Holding

Interest under Section 34 cannot be awarded for any period before the publication of the preliminary notification; possession taken prior to such notification is not recognised under the Act, and only rent or damages may be awarded for that period.

Summary

The case concerned a plot of land that the original owner, R.L. Jain, bought at a public auction on the basis that it lay outside a 1959 preliminary acquisition notification. The government later took possession of the plot in 1961 and awarded compensation, which Jain accepted under protest. He subsequently obtained a decree declaring the earlier acquisition proceedings void and later obtained an injunction against the Delhi Development Authority (DDA) for construction on the land. To save the construction, a fresh acquisition notification was issued in 1992 and the Collector awarded market value, solatium and interest dating back to the 1961 possession. The appellant argued that interest should be payable from the date of possession, relying on earlier case law, while the respondents contended that interest under Section 34 of the Land Acquisition Act only accrues after the publication of the preliminary notification. The Supreme Court held that possession taken before a Section 4(1) notification is outside the Act, so interest cannot be awarded for the pre‑notification period; only rent or damages may be awarded under Section 48. The earlier nullity of the acquisition does not invalidate a fresh acquisition, and the auction stipulation does not bar the proceedings. The appeal was dismissed.

Issues considered

Whether interest under Section 34 of the Land Acquisition Act is payable for the period preceding the publication of the preliminary notification when possession was taken earlier.
Whether possession taken before a Section 4(1) notification is recognised under the Act.
Whether a decree declaring earlier acquisition proceedings void bars a fresh acquisition proceeding.
Whether the auction stipulation that the plot was outside the purview of the notification invalidates the acquisition.

Legislation cited

Land Acquisition Act, 1894s. 11, s. 16, s. 17, s. 23, s. 23(1), s. 28, s. 34, s. 4, s. 48, s. 6

Subjects

Land acquisitionSection 34 interestPreliminary notificationPossession before notificationCompensationNullity of acquisition proceedingsDelhi Development Authority

Judgment

A R.L. JAIN (D) BY LRS.
v.
-
DDA AND ORS.

MARCH 12, 2004

B [S. RAJENDRA BABU, DR. AR. LAKSHMANAN
AND G.P. MATHUR, JJ.]

Land Acquisition Act-Ss. 4, 6, 16, 17, 23, 28, 34 and 48:
,.
c Acquisition proceeding in respect of a large area of land including _...._
disputed plot-The plot purchased by the claimant in an auction sale from the
Government with stipulation that it was outside the purview of acquisition-
Government transferred possession ofthe plot to Delhi Development Authority--
Land Acquisition Collector determining compensation-Acceptance thereof
D by the owner/claimant-Suit for declaring the acquisition proceedings illegal-
Decreed by trial Court declaring the proceedings null and void-Appeal
dismissed by Appellate Court-Suit for injunct{on restraining DDAfrom raising
construction on the plot and possession-Decreed by trial Court-Appeal
dismissed by Appellate Court-High Court dismissed second appeal-Issuance
of fresh notification and declaration by the .Government and raising of .
,I..
E construction by DDA-Challenge to-High Court directing payment of
compensation but denied demolition ofconstruction-Award made by Collector
determining compensation, solatium and interest-Challenge to-Affirmed by
High Court except interest-On appeal, Held: Publication of notification sine
qua non for any land acquisition proceeding-Taking over possession prior
F to"'issuance of notification neither contemplated nor recognized -Thus, f!larket
value of the land/compensationlsolatium could be determined as on the date
of publication of notification-Since earlier proceeding declared null and
void, claimant not entitled to compensation or interest thereto for anterior
period-Acquisition proceedings could not be rendered invalid merely on the
ground that the plot was stated to be kept outside the purview ofthe notification.
G
Dispossession prior to issuance of notification-Relief-Held: Collector
may determine rent/damages and interest thereon in lieu of use of the property
to which landowner is entitled.

Words and Phrases: 'Acquisition' and 'taking possession '-Meaning of
H 1156 ·
R.L. JAIN v. DDA 1157

- in the context of Land A<;quisition Act. A
The issue wliich arose for consideration in the appeal was as to
whether in a case of land acquisition where possession was taken before
the issuance of notification under Section 4(1) of the Land Acquisition Act,
the claimant (owner of the land) is entitled to interest for such anterior
period in acl'.ordance with Section 34 of the Act. In view of the conflict of B
opinion on the issue in two decisions of this Court in Shri Vijay Cotton and
Oil Mills v. State of Gujarat, [1991) 1 SCC 262 and Union of India v. Budh
Singh and Ors., (1995) 9 SCC 233, the present Bench has referred the
matter to a larger Bench and has thus come up before the three Judges

- Bench.

It was contended by the appellant that since the earlier suit was
c
" decreed by the trial Court holding the notification null and void and
acquisition proceedings illegal, the earlier notification became non est in
the eye of law; that since possession of the plot had been taken over by
the Government before issuance of fresh notification, the appellant was D
entitled to interest from the date of taking possession and that the view
taken by this Court in the case of Shri Vijay Cotton and Oil Mills v. State
of Gujarat is legally correct and equitable view, and therefore applying
the ratio of the case, the award made by the Collector wherein interest
for the anterior period had been awarded, was perfectly correct.
E
On behalf of the respondent-Union of India, it was submitted that
since the acquisition proceeding could commence only after publication
of the notification, market value of the land has to be determined from
the date of its issuance; that Sections 28 and 34 of the Act nowhere
contemplate payment of compensation for any anterior period; and that F
the view taken by this Court in the case of Union of India v. Budh Singh
and Ors., (1995) 9 SCC represents the correct legal position.

