Supreme Court of India

PATEL JOITARAM KJALIDAS AND ORS.versusSPL. LAND ACQUISITION OFFICER AND ANR.

Citation: 2006 INSC 1002
Decided: 13 December 2006
Disposal: Appeal(s) allowed
Bench: B P SINGH

Holding

Interest on the additional amount payable under Section 23(1A) and on solatium payable under Section 23(2) of the Land Acquisition Act is mandatory, and the appeal is maintainable as a special case, entitling the petitioners to such interest.

Summary

The petitioners, owners of land acquired under the Land Acquisition Act, 1894, obtained a compensation award from a Reference Court under Section 18 but were denied interest on the additional amount (Section 23(1A)) and solatium (Section 23(2) ) following the then‑law of Prem Nath Kapoor (1996). The Special Land Acquisition Officer appealed the award; the High Court dismissed the appeal without granting interest. While the petitioners had not claimed interest before the High Court, the Supreme Court’s decision in Sunder v. Union of India (2001) – pronounced on the same day as the High Court judgment – held that interest is payable on those amounts. The Court considered whether the petitioners could raise the claim now and whether the appeal was maintainable. It held that, although the claim should ideally have been made earlier, the unique circumstance of the Supreme Court’s later ruling justified allowing the appeal as a special case. Consequently, the petitioners were entitled to interest on the amounts payable under Sections 23(1A) and 23(2).

Issues considered

Whether the petitioners may claim interest on the additional amount and solatium under Sections 23(1A) and 23(2) of the Land Acquisition Act despite not having raised the claim before the High Court.
Whether the special leave petition is maintainable when the relief sought was not pleaded in the earlier proceedings.
Whether interest on the amounts is automatic and does not require judicial discretion.

Legislation cited

Land Acquisition Act, 1894s. 18, s. 23(1A), s. 23(2), s. 26, s. 27, s. 28, s. 34

Subjects

Land acquisitionInterest on solatiumSection 23Section 18Special leave petitionSunder caseCompensationProcedural defaultSupreme Court

Judgment

A PA TEL JOITARAM KJAUDAS AND ORS.
-
v.
SPLLAND ACQUISITION OFFICER AND ANR.

DECEMBER 13, 2006

B [B.P. SINGH AND AL TAMAS KABIR, JJ.]

Land Acquisition Act, 1894-Sections 23 (IA) and 23 (2)-lnterest on
solatium-Entitlement to-Denied by reference Court in view of ruling of
C Supreme Court-Appeal to High Court by Land Acquisition Office1 :iJ··missed-
lnterest not claim before High Court-On the date ofjudgment of impugned
order, ruling by Supreme Court permitting interest on solatium-Appeal to
this Court seeking interest on solatium-Maintainability of appeal questioned
on the ground that such plea not raised before High Court-Held: Though
D claimants ought to have raised such claim before High Court, but the appeal
is maintainable in view of the fact that they could not have raised the claim
before High Court as the judgment entitling them to such benefit, was passed
on the date when impugned judgment was passed-Hence claimants are
entitled to the claim.

E In land acquisition case, Reference Court enhanced the compensation
to the claimants, but declined award of interest under Sections 23 (lA) and
23 (2) of the Land Acquisition Act in view of judgment in Prem Nath Kapoor
and Anr. v. National Fertilizers Corporation of India Ltd and Ors., (1996.J 2
SCC 71. Against enhanced compensation, Land Acquisition Officer filed
F appeal and the same was dismissed by High Court which is impugned in the
present appeal. Therein, claimants made no claim in respect of interest on
solatium. A Constitution Bench of Supreme Court held that interest is payable
on solatium. The date of impugned judgment and Constitution Bench judgment
was the same. Hence the present appeal caliming interest on solatium.
G Allowing the appeals, the Court

HELD: Remission of matter to High Court would only be a formality
because having regard to the law laid down in Sunder 's case, the High Court

