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Judgment
P. Shanmugam, J.—The claimant as well as the Land Acquisition Officer, aggrieved by the common judgment rendered under the Land
Acquisition Act, have filed the above appeals.
An extent of 11.38.0 hectares of dry lauds in Survey No.918/3 Part etc. of Mutliur Village, Palayankottai Taluk, Tirunelveli Kattabomman
District were acquired for the formation of a new Water Tank. The notification u/s 4(1) of the Land Acquisition Act, 1894 (hereinafter referred to
as the Act) was published on 30.5.1990. The Land Acquisition Officer, by Award No. 1 of 1993 dated 30.4.1993, determined the compensation
for the various claimants. The lands in question that were acquired are confined to 2.23.0 hectares in S.No.926/1 etc. Before the Land Acquisition
Officer, one Thiru Gomathinayagam, General Power of Attorney of the claimant S. Balasubramanian is said to have given a statement on his behalf
stating that he has no objection to the proposed acquisition, but requested to make early payment of compensation for the proposed acquisition of
the lands. Accordingly, the Land Acquisition Officer, as far as these lands are concerned, fixed a total compensation of Rs.2,36,072 including 30%
solatium and 12% interest on the land value, from 20.6.1990 to 30.4.1993. The market value was determined at the rate of Rs.18,000 per acre by
the Officer. Aggrieved by this, the claimant filed a statement dated 22.8.1994 for a reference u/s 18 of the Act seeking to determine the market
value at Rs.30,000 per acre and also claiming that possession of the lands was taken long prior to the notification u/s 4(1) of the Act, i.e. on
1.5.1975. On reference, the learned Sub Judge, in L.A.O.P No. 85 of 1994, fixed the market value at the rate of Rs. 25, 000 per acre ( Rs.
61,750 per hectare). He has also awarded 9% interest from 1.7.1976, the alleged date of taking possession of the land, for a period of one year
and 15% interest thereafter.
Not being satisfied with the enhancement and seeking for a further enhancement to Rs.30,000 per acre, the claimant has filed the appeal A.S.
No. 63 of 1996. The Land Acquisition Officer has also questioned the judgment in reference to the market value, solatium and interest from the
alleged date of taking possession of the lands in A.S. No. 269 of 1996 .
Learned counsel for the claimant Mr.S. Jayaraman made two submissions. As far as the merits in fixation of the market value are concerned,
according to him, the disallowance of the claim of Rs.30,000 per acre instead of Rs.25,000 is erroneous. According to him, the learned Judge
having accepted Ex.A.1, erred in deducting Rs.6,000 towards expenses for the formation of the water tank. On the second point, it is submitted
that the learned Judge foiled to give the benefit u/s 23(1A) of the Act from the date of taking possession of the land till realisation of the entire
amount, but has given only from the date of the notification u/s 4(1) of the Act.
Learned Additional Government Pleader Mr. V. Ravi submitted that the claimant, after having accepted the compensation before the Land
Acquisition Officer and having only sought for early payment of compensation only, the learned Judge erred in accepting Ex.C.1 sale deed without
examining either the vendor or the vendee in order to prove the sale deed. According to him, the Land Acquisition Officer has considered the
document and rejected the same on the ground that the land covered under Ex.C.1 sale deed is more than one kilometre away and hence, its value
does not reflect the real market value, whereas, he has accepted the data sale deed, out of the 31 sates in reference to 16 cents of land, namely
document No.2745 dated 13.11.1989, which worked out to Rs.18,000 per acre or Rs.44,450 per hectare (Ex.B.2). According to him, the
enhancement of compensation from Rs.180 per cent to Rs.250 per cent is exorbitant and without considering the relevant document.
On the interest point, the learned Additional Government Pleader submitted that the claimant is entitled interest only from the date of the
notification u/s 4(1) and not from an earlier date. There are no records to show that there was any previous notification under the Land Acquisition
Act. If the claimant wants compensation from the year 1975, he cannot base that claim on the assumed market price of the year 1990. He can
claim compensation with reference to the actual market price as on 1.7.1975 with 30% solatium and interest allowable as per Sections 28 and 34
of the Act. He further submitted that the claimant cannot seek for 12% additional value as per Section 23(1A) as it is not admissible for the prior
entry cases. Both the counsel relied on the rulings in support of their contentions,
We have heard the counsel for both sides, gone through the records and considered matter carefully.