Dismissing the appeal, the Court

HELD: 1. The scheme of the Land Acquisition Act does not G
contemplate taking over possession of the land prior to the issuance of
notification under Section 4(1) of the Act and if possession is taken prior
to the said notification it will be de hors the Act. It is for this reason that
both Sections 11(1) and 23(1) enjoin the determination of the market value
of the land on the date of publication of the notification for the purpose
of determining the amount of compensation to be awarded for the land H
1158 SUPREME COURT REPORTS (2004] 2 S.C.R.

A acquired under the Act. These provisions show in unmistakable terms
that publication of notification under Section 4(1) is the sine-qua-non for
any proceedings under tll:e Act. (1168-8-C)

2.1. The provision oflaw under Section 34 ofthe Act should not be
read in. isolation divorced from its context. The words "such possession"
B and "so taking possession" are important and have to be given meaning
in the light of other provisions of the Act. The words "so taking
possession" means taking possession in accordance with Sections 16 or 17
of the Act. These are the only two Sections in the Act which specifically
deal with the subject of taking possession of the acquired land. Clearly
C the stage for taking possession under these provisions would be reached
only after publication of the notification. If possession is taken prior to
the issuance of the notification it would not be in accordance with Sections '•
16 or 17 and would be without any authority of law and .consequently
cannot be recognized for the purposes of the Act. For the parity of reasons
the words "from the date on which he took possession of the land"
D occurring in Section 28 of the Act would also mean lawful taking of
possession in accordance with Sections 16 or 17 of the Act. The words
"so taking possession" can under no circumstances mean such
dispossession of the owner of the land which has been done prior to
publication of notification which is de hors the provisions of the Act.
(1168-F-G; U69-A-C]
E
2.2. It is well settled that a decision is an authority for what it
actually decides. What is of the essence in a decision is its ratio and· not
every observation found therein nor what logically follows from the
· various observations made therein. Shri Vijay Cotton and C?il Mills v. State
F of Gujarat, [1991) 1 sec 262 is therefore not an authority for the
proposition that where possession is taken before issuance of the
notification, interest on the compensation amount could be awarded in
accordance with Section 34 of the Act-with effect from the date of taking
of possession. (1169-G-H; 1117-A-B]

G Krishena Kumar v. Union of India, AIR (1990) SC 1782; Municipal
Corporation of Delhi v. Gurnam Kaur, AIR (1989) SC 38 and Mis. Orient
Paper and Industries Ltd and Anr. v. State of Orissa, AIR (1991) SC 672,
reiied on.

Shri Vijay Cotton and Oil Mills v. State of Gujarat, [1991] 1 SCC 262
H and Smt. Lila Ghosh v. State of West Bengal, J.T. (2003) 9 SC 23,
R.L. JAIN v. ODA 1159
distinguished. A
2.3. Sub-section (lA) of Section 23 of the Act enjoins payment of
an amount calculated at the rate of twelve per centum per annum on such
market value for the period commencing on and from the date of the
publication of the notification under Section 4(1), in respect of such land
to the date of the award of the Collector or the date of taking possession B
=--- of the land, whichever is earlier. Thus, it was rightly held in the- case of
MA. Jabbar* that claimant would not be entitled to the payment of an
additional amount for the period anterior to publication of the notification.
[1170-G; 1171-A)

*Special Tehsildar (LA) PWD Schemes Vijaywada v. MA. Jabbar, AIR C
(1995) SC 762 , relied on.

Assistant Commissioner, Gadag, Sub-Division, Gadag v. Mathapathi
Basavanewwa and Ors., AIR (1995) SC 2492, overruled.

Satinder Singh v. Umrao Singh and Anr., AIR (1961) SC 908, referred D
to.

2.4. The normal rule is that if on account of acquisition of land a
person is deprived of possession of his property he should be paid
compensation immediately and if the same is not paid to him forthwith E
he would be entitled to interest thereon from the date of dispossession till
the date of payment thereof. But in the instant case, the land has been
acquired only after the fresh notification was issued on 9.9.1992 as earlier
acquisition proceedings were declared to be null and void in the suit
instituted by the land owner himself and consequently he was not entitled
to compensation or interest thereon for the anterior period. (1172-A-B) F
2.5. In a case where the land owner is dispossessed prior to the
issuance of preliminary notification the Government merely takes
possession of the land but the title thereof continues to vest with the land
owner. It is fully open for the land owner to recover the possession of his
land by taking appropriate legal proceedings. He is therefore only entitled G
to get rent or damages for use and occupation for the period the
Government retains possession of the property. Where possession is taken
prior to the issuance of the notification, it would be just and equitable that
the Collector may also determine the rent or damages for use of the
property to which the land owner is entitled while determining the H
]·160 SUPREME COURT REPORTS [2004] 2 S.CR.

