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PETITIONER: PREM NATH KAPUR & ANR. ETC.

       Vs.

RESPONDENT: NATIONAL FERTILIZERS CORPORATION

DATE OF JUDGMENT29/11/1995

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. HANSARIA B.L. (J) MANOHAR SUJATA V. (J)

CITATION:  1996 SCC  (2)  71        JT 1995 (9)    23  1995 SCALE  (7)109

ACT:

HEADNOTE:

JUDGMENT:                             WITH                CIVIL APPEAL NO. 11399 OF 1995          [Arising out of SLP (C) No. 7840 of 1987]                       J U D G M E N T K. Ramaswamy, J.      Leave granted.      Notification  under   Section  4   (1)  of   the   Land Acquisition Act, 1894 [for short, "the Act"] acquiring large track  of   land  including   the  land   belonging  to  the appellants, was published on February 5, 1973. On October 9, 1975, the  Collector made his award determining compensation @ Rs.  10,080/- per acre. On reference under Section 18, the Civil Court,  by award  and decree  dated January  2,  1979, confirmed the  award of  the Collector. In another reference of the cosharers, the District Judge by his award and decree dated January 24, 1980 enhanced the compensation. On further revision, the  High  Court  by  order  dated  May  23,  1983 determined the  compensation @  Rs.24,000/- per  acre  while dismissing the  appeal  of  the  respondent-Corporation.  On January 9,  1975, after  the award  was made,  the Collector paid  the   compensation  including  solatium  and  interest determined  thereon.  After  the  High  Court  enhanced  the compensation in  revision, the same was deposited on January 14, 1984.  It is  not necessary  to dilate but suffice it to mention that  the appellants  by  way  of  revision  claimed compensation for  damages for  severance of other lands from acquired land  as provided  under clause  thirdly of Section 23(1). In  another revision, the appellants claimed solatium and interest on damages for severance of the lands which was also granted by the High Court. In yet another revision, the High Court  enhanced solatium  and interest  and  additional amount under  Sections 23(2),  28 and 23 (1-A) as amended by Act 68  of 1984.  The appellants  laid  execution,  firstly, after appropriating  the amount received towards costs, then

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towards interest  on the total compensation and solatium and then for  compensation in  respect of  the lands.  Executing Court granted the relief, but the High Court in revision set aside the  order dated  March 11, 1987 in Civil Revision No. 3814 of  1986 and directed the Executing Court to dispose of the matter  in the  light of the law laid down therein. Thus these appeals  by special leave. Another Bench of this Court issued notice  suo  motu  on  the  amounts  awarded  towards severance  charges,   interest  and   solatium  thereon  and additional benefits under under the Amendment Act.      Shri Pankaj  Kalra, learned  counsel for the appellants contended that the present controversy having been concluded by a  recent judgment  of this  Court in  Mathunni Mathai v. Hindustan Organic  Chemicals [JT  1995 (4)  SC 233],  is  no longer res integra. He further contended that the appellants are entitled  to appropriate  the costs  from the  principal amount of  compensation,  then  towards  interest  on  total amount of  compensation from  the date  of taking possession till date  of payment as determined by the Collector as well as the  High Court.  The hierarchy of courts would determine the compensation  after considerable  delay and the owner or interested person  is entitled to be compensated for loss in value of  their land. On determination thereof, the State as judgment-debtor is  liable to  restitute the owner with just compensation by way of principal amount and interest accrued thereon. The  owner of  the  land  as  judgment-creditor  is entitled to  appropriate the  principal amount  deposited by the Collector,  in the  first instance,  towards costs, then towards interest  on total amount and the balance amount and interest accrued  thereon is  entitled to  be  recovered  in execution. Therefore,  the  High  Court  was  not  right  in holding that  the appellants  were entitled  to the interest only from the respective dates of the award of the Collector or the orders of the court. The direction not to appropriate the amount  deposited by  the Collector  first towards costs and then  interest is  clearly illegal.  In support thereof, Shri Kalra  placed strong  reliance on  the judgment of this Court in Meghraj & Ors. v. Bayabai & Ors. [AIR 1970 SC 161].      The question,  therefore, is when does the liability of the State  to pay  interest ceases? Whether the owner of the land is  entitled to  appropriate from  the amount deposited towards costs  and then  towards interest and then principal amount and again interest on total amount?      In this  behalf, it  is appropriate  to notice relevant provisions  of  the  Act.  Section  23(1),  clause  firstly, envisages that  in determining the amount of compensation to be awarded  for land acquired under the Act, the Court shall take into  consideration "the  market-value of  the land" at the date  of  the  publication  of  the  notification  under Section 4(1).  Sub-section (2)  of Section  23 provides that "in addition  to the  market-value" of  the land,  the Court shall "in  every case  award a  sum of  thirty per centum on such market-value, in consideration of the compulsory nature of the acquisition"; preceding September 24, 1984, at 15% on such market-value.  Similarly, under  Section 23  (1-A),  as inserted by  Act 68  of 1984,  "in addition"  to the market- value of  the land,  the Court  shall in every case award an amount calculated at the rate of twelve per centum per annum "on such market-value" for the period commencing on and from the date of publication of Section 4 (1) notification to the date of  the award  of the  Collector or  the date of taking possession of  the land,  whichever is  earlier. Section  31 enjoins that the Collector on making the award under Section 11, shall  tender payment of the compensation to the persons interested entitled thereto according to the award. He shall

