IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 10665 OF 2010 [Arising out of SLP(C) No.2427/2009]

M. BUGGAPPA(D) THRO' LR & ORS. ......APPELLANTS  

Versus

LAND ACQUISITION OFFICER-CUM-MANDAL  REVENUE OFFICER & ANR.

.....RESPONDENTS

O R D E R

Leave granted.  

2. The  appellants’  land  was  acquired  in  pursuance  of  

preliminary notification dated 3.7.1990 and final notification  

dated 18.10.1990 for the public purpose of providing plots to  

persons  belonging  to  weaker  sections.  Possession  of  the  

acquired land was however taken over on 17.11.1977. The Land  

Acquisition  Officer,  by  his  award  dated  21.3.1991,  offered  

compensation at Rs.110/- per sq. yard. The Reference Court, by  

its  judgment  dated  30.12.1999,  affirmed  the  said  rate  of  

compensation.  On  appeal  to  the  High  Court,  by  the  impugned  

judgment  dated  13.10.2008,  compensation  was  increased  to  

Rs.160/- per sq. yard.

3. The Reference Court apart from awarding solatium, also  

awarded additional amount on the market value at the rate of  

12% per annum from 17.11.1977 to 3.7.1990. The Reference Court  

awarded interest at 9% per annum from 17.11.1977 for a period  

of one year and at the rate of 15% per annum from 17.11.1978.  

The High Court while increasing the compensation as above, held  

that  the  appellants  were  not  entitled  to  additional  amount  

under Section 23(1A) of the Land Acquisition Act, 1894 ('the  

Act', for short).  The High Court also held that appellants

were not entitled to interest from 17.11.1977 but only from the  

date of preliminary notification namely, 3.7.1990.  The said  

judgment is under challenge in this appeal by special leave.  

4. Learned counsel for the appellant did not challenge the  

correctness of the compensation determined at Rs.160/- per sq.  

yard.  His  grievance  was  only  in  regard  to  the  denial  of  

additional amount under Section 23(1A) of the Act and denial of  

interest  from  the  date  of  possession  till  the  date  of  

preliminary notification.

Re: Additional Amount

5. Section 23(1A) of the Act provides that in addition to  

the market value of the land, the Court shall award an amount  

calculated at the rate of twelve per cent per annum on such  

market value for the period commencing on and from the date of  

the  publication  of  the  notification  under  Section  4(1) in  

respect of such land, to the date of the award of the Collector  

or  the  date  of  taking  possession  of  the  land,  whichever  is  

earlier. Thus  the  date  of  commencement  for  payment  of  

additional  amount  is  the  date  of  notification  under  Section  

4(1) of the Act. The date of possession is the last date upto  

which additional amount can be awarded and not the commencement  

date. As the award was made on 21.3.1991 and possession was  

taken on 17.11.1977, no additional amount would be payable. The  

Reference Court has awarded additional amount from the date of  

taking possession to date of notification under Section 4(1) of  

the  Act.  This  is  contrary  to  Section  23(1A)  as  it  directs  

payment of additional amount only from the date of notification

under Section 4(1) of the Act (which is 3.7.1990). There is no  

question  of  paying  any  additional  amount  from  ‘3.7.1990  to  

17.11.1977’ which is absurd and impossible. Additional amount  

cannot be granted under Section 23(1A) of the Act in regard to  

any acquisition where possession was taken over prior to the  

date  of  the  notification  under  Section  4(1)  of  the  Act.  

Therefore, the Reference Court committed an error in awarding  

additional amount under Section 23(1A) of the Act and the High  

Court has rightly corrected the same.   

Interest

6. Insofar as interest is concerned, this Court in  R.L.  

Jain(D) By Lrs. v. DDA & Ors.- (2004) 4 SCC 79 and Special Land  

Acquisition Officer v. Karigowda - (2010) 5 SCC 164, made it  

clear that interest cannot be awarded from a date prior to the  

date  of  preliminary  notification  merely  on  the  ground  that  

possession  was  taken  prior  to  the  date  of  preliminary  

notification. Therefore award of interest under Section 28 of  

the Act from a date prior to date of preliminary notification  

is not sustainable and High Court was right in correcting the  

date  on  which  the  liability  to  pay  interest  would  arise  to  

3.7.1990.

Damages

7. This Court in  R.L.Jain (supra) observed that the land  

owner  is  entitled  to  compensation  for  wrongful  use  and  

occupation  from  the  date  of  actual  possession  to  date  of  

preliminary notification. We extract below the relevant portion

of the said judgment:

“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.”

In a subsequent decision in  Madishetti Bala Ramul (D) By Lrs.  

Vs. The Land Acquisition Officer, (2007) 9 SCC 650, this Court  

was of the view that instead of remanding the matter to the  

Collector  for  determining  the  amount  of  compensation  to  the  

landowners  for  the  period  prior  to  the  date  of  preliminary  

notification, interest of justice would be met if a direction  

is made for payment of some interest on the amount awarded, by  

way of damages for the period of illegal use, that is, between  

the date of dispossession to date of preliminary notification.

8. We are of the view that having regard to the fact that  

the possession of the land was taken as long back in 1977, that  

is 33 years ago, it would not be just and proper to remand the  

matter  to  the  Collector  at  this  stage  for  determination  of  

compensation for wrongful use at this stage.  Award of 6% per  

annum  on  the  compensation  amount,  as  damages  for  use  and  

occupation from the date of dispossession (17.11.1977) to date  

of preliminary notification (3.7.1990) in addition to what has  

been  awarded  by  the  High  Court  would  serve  the  interest  of  

justice.

9. Learned  counsel  for  the  appellant  submitted  that  in  

Madishetti Bala Ramul (supra) this Court had awarded damages at  

the rate of 15% per annum (on the market value determined) and,  

therefore, we should award damages at that rate. We find that  

award of damages at 15% on the compensation on the peculiar  

facts and circumstances of the case, and not on account of any  

principle evolved. Further, the market value as on 17.11.1977  

when possession was taken would have been much less than the  

market value as on 3.7.1990.  Therefore, if damages is awarded  

at 6% per annum on the market value determined as on 3.7.1990,  

the actual rate of damages with reference to the market value  

as on 17.11.1977 will be much more. In the circumstances, we  

are  of  the  view  that  the  damages  for  dispossession  without  

initiating acquisition proceedings, when expressed in terms of  

a percentage of the compensation determined with reference to  

the market value more a decade later should not be more than 6%  

per  annum.  Where  of  course  the  preliminary  notification  is  

issued  within  one  or  two  years  from  the  date  of  taking  

possession, the court may award damages even at 8% to 10% of  

the  market  value  determined  depending  upon  the  facts  and  

circumstances.  

10. We accordingly allow the appeal in part, and award in  

addition to what has been awarded by the High Court, damages at  

6% per annum from 17.11.1977 to 3.7.1990, on the market value  

determined as on 3.7.1990. The amount so due as damages shall  

carry  interest  at  6%  per  annum  from  the  date  of  award  

(21.3.1991) to date of payment. The amount awarded as damages  

shall not carry any additional amount or solatium.

  .....................J.          ( R.V. RAVEENDRAN )

New Delhi;        .....................J. December 13, 2010.              ( A.K. PATNAIK )