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REPORTABLE

SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  475 OF 2020 [ARISING OUT OF S.L.P. (CIVIL) NO.29148 OF 2016]

CHANABASAPPA   …APPELLANT

VERSUS

KARNATAKA NEERAVARI NIGAM LTD. & ANR.   …RESPONDENTS

J U D G M E N T

ARUN MISHRA, J.

1. This appeal has been preferred by the appellant­claimant

aggrieved by the judgment and order dated 17.02.2016 passed by the

High Court of Karnataka, Circuit Bench at Dharwad, enhancing the

compensation to Rs.3,00,000/­ per acre.  Interest under section 34 of

the Land Acquisition Act, 1894 (for short,  ''the Act") has also been

awarded from the date of the award,  i.e. 23.07.2009 and not for the

period prior thereto.   

2. Notification under section 4 was issued on 7.6.2007 for

acquiring inter alia the land belonging to the appellant, and the award

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was passed on 23.7.2009.   It was submitted that under Malprabha

Reservoir Project, a dam was constructed in the district of Belgaum

across the Malprabha river by the Government of Karnataka.   The

original height of the dam was 2074.5 feet.  This was raised to 2079.5

feet.  However,  while raising the  height,  a  proper  survey  was  not

conducted as to the land which would come under submergence.  As

a result thereof, in the year 1991 when the full reservoir level

breached, water entered into those lands which were not acquired.

The issue was raised in the Karnataka Legislative Assembly on

6.9.1991; however, the acquisition process was initiated belatedly in

the year 2007.  

3. Notification under section 4 of the Act was issued on 7.6.2007.

Declaration under section 6 of the Act  was issued on 15.12.2007.

The award was passed on 23.7.2009, awarding a sum of Rs.56,672/­

per acre.  Reference was sought on 1.9.2009, claiming compensation

at the rate of Rs.5,00,000/­ per acre.   The Senior Civil Judge,

Bailhongal, awarded a sum of Rs.2,70,000/­ per acre.   Aggrieved by

the decision, an appeal was preferred before the District Court.  The

District Court reduced the compensation to Rs.2,25,000/­ per acre by

applying the capitalization method.  Aggrieved thereby, Misc. Second

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Appeal was preferred in the High Court.   The High Court awarded

compensation at the rate of Rs.3,00,000/­ per acre.  By the impugned

order, the High Court ordered payment of interest from the date of

award,  i.e.  23.7.2009, and not  from the date of  notification issued

under section 4 or w.e.f. 1991.  Hence this appeal has been preferred.

4. It was submitted by Shri Gaurav Banerjee, learned senior

counsel appearing on behalf of the appellant that, as a matter of fact,

the area came under submergence in the year 1991. Thus, the

damages ought to have been awarded from the year 1991 till the date

of notification under section 4, and interest under section 34 should

have been awarded with effect from the date  of  notification under

section 4. It was submitted that rent or damages may be awarded as

the amount of interest to be awarded under section 34 of the Act.  

5. On the other hand, Shri Naveen R. Nath, learned counsel

appearing for the respondent submitted that no case is made out to

award the compensation from 1991 or from the date of notification

under section 4.   He also disputed that the area came under

submergence from the year 1991 and submitted that several

documents from the year 1993 to 2005 had been placed on record

showing cultivation on the disputed land. Inquest conducted in the

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presence of panchas dated 9.6.2009 is on record in which crops of

sugarcane, wheat, jwar, cotton are shown.  An inspection of the land

was conducted on 20.07.2008, which shows the existence of  open

well, borewell in the said land. Thus, having claimed to be in

cultivation possession of the land, the appellant cannot be said to be

entitled for any compensation for the period 1991 till the date of the

notification.   Interest has been awarded from the date of the award.

As such no interference is called for in the matter.

6. In  Lila Ghosh v. State of West Bengal  (2004) 9 SCC 337, this

court held that interest under section 34 or section 28 can start only

from the date the possession  is taken.  Unless there is  a case of

urgency under section 17(1) of  the Act where possession has been

taken, or the acquisition process is initiated, in such cases,

compensation would be payable by virtue of provisions of section 17

of the Act.  This Court observed :

“19. Even though the authority in Shree Vijay Cotton & Oil Mills Ltd (1991) 1 SCC 262 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  the  case  where  possession  is  taken  prior  to  acquisition

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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,  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,  whereby  invoking  urgency  clause possession has been 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.”

(emphasis supplied)

7. In R.L. Jain v. DDA & Ors. (2004) 4 SCC 79 this Court held that

in a case where the landowner is dispossessed prior to the issuance of

preliminary notification under section 4 of the Act, it is open to the

landowner to recover the possession of his land by taking appropriate

legal proceedings.  Therefore, he is only entitled to get rent or damage

for use and occupation for the period the Government retains

possession of the property. When possession is taken prior to

issuance of preliminary notification, the Collector may also determine

the rent or damages.  This Court has observed thus:

“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

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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.”

8. In  Siddhappa Vasappa Kuri & Anr. v. Special Land Acquisition

Officer & Anr. (2002) 1 SCC 142 this Court has laid down:

“6. It is, as we see it, clear from Section 23(1-A) that the starting point for the purposes of calculating the amount to be awarded thereunder, at the rate of 12 per centum per annum on the market value, is the date of publication of the Section 4 notification. The terminal point for the purpose is either the date of the award or the date of taking possession, whichever is earlier. In the present case, possession of the land having been taken prior to the publication of the Section 4 notification, that terminal is not available. The only available terminal is the date of the award. The High Court, therefore,  was  in  no  error  in  holding  that  the  appellants  were entitled to the additional compensation under Section 23(1-A) for the period 8-3-1991 to 6-2-1993.”

