Holding

The notification appointing the arbitrator was valid because a genuine dispute over compensation existed, and the earlier Division Bench’s findings were not tentative; consequently, the arbitrator had jurisdiction and the award stands, subject to reduction of interest to 9% per annum.

Summary

The appellants' property was requisitioned in 1987 and acquired under the Requisition and Acquisition of Immovable Property Act, 1952. Although a 1975 agreement fixed a price of Rs 18,98,000, the claimants received this amount in 1993 under protest and later sought higher compensation, leading the State Government to appoint an arbitrator under Section 8(1)(b) of the Act. The arbitrator awarded Rs 70,000 per kattah (the market value on the acquisition date) plus interest and solatium. Union of India challenged both the validity of the arbitrator’s appointment, arguing no referable dispute existed, and the award itself. The Calcutta High Court first upheld the notification but later set aside the award, holding the earlier findings were tentative. The Supreme Court held that the earlier Division Bench’s findings were not tentative, that a genuine dispute over compensation existed, and therefore the notification and the arbitrator’s jurisdiction were valid; the award was upheld, with interest reduced to 9% per annum. The civil appeal was partly allowed, setting aside the High Court judgment and directing payment of compensation as per the award.

Issues considered

Whether the notification appointing an arbitrator under Section 8(1)(b) of the Requisition and Acquisition of Immovable Property Act, 1952 was valid in the absence of a referable dispute.
Whether the findings of the earlier Division Bench were tentative and thus not binding on the later Division Bench.
Whether the arbitrator had jurisdiction to determine compensation, solatium and interest.
Whether the award could be set aside on the ground of lack of material evidence or procedural irregularities.

Legislation cited

Subjects

Requisition and Acquisition ActArbitrationCompensationLand acquisitionReferable disputeJurisdictionInterest rateSolatiumCivil appeal

Judgment

A MAHESH LALL SEAL AND ORS.
v.
UNION OF INDIA AND ORS.

SEPTEMBER I, 2006

B [ARIJIT PASA YAT AND SH. KAPADIA, JJ.)

.. ,,.
Requisition and Acquisition of Immovable Property Act, 1952-Sections
8(/)(a)(b) and I I-Property acquired 12 years after agreement-Payment
C received by claimants under protest-State Government issuing notification
appointing arbitrator-Notification challenged on the ground that there
was no referable dispute-Meanwhile award passed by arbitrator-Validity
of notification upheld by Single Judge and Division Bench-Award
challenged-Subsequent Division Bench holding that findings by earlier
Division Bench were tentative and setting aside award on the ground that
D arbitration proceedings were without jurisdiction as there was no referahle
dispute-Whether subsequent Division Bench right in holding that findings
by earlier Division Bench were tentative in nature-In the circumstances,
held, finding by earlier Division Bench could not be held to be tentative and
issue stands concluded by earlier Division Bench--Practice and procedure.

E Property belonging to appellants-claimants was acquired by Union of
India on 3.3.1987 under Section 8(1)(a) of Requisition and Acquisition of
Immovable Property Act, 1952 at fixed price of Rs. 18,98,00fli. in terms of
agreement dated 18.7.75. On 26.5.93 claimants received the entire amount
of Rs. 18,98,000/- under protest. State Government issued notification
F appointing arbitrator under Section 8(1)(b) of 1952 Act to which Union of
India objected by filing Objections on the ground that on account of agreement
between parties on 18.7.75 and signing of Form Kon 26.5.93 by claimants,
the Arbitrator could not make award under Section 8(3) of the 1952 Act beyond
the agreed amount of Rs. 18,98,000/-. Claimants filed claim petitions before
Arbitrator claiming compensation in respect of acquired property @ R~.
G 3,00,000/- per kattah. On 5.1.98 Union of India filed written objection before
arbitrator stating that fair market value of acquired lands on 3.3.87 would ·•
not exceed Rs. 70,000/- per kattah. Union of India also filed writ petition
seeking cancellation of appointment of arbitrator. However, there was no stay
of proceedings before the arbitrator by the High Court. Claimants agreed to
H 696
MAHESH LALL SEAL v. U.0.1 697
receive compensation@ Rs. 70,000/- per kattah as suggested by Union of A
India in its objection dated 5.1.98. On 21.1.2000 Union of India moved
application before Arbitrator saying that concession made on 5.1.98 by

