UNION OF INDIA AND ORS.versusMUNSHA AND ORS.

 ....
                            UNION OF INDIA AND ORS.                                  A
                                       v.
                               MUNSHA AND ORS.

                                  NOVEMBER 9, 1995

                   [K. RAMASWAMY AND B.L. HANSARIA, JJ.]                             B

               Requisitioning and Acquisition of Immovable Property Act, 1952/Req-
 "':
        uisitioning and Acquisition of Immovable Property Rules 1953 :

              S.8(l)(b )/R.9(5)(i)-lmmovable property-Acquisition of-Compensa-       c
        tion-Appointment of arbitrator-Land owners' claim for interest due to delay
        in appointment of arbitrato~Held, land owners having failed to communi-
        cate their acceptance or otherwise of offer made by competent authority, no
        dutj cast on it to appoint arbitrator-No /aches in appointment of arbitrator
        as obligation to appoint arbitrator arises where interested person communi-
        cates his non-acceptance of offer enjoined by R.9(5) (i)-Award of arbitrator
                                                                                     D
,,      awarding 30% solatium and 9% interest for one year from taking possession
        and thereafter 15% till deposit on enhanced compensation set aside.

              Certain lands of the respondents were acquired under the Requisi-
        tioning and Acquisition of Immovable Property Act, 1952. The Land Ac- E
        quisition Officer made the award in 1970 anil awarded compensation, at
        the rate of Rs. 375 per kanal. In 1986, the respondents filed a writ petition
        before the High Court for appointment of an arbitrator. The writ petition
        was allowed and an arbitrator was appointed who gave his award deter-
        mining compensation at the Rate of Rs. 150 per maria. He also awarded F
        30% solatium and 9% interest for one year from the date of taking
        possession and thereafter 15% till the date of deposit on the enhanced
        compensation. The Government challenged the award before the High
        Court in an appeal which was dismissed. They filed a letters patent appeal
        and prayed for an ad intelim stay. The High Court refused the stay and
        directed to release the payment of compensation. Aggrieved, the Govern- G
        ment filed the appeal by special leave.

)~            It was contended for the respondents that on failure to accept the
        offer of payment of compensation determined by the Land Acquisition
        Officer, tl10ugh the respondents had not communicated their refusal, on      H
                                           25
    26                     SUPREME COURT REPbRTS [1995] SUPP. 5 S;C.R.

A   expiry of the prescribed period, a_ duty was cast upon the competent
    authority and the Central Government to appoint the arbitrator, and since
    there was delay in appointment of the arbitrator, the appellants were liable
    to pay the interest.

            Rejecting the claim of the respondents and allowing the appeal, this
B   Court

          HELD: 1.1. Sub-rules(3), (5) and (6) of Rule 9 of the Requisitioning
    and Acquisition of Immovable Property Rules 1953 indicate that after an
    award has been made, not only the competent authority is enjoined to
c   communicate its offer in writing to the person interested, but the latter is
    also enjoined to communicate, within 15 days of the receipt of the offer, in
    writing to the competent authority "his acceptance or othe1wise of the offer'.
    Since admittedly the appellants had not communicated their acceptance
    or otherwise of the offer made by the competent authority, there was no
    duty cast on it to appoint arbitrator under S.S(l)(b) of the Requisitioning
D   and Acquisition of Immovable Property Act, 1952. [29-B-C; G-H]

          1.2. There were no laches in appointment of arbitrator as the obliga-
    tion to appoint arbitrator arises where the interested person communi-
    cates his non-acceptance of the offer enjoined by sub-rule (5) (i) of Rule 9
E   of the Rules. The requirement of sub-rule (6) of R.9 to submit a report to
    the Central Government where the person to whom offer has been made
    does not communicate within 15 days, cannot be regarded as requiring the
    Central Government to appoint arbitrator on knowing about the fact of
    non-communication of the interested person. Something more is needed to
    require appointment. of arbitrator-the i_nterested person must communi:
F   cate about his non-acceptance of the offer, which was not done in the
    instant case. [30-C-E]

          Union of India v. Hari .Klishan Kliosla, [1993] Supp. 2 SCC 149,
    referred to.
G
          1.3. The award of the arbitrator awarding 30% solatium and interest
    at the rate of 9% for one year from the date of taking possession at 15%
    thereafter ~ill the date of deposit, stands set aside. [30-F]

            CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10023 of
H   1995.
                      U.0.1. v. MUNSHA[RAMASWAMY,J.]                          27

           From the Judgment and Order dated 5.3.93 of the Punjab & Haryana        A
      High Court in C.W.P. No. 316 of 1993.