Of the total extent of 11.38 hectares acquired for the formation of water tank, the claimant, who claims to be the owner of 3.23 hectares, alone
has sought for a reference and an enhanced compensation. The Reference Court has enhanced the compensation from Rs.180 per cent to Rs.250
per cent by accepting the Ex.A.1 sale deed value, which works out at the rate of Rs.30,052 per acre and rejecting A,2 data sale deed. The
learned Judge deducted Rs.6,000 towards development charges and fixed the market value at Rs.25,000 per acre. Though the vendor and the
vendee have not been examined, the said document formed part of consideration by the Award Officer, but rejected on the ground that it was
located one kilometre away. Considering the facts and circumstances, the value having been determined on the basis of the sale deed dated
10.11.1989, the market value as determined by the Reference Court is reasonable and can be accepted as representing the market value as on the
notification u/s 4(1) of the Act, i.e. 30.5.1990. The claimant, for the first time, in his reference application, has stated that the land was taken
possession of on 1.5.1975, much prior to the notification u/s 4(1) dated 30.5.1990. In the counter filed by the Land Acquisition Officer, it is
submitted that the lands were already taken over by the Public Works Department with the consent of the land owners and that the tank was
formed. But, it is also stated that the land acquisition proceedings were initiated for the lands in the year 1990 only. No records have been
produced to show that there was any other notification u/s 4(1) prior to 30.5.1990. The Sub-court also has given a finding that the land was taken
possession of on 1.7.1976. However, the question to be considered is whether the claimant is entitled to compensation on the market value on the
date of publication of the notification u/s 4(1) or from the date of taking possession, prior to the notification u/s 4(1). The Award Officer as well as
the court below has determined the compensation on the date of the notification u/s 4(1), i.e. 30.5.1990. However, the reference court has
awarded interest u/s 34 from the date of taking possession, i.e. from 1.7.1976 at the rate of 9% for the first year and 15% from 1.7.1977. As
rightly pointed out by the learned Additional Government Pleader, if the claimant wants compensation from the year 1975, then he can claim the
value which prevailed only in 1975 with 30% solatium and interest admissible as per Sections 28 and 34 of the Act. The claimant cannot get the
market value fixed in the year 1990 and seek other benefits such as additional amount u/s 23(1A) as well as interest from 1976 on the market
value of the year 1990. We do not find any power either to the Land Acquisition Officer or to the court to determine the amount of compensation
for the purpose of awarding compensation anterior to the notification u/s 4(1). If possession was taken not under the Land Acquisition Act,
especially when the Land Acquisition Officer has stated that the land was taken over by the Public Works Department with the consent of the land
owners and that they appear not to have objected to the taking possession of the land being given to the Public Works Department for formation
of the water tank, they will be entitled for compensation for the deprivation of their land, but not under the Land Acquisition Act. It is pointed out
that as a matter of fact, the claimant has filed a Writ Petition No.2813 of 1978 seeking for a mandamus to direct the respondents to pay
compensation for the lands. A learned Judge of this Court, by order dated 31.7.1978, dismissed the writ petition with an observation that if there is
any unreasonable delay in the acquisition proceedings, the petitioner could come to this court at a later date. The petitioner has not objected to the
notification u/s 4(1) and during the enquiry, he has conceded for the compensation awarded on the market value on the date of the notification u/s
4(1). Having accepted the fixation of market value on the date of the notification u/s 4(1), it is not open to the claimant to claim interest and other
benefits from an anterior date, i.e. 1976 and as per the 1990 market value.
In Astekaar Naganaatha Rao and Others etc. Vs. The Assistant Commissioner and Land Acquisition Officer and others etc., , the Supreme
Court held that the claimants are entitled to interest at 9% for one year from the date of notification and on expiry thereof, at the rate of 15% till the
date of deposit. In that case, the lands were taken possession of on 31.12.1942: however, the notification u/s 4(1) of the Act was published in
February, 1983. It was contended that no amount as rent has been paid from the year 1942. The question that arose for consideration was from
what date the claimants were entitled to interest. The Supreme Court held that the respondents were liable to pay rent payable from the date of
taking possession till the date of the notification as per the direction and settlement. Since notification u/s 4(1) of the Act was published in the year
1983, it was held that the claimants were entitled to interest at 9% for one year and on expiry thereof, they were entitled to 15% from the year
1984. In Collector of Puri Vs. Hrushikesh Mitra and Others, , a Division Bench of the Orissa High Court lias held that legally, the claimants can
claim compensation only from the date on which the proceedings under the Land Acquisition Act commenced and possession of the property
under the Act must also be deemed to have been taken only from that date and interest can be only from that date by virtue of Section 34 of the
Act. However, in that case, since the Deputy Collector himself allowed interest from the date of acquisition, the court did not interfere with the
award.
