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CASE NO.: Appeal (civil)  5785 of 2006

PETITIONER: Patel Joitaram Kalidas & Ors.                           \005.Appellants

RESPONDENT: Spl. Land Acquisition Officer & Anr.            .\005Respondents

DATE OF JUDGMENT: 13/12/2006

BENCH: B.P. Singh & Altamas Kabir

JUDGMENT: J U D G M E N T

(Arising out of SLP) No.11062-135 OF 2002)  WITH C.A Nos.              5786             /06 @ SLP(C) Nos.11136-11192 of 2002,    C.A Nos.              5787             /06 @ SLP(C) Nos.11194-11205 of 2002,  C.A Nos.              5788             /06 @ SLP(C) Nos.11206-11225 of 2002,  C.A Nos.              5789               /06 @ SLP(C) Nos.11227-11237 of 2002,  C.A Nos.              5790             /06 @ SLP(C) Nos.11238-11247 of 2002,  C.A Nos.              5791             /06 @ SLP(C) Nos.11248-11260 of 2002,  C.A Nos.              5792             /06 @ SLP(C) Nos.11262-11270 of 2002,  C.A Nos.              5793             /06 @ SLP(C) Nos.11273- 11279 of 2002,  C.A Nos.              5794             /06 @ SLP(C) Nos.11280-11289 of 2002,  C.A Nos.              5795             /06 @ SLP(C) Nos.11291-11299 of 2002,  C.A Nos.              5796             /06 @ SLP(C) Nos.11310-11314 of 2002,  C.A Nos.              5797             /06 @ SLP(C) Nos.11401-11440 of 2002,  C.A Nos.              5798             /06 @ SLP(C) Nos.11369-11387 of 2002,  C.A Nos.              5799             /06 @ SLP(C) Nos.11315-11336 of 2002,  C.A Nos.              5800             /06 @ SLP(C) Nos.11389-11400 of 2002,  C.A Nos.              5801             /06 @ SLP(C) Nos.11358-11368 of 2002,  C.A Nos.              5802             /06 @ SLP(C) Nos.11301-11309 of 2002,  C.A Nos.              5803             /06 @ SLP(C) Nos.11441-11451 of 2002,  C.A Nos.              5804             /06 @ SLP(C) Nos.11338-11355 of 2002,  C.A Nos.              5805             /06 @ SLP(C) Nos.11356-11357 of 2002.  

B.P. SINGH, J.

       Permission to file SLP granted.         Special Leave granted.         In this batch of appeals the sole question which falls for  consideration is whether the appellants herein are entitled to maintain  an application for special leave before this Court impugning the  judgment and order of the High Court which affirmed the findings of  the Reference Court under Section 18 of the Land Acquisition Act in  appeals preferred by the Special Land Acquisition Officer the  respondent herein.  The appellants contend that the High Court ought  to have, even in the appeals preferred by the Special Land Acquisition  Officer, awarded interest on solatium payable under Section 23 (2) of  the Land Acquisition Act.  The respondent on the other hand,  contends that the appeals had been preferred before the High Court by  the Special Land Acquisition Officer in which the appellants herein  were the respondents.  The appeals preferred by the Special Land  Acquisition Officer having been dismissed by the High Court, the  appellants cannot be said to be parties aggrieved by the judgment and  order of the High Court.  Before the High Court they had not even  prayed for grant of interest on solatium and, therefore, they cannot be  permitted to move this Court by way of special leave claiming such  relief. It is not disputed by them that if really such a claim was made

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either before the Collector or before the Reference Court dealing with  the matter under Section 18 of the Land Acquisition Act, having  regard to the law as now settled by a decision of this Court, interest on  solatium was bound to be granted to the appellants.  

