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PETITIONER: UNION OF INDIA & ORS.

       Vs.

RESPONDENT: DHANWANTI DEVI & ORS.

DATE OF JUDGMENT:       21/08/1996

BENCH: K. RAMASWAMY, S. SAGHIR AHMAD, G.B. PATTANAIK

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T K. Ramaswamy, J.      Application for impleadment allowed.      Leave granted.      This appeal  by special  leave arises form the judgment and order  dated September 29, 1992 passed by the High Court of Jammu & Kashmir CIMA No.72 of 1988.      The only  question that  arises for  decision  in  this appeal is:  whether the respondents are entitled to solatium and interest  under the  Jammu  &  Kashmir  Requisition  and Acquisition of  Immovable Property  Act,  1968  [hereinafter referred to as the "Act"]?      The facts  in nutshell  are that  land admeasuring  399 kanals and  4 marlas situated in Villages Rampur, Talwal and Goverdhan Pain  was  acquired  for  public  purposes,  viz., defence, by  publication of  notification under Section 7 of the  Act  on  his  award  dated  November  3,  1986  awarded compensation @  Rs.21,000/- in  respect of lands situated in villages Rampur  and Talwal  and Rs.10.000/-  per  kanal  in respect of  land situated in village Goverdhan Pain with 10% escalation on  accordingly  paid  but  feeling  dissatisfied therewith, the  claimants-landowners sought  reference under Section  of the Act to the arbitrator who by his award dated March 8,  1987 enhanced  the compensation to Rs.60,000/- per kanal in  respect of lands in villages Rampur and Talwal and Rs. 40.000/-  per  kanal  in  respect  of  land  in  village Goverdhan Pain; he also awarded 15% solatium and 4% interest per annum on the enhanced compensation. When the High Court, it by  impugned judgment  and order dated September 29, 1992 confirmed the  same and dismissed the appeal holding that no discrimination could  be made between the owners whose lands are acquired under the Land Acquisition Act, 1894 and owners whose lands  are  acquired  under  the  Act  and  hence  the arbitrator was  justified in  awarding solatium and interest to the  land-owner-respondents. Hence this appeal by special leave.      The admitted  position is that prior to the acquisition properties were  under requisition  under Section  3 of  the Act. Shri  Nambiar, learned senior counsel for the appellant contended that  the  Act  did  not  confer  power  upon  the

