Chimanlal Kuberdas Modi (D) By Lrs. vs Gujarat Industrial Development Corp. & Ors.

Chimanlal Kuberdas Modi (D) by Lrs........................Appellant

Versus

Gujarat Industrial Development Corp. & Ors........Respondents

WITH

CIVIL APPEAL NO. 1386 of 2004

JUDGMENT

Dr. Mukundakam Sharma, J.

1. The only issue which arises for our consideration in this

appeal is whether or not the appellant would be entitled to

payment of interest under Section 34 of the Land Acquisition

Act, 1894 on the solatium on the compensation paid in terms

1 of the decision of the case in Sunder Vs. Union of India

reported in (2001) 7 SCC 211 and further explained in the

case of Gurpreet Singh Vs. Union of India reported in (2006)

8 SCC 457.

2. The land belonging to the appellant was acquired by

issuing a notification under Section 4 and 6 of the Land

Acquisition Act, 1894 (hereinafter referred to as "the Act"). A

notification was issued on 4.10.1973 for the beneficiary,

namely, Respondent No. 1 under Section 4 of the Act.

Thereafter another notification under Section 6 of the Act was

issued by the competent authority on 4.11.1976. The Land

Acquisition Officer passed an Award in the land acquisition

case wherein he determined the market value of the land at

`1.28 per sq. meter. Possession of the land was also taken

over by the Land Acquisition Officer on the date of the passing

of the Award. Pursuant to the aforesaid Award, the appellant

was paid an amount of ` 73,191.09.

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3. Being aggrieved by the Award dated 22.9.1986,

determining the market value of the land at ` 1.28 per sq.

meter, the appellant filed two references under Section 18 of

the Act. During the pendency of the aforesaid reference before

the Reference Court, the respondent paid a further sum of `

1,18,557.08 towards the balance compensation for the land.

4. By a judgment and order dated 26.2.1999, the Reference

Court disposed of the case, determining the market value of

the land at ` 30 per sq. meter. While disposing of the said

case, the following decree was passed by the Reference Court.

1. The reference cases are hereby partly allowed and the Respondents are hereby ordered to pay ` 28.72 Ps. over and above ` 1.28 Ps. Per Sq. Mtr. already awarded by the Land Acquisition Officer for the acquired lands.

2. The claimants be also paid the solatium at the rate of 30% and interest at the rate of 9% per annum till one year after the possession of the acquired lands was taken by the Government, and if the amount is not paid within one year, the claimants is entitled to the interest at the rate of 15% per annum thereafter till the entire amount is deposited.

3. The claimants are also entitled to get increase of 12% from the date of publication of notification u/s 4 i.e. dated November 15, 1973 to the date of award i.e. September 22, 1986, passed by the Land

3 Acquisition Officer, as provided u/s 23 (1A) of the Land Acquisition Act.

******* ******** ******** *******

5. In terms of the aforesaid decree passed, a Schedule was

also attached to the said judgment in which compensation

payable to the appellant to the extent of market value of the

land, solatium at the rate of 30% on the amount calculated

and increase at the rate of 12 % per annum on the market

value under Section 23(1A) was calculated.

6. Consequent thereto, the appellant filed an execution

application for recovery of the balance amount as awarded by

the Reference Court. During the pendency of the aforesaid

execution application, the respondent paid an amount as part

payment of the dues payable by the respondent to the

appellant. While the said execution case was pending, the

appellant also filed an application for payment of the amount

of interest payable under Section 34 of the Act, at the rate of

9% for the first year and 15% thereafter on the amount

4 awarded by the Reference Court under Section 23(1A) and

23(2) of the Act. As against the said prayer of the appellant,

the respondents filed objection. The said objection was heard

by the executing court, and by an order dated 9.9.2002, the

executing court rejected the objection filed by the respondent

No. 1 herein and issued a warrant for recovery of balance

amount and further interest from 1.7.2002, relying on the

ratio of the judgment of this Court in Sunder Vs. Union of

India (supra).

7. Being aggrieved by the aforesaid order passed by the

executing court, the respondent filed a revision petition before

the Gujarat High Court contending inter alia that the

Reference Court did not award interest on the aggregate

amount and therefore, the executing Court was not justified in

awarding an amount under the aforesaid head of Section 34 of

the Act. It was also contended that the ratio of the judgment

in Sunder (supra) is not applicable to the facts of the present

case because on the date when the decree was passed, interest

5 was not payable on the amount of solatium as also on the

amount payable under Section 23 of the Act.

8. By a judgment and order passed on 20.2.2003, the High

Court upheld the aforesaid contentions and allowed the appeal

filed by the respondent and set aside the order passed by the

executing court on 9.9.2002.

9. Being aggrieved by the aforesaid order, the appellants

filed the present Special Leave Petition in which leave was

granted and on which we have heard the learned counsel

appearing for the parties.

10. The learned counsel appearing for the appellant

reiterated the same submissions that the decisions in the

cases of Sunder (supra) and Gurpreet Singh (supra) are

clearly applicable to the facts and circumstances of the

present case. She also submitted that since the execution of

the order passed in the reference case was pending on the date

when the decision in the case of Sunder (supra) was delivered,

the said decision should, therefore, have been relied upon as

6 clearly held in Gurpreet Singh's case (supra) and on the

basis of that benefit of payment of interest on solatium should

have been given to the appellant.

11. Learned counsel appearing for the respondent, however,

refuted the aforesaid submissions by contending that the

decisions in the case of Sunder (supra) as also of Gurpreet

Singh (supra) are not applicable to the facts and

circumstances of the present case.