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also pay  the same  to them, unless prevented by one or more contingencies mentioned  in sub-section  (2). In that event, he "shall deposit the amount of compensation in the court to which a  reference under  Section 18  would  be  submitted". Section 34  directs that  when the amount of compensation is not paid or deposited on before the taking possession of the land, the  Collector "shall  pay  the  amount  awarded  with interest thereon" at the rates preceding Amendment Act 68 of 1984 at  six per  centum per  annum  or  as  per  the  rates prescribed by local Amendments made by the appropriate State Legislatures, from  the date  of taking possession "until it shall have  been so  paid or deposited". After the Amendment Act came  into force  on September  24, 1984,  the  rate  of interest was  revised as 9 per centum per annum. The proviso to Section  34 further  enjoins that if such compensation or any part  thereof "is not paid or deposited" within a period of one  year from the date of taking possession, interest at the rate  of 15  per centum  per annum shall be payable from the date of expiry of one year on the amount of compensation or part  thereof which  has not  been  "paid  or  deposited" before the date of such expiry.      In the  event of  the amount having been deposited into the court  in the contingencies specified in sub-section (2) of Section  31 or  on reference under Section 30, Section 33 gives power  to the  Court, on  an application  by  a  party interested or claiming an interest in such money, to pass an order to invest the money so deposited in such Government or other approved  securities as  it may  think proper, and may direct  the  interest  or  other  proceedings  of  any  such investment to  be accumulated  and paid in such manner as it may consider  proper so  that the parties interested therein may have  the benefit  therefrom as they might have had from the land  in respect  whereof such  money  shall  have  been deposited or as near thereto as may be.      On reference under Section 18 and after enquiry made by the Court  under Sections 20 and 21, Section 26 (2) declares that the  award made  shall be  deemed to  be "decree" under Section 2 (2) of Civil Procedure Code (for short, "CPC"] and the statement  of grounds  as "judgment" under Section 2 (9) of the  CPC. Section  28 enjoins that the award of the Court may direct  that the  Collector "shall  pay interest on such excess or  part thereof"  (emphasis supplied),  at the rates similar to  those mentioned  in Section 34 from "the date on which he  took possession of the land to the date of payment of such excess into Court". The duty to pay enhanced rate of interest as  provided  in  the  proviso  to  Section  34  is similarly provided  in the  proviso to  Section  28  as  per Section 18  of the  Amendment Act  68 of 1984. Section 53 of the Act  makes CPC  applicable to the proceedings before the court under  the Act.  It provides  that "save  in so far as they may  be inconsistent  with anything  contained in  this Act" [emphasis  supplied], the  provisions of  the CPC shall apply to all proceedings before the Court under the Act.      A reading  of the above provisions would establish that the award  consists of (a) the compensation determined under Section 23  (1), (b) solatium on the market-value determined under Section  23 (2),  as  additional  sum  for  compulsory nature of  acquisition, and  (c) payment  of interest on the amount of  compensation under  Section 11, on excess or part thereof under  Section 26  awarded by court from the date of taking possession  till date  of payment or deposit into the court at the rates specified under the respective provisions of Sections  34 and  28. Under  Section 23 (1-A), additional amount at 12 per centum per annum shall be paid or deposited from the  date of notification under Section 4 (1) till date

