Holding

The competent authority must associate with the Union’s local officer and obtain its approval; an offer is not binding without timely written acceptance and such approval; the Union of India is a person interested with locus standi; the arbitrator lacks power to award solatium and interest; the market‑value determination is upheld, but the solatium and interest are set aside.

Summary

The Union of India sought compensation for land requisitioned by the State of Jammu & Kashmir for an air‑field extension. The competent authority fixed market value, solatium and interest, but the local officer required approval of the Union of India, which was never obtained. The Union invoked Section 8 of the Jammu & Kashmir Requisitioning and Acquisition of Immovable Property Act, 1968, leading to an arbitrator’s enquiry, which the respondents contested as an offer already accepted. The Supreme Court held that the competent authority must associate with the Union’s local officer and obtain its approval; an offer is not binding without written acceptance within 15 days and such approval; the Union of India qualifies as a “person interested” and has locus standi; the arbitrator cannot award solatium or interest; consequently the market‑value determination was upheld while the solatium and interest were set aside. The appeal was allowed.

Issues considered

The competent authority must associate with the local officer of the Government concerned and obtain its approval when requisition is for the Union of India.
Whether an offer made under Rule 9 becomes binding without written acceptance within the prescribed period and without the Union's approval.
Whether the Union of India is a "person interested" under Section 2(d) of the Act and has locus standi to object to the compensation.
Whether the arbitrator appointed under Section 8(1)(b) has power to award solatium and interest.
Whether the market‑value determination made by the competent authority stands despite procedural defects.

Legislation cited

Jammu and Kashmir Requisitioning and Acquisition of Immovable Property Act, 1968s. 16, s. 21, s. 2(d), s. 7, s. 8
Requisition and Acquisition of Immovable Property Rules, 1969s. Rule 9

Subjects

requisitionacquisitioncompensationmarket valueofferacceptancelocus standiperson interestedarbitratorsolatiuminterestJammu and KashmirUnion of India

Judgment

A UNION OF INDIA AND ANR.
v.
DISTRICT JUDGE, UDHAMPUR AND ORS.

APRIL 5, 1994

B [K. RAMASWAMY AND N. VENKATACHALA, JJ.]

Jammu and Kashmir Requisitioning and Acquisition of Immovable
Property Act, 1968: Sections 7, 8, 16 and 21.

C Land-:li.equisition and Acquisition by State at the instance of Union
of India-Competent Authority-Determination of Market Value by Union of
lndicr-Whether has right to associate with Competent Authority-Approval of
compensation by Union of Indicr-Whether necessary-{Jnion of India
whether has Locus Standi to object to the compensation-Arbitrator ap-
pointed under the Act-Whether has power to award Interest and solatium.
D
Section 2(dt-'Person lnterested'-Who is.

Requisition and Acquisition of Immovable Property Rules, 1969 : Rule
9.

E Expression 'Local Officers of the Government concerned with the
Property'-Scope of

In exercise of its powers under Section 21 read with Section 7 of the
Jammu and Kashmir Requisitioning and Acquisition of Immovable
F Property Act, 1968 the State of Jammu and Kashmir reqnisitioned and
acquired certain lands at the instance of Union of India for extension of
Air Field at Udhampur. The Competent Authority, appointed under Sec-
tion 16, determined the market value of the land and also awarded 15%
solatium and interest at 4% from the date of Notification under Section 7
to the date on which possession of the land was taken. Thereafter, the
G Competent Authority issued a letter about the market value determined
by him to the Local Officer for approval. The Local Officer stated that
though he was agreeable to the amount determined, unless the approval
of the Government of India was obtained, he cannot give his concurrence.
However, no concurrence of Government of India was obtained nor was
H any offer communicated to it for acceptance. Since the Union of India bad
360
U.0.1. v. DISTI. JUDGE, UDHAMPUR 361