- .;
Advocate conceding rate of Rs. 70,000/- per kattah was without obtaining
instructions and the claimants were not entitled to receive compensation at
the said rate. Arbitrator on 18.5.2000 dismissed the objection dated 21.1.2000 B
filed by Union of India and also came to the conclusion that dispute regarding
compensation did exist and the Arbitrator had jurisdiction to try and decide
such dispute. Writ Petition preferred by Union of India against decision dated
18.5.2000 of the arbitrator was dismissed by High Court. Earlier writ petition
filed by Union of India seeking cancellation of appointment of arbitrator was
also dismissed by Single Judge on 28.9.2000 holding that there existed dispute C
as to amount of compensation payable for acquisition of the premises on 3.3.87
and State Government was competent to appoint an arbitrator under Section
8(l)(b) of the 1952 Act. Arbitrator announced award on 25.10.2000 assessing
market value at the rate of Rs. 70,000/- per Kattah as on 3.3.87. Aggrieved
by the decision of the Single Judge dated 28.9.2000, Union of India preferred
writ appeal which was dismissed by Division Bench holding that notification D
issued under Section 8(1)(b) of the 1952 Act appointing arbitrator was valid
in law without going into the question of validity of the Award.

When claimants filed writ petition for realization of compensation as
per the Award, Union of India filed appeal before Division Bench under Section E
II of the 1952 Act against award dated 25. 10.2000. Union of India again
contended that notification appointing arbitrator was not valid as there existed
no dispute to be referred to arbitration; that award was passed on the basis of
concession made by Union of India without noticing that the same were
subsequently withdrawn ; and that claimants were not entitled to sofatium and
interest as awarded. Division Bench allowed appeal and set aside award dated F
25.10.2000 on the ground that arbitration proceedings were without
jurisdiction as there was no referable dispute holding that there was no res-
... judicata as the findings given by earlier Division Bench were tentative in
nature; and that arbitrator erred in fixing compensation @ Rs. 70,000/- per
kattah as there was no material on record for assessing valuation, particularly G
when no evidence was taken by the arbitrator. Hence, this appeal by the
claimants.

Partly allowing the appeal, the Court

Held: I.I. There is a difference between the validity of the notification H
698 SUPREME COL:RT REPORTS [2006] SUPP. 5 S.C.R.

A issued under Section 8(1)(b) of the Requisition and Acquisition of Immovable
Property Act, 1952 on one hand and the validity of the Award on merits
announced by the Arbitrator on 25.10.2000 on the other. In the earlier round
of litigation the question which arose for determination before the High Court
was: whether the notification issued under Section 8(l)(b) of the 1952 Act
B appointing an arbitrator was valid in law. In that litigation there was no question
of deciding on merits the validity of the Award dated 25.10.2000. A concurrent
finding was recorded by Single Judge and by the Division Bench upholding
the validity of the notification under Section 8(l)(b) of the 1952 Act. The
notification was upheld. By no stretch of imagination one can say that the
concurrent findings given were tentative in nature. 1707-A, B, q
c 1.2. It is important to note that the premises in question were acquired
on 3.3.87 which is 12 years after the agreement dated 18.7.75. Under the
scheme of the 1952 Act as in the case of Land Acquisition Act fair market
value has to be determined as on the date of acquisition. In this case acquisition
had taken place on 3.3.87. If the contention of Union of India is to be a~cepted
D it would amount to pegging of the price which is not permissible under the
law of acquisition. The Division Bench in the earlier round had given a finding
that the premises in question are located in a posh area. In the earlier round
a concurrent finding was given by the High Court, both by Single Judge and
by the Division Bench, that the claimants had received compensation under
E protest. In the circumstances, it cannot be said by the subsequent Division
Bench that the earlier findings were tentative. (707-C, D, El