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of award or taking possession of land, whichever is earlier. The additional  amount under  Section 23  (1-A) and solatium under Section  23 (2)  are in  addition to  the compensation under Section  11 and excess amount determined under Section 23 (1)  read with  Section 26  or Section 54. Equally, under Section 26  of the  Act award is deemed to be a decree under Section 2 (2) of the CPC for the excess amount determined by the Court;  this  would  be  so  proprio  vigore,  when  the appellate court  under Section  54 has  further enhanced the compensation.      After notification under Section 4 (1) was published in the Gazette  and an  enquiry under  Section  5-A  conducted, publication of  the  declaration  under  Section  6  in  the Gazette gives  conclusiveness to  the  public  purpose.  The State is  authorised  to  empower  a  specified  officer  to proceed for  taking steps  under the  Act to  determine  the compensation. On service of notice under Section 9 read with Section 10,  enquiry under Section 11 would be conducted and the  Collector/Land   Acquisition  Officer  makes  an  award thereunder. Section  12 enjoins  him to serve notice, unless the party  is present either in person or through counsel at the time  of making  of the  award, to  the claimant  or the persons interested  or known to be interested, of his making of the  award. Section 16 empowers him to take possession of the land  which shall  thereupon  "vest  absolutely  in  the Government free  from all encumbrances". In case of urgency, sub-section (4)  of  Section  17  empowers  the  appropriate Government to  dispense with  the enquiry  under Section 5-A and  thereafter   declaration  under   Section  6  would  be published. Under  sub-section (1) of Section 17, appropriate Government, in  cases of urgency, is empowered to direct the Collector, though  no award  under Section 11 has been made, to take  possession of  the lands  after service  of  notice under Section  9 and  on the  expiration of 15 days from the publication of  such notice.  Such land shall thereupon vest absolutely in the Government free from all encumbrances.      It would  thus be  seen that  Section  34  of  the  Act fastens liability  on the  Collector to  pay interest on the amount of  compensation determined under Section 23 (1) with interest under Section 34 from the date of taking possession till date  of payment  or deposit  into the  court to  which reference under  Section 18 would be made. After the enquiry under Section  20 read  with Section  21 on determination of excess amount  of  compensation,  Section  28  empowers  the court, if in its opinion the Collector ought to have awarded compensation as  determined by  him, to  award interest  "in excess of sum which the Collector did award as compensation" The award  of the  court may  direct the  Collector to a pay interest on  such excess  or part  thereof from  the date on which he  took possession of the land to the date of payment of  such   excess  "into   Court"  at  the  rates  specified thereunder. In  other words,  Sections 34  and 28 fasten the liability on  the State  to pay  interest on  the amount  of compensation or on excess compensation under Section 28 from the date  of the  award and  decree but the liability to pay interest on  the excess amount of compensation determined by the Court  relates back  to the date of taking possession of the land to the date of the payment of such excess "into the court".  Section   34  when   contrasted  with  Section  28, visualises payment  of interest  from  the  date  of  taking possession when enquiry under Section 5-A was dispensed with and possession was taken under sub-section (1) of Section 17 till date of payment or deposit into the court while Section 28 enjoins  the Collector to make payment of interest at the specified rates  "on such  excess or  any part thereof" from

