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CASE NO.: Appeal (civil)  2693 of 2007

PETITIONER: Madishetti Bala Ramul (D) By LRs

RESPONDENT: The Land Acquisition Officer

DATE OF JUDGMENT: 17/05/2007

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO.  2693           OF 2007  [Arising out of S.L.P. (Civil) No. 17397 of 2005]

S.B. SINHA, J :

1.      Leave granted.

        2.      This appeal is directed against a judgment and order 09.02.2005  passed by a Division Bench of the Andhra Pradesh High Court whereby and  whereunder the appeal preferred by the respondent herein under Section 54  of the Land Acquisition Act, 1894 (for short, ’the Act’) against a judgment  and award dated 02.01.1999 passed by the Principal Senior Civil Judge,  Warangal in O.P. No. 72 of 1997 was allowed in part.

3.      Certain basic fact of the matter is not in dispute.   

       42 acres 08 guntas of land situated in Hanamkonda Village was  acquired for a public purpose, namely, excavation of Kakatiya canal.  A  draft notification was published in the District Gazette under Section 4 of the  Act for acquisition of 4 acres 10 guntas  of the land in Survey No.622 on  16.03.1979.  Possession of the said land was taken over on 18.05.1979.  An  award was passed by the Land Acquisition Officer on 12.06.1988 fixing the  market value of the acquired land @ Rs.75,000/- per acre.  The said award,  however, was confined to 1 acre 5 guntas only as the balance 3 acres 5  guntas of land was held to be belonging to the Government of Andhra  Pradesh.  A writ petition filed thereagainst, which was marked as Writ  Petition No. 10387 of 1989, was allowed by the High Court of Andhra  Pradesh by a judgment and order dated 17.11.1989 directing the Collector to  refer the dispute to the Court in terms of Section 30 of the Act.  However,  later on, it was found by the respondent that the entire 4 acres 10 guntas of  land belonged to the appellants.  

4.      The Parliament enacted the Land Acquisition (Amendment) Act, 1984  which came into effect on or about 24.09.1986. As in terms of the said  amendment, an award was to be passed within a period of two years from  the date of issuance of the notification, another notification was issued by  the Collector in respect of the said 3 acres 5 guntas of land on or about  23.12.1991.  In respect of the said area,  another award was passed by the  Land Acquisition Officer at the same rate, namely, Rs.75,000/- per acre with  all the statutory benefits except additional market value.  When a writ  petition was filed before the High Court by Appellants, which was marked  as Writ Petition No. 16220 of 1994, by its judgment dated 18.12.1995 the  High Court directed the Land Acquisition Officer to grant additional market  value in terms of Section 23(1)(a) of the Act and interest as per Section 34  thereof from the date of taking possession, pursuant whereto and in  furtherance whereof a supplemental award was passed on  12.06.1998.  A

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reference was made by Appellants in terms of Section 18 of the Act and by a  judgment and order dated 02.01.1999, the Principal Senior Civil Judge  awarded compensation for acquisition of the said land @ Rs.60/- per square  yard as against the claim of Rs.150/- per square yard.  However, the learned  Judge granted additional market value and interest from the date of taking  possession till the date of award, holding :

"In the result it is ordered as follows :

       i)      The Claimant is entitled to market value of                      the acquired land at Rs. 60/- per sq. yard.

       ii)     The Claimant is entitled to solatium at 30%                      on the enhanced market value.

iii)    The Claimants are also entitled to          additional market value at 12% P.A. on the          enhanced market value from 1.05.1979 to          06.05.1994.

iv)     The Claimants is entitled to interest @ 9 %          p.a. for one year from 18.05.1979 and @          15% p.a.,       thereafter on the enhanced          market value till the payment is made or          deposited

               The reference is answered accordingly."

5.      An appeal was preferred thereagainst by Respondent and by reason of  the impugned judgment, the High Court held that Appellants are not entitled  to additional market value and interest from the date of taking of the  possession till the date of the award.   

6.      Mrs. K. Amareshwari, the learned Senior Counsel appearing on behalf  of Appellants, would submit that having regard to the fact that Section  23(1)(a) of the Act was introduced by the Amending Act 68 of 1994  providing for additional market value @  12% per annum from the date of  taking possession till the date of the award whichever is earlier, Appellants  became entitled thereto with effect from 18.05.1979.   

7.      It was contended that possession having been taken in terms of the  provisions of the Act,  and furthermore having regard to the fact that the  High Court of Andhra Pradesh issued a direction in that behalf in its  judgment  dated 28.12.1995 passed in Writ Petition No. 16220 of 1994 and  the Land Acquisition Officer having granted the same, amount could not  have been reduced in view of Section 25 of the Act.   

8.      Mr. Rahul Shukla, learned counsel appearing on behalf of the  respondent, on the other hand, submitted that no compensation is payable for  taking possession of the land de’hors a valid notification under the Act.