H 922
PA TEL JOIT ARAM KJALIDAS v. SPL. LAND ACQUISITION OFFICER 923

is bound to award the interest on the additional amount payable under Section A
23 (IA) and solatium payable under Section 23 (2) of the Act Moreover, grant
of interest on these amounts is consequential and automatic and involves only
arithmetical calculation and not application of judicial mind or exercise of
judicial discretion. It is no doubt true that the appellants ought to have made
such a claim before the High Court, even in the appeals preferred by the State. B
But in fairness to the appellants it must be conceded that during the pendency
of the appeals before the High Court the law as laid down in Prem Nath
Kapoor's case held the field and, therefore, it would have been futile for them
to claim interest. The claimants could have filed such an application before
the High Court if the judgment in Sunder was pronounced when the appeals C
were pending before the High Court. Unfortunately, they could not do so
because the judgment in Sunder and the impugned judgment in the appeals
preferred by the State before the High Court were pronounced on the same
day. Having regard to these facts, peculiar to this case, the appeals preferred
by the appellants are allowed as a special case in the interest of justice. D
Accordingly, the appellants are entitled to interest on the amounts payable to
them under Section 23 (IA) and Section 23 (2) of the Land Acquisition Act.
(930-D-H; 931-A(

Sunder v. Union of India, (2001 J 7 SCC 211, followed.
E
Union ofIndia v. Shri Ram Mehar and Ors., (1973( l SCC 109; Periyar
and Pareekanni Rubbers ltd. v. State of Kera/a, (1991 ( 4 SCC 195; Mir
Fazeelath Hussain and Ors. v. Special Deputy Collector, Land Acquisition,
Hyderabad, (1995) 3 SCC 208; Prem Nath Kapoor and Anr. v. National
Fertilizers Corporation ofIndia Ltd. and Ors., [1996) 2 SCC 71; Yadavrao P.
F
Pathade (D) by Lrs. and Ors. v. State of Maharashtra, (1996) 2 SCC 570,
referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5785 of2006.

From the Final Judgment and order dated 19.9.2001 of the High Court G
of Gujarat at Ahmedabad in First Appeai Nos. 1320 to 1356, 1358 to 1363 and
1365 to 1395 of2001.

WITH

Civil Appeal Nos. 5786-5805 of2006. H
924 SUPREME COURT REPORTS [2006) SUPP. 10 S.C.R.

A Sunil Gupta, Pratap Kalra, Harish J. Jhaveri for the Respondents.

U.U. Lalit, Ramesh Singh Rutmik Panda, Shivangi, Hemantika Wahi,
Ashish Verma, K.R. Sasiprabhu, for the Respondents.

The Judgment of the Court was delivered by
B
B.P. SINGH, J. Permission to file SLP granted.

Special Leave granted.

In this batch of appeals the sole question which falls for consideration
C is whether the appellants herein are entitled to maintain an application for
special leave before this Court impugning the judgment and order of the High
Court which affirmed the findings of the Reference Court under Section 18 of
v•
the Land Acquisition Act in appeals preferred by the Special Land Acquisition
Officer the respondent herein. The appellants contend that the High Court
D ought to have, even in the appeals preferred by the Special Land Acquisition
Officer, awarded interest on solatium payable under Section 23 (2) of the Land
Acquisition Act. The respondent on the other hand, contends that the
appeals had been preferred before the High Court by the Special Land
Acquisition Officer in which the appellants herein were the respondents. The
E appeals preferred by the Special Land Acquisition Officer having been dismissed
by the High Court, the appellants cannot be said to be parties aggrieved by
the judgment and order of the High Court. Before the High Court they had
not even prayed for grant of interest on solatium a.nd, therefore, they cannot
be permitted to move this Court by way of special leave claiming such relief.
F It is not disputed by them that if really such a claim was made either before
the Collector or before the Reference Court dealing with the matter under
Section 18 of the Land Acquisition Act, having regard to the law as now
settled by a decision of this Court, interest on solatium was bound to be
granted to the appellants.

G The few facts which are relevant for the disposal of these appeals are
as follows:-

Five Notifications under Section 4 of the Land Acquisition Act, 1&94
(hereinafter referred to as the "Act) was published for acquisition of lands
H
PA TEL JOITARAM KJALIDAS v. SPL. LAND ACQUISITION OFFICER [SINGH, J .J 925

situated in Village Vekara District Mehsana, Gujarat. The appellants are the A
land-owners of the lands sought to be acquired by the aforesaid Notifications.
The Special Land Acquisition Officer offered compensation @ Rs.24,000/- per
hec. (Rs.2.40 per sq. mtr.) for irrigated lands and Rs.16,000 per. hec. (Rs.1.60
per sq. mtr.) for non-irrigated lands. The appellants claimed a reference under
Section 18 of the Act and demanded compensation@ Rs.30 per sq. mtr.. By B
its judgment and order of April 20, 2000 the Reference Court under Section
18 of the Land Acquisition Act determined the market value of the lands of
the appellants @ Rs.22 per sq. mtr.. However, it did not award interest on
the amounts payable under Section 23 (IA) and Section 23(2) of the Land
Acquisition Act, namely, on the amount payable by way of additional amount C
and solatium. The Reference Court following the judgment of this Court in
Prem Nath Kapoor & Anr. v. National Fertilizers Corporation of India Ltd
& Ors., [1996] 2 SCC 71 held that no interest was payable in respect of
amounts envisaged by Sections 23 (IA) and 23 (2) of the Act.

