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CASE NO.: Appeal (civil)  6063-6064 of 2000

PETITIONER: SPECIAL DEPUTY COLLECTOR (LAND ACQUISITION), GENERAL,HYDERABAD

RESPONDENT: B. CHANDRA REDDY & ORS

DATE OF JUDGMENT: 16/04/2007

BENCH: C.K. THAKKER & LOKESHWAR SINGH PANTA

JUDGMENT: J U D G M E N T

C.K. THAKKER, J.

       Present appeals are filed against the judgment and  order passed by the Division Bench of the High Court of  Andhra Pradesh on April 12, 1999 in Writ Appeal M.P.  No. 1001 of 1995 and W.A.S.R. No. 38345 of 1995 by  which it confirmed the order passed by the learned Single  Judge on January 27, 1995 in Writ Petition No.12016 of  1993 directing the appellant herein to comply with the  award passed by an Arbitrator appointed under the  Requisitioning and Acquisition of Immovable Property Act  of 1952 (hereinafter referred to as "the Act").         The facts giving rise to the present appeals are that  the respondents-claimants were the owners of the land  bearing Survey No 83 admeasuring 12 acres and 5  gunthas and Survey No. 86/2 admeasuring 12 acres and  30 guntas, situated at Devarayamzal Village, Medchal  Mandal, Rangareddy District of Andhra Pradesh. The  land was initially requisitioned for defence purpose, i.e.  for the purpose of extension of rifle range of Hakimpet  Airfield, EMC Centre, Secunderabad. The Competent  Authority thereafter initiated proceedings for acquisition  of land and by an award dated February 6, 1978, offered  compensation to the respondents-land-owners at the rate  of Rs. 4000/- per acre.  The respondents-land-owners did  not accept the amount of compensation as offered by the  Competent Authority under the Act and the case was  referred to an Arbitrator under the Act.  Arbitration Case  No. 1 of 1988 was registered.  The parties were granted  an opportunity to adduce evidence and finally by an  award dated November 13, 1991, the learned Arbitrator  awarded an amount of Rs. 9000/- per acre to the land- owners.  Over and above the amount of compensation,  the Arbitrator also awarded solatium @ 30% per annum  and interest @ 6% per annum.  The amount was not paid  by the appellant to the claimants.  The claimants, in the  circumstances, were constrained to approach the High  Court by filing Writ Petition No. 12016 of 1993 for  issuing appropriate directions to the authorities to pay  the amount awarded by the Arbitrator.  By an order  dated January 27, 1995, a Single Judge of the High  Court issued necessary directions as prayed by the  claimants and ordered the authorities to pay the amount  within sixty days. Writ Appeal filed by the appellant  before the Division Bench of the High Court was  dismissed on the ground of delay as also on merits.  The  said decision has been challenged by the appellant in

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this Court.           On February 14, 2000, when the matter was placed  for admission - hearing, a two-Judge Bench issued notice  limited to solatium and interest and the following order  was passed\027         "Issue notice on SLP restricted to  solatium and interest.  Notice will also issue on  application for condonation of delay.  Ld.  counsel is permitted to file a copy of grounds  of appeal in the CMA which is pending in the  High Court.  There is no stay in respect of the  other amount covered by the award."

       On October 9, 2000, leave was granted.  The matter  was placed for final hearing before us on January 23,  2007. We heard the matter for some time and passed the  following order\027         We have heard learned counsel for the  parties for some time.  It was stated by learned  counsel for the appellant that aggrieved by the  Award passed by the Arbitrator under Section  8 of the Requisitioning & Acquisition of  Immovable Property Act, 1952 (hereinafter  referred to as ’the act’), the appellant has  preferred an appeal under Section 11 of the  said Act and it is pending in the High Court of  Andhra Pradesh at Hyderabad.  He prays for  some time so as to enable him to produce a  copy of the Memorandum of Appeal as well as  the latest status of the said appeal.  Two  weeks’ time is granted for the purpose.         List the appeals thereafter."