not approved the determination of market value of land it sought reference A
under Section 8 of the Act and a District Judge was appointed Arbitrator
under Section S(l)(b). But the respondent raised objection that the en-
quiry to be conducted by the Arbitrator would be without jurisdiction
because the award passed by the Competent Authority was offer which was
acceptable to the respondent and the Union of India had no right to object B
to the award as requisition and acquisition had been done by the Com-
petent Authority on behalf of the Union of India. Since the Arbitrator
proceeded with the enquiry without deciding the objection the respondents
filed a Writ Petition in the High Court which directed the Competent
Authority to enter into an agreement with the respondents in Form 'K' by
holding that the award passed by the Competent Authority was on offer C
and the same having been accepted by the respondent it must be deemed
to be one made under Rule 9 of the Requisition & Acquisition of Immov-
able Property Rules, 1969 read with Section 8(1)(a) of the Act.

On appeal the Division Bench while upholding the view of the Single
Judge that the award of the Competent Authority was an offer and that D
the appellants were bound by the offer, set aside the direction given to
enter into an agreement in Form 'K', instead it directed the District Jndge
to decide the objections. filed by the appellants. Thereafter, the District
Judge overruled the objection and held that the respondents have accepted
the offer. Though no finding was recorded that the offer became enforce- E
able in consequence of rejecting the reference under Section 8(1)(b), it was
concluded that the appellants were bound by the offer made by the Com-
petent Authority and it would be one enforceable under Section S(l)(a).

The appellants filed a Writ Petition and a Division Bench while
affirming the view of the Single Judge and the Division Bench in the earlier F
proceedings held that the order passed by the District Judge was valid and
the locus standi of the appellants to file the Writ Petition was doubted
thereby accepting the stand taken by the respondents that the appellants
were not the persons interested under Section 2(d) of the Act and dis-

- missed the petition. Union of India preferred appeal in this Court.

Allowing the appeal, this Court
G

HELD : 1.1. A reading of Section S(l)(a) of Jammu and Kashmir
Requisitioning and Acquisition of Immovable Property Ac~ 1968 and- Rule
9 made thereunder clearly indicate that the competent authority appointed H
362 SUPREME COURT REPORTS (1994] 3 S.C.R ..

A under Section 16 is enjoined to associate himself with the local officer of.
the Government concerned_ i.e. when land is acquired for the Union
Government, its officer, in fixing the compensation. (368-H, 369-A]

1.2. The language of Rule 9(1), namely, the delegated authority shall
"as far as may be associated with itself the local officer of the Government
B concerned with the property in fixing compensation" would necessarily
mean that I.he local officer of the µoyernment of India which would be
apparent if one reads the language closely with the language used in
Section 21 which expressly postulates that when in Section 21 which
expressly postulates that when the requisition is sought on behalf of the
c Union of India, the Government of Jammu & Kashmir acts under Section
21 requisitioning the land for the public purposes of the Union of India.
Admittedly when the Notification under Section 21 was issued requisi-
tioning the land for defence purpose and the land was acquired under
Section 7, association with the competent authority is only of the local
officer of the Government of India and not of the State Government. The
D ·reason is obvious that the officers of the Union of India are interested to
collect the best evidence of the prevailing market value and would place
that evidence before the competent authority to fix true and correct com-
pensation. (369-F-H, 370-A]

1.3. The delegated competent authority, when is enjoined to deter-
E
mine compensation in association with local officer of the concerned
Government when it comes to Union of India, he most associate himself
with the local officers of the Central Government and obtain the approval
of the Department of Central Government. (369-B-C]

F 2. The necessity to obtain "the approval of the Government in the
administrative department concerned" would also necessarily mean the
approval of the Government of India in its administrative department i.e.
the department for which requisition was made. The object appears to be
that when the compensation determined by the competent authority under
G Section S(l)(a) is sought to be made a binding contract on the Union of
India or its department for which requisition was done, its approval is a
necessary conditions precedent so as to bind the Department for which
requisition was done or the Union of India. (370-B-C]