The few facts which are relevant for the disposal of these  appeals are as follows:- Five Notifications under Section 4 of the Land Acquisition Act,  1894 (hereinafter referred to as the "Act) was published for  acquisition of lands situated in Village Vekara District Mehsana,  Gujarat.  The appellants are the land-owners of the lands sought to be  acquired by the aforesaid Notifications.  The Special Land Acquisition  Officer offered compensation @ Rs.24,000/- per hec. (Rs.2.40 per sq.  mtr.) for irrigated lands and Rs.16,000 per. hec. (Rs.1.60 per sq. mtr.)  for non-irrigated lands.  The appellants claimed a reference under  Section 18 of the Act and demanded compensation @ Rs.30 per sq.  mtr..  By its judgment and order of April 20, 2000 the Reference  Court under Section 18 of the Land Acquisition Act determined the  market value of the lands of the appellants @ Rs.22 per sq. mtr..   However, it did not award interest on the amounts payable under  Section 23 (1A) and Section 23(2) of the Land Acquisition Act,  namely, on the amount payable by way of additional amount and  solatium.  The Reference Court following the judgment of this Court  in Prem Nath Kapoor & Anr. Vs. National Fertilizers Corporation of  India Ltd. & Ors. (1996) 2 SCC 71 held that no interest was payable  in respect of amounts envisaged by Section 23 (1A) and 23 (2) of the  Act. Aggrieved by the judgment and order of the Reference Court  enhancing the compensation payable to the appellants, the Special  Land Acquisition Officer preferred First Appeal Nos.1320 to 1395 of  2001 before the High Court of Gujarat at Ahmedabad which came to  be disposed of by the judgment and order of the High Court dated  September 19, 2001.  The High Court found no reason to interfere  with the determination of compensation by the Reference Court and  accordingly dismissed the appeals.  

The instant special leave petitions have been filed by the  claimants contending that the High Court ought to have awarded  interest on the amounts payable under Section 23(1A) and 23(2) of the  Act.  It is their case that the interest payable on these amounts must be  incorporated in the decree of the Court even if no prayer is made for it  because the Act obliges the Collector to pay such interest on the  amount determined by the Collector or the Court.  For awarding such  interest no exercise of judicial discretion is called for.  Only an  arithmetical exercise has to be undertaken to calculate the interest  payable.  They, therefore, submit that the High Court ought to have  passed an order awarding interest to the appellants on the amounts  payable under Section 23 (1A) and 23 (2) of the Act even if no formal  claim was made before it by the claimant.

To appreciate the submission of the appellants it is necessary to  notice a few other facts.  

The question as to whether interest is payable on the additional  amount payable under Section 23 (1A) and on solatium under Section  23 (2) of the Act came up for consideration before this Court in Union  of India Vs. Shri Ram Mehar and Ors. (1973) 1 SCC 109.  This Court  held that "market value" is only one of the components to be reckoned  with in the determination of the amount of compensation.  Solatium  did not form part of the "market value" of the land.  Thus the word  "compensation" in Section 23 (1) of the Act consists of the "market  value" of the land and the solatium which is the consideration for the  compulsory nature of the acquisition.  Following the principle laid  down in Ram Mehar, a two Judge Bench of this Court in Periyar and  Pareekanni Rubbers Ltd. Vs. State of Kerala (1991) 4 SCC 195

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affirmed the view that the claimant is entitled to interest on solatium  under the Act.

However, in Mir Fazeelath Hussain and Ors. Vs. Special  Deputy Collector, Land Acquisition, Hyderabad (1995) 3 SCC 208, a  three Judge Bench of this Court held that solatium is not a part of the  award and hence interest is not claimable thereon.  The same view  was reiterated in Prem Nath Kapoor (supra) and later in Yadavrao P.  Pathade (D) by Lrs.& Ors. Vs. State of Maharashtra  (1996) 2 SCC  570 the same was reiterated by a three Judge Bench of this Court.

On account of the conflict of decisions of this Court of co-equal  benches the matter was ultimately referred to a larger bench of five  Judges and the matter has since been settled by a decision of this  Court rendered by a Bench consisting of five Judges in Sunder Vs.  Union of India (2001) 7 SCC 211.  The judgment of the Supreme  Court was delivered on September 19, 2001.  

It is a co-incidence that the impugned common judgment of the  High Court in the instant case was also pronounced on September 19,  2001, the same day on which judgment of the larger Bench of the  Supreme Court in Sunder’s case was pronounced holding that interest  was payable on the amount envisaged by Section 23 (1A) as well as  23 (2) of the Act.

