Court to establish the nature and
quantum of its alleged interest or to justify the share awarded to it.
Counsel submits that in the absence of a formal claim, and in the
absence of any evidentiary material whatsoever, the Reference Court
could not have upheld the apportionment in favour of Respondent No.
2 solely on the basis of the legal position that the Union of India
retained the reversionary title. It is further contended that the right to
compensation, must be actively asserted and supported by evidence,
and cannot be sustained on the basis of a legal presumption alone.
13. On the cumulative strength of the above submissions, learned
counsel urges that the impugned judgment is legally erroneous, that
the appellants as perpetual lessees holding under a Government Grant
are entitled to the entire compensation of ₹11,53,74,028/-, and that the
20% apportionment in favour of Respondent No. 2 deserves to be set
aside.
14. Per Contra , Learned counsel appearing for respondent No. 2
resists the appeal and urges that the impugned judgment has been
correctly and carefully reasoned, and does not call for any interference
by this Court. It is submitted that the Reference Court correctly
appreciated both the factual position and the governing legal
principles, and that the arguments made by the appellants are
Signature Not Verified
LA.APP. 244/2016 Page 8 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

fundamentally flawed in its premise that a perpetual lessee is
equivalent to an owner.
15. The learned counsel for the respondent no.2 submits that the
nature of the title of the appellant is that of a lessee and not an owner,
regardless of how the lease is described. It is contended that the
characterisation of the lease as “perpetual” does not have the legal
effect of conferring ownership upon the lessee. The distinction
between a long-term or perpetual lease and an outright conveyance of
ownership is well-established. Reliance is placed on Union of India v.
Hotel Excelsior Ltd . , (2013) 1 SCC 157, wherein the Apex Court
affirmed that the reversionary interest remains with the lessor-
Government even in the case of very long-term leases.
16. Learned counsel further submits that the status of the appellants
as lessees is conclusively established by the undisputed fact that the
subject property was never converted from leasehold to freehold. The
Government of India has, over the years, administered a scheme for
the conversion of leasehold properties to freehold, and cinema hall
properties were, at the relevant point in time, expressly excluded from
this conversion scheme. Accordingly, the appellants had no legal
avenue to acquire freehold title during the material period, and their
continued holding of the property under the terms of the Lease Deed is
not disputed. It is also contended that this admitted factual position
rejects the claim of the appellants to the entirety of the compensation,
since the entire basis of that claim that they hold in the nature of
Signature Not Verified
LA.APP. 244/2016 Page 9 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

owners is unsupportable in law. Reliance is placed on Mohd. Noor v.
Mohd. Ibrahim , (1994) 5 SCC 562, where the Supreme Court
observed that heritability and transferability of a leasehold interest,
while hallmarks of a valuable property right, do not by themselves
amount to ownership, since ownership requires absolute dominion
over the property that a lease by its very nature withholds from the
lessee.
17. It is submitted that the principle of apportionment between
lessor and lessee in cases of compulsory acquisition of leasehold land
stands authoritatively and bindingly settled by the Supreme Court, the
decision in Inder Parshad v. Union of India , (1994) 5 SCC 239
having been expressly affirmed and applied by a Division Bench of
the Supreme Court in Brij Behari Sahai v. State of U.P . , 2004 (1)
SCC 641, wherein the Court held that apportionment in the ratio of
75% to the lessee and 25% to the State is just and reasonable on the
facts of such cases, and that once the interest of the Government is
fixed at 25%, there is no further need to direct capitalisation of ground
rent as a separate deduction thereby conclusively establishing that the
lessor-Government is entitled to a share in the compensation.
18. On the procedural objection relating to the non-filing of a claim
by Respondent No. 2, learned Counsel submits that this argument
fundamentally misunderstands the nature of proceedings under
Sections 30 and 31 of the Act. The entitlement of Respondent No. 2
flows not from any act of participation in the proceedings of Land
Signature Not Verified
LA.APP. 244/2016 Page 10 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