3.1. The High Court was not right in its conclusion that there must
H be deemed acceptance by the respondents since they had so stated in their -, .
U.0.1. v. DIS1T.JUDGE, UDHAMPUR 363

objection in the enquiry proceedings held for the determination of the A
compensation by the arbitrator appointed under Section 8(1) (b) of the Act.
(370-H - 371-A]
3.2. Under Rule 9(5) it is mandatory that every person interested in
the oiler shall 'within 15 days of the receipt of the oiler communicate in
writing to the competent authority his acceptance or otherwise of the B
offer'. The communication of the offer to the person concerned and his
acceptance within 15 days thereafter from the date of the receipt of the
oiler are mandatory requirements and should be complied with. The
procedure has been prescribed in a mandatory language to ensure that
the oiler must be made after the approval by the Government concerned
or with the approval of its officer specifically authorised in that behalf. C
The acceptance also should be in writing and must be made within the
time prescribed. Otherwise the oiler does not bind the requisitioning
Department for which acquisition was done or the Union of India or the
owner whose land had been acquired for the public purpose. [370-F-H]

4.1. the view of the High Court that the appellants are not interested D
persons is clearly illegal and is accordingly set aside. [372-G]

4.2. The requisitioning authority is a person interested since it is
interested in the fixation of the proper and just market value or compensa-
tion of the land acquired on its behalf as well as to see that the true extent E
of the land is acquired and is free from encumbrances. The participation in
the proceedings by the local officers is to enable not only the determination
of the proper and just market value or compensation in their_ presence after
laying necessary and relevant evidence but also to secure valid title to the
land acquired so that land acquisition officer and the court determines just
and proper market value of the lands. Therefore, the appellant is a proper F
and necessary party under Order 1 Rule 10 C.P.C. It is also the person
interested under Section 2(d) of the Act. [372-E-G]

Himlayan Tiles & Marbles (P) Ltd. v. Francis Victor Countinho (Dead)
by Lrs & Ors., (1980] 3 S.C.R. 233; Neelgangabhai v. State of Kamataka, G
(1990] 3 S.C.C. 617; Krishi Upaj Mandi Samiti v. Ashok Singhal & Ors.,
(1991] Suppl. 2 S.C.C. 419; Union of India v. Sher Singh & Ors., (1993] 1
' S.C.C. 608 and Bihar State Elect1icity Board v. State of Bihar & Ors., Civil
Appeal Nos.1577-1600/94 decided on 21st Feb. 1949, referred to.

5. In view of the fact that there is no agreement between the parties H
364 SUPREME COURT REPORTS

A as contemplated under Section 8(l)(a) read with Rule 9, the only course
open to the authorities is to appoint arbitrator under Section 8(1)(b) of
the Act who is enjoined to determine the market value as contemplated
under Section 8(3). In that view, necessarily the matter has lo be remitted
for arbitrator's decision afresh. But on the facts of this case since 23 years
have elapsed there is no justification to remit the matter. Accordingly
B fixation of market value is upheld in the peculiar circumstances of the
case. [372-H, 373·A-D]

6. The arbitrator has no power to award solatium and interest. The
determination of the solatium at 15% and award of interest at 4% by the
C competent authority under Section 8(3) of the Act is illegal and is accord-
ingly set aside. [373-C-D]

Union of India v. Harikn'shna Khosla, [1993] Suppl. 2 S.C.C. 149,
applied.

D CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2672 of
1986.

From the Judgment and Order dated 8.5.85 of the Jammu & Kashmir
High Court in W.P. No. 295 of 1984

E AS. Nambiar Ms. A Subhashini and C. Ramesh for the Appellant.

Bhim Singh, S.K. Bandyopadhyaya, L.R. Singh and Ms. Sushma Suri
for the Respondents.