A compensation amount payable to the land owner for the acquisition of the
property. The provision of Section 48 of the Act lend support to such a
course of action. For delayed payment of such amount appropriate
interest at prevailing bank rate may be awarded. (1172-C-E]

3. The stipulation in the auction sale of the plot that it was outside
B the purview of the notification in pursuance of the acquisition proceedings,
by itself could not render the acquisition proceedings invalid. (1173-A]

4.1. The sale certificate issued in favour of the claimant shows that
the plot was purchased for Rs. 3200/- only and he had received almost
double the amount of compensation. Therefore, even on equitable ground
C he is not entitled to any amount from the date of dispossession till the date
of issuance of second notification. (1172-G-H]

4.2. The claimant on the one hand received compensation amount
in terms of the award of the Collector and sought a reference to the Court
D on the ground of alleged inadequacy of compensation and at the same time
· filed the suit challenging the acquisition proceedings wherein he obtained
a decree declaring the acquisition proceedings nujl and void. It was on
account of this judgment and decree that he succeeded in the second suit,
wherein a decree for demolition of construction made by DDA and
restoration of possession in his favour was passed. It was in such
E circumstances that in order to save the construction the land acquisition
proceedings were initiated again by issuing a notification under Section
4(1) of the Act on 9.9.1992 and the Collector awarded a sum of
Rs.16,54,175 as the market value of the land and Rs. 4,96,252 as solatium.
The claimant has thus been more than adequately compensated.
F [1173-C-D]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5515 of
1997.

From the Judgment and Order dated 19.3.97 of the Delhi High Court
G in C.W.P. No. 292 of 1995.
Dushyant Dave, S.K. Bagga and Seeraj Bagga for the· Appellant.

Mukul Rohtagi, Additional Solicitor General and V .B. Saharya for
Mis. Saharya and Co.for the Respondents. ,...,

H The Judgment of the Court was delivered by
R.L. JAIN 1·. DDA [G.P. MATHUR. J.J 1161
-- G.P. MA THUR, J. In view of conflict of opinion in two decisions of A
this Court, namely, Shri Vijay Cotton and Oil Mills v. State of Gujarat,
(1991] l SCC 262 and Union of India v. Budh Singh and Ors., [1995] 9 SCC
233, the appeal has been placed for hearing before this larger Bench and the
question in issue is whether in a case where possession is taken before the
issuance of notification under Section 4(1) of the Land Acquisition Act, the B
claimant (owner of land) is entitled to interest for such anterior period in
accordance with Section 34 of the said Act.

2. The relevant facts may be noticed in brief. The Chief Commissioner,
Delhi, on behalf of the Delhi Administration, issued a preliminary notification
under Section 4( l) of the Land Acquisition Act (hereinafter referred to as C
"the Act") on 13. l l.1959 for acquisition of a large area of 34070 acres of
land including I bigha 11 biswa area in khasra no.223 of village Kharera for
the planned development of Delhi. This was followed by a declaration under
Section 6 of the Act, which was published in the Gazette on l l.10.1961. The
dispute in the present appeal relates to aforesaid plot bearing khasra no.223.
Being an evacuee property, the said plot was notified for being sold in public D
auction by the Ministry of Rehabilitation and it appears that in the auction
notice it was mentioned that the same shall be out of the purview of the
notification issued on 13.l l.1959 under Section 4(1) of the Act for acquisition
of the land. The original appellant R.L. Jain purchased the said plot in the
auction held on 8.4.1960 and a sale certificate was issued in his favour on E
31.8.1961. In pursuance of the notifications issued under Sections 4(1) and
6 of the Act, the possession of plot no.223 was taken over by the Collector
on l 0.11.196 l and was handed over to the Delhi Development Authority (for
short "the DDA"). The plot was included in Award No.1245 made by the
Collector on 30.12.1961 and compensation amount was determined. R.L.
Jain received the compensation amount under protest and sought reference to F
the Court since he was dissatisfied with the amount of the compensation
offered and paid to him. The Collector thereafter made a reference to the
Court under Section 18 of the Act..

3. After considerable period of time, R.L. Jain filed Suit No.154 of
1965 impleading Union of India as the sole defendant seeking a declaration G
that the proceedings taken for acquisition of plot bearing no.223 of village
Kharera, whiCh had been purchased by him in public auction, were illegal as
it was stipulated in the auction notice that the said plot was not included in
the preliminary notification- issued under Section 4(1) of the Act which was
published on 13.11.1959. After contest, the Sub-Judge First Cla5s, Delhi H
1162 SUPREME COURT REPORTS [2004] 2 S.C.R.

A passed a decree on 12.4.1967 that the acquisition proceedings including
notification dated 11. l 0.1961 issued under Section 6 of the Act with regard
-
to the plot in dispute are null and void. The Union of India preferred an
appeal being RCA No.59 of 1968 but the same was dismissed by Senior
Subordinate Judge, Delhi (with enhanced appellate powers) on 13.1.1969 and
B the judgment and decree dated 12.4.1967 of the Subordinate Judge was
affirmed. The matter rested there as it was not carried in second appeal
before the High Court.