2. Before the Arbitrator the claimants had asked for enhancement of
compensation at the rate of Rs. 3,00,000/- per kattah. In reply, on 5.1.98 Union
of India stated that the fair rate was Rs. 70,000/- per kattah. On 21.1.2000
p an affidavit is filed by Union of India before the Arbitrator saying that the
advocate had no authority to concede the rate at Rs. 70,000/- per kattah. By
decision dated 18.5.2000 the objections filed by Union of India dated 21.1.2000
were rejected. The decision of the Arbitrator was challenged in a writ petition.
This writ petition was also dismissed by the High Court and, therefore, it is
not open to Union of India now to say that Rs. 70,000/- per kattah was not the
G fair rate. This issue was also, therefore, concluded. 1707-E, F, G)

3. Before the Arbitrator the claimants had submitted a valuation report
under which the valuer has relied upon sale instance and had calculated the
fair market value of the acquired property at Rs. 73,900/- per kattah. In fact,
H even the Arbitrator in the impugned Award has referred to the report of the
MAHESH LALL SEAL v. U.0.1. [KAPADIA • .I.] 699
·,
expert valuer and also to the sale instance dated 18.7.86 and, therefore, it A
cannot be said that the impugned Award is based only on the concession made
by Union of India vide its objections dated 5.l.98.1707-G; 708-A, Bl

4. On behalf of the claimants, it has been stated that the claimants will
not press their claim for solatium. In the circumstances, the question as to
whether the claimants were entitled to solatium under provisions of the 1952 B
Act is not required to be examined. However, the interest awarded by the
Arbitrator at the rate of 15% per annum from the date of acquisition till
payment is on the higher side and accordingly payment of interest at the rate
of9% per annum instead of 15% per annum is directed.1708-B, q

5. Union of India isdirected to pay compensation that is land value at C
the rate of Rs. 70,000/- per kattah in respect of Danga and Bastu land and
Rs. 35,000/- per kattah for the pond land without solatium with interest at
the rate of9% per annum from the date of acquisition till payment, less the
amount which has already been paid till date. (708-F, Cl
D
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 723 of2006.

From the Judgment and Order dated 6.12.2004 of the High Court of
Calcutta in F.M.A.T. No. 151/2004.

Bhaskar Gupta, Avijit Bhattacharjee and Saumya Kr. for the Appellants. E
Vikas Singh, A.S.G., Indra Sawhney, Anil Katiyar, Tara Chand Sharma
and Neelam Sharma for the Respondents.

The Judgment of the Court was delivered by

KAPADIA, J. This civil appeal by grant of special leave appeal seeks F
to challenge judgment and order dated 6.12.04 passed by a Division Bench
of the Calcutta High Court allowing F.M.A.T. No.151 of2004 filed by Union
of India (respondents herein) challenging the Award of the Arbitrator dated
25.10.2000.
G
Before the High Court the main contention advanced by Union of India,
on whose behest the property was acquired, was that the claimants had
entered into agreement with the Government on 18.7 .75 for sale of properties
under Section 8(l)(a) of the Requisitioning and Acquisition of Immovable
Property Act, 1952 (hereinafter referred to as "the 1952 Act") at a fixed price
of Rs.18,98,000/- and in terms of such agreement the full price was paid upon H
700 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.

A execution of an agreement in Form Kon 26.5.93 and, therefore. there was no
question of any dispute being referred to arbitration.

The short question which arises for determination in this civil appeal is:
whether the impugned Award of the Arbitrator dated 25.10.2000 was null and
void on account of absence of referable dispute to the Arbitrator. The
B background facts are as follows:

At all material times, appellants (claimants) were the joint owners of Dag
Nos.6I3, 6I4, 617 and 6I8 measuring 7.16 acres in area, witlrin Mouza Nainan,
P. S. Baranagar, District North 24 Parganas, being portion of premises No.46,
B. T. Road, Calcutta (hereinafter referred to as "the acquired property"). The
C said acquired property was initially requisitioned by Union of India under
Defence of India Act and Rules. This was on 22.4. I942. On 3.3. I987 the said
property was acquired under the I952 Act along with other properties when
Form J was published. Up to 31.12.74 the rent of the <:cquired property was
assessed by the L.A. Collector at the rate of Rs.4 I0/- per month. However,
D this rate of rent was subsequently increased to Rs.55.465/- per annum. The
claimants were paid rent at the rate of Rs.55,465/- per annum during the period
1.1.75 till 2.3.87 when, as stated above, the property stood acquired. In the
meantime, prior to 10.3.87 U.L.C. Act I976 (for short, "the 1976 Act") came
into force. The claimants filed an application under Section 27(2) of 1976 Act
for exemption from vesting excess land and for permission to transfer in
E favour of Union of India. The State Government did not finalise the solatium.
The State Government failed to decide as to which portion of the aforesaid
premises was liable for vesting in the State Government under the said 1976
Act. As the requisition of the disputed premises under the I952 Act was due
to expire on 10.3.87, an order of acquisition was made on 3.3.87. On 27.3.87
p Union of India informed the land acquisition officer that the acquiring body
had decided to place Rs. I8,98,000/- for disbursement to the claimants in terms
of the agreement dated I8.7.75. Accordingly, the land acquisition officer
published an award for Rs.18,98,000/- on 8.6.88. However, the State Government
on 6.8.88 appointed an Arbitrator vide notification no.492-Reqn. which was
later on cancelled on 16.3.90 at the behest of the Central Government.
G
On 26.5.93 ultimately the claimants received the entire amount of
Rs. I 8,98,000/- under protest. They filed writ petition praying for reference
under Section 18( 1) of the Land Acquisition Act for enhancement of
compensation. On 24.1.96 High Court directed the claimants to approach the
H collector. Accordingly on 23.2.96 an application was made for reference before
MAHESH LALL SEAL v. U.0.1. [KAPADIA, J.) 701
•
the L.A. Collector under Section 18( I) of the L.A. Act. A
On 2.4.97 the State Government once again appointed Arbitrator to
which Union of India objected. This objection was filed by Union of India on
25.4.97. On 22.12.97 claimants filed their claim petitions before the Arbitrator
claiming the compensation in respect of the acquired property at the rate of
Rs.3,00,000/- per kattah. On 5.1.98 Union of India filed its written objection B
before the Arbitrator under which it stated that the fair market value of the
acquired lands on 3.3.87 would not exceed Rs. 70,000/- per kattah. However,
the Union of India moved the High Court under Article 226 of the Constitution
on 10.12.98 vide Writ Petition No.2503 of 1998 seeking cancellation of the
appointment of Arbitrator. There was no stay, therefore, the Arbitrator C
proceeded. On 6.12.99 the claimants filed their reply ;,nd agreed to receive
compensation at the rate of Rs.70,000/- per kattah as suggested by Union of
India in its objection dated 5.1.98. By interim order dated 15.12.99 learned
Single Judge refused to stay the arbitration proceedings and directed the
proceedings to continue subject to the result of the writ petition. On 21.1.2000
an application was moved before the Arbitrator by Union of India, pursuant D
to the leave granted by the Arbitrator, saying that the concession made on
5.1.98 by learned advocate conceding the rate of Rs. 70,000/- per kattah was
without obtaining instructions and, therefore, the claimants were ·not entitled
to receive compensation at that rate. Before the Arbitrator, Union of India as
well as the L.A. Collector contended that on account of agreement between E
the parties as far back as on 18.7.75 and in view of the claimants' signing Form
K as far back as on 26.5.93, the Arbitrator was not in a position to make the
award under Section 8(3) of the 1952 Act beyond the amount agreed upon,
namely, Rs.18,98,000/-. This is the main contention all through out by Union
of India. By order dated 18.5.2000 the Arbitrator held that the dispute was
between the claimants on one side and Union of India on the other side; that F
Union of India was represented by the L.A. ·collector who had engaged the
government pleader to appear in the case and conte.st the case on behalf of
Union of India and accordingly the government pleader filed his written
objections against the claim on 5. I .98. The Arbitrator further found that the
Vakalatnama filed by the government pleader continued to remain in for1.,e. It G
was never withdrawn. That being the position the Arbitrator came to the
conclusion that the application made by Union of India on 21.1.2000
withdrawing its earlier statement of the fair value of Rs. 70,000/- per kattah,
was not maintainable. By the said order the Arbitrator rejected the objections
filed by Union of India on 21. 1.2000 and came to the conclusion that the
dispute regarding compensation did exist and therefore, the Arbitrator had H
702 SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R.