The following Order of the Court was delivered :
F 1.
This appeal arises from a case which had a chequered career. The
appellant addressed a letter on February 8, 1968 to the Dy. Commissioner,
Udhampur, State of Jammu & Kashmir enquiring about the availability of
the land for extension of Air Field, Udhampur. The Addi. Secretary, Govt.
of Jammu & Kashmir, wrote a letter to the Ministry of Defence that 2027
G Kanals and 18 Marlas of land was available for acquisition at an ap-
1
proximate cost of Rs. 12,62,655.32 paise subject to normal rise or decrease
in that amount, which may occur on the determination of the market value. ., ~

The Govt. had agreed and accorded sanction on July 27, 1970 for a sum
of Rs. 13,34,056 for acquisition of the land. Thereafter the Govt. of Jammu
H & Kashmir issued notification under s.21 on December 16, 1971 requisi-
U.O.l. v. DISTI.JUDGE. UDHAMPUR 365
.> \

tioning 2134 Kanals of the said land situated in village and tehsil Udham- A
pur. A notification under s.7 of the Requisition & Acquisition of Immov-
able Property Act 35, 1968 of Jammu & Kashmir (for short 'the Act') was
published in S.R.O. No. 843 dated December 16, 1972. Thereafter exercis-
ing the power under s.16 of the Act the Dy. Commissioner. U dhampur was
appointed as a competent authority under the Act. He determined market
value @ Rs. 5100 per Kanai for Class 'A' lands in alJ the villages, Rs. 4500
B
for Class 'B' lands in all the villages and Rs. 4800 per kanal for class 'C' in
all t_he villages. in addition he awarded 15% solatium and interest at 4%
from December 16, 1972 to June 25, 1973, the date on which possession
was taken. The compensation had come to about Rs. 1,21,00,000. A letter
was issued to the Subordinate officers for their approval. Since the appel- c
lants had not approved the determination of the market value at the said
rate, they sought a reference under s.8 of the Act. The District Judge was
appointed as an arbitrator under s.8(1)(b). At the beginning of the enquiry
proceeding, held by the District Judge to determine the market value, the
respondents filed an objection before the arbitrator contending that the D
award passed by the competent authority was an offer and it was accept-
able to them. Since the requisition and acquisition had been made by the
j
competent authority for and on behalf of the appellants they had no right
to object to the award made by the competent authority. Therefore, the
enquiry to be held by the District Judge as Arbitrator was without juris-
diction. But when the enquiry of the Arbitrator proceeded, without decid- E
ing the respondents objections, they filed a writ petition in 1975. The
learned single Judge in his order dated February 22, 1979 held that the
award passed by the competent authority being an offer, when the respon-
dents had accepted that offer, it must be deemed to be one made under
rule 9 read with s.S(l)(a) of the Act. Therefore, the appellants had no right
F
to object to the offer made by the competnet authority. Accordingly he
directed the competent authority to enter into an agreement with the
respondents in Form 'K'. Dissatisfied with that order the appellant filed
L.P.A. No. 35/79. The division bench, by its order dated April 27, 1983
while upholding the view of the Single Judge that the award of the com-
petent authority was an offer and that the appellants were bound by the G
offer, set aside the direction given to enter into an agreement in Form 'K',
instead directed the District Judge to decide the objections filed by the
appellants. Thereafter, the District Judge overruled the objections .and held
that the respondents had accepted the offer. Though no direct finding was
H
366 SUPREME COURT REPORTS [1994] 3 S.C.R.