In Shree Vijay Cotton and Oil Mills Ltd. Vs. State of Gujarat, , the Supreme Court held as follows:
There is no dispute that under the Act, the claimant is entitled to compensation at the rate of the market value of the land under the date of 4(1)
notification. Section 23(1) of the Act enumerates the matters which are to be taken into consideration in determining the compensation. On
reference u/s 18 of the Act, the parties go to trial before the court primarily on the issue of determination of market value of the land. So far as the
award of interest is concerned, this is never an issue between the parties. Once the conditions under Sections 28 and 34 of the Act are satisfied,
award of interest is consequential and automatic.
In that case, there was no notification u/s 4(1) at all. But, the declaration u/s 6(1) was treated as composite notification u/s 4(1) and market value
was determined on that day. In those circumstances, their lordships held that the payment of interest is not dependent on any claim and when once
Section 34 is attracted, it is obligatory to pay interest and accordingly, it was held in that case that the appellant was entitled to interest on the
compensation amount for the period from the year 1949 to 1955. In The Revenue Divisional Officer, Guntur Vs. Vasireddy Rama Bhanu Bhupal
and Others, , it was held that interest is payable on equitable principles by way of compensation for deprivation of possession without payment of
the value thereof. Their Lordships held that In order to give effect to that principle completely, perhaps the logical and proper course is to calculate
the value at the end of each year and award interest thereon upto the date of payment. That result is achieved in effect by grant of interest on the
value as on the date of acquisition, that is 1956, which is somewhere midway between taking possession and the award of compensation, and
calculating interest at 6% on that day. In that case, a question arose as to whether the claimants are entitled to interest under the Act or as on
30.11.1950, when the Municipality is said to have taken possession not under the Act, but by private negotiation or from the date of notification
u/s 4(1) of the Act, namely 12.4.1956 or from the date of making the award namely 31.3.1958 or from any subsequent date under the Act.
In Smt. Swarnamayi Panigrahi and Others Vs. Land Acquisition Collector, , a Division Bench of the Orissa High Court has held that the
proper compensation means only such compensation as is provided for under the Land Acquisition Act and such compensation necessarily implies
the statutory interest permissible u/s 34 of the Act. In cases where the owner is deprived of his possession of certain property without payment of
compensation and money, the owner undoubtedly loses both his interest on the money as also his possession. Justice requires that the owner
should not lose both and therefore, to compensate his property is either to pay him immediately the consideration money or to pay interest on the
same until the date of payment. In Assistant Commissioner, Gadag SUb-Division, Gadag Vs. Mathapathi Basavannewwa and others, , the
Supreme Court held that if possession is taken earlier and notification issued later but the award is subsequently made, the owner is entitled to
compensation from the date of taking possession till the date of the award. The expression whichever is earlier in Section 23(1A) has to be
construed in that backdrop and the claimant would be entitled to additional amount from the date of taking possession. According to the Supreme
Court, the object of introducing Section 23(1A) is to mitigate the hardship caused to the owner of the land who has been'' deprived of the
enjoyment of his land by taking possession from him and using it for public purpose, because of considerable delay in making the award offering
payment thereof. To obviate such hardship, Section 23(1A) was introduced and the Legislature envisaged that the owner of the land is entitled to
12 per cent per annum additional amount on the market value for a period commencing on and from the date of publication of the notification u/s
4(1) of the Act. In Revenue Divisional Officer v. Venkatarama Ayyar, AIR 1936 Mad. 199, a Division Bench of our High Court has held that the
right to receive interest takes the place of right to retain possession. The foundation of Section 34 of the Act is that when compensation is payable
and has not been paid, interest for non-payment must be given from the date of taking possession. Their Lordships followed the decision of the
Bombay High Court, in Vallabdas Narainji v. Divisional Officer, Bandra AIR 1929 P.C. 163, wherein it was held that the appellant was entitled to
compensation for occupation of the lands when acquisition was before the notification, by award of interest on the value of the land computed from
the date when the Government lakes possession.