A jurisdiction to try and decide such dispute.
Being aggrieved by the decision of the Arbitrator dated 18.5.2000 Union
of India preferred one more writ petition in the High Court bearing No. I2072
of2000. This writ petition was dismissed on 30.8.2000 in /imine as misconceived
in view of the earlier order of the High Court dated I 5. I2.99 directing the
B Arbitrator to proceed with the arbitration.
On 28.9.2000 the writ petition filed by Union of India seeking cancellation
of the appointment of Arbitrator was also dismissed by learned Single Judge
who took the view that the claimants had received Rs.14,80,000/- out of
Rs.18,98,000/- by executing agreement in Form K under Rule 9(5) of the
C Requisitioning and Acquisition of Immovable Property Rules 1953 under
protest; that various proceedings were initiated before the L.A. Collector but
determination could not be made under Section 8 of 1952 Act on account of
objections raised by Union of India regarding maintainability of arbitration
proceedings and that the State Government had the power to appoint an
D arbitrator under the said 1952 Act. In this connection, learned Single Judge
observed that written objections were filed by the claimants protesting against
the offer of Rs.18,98,000/- on the same day when Form K was executed.
Learned Single Judge further observed that the Form K agreement contained
clause (6) which inter a/ia provided that any dispute or difference arising out
of the subject-matter of the agreement shall be referred to an arbitrator, to be
E appointed by the government, and the decision of the Arbitrator shall be
conclusive on all the parties. The provisions of Arbitration Act I940 were
made applicable to such arbitration. Learned Single Judge further found that
under the agreement dated I 8.7.75 the right, title and interest was never
conveyed to the Central Government and on the contrary the premises were
p acquired on 3.3.87 under the provisions of the 1952 Act after a lapse of about
12 years and, therefore, the consideration of Rs.18,98,000/- had no relevance
in the matter of acquisition on 3.3.87. In this connection, learned Single Judge
observed that the agreement dated I 8.7.75 can by no stretch of imagination
constitute a fair amount of compensation payable in respect of acquisition on
3.3.87. Thus, it was held that in view of Section 8(1)(b) read with clause (6)
G of the agreement in Form K, there existed a dispute as to the amount of
compensation payable for acquisition of the premises on 3.3.87. Thus, there
was a referable dispute to the arbitrator. In the circumstances, it was held that
the State Government was competent to appoint an arbitrator under Section
8(1 )(b) of the 1952 Act. The writ petition was accordingly dismissed.
H
MAHESH LALL SEAL v. U.0.1. [KAPADIA. J.] 703
~
.. On 25. l 0.2000 the Arbitrator announced his award under which he A
rejected the claim made by the claimants at the rate of Rs.3,00,000/- per kattah.
He assessed the market value at the rate of Rs.70,000/- per kattah as on 3.3.87.
In his Award it was observed that no witness was examined on either side
for the reason that the claimants had accepted the rate of compensation
offered by Union of India in their written reply dated 5.1.98. The Arbitrator
has further held that the claimants have also filed the report of the Valuer, the B
sale deed of the adjoining land, the sale instances and accordingly he valued
the premises at the rate of Rs.70,000/- per kattah. He also awarded solatium
and interest. Accordingly, the amount of Rs.2,65,66,750/- has been awarded
as compensation.