Acquisition Collector, but from its legal title as the superior
landowner. To hold otherwise would be to allow a procedural
irregularity to defeat a substantive property right, which the courts
have consistently refused to do. Reliance is placed on Paru Kutty
Amma v. Velu Nair , 1987 SCC OnLine Ker 202, wherein the
Coordinate Bench of Kerela High Court held that even a party who
has not filed a claim before the Collector is entitled to establish its
right to compensation before the Reference Court.
19. On the basis of the foregoing submissions, learned counsel
contends that the impugned judgment correctly upheld the
apportionment and that the present appeal lacks merit and is liable to
be dismissed.
20. This Court has heard learned counsel for the parties, perused the
record, and considered the judgments relied upon. The issue for
determination is whether the appellants, who are perpetual lessees
under a Government grant, are entitled to the entire compensation
upon acquisition of the land, or whether Respondent No. 2, as the
lessor, is also entitled to a share. The answer to this question depends
upon the terms of the lease deed dated 31.03.1960, the relevant
statutory provisions, and the settled legal principles governing
apportionment of compensation in cases of leasehold property.
21. The foundational premise of the arguments of appellants that as
perpetual lessees, they are in the position of virtual owners and
therefore entitled to the entirety of the compensation requires careful
Signature Not Verified
LA.APP. 244/2016 Page 11 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

scrutiny. It is well-settled that a lease and a sale operate very
differently in law. A sale or absolute conveyance transfers ownership
from the vendor to the purchaser, vesting in the purchaser all the rights
of dominion, enjoyment, and disposition that the vendor possessed. A
lease, by contrast, transfers only the right to enjoy the property for a
defined period (or in perpetuity), subject to conditions on payment of
rent, and the ownership, or the “absolute title” in Indian parlance
remains with the lessor.
22. In Kiran Tandon v. Allahabad Development Authority , (2004)
10 SCC 745, the Supreme Court the Court held that a lessee cannot be
treated as the owner of acquired land, as a lease under Transfer of
Property Act, 1882 confers only a limited right to enjoy the property
for a specified period, which determines by efflux of time. The
relevant para is extracted below :

Signature Not Verified
LA.APP. 244/2016 Page 12 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

Emphasis supplied
23. It is also important to note the specific context in which the
subject lease was granted. As revealed from the documents relied
upon by the appellant, the disposal of property was under the
Displaced Persons (Compensation and Rehabilitation) Act, 1954,
through a public auction, culminating in a leasehold grant for a period
of 99 years rather than an outright sale. It was a deliberate policy of
the Government of India to retain the underlying title to such land, for
reasons of public interest, while allowing allottees to enjoy and
develop the property over the long term. The perpetual lease was the
instrument chosen to effectuate this policy: it gave the allottees a
secure and inheritable interest in the land, while preserving the
ownership of the Government. Any interpretation of the Lease Deed
that would have the effect of converting the leasehold into an
ownership interest without the formal steps of freehold conversion
having been taken, would frustrate this deliberate policy choice and
cannot be accepted.
24. The Land Acquisition Act, 1894 proceeds on the premise that
when land is compulsorily acquired, all interests subsisting therein at
the date of acquisition are extinguished and converted into a monetary
equivalent in the form of compensation. Section 3(x)(i) of the Act
Signature Not Verified
LA.APP. 244/2016 Page 13 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

defines “person interested” to include all persons claiming an interest
in compensation to be made on account of the acquisition, which
embraces both the owner and other persons holding lesser interests,
such as lessees, mortgagees, and encumbrances. The relevant Section
of the act is extracted below:-
“Section 3 (x)(i) –
(x) “person interested” means—

25. The governing principle in cases of acquisition of leasehold
land is that the compensation must reflect the value of each interest in
the land, and the total compensation is to be divided among the
persons interested in proportion to the value of their respective
interests. This principle was authoritatively stated by the Supreme
Court in Inder Parshad v. Union of India , (1994) 5 SCC 239. In that
case, the Supreme Court held that in the case of acquisition of
leasehold property, the compensation is required to be apportioned
between the lessor and the lessee, having regard to the nature of the
interest held by each. The court emphasised that the total
compensation represents the full market value of the land in absolute
ownership, and since the leasehold and the reversion together
constitute that absolute ownership, neither party alone can claim the
entirety.
26. The attempt of the appellants to distinguish Inder Parshad on
Signature Not Verified
LA.APP. 244/2016 Page 14 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

the ground that it was decided in the context of a lease without an
express compensation clause deserves careful consideration. It is true
that the presence of a specific contractual clause addressing
compensation is a relevant factor. However, the question is not merely
whether such a clause exists, but what the clause, properly and
contextually interpreted, actually provides. The Reference Court holds
that Clause I sub clause (xii) of the present Lease Deed, when properly
construed, does not have the effect of allocating the reversionary share
of the lessor to the lessee, and therefore the ratio of Inder Parshad
continues to apply. The distinction of the appellant, does not withstand
scrutiny.
27. In Kiran Tandon (Supra), it was further held by the Supreme
Court that a lessee is not entitled to the entire compensation upon
acquisition; rather, compensation must be apportioned between the
lessee and the lessor depending on the nature and duration of the lease.
Upholding this principle, the Court affirmed that leasehold rights,
being distinct from ownership, warrant only a proportionate share in
compensation, as consistently recognised in prior precedents. The
relevant paragraph is extracted below : -