In Satinder Singh and Others Vs. Amrao Singh and Others, , their Lordships considered the question whether the amount, of compensation
awarded for the property acquired under the East Punjab Requisition of Immovable Property (Temporary Powers) Act should carry a reasonable
rate of interest from the date when the claimants lost possession of the properties. Their lordships observed as follows :
What then is the contention raised by the claimants? They contended that their immovable property has been acquired by the State and the State
has taken possession of it. Thus they have been deprived of the right to receive the income from the property and there is a time lag between the
taking of the possession by the State and the payment of compensation by it to the claimants. During this period they have been deprived of the
income of the property and they have not been able to receive interest from the amount of compensation. Stated broadly the act of taking
possession of immovable property generally implies an agreement to pay interest on the value of the property and it is on this principle that a claim
for interest is made against the State. .... It would thus be noticed that the claim for interest proceeds on the assumption that when the owner of
immovable property loses possession of it he is entitled to claim interest in place of right to retain possession. .....When a claim for payment of
interest is made by a person whose immovable properly has been acquired compulsorily he is not making claim for damages properly or technically
so called: he is basing his claim on the general rule that if he is deprived of his land he would be put in possession of compensation immediately, if
not, in lieu of possession taken by compulsory acquisition interest should be paid to him on the said amount of compensation..... We have already
seen that the right to receive interest in lieu of possession of immovable property taken away either by private treaty or by compulsory acquisition
is generally regarded by judicial decisions as an equitable right, and so, the proviso to Section 1 of the Interest Act saves the said right. We must
accordingly hold that the High Court was in error in rejecting the claimants'' case for the payment of interest on compensation amount, and so we
direct that the said amount should carry interest at 4% per annum from the date when respondent 2 took possession of the claimant''s lands to the
date on which it deposited or paid the amount of compensation to them.
From the above decisions, it is clear that the claimants are entitled to interest from the date of taking possession for deprivation of the right to
their property. At the same time, it has been held that the interest must represent their probable loss of income. In this case, the property was said
to have been taken possession of in the year 1976, whereas the notification u/s 4(1) was of the year 1990. Therefore, the value that is fixed as
compensation is on the basis of the year 1990. The market value of the land in the year 1976 could not have been the same as that of the year
1990. Therefore, the claimants are entitled to interest only on the market value of the land in the year 1976 inasmuch as 15 years have gone by
from the date of taking possession. If the claimants are to be given interest at the rate of 6%, till the year 1984, 9% from the year 1984 and 15%
from the year 1985, besides 12% from the year 1984 as additional amount, the claimants will be making a profit out of this compensation.
We are not inclined to remand the matter for the purpose of fixing the market value of the land prevalent in the year 1976 or the rent or income
that the land would have earned in the year 1976. Learned counsel for the appellant prays that whatever be the value, the same may be decided by
this court as the matter is pending from the year 1976, we cannot treat the Award of the year 1993 for the purpose of claim u/s 23(1 A), Section
23(2) and Section 34 of the Act from the year 1976. That will lead to unrealistic compensation being given. Practically, the lands were dry lands
and were not cultivated. There are no records or evidence to fix the market value as prevailing in the year 1976. Therefore, considering the value
of the land at Rs.30,050 per acre in the year 1-990, after giving due allowance for the 15 years, we fix the market value of the land for the purpose
of awarding interest at Rs.10,000 Per acre and award interest at the rate of 6% from 1.7.1976 for one year, additional interest at the rate of 15%
and interest u/s 34 of the Act at this rate, from 1.7.1977 to 30.5.1990. The Constitution Bench in K.S. Paripoornan v. State of Kerala, 1994 (5)
S.C.C. 591 has held that Section 23(1A) (additional amount) shall not apply to proceedings initiated prior to the commencement of the Amending
Act on 24.9.1984. The claimants are not entitled to additional amount. But, they shall be entitled to 30% solatium on Rs.10,000 per acre. From
the date of notification u/s 4(1), the claimant shall be entitled to interest, additional interest, solatium and additional amount for the value of the land
at Rs.25,000 per acre.
The liability to pay interest is only on the excess amount of compensation paid u/s 23(1) of the Act and not on the amount, already determined
by the Land Acquisition Officer u/s 11 and paid or deposited. The claimant/claimants are not entitled to interest on solatium u/s 23(2) or on the
additional amount u/s 23(1A). Similarly, no solatium is payable on additional amount as held by the Supreme Court in Premnath Kapoor v.
National Fertiliser Corporation of India Limited, 1996 (2) S.C.C. 711 , Tehri Hydro Development Corpn. Vs. S.P. Singh and Others, , State of
Haryana and Another Vs. Joginder Singh, and Yadavrao P. Pathade (Dead) by Lrs. and Others Vs. State of Maharashtra, , The question whether
solatium has to be considered as a component of compensation and whether interest can be paid thereon has been referred to a larger Bench by
the Supreme Court in Kapur Chand Jain (Dead) and Others Vs. State Govt. of H.P. and Others, . Therefore, the claimant/claimants shall be
entitled to interest on the basis of the judgment that will be rendered by the Supreme Court in this case, without seeking further amendment to the
decree in case the point is decided in their favour.
For the above reasons, the Government appeal A.S.No.269 of 1996 is allowed to extent indicated. The appeal filed by the claimant
A.S.No.63 of 1996 is dismissed. No costs. Consequently, the connected C.M.Ps. are closed.