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arbitrator or  the court to award solatium and interest. The controversy  is  no  longer  res  integra  as  a  two-Judge, Udhampur &  Ors. [JT  1994 (3)  SC 629]  has held  that  the claimants are  not entitled  to solatium  and interest under the Act.  The ratio in Union of India v. Hari Krishna Khosla [1993 Supp. (2) SCC 149] was applied wherein the Requisition and Acquisition  of Immovable Property Act, 1952 [for short, the "Central  Act"] similarly did not provide for payment of solatium and  interest. Thus, it is contended, a three-Judge Bench of  this Court  had held  that the  arbitrator and the court have  no power  to award  solatium and interest on the enhanced compensation under the Act.      On the  other  hand,  argument  of  Shri  Vaidyanathan, learned senior  counsel for  the second  respondent, is that the Act  is  a  measure  of  appropriation  of  the  private property of  citizens though  for public  purpose. When  the owner is  deprived of  his possession  and enjoyment  of his property payment  of solatium  and interest  for  compulsory acquisition. In  equity, the owner is entitled with interest in lieu  thereof. This  Court had  held in  Satinder Singh & Ors. v.  Amrao Singh & Ors. [(1961) 3 SCC 676] that from the date  of   dispossession  till   the  date   of  receipt  of compensation it  is an  implied agreement to pay interest on the value  of the property. The right to receive interest is in place  of right  to retain possession. Unless the statute specifically and  expressly excludes payment of interest and solatium the  land-holder towards compensation and solatium; denial thereof  would amount  to unjust  enrichment  by  the State depriving the land-holder of his land as well as right to receive  compensation for  the  intervening  period.  The denial also  is arbitrary  and most  unjust. In the State of Jammu  &   Kashmir,  the   right  to  property  is  still  a fundamental  right;   hence,  deprivation  of  the  property without  payment   of  solatium  and  interest  violates  an individual’s fundamental  right to  property and, therefore, it  would   be  arbitrary   offending  Article   14  of  the Constitution. When  an acquisition  under  Land  Acquisition Act, 1894  is resorted to, the claimant-owner is entitled to solatium under Section 23 [2], interest under Section 34 and 28 and  additional amount under Section 23 [1-A]. The denial of  payment   of  solatium   and  interest,   therefore,  is discriminatory violating Article 14 of the Constitution. The very concept of market value is a price which is agreed upon by a  willing purchaser as consideration for purchase of the property from  a willing  seller. Compulsory  purchase is  a hypothetical sale.  Based  on  the  above  premises,  it  is contended, a  purchaser on taking possession of the property has to  pay  the  entire  consideration  forthwith  but  the quantification of  compensation under  the "Acquisition Act, 1894 [for  short, the  "Acquisition  Act"]  takes  place  at hierarchical  stages.  Until  quantification  is  done,  the claimant-owner is  entitled to  interest for the interregnum between the  date of  taking  possession  and  the  date  of determination and deposit of the compensation so determined. Applying the  above principles,  this Court  repeatedly  has held that  payment of  solatium and  interest is an integral part  of   the  compensation.   In  support   thereof,  Shri Vaidyanathan placed  reliance on the ratio decidendi in R.B. Lala Narsingh  Das vs. Secy. of State for India [AIR 1925 PC 91 at  92], Raghubans  Narain Singh  v.  The  Uttar  Pradesh Government through Collector of Bijnor [(1967) 2 SCR  489 at 497], Prithvi  Raj Taneja v. State of Madhya Pradesh  & Ors. [(1977) 2  SCR 682  at 684-85], Birminghan City Corporation. v. West  Midland Baptis  [Trust] Association  (Incorporated] [1969 (682  at 684-85], Birminghan City Corporation. v. West

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Midland  Baptis   [Trust]  Association  [Trust]  Association (Incorporated] [1969  (3) All ER 172], Commissioner of Sales Tax, J&K  & ors. v. pine chemicals Led. & Ors. [(1995) 1 SCC 58], Prabhu  Dayal &  Ors. v.  Union of India [(1995) Supp 4 SCC 2211,  Yanamadala Co-operative  Labour Contract  Society Ltd., v.  Assistant Director of Mines & Geology, Guntur [AIR 1984 AP 271], Periyar & Pareekanni Rubbers Ltd.. v. State of Kerala [(1991)  4 SCC  195], Nagpur Improvement Trust & Anr. v. Vithal  Rao &  Ors. [(1973)  1 SCC  500), P.C. Goswami v. Collector of  Darrang [(1982)  1 SCC 439], State of Kerala & Ors. v.  T.M. Peter  & Ors.  [(1980) 3  SCC 554]. He further contended that  in Union  of India  v.  Hari  Kishan  Khosla [(1993) Supp 2 SCC 149] a three-Judge Bench did not consider the ration  in Satinder  Singh’s case  [supra]  which  is  a decision of  co-ordinate Bench  of three Judges. There is no ratio in Hari Kishan Khosla’s case; it is only a conclusion. A  conclusion  does  not  constitute  precedent.  If  it  is considered to be ratio, it is inconsistent with the ratio in Satinder Singh’s  case does  not have  the effect  of  being over-ruled in  Hari Kishan  Khosla’s case.  It is per se per incuriam. If  a co-ordinate Bench disagrees with the view of an earlier  co-ordinate Bench  disagrees with the view of an earlier co-ordinate  Bench, the  only  course  open  to  the former  is   to  refer  the  matter  to  the  larger  Bench. Therefore,  the   decision  in  Hari  Kishan  Khosla’s  case requires reconsideration by a Constitution Bench.      Having considered  and given  anxious consideration  to the respective contentions, the question arises: whether the respondents are  entitled to solatium and interest under the Act? It is not necessary to Burden the judgment with copious references made  by Shri  Vaidyanathan. Suffice  it to state that the  State exercising  the power  of eminent  domain is empowered to  acquire, for  public purposes, the property of citizen. The  compensation  for  the  acquired  property  is determined according  to the principles laid down in the Act under which  the property  came to  be acquired.  It is true that by  process of  compulsory acquisition,  the  owner  is deprived of his possession and enjoyment and in lieu thereof compensation be  awarded as  per the principles laid down in the Act.  The determination  of the  compensation is done at hierarchical stages as per law.      Before adverting  to and  considering whither  solatium and interest  would be payable under the Act, at the outset, we will dispose of the objection raised by Shri Vaidyanathan that Hari  Kishan Khosla’s  case is  not a binding precedent nor does  it operate  as ratio decidendi to be followed as a precedent and per se per incuriam. It is not everything said by a Judge who giving judgment that constitutes a precedent. The only  thing in a Judge’s decision binding a party is the principle upon which the case is decided and for this reason it is  important to  analyse a  decision and isolate from it the ratio decidendi. According to the well settled theory of precedents, every  decision contain three basic postulates - [i] findings  of material  facts, is the inference which the Judge draws  from the  direct, or  perceptible  facts;  [ii] statements of  the principles of law applicable to the legal problems disclosed  by the   facts; and [iii] judgment based on the  combined effect  of the above. A decision is only an authority for  what it  actually decides.  What  is  of  the essence in  decision is  its ratio and not every observation found therein  not what  logically follows  from the various observations made  in the  judgment. Every  judgment must be read as applicable to the particular facts proved, since the generality of  the expressions  which may  be found there is not intended to be exposition of the whole law, but governed