Signature Not Verified
LA.APP. 244/2016 Page 15 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

Signature Not Verified
LA.APP. 244/2016 Page 16 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

Emphasis supplied
28. The most forceful legal argument of the appellants rests upon
the combined operation of Section 3 of the Grants Act, and Clause I
sub clause (xii) of the Lease Deed. Section 3 of the Government
Grants Act provides that all grants and other assurances of any
property made or purporting to be made by or on behalf of the
Government shall be construed and take effect as provided by their
tenor, and shall be valid and effectual according to the tenor of such
grants, notwithstanding the provisions of any law, or any rule of
equity to the contrary. The appellants contend that this provision
mandates strict adherence to the terms of the Lease Deed, and that
Clause (xii) — which they read as awarding the entirety of
compensation to the lessee — must accordingly be given full effect.
29. It is relevant to give a read to the Sections 2 and 3 of the
Government Grants Act, 1854 which are reproduced below :-
“Sec 2. Transfer of Property Act, 1882, not
to apply to Government grants .-Nothing in the
Transfer of Property Act, 1882 (4 of 1882),
contained shall apply or by deemed ever to
Signature Not Verified
LA.APP. 244/2016 Page 17 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

30. In order to understand the tenor of the Lease Deed dated
31.03.1960, specifically Sub-Clause (XII) of Clause I, it is pertinent to
extract some clauses of the same. The Relevant clauses of the Lease
deed is extracted below : -

(b) The Lessee shall before any assignment
or transfer of said premises hereby
demised or any part thereof obtain from
the Lessor approval in writing of the said
Signature Not Verified
LA.APP. 244/2016 Page 18 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

Provided further that in the case of any
transfer or assignment subsequent to the
first transfer or assignment the Lessor
Signature Not Verified
LA.APP. 244/2016 Page 19 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

(e) The ground rent will be payable in
advance in half yearly installments on the
th th
15 January and 15 July each year. The
ground rent shall be payable for the full
half-year for the period from the date of
purchase of the grant of a lease of the site
th th
on the 15 January or 15 July next
following as the case may be, and shall be
paid by the purchaser, at once at the time
Signature Not Verified
LA.APP. 244/2016 Page 20 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

(i) to (x)..... not relevant
(xi) the lessee and his
successors and assignees shall
on the determination of the
lease on the expiry of the period
of 99 years yield up the demised
premises with all buildings
erected thereon and landlord's
fixtures thereto provided that
the Lessor shall pay to the
Lessee the value of the said
buildings and fixtures at the
date of determination of the
tenancy such value to be
determined in the absence of
agreement by a sole Arbitrator
agreed upon by both the parties
or in the absence of such
agreement by two arbitrators
one to be appointed by each
party. The provisions of the
Arbitration Act, 1940 and any
statutory notification thereof
shall apply to any such
arbitration. The Lessor may,
however, renew the lease of the
land after the expiry of 99 years
on such terms and conditions as
considered necessary by the
Lessor;
(xii) if during the period of the
Signature Not Verified
LA.APP. 244/2016 Page 21 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

lease the premises are required
for a public purpose or for any
administrative purpose by the
Lessor, the Lessor shall at the
expiry of a notice of fifteen
days to the effect that the said
premises are required for such
purpose to be served upon the
Lessee by an officer appointed
by the Lessor in this behalf be
at liberty to take possession of
the land together with all
buildings, structures and
appurtenance. The Lessee shall
be entitled to compensation in
respect of the land, buildings
and structures. The
compensation payable under
this clause shall in case of
dispute, be determined by the
Lessor or such officer as he
may appoint for the purpose, as
nearly as may be in accordance
with the provisions of Land
Acquisition Act or regulations
for the time being in force
relating to the same and the
decision of the lessor or such
officer shall be final and
conclusive;”

31.
This Court has carefully considered the argument of the
appellants and is unable to accept it for the following reasons. The
word “tenor” in Section 3 refers to the overall import, purport, and
effect of the grant, not to any isolated clause extracted from its
context. A perusal of the clauses of the Lease Deed along with section
Signature Not Verified
LA.APP. 244/2016 Page 22 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