Counsel for the respondents contend that there is no reason why  the appellants should be permitted to make a claim before this Court  which they had not made before the High Court.  Their claim for grant  of interest on these amounts was negatived by the Reference Court  relying upon the earlier judgment of this Court in Prem Nath  Kapoor’s case.  The appellants did not appeal against that part of the  order of the Reference Court and, therefore, they have given up their  right to claim interest on the additional amount and the solatium  payable under Section 23 of the Act.  

The appellants on the other hand, contend that at the time when  the reference under Section 18 was decided by the Court, the  judgment in Prem Nath Kapoor held the field and, therefore, in the  teeth of that judgment of the Supreme Court it was not considered  advisable to appeal against that part of the order.  Even so, they could  have made such a claim before the High Court when the appeal  preferred by the Special Land Acquisition Officer was being heard by  it.  Unfortunately, even till then the judgment of the Supreme Court in  Sunder’s case had not been pronounced.  It is only accidental that the  impugned common judgment and order of the High Court and the  judgment in Sunder’s case were pronounced on the same day and,  therefore, it was only after the disposal of the appeals by the High  Court that the appellants could, on the strength of the decision in  Sunder’s case, claim interest on these amounts.  It is for this reason  that they have invoked the special jurisdiction of this Court under  Article 136 of the Constitution of India.

The appellants heavily relied on the observations made in Shree  Vijay Cotton & Oil Mills Ltd. Vs. State of Gujarat (1991) 1 SCC 262.  That was a case where Government took possession of certain lands  under an arrangement with the owners on November 19, 1949.  It  raised structure on the aforesaid land but did not give land in  exchange to the owners thereof.  On February 1, 1955 a Notification  under Section 6 (1) of the Act was issued declaring that the land was  needed for public purpose.  The Collector awarded Rs.5075.44 as  compensation.  The land-owner asked for a reference under Section  18 of the Act.  The Court decided the reference under Section 18 and  found that the claimant was entitled to compensation on the basis of  market value of the land on the date of Notification under Section 6 of  the Act.   It accordingly awarded compensation  @ Rs.3 per sq. yard

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as also solatium @ 15 per cent and interest @ 6 per cent from  February 1, 1955.  The award of the Court was challenged by the  State which preferred an appeal before the High Court.  The High  Court held that the relevant date for determining the compensation  based on determining the market value of the land was the date of the  Notification under Section 4 (1) of the Act and since no such  Notification was issued it was not possible to determine the amount of  compensation payable under the Act.  The claimants came to this  Court after obtaining certificate from the High Court and finally this  Court allowed the appeal and remanded the matter to the High Court  holding that the Notification under Section 6 of the Act be treated as a  composite Notification under Section 4(1) and Section 6 (1) of the Act  and, therefore, the Court could lawfully award the market value of the  land on that day.  The High Court thereafter accepted the appeal  preferred by the State and reduced the price of acquired land from  Rs.3 per sq. yard to Rs.1.35 per sq. yard,  however rejecting the claim  of the claimant to interest from November 19, 1949 instead of  February 1, 1955.  The claimants therefore, preferred an appeal in  which the aforesaid judgment was rendered.

This Court noticed that the State had filed an appeal before the  High Court against the award of compensation @ Rs.3 per sq. yard  but the appellant/claimant did not file any appeal against that part of  the award which went against it and restricted the amount of interest  from February 1, 1955 instead of November 19, 1949.  The appellant  filed cross objections but they were dismissed as barred by time.  The  High Court on interpretation of Section 23(1), 26, 27 and 28  concluded that the interest payable to the claimants has to be a part of  the award \026 decree alongwith the compensation amount and as such is  subject to rules of procedure and limitation.  Thus, the cross  objections of the claimants having been rejected as time barred, it  could not claim interest in appeal preferred by State.  The High Court  also found that the relief was barred by reason of the principle of res- judicata.           

After noticing the findings of the High Court this Court held  that on a reference under Section 18 of the Act the parties go to trial  primarily for the determination of market value of the land.  So far as  award of interest is concerned, it is never an issue between the parties.   Once, the conditions under Section 28 or Section 34 of the Act are  satisfied the award of interest is consequential and automatic.  This  Court went on to observe:-

"The High Court while appreciating the point in issue  did not consider the mandatory provisions of Section  34 of the Act.  The said section specifically provides  that when the amount of compensation is not paid on  or before taking possession of the land the Collector  shall pay interest at 6 per cent per annum from the  date of taking over possession.  The payment of  interest is not dependent on any claim by the person  whose land has been acquired.  There can be no  controversy or any lis between the parties regarding  payment of interest.   When once the provision of  Section 34 are attracted it is obligatory for the  Collector to pay the interest. If he fails to do so the  same can be claimed from the court in proceedings  under Section 18 of the Act or even from the appellate  court/courts thereafter".