9.      The short question which, therefore, arises for consideration is as to  whether Section 25 of the Act will have any application in the fact of the  present case. Two notifications were issued separately. The second  notification was issued as the first notification did not survive.  Valuation of  the market rate for the acquired land, thus, was required to be determined on  the basis of the notification dated 23.12.1991.  The earlier notification lost  its force.   If the notification issued on 16.03.1979 is taken into consideration  for all purposes, the subsequent award awarding market value of the land @  Rs. 65/- per square yard cannot be sustained.  As the said market value has  been determined having regard to the notification issued on 23.12.1991,  possession taken over by Respondent in respect of 3 acres 5 guntas of land,   pursuant to the said notification dated 16.03.1979 was in the eye of law,  therefore, illegal.  The High Court evidently directed  grant of additional

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market value @ 12% per annum on the enhanced market value from the date  of the publication of the notification dated 23.12.1991 as also interest  thereupon from the said date  in stead and place of 18.05.1979.  We  generally agree therewith.  

10.     The findings of the High Court cannot be faulted in strict sense of the  law.  We generally agree therewith.

11.     In R.L. Jain (D) By L.Rs. v. DDA and Others [(2004) 4 SCC 79], a  three-Judge Bench of this Court, opined :         "11. In order to decide the question whether the  provisions of Section 34 of the Act regarding payment of  interest would be applicable to a case where possession  has been taken over prior to issuance of notification  under Section 4(1) of the Act, it is necessary to have a  look at the scheme of the Land Acquisition Act.  Acquisition means taking not by voluntary agreement but  by authority of an Act of Parliament and by virtue of the  compulsory powers thereby conferred. In case of  acquisition the property is taken by the State permanently  and the title to the property vests in the State\005"

12.     Noticing the provisions of the Act it was held that possession can be  taken over only after an award is made.  It was observed : "\005Section 17 is in the nature of an exception to Section  16 and it provides that in cases of urgency, whenever the  appropriate Government so directs, the Collector, though  no such award has been made, may, on the expiration of  fifteen days from the publication of the notice mentioned  in Section 9(1), take possession of any land needed for a  public purpose and such land shall thereupon vest  absolutely in the Government, free from all  encumbrances. The urgency provision contained in  Section 17(1) can be invoked and possession can be  taken over only after publication of notification under  Section 9(1) which itself can be done after publication of  notification under Sections 4(1) and 6 of the Act. Even  here in view of sub-section (3-A) the Collector has to  tender 80 per cent of the estimated amount of  compensation to the persons interested/entitled thereto  before taking over possession. The scheme of the Act  does not contemplate taking over of possession prior to  the issuance of notification under Section 4(1) of the Act  and if possession is taken prior to the said notification it  will be dehors the Act. It is for this reason that both  Sections 11(1) and 23(1) enjoin the determination of the  market value of the land on the date of publication of  notification under Section 4(1) of the Act for the purpose  of determining the amount of compensation to be  awarded for the land acquired under the Act\005"

       It was furthermore held :

       "12. The expression the Collector shall pay the  amount awarded with interest thereon at the rate of nine  per centum per annum from the time of so taking  possession until it shall have been so paid or deposited  should not be read in isolation divorced from its context.  The words such compensation and so taking possession  are important and have to be given meaning in the light  of other provisions of the Act. Such compensation would  mean the compensation determined in accordance with  other provisions of the Act, namely, Sections 11 and 15  of the Act which by virtue of Section 23(1) mean market  value of the land on the date of notification under Section

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4(1) and other amounts like statutory sum under sub- section (1-A) and solatium under sub-section (2) of  Section 23. The heading of Part II of the Act is  Acquisition and there is a sub-heading Taking Possession  which contains Sections 16 and 17 of the Act. The words  so taking possession would therefore mean taking  possession in accordance with Section 16 or 17 of the  Act. These are the only two sections in the Act which  specifically deal with the subject of taking possession of  the acquired land. Clearly, the stage for taking possession  under the aforesaid provisions would be reached only  after publication of the notification under Sections 4(1)  and 9(1) of the Act. If possession is taken prior to the  issuance of the notification under Section 4(1) it would  not be in accordance with Section 16 or 17 and will be  without any authority of law and consequently cannot be  recognised for the purposes of the Act. For parity of  reasons the words from the date on which he took  possession of the land occurring in Section 28 of the Act  would also mean lawful taking of possession in  accordance with Section 16 or 17 of the Act. The words  so taking possession can under no circumstances mean  such dispossession of the owner of the land which has  been done prior to publication of notification under  Section 4(1) of the Act which is dehors the provisions of  the Act."

