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PETITIONER: UNION OF INDIA

       Vs.

RESPONDENT: SHRI RAM MEHAR & ANR.

DATE OF JUDGMENT26/10/1972

BENCH: GROVER, A.N. BENCH: GROVER, A.N. MATHEW, KUTTYIL KURIEN MUKHERJEA, B.K.

CITATION:  1973 AIR  305            1973 SCR  (2) 720  1973 SCC  (1) 709

ACT: Land  Acquisition  (Amendment and Validation)  Act  1967--S. 4(3)--Whether  interest was payable on the market  value  of the land acquired, and also on the amount of 15% payable  on such market value under Sub. S.    (2) of the Section.

HEADNOTE: Section   4(3)  of  the  Land  Acquisition  (Amendment   and Validation) Act, 1967 provides that where acquisition of any particular land has been made under the Land Acquisition Act 1894,  a  simple interest at the rate of six  per  cent  per annum  on the market value of such land as determined  under S.  23  of the Land Acquisition Act 1894 from  the  date  of expiry  of three years to the date of tender of  payment  of compensation,  shall be paid and Section 23(1) of  the  Land Acquisition  Act  provides  for the various  factors  to  be considered   by   Court  in  determining   the   amount   of compensation,  such as, the market value of the land at  the date  of  publication  under S. 4 of  the  Act,  the  damage sustained by the person etc., and S. 23(2) provides that  in addition,  to the market value of the land, the Court  shall award  in every case, a sum of 15% on such market value  for compulsory acquisition. On   question whether interest was payable under S.  4(3) of the  Amending Act, not only on the market value of the  land as  determined  under s. 23(1); but also on  the  additional amount of 15% (solatium) payable on such market value  under Sub.  Section (2) of that Section,, HELD : (1) The additional amount of 15% certainly forms part of  the  amount  of compensation because under  S.  23,  the compensation  is to consist of what is provided for in  Sub- section (1); plus the additional amount of 15% on the market value of the land acquired.  But ’compensation’ and  ’market value’  are distinct expressions and have been used as  such in the Land Acquisition Act.  The key to the meaning of  the word  "compensation"  is  to be found in  S.  23(1)  and  it consists of the market value of the land and the sum of  15% of   such   market  value,  which  is  stated  to   be   the consideration for the compulsory nature ,of the acquisition. Market  value is, therefore, only one of the  components  in the  determination  of the amount of compensation.   If  the

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legislature  has used the word "market value" in S. 4(3)  of the  Amending  Act,  it  must  be  held  that  it  was  done deliberately and what was intended was that interest  should be  payable on the market value of the land and not  on  the amount of compensation., [725F] Raja  Vyringharla  Narayana  Gajapatiraju  v.  The   Revenue Divisional  Officer,  Vizagapatam 66  I.A.  104;  Chaturbhuj Pandri  &  Ors. v. Collector, Rajgarh [1969] 1  S.C.R.  412; Sub-Collector of Godavari v. Saragam I.L.R. 30 Mad. 151  and Krishna Bai v. The Secretary of State for India in  Council; I.L.R. 42 All. 555 referred to. Union of India v. Nathu R.F.A. 104 of 1968 decided on 21-12- 68 of the Delhi High Court is over-ruled.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1014  of 1971. Appeal  by special leave from the judgment and  order  dated December  24, 1970 of the Delhi High Court at New  Delhi  in R.F. No. 279 of 1969. 721 L. N. Sinha, Solicitor-General of India, S.N.  Prasad  and R.   N. Sachthey, for the appellant. V. C. Mahajan, for the respondents. The Judgment of the Court was delivered by GROVER,  J. The sole point for determination in this  appeal by  special  leave from a judgment of the Delhi  High  Court relates  to  the  true  meaning  and  construction  of   the expression  "market value" employed in s. 4(3) of  the  Land Acquisition   (Amendment   and   Validation)   Act,    1967, hereinafter called the ’Amending Act’. The  facts may be briefly stated.  By a notification  dated’ October  24, 1961 issued under s. 4 of the Land  Acquisition Act  1894,  hereinafter called the ’Principal  Act’  certain land  in  the revenue estate of Shakurpur was sought  to  be acquired.   The  Land Acquisition Collector gave  an  award- dated  March 1, 1967 fixing compensation at the rate of  Rs. 3500 per Bigha.  The respondents being dissatisfied with the award  applied for a reference under s. 18 of the  Principal Act  claiming enhancement in compensation.   The  Additional District Judge held that the market value of the land on the relevant, date was Rs 5,000 per Bigha and the claimants were entitled  to  enhancement  at the rate of Rs.   IS  00,  per Bigha.  He also directed that interest should be awarded  at 6%  per annum on the market value of the land  from  October 24,  1964  till  the date of tender of the  payment  of  the amount  awarded by the Collector.  This was in view of s.  4 (3)  of the Amending Act since the date of the  notification under  s. 6 of the Principal Act was August 16,  1966  which was more than three years from the date of the  notification under  s. 4 of the principal Act.  He also awarded  interest on  the enhanced amount from the date of dispossession  till the  date of payment of the amount in court.  The  Union  of India  filed an appeal to the Delhi High Court.  No  dispute was  raised with regard to the interest awarded under s.  28 of the Principal Act.  The controversy was confined only  to the question of interest under s. 4(3) of the Amending  Act. In  view of a previous decision of the Delhi High  Court  in Union of India v. Nathu(1) a learned single judge  dismissed the appeal. Before  us the correctness of the decision of  the  Division Bench  mentioned above on the interpretation of s.  4(3)  of the  Amending  Act particularly with reference to  the  true

