http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

PETITIONER: UNION OF INDIA & ORS.

       Vs.

RESPONDENT: MUNSHA & ORS.

DATE OF JUDGMENT09/11/1995

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. HANSARIA B.L. (J)

CITATION:  1995 SCC  Supl.  (4) 660 JT 1995 (8)   289  1995 SCALE  (6)353

ACT:

HEADNOTE:

JUDGMENT: J U D G M E N T Ramaswamay, J.      Leave granted.      This appeal  by special  leave arises from the judgment and order  dated March  5, 1993  passed in  C.W.P. No.316 of 1993 by  the High  Court of  Punjab & Haryana at Chandigarh. The competent  authority, viz., the Special Land Acquisition Collector made  an award  under Section 8 of the Requisition and Acquisition  of Immovable Property Act, 1952 [for short, "the Act"]  and awarded  compensation @  Rs.375/- per kanal. This was  done as  early as  in 1970.  In 1986,  Civil  Writ Petition No.2391  of 1986  was filed  by the respondents for appointment of  an arbitrator.  The High  Court allowed  the write petition  on July 28, 1986 and directed the appellants to appoint  an arbitrator. The arbitrator thus appointed, by his award  dated December 12, 1991 determined compensation @ Rs.150/- per  marla. He  also awarded  solatium  @  30%  and interest @ 9% per annum for one year and on expiry thereof @ 15% on  the enhanced  compensation. Aggrieved  by  the  said awarded, the  appellants filed  an appeal  in the High Court which was  dismissed on  May  20,  1992.  A  Letters  Patent Appeal, viz.,  392 of 1992, was filed against the said order of the  learned single  Judge and the same is pending in the High Court.  Since the  respondents challenged  the award in question, the  appellants sought  for stay  and the stay was refused. The High Court directed by the impugned order dated March 5,  1993 to  release the  payment of  the compensation forthwith in  lieu  of  the  land  acquired  by  it  in  any appropriate proceedings.  Feeling  aggrieved  thereby,  this appeal by special leave has been filed.      It is  contended for the respondents that on failure to accept the  offer of  payment of  compensation determined by the competent  authority, viz., the Special Land Acquisition Collector, though  the respondents  had not  communicated in writing their  refusal to accept the award, on expiry of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

prescribed  period,   a  duty  was  cast  on  the  competent authority  and   the  Central   Government  to   appoint  an arbitrator. Since  arbitrator was not appointed for no fault on their  part, the appellants are enjoined to make good the loss by  paying interest.  Therefore, the appellants are not relieved from  paying interest,  as this  Court in  Union of India v.  Hari Krishan  Khosla [(1993)  Supp.  2  SCC  149], despite holding  that law  has conferred  no  power  on  the arbitrator to  award solatium  and interest on the amount of compensation determined  under Section  8 of  the  Act,  had upheld in  paragraph 79  [page 172]  on the  facts  of  some appeals, award  of solatium and interest, as there was delay in appointment of arbitrator, which was of 16 years in those appeals. The dely here also was of 16 years.      The question,  therefore, is whether the appellants are liable to  pay interest  to the respondents for the delay in appointment  of   arbitrator.  Section  8  [1]  of  the  Act envisages  that  where  any  property  is  requisitioned  or acquired under the Act, there shall be paid compensation the amount of  which shall  be  determined  in  the  manner  and according to the principles set out thereunder. Manners laid down  are   two:  (i)   fixation  by   agreement;  and  (ii) determination by  arbitrator to  be appointed by the Central Government where  no agreement  can be reached. Section 9 of the Act  enjoins payment of amount of compensation under the award subject to any rules made under the Act. The competent authority is,  therefor,  enjoined  to  pay  the  amount  of compensation to  the person  or persons  entitled thereto in such manner  and within such time as may be specified in the award.  Under   sub-rule  [3]   of  Rule  9,  the  competent authority, viz.,  the Land  Acquisition officer is enjoined, as soon  as may  be  practicable,  to  communicate  to  each interest person  an offer,  which is fair in his opinion, of amount of  compensation payable to such person in respect of the acquired property. Under sub-rule [5] (i), when an offer is made  to such  person, he  shall within  15 days  of  the receipt  of   the  offer,  communicate  in  writing  to  the competent authority  his  acceptance  or  otherwise  of  the offer. If  he accepts  the offer,  the  competent  authority should enter  into an  agreement with  him on  behalf of the Central Government in Form K. Clause (ii) of sub-rule [5] is not material  and hence  omitted. Under sub-rule [6], if the person to  whom an  offer is made, does not accept the offer or does not communicate within 15 days of the receipt of the offer, in  writing to the competent authority his acceptance or otherwise  of the  offer, the competent authority should, as soon as may be, submit to the Central Government a report setting forth  the full  facts of  the case, particularly as regards the  nature and  extent of  the disagreement between himself on  the one  hand and  the interested  person on the other, and  he should  forward with the report all connected papers. The  competent authority  should at  the  same  time deposit in  court the  amount offered  by him  to  the  said person under sub-rule [3].      Reading of  these rules do indicate that after an award has been  made,  the  competent  authority  is  enjoined  to communicate its  offer in  writing to the person interested. Such interested  person is  also enjoined, emphasised by the use of  the word  ‘shall’, to communicate, within 15 days of the receipt  of the  offer,  in  writing  to  the  competent authority "his  acceptance or otherwise of the offer". If he accepts  the  offer,  the  competent  authority  is  further enjoined to  enter into  an  agreement,  on  behalf  of  the Central Government,  with him  in Form  K  and  to  pay  the compensation awarded  by him.  If the interested person does