4. As mentioned earlier in pursuance of the notifications issued under
Sections 4(1) and 6 of the Act, the possession of the plot in dispute had been
C taken over by the Collector on l 0.11.1961 and was handed over to the DDA
which commenced construction on the acquired land. R.L. Jain then filed
-
Suit No.421 of 1967 against Union oflndia and DDA for permanent injunction
restraining them from making any construction over the disputed plot and
from disposing of the same in any manner. During the pendency of the suit
an undertaking was given by the DDA that no construction would be raised
D on the plot in dispute. However, the DDA proceeded with the constructions
and consequently the plaint was amended and relief of mandatory injunction
for removal of the construction was sought. The Sub-Judge, Delhi decided
the suit on 19.1.1980 and passed a decree for demolition of the construction
and the possession. The appeal (RCA No.465 of 1980) preferred against the
E said judgment and decree was dismissed by the Additional District Judge,
Delhi on 18 .3 .1989 and the decree for demolition and removal of the
construction was affirmed. The DDA preferred a second appeal (RSA No.71
of 1989) in Delhi High Court which was summarily dismissed on 14.8.1991
and then Special Leave Petition was filed in this Court. In order to save the
demolition of the building constructed over the plot in dispute, the appropriate
F authority issued fresh notification under Section 4(1) of the Act for acquisition
of the plot in dispute on 9.9.1992 and the declaration made under Section
6(1) of the Act was published on 8.9.1993. After noticing that the notifications
under Sections 4 and 6 had already been. issued, the Special Leave Petition
filed by DDA was disposed of on 13 .12.1993 with the following directions:

G "Keeping in view the facts and circumstances of this case and to do
complete justice between the parties we are of the view that it would
not be appropriate to permit the demolition of the flats which have
already been constructed on the land in dispute. We, therefore, direct
that the compensation which shall be determined under the land
acquisition proceedings in respect of the land in dispute shall be
H
-
R.L. JAIN 1·. ODA [G.P. MATHUR. J.] 1163

payable and paid to the respondent-R.L. Jain or his nominee. Needless A
to say that all offers and counter offers for settling the dispute which
were made before this Court, shall stand withdrawn and ineffective.
We direct that the land acquisition proceedings be expedited and ,be
completed preferably within six months from today. We allow the
appeal in the above terms. No costs."
B

- The Collector thereafter made an award on 11.6.1994 for the plot in
dispute determining its market value as Rs. 16,54, 175 and solatium at the rate
of 30% on the said amount as Rs. 4,96,252. The Collector also awarded
interest from 10.l l.1961 to 9.11.1962 at the rate of 9% amounting to
Rs.1,93,538 and 10.11.1962 to I 0.6.1994 (from the date of dispossession till
the date of the award) at the rate of 15% amounting to Rs. 1,01,86,839.
c
5. The award of the Collector was challenged by the DDA by filing
Writ Petition No.292 of 1995 which has been partly allowed by the High
Court by the impugned judgment and order dated 19 .3 .1997. The High Court
has held that the award of interest under Section 34 of the Act at the rate of D
9% p.a. w.e.f. 10.11.1961 to 9.12.1962 and then at the rate of 15% p.a. from
I 0.11.1962 to 10.6.1994 is without jurisdiction and to that extent the award
has been set aside. The remaining part of the award i.e. for market value of
land and solatium has been upheld.
---·
6. Shri Vijay Cotton and Oil Mills Ltd. v. State of Gujarat, (1991] I E

- SCC 262 has been decided by a Bench of two Judges. In this case the
possession of the land was taken over by the government on 19 .11.1949
under an arrangement that suitable land of equal value will be given to the
owner. But, the government did not give any other alternative land and
acquisition proceedings were initiated whereunder the notification under
Section 6(1) of the Act was issued on l.2.1955. The claimant was not satisfied
F
with the award made by the Collector and accordingly asked for a reference
under Section 18 of the Act. The District Judge determined the amount of
compensation for the acquired land but did not award any interest. The owner
of the land did not prefer any appeal against the award of the District Judge
before the High Court, but the State preferred an appeal challenging G
enhancement in compensation. The claimant, then filed time barred cross
objection under Order 41 Rule 22 CPC along with an application for
condonation of delay. The application for condonation of delay was dismissed
r
"' with the result, the cross objection stood rejected as time barred. It was
contended on behalf of the claimant (owner of the land) that he was entitled
H
1164 SUPREME COURT REPORTS [2004] 2 S.C.R.

A to interest with effect from I 9. I 1.1949. The High Court took the view that
as the District Judge had not awarded interest for the period claimed by the
claimant and his cross objection having been rejected as time barred, the
claimant had no right to claim interest in the appeal preferred by the State
Government. The claimant then preferred an appeal in this Court which
B modified the decree of the High Court by awarding interest. Paras 16 and 17
of the Report wherein the matter was dealt with read as under:

"16 ................ The interest to be paid under Section 34 and also under
Section 28 is of different character than the compensation amount
-
..J
(

under Section 23(1) of the Act. Whereas the interest, if payable under

c the Act, can be claimed 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.
D
17. 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 filed separate appeal/
cross objections before the High Court for the purposes of claiming
interest under Section 28 or Section 34 of the Act. He could claim the
E interest in the State appeal. The fact that he filed cross-objections
which were dismissed as time barred, is wholly irrelevant."

7. The appeal preferred by the claimant was accordingly allowed and
it was held that he was entitled to interest on the compensation amount for
the period 19.11.l 949 to l.2.1955 in accordance with the provisions of the
F Act, as they stood prior to amendment made by Act No. 68 of 1984.