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meaning   of   the  expression  "market  value"   has   been challenged. It is necessary to refer to the provisions of the  Principal Act and the Amending Act to the extent they are material and relevant for the purpose of this appeal.  Clause (a) of s. 3 of  the  Principal  Act defines  the  expression  "land"  as including benefits to arise out of land and things  attached to the earth or permanently (1)  R.F.A. 104 of 1968 decided on 21-12-1968. 722 fastened  to anything attached to the earth.  Section  4  of that   Act   provided   for   publication   of   preliminary notification.  Section 5A provides for hearing of objections and  s. 6 for declaration of intended acquisition.   Section 6(1) provides, inter alia, that subject to the provisions of Part   VII  of  the  Principal  Act  when  the   appropriate government  is satisfied, after considering the  report,  if any, made under s. 5 (A) sub-s. (2) that any particular land is  needed  for  a  public  purpose  or  for  a  company   a declaration  shall  be made to that effect.   In  that  sub- section  the following was inserted by S. 3 of the  Amending Act:               "And  different declarations may be made  from               time  to time in respect of different  parcels               of  any land covered by the same  notification               under  s.4 sub-s. (1) irrespective of  whether               one  report or different reports has  or  have               been  made (wherever required) under  s.  5-A,               subsection (2)".               In place of the proviso the following  proviso               was substituted:               "Provided  that no declaration in  respect  of               any particular land covered by a  notification               under  s.  4, sub-s. (1) published  after  the               commencement    of   the   Land    Acquisition               (Amendment  and  Validation)  Ordinance.  1967               shall be made after the expiry of three  years               from the date of such publication".               Section 4 of the Amending Act is as follows:                "4.  Validation of certain acquisitions.               (1)..........               (2)..........               (3)Where acquisition of any particular land               covered by a notification under sub-s. (1)  of               s.  4 of the Principal’ Act, published  before               the  commencement  of  the  Land   Acquisition               (Amendment and Validation) Ordinance 1967,  is               or  has been made in pursuance of  any  decla-               ration  under section 6 of the Principal  Act,               whether    made   before   or    after    such               commencement,  and such declaration is or  has               been made after the expiry of three years from               the date of publication of such  notification,               there   shall   be   paid   simple   interest,               calculated  at the rate of six  percentum  per               annum  on  the market value of such  land,  as               determined  under section 23 of the  Principal               Act,  from  the  date of expiry  of  the  said               period of three years to the date of tender of               payment   of  compensation  awarded   by   the               Collector for the acquisition of such land :                Provided......................." 723 Section  11  of the principal Act provides for  inquiry  and award  by  the  Collector.  The award  has  to  include  the