       As per our direction, the Registry placed the matter  on Board on February 13, 2007.  We observed on that  day that on January 23, 2007, when the matter was  called out for final hearing, a statement was made that  an appeal was filed against the award passed by the  Arbitrator and was pending for final hearing. The matter  was, therefore, adjourned to enable the parties to  produce a copy of Memorandum of Appeal and latest  status of the appeal.  But it was stated at the date of  hearing, i.e. on February 13, 2007 that on inquiry by the  learned counsel for the appellant, he was informed that  no such appeal had been filed by the appellant. The  appeal was instituted by other claimants.  Accordingly,  we had proceeded with the matter and heard the learned  counsel for the parties.         The only point which is pressed before us by the  learned counsel for the appellant is that the Arbitrator  had committed an error of law and of jurisdiction in  granting solatium and interest.  According to him,  solatium and interest can only be granted under the  Land Acquisition Act, 1894 and not under the Act under  which acquisition has been made by the appellant. The  Arbitrator has no power to grant solatium and interest  and the award is, therefore, vulnerable.  Neither the  Arbitrator could have ordered payment of solatium and  interest to the claimants nor the High Court could have  issued the direction to pay such amount.  The said  direction, hence, deserves to be set aside by allowing the  appeals.         Though in the appeals filed before this Court, a  ground was taken that the High Court could not have  passed an order asking the appellant to pay to the

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claimants the amount awarded by the Arbitrator in view  of the fact that the appellant had challenged the award  passed by the Arbitrator under the Act and the appeal  was pending, as stated earlier, at the time of hearing of  appeals, it was admitted that the award passed by the  Arbitrator was never challenged by the Land Acquisition  Officer and it had attained finality.  The question,  therefore, is confined to legality or otherwise of the order  of Arbitrator granting solatium and interest under the  Act.         The learned counsel for the respondents-claimants  supported the award as also directions by the High Court  asserting the award to be legal, valid and in consonance  with law and calling for ‘no interference’.  It was  alternatively argued that even if this Court is of the view  that the award passed by the Arbitrator was not strictly  in accordance with law, it may not exercise discretionary  and equitable jurisdiction under Article 136 of the  Constitution considering the fact that the award was  passed in 1991,  it was never challenged by the Land  Acquisition Officer and it had attained finality.  It was,  therefore, incumbent upon the Land Acquisition Officer  to comply with the directions in the award and to pay the  amount which was not done. Even though the claimants  succeeded, they were constrained to approach the High  Court and in 1995, a Single Judge directed the appellant  to comply with the Award.  Even Letters Patent Appeal  was dismissed.  This is, therefore, not a fit case to grant  any relief in favour of the appellant.         The learned counsel for the parties invited our  attention to the relevant provisions of the Act.  Section 3  enables the Competent Authority to requisition  immovable property in certain cases.  Section 4  empowers the Authority to take possession of  requisitioned property. Section 5 deals with rights over  requisitioned property.  Section 6 relates to release of  property from requisitioning. Section 7 authorises the  Government to acquire the requisitioned property.   Section 8 lays down principles and fixes method of  determining compensation.  Section 9 deals with  payment of compensation.  Sections 10 and 11 provide  for appeals in certain cases.  Reliance was also placed by both the sides on  several decisions of this Court.  It was submitted by the  learned counsel for the appellant that the question is no  longer res integra so far as payment of solatium and  interest under the Act of 1952 is concerned and it has  been held that the provisions of Land Acquisition Act  cannot be invoked while deciding the cases under the  present Act and Arbitrator has no power, authority or  jurisdiction to grant solatium and interest. On behalf of claimants, on the other hand, it was  urged that under the provisions of the Act of 1952,  solatium and interest had been awarded in several cases  and those orders had been upheld by this Court.  One of  the grounds which weighed with this Court in upholding  such award was equity in favour of claimants.  We may  deal with some of the decisions in this regard.         In Satinder Singh vs. Umrao Singh & Anr., AIR 1961  SC 908, this Court was considering the case of  acquisition of land under the East Punjab Requisition of  Immovable Property (Temporary Powers) Act, 1948.  The  question before the Court was whether the claimants  would be entitled to interest on the amount of  compensation.  It was argued on behalf of the claimants

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that the amount of compensation awarded must carry a  reasonable rate of interest from the date of acquisition  when the claimants lost possession of the property.  The  argument was, however, negatived by the High Court  mainly on the ground that the Act of 1948 made no  provision for payment of interest. Omission to make such  provision amounted in law to an intention not to award  interest on compensation amount determined under the  Act.   The Court then considered the question on principle  and stated;         What then is the contention raised by the  claimants? They contend that their immovable  property has been acquired by the State and  the State has taken possession of it. Thus they  have been deprived of the right to receive the  income from the property and there is a time  lag between the taking of the possession by the  State and the payment of compensation by it  to the claimants. During this period they have  been deprived of the income of the property  and they have not been able to receive interest  from the amount of compensation. Stated  broadly the act of taking possession of  immovable property generally implies an  agreement to pay interest on the value of the  property and it is on this principle that a claim  for interest is made against the State. This  question has been considered on several  occasions and the general principle on which  the contention is raised by the claimants has  been upheld.                     (emphasis supplied)