8. In. Union of India v. Budh Singh and Ors., [l 995] 6 SCC 233 which
has also been decided by a Bench of two Judges, the possession of land was
taken on 15 .3 .1963 and the notification under Section 4(1) of the Act was
published on 16.l l.1984. The award decree passed by the reference Court
G attained finally. In execution proceedings the High Court passed an order that
in the event of default in payment of the amount within the stipulated time,
interest at the rate of 18 per cent per annum from the date of taking possession
shall be paid. In appeal before this Court the only question raised was whether
the owners of the land were entitled to interest at the rate of 18 per cent per
H annum from 15.3.1963, the date on which the possession was taken, till
R.L. JAIN v. DOA [G.P. MATHUR . .I.] 1165
15.11.1984, preceding the date on which the notification under Section 4(1) A
had been published. After analysis of the provisions of th.e Act it was held
that the Land Acquisition Act is a complete Code covering the entire field of
operation of the liability of the State to make payment of interest and
entitlement thereof by the owner when the land is taken over. The court has
no power to impose any condition to pay interest in excess of the rate and B
the manner prescribed by the statute as well as for a period anterior to the
publication of notification under Section 4(1) of the Act. It was also held that
the parameter for initiation of proceedings is the publication of the notification
under Section 4 (1) of the Act which would give legitimacy to the State to
take possession of the land in accordance with the provisions of the Act and
further any possession taken otherwise would not be considered to be C
possession taken under the Act. The Bench went on to hold that the Act
being a self-contained code, the common law principles of justice, equity and
good conscience cannot be extended in awarding interest, contrary to the
provisions of the statute.

9. Shri Dushyant Dave, learned senior counsel for the appellant has D
submitted that in Suit No. 154 of 1965 filed by the original appellant R.L.
Jain, a decree had been passed that the notification issued under Section 6 of
the Act on 11.10.1961 was null and void and the proceedings for acquisition
of land with regard to plot No. 223 of village Kharera were illegal and the
said decree became final in view of the dismissal of the appeal preferred by E

-- Union of India. The earlier notification;; issued under Section 4( 1) and 6 of
the Act, therefor~, became non est in the eyes of law but the possession of
the plot in dispute had been taken over by Union of India on 10.11.1961. The
fresh notification under Section 4(1) of the Act was issued on 9.9.1992.
Section 34 clearly Jays down that when the amount of compensation is not
paid or deposited on or before taking possession of the land, the Collector F
shall pay the amount awarded with interest thereon from the time of so taking
possession until it is paid or deposited. The appellant was consequently entitled
to interest from the date of taking possession, viz. from 10.11.1961 and the
Collector had rightly included the interest component in the award made by
him. Learned counsel has submitted that language of Section 34 and also of G
Section 28 is plain and unambiguous and, therefore, no other view is possible.
He has also submitted that in case it is held that the owner of the land is not
entitled to interest for the period anterior to notification under Section 4(1)
of the Act, it will be highly unjust and in~quitable. In support of his submission,
he has placed reliance on Inglewood Pulp and Paper Co. Ltd. v. New
Brunswick Electric Power Commission, AIR (1928) PC 287, wherein it was H
1166 SUPREME COURT REPORTS [2004] 2 S.C.R.

A held that on a contract for sale and purchase of land it is the practice to
require the purchaser to pay interest on his purchase money from the date
-
when he took possession. He has also referred to The Revenue Divisional
Officer Guntur v. Vasireddy Rama Bhanu Bupal and Ors., AIR (1970) AP
262 (FB) wherein it was held that possession taken even prior to acquisition
proceedings and with the consent of the owner would be possession of land
B under the Act and interest is payable from the date of taking possession.
Reliance has also been placed upon Smt. Swarnamayi v. Land Acquisition.
Collector, AIR (1964) Orissa 113, where having regard to Chapter XXVI
Rule 3 of Land Acquisition Manual, it was held that where possession was
obtained in accordance with the consent of the owner thereof before acquisition
C proceedings started, interest from the date of taking over possession can be
granted. Learned counsel has lastly submitted that the view taken by this
Court in Shri Vijay Cotton and Oil Mills (supra) is the legally correct and
equitable view and applying the ratio of the said case, the award made by the
Collector wherein the appellant had been awarded interest from the date of
taking over possession, was perfectly correct and the High Court has erred
D in setting aside the interest component.

10. Shri Mukul Rohtagi, learned Additional Solicitor General appearing
for the respondents has submitted that under the Scheme of the Act no event
prior to publication of notification under Section 4( I) of the Act can be taken
IE note of as any proceedings under the Act can commence only after publication
of the said notification. The market v~lue of the land has to be determined
as on the date of issuance of preliminary notification under Section 4( I) and
therefore, the Collector or the Court cannot trav.el prior to the said date. Both
Sections 28 and 34 contemplate payment of interest where possession is
taken over under the Act after the notification under Section 4(1) has been
IF issued and compensation amount has not been paid and not for any anterior
period. The view taken in Union ofIndia v. Budh Singh (supra) it is submitted,
represents the correct legal position which has been reiterated in a recent
decision in Smt. Lila Ghosh v. State of West Bengal, JT (2003) 9 SC 23.