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compensation which, in the opinion of the Collector,  should be  allowed  for the land.  Section 18  enables  any  person interested  who has not accepted the award of the  Collector to make a written application to him requiring him to  refer the  matter  for  the determination of the  court  when  his objection  relates to the amount of compensation apart  from other  matters.   Section 23 of the Principal  Act  must  be reproduced in its entirety.               S.23  "(1)  In determining the  amount  of               compensation  to be awarded for land  acquired               under  this  Act, the Court  shall  take  into               consideration--               First,  the  market value of the land  at  the               date  of the publication of  the  notification               under s. 4, sub-s. (1).               Secondly,  the damage sustained by the  person               interested  by  reason of the  taking  of  any               standing  crops or trees which may be  on  the               land  at  the time of the  Collector’s  taking               possession thereof.               Thirdly, the damage (if any), sustained by the               person, at the time of the Collector’s  taking               possession of the land, by reason of  severing               such land from his other land;               Fourthly,  the damage (if any),  sustained  by               the  person  interested, at the  time  of  the               Collector"s taking possession of the land,  by               reason   of   the   acquisition    injuriously               affecting  his  other  property,  movable   or               immovable,   in  any  other  manner,  or   his               earning;               Fifthly, if, in consequence of the acquisition               of  the  land  by the  Collector,  the  person               interested   is   compelled  to   change   his               residence or place of business, the reasonable               expenses  (if any) incidental to such  change;               and               Sixthly,   the  change  (if  any)  bona   fide               resulting  from diminution of the  profits  of               the  land between the time of the  publication               of the declaration under s. 6 and the time  of               the Collector’s taking possession of the land.               (2)In  addition to the market value of  the               land  as  above provided, the Court  shall  in               every  case award a sum of fifteen per  centum               on  such market value in consideration of  the               compulsory nature of the acquisition", Sections 28 and 34 of the Principal Act provided for payment of interest on the excess amount of compensation as directed by the court and when the amount of compensation is not paid or deposited on or before taking possession of the land. 724 In the case decided by the Division Bench of the Delhi  High Court  one  of the main points which arose was  whether  the market  value  on which interest has to be  awarded  in  the circumstances mentioned in s. 4(3) of the amending Act would include the statutory charge of 15% on that market value  as provided for by s.  23(2)   of  the  Principal   Act.    The decision of the Division Bench on  this point was as follows               "It therefore appears to us that while dealing               with the question of market value of the  land               the  statutory  charge of 15% on  such  market               value  as provided for in sub-s. (2) of s.  23               has got to be added to the market value of the               land, although it may still be regarded as  an

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             additional  charge to the market value of  the               land.   The  addition of this  amount  to  the               market  value of the land as defined in  s.  3               (a) of the principal Act, is therefore a  part               of the market value of the land "as determined               under s. 23 of the Principal Act" mentioned in               sub-s.  (3)  of s. 4 of  the  Validating  Act,               1967.   Section 23 is wide enough not only  to               include  the  "market value" of  the  land  as               defined  in S. 3 (a) of the Act but  also  the               additional 15% under sub-s. (2) of s. 23 which               by all accounts, becomes a part of the  market               value  of  the land.   Without  that  addition               there  can be no determination of  the  market               value of the land as "under section 23 of  the               Principal Act". The  Division  Bench  of the High Court  thus  came  to  the conclusion  that interest was payable under s. 4(3)  of  the Amending  Act  not only on the market value of the  land  as determined under s. 23(1) but also on the additional  amount of 15% payable on such market value under,sub-s. (2) of that section.   This additional payment is popularly  called  the "solatium".  On behalf of the Union of India the correctness of  the  view  of the Delhi High  Court  has  been  strongly assailed.   It  has  been urged  by  the  learned  Solicitor General  that  market  value  cannot  possibly  include  the "solatium"  which is a payment which does not form  part  of the  market value of the land.  It is an  additional  amount which  the  court has to award in every case on  the  market value  in  consideration  of the compulsory  nature  of  the acquisition. The High Court relied on certain decisions of different High Courts  which  turn on what was included in  the  expression "land"  as defined in s. 3(a) of the principal Act  and  for deter-mining the market value of all those things that  fall within that expression.  The High Court appears to have read those judgments in a way which would justify the  conclusion that the word "’market value" as used in sub-s. (2) of s. 23 of the principal Act was not confined only 725 to  the  market value mentioned in s. 23(1) "first"  but  it also included the various items which have to be taken  into consideration and which are covered by clauses "secondly" to "sixthly" in s.     23(1).   This  Court  had  occasion   in Chaturbhuj Panda & Others v.  The  Collector, Rajgarh(1)  to consider the question whether the value of trees standing on the land was to be added to the market value of the land for the  purpose of the addition of 15% solatium.  Referring  to some  of the judgments on which the High Court  relied  i.e. Sub-Collector  of Godavari v. Saragam(2) and Krishna Bai  v. The  Secretary  of  State for India in Council  (3)  it  was observed  that the law laid down by these cases was  correct but  the  question which was considered by  this  Court  was confined only to the point whether the value of trees was to be included in the market value for the purpose of  awarding the  15%  solatium.   This Court  held  that  the  statutory allowance  under s. 23 (2) had to be given on the  value  of the  trees because under s. 3 (a) of the Principal  Act  the expression "land" includes benefits to arise out of land and things  attached to the earth.  In other words the  decision rested  on the meaning of the expression "land" and  not  on the  fact that clause "secondly" in s. 23(1) refers  to  the damage sustained by reason of taking any trees which may  be on  the land.  It is altogether unnecessary in  the  present case  to determine the question whether the market value  on

