VLJAY COTION AND OIL MILLS (P) LTD.versusSTATE OF GUJARAT

           VlJAY COTION AND OIL MILLS (P) LTD.                              A
                                    V,
                        STATE OF GUJARAT

                         DECEMBER 6, 1990

          [KULDIP StNGH AND N.M. KASLIWAL, JJ.]                             B

      Land Acquisition Act, 1894--Section 6(1), 23 & 26-Costs and
inierest can be awarded 6y higher courts if not awarded by lower court.

       The appellant owned land in Kutch District and the Government
of Gujarat took its possession on a specific understanding that in C
exchange the Government would give Iii It land of equal value but the
GoverDIDellt resiled aild issued a notification under section 6(1) of the
Lalld Acquisition Act, 1894 straightaway declaring that the land in
question was needed for public purpose. The collector awarded
Rs.5,075/44 np as compel!Slition. At the instance ilf the appellant, a
reference to the Court was made Under Section 18 of the Act and the D
bistrict Judge deterniiiied the compensation at the rate of Rs.3 per sq.
yard on the basis of the market value of the iand on the date of the
notlfieatlon and paid sillatium and intere8t from that date. The State
preferred an appeal against the award of the District Judge before the
lligb Court but the appellant did not appeal against that part of the
award which went agatnst him but rued Cross-objection5 wbicb being E
time-barred were dismissed; lo the Cross-objections the appellant bad
inter dlia clalined tnterest from November 19, 1949 the date when the
land in question was taken over by the Government and not from
Febrtiary l; 1955; the date when the notification under the Land Acqui-
sition Act was issued. The High Colirt riiied that the compensation
i:Oiild only be ileterinined on ihe bashi of the market value of the land on F
the date oftbe notificaiion issued un8et 4(i) of the Land Acquisition Act
and since such a notification had not beeri issued tn the case, it was not
possible to detertnine the amount Of ciitnpel!Slition payable to the appel-
lant. The clalinant appellant appealed to this Court on the strength oi'a
certificate and this court beta that the notification dated February 1,
1955 issued iiriiler Section Ii of the Act could be treated as a composite G
notification both under Section 4(1) a!i also under Section 6(1) of the Act
and the district Judge could lawfully award the market value of the
land; SO holding, the Ciliirt remanded tbe matter to the High Court for
disposal on merit. The High Court on i'enland reduced the price of the
acquired land froin Rs.3 per sq. yard to 1.35 sq, yard and rejected the
daiiri of the cialniant to tnterest from November 19, 1949 instead of H

                                  447
    448          SUPREME COURT REPORTS                 (1990] Supp. 3 S.C.R.

A   February 1, 1955, as the Cross-objections failed by it were treated to be
    time-barred. Hence this appeal raising both the contentions re: .price
    of the land and the award of interest., w.e.f. Feb. 1, 1955.

          Partly allowing the appeal this Court;

B         HELD: ( 1) On a reference under Section 18 of the Act the parties        .i
    go to trial before the Court primarily on the issue of determination of
    market value of the land. So far as award of interest is concerned it is
    never an issue between the parties. Once the conditions under Section
    28 or Section 34 of the Act are satisfied the award of interest is conse-
    quential and automatic. [454G-H]
c         (2) The payment of interest is not dependent on any claim by the
    person whose land has been acquired. There can be no controversy or
    any lis between the parties regarding payment of interest. When once
    the provision of section 34 are attracted it is obligatory for the collector
    to pay the interest. If he fails to do so the same can be claimed from the
D   Court in proceedings under section 18 of the Act or even from the
    appellate court/courts thereafter. [455B]

          Reading section 23 with section 26 of the Act, it is clear that the
    award, which is deemed to be a decree, is the sum total of conclusions         '
    reached by the courts in determining compensation under Section 23 on
E   appreciation of the evidence between the parties. The costs under
    Section 27 and the interest under Section 28 and 34 are added to the
    compensation amount to make it a consolidated award. The costs and
    interest under the Act if not awarded by the lower court can always be
    awarded by the higher courts in any proceedings under the Act and to
    any party entitled to the same under the Act. [455D-E]
F
          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3(N)
    of 1972.

