Holding

Interest on solatium under Section 23(2) is not payable; Section 28 authorises interest only on compensation under Section 23(1).

Summary

The appellants, heirs of Yadavrao P. Pathade, appealed against the State of Maharashtra seeking interest on the solatium awarded under Section 23(2) of the Land Acquisition Act, 1894. The compensation had been enhanced by the reference court and further by the High Court to Rs 42,056.15, but the High Court refused interest on the solatium of Rs 6,308.42, relying on the statutory scheme. The appellants relied on Periyar and Pareekanni Rubbers Ltd. v. State of Kerala, claiming that interest on solatium forms part of the compensation component under Section 23(1). The Supreme Court examined Sections 23(1), 23(2) and 28 of the Act and held that Section 28 authorises interest only on the compensation determined under Section 23(1), not on the additional solatium under Section 23(2). Consequently, the High Court was correct in denying interest on solatium, though the State must pay interest on the enhanced compensation under Section 28. The appeal was dismissed without costs.

Issues considered

Whether interest is payable on the solatium amount awarded under Section 23(2) of the Land Acquisition Act, 1894

Legislation cited

Land Acquisition Act, 1894s. 23(1), s. 23(2), s. 26, s. 28, s. 54

Subjects

Land acquisitionSolatiumInterest on compensationSection 23(2)Section 28Compensation enhancementSupreme Court

Judgment

YADAVRAO P. PATHADE (DEAD) BY LRS. ETC. A
v.
STATE OF MAHARASHTRA

JANUARY 24, 1996

[K. RAMASWAMY, S. SAGHIR AHMAD AND B
G.B. PATTANAIK, JJ.]
-!
Land Acquisition Act, 1894:

Sections 23(2), 26, 28----lnterest on solatiwn-Not a part of the com- C
ponent of compensation under S.23(1)-Claimants entitled to interest on
enhanced compensation from date of award and on appeal on the re;pective
compensation, if enhanced, till date of deposit-State directed to deposit the
balance of interest on enhanced compensation till deposit.

Pe1iyar and Pareekanni Rubbers Ltd. v. State of Kera/a, AIR (1990) SC D
-y
2192, held per incurium.

Prem Nath Kapur & Anr. Etc. v. National Fmilizers Corporation of
India Ltd. & Ors., C.A. 11398/95 etc. decided by S.C. on November 29, 1995,
referred to.
E
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2B72 of
1996 Etc. Etc.

From the Judgment and Order dated 8.10.91 of the Bombay High
Couit in F.A. No. 687 of 1979 with C.0.S. No. 554 of 1983.
F
S.K.C. Pasi and V.S. Kulkarni for the Appellants.

S.M. Jadhav and D.M. Nargolkar for the Respondent.
•
The following Order of the Court was delivered :
G
Leave granted.

The only question is : whether the appellants are entitled to payment
of interest on solatium payable under Section 23(2) of the Land Acquisition
Act(Act 1 of 1894) (for short, 'the Act'). The additional amount was
awarded by the reference Court on December 15, 1979 enhancing the H
965
/
}-,
966 SUPREME COURT REPORTS [1996] 1 S.C.R.

A compensation. The High Court by its judgment dated 4.12.1995 has further
enhanced the compensation to Rs. 42,056.15. The appellants claimed inter-
est on solatium of Rs, 6308.42 which was disallowed by the High Court.
The interest on solatium was calculated from 1.l.1Y67 to 31.12.1971. The
appellants placed reliance on a judgment of this Court in Periyar and
B Pareekamii Rubbe1J Ltd. v. State of Kera/a, AIR (1990) SC 2192 contending
that interest on solalium is a p"rt of the component under Section 23(l)of
the Act and that, therefore, they are entitled to payment of the interest.
The High Court, therefore, was not right in refusing interest on solatium.
To appreciate the contention it is necessary to look to the provisions of the
Act.
c
Section 28 gives power to the Court lo award interest when the Court
enhances the compensation in excess of amount awarded by the Collector
at the rate specified therein, namely, preceding the Amendment Act 68 of
1984, at 6% per annum under the Central Act or at the rates as per the
D approprial c Act amended by the local amendments to the Act. After the
Amendment Act coming into force w.e.f. September 24, 1984 the claimants
would be entitled to interest at 9% p.a. for one year from the date of taking
possession and on expiry thereof, at 15% p.a. till the date of the deposit
into the Court.

E Section 23(1) envisages that in determination of compensation to be
awarded for the land acquired under the Act, the Court shall take into
consideration the respective' criteria laid in Clauses (1) to (6) applicable to
the given facts of the case. Therefore, the Court is empowered under
Section 23(1) to determine compensation to be awarded to the claimant.
F
Section 23(2) provides that "in addition" to the market value of the
land as above provided, the Co.mt shall in every case award a sum at 15%
preceding the Amendment Act and after the Amendment Act, 30% p,a,
on such market value in conS'ideration of the con1pu1sory nature of the
acquisition. The legislation, therefore, made a distinction between compen-
G sation under Section 23(1) and the additional amount on such market value
as solatium in consideration of compulsory nature of acquisition. In other
words, Section 28 does not comprehend payment of interest on solatium
when it expressly mentions payment of interest on compensation under
Section 28 referable to Section 23(1) of the Act. Thus the High Court was
H right in not awarding interest on solatium, Similar view was taken by this
Y.P. PATHADE v. STATE 967

Court after Periar's case (supra) by a three-Judge Bench in Prem Nath A
Kapur & Anr. etc. v. National Fertilizers Corporation of India Ltd. & Ors.,
C.A. 11398/95 etc. decided on November 29, 1995.

It is true that in Peiiyar's case this Court had held that interest on
solatium is part of the component under Section 23(1). Unfortunately,
neither the provisions were considered nor the' distinction of the above B
provisions had been brought to the notice of this Court at that time.
Therefore, mistaken view was taken to hold that interest on solatium is part
of the component of compensation under Section 23(1) of the Act. It is
needless to mention that under Section 28 the claimants will be entitled to
the interest on enhanced compensation from the date of the award of the C
Court under Section 26 and on appeal under Section 54 on the respective
compensation, if enhanced, till date of deposit in the Court. Therefore, the
State is required to deposit the balance of interest on the enhanced
compensation till date of deposit into the Court.

The appeals are accordingly disposed of but, in the circumstances, D
without costs.

G.N. Appeals disposed of.

,