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which  15%  solatium  is to be awarded by  the  court  would include  the  various items given in clauses  "secondly"  to "sixthly"  in  s. 23(1) of the Principal Act.  What  we  are concerned  with is whether the expression "market value"  in s.  4(3)  of the Amending Act will take  in  the  additional amount of 15% which is to be awarded on the market value  of the  land acquired under s. 23(2) of the Principal Act.   We can, find no warrant for the view which appealed to the High Court that market value would consist-of not only the market value  of the land but also the 15% solatium which is to  be granted  under s. 23(2) in consideration of  the  compulsory nature  of  acquisition.   The  additional  amount  of   15% certainly  forms part of the amount of compensation  because under  s.  23  the compensation is to  consist  of  what  is provided for in sub-s. (1 ) and the additional amount of 15% on the market value of the land acquired.  But  compensation and market value are distinct expressions and have been used as  such  in the Acquisition Act.  It is  not  possible  for anyone to contend that solatium falls within the  expression "land" within the meaning of, s. 3(a) of the Principal  Act. Since  under  s. 4(3) of the Amending Act.  It is  only  the market  value  of  land on which interest  has  to  be  paid solatium  cannot form part of the market value of the  land. In  the  well known decision of the Privy  Council  in  Raja Vyrigherla Narayana Gajapatiraju v. (1) [19691 1 SCR. 412.     (3) ILR 42.  All 555. (2) ILR 30 Mad. 151. 726 The  Revenue Divisional Officer, Vizagapatam(1) it was  laid down  that market value is the price which a willing  vendor might reasonably expect to obtain from a willing  purchaser. Disinclination  of the vendor to part with his land and  the urgent  necessity  of  the purchaser to buy  must  alike  be disregarded  and both must be treated as persons dealing  in the  matter  at arms length and without-compulsion.   It  is somewhat interesting that the Law Commission of India in its report  submitted in 1957 on the need for reform in the  law of land acquisition observed:               "We are not also in favour of omitting Section               23  (2) so as to exclude solatium of 15%.  for               the compulsory nature of the acquisition.   It               is  not enough for a person to get the  market               value of the land as compensation in order  to               place  himself in a position similar to,  that               which he could have occupied had there been no               acquisition;    he   may   have    to    spend               considerable.   further  amount  for   putting               himself    in    the    same    position    as               before.........As  pointed out  by  Fitzgerald               the community has no right to enrich itself by               deliberately  taking away the property of  any               of its members, in such circumstances  without               providing adequate compensation for it.   This               principle  has  been in force  in  India  ever                             since  the Act of 1870.  The  Select Committee               which examined the Bill of 1893 did not  think               it necessary to omit the provision but on  the               other hand transferred it to Section 23". It  seems to us that the term "market value" has acquired  a definite connotation by judicial decisions.  Any addition to the   value  of  the  land  to  the  owner  whose  land   is compulsorily acquired’ which addition is the result of  such factors  as  are  unrelated to the  open  market  cannot  be regarded  as a part of the market value.  It is  significant

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and has been noticed at an earlier stage also that according to  the  other sections which appear in the  Principal  Act, interest is payable on such amount which is either a part of compensation  or is the total compensation  payable  itself. If  market  value  and compensation  were  intended  by  the legislature  to  have the same meaning it  is  difficult  to comprehend  why the word "compensation" in s. 28 and 34  and not "market value" was used.  The key to the meaning of  the word  "compensation"  is to be found in s.  23(1)  and  that consists (a) of the market value of the land and (b) the sum of  1501,  on such market value which is stated  to  be  the consideration for the compulsory nature of the  acquisition. Market value is therefore only one of the components in  the determination  of  the  amount  of  compensation.   If   the legislature  has used the word "market value" in s. 4(3)  of the  Amending  Act  it  must  be  held  that  it  was   done deliberately and what was intended was that- interest should be  payable on the market value of the land and not  on  the amount of compensation (1)66 I.A. 104. 727 otherwise there was no reason why the Parliament should  not have  employed  the  word "compensation"  in  the  aforesaid provision of the Amending Act. For the reasons given above we are unable to accept the view of  the  High  Court that market value in  s.  4(3)  of  the Amending  Act  means  the same  thing  as  compensation  and includes  the  amount of 15% payable under s. 23(2)  on  the market value of the land.  This appeal, therefore,  succeeds to the extent that the amount awarded to the claimants shall be  computed in accordance with our decision.  In all  other respects  the appeal is dismissed.  The parties are left  to bear their own costs in this Court. S.N.                     Appeal partly allowed. 728