Aggrieved.by the judgment and order of the Reference Court enhancing D
the compensation payable to the appellants, the Special Land Acquisition
Officer preferred First Appeal Nos.1320 to 1395 of2001 before the High Court
of Gujarat at Ahmedabad which came to be disposed of by the judgment and
order of the High Court dated September 19, 200 I. The High Court found no
reason to interfere with the determination of compensation by the Reference E
Court and accordingly dismissed the appeals.

The instant special leave petitions have been filed by the claimants
contending that the High Court ought to have awarded interest on the
amounts payable under Sections 23(1A) and 23(2) of the Act. It is their case p
that the interest payable on these amounts must be incorporated in the decree
of the Court even if no prayer is made for it because the Act obliges the
Collector to pay such interest on the amount determined by the Collector or
the Court. For awarding such interest no exercise of judicial discretion is
called for. Only an arithmetical exercise has to be undertaken to calculate the G
interest payable. They, therefore, submit that the High Court ought to have
passed an order awarding interest to the appellants on the amounts payable
under Section 23 (IA) and 23 (2) of the Act even if no formal claim was made
before it by the claimant.

H
926 SUPREME COURT REPORTS [2006) SUPP. 10 S.C.R.

A To appreciate the submission of the appellants it is necessary to notice
a few other facts.

The question as to whether interest is payable on the additional amount
payable under Section 23 (IA) and on solatium under Section 23 (2) of the
B Act came up for consideration before this Court in Union ofIndia v. Shri Ram
Mehar and Ors., [1973] 1 SCC 109. This Court held that "market value" is
only one of the components to be reckoned with in the determination of the
amount of compensation. Solatium did not form part of the "market value"
of the land. Thus the word "compensation" in Section 23 (1) of the Act
consists of the "market value" of the land and the solatium which is the
c consideration. for the compulsory nature of the acquisition. Following the
principle laid down in Ram Mehar, a two Judge Bench of this Court· in Periyar
and Pareekanni Rubbers Ltd. v. State of Kera/a, [ 1991] 4 SCC 195 affirmed
the view that the claimant is entitled to interest on solatium under the Act.

D However, in Mir Fazeelath Hussain and Ors. v. Special Deputy Collector,
Land Acquisition, Hyderabad, [1995] 3 SCC 208, a three Judge Bench of this
·court held that solatium is not a part of the award and hence interest is not
claimable thereon. The same view was reiterated in Prem Nath Kapoor
(supra) and later in Yadavrao P. Pathade (D) by Lrs.& Ors. v. State of
E Maharashtra, [1996] 2 sec 570 the same was reiterated by a three Judge
Bench of this Court.

On account of the c~nflict of decisions of this Court of co-equal benches
the matter was ultimately referred to a larger bench of five J~dges and the
matter has since been settled by a decision of this Court rendered by a Bench
F consisting of five Judges in Sunder v. Union of India, [2001] 7 SCC 211. The
judgment of the Supreme Court was delivered on September 19, 2001.

It is a co-incidence that the impugned common judgment of the High
Court in the instant case was also pronounced on September 19, 2001, the
G same day on which judgment of the larger Bench of the Supreme Court in
Sunder 's case was pronounced holding that interest was payable on the
amount envisaged by Section 23 (IA) as well as 23 (2) of the Act.