Aggrieved by the decision dated 28.9.2000 delivered by learned Single
c
Judge dismissing Writ Petition No.2503 of 1998 regarding maintainability of
the arbitration proceedings, Union of India preferred writ appeal APOT No.42
of 2001 filed on 7.1.2001. By decision dated 28.8.2001 the Division Bench
dismissed the writ appeal. The main contention advanced by Union of India
before the Division Bench was that the claimants had received compensation D
amounting to Rs.18,98,000/- under the agreement in Form K and, therefore,
there did not exist any dispute as to the amount of compensation payable for
the same to the owners for which an arbitration was required to be entered
into in exercise of the power under Section 8(!)(b) of the 1952 Act. This
argument was rejected by the Division Bench holding that there was no
E
material on record to show that the claimants had communicated their
acceptance to the offer made by Union of India. On the contrary the Division
Bench found that when Form K came to be executed in 26.5.93, the amount
of Rs.14,80,000/- was accepted by the claimants under protest. The Division
Bench further found that Union of India has never denied receipt of objections
from the claimants at the time of receiving compensation. In the circumstances, F
the Division Bench found that there existed disputes between the claimants
and Union of India regarding the quantum of compensation and, therefore,
it was not open to Union of India to challenge the notification issued under
Section (8)(1)(b) of the 1952 Act appointing the Arbitrator. The Division
Bench further found that the agreement dated 18.7.75 for Rs.18,98,000/- was
in fact cancelled by the Estates Officer on 15.9.76. The premises in question
G
comprised of 8.90 acres of land. In 1975 the rate was around Rs.5,000/- per
kattah. The Division Bench found that the premises are located in a posh area
in Barrackpore Trunk Road, Calcutta. The Division Bench agreed with the
view expressed by learned Single Judge that Form K contained clause (6)
~;.
which itself stipulated that any dispute or difference in the matter of H
704 SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R.
~ .,.
A detennination of compensation shall be decided by arbitration. It was observed
that in the present case Union of India made an offer of Rs.18,98.000/- in 1975
under the agreement dated.18.7.75 when the premises were under requisition
and by such an agreement no right, title or interest was ever transferred by
the claimants to Union of India. Therefore, it was held that the notification
under Section 8(l)(b) of the 1952 Act was valid. This was the main aspect to
B be decided by the Division Bench. However, when the writ appeal APOT
No.42 of 200 I came for decision the Award of the Arbitrator had come into
existence and, therefore, the Division Bench observed that the question of the
validity of the Award, whether by consent or otherwise, was not required to
be gone into because the only question before the Division Bench was
c whether the notification issued under Section 8( I)(b) of the 1952 Act was with
or without jurisdiction. The High Court, therefore, did not go into the question
of the merits of the Award. The High Court declared that the notification
under Section 8(l)(b) of the 1952 Act was valid in law as there existed a
dispute as to compensation between the claimants and Union of India.

D Aggrieved by the decision dated 28.8.200 I, Union of India preferred
S.L.P.....(C)......CC2417.

On 18.3 .2002 the following order was passed by the Supreme Court in
S.L.P.:

E "Learned Additional Solicitor General appearing for the petitioners
seeks leave of the Court to withdraw this petition to pursue other
remedies that may be perraissible under the law. The Special Leave
Petition is dismissed as withdrawn."

Union of India thereafter preferred an application for review before a
F Division Bench of the High Court against the judgment delivered on 28.8.2001
by the earlier Division Bench of the High Court. The review application was
dismissed on 14.1.2003 with an observation that Union of India was free to
challenge the Award in que~tion in accordance with law. It was made clear
that in its decision dated 28.8.200 I the earlier Division Bench has not gone
into the merits of the Award.
G
Since the claimants did not receive compensation, on 11.11.2003 the
claimants moved the High Court vi de Writ Petition No.3001 of 2003 for
realization of the compensation as per the Award. They sought execution of
the Judgment of the High Court. At that stage Union of India filed an appeal
H '°*
MAI-IES!-1 LALL SEAL v. U.0.1. [KAPADIA, J.] 705
.....
bearing f.M.A.T. No.151 of 2004 under Section 11 of the 1952 Act against the A
Award of the Arbitrator dated 25.10.2000.

By impugned judgment dated 6.12.2004 the Division Bench allowed the
appeal preferred by Union of India. In appeal, Union of India once again
contended that the property in question was acquired on the basis of the
agreement dated 18.7.75 under which compensation was ultimately received B

-,___
at the rate of Rs.18,98,000/- when Form K executed and, therefore, there was
no dispute in existence to be referred to arbitration. It was urged that the
impugned Award was passed by the Arbitrator on the basis of the concession
made vide objections dated 5.1.98 a;id without noticing the fact that the said
objection was withdrawn by Union of India on 21.1.2000 when fresh objections
were filed saying that the _claimants were not entitled to compensation exceeding
c
Rs.18,98,000/-. It was also urged on behalf of Union of India that claimants
were not entitled to solatium and interest as awarded by the Arbitrator. On
behalf of the claimants it was once again submitted that the agreement dated
18. 7.75 offering the price of Rs.18,98,000/- cannot constitute compensation for
acquisition which took place after 12 years on 3.3.87 and that reference of D
such dispute to arbitration cannot be disputed as illegal. It was urged that
the balance amount of Rs.14,80,000/- received on 26.5.93 when Form K was
signed, have been received under protest and, therefore, the dispute continued
to exist. The claimants also placed reliance on the judgment of the Division
Bench dated 28.8.2001 in writ appeal APOT No.42 of2001 in support of their
contention that the notification under Section 8(1 )(b) of the 1952 Act appointing
E
an arbitrator was legal, valid and in accordance with law.