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and qualified  by the  particular facts of the case in which such expressions  are to  be found.  It would, therefore, be not profitable to extract a sentence here and there from the judgment and  to build  upon it  because the  essence of the decision is  its  ratio  and  not  every  observation  found therein. The enunciation of the reason or principle on which a question  before a court has been decided is alone binding between the  parties to  it, but  it, is  the abstract ratio decidendi, ascertained on a consideration of the judgment in relation to  the subject matter of the decision, which alone has the  force of  law and  which, when  it is clear what it was, is  binding. It  is only the principle laid down in the judgment that  is binding  law  under  Article  141  of  the Constitution. A  deliberate  judicial  decision  arrived  at after hearing  an argument on a question which arises in the case or  is put  in issue  may constitute  a  precedent,  no matter  for   what  reason,   and  the   precedent  by  long recognition may mature into rule of stare decisis. It is the rule deductible from the application of law to the facts and circumstances  of  the  case  which  constitutes  its  ratio decidendi.      Therefore, in  order to  understand and  appreciate the binding force  of a decision is always necessary to see what were the  facts in  the case in which the decision was given and what  was the point which had to be decided. No judgment can be  read as  if it is a statute. A word or a clause or a sentence in  the judgment  cannot  be  regarded  as  a  full exposition of  law. Law  cannot  afford  to  be  static  and therefore, Judges are to employ an intelligent in the use of precedents. It would, therefore, be necessary to see whether Hari Kishan  Khosla’s case  would form  a binding precedent. Therein, admittedly  the question  that had  arisen and  was decided by  the Bench  of three  Judges was whether solatium and interest are payable to an owner whose land was acquired under the provisions of the Central Act? On consideration of the facts,  the relevant  provisions in  the Central Act and the previous  precedents bearing  on the topic the Court had held  that   solatium  and   interest  are  not  a  part  of compensation. It is a facet of the principle in the statute. The Central  Act omitted  to provide for payment of solatium and interest  since preceding  the acquisition  the property was  under   was  under   requisition  during  which  period compensation  was  under  requisition  during  which  period compensation was  paid to  the owner.  The position obtained and  enjoyed   by  the   Government  during  the  period  of requisition continued  after acquisition. The same principle was applied  without further  elaboration on  entitlement to payment of  interest of  an  owner.  It  is  true  that  the decisions relied on by Shri Vaidyanathan on the principle of payment of  interest as  part of  compensation in respect of land acquired  were brought  to the  attention of this Court for discussion.  What would  be considered  a little  later. Suffice it  to say  for the  present that  the finding  that solatium and interest are not payable for the lands acquired under the  Central Act  as part of compensation is a binding precedent. Obviously,  therefore, this  Court  followed  the ratio therein  in District Judge, Udhampur case [supra]. The contention, therefore, that Hari Kishan Khosla’s case cannot be treated  as a binding precedent since therein there is no ratio but  a conclusion  without discussion,  is not tenable and devoid  of force.  In that  view, it is not necessary to discuss in extenso the effect of the decisions cited by Shri Vaidyanathan. Equally,  the contention  of Shri Vaidyanathan that the  ratio in  Hari Kishan Khosla’s case is in conflict with the  ratio in  Satinder Singh’s  case which was neither