,..., 11. In order to decide the question whether the provisions of Section
.J 34 of the Act regarding payment of interest would be applicable to a case
where possession has been taken over prior to issuance of notification under
Section 4( l) of the Act it is necessary to have a look at the Scheme of the
Land Acquisition Act. Acquisition means taking not by voluntary agreement
but by authority of an Act of Parliament and by virtue of the compulsory
l
i powers thereby conferred. In case of acquisition the property is taken by the
R.L. .JAIN v. DOA [G.P. MATHUR. J.] 1167

- State permanently and the title to the property vests in the State. The Land A
Acquisition Act makes complete provision for acquiring title over the land,
taking possession thereof and for payment of compensation to the land owner.
Part II of the Act deals with acquisition and the heading '1f Section 4 is
"Publication of preliminary notification and powers of officers thereupon".
Sub-section (I) of Section 4 provides that whenever it appears to the B
appropriate government that land in any locality is needed or is likely _to be
needed for any public purpose or for a company, a notification to that effect
shall be published in the Official Gazette and in two daily newspaper~
circulating in that locality and the Collector shall cause public notice of the
substance of such notification to be given at convenient places in the said
locality. Sub-section (2) provides that thereupon it shall be lawful for any C
officer either generally or specially authorised by such Government in this
behalf and for his servants and workmen, to enter upon and survey and take
levels of any land in such locality, to dig or bore in the sub-soil and to do
all other acts necessary to ascertain whether the land is adapted for such
purpose etc. etc. This provision shows that the officers and servants and D
workmen of the government get the lawful authority to enter upon and survey
the land and to do other works only after the preliminary notification under
Section 4(1) has been published. Section 5-A enables a person interested in
any land which has been notified under Section 4 (1) to file objection against
the acquisition of the land and also for hearing of the objection by the Collec;:tor.
If the State Government is satisfied, after considering the report, that any E
particular land is needed for public purposes or for a company, it can make
a declaration to that effect under Section 6 of the Act and the said declaration
has to be published in the Official Gazette and in two daily newspapers and
public notice of the substance of such declaration has to be given in the
locality. Thereafter the Collector is required to issue notice to persons interested
under Section 9 (1) of the Act stating that the Government intends to take F
possession of the land and that claims to compensation for all interests in
such land may be made to him. Section l l provides for making of an award
by the Collector of the compensation which should be allowed for the land.
Section 16 provides that when the Collector has made an award under Section
l l, he may take possession of the land which shall thereupon vest absolutely G
in the Government, free from all encumbrances. This provision shows th<!.t
possession of the land can be taken only after the Collector has made an
award under Section 11. Section 17 is in the nature of an exception to Section
16 and it _provides that in cases of urgency, whenever the appropriate
Government so directs, the Collector, though no such award has been made,
may, on the expiration of fifteen days from the publication of the notice H
1168 SUPREME COURT REPORTS [2004 j 2 S.C.R.

A mentioned in Section 9 (I), take possession of any land needed for a public
purpose and such land shall thereupon vest absolutely in the Government,
--
free from all encumbrances. The urgency provision contained in Section
17(1) can be invoked and possession can be taken over only after publication
of notification under Section 9(1) which itself can be done after publication
B of notification under Sections 4( I) and 6 of the Act. Even here in view of
sub-section (3-A) the Collector has to tender 80 per cent of the estimated
amount of compensation to the persons interested entitled thereto before
taking over possession. The scheme of the Act does not contemplate taking
over of possession prior to the issuance of notification under Section 4( I) of
the Act and if possession is taken prior to the said notification it will de hors
C the Act. It is for this reason that both Sections 11(1) and 23(1) enjoin the
determination of the market value of the land on the date of publication of
notification under Section 4(1) of the Act for the purpose of determining the
amount of compensation to be awarded for the land acquired under the Act.
These provisions show in unmistakable terms that publication of notification
under Section 4( I) is the sine-qua-non for any proceedings under the Act
D Section 34 of the Act, on the basis whereof the appellant laid claim for
interest, reads as under:

"34. Payment of Interest-When the amount of such compensation is
not paid or deposited on or before taking possession of the land, the
Collector shall pay the amount awarded with interest thereon at the·
E rate of nine per centum per annum from the time of so taking
possession until it shall have been so paid or deposited.

Provided that if such compensation or any part thereof is not paid·
or deposited within a period of one year from the date on which
possession is taken, interest at the rate of fifteen per centum per
F annum shall be payable from the date of expiry of the said period of
one year on the amount of compensation or part thereof which has
not been paid or deposited before the date of such expiry."

12. The expression "the Collector shall pay the amount awarded with
G interest thereon at the rate of nine per centum per annum from the time of ,..
so taking possession until it shall have been so paid or deposited" should not
be read in isolation divorced from its context. The words "such possession"
and "so taking possession" are important and have to be given meaning in the
light of other provisions of the Act. "Such compensation" would mean the
compensation determined in accordance with other provisions of the Act,
H namely, Sections 11and15 of the Act which by virtue of Section 23(1) mean
R.L. JAIN v. DDA [G.P. MATHUR, J.] 1169
market value of the land on the date of notification under Section 4( 1) and A
other amounts like statutory sum under sub-section (1-A) and solatium under
Sub-section (2) of Section 23. The heading of Part II of the Act is Acquisition
and there is a sub-heading "Taking Possession" which contains Sections 16
and 17 of the Act. The words "so taking possession" would therefore mean
taking possession in accordance with Sections 16 or 17 of the Act. These are B
the only two Sections in the Act which specifically deal with the subject of
taking possession of the acquired land. Clearly the stage for taking possession
under the aforesaid provisions would be reached only after publication of the
notification under Sections 4(1) and 9(1) of the Act. If possession is taken
prior to the issuance of the notification under Section 4( 1) it would not be in
accordance with Sections 16 or 17 and will be without any authority of law C
and consequently cannot be recognised for the purposes of the Act. For the
parity of reasons the words "from the date on which he took possession of
the land" occurring in Section 28 of the Act would also mean lawful taking
of possession in accordance with Sections 16 or 17 of the Act. The words "so
taking possession" can under no circumstances mean such dispossession of
the owner of the land which has been done prior to publication of notification D
under Section 4(1) of the Act which is de hors the provisions of the Act.