On the above contentions the Division Bench in the second round of
litigation held that there was no res judicata because the findings given by
the earlier Division Bench in its decision dated 28.8.2001 were tentative in F
nature. Accordingly in the second round the Division Bench records a finding,
contrary to the decision of the Division Bench in the first round, that at the
time of receiving the balance amount of Rs. 14,80,000/- and at the time of
signing of Form K on 26.5.93 there did not exist any objection from the
claimants. In this connection the Division Bench observed that the claimants
had received Rs.14,80,000/- on execution ofform K agreement on 26.5.93 but G
=- there was no simultaneous objection from the claimants who in fact objected
to the amount only after receiving the balance amount of Rs.14,80,000/- and,
therefore, according to the Division Bench it cannot be said that the claimants
received compensation under protest. One fails to understand how in the
second round of litigation the subsequent Division Bench gave contrary view
H
706 SUPREME COURT REPORTS [2006) SUPP. 5 S.C.R.

A on the same point. Realising this difficulty. the subsequent Division Bench
holds that the findings given on the above question by the Division Bench
in the earlier round were tentative findings and since they were tentative
findings the subsequent Division Bench once again goes into the same
question and holds that the claimants received the compensation amounting
to Rs. 18.98.000/- without any protest and consequently the arbitration
B proceedings were without jurisdiction. On the merits of the Award the
subsequent Division Bench however holds that on 5.1.98 written objections
were filed on behalf of Union of India under which it was conceded that the
rate of the fair market value was Rs.70,000/- per kattah and not Rs.3,00,000/
-
,>

- per kattah as cont.ended by the claimants. However, these written objections
C dated 5.1.98 were subsequently withdrawn on 21.1.200 and, therefore, the
Arbitrator erred in fixing compensation at the rate of Rs.70,000/- per kattah.
The subsequent Division Bench observed that there was no material on
record for assessing valuation, particularly, when no evidence was taken by
the Arbitrator. In the circumstances, the subsequent Division Bench has set
aside the Award dated 25.10.2000. Hence this civil appeal by the claimants.
D
The short question which arises for determination is: whether the
subsequent Division Bench was right in holding that the findings given by
the earlier Division Bench on the maintainability of the arbitration proceedings, ·
were tentative in nature and, therefore. not binding on the subsequent Division
E Bench.