9. In the  Special Land Acquisition Officer v. Karigowda & Ors.

(2010) 5 SCC 708 has observed that no interest can be claimed for

the period prior to the Section 4 notification. Where possession has

been lost prior to initiation of the acquisition proceedings, the

landowners can claim rent or damages before the Collector.

Following observations have been made in Karigowda supra:

"101. As is evident from the above dictum of the Court, despite dispossession, the title continues to vest in the landowners and it is open for the landowners to take action in accordance with law. Once notification under Section 4(1) of the Act has been issued and the acquisition proceedings culminated into an award in terms

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of Section 11, then alone the land vests in the State free of any encumbrance or restriction in terms of provisions of Section 16 of the  Act.  The  court,  in  situations  where  possessions  have  been taken prior to issuance of notification under Section 4(1) of the Act,  can  direct  the  Collector  to  examine  the  extent  of  rent  or damage  that  the  owners  of  land  would  be  entitled  to,  the provisions of Section 48 of the Act would come to aid and the court would also be justified in issuing appropriate direction. This was the unequivocal view expressed by the Court in  R.L. Jain case as well. This legal question is no more open to controversy and stands settled by this Court. We would follow the view taken and accept the contention of the appellant State that the Reference Court  as  well  as  the  High  Court  could  not  have  granted  any interest under the provisions of the Act, for a date anterior to the issuance  of  notification  under  Section  4  of  the  Act.  However, following the dictum of the Bench in R.L. Jain case, we direct the Collector to examine the question of payment of rent/damages to the claimants, from the period when their respective lands were submerged  under  the  backwater  of  the  river,  till  the  date  of issuance of the notification under Section 4(1) of the Act, from which date, they would be entitled to the statutory benefits on the enhanced compensation.”

10. In Karigowda supra, the question came up for consideration as

to interest payable on taking of possession.   This Court considered

various issues and observed that the decision of Larger Bench in R.L.

Jain‘s  case (supra) is binding.   It has been observed that once

notification under section 4(1) has been issued and the award has

been passed, then only the  land will  vest  in the State. In case  its

possession has been taken earlier to the issuance of notification

under section 4(1) of the Act, the Court can direct the Collector to

examine the extent of rent or damage that the owners of the  land

would  be entitled to.   The  Collector  was  directed to examine the

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question of payment of rent/ damages from the period their respective

lands were submerged in the backwater of the river, till the date of

issuance of notification  under section  4(1) from  which  date, they

would be entitled to claim benefits on the enhanced compensation.

The question of interest  arises  after the date  of  notification under

Section 4 and not prior to under section 28 or 34 of the Act.

11. When we consider the provisions of section 23, while

determining the  compensation  under section 23(1) of the  Act, the

Court shall  take  into consideration firstly, the market value of  the

land on the date of publication, secondly, the damage sustained by

reason of taking of any standing crops or trees and other damages at

the time of taking possession. Under section 23(1)(A) of the Act, the

additional compensation is awarded at the rate of twelve percent per

annum on the market value from the date of notification under

section 4.   Under section 23(2) of the Act, in addition to the market

value, thirty percent solatium is awarded on such market value.   

12. In the present matter, we are concerned with the question of

interest to be awarded under section 34.   Section 34 of the Act is

extracted hereunder:

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“34.  Payment  of  interest  –  When  the  amount  of  such compensation  is  not  paid  or  deposited  on  or  before  taking possession  of  the  land,  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:

[Provided that if such compensation or any part thereof is not paid or deposited within a period of one year from the date  on which  possession is  taken,  interest  at  the rate  of fifteen per centum per annum shall be payable from the date of expiry of the said period of one year on the amount of compensation or part  thereof which has not been paid or deposited before the date of such expiry.]”

13. Under section 34, nine percent interest is payable for the first

year from the date of taking possession, and in case it is not paid

within one year from the date of possession, the interest at the rate of

fifteen percent per annum is payable.   

14. In the present matter, interest has been awarded from the date

of the award under section 34, not from the date of notification under

section 4.  It was submitted on behalf of the respondents that it was

not claimed before the reference court that possession was deprived

of  in the year 1991.   Compensation / Damages were not claimed

from the year 1991 and the factum of submergence has been

disputed.

15. In the instant case, the date of taking of the

possession/submergence is disputed, and there is no categorical

finding recorded that area in question came under submergence with

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effect from the year 1991 and was not as a matter of fact in

possession of the appellant. Certain documentary evidence has been

pointed out, indicating that the land was in cultivating possession of

the appellant.  It is also not clear for how much period of a year the

area in question remained in submergence. Certain documents have

been filed by the appellant in this Court in the form of

correspondence showing that certain survey numbers in various

villages came under submergence, which was required to be acquired.

The question is, which were those survey numbers that came under

submergence  has to  be examined  by the  Collector.  The  claim of

damages would depend upon the factum whether the land has come

under submergence in the year 1991 for which adequate directions

have been issued by the High Court to the Collector.   

16. In these circumstances, we direct the Collector shall  examine

whether the area had come under submergence and shall determine

the quantum of damages to be paid from 1991 till the date of

notification under section 4. In case the area has come in

submergence, then the appellant shall be entitled to the interest

under Section 34 from the date of notification under Section 4 till

award also.  Interest under Section 34 at the most can follow from the

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date of notification under section 4, in case the area had come under

submergence at any point of time before the notification was issued.

The Collector shall determine the aforesaid aspect within six months

after hearing the parties and the evidence as may be adduced.   The

appeal is accordingly disposed of .   

…..………………………J.    (Arun Mishra)

…..………………………J.   (Indira Banerjee)  

New Delhi;        January 21, 2020