           K.N. Shukla, Ms. Niranjana Singh and Ms. A Subhashini for the
      Appellants.

            Sanjay Sarin and Ashok Mathur for the Respondents.                     B

            The Judgment of the Court was delivered by

            RAMASWAMY, J. Leave granted.

            This appeal by special leave arises from the judgment and order        c
      dated March 5, 1993 passed in C.W.P. No. 316 of 1993 by the High Court
      of Punjab & Haryana at Chandigarh. The competent authority, viz., the
      Special Land Acquisition Collector made an award under Section 8 of the
      Requisition and Acquisition of Immovable Property Act, 1952 (for short,
      "the Act") and awarded compensation @ Rs.375 per kanal. This was done D
      as early as in 1970. In 1986, Civil Writ Petition No. 2391 of 1986 was filed
      by the respondents for appointment of an arbitrator. The High Court
      allowed the writ petition on July 28, 1986 and directed the appellants to
      appoint an arbitrator. The arbitrator thus appointed, by his award dated
      December 12, 1991 determined compensation @ R. 150 per maria. He also E
      awarded solatium @ 30% and interest @ 9% per annum for one year and
      on expiry thereof@15% on the enhanced compensation. Aggrieved by the
      said award, the appellants filed an appeal in the High Court which was
      dismissed on May 20, 1992. A Letters Patent Appeal, viz., 392 of 1992, was
      filed against the said order of the learned single Judge and the same is
      pending in the High Court. Since the respondents challenged the award in F
.,.   question, the appellants sought for stay and the stay was refused. The High
      Court directed by the impugned order dated March 5, 1993 to release the
      payment of the compensation forthwith in lieu of the land acquired by it
      subject to any order obtained otherwise by it in any appropriate proceed-
      ings. Feeling aggrieved thereby, this appeal by special leave has been filed. G

            It is contended for the respondents that on failure to accept the offer
      of payment of compensation determined by the competent authority, viz.,
      the Special Land Acquisition Collector, though the respondents had not
      communicated in writing their refusal to accept the award, on expiry of the
      prescribed period, a duty was cast on the competent authority and the H
    28                    SUPREME COURT REPORTS [1995] SUPP. 5 S.C.R.

A Central Government to appoint an arbitrator. Since arbitrator was not
    appointed for no fault on their part, the appellants are enjoined to make
    good the loss by paying interest. Therefore, the appellants are not relieved
    from paying interest, as this Court in Union of India v. Hari Krishan Khosla,
    [1993] Supp. 2 SCC 149, despite holding that law has conferred no power
    on the arbitrat~r to award solatium and interest on the amount of compen-
B   sation determined under Section 8 of the Act, had upheld in paragraph 79
    (page 172) on the facts of some appeals, award of solatium and interest,
    as there was delay in appointment of arbitrator, which was of 16 years in
    those appeals. The delay here also was of 16 years.

c          The question, therefore, is whether the appellants are liable to pay
    interest to the respondents for the delay in appointment of arbitrator.
    Section 8(1) of the Act envisages that where any property is requisitioned
    or acquired under the Act, there shall be paid compensation the amount
    of which shall be determined in the manner and according to the prin-
D   ciples set out thereunder. Manners laid down are two : (i) fixation by
    agreement; and (ii) determination by arbitrator to be appointed by the
    Central Government where no agreement can be reached. Section 9 of the
    Act enjoins payment of amount of compensation under the award. subject
    to any rules made under the Act. The competent authority is, therefore,
    enjoined to pay the amount of compensation. to the person or persons
E   entitled thereto in such maiiner and within such time as may be specified
    in the award. Under sub-rule (3) of Rule 9, the competent authority, viz.,
    the Land Acquisition Officer is enjoined, as soon as may be practicable,
    to communicate to each interested person an offer, which is fair in his
    opinion, of amount of compensation payable to such person in respect of
F   the acquired property. Under sub-rule (5) (i), when an offer is made to·
    such person, he shall within 15 days of the receipt of the offer, communicate
    in writing to the competent authority his acceptance or otherwise of the offer.
    If he accepts the offe1; the competent authority should enter into an agreement
    with him on behalf of the Central Govemment in Fomi K. Clause (ii) of
G sub-rule (5) is not material and hence omitted. Under sub-rule (6), if the
    person to whom an offer is made, does not accept the offer or does not
    communicate within 15 days of the receipt of the offer, in writing to the
    competent authority his acceptance or otlwwise of the offer, the competent
    authority should, as soon as may be, submit to the Central Government a
    report setting forth the full facts of the case, particularly as regards the
H   nature and extent of the disagreement between himself on the one hand
                U.0.1. v. MUNSHA[RAMASWAMY,J.]                            29

and the interested person on the other, and he should forward with the          A
report all connected papers. The competent authority should at the same
time deposit in court the amount offered by him to the said person under
sub-rule (3).