The Court there referred to Swift & Co. v. Board of  Trade, 1925 A.C. 520, (HL) wherein the House of Lords  held that in a contract for sale and purchase of land it is  the practice of the Court of Chancery to require the  purchaser to pay interest on his purchase money from  the date when he took, or might safely have taken,  possession of the land. The Court also noted that the principle had been  recognized since more than a century and referred to  another English decision in Birch v. Joy, (1852) 3 H.L.C.  565. In Birch, Viscount Cave, L.C. observed that this  practice rests upon the view that the act of taking  possession is an implied agreement to pay interest.  The  Court also referred to a decision of the Judicial  Committee of the Privy Council in Inglewood Pulp & Paper  Co. Ltd. V. New Brunswick Electric Power Commission,  1928 AC 492 : AIR 1928 PC 287 wherein it was held that  upon the expropriation of land under statutory power  (whether for private gain or for public good), the owner is  entitled to interest upon the principal sum awarded from  the date when possession was taken, unless the statute  clearly shows an intention to the contrary. The Court, therefore, concluded that the claim for  interest proceeds on the assumption that when the owner  of immovable property loses possession of property, he  can claim interest in lieu of right to retain possession.           Dealing with the contention of difference between  two Acts, namely, the East Punjab Requisition of  Immovable Property (Temporary Powers) Act, 1948 and  the Land Acquisition Act, 1894, the Court observed; The question which we have to consider  is whether the application of this rule is

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intended to be excluded by the Act of 1948,  and as we have already observed, the mere fact  that s. 5(3) of the Act makes s. 23(1) of the  Land Acquisition Act of 1894 applicable we  cannot reasonably infer that the Act intends to  exclude the application of this general rule in  the matter of the payment of interest.  A similar issue came up for consideration before a  Constitution Bench of this Court in National Insurance  Co. Ltd., Calcutta v. Life Insurance Corporation of India,  AIR 1963 SC 1171.  There, the Court was considering the  question whether the Corporation under the Life  Insurance Corporation Act, 1956 was or was not required  to pay compensation with interest to the insurer.  The  Court noted that neither the Act nor the Rules contained  any express provision for grant of interest.  Relying on  English cases referred to earlier, however, the Court held  that the insurer would be entitled to claim interest once  it is proved that he was illegally deprived of the amount  to which he was legally entitled and there was delay on  the part of the Corporation in making payment of such  amount. Strong reliance was placed by the learned counsel  for the claimants on a decision of seven-Judge Bench in  Nagpur Improvement Trust & Anr. v. Vithal Rao & Ors.,  (1973) 1 SCC 500.  That was a case in which  constitutional validity of certain provisions of the Nagpur  Improvement Trust Act, 1963 was under challenge.  The  contention of the claimants was that difference in rate of  payment of compensation under the Improvement Trust  Act and the Land Acquisition Act was arbitrary,  discriminatory and violative of equality clause under  Article 14 of the Constitution.  The High Court declared  the provisions unconstitutional and ultra vires infringing  Article 14 of the Constitution. This Court considered the  relevant provisions as also the factum of acquisition of  property and posed a question whether such  classification could be said to be ’reasonable  classification’ in law.   This Court then stated; It would not be disputed that different  principles of compensation cannot be  formulated for lands acquired on the basis that  the owner is old or young, healthy or ill, tall or  short, or whether the owner has inherited the  property or built it with his own efforts, or  whether the owner is a politician or an  advocate. Why is this sort of classification not  sustainable? Because the object being to  compulsorily acquire for a public purpose, the  object is equally achieved whether the land  belongs to one type or another type. The Court proceeded to state; Can classification be made on the basis  of the public purpose for the purpose of  compensation for which land is acquired? In  other words can the legislature lay down  different principles of, compensation for lands  acquired say for a hospital or a school or a  Government building? Can the legislature say  that for a hospital land will be acquired at 50%  of the market value, for a school at 60% of the  value and for a Government building at 70% of  the market value? All three objects are public  purposes and as far as the owner is concerned