Counsel for the respondents contend that there is no reason why the
appellants should be permitted to make a claim before this Court which they
H
PATEL JOITARAM KJALIDAS 1•. SPL. LAND ACQUISITION OFFICER [SINGH, J.J 927

had not made before the High Court. Their claim for grant of interest on these A
amounts was negatived by the Reference Court relying upon the earlier
judgment of this Court in Prem Nath Kapoor 's case. The appellants did not
appeal against that part of the order of the Reference Court and, therefore,
they have given up their right to claim interest on the additional amount and
the solatium payable under Section 23 of the Act. B
The appellants on the other hand, contend that at the time when the
reference under Section 18 was decided by the Court, the judgment in Prem
Nath Kapoor held the field and, therefore, in the teeth of that judgment of
the Supreme Court it was not considered advisable to appeal against that part C
of the order. Even so, they could have made such a claim before the High
Court when the appeal preferred by the Special Land Acquisition Officer was
being heard by it. Unfortunately, even till then the judgment of the Supreme
Court in Sunder 's case had not been pronounced. It is only accidental that
the impugned common judgment and order of the High Court and the judgment
in Sunder's case were pronounced on the same day and, therefore, it was only D
after the disposal of the appeals by the High Court that the appellants could,
on the strength of the decision in Sunder 's case, claim interest on these
amounts. It is for this reason that they have invoked the special jurisdiction
of this Court under Article 136 of the Constitution of India.
E
The appellants heavily relied on the observations made in Shree Vijay
Cotton & Oil Mills Ltd v. State o/Gujarat, (1991] I SCC 262. That was a
case where Government took possession of certain lands under an arrangement
with the owners on November 19, 1949. It raised structure on the aforesaid
land but did not give land in exchange to the owners thereof. On February F
1, 1955 a Notification under Section 6 (I) of the Act was issued declaring that
the land was needed for public purpose. The Collector awarded Rs.5075.44
as compensation. The land-owner asked for a reference under Section 18 of
the Act. The Court decided the reference under Section 18 and found that
the claimant was entitled to compensation on the basis of market value of the G
land on the date of Notification under Section 6 of the Act. It accordingly
awarded compensation @ Rs.3 per sq. yard as also solatium @ 15 per cent
and interest@6 per cent from February I, 1955. The award of the Court was
challenged by the State which preferred an appeal before the High Court. The
High Court held that the relevant date for determining the compensation H
928 SUPREME COURT REPORTS [2006) SUPP. 10 S.C.R.

A based on determining the market value of the land was the date of the
Notification under Section 4 (1) of the Act and since no such Notification was
issued it was not possible to detennine the amount of compensation payable
under the Act. The claimants came to this Court after obtaining certificate
from the High Court and finally this Court allowed the appeal and remanded
B the matter to the High Court holding that the Notification under Section 6 of
the Act be treated as a composite Notification under Section 4(1) and Section
6 (I) of the Act and, therefore, the Court could lawfully award the market
value of the land on that day. The High Court thereafter accepted the appeal
preferred by the State and reduced the price of acquired land from Rs.3 per
C sq. yard to Rs.l.35 !Jer sq. yard, however rejecting the claim of the claimant
to interest from November 19, 1949 instead of February 1, 1955. The claimants
therefore, preferred an appeal in which the aforesaid judgment was rendered.

This Court noticed that the State had filed an appeal before the High
Court against the award of compensation @ Rs.3 per sq. yard but the appellant/
D claimant did not file any appeal against that part of the award which went
against it and restricted the amount of interest from February l, 1955 instead
of November 19, 1949. The appellant filed cross objections but they were ·
dismissed as barred by time. The High Court on interpretation of Sections
23(1 ), 26, 27 and 28 concluded that the interest payable to the claimants has
E to be a part of the award - decree alongwith the compensation amount and
as such is subject to rules of procedure and limitation. Thus, the cross
objections of the claimants having been rejected as time barred, it could not
claim interest in appeal preferred by State. The High Court also found that
the relief was barred by reason of the principle of res-judicata.
F
After noticing the findings of the High Court this Court held that on
a reference under Section 18 of the Act the parties go to trial primarily for the
detennination of market value of the land. .So far as award of interest is
concerned, it is never an issue between the parties. Once, the conditions
G under Section 28 or Section 34 of the Act are satisfied the award of interest
i's consequential and automatic. This Court went on to observe:-

"The High Court while appreciating the point in issue did not consider
the mandatory provisions of Section 34 of the Act. The said section
specifically provides that when the ar:10unt of compensation is not
H paid on or before taking possession of the land the Collector shall pay
PA TEL JOIT ARAM KJALIDAS v. SPL. LAND ACQUISITION OFFICER [SINGH, J.J 929

interest at 6 per cent per annum from the date of taking over possession. A
The payment of interest is not dependent on any claim by the person
whose land has been acquired. There can be no controversy or any
lis between the parties regarding payment of interest. When once
the provision of Section 34 are attracted it is obligatory for the Collector
to pay the interest. If he fails to do so the same can be claimed from B
the court in proceedings under Section 18 of the Act or even from the
appellate court/courts thereafter".