       Reading of these rules do indicate that after an award has been
made, the competent authority is enjoined to communicate its offer in B
writing to the person interested. Such interested person is also enjoined,
emphasised by the use of the word 'shall', to communicate, within 15 days
of the receipt of the offer, in writing to the competent authority "his
acceptance or otherwise of the offer". If he accepts the offer, the competent
authority is further enjoined to enter into an agreement, on behalf of the
Central Government, ·with him in Form K and to pay the compensation
                                                                                c
awarded by him. If the interested person does not accept the offer, nor
communicates within 15 days of the receipt of the offer, in writing to the
competent authority his acceptance or otherwise of the offer, the com-
petent authority is enjoined to submit to the Central Government a report
setting forth the full facts, in particular the nature and extent of the D
disagreement between himself and the interested person and should for-
ward with the report all connected papers to the Central Government. He
is also enjoined to deposit in the court the amount offered by him to the
interested person.

       Thus, it may be seen that the interested person is enjoined to           E
communicate within 15 days from the date of the receipt of the acceptance
or otherwise in writing of the offer made by the competent authority. The
ratio in Smt. Seeto Devi & Ors. Etc. v. Union of India & Ors., C.A. arising
out of S.L.P. No. 7411 of 1995 etc. decided on July 28, 1995 on which
reliance was placed by the counsel for the respondents has no application       F
to the facts of this case. Therein, it was found by this Court that "in fact,
the case of the appellants is that they had accepted the amount sent to
them under protest to which there is no demur and, therefore, they did not
sign the agreement in Form K which was sent to them." In those cir-
cumstances, this Court had held that the competent authority and the
Central Government ought to have appointed arbitrator to determine the          G
compensation payable to the claimants. In this case, however, since admit-
tedly the appellants had not communicated their acceptance or otherwise
of the offer made by the competent authority, there was no duty cast on it
to appoint arbitrator under S.8(1)(b) of the Act. In paragraph 79 of the
decision in Hali Krishan Klwsla's case (supra), this Court considered the       H
    30                    SUPREME COURT REPORTS (1995] SUPP. 5 S.C.R.

A   observations made in Harbans Singh Shanni Devi v. Union of India, (1995]
    supp. 4 sec.

          What was stated in Hari Kris/tan Khosla's case cannot assist the
    respondents because the general ratio laid in that case, viz, the provisions
    of the Land Acquisition Act have no application to the acquisition under
B · the Act and the payment of solatium and interest cannot be fastened since
    the Act did not provide for payment of interest and solatium, squarely
    applies to the facts in this case, for the reason that there was no !aches on
    the part of the appellants in appointing arbitrator, which was assumed in
    Hari /(Jishan Khosla's case. We have said about there being no laches in
C appointment of arbitrator in the case at hand as the obligation to appoint
    arbitrator arises where the interested person communicates his non-accep-
    tance of the offer enjoined by sub-rule (5) (i) of Rule 9. The requirement
    of sub-rule (6) to submit a report to the Central Government where the
    person to whom offer has been made does not communicate within 15 days,
    cannot be regarded as requiring the Central Government to appoint ar-
D bitrator on knowing about the fact of non-communication of the interested
    person. According to us, something more is needed to require appointment
    of arbitrator - the interested person must communicate about his non-ac-
    ceptance of the offer, which was not done here in the case at hand. In Hari
    Shankar Khosla's case this Court had assumed laches on the part of the
E Central Government due to delay of 16 years in appointment of arbitrator.
    We would not draw such a presumption here.

          Since the determination of the compensation by the arbitrator is
    subject matter of the Letters Patent Appeal, we decline to go into the
    merits. However, the award of the arbitrator awarding solatium @ 30%
F   and interest @ 9% for one year from the date of taking possession and @
                                                                                     <
    15% thereafter, till the date of deposit, stands set aside. In other respects,
    we express no opinion.

           The appeal is accordingly allowed but, the circumstances, with no
G order as to costs.
    R.P.                                                         Appeal allowed.