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it does not matter to him whether it is one  public purpose or other. Article 14 confers an  individual right and in order to justify a  classification there should be something which  justifies a different treatment to this individual  right. It seems to us that ordinarily a  classification based on the public purpose is  not permissible under Article 14 for the  purpose of determining compensation. The  position is different when the owner of the land  himself is the recipient of benefits from an  improvement scheme, and the benefit to him is  taken into consideration in fixing  compensation. Can classification be made on  the basis of the authority acquiring the land?  In other words can different principles of  compensation be laid if the land is acquired for  or by an Improvement Trust or Municipal  Corporation or the Government? It seems to us  that the answer is in the negative because as  far as the owner is concerned it does not  matter to him whether the land is acquired by  one authority or the other. In the opinion of the Court, it was immaterial  whether acquisition is under one Act or another and held  that if the two Acts could enable the State to give one  owner a different treatment from another equally  situated, the owner who is discriminated against can  claim the protection of Article 14.  It was, therefore, held  that the High Court was right in declaring such            ’so-called’ classification unreasonable and violative of  Article 14. The learned counsel for the appellant, however,  invited our attention to a three-Judge Bench decision in  Union of India v. Hari Krishan Khosla (dead) by Lrs., 1993  Supp (2) SCC 149.  According to the learned counsel, the  Court in Hari Krishan Khosla considered the scheme of  both the Acts, referred to earlier decisions including  Nagpur Improvement Trust, and held that the scheme of  Requisitioning Acts and Acquisition Acts is totally  different, distinct and independent and the principles  applicable to Acquisition Laws cannot ipso facto be  applied to Requisitioning Laws.  The Court observed that  if the Requisitioning Laws do not provide for payment of  solatium or interest, such provision would not be hit by  Article 14 of the Constitution. The claimant, therefore,  would not be entitled to the benefit of solatium or  interest, on the analogy of Acquisition Laws. The counsel also referred to subsequent cases.  In  some of the decisions, grant of solatium and interest  under the Act in question has been upheld whereas in  other cases, the claim had been negatived. In view of above decisions, we would have  considered the larger question posed before us. In our  opinion, however, it is not necessary to enter into such  question in view of the fact that to us, the alternative  submission made by the learned counsel for the  claimants deserves acceptance. Admittedly, the offer of  amount as compensation by the Competent Authority  under the Act had not been accepted by the claimants  and they opted for appointment of Arbitrator under the  Act.  An Arbitrator was appointed as early as on February  8, 1988 and Arbitration Case No. 1 of 1988 was  registered.  Award was made by the Arbitrator on  November 13, 1991.  Even though it was asserted by the

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appellant at one stage before this Court that the award  was not final and an appeal was filed against it,  subsequently it was admitted that no such appeal had  been filed and the award had attained finality.  On the  contrary, record revealed that on the basis of the award  in which solatium and interest was granted by the  Arbitrator, other land-owners had also claimed the  similar benefit of solatium and interest which was  allowed. In our view, therefore, the claimants are right in  submitting that once an award was passed, validity of  which was never under challenge, a public authority  ought to have acted in accordance with directions issued  in the award and should have made the payment.  The  authorities, however, virtually ignored the award though  it was never challenged by taking appropriate action in  accordance with law.  The claimants were constrained to  approach the High Court for the award being executed  and payment made. When the requisite directions were  issued by the learned Single Judge, the order was  challenged by filing intra-Court appeal.  There was delay  in filing appeal. The Division Bench was not satisfied as  to ’sufficient cause’ for condonation of delay.  Even on  merits, the Court felt that it was not a fit case to interfere  with the award passed by the Arbitrator in 1991 and  accordingly, the Letters Patent Appeal was dismissed on  both the grounds, i.e. on the ground of delay as well as  on merits. We are of the considered view that the case in hand  is not one which calls for exercise of discretionary power  under Article 136 of the Constitution in favour of the  appellant.  In some cases, this Court had refused to  interfere with the orders passed by the High Courts.   Thus, in Prabhu Dayal & Ors. v. Union of India, 1995  Supp (4) SCC 22, it was contended on behalf of the Union  of India that the claimants were not entitled in law to  solatium. But the court held that for about 22 years, no  arbitrator was appointed by the Union to determine  market value of the land acquired by the Government  and hence, the claimants  were entitled to solatium on  the ground of equity.  The Court followed an earlier  decision in Harbans Singh v. Union of India, 1995 Supp  (4) SCC 223 wherein on similar ground, such relief was  granted. Even in Hari Krishan Khosla, equitable aspect  was considered by this Court. [See also Girdhari & Ors. v  Union of India & Ors; (2005) 11 SCC 291. For the foregoing reasons, in our considered  opinion, this is not a fit case to exercise discretionary  jurisdiction under Article 136 of the Constitution.  The  appeals deserve to be dismissed and are accordingly  dismissed with costs.