3 of the Grants Act makes it abundantly clear that the lessee was never
intended to be the absolute owner of the property, but was merely
conferred a limited right of enjoyment subject to stringent conditions
imposed by the lessor, respondent No.2. The clauses of the lease deed
reveal that every aspect of the rights of the lessee, be it construction,
user, transfer, or possession is subject to prior approval and
continuous supervision of the lessor. The lease was liable to be
determined after a period of 99 years. Clause I (XII) confers upon the
lessor the right to acquire the leased property, including the land,
buildings, and appurtenances, for any public or administrative
purpose, upon giving notice to the lessee. In such an event, the clause
recognises the lessee’s right to receive compensation. It further
provides that the amount of compensation shall be determined by the
lessor, through its designated officer, in accordance with the
provisions of the Land Acquisition Act or any regulations in force at
the relevant time, and accords finality to the decision of the lessor in
this regard. The said clause does not, at any stage, contemplate
payment of the entire compensation to the lessee. Rather, it vests the
authority in the lessor to determine the compensation payable in
accordance with the applicable law. A reading of Clause XII in the
context of the entire lease deed makes it clear that the appellant has
not established any entitlement to 100% of the compensation on the
basis of ownership of the land and building. An isolated clause cannot
be given an interpretation that conflicts with the dominant character of
the instrument.
Signature Not Verified
LA.APP. 244/2016 Page 23 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

32. The dominant character of the 1960 Lease Deed is that of a
leasehold — the grant creates a leasehold interest and retains
ownership in the Government. Clause I Sub-Clause (xii), read in that
context, is a provision that protects the lessee from being left without
compensation upon acquisition; it ensures that the lessee is not
deprived of the value of its leasehold interest and the improvements
made by it. It does not, and cannot, by implication, strip the
Government of its reversionary ownership interest.
33. This interpretation is reinforced by the settled canon of
construction that specific clauses in a document must be read
harmoniously with its general scheme, and that a specific clause
cannot be given a meaning that would contradict or override the
dominant intent of the instrument as a whole. So far as the arguments
of counsel for the appellant regarding the property being freehold and
reference to the notification of the Court regarding the conversion of
cinema hall properties into freehold is concerned, it is not the case of
the appellant that the property is freehold nor he could show their right
beyond being owners of leasehold rights.
34. The submission of the appellants that Respondent No. 2 did not
file any claim before the Land Acquisition Collector and is therefore
disentitled from claiming a share in the compensation cannot be
sustained. The proceedings under Sections 30 and 31 of The Act have
a specific and well-defined character. Section 30 provides that when
the amount of compensation has been settled by award, the Collector
Signature Not Verified
LA.APP. 244/2016 Page 24 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

is required, if he is of opinion that it is proper to make a payment
under Section 31 before satisfying all the persons interested, to refer
the whole matter for determination by the court. Section 31 provides
that the court, on a reference under Section 30, shall apportion the
compensation as it deems proper. These provisions establish a
machinery for distribution of compensation among all persons
interested, based on their legal rights in the property, and not merely
among those who participated in the earlier stages of the proceedings.
35. A Division Bench of Kerala High Court in Paru Kutty Amma v.
Velu Nair , 1987 SCC OnLine Ker 202 , expressly held that a party
who has not filed a claim before the Collector is not thereby precluded
from establishing its right to compensation before the Reference
Court. The relevant para of the judgment is extracted below :-

Signature Not Verified
LA.APP. 244/2016 Page 25 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

Emphasis supplied
36. In the proceedings under Sections 30 and 31, the entitlement of
each party must be determined on the basis of its legal interest in the
property, regardless of procedural participation. The reference
proceedings are not adversarial in the traditional sense; they are
investigative and inquisitorial in character, with the court tasked with
allocating compensation in accordance with the true legal rights of the
parties. To deprive Respondent No. 2 of its share on purely procedural
grounds, when its substantive property right as the reversionary
landowner is beyond dispute, would be to permit form to triumph over
substance, which is a result that the law does not countenance.
37. In view of the above discussion, the appeal is dismissed. The
Signature Not Verified
LA.APP. 244/2016 Page 26 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01

impugned judgment and decree dated 11.07.2016 passed by the
learned Additional District Judge-02 (West), Delhi/Reference Court in
LAC No. 11A/2010 qua the apportionment of the shares between the
appellant and respondent no.2 is affirmed.
38. Pending applications, if any, also stand disposed of.






RENU BHATNAGAR, J.


APRIL 16, 2026/ neha/my
Signature Not Verified
LA.APP. 244/2016 Page 27 of 27
Signed
By:PRIYADARSHANI JAIN
Signing Date:16.04.2026
18:13:01