A recorded that the offer became enforceable in consequence of rejecting the
reference under s.8(1)(b), it must be concluded that the appellants were
bound by the offer made by the competant authority and it would be one •
enforceable under s.8(1)(a) of the Act. The appellants filed W.P. No.
295/84 and the division bench by its order dated May 8, 1985 while
affirming the view of the single Judge and the division bench in the earlier
B proceedings held that the order passed by the District Judge is valid and
the locus standi of the appellants to file the writ petition was doubted
accepting the stand taken by the respondents that the appellants were not
the persons interested under s.2( d) of the Act and dismissed the writ
petition. Thus appeal by special leave.
c
Section 2(b) defines 'Competent Authority' to mean any person or
authority appointed by the Government by notification published in the
Government Gazette to perform the functions of the competent authority
under the Act for such area as may be specified in the notification. Section
16 of the Act empowers the Government to delegate to the authorised
D officer the exercise of its powers and duties under the Act, subject to such
circumstances and under such conditionsi if any, as may be specified in the
notification. In pursuance thereof, the competent authority was appointed
to exercise the powers of the Government and to perform its duties under
the Act. Section 21 of the Act provides the mode and procedure to
E requisition the immovable property situated in the State of Jammu and
Kashmir "required by the Union Govt. in connection with the purpose of
the Union" and when the requisition in this behalf was received by the State
Govt. it shall notify that such property be requisitioned. Exercising the
power under s.21 followed by a notification issued under s.7(1)(a), State
Govt. acquired the said property for extension of the Air field at Udham-
F pur. Section 8 provides the procedure to determine the compensation,
which reads thus:

"Section 8: Principles and methods of determining compensation:

(1) Where any property is requisitioned or acquired under this
G
Act, there shall be given compensation which shall be determined
in the manner and in accordance with the principles hereinafter
set out, that is to say :-

(a) Where the compensation can be fixed by agreement, it shall
H be given in accordance with such agreement;
U.OJ. v. DISIT. JUDGE, UDHAMPUR 367

(b) Where no such agreement can be reached, the Government A
shall appoint an arbitrator a person who is a District Judge or
Additional District Judge;

Sub-section (3) of the Act provides :

The compensation for the acquisition of any property under s. 7, B
in the absnece of an agreement, shall be:-

(a) the price which the requisitioned property would have fetched
in the open market, if it had remained in the same condition as it
was at the time of requisitioning and been sold on the date of
acquisition, or
c
(b) twice the price which the requisitioned property would have
fetched in the open market if it had been sold on the date of
requisition, whichever is less.
D
The Government framed the rules. namely Requisition & Acquisition
of Immovable Property Rules, 1969 Which came into effect from January
l
5, 1970 (for whorl 'the Rules'). Rule 9 is the relevant rule concerned in this
case, reads thus :

"Rule 9 : COMPENSATION : (1) An authority to whom the E
powers of the Government have been delegated shall, as far as
may be associated with itself the local officer of the Government
concerned with the property in fixing compensation under cluase
(a) of sub-s. (1) of s.8, and obtain the approval of the Government
in the Administrative Department concerned (or) any officer
authorised by the Government in this behalf.
F

xxx xxx

(3) The competent authority shal~ as soon as may be particable
after the making of a requistioning order or the service of a notice G
of acquisition, communicate to each person interested an offer of
what in the opinion of the competent authority, is a fair amount
of compensation payable to such person in respect of the property
requisitioned or acquired.

xxx xxx xxx H
368 SUPREME COURT REPORTS [1994] 3 S.C.R.

A (S)(i) Every person interested to whom an offer is made under
sub-rule (3) shall, within fifteen days of the receipt of the offer,
communicate in writing to the competent authority his acceptance
or otherwise of the officer. If he accepts the offer the competent
authority shall enter into an agreement with him on behalf of the
Government-in Fann 'K'.
B
(ii) In the following circumstances, the competent authority may
at his discretion make to an eligible claimant on accont payment
upto 80 percent of the amount which, in the opinion is likely to be
assessed as compensation or recurring compensation, as the case
c may be.

(a) when there is likely to be delay in assessing compensation;

(b) where tne competent authority has made an assessment but
there is delay in reaching an agreement though there 1s a
D reasonable prospect of agreement though being reached; or

(c) where it is clear that an agreement cannot be reached.