          Appeal by Certificate from the Judgment and Decree dated 9/
    10.2.70 of the Gujarat High Court in First Appeal No. 718 of 1960.
G
          Harish N. Salve (N.P.), Mrs. A.K. Verma and Mrs. S. Sukuma-
    ran for the appellant.

          R.N. Sachthey and M.N. Shroff for the respondent.

H         The Judgment of the Court was delivered by
VIJAY COITON MILLS v. STATE OF GUJARAT [KULDIP SINGH, J.]           449

      KULDIP SINGH, J. The Vijay Cotton & Oil Mills Ltd. was the
owner of 6 acres 38/ 1/2 Gunthas df land situated on the Bhachau-          A
Rahapar Road in Kutch District. On November 19, 1949 the Govern-
ment of Kutch took possession of the said fand under an arrangement
that the Government would give to the owner in exchange suitable
land of equal value. The Government constructed on the land, a State
Guest House and a Court-House. Thereafter the Government did not           B
give any other land in exchange and instead decided to acquire the
same. On February I, 1955 the Government issued a notification un-
der Section 6(1) of the Land Acquisition Act, 1894 (hereinafter called
'the Act') declaring that the land was needed for public purpose. The
Collector awarded Rs.5,075.44np as compensation. Feeling dissatis-
fied the claimant asked the Collector to make a reference to the Court
under Section 18 of the Act which was done. The learned District           c
Judge found that the claimant was entitled to compensation on the
basis of the market value of the land on the date of notification under
Section 6 of the Act. He determined the same at the rate of Rs.3 per
square yard. He also awarded solatium at the rate of 15% and interest
at 6% from February 1, 1955. The State preferred an appeal against         D
the award of the District Judge before the High Court.

      The High Court came to the conclusion that the compensation
under the Act could only be determined on the basis of the market
value of the land on the date of the notification under Section 4(1) of
the Act and since no such notification was issued it was not possible to   E
determine t]je amount of compensation payable under the Act. The
claimant, after obtaining a certificate from the High Court, filed civil
appeal in this Court. Taking into consideration the scheme of the Act
this Court held that the notification dated February 1, 1955 issued
under Section 6 of the Act could be treated as a composite notification
under Section 4(1) and Section 6(1) of the Act and the District Judge      F
could lawfully award the market value of the land on that day. The
matter was, thus, remanded to the High Court for disposal on merit.

      There were two questions for consideration before the High
Court. Whether the compensation awarded by the learned District
Judge at the rate of Rs.3 per square yard was wrong and if so to what      G
extent. The second question was raised by the claimant wherein he
claimed interest on the compensation amount from November 19,
1949 instead of February 1, 1955 as awarded by the District Judge. He
contended that under Sections 34 and 28 of the Act he was entitled to
interest from the date the possession of the land was taken-over from
him.                                                                       H
    450         SUPREME COURT REPORTS               [1990] Supp. 3 S.C.R.

          The High Court accepted the State-appeal and reduced the price
A
    of acquired land from Rs.3 per square yard to Rs.1.35 per square yard.
    The ·High Court rejected the claim of the claimant to interest from
    November 19, 1949 instead of February 1, 1955. This appeal by the
    claimant via special leave petition is against the judgment of the High
    Court.
B
          We may take-up the first question. While determining the value
    of the land the learned District Judge relied upon his inspection-note
    Exhibit 39 and two instances of sale Exhibit 12 and Exhibit 13. The
    High Court ruled-out the inspection-note from consideration on the
    ground that the same was based on extraneous material and was not an
    evidence on the record of the case. So far as the instances Exhibits 12
c   and 13 are concerned, the High Court came to the conclusion that
    these were comparable instances both in point of time and quality but
    keeping in view the smallness of the size of the plots, comprising these
    instances, as compared to the acquired land the High Court fixed the
    price of the acquired land at 40% of the average price of the plots.
D   Since the District Judge found Rs.3 per square yard as price of the
    acquired land, the High Court reduced the same by 60% and allowed
    the price at Rs.1.35 per square yard.