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the date  of taking  possession of  the land  to the date of payment of  such excess  amount or  part  thereof  into  the court. Section  53 specifically envisages that to the extent of any  inconsistency in  the provisions  of  the  Act,  the applicability of CPC to the proceedings under the Act stands excluded and  the provisions  of the  Act shall  prevail. In other words,  to  the  extent  of  the  specific  provisions provided in  the Act  when found  inconsistent with the CPC, only the provisions in the CPC which are consistent with the provisions  of   the  Act,  would  stand  attracted  to  the proceedings under  the  Act.  By  necessary  exclusion,  the inconsistent provisions of CPC stand excluded.      The basic  question, therefore,  would be  whether  the claimant is  entitled  to  appropriate  from  the  principal amount of  compensation  determined  under  Section  23  (1) towards costs,  and  then  towards  interest  payable  under either Section  34 or Section 28 or after Amendment Act came into force  w.e.f. September  24,  1984,  additional  amount under Section  23 (1-A).  Even in general principles of law, Section 60  of the  Contract Act  provides  that  where  the debtor has  omitted to  intimate  and  there  are  no  other circumstances indicating  as to which debt the payment is to be applied,  the creditor may apply it at his discretion, to any lawful  debt actually  due and  payable to  him from the debtor, whether  its recovery is or is not barred by the law in force  for the time being, as to the limitation of suits. It would,  therefore, be  clear that  the debtor  may indeed exercise  that  right  and  may  specify  his  appropriation expressly or  his intention may be implied as shown by other circumstances, indicating  that his intention at the time of payment was  to appropriate the amount deposited by him to a specific debt or account towards the debt.      It is  clear from the scheme of the Act and the express language used  in Sections  23 (1)  & (2), 34 and 28 and now Section 23  (1-A) of  the  Act  that  each  component  is  a distinct and  separate one.  When compensation is determined under Section  23 (1),  its qualification,  though  made  at different levels,  the liability  to  pay  interest  thereon arises from  the date on which the qualification was so made but, as  stated earlier,  it relates  back to  the  date  of taking possession  of the  land till  the date of deposit of interest  on   such  excess  compensation  into  the  court. Equally, when  the appellate  court under Section 54 further enhances the  compensation,  interest  is  payable  on  such excess amount  determined under  Section 23  (1).  In  other words, the  liability to pay interest arises as and when the compensation  is  further  enhanced  and  liability  to  pay interest would be co-terminus with the payment of the amount under Section  34 from  the date  of taking  possession till date of payment or deposit or under Section 28 or Section 54 from the  date of taking possession till the date of deposit of such  excess amount  into the court. The liability to pay interest is  only  on  the  excess  amount  of  compensation determined under Section 23(1) and not on the amount already determined by  the Land Acquisition Officer under Section 11 and paid  to the  party  or  deposited  into  the  court  or determined under Section 26 or Section 54 and deposited into the court  or on solatium under Section 23(2) and additional amount under Section 23(1-A).      Thus we  hold that the liability to pay interest on the amount of  compensation  determined  under  Section  23  (1) continues to  subsist until  it is  paid  to  the  owner  or interested person  or deposited  into court under Section 34 read with Section 31. Equally, the liability to pay interest on the excess amount of compensation determined by the Civil