13. In Union of India v. Budh Singh, (supra) after analysis of the
provisions of the Act the Bench arrived at the following conclusions:

"The parameter for initiation of the proceedings is the publication of E
the notification under Section 4( 1) of the Act in the State Gazette or
in an appropriate case in District Gazette as per the local amendments.
But the condition precedent is publication of the notification under
Section 4(1) in the appropriate gazette. That would give legitimacy to
the State to take possession of the land in accordance with the F
provisions of the Act. Any possession otherwise would not be
considered to be possession taken under the Act."

14. In Shri Vijay Cotton and Oil Mills (supra), the precise ·question
raised here namely whether in a case where the possession is taken prior to
the issuance of notification under Section 4(1) of the Act, interest can be G
awarded in accordance with Sections 28 or 34 of the Act was not examined
and the only issue examined was whether in an appeal which has been preferred
by the State Government challenging the quantum of compensation awarded
by the District Judge it is open to the High Court to award interest to the
claimant even though he had not preferred any appeal or cross objection for
the said purpose. It is well settled that a decision as an authority for what it H
1170 SUPREME COURT REPORTS (2004] 2 S.C.R.

A actually decides. What is of the essence in a decision is its ratio and not every ·-·""""-
observation found therein nor what logically follows from the various
observations made therein. (See Krishena Kumar v. Union of India, AIR
(1990) SC 1782, Municipal Corporation of Delhi v. Gurnam Kaur, AIR
(1989) SC 38 and Mis. Orient Paper and Industries Ltd. and Anr. v. State of
B Orissa, AIR (1991) SC 672). Shri Vijay Cotton and Oil Mills (supra) is
therefore not an authority for the proposition that where possession is taken
before issuance of notification under Section 4( 1), interest on the compensation
amount could be awarded in accordance with Section 34 of the Act with
effect from the date of taking of possession.

C 15. Similar view has been taken in a recent decision by a Bench of two
Judges in Smt. Lila Ghosh v. State of West Bengal, JT (2003) 9 SC 23 and
the reasons given there in para 16 of the Report are being reproduced below:

"Even though the authority in Shree Vijay Cotton and Oil Mills Ltd.
appears to support the claimants, it is to be seen that apart from
mentioning sections 28 and 34, no reasons have been given to justify
D
the award of interest from a date prior to commencement of acquisition
proceedings. A plain reading of section 34 shows that interest is
payable only if the compensation which is payable, is not paid or
deposited before taking possession. The question of payment or deposit
of compensation will not arise if there is no acquisition proceeding.
E In case where possession is taken prior to acquisition proceedings a
party may have a right to claim compensation or interest. But such ,..
a claim would not be either under section 34 or section 28. In our .........
view interest under these sections can only start running from the
date the compensation is payable. Normally this would be from the
date of the award. Of course, there may be cases under section 17
F where by invoking urgency clause possession has been taken before
the acquisition proceedings are initiated. In such cases, compensation,
under the Land Acquisition Act, would be payable by virtue of the
provisions of section 17. As in cases under section 17 compensati0n
is payable, interest may run from the date possession was taken ...."
G 16. In this connection it will be apposite to refer to Sub-section (IA)
of Section 23 of the Act which enjoins payment of an amount calculated at
the rate of twelve per centum per annum on such market value for the p~riod
commencing on and from the date of the publication of the notification under
Section 4(1), in respect of such land to the date of the award of the Collector
H or the date ,of taking possession of the land, whichever is earlier. There are
R.L. JAIN v. DDA [G.P. MATHUR, J.] 1171

two decisions of this Court, wherein same controversy arose namely, whether A
the claimant would be entitled to additional sum at the rate of twelve per
centum on the market value where possession has been taken over prior to
publication of notification under Section 4(1). In Special Tehsildar (LA) PWD
Schemes Vijaywada v. MA. Jabbar, AIR (1995) SC 762 which has been

--
decided by a Bench of two Judges (K. Ramaswamy and Mrs. Sujata V.
Manohar, JJ.) it was held that claimant would not be entitled to this additional B
sum for the period anterior to publication of notification under Section 4(1).
However in Assistant Commissioner, Gadag, Sub-Division, Gadag v.
Mathapathi Basavanewwa and Ors., AIR (1995) SC 2492 also decided by a
two-Judge Bench (K. Ramaswamy and B.L. Hansaria, JJ) it was held that
even though notification under Section 4( l) was issued after taking possession C
'I of the acquired land the owners would be entitled to additional amount at
twelve per cent per annum from the date of taking possession though
notification under Section 4(1) was published later. For the reasons already
indicated, we are of the opinion that the view taken in Special Tehsildar is
legally correct and the view to the contrary taken in Assistant Commissioner, D
Gadag (supra), is not in accordance with law and is hereby overruled.

