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CASE NO.: Appeal (civil)  3301 of 2002

PETITIONER: State of Maharashtra and Ors.                            

RESPONDENT: Vs. Maimuma Banu and Ors.                                    

DATE OF JUDGMENT: 05/08/2003

BENCH: S.N. VARIAVA & ARIJIT PASAYAT.

JUDGMENT:

J U D G M E N T

WITH

Civil Appeal Nos.3303/2002,3304/2002,3305/02, 3306/2002,3307/2002,3302/2002,3308/2002,        3309/2002,3310/2002, 3311/2002, 3312/2002,  3313/2002,3314/2002, 3315/2002, 3316/2002,  3317/2002,3318/2002, 3319/2002, 3320/2002,  3321/2002, 3322/2002.

ARIJIT PASAYAT,J

       The only point involved in these cluster of appeals is  whether the High Court of Bombay was justified in directing  payment of interest on rental compensation awarded to  persons whose lands were acquired under the Land  Acquisition Act, 1894 (in short the ’Act’).

       Factual matrix giving rise to these appeals is almost  undisputed except that the dates in regard to the  notifications issued under Sections 4 and 6 of the Act are  different. Lands of the respondents were acquired by the  appellant-State by private negotiations and accordingly  possession was taken prior to issuance of notification  under Section 4 of the Act. Subsequently, notification  under Section 6 of the Act was also issued. The Land  Acquisition Officer fixed the compensation payable and the  statutory entitlements.  The State of Maharashtra by  several resolutions and instructions contained in Circulars  dated 1.12.1972, 17.9.1977, 2.4.1979 and 24.3.1988 provided  for rental compensation payable to title holders of lands.  The resolutions in question, inter alia, provided that  where possession of lands is taken by private negotiations  a certain percentage of the estimated value of the land was  to be paid as rental compensation.  It was also indicated  that prompt payment of such compensation should be done.

       The land owners approached the High Court by filing  writ petitions making a grievance that after taking  possession of the land no rental compensation was either  being paid, or, there was abnormal and unusual delay in  making payment thereof. They claim interest for such

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delayed payment. The High Court by impugned judgment held  that the non payment of rental compensation within the time  prescriptions indicated in the resolutions  amounted to  deprivation of valuable property without due payment  therefor. It was directed that State authorities have to  pay the compensation and interest thereon at the rates  prescribed in the Government resolution dated 24th March,  1988 and the payment was to be released as expeditiously as  possible but in no case beyond the period of six months  from the date of judgment by the Collector concerned. It  was held that land owners will be entitled to raise demand  of rental compensation as well as the interest thereon  before the Collector when the award under Section 11 of the  Act is passed or before the Reference Court, as the case  may be. In case the concerned Owner has not been paid 80%  of the compensation as calculated by the Collector while  taking possession of the land without issuing notice under  Section 4(1) of the Act, the Government  was directed to  review its policy for higher rate of rental compensation as  well as interest thereon in the light of provisions  contained in Sections 17(3-A), 23(1-A) and 28 of the Act.  The rate of interest was stipulated to be 12% on the rental  compensation amount.    The High Court with reference to  various resolutions  noted above accepted the prayer and  directed as noted above.

       In support of the appeals, learned counsel for the  appellant-State  and its functionaries submitted that there  was no question of granting any interest on the rental  compensation. The High Court clearly erred in relying on  provisions like Section 17(3-A) or 23(1-A) to grant  interest by analogy. There is no statutory entitlement for  any rental compensation. But with a view to eliminate   difficulties of the land owners whose claims get locked up  in the litigation and with a sense of benevolence, the  novel concept of rental compensation was introduced by the  State. When there is no statutory entitlement, the question  of granting any interest does not arise. It is pointed out  that in most of the cases payment of the rental  compensation has been made. It is also submitted that when  there is no statutory liability there is no question of  paying any interest on assumed equitable grounds. The rate  of 12% it is submitted is clearly without any basis and cut  off date fixed whereafter the interest starts running is  without any rationale. The claim for interest has been made  after unusually long periods, and the High Court should  have thrown out the writ petitions on the ground of delay  and laches.           Per contra, learned counsel for the respondents  submitted that the true essence of the resolutions and the  purpose for which rental compensation was granted is sought  to be over looked on the technical plea that the amount of  rental compensation is not under the Act. Even if it is not  under the Act, the spirit behind statutory prescriptions  under Sections 17(3-A) and 23(1-A) read with Section 28 of  the Act cannot be lost sight of. It was submitted that the  decisions relied upon by the High Court in  Gadag Sub- Division, Gadag v. Mathapathi Basavannewwa and Ors (1995  (6) SCC 355) and Executive Engineer, Irrigation Division v.  Laghubhai Nanubhai and Ors. (1995 Supp (4) SCC 583) clearly  indicate the logic of the claim made by the land owners and  accepted by the High Court.     The High Court took note of  the fact that in some cases interest has been granted and  therefore a departure cannot be made in respect of the

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present respondents.  