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distinguished nor  overruled and  that the decision of a co- ordinate Bench cannot have the effect of overruling decision of another  co-ordinate Bench,  cannot be given countenance. The effect  of the  ratio in  Satinder Singh’s  case will be considered a little later; suffice it to state that there is no conflict  in the ratio of these two cases if the facts in Satinder Singh’s case are closely analysed and the principle laid down  therein is  understood in its proper perspective. Therefore, Hari  Kishan Khosla’s  case cannot  be held to be per incuriam  not has  it the effect of overruling the ratio decidendi of Satinder Singh‘s case.      Taking the  question of  entitlement to  interest as  a first  question,   as  vehemently  argued  by  vaidyanathan, broadly speaking.  The act of taking possession of immovable properties generally implies an agreement to pay interest on its consideration  for  deferred  payment.  In  a  court  of equity, when  the seller  parts with possession of immovable property, the  purchaser becomes  its owner while the seller receives money as consideration in lieu of the property. The seller, therefore, is entitled to claim interest in place of his retaining  possession  of  the  property  till  date  of payment. On  this premise,  claim  for  interest  is  sought against the  State when  it exercises  its power  of eminent domain and  acquires the  property of  a citizen  or  public purpose.  This   principle  was   extended  in   equity   to recompensate the owner for deprivation of his possession and enjoyment thereof in accordance with law. It was, therefore, held in equity that the owner is entitled to interest on the principal amount of award from the date of taking possession unless  the  statute  under  which  the  land  was  acquired expresses its contrary intention. It is on this premise that the right  to receive  interest takes  the place of right to retain possession  and its  enjoyment. It is equally settled law that  equity operates  where statute does not occupy the field. Conversely,  when the  statute occupies the field the equity yields place to the statute.      The question,  therefore, is whether the  Act expresses any intention to exclude payment of interest and solatium in respect of  the property  acquired thereunder?  It is not in dispute that  the property  was initially  under requisition whereunder   possession   thereof   was   taken   from   the respondents.  During   the   period   of   requisition   the respondents received  compensation. The  quantum thereof was sought to  be put  in issue  but since   that  question  was neither relevant nor in issue in the courts below, we desist from going  into that aspect. Under section 7(1) of the Act. where property  is subject to requisition, if the Government is of  the opinion   that  it is  necessary to  acquire  the property for  a public  purpose, it is empowered tho acquire such property  by making  publication to  that effect in the State Gazette.  Preceding thereto,  a prior  notice of  show cause should  be given  to the owner claimants as to why the property should  not be  acquired; their objections, if any, should be  considered after giving an opportunity and before deciding the  same. Such  an order  in substance  is like  a declaration under  section 6  of the  Acquisition Act  after enquiry under Section 5-a . By  operation of sub section(2), the property  comes to an end. Sub section(3) enumerates the circumstances in  which the  property  cannot  be  acquired. Section 8 prescribes principles on which  compensation shall be determined  and given  to the owner, in the manner and in accordance with  the principles  set out therein. Clause (a) thereof gives  right to  fix   compensation by  an agreement between the Government and the owner indication thus: "where the compensation  can be  fixed by  agreement. it  shall  be