       It was observed :                  "18. In a case where the landowner is dispossessed  prior to the issuance of preliminary notification under  Section 4(1) of the Act the Government merely takes  possession of the land but the title thereof continues to  vest with the landowner. It is fully open for the  landowner to recover the possession of his land by taking  appropriate legal proceedings. He is therefore only  entitled to get rent or damages for use and occupation for  the period the Government retains possession of the  property. Where possession is taken prior to the issuance  of the preliminary notification, in our opinion, it will be  just and equitable that the Collector may also determine  the rent or damages for use of the property to which the  landowner is entitled while determining the  compensation amount payable to the landowner for the  acquisition of the property. The provisions of Section 48  of the Act lend support to such a course of action. For  delayed payment of such amount appropriate interest at  prevailing bank rate may be awarded."   13.     Yet again in Lila Ghosh (Smt.) (Dead) Through L.R. Tapas Chandra   Roy etc. v. State of West Bengal etc. [(2004) 9 SCC 337], this Court held :           "19. Even though the authority in Shree Vijay  Cotton & Oil Mills Ltd. appears to support the claimants,  it is to be seen that apart from mentioning Sections 28  and 34, no reasons have been given to justify the award  of interest from a date prior to commencement of  acquisition proceedings. A plain reading of Section 34  shows that interest is payable only if the compensation,  which is payable, is not paid or deposited before taking  possession. The question of payment or deposit of  compensation will not arise if there is no acquisition  proceeding. In case where possession is taken prior to  acquisition proceedings a party may have a right to claim  compensation or interest. But such a claim would not be  either under Section 34 or Section 28. In our view

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interest under these Sections can only start running from  the date the compensation is payable. Normally this  would be from the date of the Award. Of course, there  may be cases under Section 17 where by invoking  urgency clause possession has bean taken before the  acquisition proceedings are initiated. In such cases,  compensation, under the Land Acquisition Act, would be  payable by virtue of the provisions of Section 17. As in  cases under Section 17 compensation is payable interest  may run from the date possession was taken. However,  this case does not fall into this category."

14.     In this case, however, the appellants herein were dispossessed  pursuant to a  notification which for one reason or other could not be given  effect to.  Another notification under Section 4 of the Act had to be issued.   The said notification was held to be not invalid.  The State put forward the  claim in respect of a portion of a property which it could not do.  Possession  must be obtained under a valid notification.

15.     The Land Acquisition Officer took possession of the land on the basis  of a notification which did not survive.  Respondent could not have  continued to hold possession of land despite abatement of the proceeding  under the 1984 Act.   It was directed to be decided by the High Court upon a  reference made by the Collector in terms of Section 30 of the Act.  The  State, therefore, itself realized that its stand in regard to the ownership of 3  acres and 5 guntas of land was not correct.  It, therefore, had to issue another  notification having regard to the provisions contained in the Land  Acquisition (Amendment) Act, 1984.  Whereas the High Court may be  correct in interpreting the question of law in view of the decision of this  Court,  but the same would not mean that Appellants would not get anything  for being remaining out of possession from 1979 to 1991.   

16.     Mrs.  Amareshwari relied upon Section 25 of the Act which is as  under : "25. Amount of compensation awarded by court not  to be lower than the amount awarded by the  Collector.\027The amount of compensation awarded by  the court shall not be less than the amount awarded by  the Collector under section 11."

17.     Section 25 of the Act merely prohibits that total amount of the award  granted by the Collector cannot be reduced.  Section 25 which has  undergone an amendment in the year 1984, thus, merely lays down that the  amount of compensation awarded by the reference court shall not be less  than the amount awarded by the Collector, and in no circumstances the  amount awarded by the Collector can be reduced.  What is an award is a  total sum and not the ingredients contained therein.  An award made by the  Collector is in the form of an offer.  It is in that sense only that the amount  contained therein cannot be reduced.  

18.     It is not the case of the appellants that the total amount of  compensation stands reduced.  If it had not been, we fail to understand as to  how Section 25 will have any application in the instant case.  Furthermore,  Section 25 being a substantive provision will have no retrospective effect.   The original award was passed on 08.02.1981, Section 25, as it stands now,  may, therefore, not have any application in the instant case.   

19.     In Land Acquisition Officer-cum-DSWO, A.P.  v. B.V. Reddy and  Sons [(2002) 3 SCC 463], this Court opined that Section 25 being not a  procedural provision will have no retrospective effect, holding :         "6. Coming to the second question, it is a well- settled principle of construction that a substantive  provision cannot be retrospective in nature unless the  provision itself indicates the same. The amended  provision of Section 25 nowhere indicates that the same

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would have any retrospective effect. Consequently,  therefore, it would apply to all acquisitions made  subsequent to 24-9-1984, the date on which Act 68 of  1984 came into force. The Land Acquisition  (Amendment) Bill of 1982 was introduced in Parliament  on 30-4-1982 and came into operation with effect from  24-9-1984\005"          20.     In the peculiar facts and circumstances of the case, although the  proper course for us would have to remand the matter back to the Collector  to determine the amount of compensation to which the Appellants would be  entitled for being remained out of possession since 1979, we are of the  opinion that the interest of justice  would be met if this appeal is disposed of  with a direction that  additional interest @ 15% per annum on the amount  awarded in terms of award dated 02.01.1999  for the period 16.03.1979 till  22.12.1991, should be granted, which, in our opinion, would meet the ends  of justice.          21.     The appeal is allowed in part and to the extent mentioned  hereinbefore.  Appellant shall not be entitled to costs.  Counsel’s fee is  assessed at Rs.50,000/-