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

not accept the offer, nor communicates within 15 days of the receipt of  the offer, in writing to the competent authority his acceptance  or otherwise  of the  offer,  the  competent authority is  enjoined to submit to the Central Government a report setting  forth the  full  facts,  in  particular  the nature and  extent of  the disagreement  between himself and the interested  person, and  should forward  with the report all connected  papers to  the Central  Govenment. He is also enjoined to  deposit in  the court the amount offered by him to the interested person.      Thus, it  may be  seen that  the interested  person  is enjoined to  communicate within 15 days from the date of the receipt of  the acceptance  or otherwise  in writing  of the offer made  by the  competent authority.  The ratio  in Smt. Seeto Devi  & Ors.  etc. etc. v. Union of India & Ors. [C.A. arising out of S.L.P. Nos. 7411 of 1995 etc. decided on July 28, 1995]  on which  reliance was  placed by the counsel for the respondents  has no  application to  the facts  of  this case. Therein, it was found by this Court that "in fact. the case of  the appellants is that they had accepted the amount sent to  them under  protest to which there is no demur and, therefore, they  did not  sign the agreement in Form K which was sent  to them."  In those  circumstances, this Court had held that the competent authority and the Central Government ought  to   have  appointed  arbitrataor  to  determine  the compensation  payable   to  the  claimants.  In  this  case, however,   since   admittedly   the   appellants   had   not communicated their acceptance or otherwise of the offer made by the  competent authority, there was no duty cast on it to appoint  arbitrator  under  s.  8(1)  (b)  of  the  Act.  In paragrapah 79  of the decision in Hari Krishan Khosla’s case [supra], this  Court considered  the  observations  made  in Harbans Singh  Shanni Devi v. Union of India [C.A. Nos. 470- 71 of 1985 decided on February 11, 1985].      What was  stated in  Hari Krishan  Khosla’s case cannot assist the  respondents because  the general  ratio laid  in that case,  viz., the  provisions of the Land Acquistion Act have no application to the acquisition under the Act and the payment of  solatium and  interest cannot  be fastened since the Act  did  not  provided  for  payment  of  interest  and solatium, squarely  applies to  the facts  in this case, for the reason  that there  was no  laches on  the part  of  the appellants in  appointing arbitrator,  which was  assumed in Hari Krishan  Khosla’s case.  We have said about there being no laches  in appointment  of arbitrator in the case at hand as the  obligation to  appoint arbitrator  arises where  the interested person  communicates his  non-acceptance  of  the offer  enjoined   by  sub-rule   (5)  (i)  of  Rule  9.  The requirement of  sub-rule (6)  to  submit  a  report  to  the Central Government  where the  person to whom offer has been made does not communicate within 15 days, cannot be regarded as requiring the Central Government to appoint arbitrator on knowing about the fact of noncommunication of the interested person. According to us, something more is needed to require appointment of  arbitrator  -  the  interested  person  must communicate about  his nonacceptance of the offer, which was not done  here in  the case at hand. In Hari Shankar Kosla’s case this  Court had  assumed laches  on  the  part  of  the Central Government  due to  delay of 16 years in appointment of arbitrator. We would not draw such a presumption here.      Since the  determination of  the  compensation  by  the arbitrator is  subject matter  of the Letters Patent Appeal, we decline  to go into the merits. However, the award of the arbitrator awarding solatium @ 30% and interest @ 9% for one year  from   the  dated  of  taking  possession  and  @  15%

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

thereafter till  the date  of deposit,  stands set aside. In other respects, we express no opinion.      The  appeal   is  accordingly   allowed  but,   in  the circumstances, with no order as to costs.