(iii) if the competent authority makes an 11 011 account'1 payment
under clause (ii), be shall enter into an agreement with the person
E to whom payment is made on behalf of the Govermnent in Form
'L' with such modification as the nature of the case may require.

(6) If any person to whom an offer is made under sub- rule (3)
does not accept the offer or does not within fifteen days of the
receipt of the.. offer communicate in writing to the competent
F authority his acceptance or otherwise of the offer, the competent
authority shall as soon as may be submitted to the Government a
report setting forth the full facts of the case. Particularly as regards
the nature and extent of disagreement between himself on the one
hand and the said person on the other hand and he shall also
forward with the report all connected papers. The competent
G
authority shall at the same time deposit said person under sub-rule
(3).

A reading of s.8(1)(a) and rule (9) would clearly indicate that the com-
petent anthority appointed under s.16 is enjoined lo associate himself with
H the local officer of the Government concerned, i.e. when acquired for the
., U.0.1. v. DISTI.JUDGE, UDHAMPUR 369

UnioD. Government, its officer, in fixing the compensation. The contention A
of Mr Bhim Singh learned counsel for the respondents that the officer of
the Government concerned would necessarily mean only the officer of the
State Govt. who is empowered to act under the Act; the officers of the
appellant, Union of India have no right or authority to associate with the
competent authority, to determine the compensation, is devoid of sub-
stance. The phrase "local officers of the govt. concerned with the property"
B
in rule 9(1) read with ss.8 and 21 bting out the distinction. Therefore, the
• delegated competent authority, when is enjoined to determine compensa-
tion in association with local officer of the concerned Govt. when it comes
to Union of India, he must associate himself with the local officers of the
Central Govt. and obtain the approval of the Dept. of Central Govt. or the c
approval of any officer the Central Govt. as may have been authorised.

In this case, the compensation was fixed with the association of the
local officers of the appellant. The contention that the appellants have no
locus standi is equally no longer res integra. in addition he also contends D
that for the second limb of rule 9(1) i.e. the approval of the Govt. in the
administrative department, it is only of the State Govt. of Jammu &
Kashmir or an officer authorised by the State Govt. in that behalf. Since
the competent authority having been authorised in the notification, there
is no need for further authorisation or the approval needed in this behalf
and that, therefore, the award made by the competent authority is only an E
offer as held by the High Court in the previous litigation. It binds the
appellants and that, therefore, they cannot question the offer made by the
competent authority. We find no force in the contention. The language of
Rule 9(1), namely, the delegated authority shall "as far as may be associated
with itself the local officer of the Govt. concerned with the property in F
fixing compensation" would necessarily mean that the local officer of the
Govt. of India that is apperent when we read the language closely with the
language used in s.21 of the Act. Section 21 expressly postulates that when
the requisition is sought on behalf of the Union of India, the Govt. of
Jammu & Kashmir acts under s.21 requisitioning the land for the public
purposes of the Union of India. Admittedly when the notification under G
s.21 was issued requisitioning the land for defence purpose and the land
was acquired under s. 7, association with the competent auihority, is only
·~ • of the local officer of the Govt. of India and not of the State Govt. The
reason is obvious that the officers of the appellant are interested to collect
the best evidence of the prevailing market value and would place that H
370
,.,...
SUPREME COURT REPORTS [1994] 3 S.C.R.

A evidence before the competent authority to fix true and correct compen-
sation. •'
I
•
The second limb, namely, the necessity to obtain "the approval of the
Govt. in the administration department concerned" would also necessarily
mean the approval of the Govt. of India in its administration department
I B
i.e. the department for which requisition was made. The object appears to
be that when the compensation determined by the competent authority
~

under s.8(1)(a) is sought to be made a binding contract on the Union of
India or its department for which requisition was done, its approval is a
necessary condition precedent so as to bind the Department for which
c requisition was done or the Union of India.