       It was pointed out by learned counsel for the  appellants that there was no resolution adopted for  granting interest and even if in some cases interest has  been held to be payable by a person whose competence to  give such direction is not free from doubt, the land owners  cannot lay claims for amounts which are not statutorily  payable to them.  Merely because in single case or two  interest was directed to be paid, it has no binding force.  

It is to be noted that the resolutions adopted by the  Government were intended to benefit the land owners whose  lands were acquired. To avoid unnecessary delays in payment  urgency for follow up action was indicated in the  resolutions. To that extent, learned counsel for the land  owners are on terra firma. But legally the land owners are  not entitled to any interest. There is no provision either  in the resolutions or in the statutes concerned which  entitles the land owners to payment of interest. Whatever  is statutorily payable has been clearly indicated in the  Act itself. Section 23(1-A) of the Act was introduced by  Amendment Act of 1984. There is no dispute, and in our  opinion rightly that rental compensation is not relatable  to the Act. The entitlement of the claimants is on the  basis of Government’s resolutions i.e. on the basis of  executive orders.  

       It is crystal clear from a bare reading of the  provisions of the Act that it does not provide for payment  of any rental compensation. Therefore, the appellants are  correct in their stand to the extent that the liability   for rental compensation does not have its source under the  Act. Therefore, the logic of Sections 17(3-A), 23(1-A),  Section 28 of the Act and Section 34 has no application in  law to rental compensation. That being the position, the  High Court was not justified in relying on Sections 17(3- A), 23(1-A) or Section 28 of the Act to grant interest.

But the problem does not end there. Admittedly, the  possession of land was taken long years back. Thereafter,  the land owner does not practically possess any right over  the land in question except to the compensation as  statutorily provided for. But it would be illogical and  improper to turn Nelson’s eye to the factual position as  highlighted by the respondents. It is not in dispute that  in most of the cases the rental compensation has not been  paid. If that factual position continues it clearly is a  case where the amount to which a person is entitled is  withheld without any legitimate  excuse. Learned counsel  for the appellants strenuously urged that in most of the  cases the proceedings have not yet attained finality and  are pending either before Reference Court or in appeal.  That does not provide a legitimate excuse to the appellants  to withhold payment of the rental compensation. The amount  calculated on the basis of award by the Land Acquisition  Officer cannot be below than the amount to be ultimately  fixed. If in appeal or the reference proceeding, there is  any variation, the same can be duly taken note of as  provided in law. There is no difficulty and we find none as  to why the compensation on the basis of value determined by

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the Land Acquisition Officer cannot be paid. If there is  upward revision of the amount, the consequences will follow  and if necessary re-determination of the rental  compensation can be made and after adjustment of the amount  paid, if any, balance can be paid. If however the Land  Acquisition Officer’s award is maintained then nothing  further may be required to be done.  In either event,  payment of the rental compensation expeditiously would be  an appropriate step. Looking at the problem from another  perspective, one thing is clear that authorities have  clearly ignored the sense of urgency highlighted in the  various resolutions.  

The crucial question is whether there can be any  direction for interest on rental compensation once it is  held that the same has to be paid within the time frame,  notwithstanding the fact that there is no statutory  obligation.  

       It is not in dispute that in certain cases payments  have already been made. Though the inevitable conclusion is  that the High Court is not justified in  directing grant of  interest on the logic of various provisions contained in  the Act, yet there is an element of equity in favour of the  land owners.  It is, however, seen that the writ  applications were filed long after the possession was  taken.  This factor cannot be lost sight of while working  out the equities. It would therefore be appropriate if  appellants pay interest @6% from 1.4.2000 till amounts  payable as rental compensation are paid to the concerned  land owners. This direction shall not apply to those cases  where the payments have already been made prior to  1.4.2000. Appeals are allowed to the extent indicated  without any stipulation of costs.