This Court also observed:-

"There is inherent evidence in the wording of Sections 28 and 34 to C
show that the framers of the Act intended to assure the payment of
interest to the person whose land was acquired and it was not the
intention to subject the said payment to procedural hazards. Section
34 lays down that "the Collector shall pay the amount awarded with
interest at 6 per cent per annum .... " The legislative mandate is clear. D
It is a directive to the collector to pay the interest in a given
circumstance. Section 34 nowhere says that the interest amount is to
be included in the award-decree as prepared under Section 23( I) read
with Section 26 of the Act. Similarly Section 28 provides "the award
of the court may direct that the Collector shall pay interest". Here E
also the award under Section 23(1) read with Section 26 has been kept
distinct from the payment of interest under the section. The interest
to be paid under Section 34 and also under Section 28 is of different
character than the compensation amount under Section 23(1) of the
Act. Whereas the interest, if payable under the Act, can be claimed F
at any stage of the proceedings under the Act, the amount of
compensation under Section 23( 1) which is an award-decree under
Section 26, is subject to the rules of Procedure and Limitation. The
rules of procedure are hand-maiden of justice. The procedural hassle
cannot come in the way of substantive rights of citizens under the
Act. G

We do not, therefore, agree with the reasoning and the findings
reached by the High Court. We are of the opinion that it was not
necessary for the appellant-claimant to have tiled separate appeal/
cross-objections before the High Court for the purposes of claiming H
930 SUPREME COURT REPORTS (2006] SUPP. 10 S.C.R.

A
interest under Section 28 or Section 34 of the Act. He could claim the
interest in the State appeal. The fact, that he filed cross-objections
which were dismissed as time barred, is wholly irrelevant".

Learned counsel appearing on behalf of the respondents submitted that
B in terms of the judgment in Shree Vijay Cotton even if the claimants had right
to claim interest at any stage, they ought to have made such a claim before
the High Court at any time before the disposal of the appeals. Though, it
was not necessary to make such a claim in any particuljtr form, and neither
the rules of procedure nor the rigors of limitation inhibited the right of the
c claimants to claim interest, the I.east that was expected of them was to make
a claim in some form or the other, which they have failed to do. In such a
case, it would not be appmpriate for this Court to exercise its discretion under
Article 136 of the Constitution of India to grantrelief to the appellants.

D Having regard to the submissions urged on behalf of the respondents
we. could have remitted the matter to the High Court to give an opportunity
to the claimants to make a claim of interest before the High Court. That
however, would only be a formality because having regard to the law laid
down in Sunder, the High Court is bound to award the interest on the
E additional amount payable under Section 23(1A) and solatium payable under
Section 23 (2) of the Act. Moreover, grant of interest on these amounts is
consequerttiaf and· automatic and involves only arithmetical calculation and
not application of judicial mind or exercise of judicial discretion. It is no doubt
true that the appellants ought to have made such a claim before the .High
F Court, even in the appeals preferred by the State. But in fairness to the
appellants it must be conceded that during the pendency of the appeals
before the High Court the law as laid down in Prem Nath Kapoor held the
field and, therefore, it would have been futile for them to claim interest. The
claimants could have filed such an application before the High Court if the
I

G judgment in Sunder was pronounced when the appeals were pending before
the High Court. Unfortunately, they could not do so because the judgment
in Sunder and the impugned judgment in the appeals preferred by the State
before the High Court were pronounced on the same day. Having regard to
these facts,· peculiar to this case, we are ~persuaded to allow the appea\s
preferred by the appellants as a special case in the interest of justice.
H
PATEL JOIT ARAM KJALIDAS v. SPL. LAND ACQUISITION OFFICER [SINGH, J.J 93 J

Accordingly, we hold that the appellants are entitled to interest on the A
amounts payable to them under Section 23 (IA) and Section 23 (2) of the Land
Acquisition Act. We direct the Collector to calculate the interest payable and
pay the same to the appellants without further delay. These appeals are
accordingly allowed. No order as to costs.
B
K.K.T. Appeals allowed.

i
I

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