       This Court also observed:-

"There is inherent evidence in the wording of Sections  28 and 34 to show that the framers of the Act intended to  assure the payment of interest to the person whose land

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was acquired and it was not the intention to subject the  said payment to procedural hazards.  Section 34 lays  down that "the Collector shall pay the amount awarded  with interest at 6 per cent per annum\005.."  The legislative  mandate is clear.  It is a directive to the collector to pay  the interest in a given circumstance.  Section 34 nowhere  says that the interest amount is to be included in the  award-decree as prepared under Section 23(1) read with  Section 26 of the Act.  Similarly Section 28 provides "the  award of the court may direct that the Collector shall pay  interest".  Here also the award under Section 23(1) read  with Section 26 has been kept distinct from the payment  of interest under the section.  The interest to be paid  under Section 34 and also under Section 28 is of different  character than the compensation amount under Section  23(1) of the Act.  Whereas the interest, if payable under  the Act, can be claimed at any stage of the proceedings  under the Act, the amount of compensation under Section  23(1) which is an award-decree under Section 26, is  subject to the rules of Procedure and Limitation.  The  rules of procedure are hand-maiden of justice.  The  procedural hassle cannot come in the way of substantive  rights of citizens under the Act.

       We do not, therefore, agree with the reasoning and  the findings reached by the High Court.  We are of the  opinion that it was not necessary for the appellant- claimant to have filed separate appeal/cross-objections  before the High Court for the purposes of claiming  interest under Section 28 or Section 34 of the Act.  He  could claim the interest in the State appeal. The fact, that  he filed cross-objections which were dismissed as time  barred, is wholly irrelevant".

       Learned counsel appearing on behalf of the respondents  submitted that in terms of the judgment in Shree Vijay Cotton even if  the claimants had right to claim interest at any stage, they ought to  have made such a claim before the High Court at any time before the  disposal of the appeals.  Though, it was not necessary to make such a  claim in any particular form, and neither the rules of procedure nor the  rigors of limitation inhibited the right of the claimants to claim  interest, the least that was expected of them was to make a claim in  some form or the other, which they have failed to do.  In such a case,  it would not be appropriate for this Court to exercise its discretion  under Article 136 of the Constitution of India to grant relief to the  appellants.

       Having regard to the submissions urged on behalf of the  respondents we could have remitted the matter to the High Court to  give an opportunity to the claimants to make a claim of interest before  the High Court.  That however, would only be a formality because  having regard to the law laid down in Sunder, the High Court is bound  to award the interest on the additional amount payable under Section  23(1A) and solatium payable under Section 23 (2) of the Act.   Moreover, grant of interest on these amounts is consequential and  automatic and involves only arithmetical calculation and not  application of judicial mind or exercise of judicial discretion.  It is no  doubt true that the appellants ought to have made such a claim before  the High Court, even in the appeals preferred by the State.  But in  fairness to the appellants it must be conceded that during the  pendency of the appeals before the High Court the law as laid down in  Prem Nath Kapoor held the field and, therefore, it would have been  futile for them to claim interest.  The claimants could have filed such  an application before the High Court if the judgment in Sunder was

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pronounced when the appeals were pending before the High Court.   Unfortunately, they could not do so because the judgment in Sunder  and the impugned judgment in the appeals preferred by the State  before the High Court were pronounced on the same day.  Having  regard to these facts, peculiar to this case, we are persuaded to allow  the appeals preferred by the appellants as a special case in the interest  of justice.  Accordingly, we hold that the appellants are entitled to  interest on the amounts payable to them under Section 23 (1A) and  Section 23 (2) of the Land Acquisition Act.  We direct the Collector to  calculate the interest payable and pay the same to the appellants  without further delay.  These appeals are accordingly allowed.  No  order as to costs.