          According to the High Court while fixing the price of a large
    chunk of land on the basis of comparable instances of small plots some
E   allowance has to be made and for doing so there is no hard and fast
    rule and mathematical accuracy can hardly be achieved. That may be
    so but in the facts of this case one gets the impression that the High
    Court has given higher allowance than was warranted. Be that as it
    may the High Court, on appreciation of evidence and taking into con-
    sideration all the facts and circumstances before it has come to the
F   conclusion that the reasonable market price of the acquired land
    would be Rs.1.35 per square yard and we, in our jurisdiction under
    Article 136 of the Constitution, do not wish to interfere with the same.

           Before we deal with the second question we may give some more
    facts in that context. As mentioned above, the possession of the land
G   was taken from the appellant by the Government on November
    19, 1949. The notification under Section 6 was issued on February l,
     1955. The learned District Judge in his award granted interest on the
    compensation amount from February 1, 1955. The State filed an
    appeal before the High Court against the award of compensation at
    Rs.3 per square yard but the appellant-claimant did not file any appeal
H   against that part of the award which by implication went against him
VIJAY COITON MILLS v. STATE OF GUJARAT [J(ULDIP SINGH, J.] 451

and restricted the amount of interest from February I, 1955, instead of
November 19, 1949 .. The appellant, however, filed cross-objections         A
under Order 41 rule 22 of the Civil Procedure Code. Since the objec-
tions were barred by limitation an application for condonation of delay
was also filed alongwith the objections, The said application was dis-
missed with the.result that the cross-objections stood rejected as time
barred. The appellant filed some other applications in the High Court       B
but it is not necessary to mention the same. The fact remains that the
cross-objections though filed by the appellant stood rejected as time
barred.

      The High Court posed various questions for its consideration in
the following terms:
                                                                            c
           In view ·Of these· rival contentions, it would be necessary
           first to determine as to whether the claim of interest is a
           part of compensation to be awarded under a decree that
           may be passed under section 26 and appealable under
           section 54. of the Act. The further question that would arise D
           to be determined would be whether the claimant was
           required to either file an appeal or file cross-objections in
           respect ·of the rejection of any such claim by the Trial
           Court. Then there would arise a question as to the effect of
           the cross-objections being rejected as time-barred by this
           Court and it is only then that everything is found in favour F.
           of the claimant that the question may arise as to the
           applicability of provisions contained in Order XLI rule 33
           of the Civil Procedure Code. Even if they were to apply
           and the Court was entitled to invoke those powers, it would
           be further essential to consider whether this is a fit case in
           which such exercise of powers should be made."                 F

      While answering the above quoted questions, the High Court, oil
the interpretation of Section 23(1). 26, 27 and 28, came to the conclu-
sion that the interest, payable to the claimants under the Act, has to be
part of the award-decree alongwith the compensation amount and as
such is subject to rules of procedure and limitation. In this respect       G
High Court observed as under:

           "In our view, much though interest can be treated as not a
           part of compensation as such under section 23(1) of the
           Act, it has to .be made a part of the award to be passed
           under section 26 of the Act. It is that award which includes     H
    452         SUPREME COURT REPORTS                [ 1990] Supp. 3 S.C.R.

               the order relating to costs and interest contemplated under
A
               sections 27 and 28 respectively alongwith the amount of
               compensation awarded under section 23( 1) of the Act that
               makes a complete award. It is that award or a part of that
               award which becomes appealable as the case may be under
               section 54 of the Act as that award is deemed to be a decree
B              under section 2 clause (2) and section 2 clause (9) respec-
               tively of the Civil Procedure Code";

           The High Court rejected the claim of the appellant regarding
  intP.rest on the ground that his cross-objections having been rejected as
  ti ••• e-barred he had no right to claim the same in the state appeal. The
C High Court held as under:

               "In the present case, the respondent had actually filed the
               cross-objections after the period of limitation was over and
               since his request for condoning the delay cased in filing the
               same came to be rejected, the cross-objections stood
D              rejected as time-barred, in view of section 3 of the Indian
               Limitation Act. The effect thereof would be that the relief
               now sought for cannot be re-agitated in this appeal bet-
               ween the same parties. The relief is barred by reason of the
               principle of res-judicata inasmuch as the claim can be taken
               to have been rejected by the Trial Court on merits." ls2.
E              lm!O

         The High Court further held that the appellant could not invoke
    the provisions of Order 41 rule 33. The reasoning in that respect is as
    under:

F               "The powers of the appellate court under Order XLI, rule
                33, cannot override the other provisions relating to the
                appeal and the cross-objecions and in any case when they
                have come to be dismissed or rejected as done in the pre-
                sent case so as to give an effect to res-judicata in regard to
                the point involved in the case."
G
          Before we take-up for discussion the findings of the High Court
    we may have a look at Sections 23(1), 26, 27, 28 and 34 of the Act (as
    at the time of acquisition). which are re-produced hereinafter:

                "23. Matters to be considered in determining compensa-
H               tion, ---(1) In determining the amount of compensation to
VUAY COTTON MILLS v. STATE OF GUJARAT [KULDIP SINGH, J.I 453

         be awarded for land acquired under this Act, the Court            A
         shall take into consideration-

         first, the market value of the land at the date of the publica-
         tion of the notification under section 4, sub-section ( 1);

         secondly, the damage sustained by the person interested,          B
         by reason of the taking of any standing crops or trees which
         may on the land at the time of the Collector's taking posses-
         sion thereof;

          thirdly, the damage (if any) sustained by the person
          interested, at the time of the Collector's taking possession
          of the land, by reason of severing such land from his other
                                                                           c
          land;

          fourthly, the damage (if any) sustained by the person
          interested, at the time of the Collector's taking possession
          of the land, by reason of the acquisition injuriously affect-    D
          ing his other property, movable or immovable, in any other
          manner, or his earnings;

          fifthly, if, in consequence of the acquisition of the land by
          the Collector, the person interested is compelled to change
          his residence or place of business, the reasonable expenses      E
          (if any) incidental to such change; and

          sixthly, the damage (if any) bona fide resulting from the
          diminution of the profits of the land between the time of
          the publication of the declaration under section 6 and the
          time of the Collector's taking possession of the land."          F

          "26. Form of awards. ---(1) Every award under this part
          shall be in writing signed by the Judge, and shall specify the
          amount awarded under clause first of sub-section I of
          Section 23, and also the amounts (if any) respectively
          awarded under each of the other clauses of the same sub-         G
          section, together with the grounds of awarding each of the
          said amounts.

          (2) Every such award shall be deemed to be a decree and
          the statement of the grounds of every such award a
          judgment within the meaning of section 2, clause (2), and        H
    454         SUPREME COURT REPORTS                [ 1990] Supp. 3 S.C.R.

                section 2, clause (9), respectively of the Code of Civil Pro-
A               cedure, 1908."

                "27. Costs. ---(!) Every such award shall also state the
                amount of costs incurred in the proceedings under this
                part, and by what person and in what proportions they are
B               to be paid.

               (2) When the award of the Collector is not upheld, the
               costs shall ordinarily be paid by the Collector, unless the
               Court shall be on opinion that the claim of the applicant
               was so extravagant or that he was so negligent in putting his
               case before the Collector that some deduction from his
c              costs should be made or that he should pay a part of the
               Collector's costs."

               "28. Collector may be directed to pay interest on excess
               compensation, --·If the sum which, in the opinion of the
D              Court, the Collector ought to have awarded as compensa-
               tion is in excess of the sum which the Collector did award as
               compensation, the award of the Court may direct that the
               Collector shall pay interest on such excess at the rate of six
               per centum per annum from the date on which he took
               possession of the land to the date of payment of such excess
E              into Court."

