Union of India vs Abdul Rashid and Ors

Virender Singh, J.—The instant Letters Patent Appeal has been preferred by the Union of India (appellant in CIMA No.32/97) for setting

aside the judgment dated 26.9.2005 passed by the learned Single Judge vide which the award dated 30.5.1995 of learned District Judge, Jammu

(Arbitrator) allowing the compensation on the basis of two different classes of land and also the interest @ 12% p.a. from the date of passing of

the award has been confirmed.

Pursuant to notice all the respondents have put in their appearance.

We have heard learned counsel for the parties and also perused the impugned judgment of the learned Single Judge and award.

Mr. Gagan Basotra, submits that the learned Arbitrator had assumed that the appellant had agreed for the payment of compensation to the land

owners (respondentsherein) on the basis of class II and class III land, whereas the rate of compensation was never proposed by the appellant at

all. It was in fact, proposed by the Collector which was not agreed by the appellant. Mr. Basotra then submits that even, otherwise, the learned

District Judge (Arbitrator) had fixed the compensation of the acquired land on the higher side and the same was upheld by the learned single Judge

without considering the evidence on record and simply observing that the value of the immovable property every where is increasing day by day.

This approach was not applicable in the present case on the present set of circumstances and exorbitant rates have been given to the respondents

and call for satisfaction of the amount.

The other argument advanced by Mr. Basotra is that the interest granted to the respondents is contrary to the provisions of the Jammu and

Kashmir Requisitioning and Acquisition of Immoveable Property Act, 1968 (hereinafter referred to as the 'Act of 1968"") as no interest can be

awarded under the Act. He then submits that the judgment relied by the learned single Judge (The Managing Director, J&K Handicrafts, Jammu v.

M/s Good Luck Carpets, AIR 1990 SC 864) was under the Arbitration Act which cannot be made applicable in the facts and circumstances of

the present case as the land of the respondents was requisitioned and acquired by the State under section 7 of the Act. In the said Act, there is no

provision of interest at all and, therefore, the impugned award dated 30051995 passed by the learned District Judge, Jammu (Arbitrator) and

subsequently upheld by the learned Single Judge deserves to be setaside to that extent atleast.

In support of his contentions, Mr. Basotra relies upon a judgment of Hon'ble Apex Court rendered in Union of India vs. Hart Krishan Kholsa

(1993 Supp (2) SCC 149 (dead) by LRs and subsequently relied upon by Division Bench of this Court in case titled Gurdwara Guru Nanak Dev

Ji vs. Union of India and another, LPA(C)32/97 decided on 25052004.

Learned counsel for respondents (land owners) repudiated the submissions advanced by Mr. Basotra and submit that both the Courts below

have divulged deeply into the matter so far as amount of compensation is concerned, and, therefore, the said observations do not call for any

indulgence of this Court. With regard to the interest part, the learned counsel relied upon a latest judgment of Hon'ble Apex Court rendered in Spl.

Deputy Collector (Land Acquisition), General Hyderabad vs. B. Chandra Reddy (AIR 2007 SC 15779) and drawn our attention to paras21 and

22 of the judgment.

After giving our thoughtful consideration to all the aspects of the matter, we do not find any substance in the arguments of Mr. Basotra so far as

fixing of amount of compensation is concerned. The learned District Judge, Jammu (Arbitrator) had entered into a detailed discussion while fixing

the amount of compensation for classII land @ 24,000/ and class three land @ Rs. 20,000/per Kanal. The learned single Judge has also

rescanned the entire case once again and returned a categoric finding that the compensation awarded to the respondents is assessed on the basis of

documentary evidence placed before the Arbitrator and, therefore, cannot be said to be excessive one. We, while sitting in intraCourt appeal do

not intend to disturb the concurrent finding on facts as we do not find any basic infirmity in it. Consequently, we repel the argument of Mr. Basotra

on this aspect.

We, however, find force in the other submission advanced by Mr. Basotra visavis, interest granted to the respondents @ 12% P.A. from the

date of passing of the award by the Arbitrator and subsequently upheld by the learned single Judge. In our considered view, granting of interest is

contrary to the provisions of the Act.