The next question which we have to see is whether the High Court
was right in its view taken in the earlier proceedings that there was an offer
made by the competent authority and the same was accepted. It is not in
D dispute that after the determination of the compensation by the competent
authority, a letter was addressed about the market value determined by
him. The local officer had admittedly stated that though he was agreeable
to the amount determined, unless the approval of the Govt. of India is ..
obtained, he cannot give his concurrence. Thereafter no concurrence of
the Govt. of India had been obtained nor was any offer communicated to
E the respondents for their acceptance. No record has been placed even in
the earlier proceedings before the High Court of such a communication by
the officer and acceptance. It is seen that under Rule 9(5) it is mandatory
that every person interested in the offer shall "within 15 days of the receipt
of the offer communicate in writing to the competent authority his accep-
F tance or otherwise of the offer". It is thereby clear that the communication ~

of the offer to the person conerned and his acceptance within 15 days '
thereafter from the date of the receipt of the offer are mandatory require-
' '
ments and should be complied with. H is seen that the procedure has been
prescribed in a mandatory language to ensure that the offer must be made
after the approval by the Government concerned or with the approval of
G its officer specifically authorised in that behalf. The acceptance also should
be in writing and must be made within the time prescribed. Otherwise the
offer does not bind the requisitioning Department for which acquisition
was done or the Union of India or the owner whose land had been acquired
.• ~·

for the public purpose. The High Court, therefore, was not right in its
H conclusion that there must be deemed acceptance by the respondents since
U.0.1. v. DISTI.JUDGE, UDHAMPUR 371

_._.\ they had so stated in their objection petitions the enquiry proceedings held A
for the determination of the compensation by the arbitrator appointed
under s.8(1)(b) of the Act.

The next question, therefore, is whether the appellants have locus
standi to object to the compensation determined by the competent
authority under s.8(3) of the Act. Section 2(d) of the Act defines: B
11
The expression 11person interestedn includes all persons claiming
an interest in compensation to be made on account of the acquisi-
tion of land under this Act; and a person shall be deemed to be
interested in land if he is interested in an easement affecting the
land. 11
c
This point is no longer res integrata. Dealing with a pari materia definition
of "person interested" in Central Act this court in Himalayan Tiles &
Marbles (P) Ltd. v. Francis Victor Countinho (dead) by Lrs. & Ors., [1980]
3 SCR 235 at 242-43 had laid down thus : D
"The only case which appears to have taken a contrary view is a
division bench decision of the Orissa High Court in the case of
State of Orissa v. Amarandra Pratap Singh & Anr. where the High
Court held that the expression 'person interested' did not include
a local authority or a company on whose behalf acquisition is made E
by the State. At the same time, it was clearly held that it was open
to the company in any proceeding before the Collector or court
to appear and adduce evidence for the purpose of determining the
amount of compensation.
F
Thus, the preponderance of judicial opinion seems to favour the
view that the definition of 'person interested' must be liberally
construed so as to include a body, local authority, or a company
for whose benefit the land is acquired and who is bound under an
agreement to pay the co1npensation. In our opinion, this view
accords with the principles of equity, justice and good conscience.. G
How can it be said that a person for whose benefit the land is
acquired and who is lo pay the compensation is not a peson
interested even though its slake may be extremely vital? For
instance, the land acquisition proceedings may be held to be invalid
and thus a person concerned is completely deprived of the benefit H
372 SUPREME COURT REPORTS [1994] 3 S.C.R.