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Court under  Section 26  over  and  above  the  compensation determined by  the Collector/Land  Acquisition Officer under Section 11  subsists  until  it  is  deposited  into  court. Proprio  vigore  in  case  of  further  enhancement  of  the compensation on appeal under Section 54 to the extent of the said enhanced  excess amount  or part thereof, the liability subsists until  it is deposited into court. The liability to pay interest  ceases on  the date  on which the deposit into court is  made with the amount of compensation so deposited. As held  earlier, the  computation of the interest should be calculated from  the date  of taking possession till date of payment or  deposit in  terms of  Section 34 or deposit into court in terms of Section 28, as the case may be.      Equally, the  right to  make appropriation is indicated by necessary  implication, by  the award itself as the award or decree  clearly mentions  each of  the  items.  When  the deposit  is   made  towards   the  specified   amounts,  the claimant/owner is  not entitled to deduct from the amount of compensation  towards  costs,  interest,  additional  amount under Section  23 (1-A)  with interest and then to claim the total balance  amount with  further interest.  The ratio  of Joginder Singh & Ors. v. State of Punjab & Anr. [AIR 1985 SC 382] has  no application to the facts of this case. Right to compensation and  the qualification thereof are two distinct concepts. The  right to  compensation arises  when the  land vests in  the State while its qualification may be concluded at  a   later  stage  through  several  hierarchical  stages referred to  hereinbefore. The  question therein was whether the High Court while enhancing the compensation would direct payment of  interest on  enhanced amount  at 4  per cent per annum. This Court held that the distinction made by the High Court in  payment of interest from date of taking possession till date  of its  judgment was  incorrect. Accordingly,  it directed payment  of interest  @ 6 per cent per annum on the enhanced compensation  from the date of taking possession of the land till date of payment.      Equally, the  contention that  the claimant is entitled to interest  on solatium  is also  not warranted  by express provisions under  Section 23  (2), i.e.,  "in  addition  to" market-value, solatium  was required  to be paid. Section 34 or Section  28, as the case may be, fastens liability to pay interest only  on amount  of  compensation  or  such  excess amount of  compensation or  part  thereof  determined  under Section 23 (1). In other words, by virtue of the language of Section 23  (2), viz., "in addition to the market-value", as provided  in  Section  23  (1),  solatium  becomes  payable. Compensation under Section 23 (1), by necessary implication, excludes  the   liability  to   pay  interest  on  solatium. Equally, the  question of payment of solataium on additional amount was  also considered  by this Court in P.Ram Reddy v. State of Andhra Pradesh [(1995) 2 SCC 305] where it was held that no  solataium is  payable on  additional amount payable under Section  23 (1-A).  So too,  no interest is payable on additional amount under Section 23 (1-A) on other components or part  thereof determined  under Section  23(1)  over  and above the  award under  Section  11  by  Civil  Court  under Section 26 or on appeal under Section 54, respectively.      The  ratio   in  Megharaj   case  [supra]   is  equally inapplicable to  the appropriation of debt under the Act. It is seen  that by  operation of  Section 53 of the Act, Order 21, Rule  1 being  inconsistent with  the express provisions contained in  Section 34  and 28, stands excluded. The ratio therein, therefore,  is applicable  only  to  a  debtor  and creditor  in   an  ordinary   civil  suit  governed  by  the provisions of  the CPC.  Order 21  Rule 1 being inconsistent

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with the  express provisions  contained in Section 34 and 28 of the Act, it cannot stand extended to the cases covered by the Act.  It is  unfortunate that  these provisions were not brought to  the attention  of this  Court  when  it  decided Mathunni Mathai  case [supra], which make all the deference. With due  respect to  our learned  brethren who decided that case,  we   are,  therefore,  constrained  to  observe  that Mathunni Mathai  case cannot  be taken to have laid down the correct law.      Counsel appearing  for the  respondents in fairness has conceded that  since the respondents did not file any appeal against the  order passed by the High Court allowing damages for severance of the land and solatium and interest thereon, is not  in a  position to  assail the  correctness  thereof. However, the  revisional order  for  payment  of  additional benefits  and  enhanced  solatium  and  interest  under  the Amendment Act  68 of  1984 is clearly in excess of the power or jurisdiction  of the  High  Court.  The  power  to  award additional amount  under Section 23 (1-A) and solatium under Section 23 (2) are in addition to the marketvalue determined under Section  23 (1). Equally, interest under Section 28 is on excess amount. In other words, the power and jurisdiction to award  amounts under  Sections 23  (1-A), 23  (2) and  28 would arise  only when the Court or High Court under Section 54 enhanced compensation. There was no error in the original order for  amendment of  it under Section 151 or Section 152 of the CPC, as, when enhancement of compensation was made in revision in  1984, the  Amendment Act  68 of  1984 could not apply as  held by  this Court  in Union of India v. Raghubir Singh [(1989)  3 SCR 316] and K.S. Paripoornan [II] v. State of Kerala  [(1995) 1  SCC 367].  This  Court  in  catena  of decisions, to name a few, Union of India v. Smt. Pratap Kaur [Deed] through  Lrs. & Anr. etc. [JT 1955 (2) SC 569], State of Maharashtra  v. Maharau  Srawan Hatkar  [JT 1995  (2)  SC 583], State of Punjab & Anr. etc. v. babu Singh & Ors. [C.A. Nos. 3287-95 of 1995] decided on February 28, 1995 and State of Punjab  & Anr. vs. Jagir Singh etc. [C.A. Nos. 9911-12 of 1995] decided  on October 30, 1995, has laid the above ratio and the same are applicable to the facts of the case.      The appeals  are dismissed  accordingly. The  Executing Court shall  now proceed  with the  execution in  accordance with law declared hereinbefore. No costs.