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given in  accordance with  such agreement".  Clause(b) gives alternative mode  to the government and provides that in the absence of  such an  agreement reached between the owner and the government, "the Government shall appoint as arbitrator, a person,  who is  a District  Judge or  Additional District Judge". Clause  (c) provides assistance to the arbitrator in the form  of a  person to be nominated by the Government who has expert  knowledge as  to  the  nature  of  the  property acquired,  to   assist  the   arbitrator  as   assessor   in determining compensation.  The principle of determination of compensation found in Clause(e), the arbitrator shall, after hearing the disputes, obviously wherein Government is party, make an  award determining  the amount of compensation which appears to  him to  be "just"  and  specify  the  person  or persons to  whom such  compensation shall be paid. In making the  award,   the  arbitrator   shall  have  regard  to  the circumstances  of  each  case  and  the  provisions  of  sub sections (2)  deals with  payment of  compensation  for  the property  requisitioned.   Sub  section   (3)   contemplates compensation payable for the property acquired under Section 7. It envisages that the compensation payable "shall, in the absence  of   an  agreement,   be  the   price   which   the requisitioned property would have fetched in open market, if it had  remained in the same condition as it was at the time of  its   requisition  and   been  sold   on  the   date  of acquisition".      It would  thus be seen that in determining compensation in respect  of the  acquired property,  which is the subject matter of  prior requisition  and was  in possession  of the Government, the  principle for determination of compensation is as per the bi-lateral agreement between the owner and the Government. Where  it was  not effectuated  and no agreement was reached,  the arbitrator  is empowered tho determine the compensation which  the requisitioned  property  would  have fetched in  open market,  if it  had remained  in  the  same condition as  it was  at the time of its requisition but the prevailing price  should be  as on  the date of acquisition. Had it  been sold  in the open market to a willing purchaser by  a  willing  vendor,  the  price  offered  by  a  willing purchaser in  the open  market would  be the  yardstick. The arbitrator, therefore, is kept in the arm chair of a willing purchaser and  should consider  the circumstances  attending the requisitioned  property. Had  it remained with the owner in the  same  condition  as  it  was  at  the  time  of  its requisition and  if it  were to  be  sold  on  the  date  of acquisition in that condition, the price a willing purchaser would offer  would be  just and  fair compensation under the Act. The  Acquisition Act  provides for  payment of interest under Section  34 by the Land Acquisition Officer and by the Court under  Section 23.  Similarly, Section  23(2) provides for payment  of solatium,  in addition  to compensation,  in consideration of  compulsory  acquisition.  The  presumptive evidence furnishes  that the Jammu & kashmir Legislature was aware  of   the   above   provisions   and   principles   of determination of the compensation under the Acquisition Act. Yet,  the   Legislature  departed   from  those  principles; instead, it  set down  under the  Act its  own principles to determine  the  compensation.  The  Act  did  not  expressly provide for  payment of  interest and solatium as components of compensation under the Act.      The  question,   therefore,  emerges:   whether  it  is necessary for  the State  Legislature to  expressly  specify that interest or solatium shall not be payable for the lands or property  acquired under  Section 7(1)  of the   Act. Sub silentio is  eloquent. It would further be seen that Section