17. Shri Dave learned counsel for the appellant has also placed strong
reliance on Satinder Singh v. Umrao Singh and Anr., AIR (1961) SC 908
wherein the question of payment of interest in the matter of award of
compensation was considered by this Court. In this case the initial notification E
was issued under Section 4(1) of Land Acquisition Act, 1894 but the
proceedings for acquisition were completed under East Punjab Act No. 48 of
1948. The High Court negatived the claim for interest on the ground that the
1948 Act made no provision for award of interest. After quoting with approval
the following observations of Privy Council in Inglewood Pulp and Paper
Co. Ltd v. New Brunswick Electric Power Commission, AIR (1928) PC 287: F
"upon the. expropriation of land under statutory power, whether for
the purpose of priv.ate gain or qf good to the public at large, the
owner is entitled fo interest upon the principal sum awarded from the
date when possession was taken, unless the .statute clearly shows a
contrary intention." G
the bench held as under :
.J " .........When a claim for payment of interest is made by a person
whose immovable property has been acquired compulsorily .he is not
making claim for damages p~operly or technically so called; he is H
1172 SUPREME COURT REPORTS [2004] 2 S.C.R.

A basing his claim on the general rule that if he is deprived of his land
he should be put in possession of compensation immediately; if not,
in lieu of possession taken by compulsory acquisition interest should
be paid to him on the said amount of compensation. "

The normal rule, therefore, is that if on account of acquisition of land
B a person is deprived of possession of his property he should be paid
compensation immediately and if the same is not paid to him forthwith he
would be entitled to interest ihereon from the date of dispossession till the
date of payment thereof. But here the land has been acquired only after the
preliminary notification was issued on 9.9.1992 as earlier acquisition
C proceedings were declared to be null and void in the suit instituted by the
land owner himself and consequently he was not entitled to compensation or
interest thereon for the anterior period

18. In a case where the land owner is dispossessed prior to the issuance
of preliminary notification under Section 4(1) of the Act the government
D merely takes possession of the land but the title thereof continues to vest with
the land owner. It is fully open for the land owner to recover the possession
of his land by taking appropriate legal proceedings. He is therefore only
entitled to get rent or damages for use and occupation for the period the
government retains possession of the property. Where possession is taken
prior to the issuance of the preliminary notification, in our opinion, it will be
E just and equitable that the Collector may also detennine the rent or damages
for use of the property to which the land owner is entitled while determining
the compensation amount payable to the land owner for the acquisition of the
property. The provision of Section 48 of the Act lend support to such a
course of action. For delayed payment of such amount appropriate interest at
F prevailing bank rate maybe awarded.

19. The case may be examined from the equitable consideration as
well. In the earlier acquisition proceedings the notification under Section 4(1)
had been published on 13.11.1959 and the Collector had made an award for )
\
Rs. 6301 for the plot in dispute on 30.12.1961. The award was made within
G 1-112 months of dispossession which allegedly took place on 10.11.1961.
This amount',was paid to R.L. Jain and was retained by him. Learned counsel
for the respondent has placed before the Court a copy of the sale certificate
issued in favour of R.L. Jain on 31.8.1961 which shows that the plot was
purchased by him for Rs. 3200 only and thus he had received almost double
amount of compensation. Therefore, even on equitable ground he is not
H entitled to any amount from the date of dispossession till the date of second
R.L. JAIN v. DOA [G.P. MATHUR, J.] 1173
-\ notification under Section 4(1) of the Act which was issued in 1992. A
20. In this connection, it may be noted that the only plea taken in Suit
no. 154 of 1965 file.d by R.L. Jain was that it was given out at the time of
auction sale of the plot that the same was outside the purview of the preliminary
notification issued on 13. 11.1959 under Section 4(1) of the Act. Even assuming

- that it was so but that by itself could not render the acquisition proceedings B
invalid. At best, he would have been entitled to refund of the sale consideration
paid by him. However, the Sub-Judge passed a decree that the acquisition
proceedings with regard to the plot in dispute are illegal and the notification

- issued under Section 6(1) of the Act on 11.l 0. I 961 is null and void. The
decree having become final it is binding upon the respondent, DOA. The C
original appellant R.L. Jain on the one hand received compensation amount
in terms of the award of the Collector and sought a reference to the Court on
the ground of.alleged inadequacy of compensation and at the same time filed
the suit challenging the acquisition proceedings wherein he obtained a decree
that the· acquisition proceedings are null and void. It was on account of this
judgment and decree that he succeeded in the second suit (Suit No.421 of D
I 967), wherein a decree for demolition of construction made by DOA and
restoration of possession in his favour was passed. It is in such circumstances
that in order to save the construction the land acquisition proceedings were
initiated again by issuing a notification under Section 4(1) of the Act on
9.9.1992. Under the award given by the Collector on 11.6. I 994 he has been E

-- awarded Rs. I 6,54, 175 as the market value of the land and Rs. 4,96,252 as
solatium. The appellant has thus been more than adequately compensated and
in our opinion even on equitable grounds he is not entitied to any further
amount.

For the reasons discussed above, there is no merit in this appeal and the p
same is hereby dismissed with costs.

S.K.S. Appeal dismissed.

'
..,/