On behalf of Union of India it was vehemently urged that no interference
is called for in the present case. It was contended on behalf of Union of India
that this Court had granted liberty to Union of India vide its order dated
18.3.2002 to pursue other remedies permissible under law. It was urged that
F even the Division Bench of the Calct1tta High Court clarified the position vide
order dated 14.1.2003 saying that Union of India was free to challenge the
Award and, therefore, according to Union of India, it was open to it to raise
the same contentions regarding maintainability of arbitration proceedings
once again in the appeal filed before the Division Bench against the Award
under Section I I of the 1952 Act. In this connection, it was submitted by Ld.
G Additional Solicitor General that the findings of the earlier Division Bench
dated 28.8.2001 were tentative in nature and, therefore, the subsequent Division •
Bench was right in holding, vide impugned judgment, that the arbitration
proceedings were not maintainable as the acquisition had taken place under
the agreement dated 18.7.75. Consequently, according to Union of India, the
H Award has been rightly set aside by the Division Bench vide impugned
MAHESl-1 LALL SEAL r. U.0.1. IKAPADIA. J] 707
>-
judgment dated 6.12.2004. A
We find merit in this civil appeal. There is a difference between the
validity of the notification issued under Section 8(l)(b) of the 1952 Act on
one hand and the validity of the Award on merits announced by the Arbitrator
on 25.10.2000 on the other. In the earlier round of litigation the question which
arose for determination before the High Cou11 was: whether the notification B
.. issued under Section 8(1)(b) of the 1952 Act appointing an arbitrator was
valid in law. In that litigation there was no question of deciding on merits the
validity of the Award dated 25. I0.2000. A concurrent finding was recorded by
learned Single Judge and by the Division Bench upholding the validity of the
notification under Section 8(l)(b) of the 1952 Act.The notification was upheld. C
By no stretch of imagination one can say that the concurrent findings given
were· tentative in nature. In this connection, it is important to note that the
premises in question were acquired on 3.3.87 which is 12 years after the
agreement dated 18.7.75. Under the scheme of the 1952 Act as in the case of
Land Acquisition Act fair market value has to be determined as on the date
of acquisition. In this case acquisition had taken place on 3.3.87. If the D
contention of Union of India is to be accepted it would amount to pegging
of the price which is not permissible under the law of acquisition. The
Division Bench in the earlier round had given a finding that the premises in
question are located in a posh area. In the earlier round a concurrent finding
was given by the High Court, both by learned Single Judge and by the E
Division Bench, that the claimants had received compensation under protest.
In the circumstances, it cannot be said by the subsequent Division Bench
that the earlier findings were tentative. There is one more fact which is
required to be noted. Before the Arbitrator the claimants had asked for
enhancement of compensation at the rate of Rs.3,00,000/- per k_attah. In reply,
on 5.1.98 Union of India stated that the fair rate was Rs.70,000/- per kattah. F
On 21.1.2000 an affidavit is filed by Union of India before the Arbitrator
saying that the advocate had no authority to concede the rate at Rs.70,000/
- per kattah. By decision dated 18.5.2000 the objections filed by Union oflndia
dated 21.1.2000 were rejected. The decision of the Arbitrator was challenged
in a writ petition C.O.No.12072 of 2000. This writ petition was also dismissed G
by the High Court on 30.8.2000 and, therefore, it is not open to Union of India
now to say that Rs. 70,000/- per kattah was not the fair rate. This issue was
also, therefore, concluded.
~

i
Lastly, the most important point to be noted is that before the Arbitrator
the claimants had submitted a valuation report under which the valuer has H
708 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.

A relied upon sale instances and had calculated the fair market value of the
acquired property at Rs.73,900/- per kattah (SEE: Valuation report dated 20.12.96
-
at page 97 of Volume I filed in the Calcutta High Court in F.M.A.T. No.151 of
2004 - Part!). In fact, even the Arbitrator in the impugned Award has referred
to the report of the expert valuer and also to the sale instance dated 18.7.86
and, therefore, it cannot be said that the impugned Award is based only on
B the concession made by Union of India vide its objections dated 5.1.98.

Before concluding we may mention that Shri Bhaskar Gupta, learned
..
senior advocate appearing on behalf of the claimants, has stated that the
claimants will not press their claim for solatium. In the circumstances, we are
C not required to examine the question as to whether the claimants were entitled
to solatium under provisions of the 1952 Act. However, we are of the view
that the interest awarded by the Arbitrator at the rate of 15% per annum from
the date of acquisition till payment is on the higher side and accordingly we
direct payment of interest at the rate of 9% per annum instead of 15% per
annum.
D
For the above stated reasons, we find merit in the civil appeal and
accordingly we set aside the impugned judgment dated 6.12.2004 delivered by
the Division Bench of the Calcutta High Court in F.M.A.T. No.151 of2004 and
accordingly we direct payment of compensation to the claimants at the rate
of Rs. 70,000/- per kattah in respect of Danga and Bastu land and at the rate
E of Rs.35,000/- per kattah for the pond land with interest at the rate of 9% per
annum from the date of acquisition till payment as ordered by the Arbitrator
less amounts paid and received by the claimants till today. We may clarify that
in the Award the Arbitrator granted interest on the aggregate amount of land
value + solatium for the period of one year from the date of acquisition on
p the basis that Union of India shall pay the requisite amount within three
months from the date of the Award. However, Union of India unnecessarily
litigated on unstatable points, as stated above, and in the process interest '
continued to accrue and, therefore, we direct Union of India to pay 0
compensation that is land value at the two above-mentioned rates of Rs. 70,000/
- per kattah in respect of Danga and Bastu land and Rs.35,000/- per kattah
G for the pond land without solatium with interest at the rate of 9% per annum
from the date of acquisition till payment, less the amount which has already
been paid till date.

Accordingly, the civil appeal is partly allowed with no order as to costs.

H A.K.T. Appeal partly allowed.