12. Having regard to the aforesaid submissions and having

gone through the cited decisions, we have scrutinized the

records before us. The decree passed by the Reference Court

has been extracted hereinbefore. The Reference Court in the

decree has allowed the prayer for compensation towards the

market value of the land as also solatium at the rate of 30%

and also granted increase of 12% from the date of publication,

as also an increase in compensation in terms of Section 23(1A)

of the Act.

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13. The claimants were also held to be entitled to interest at

the rate of 9% and thereafter at 15% per annum on the entire

amount payable. In the decree, it was also mentioned that

the claimants would be entitled to get compensation as stated

in the schedule attached therein. The schedule is attached

with the decree. A bare perusal of the same indicates that in

addition to the amount shown as compensation towards

market value, solatium at the rate of 30% and increase of

compensation at the rate of 12% per annum are also shown in

the said schedule. The amount awarded in terms of the

interest at the rate of 9% per annum which is shown to be

included in the decree is, for reasons unclear, not indicated in

the said schedule, but is specifically mentioned in the decree

itself. Since a direction is made for payment of interest at the

rate of 9% per annum and thereafter at 15% per annum in the

decree, the appellant cannot be denied the benefit of the

interest on market value, which also includes solatium and for

that purpose the decisions in the case of Sunder (supra) and

Gurpreet Singh (supra) would become relevant. 8

14. In the case of Sunder (supra), this Court in paragraph 23

has stated thus:-

"23. .......We make it clear that the compensation awarded would include not only the total sum arrived at as per sub-section (1) of Section 23 but the remaining sub-sections thereof as well. It is thus clear from Section 34 that the expression "awarded amount" would mean the amount of compensation worked out in accordance with the provisions contained in Section 23, including all the sub-sections thereof."

In paragraph 24, the Court further held as follows:-

"24. The proviso to Section 34 of the Act makes the position further clear. The proviso says that "if such compensation" is not paid within one year from the date of taking possession of the land, interest shall stand escalated to 15% per annum 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". It is inconceivable that the solatium amount would attract only the escalated rate of interest from the expiry of one year and that there would be no interest on solatium during the preceding period. What the legislature intended was to make the aggregate amount under Section 23 of the Act to reach the hands of the person as and when the award is passed, at any rate as soon as he is deprived of the possession of his land. Any delay in making payment of the said sum should enable the party to have interest on the

9 said sum until he receives the payment.

Splitting up the compensation into different components for the purpose of payment of interest under Section 34 was not in the contemplation of the legislature when that section was framed or enacted."

15. The aforesaid decision of Sunder (supra) came to be

considered once again by this Court in the case of

Gurpreet Singh (supra) and in paragraph 54 of the said

judgment, this Court held thus:

"54. One other question also was sought to be raised and answered by this Bench though not referred to it. Considering that the question arises in various cases pending in courts all over the country, we permitted the counsel to address us on that question. That question is whether in the light of the decision in Sunder, the awardee/decree-holder would be entitled to claim interest on solatium in execution though it is not specifically granted by the decree. It is well settled that an execution court cannot go behind the decree. If, therefore, the claim for interest on solatium had been made and the same has been negatived either expressly or by necessary implication by the judgment or decree of the Reference Court or of the appellate court, the execution court will have necessarily to reject the claim for interest on solatium based on Sunder on the ground that the execution court cannot go behind the decree. But if the award of the Reference Court or that of the appellate court does not specifically refer to the question of interest on solatium or in cases where claim had not been made and rejected either expressly or impliedly by the Reference Court or the appellate court, and merely interest on compensation is awarded, then it would be open to the execution court to apply the ratio of

10 Sunder and say that the compensation awarded includes solatium and in such an event interest on the amount could be directed to be deposited in execution. Otherwise, not. We also clarify that such interest on solatium can be claimed only in pending executions and not in closed executions and the execution court will be entitled to permit its recovery from the date of the judgment in Sunder (19-9- 2001) and not for any prior period. We also clarify that this will not entail any reappropriation or fresh appropriation by the decree-holder. This we have indicated by way of clarification also in exercise of our power under Articles 141 and 142 of the Constitution of India with a view to avoid multiplicity of litigation on this question."

16. It is no doubt true that the execution court cannot

examine the reasons so as to go behind the decree but if in the

Award passed, the Reference Court makes a specific reference

to payment of interest but without any such reference to the

payment of interest on solatium and merely payment of

interest on compensation is granted, then it would be open to

the executing court to apply the ratio of Sunder (supra) and

declare that the compensation awarded includes solatium, and

consequently, interest on the amount could be directed to be

deposited in execution. That being the legal position as

prevailing today, we cannot ignore the observations made in

paragraph 54 of the aforesaid judgment in Gurpreet Singh 11 (supra) and we order accordingly that compensation awarded

includes solatium and therefore interest on the said amount

shall be paid by the respondent in the pending execution.

17. In our considered opinion, the ratio of the aforesaid

decision is also applicable in view of the fact that such interest

on solatium is claimed by the appellant herein in the pending

adjudication and therefore, we observe that the executing

court was justified to permit recovery of interest on solatium

from the date of judgment in Sunder (supra), i.e., 19.9.2001

and not for any prior period.

18. Having held thus and allowing the appeal filed by the

appellant to the aforesaid extent, we leave the parties to bear

their own costs.

.......................................J. [Dr. Mukundakam Sharma]

......................................J. [Anil R. Dave] New Delhi, October 22, 2010.

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