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8 of the Central Act equally does not provide for payment of solatium and  interest. The  act was passed in the year 1968 while the  Central Act  was  passed  in  1952  .  It  would, therefore,  be   reasonable  to   conclude  that  the  State Legislature was  cognizant to  the  express  provisions  for payment  of   interest  and   solatium  available   in   the Acquisition act.  The Act  omitted  similar  provisions  for payment of  interest and  solatium as  part or  component of compensation, obviously  to fall  in line  with the  Central Act.      In  satinder   singh’s   case   [supra]   East   Punjab Acquisition and Requisition of Immovable Property(Temporary) Powers Act,  1948 did not provide for any principle on which the  compensation   in  respect  of  the  property  acquired thereunder was  to be  determined. Section  5(e) of that Act makes Section  23(1)  of  the  Land  Acquisition  Act,  1894 specifically applicable  for determination  of compensation. Contention raised therein was that sections 23(2), 28 and 34 by necessary  implication stood  excluded.  Considering  the said contention, the general principle of law as regards the right to  interest on the compensation of immovable property was discussed  and it  was  held  that  when  possession  of immovable property  is taken  form  an  owner,  there  is  a general implied  agreement to  pay interest  on the value of the property.  On this  premise, the  claim for interest was made against  the  state.  Accordingly.  it  was  held  that Sections 28  and 34  providing   for payment of interest and Sections 23(2)  for payment  of solatium. were not excluded. The ratio, therefore, must be understood in the light of the facts found  there n  . Thus  considered, we  find that  the ratio in  Harikishan Khosla’s  case and  in Satinder Singh’s case are  not in  mutual conflict  nor the  former  has  the effect of  overruling the  latter. the  difficulty arises in understanding the ratio in proper perspective.      In National  Insurance  co.  Ltd.,  Calcutta  vs.  Life Insurance Corporation  of India  [1963 Supp.(2) SCR 9711 the business of  insurance carried   on  by  the  appellant  was nationalised under  Life Insurance Corporation Act, 1956 and stood vested  in the  Life Insurance Corporation of India on and from  September 1,  1956, The appointed day. The dispute between the  parties related  to the compensation payable to the appellant  corporation of  n such vesting and one of the issues  was   whether   interest   was   payable   on   such compensation. There  was no express provision for payment of interest as  the life  insurance business vested in the life Insurance corporation.  The Tribunal had held that it had no jurisdiction to  award interest  since there  was no express provision in  the act. It was conceded during the hearing in this Court  that the  corporation  agreed  to  pay  interest awardable but  the dispute  was about  the rate of interest, the amount on which it is payable and the date from which it should  be   given.  Considering  the  contentions  in  that background, this  Court had  held that the property remained just where it was. The purchaser has the money in his pocket and the  seller   has the  estate  vested  in  him  but  the character changes  in a  court of equity; the seller becomes the owner of the money and the purchaser becomes the owner f the estate.  On entering  possession, the  purchaser becomes entitled to  the rent  but if  he has  not paid  the  price, interest in  equity is  payable by him on the purchase price which belongs  to the  seller. On this principle, this court referred with  approval the  ratio in satinder Singh’s case. In this  background, it  would be  seen  that  there  is  no dispute as  regards the  principle of  law   on the right to receive interest  on the value of the property from the date

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of taking  possession by  the purchaser from the seller when the purchase  price was  not paid.  The question whether the land holder  would be  entitled to  interest  when  the  Act omitted payment thereof did not arise therein since the Life Insurance Corporation  had agreed  to pay  interest  on  the value of  the  life  insurance  business  of  the  appellant therein which  vested in  the  Life  Insurance  corporation, Therefore, the  ration  in  this  case  is  also  of  little assistance to  the facts  in this  case. The facts in Prabhu Dayal &  ors. vs.  Union of  India [1995 Supp. (4) 221] were that the  property of  the appellants was acquired under the Central Act  but the  appellants received  the  compensation under protest.  The arbitrator  was not appointed for a long period by the Government as enjoined under Section 8 of that Act to  determine the  market value. In Harbans Singh Shanni Devi V  Union of  India [Civil]   Appeal Nos 470-71 of 1985] decided  on   February  11.   1985  which  was  followed  in Harikishan Khosla’s case, solatium and interest were awarded to the  claimants. The  question which arose for decision in these cases was as to the laches on the part of the Union of India in  appointing an arbitrator to determine compensation and whether  the  owner  was  disentitled  to  interest  and solatium. This  court applied  the principle  of equity  and directed payment  of solatium  and interest  to recompensate loss of enjoyment of the money payable towards compensation. The ratio, therefore, is of no avail to the appellants.      All the  decisions cited by Mr. Vaidyanathan in support of his  contention on solatium were considered in Harikishan Khosla’s case.  His repeated  attempts failed to persuade us to have  that decision  referred to  a larger  Bench of five Judges, we  are unable  to persuade  ourselves to  doubt the correctness of the judgment in Harikishan Khosla’s case. All the decisions  cited  by  the  counsel  were  considered  in extenso bu  the Bench  in Hari Krishna Khosla’s case we are, therefore, of  the opinion  that  it  is  not  necessary  to reexamine all the decisions once over,. We are in respectful agreement with  the ratio  in Harikishan  Khosla’s case.  It would be  seen that  sub section(2)  of Section  23  of  the Acquisition Act   expressly  states  that  solatium  is  "in addition"  to   the  compensation   as   consideration   for compulsory  nature  of  acquisition.  This  distinction  was pointed out n catena of decisions including the one referred by a  Bench of  three Judges  in Prem  Nath Kapur  & Anr. v. National  Fertilizers     Corporation   of  India   Ltd.   & ors.[(1996)2 SCC  71]  .  For  parity  of  reasons,  without further discussion  it was  held that  interest also was not payable. We, therefore, respectfully agree with the ratio in Harikishan  khosla’s  case  that  the  Act  omitted  to  pay solatium and  interest ,  in addition  to compensation.  The omission  by   the  legislature,   as  stated   earlier,  is deliberate. In  district Judge  Udhampur’s case,  a Bench of two judges  of this  court had held that the claimant is not entitled to solatium and interest. Accordingly, we hold that the respondents are not entitled to solatium and interest.      It is  then contended by Mr. Vaidyanathan that citizens in jammu  & Kashmir have fundamental right to property under the J  & K  constitution. The State Act was not incorporated in Schedule  IX of  the Constitution.  The omission  to  pay solatium  and   interest  is   unconstitutional,   arbitrary offending  Article  14  of  the  constitution.  The  similar contention raised in Harikishan Khosla’s case was considered and rejected.  It was  held that  it  is  not  violative  of Article 14.  We are  in respectful  agreement with the same. The  Act  is  not  violative  of  even  Article  31  of  the constitution as application to Jammu & Kashmir.