               "34. Pay of interest. -- When the amount of such compen-
               sation is not paid or deposited on or before taking posses-
               sion of the land, the Collector shall pay the amount
               awarded with interest thereon at the rate of six per centum
F              per annum from the time of so taking possession until it
               shall have been so paid or deposited."

          There is no dispute that under the Act the claimant is entitled to
    compensation at the rate of the market value of the land on the date of
    notification under Section 4 of the Act. Section 23( 1) of the Act
G   enumerates the matters which are to be taken into consideration in
    determining the compensation. On a reference under Section 18 of the
    Act the parties go to trial before the Court primarily on the issue of
    determination of market value of the land. So far as award of interest
    is concerned it is never an issue between the parties. Once the condi·
    tions under Section 28 or Section 34 of the Act are satisfied the award
H   of interest is consequential and automatic.
 VIJAY COTION MILLS v. STATE OF GUJARAT [KULDIP .SINGH, J.]                455

        The High Court while appreciating the point in issue did not
                                                                                  A
  consider the mandatory provisions of section 34 of the Act. The said
  section specifically provides that when the amount of compensation is
  not paid on or before taking possession of the land the collector shall
  pay interest at 6% per annum from the date of taking over possession.
  The payment of interest is not dependent on any claim by the person
  whose land has been acquired. There can be no controversy or· any !is           B
  between the parties regarding payment of interest. When once the
. provision of section 34 are attracted.. it is obligatory for the collector to
  pay the interesi. If he fails to do so the same can be claimed from the
  Court in. proceedings under section 18 of the Act or even from the
  appellate court/courts thereafter.

       We ~ve carefully examined the reasoning of the High Court in               C
reaching the conclusion which we have reproduced in the earlier part
of thi.s judgment. We do not agree with the interpretation placed by
the High Court on various provisions of the Act. Reading section 23
'Yith section 26 of the Act it is clear that the award, which is deemed to
be a decree, is the sum total of conclusions reached by the courts in             o
determining compensation under Section 23 of the Act on appreciation
of the evidence between the parties. The costs under Section 27 and
the interest under _Sections 28 and 34 are added to the compensation
amount to make it a consolidated award. The costs and interest under
the Act if not awarded by the lower court can always be awarded by
higher courts in any proceedings under the Act and to any party                   E
entitled to the same under the Act.

      The.re is inherent evidence in the wording of Sections 28 and 34
to show that the framers of the Act intended to assure the payment of
interest to the person whose land was acquired and it was not the
intention to subject the said payment to procedural hazards. Section F
34 lays down that "the Collector shall pay the amount awarded with
interest at 6% per annum .... "The legislative mandate is clear. It is a
directive to the collector to pay the interest in a given circumstance.
Section 34 no where says that the interest-amount is to be included in
the award-decree as prepared under section 23(1) read with section 26
of the Act. Similarly Section 28 provides "the award of the Court may G
direct that the Collector shall pay interest." Here also the award under
Section 23(1) read with Section 26 has been kept distinct from the
payment of interest under the section. The interest to be paid under
section 34 and also under section 28 is of different character than the
compensation amount under section 23( I) of the Act. Whereas the
interest. if payable under the Act. can be claimed at any stage of the H
    456        SUPREME COURT REPORTS              [1990] Supp. 3 S.C.R.

A 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.
B       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
  interest in the State-appeal. The fact. that he filed cross-objections
C which were dismissed as time barred, is wholly irrelevant ..

        We, therefore, partly allow the appeal and set aside the judgment
  of the High Court on the second point and direct that the appellant is
  entitled to interest on the compensation amount for the period from
  November 19, 1949 to February 1, 1955. The appellant shall further be
D entitled to 6% interest on the amount so determined from February 1,
  1955 till the date of payment. We make it clear that the appellant shall
  not be entitled to invoke the provisions of the amended Act for the
  purpose of claiming higher amount of interest or for any other claim.
  The appeal is allowed in the above terms with no order as to costs.

    Y.Lal                                                 Appeal allowed.