The Apex Court, while dealing with constitutionality of section 8(3) (a) of the Act in Hari Krishan Khosla's case (supra) observed that the

aforesaid section is not violative of Article 14 of the Constitution of India. It was observed in the aforesaid judgment that amount of compensation

can be fixed by agreement under Section 8(1) (b) and in the absence of such an agreement it is left to the discretion of the Arbitrator, who under

Section 8 (1) (e) is to hear the dispute. The Arbitrator must determine the amount of compensation which appears to him to be just but he must

have regard to subsections*(2) and (3) of Section 8. It was then observed that the significant omission of solatium is indicative of the legislative

intent necessitating stress on the expressions ""just' and ""circumstances of which case"" occurring in sub section (1) (e) of Section 8. Further it was

observed that another distinguishing feature is the expression with 'open market' in Section 8(3) (a) and the reasons why solatium has not been

provided is that ""open market"" contemplates a bargain between 'free buyer' and a 'free seller' unfettered by the consideration of requisition and

consequent acquisition.

In Gurdawara Sh. Nanak Dev Ji's case (supra) relied upon by Mr. Basotra, the Division Bench of this Court, while relying upon Hari Krishan

Khosla's case (supra) declined the solatium and interest to the appellant. In the said case the land owner was granted the compensation under the

Act, whereas no solatium and interest was awarded. Union of India had shown its grievance with regard to the amount of compensation, whereas

the land owners were unhappy in disallowing the interest and solatium to them. Ultimately, both the sides had filed letters patent appeals before this

Court. The Division Bench of this Court while agreeing that the amount of compensation as already enhanced by the learned single Judge also

agreed with the view of the learned Single Judge in not awarding the solatium and interest. Therefore, in our view, the aforesaid two judgments

cited by Mr. Basotra, resolve the controversy with regard to the interest part.

With due respect, the judgment in case M/s Good Luck Carpets (Supra) relied upon by the learned Single Judge so as to award interest

would not be applicable in the present case. It was with regard to the proceedings under the Jammu and Kashmir Arbitration Act (2 of 2002 Svt.).

However, in the present case the arbitrator was appointed under section 8 (1) (b) of Act of 1968.

To be fair to learned counsel for the respondents, we may observe here that the judgment in case Spl. Deputy Collector (Land Acquisition),

General Hyderabad (Supra) cited by them would have no bearing on the facts of the present case. In the aforesaid case, the Hon'ble Supreme

Court did not disturb the finding with regard to grant of benefit of solatium and interest to the land owners primarily on the pretext that the award

was passed by the Arbitrator sixteen years back and it had attained finality being not challenged. That is not the position in the case in hand. In the

aforesaid case, Hari Krishan Kholsa's case (supra) was also referred to by the appellant(s) but no finding is returned thereto.

From the perusal of the provisions of the Act it is manifest that no provision for payment of interest on the compensation payable on the

acquisition of immovable property has been made. The reason for not providing for interest is obvious. Section 7 of the Act vests the Government

with Power to acquire only such property which is subject to requisition. Unless the property sought to be acquired has already been requisitioned

in terms of Section 3 of the Act the same cannot be acquired in terms of section 7. When a property is requisitioned in terms of section 3, the

person to whom such property belongs becomes entitled to the payment of periodic compensation during the period of requisition fixed in terms of

Rule 9 of the rules framed under section 22 of the Act which can be in the shape of monthly rental. Thus until the property is acquired and just

compensation is paid, the person to whom such property belongs continues to remain entitled to be paid the requisition compensation/rental.

Therefore, at no point of time the right of such person to receive compensation for acquisition remains in jeopardy.

Testing the case in hand on that rationale, we are of the confirmed view that the respondents are not entitled to any interest and the view taken

by the learned Arbitrator awarding them the interest on the acquired property and subsequently upheld by the learned Single Judge deserves to

bedisturbed. Ordered accordingly.

The net result is that the instant appeal is partly allowed confirming the amount of compensation already awarded to the respondents (land

owners) and disentitling them to the interest as already awarded.

LPA (C) No. 60/2005 along with connected CMPs is disposed of in the aforesaid terms.