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    The contention that the denial of solatium and interest in respect  of the  property acquired under the Act would be an unjust  enrichment of  the State, is devoid of substance. The public  money is credited to the Consolidated Fund which is expended in accordance with the Appropriation Bill passed by the  Parliament or  the State  legislature in  accordance with  the   provisions  of   the  Constitution.  The  amount collected  would   be   expended   for   the   purposes   of appropriation  and   for  implementation  of  the  Directive principles of  the state  policy and  the law  made  by  the appropriate  legislature   or  the   executive   policy   in furtherance thereof . Therefore, the non-payment of solatium and interest  does not independently get into the coffers of the public  exchequer nor  does the State enrich itself. The public money  is  expended  only  for  public  purpose.  The concept of unjust enrichment by the state is alien to and in derogation of  the constitutional  scheme and public policy. The general principal is that one should not be permitted to unjustly enrich  himself at  the expense  of  other.  Unjust enrichment of  a person occurs when he has and retains money or benefits  which injustice  and equity belongs to another. Three elements  must be  established in  order to  sustain a claim based on unjust enrichment, the benefit conferred upon the defendant by the plaintiff; appreciation of knowledge by the defendant  of the benefit under such circumstances as to make it  inequitable for the defendant to retain the benefit without payment  of its value. These principles specifically absent in the case of omission by a statute, are made by the competent Legislature  to award  interest  or  solatium,  in addition to  compensation. So  it cannot be to characterised as unjust  enrichment where  such action  does  not  involve violation of  law or  is not opposed to public policy either directly or  indirectly  when  the  statute  prescribes  the principle for  payment of  compensation  and  omits  as  its policy to  provide for  the payment of interest and solatium as component  of compensation.  It is the legislative public policy to  provide for  acquisition of  the private property for a  public purpose.  The state  pays compensation for the acquired  land in accordance with the principle laid down in the statute.  It would,  therefore, be  illogical to contend that by  legislative omission  to pay  solatium and interest the State  enriches itself  unjustly at  the expense  of the private person.  The contention, therefore, is unsustainable in law.      Accordingly, we  hold  that  the  High  court  and  the arbitrator  committed   manifest  grave   error  of  law  in awarding     solatium  and   interest  on  the  compensation determined under Section 8 of the Act.      The  appeal   is  accordingly  allowed.  The  award  of solatium and interest on the compensation awarded stands set aside.  The   compensation  stands   upheld,  but,   in  the circumstances, without costs.