A which is proposed to be given to him. Similarly, if such a person
is not heard by the Collector or a court, he may have to pay a very
heavy compensation which, in case he is allowed to appear before
a court, he could have satisfied it that the compensation was far
too heavy having regard to the nature and extent of the land. We
are, therefore, unable to agree with the view taken by the Orissa
B High Court or even by the Calcutta High Court that a company,
local authority or a person or whose benefit the land is acquired
is not an interested person. We are satisfied that such a person is
vitally interested both in the title to the property as also in the
compensation to be paid therefor because both these factors con-
c cern its future course of action and if decided against him, seriously
prejudice his rights. Moreover, in view of the decision of this Court
referred to above, we hold that the appellant was undoubtedly a
person interested as contemplated by s.18{1) of the Act. The High
Court, therefore, committed an error in throwing out the appeal
of the appellant on the ground that it had no locus to life an appeal
D
before the Bench."

This view was reiterted in Nee/agangabhai v. State of Karnataka,
[1990] 3 SCC 617; Klishi Upaj Mandi Sarniti v. Ashok Singhal & Ors. [1991]
Suppl. 2 SCC 419; Union of India v. Sher Singh & Ors., (1993] 1 SCC 608
E and Bihar State Electricity Board v. State of Bihar & Ors., Civil Apeal Nos.
1577-1600/94 dated February 21, 1994. Thus it is settled law that the
requisitioning authority is a person interested since it is interested in the
fixation of the proper and just market value or compensation of the land
acquired on its behalf as well as to see that the true extent of the land is
acquired and is free from encumbrances. The participation in the proceed-
F ings by the local officers is to enable not only the determination of the
proper and just market value or compensation in their presence after laying
necessary and relevant evidence but also to secure valid title to the land
acquired so that land acquisition officer and the court determines just and
proper market value of the lands. It is, therefore, clear that the appellant
G is a proper and necessary party under Order 1 rule 10 CPC. It is also the
person interested under s.2{ d) of the Act. Accordingly the view of the High
Court that the appellants are not interested person is clearly illegal. It is
accordingly set aside.

The question then is what is the procedure to be adopted in this case.
H In view of the fact that there is no agreement between the parties as
U.O.L v. DISTT.JUDGE, UDHAMPUR 373

< , contemplated under s.8(1)(a) read with rule 9 of the Rules, as seen earlier, A
the only course open to the authorities is to appoint an arbitrator under
s.8(1)(b) of the Act and the arbitrator is enjoined to determine the market
value as contemplated under sub-s. (3) of s.8 of the Act. In that view,
necessarily, the matter has to be remitted for the decision by the arbitrator
to be appointed by the State Govt. under s.8(1)(b) afresh. But on the facts B
in this case since 23 years have elapsed, we find no justification to remit
the matter. The competent authority had fixed the market value at the rate
specified earlier and admittedly local officers had associated themselves
with the competent officer at the time of fixation of the market value. This
court had held in Union of India v. Harikrishna Khosla, [1993] Suppl. 2 SCC
149 that the property acquired uuder the acquisition and requisition of the C
Immovable Property Act, 1952 (for short the 'Central Act'), the arbitrator
has no power to award solatium and interest. The same principle would
apply proprio vigore to the principles laid down under s.8(3) of the Act.
Accordingly we conclude that the determination of the solatium at 15%
and interest at 4% by the competent authority under s.8(3) of the Act is D
illegal. Therefore, to that extent it is set aside. However, fixation of market
value at the rates specified above are upheld in the peculiar circumstances
of the case. This court has given interim directions from time to time and
directed the appellant to deposit half of the amount determined together
with the solatium and interest etc. In the light of the decision now given,
the competent authority is directed to work out the total compensation E
payable to the lands acquired at the rate specified by it as now upheld;
deduct the amount already paid to the respondents in pursuance of the
directions issued by this conrt from time to time. If any balance amount is
found due and payable by the appellant, it would be so determined, and
would communicate the same to the local officer of the appellant. The F
competent authority is directed to decide the matters as above within a
l period of two months from the date of receipt of this order and the
appellant is directed to deposit the balance amount, if any, within a further
period of three months from the date of the receipt of the notice by the
local officer.
G
The appeal is accordingly allowed as indicated above, but in the
circumstances without costs.

T.N.A. Appeal allowed.