State Of Maharashtra And Ors vs Maimuma Banu And Ors

The only point involved in these cluster of appeals is

whether the High Court of Bombay was justified in directing

payment of interest on rental compensation awarded to

persons whose lands were acquired under the Land

Acquisition Act, 1894 (in short the 'Act').

Factual matrix giving rise to these appeals is almost

undisputed except that the dates in regard to the

notifications issued under Sections 4 and 6 of the Act are

different. Lands of the respondents were acquired by the

appellant-State by private negotiations and accordingly

possession was taken prior to issuance of notification

under Section 4 of the Act. Subsequently, notification

under Section 6 of the Act was also issued. The Land

Acquisition Officer fixed the compensation payable and the

statutory entitlements. The State of Maharashtra by

several resolutions and instructions contained in Circulars

dated 1.12.1972, 17.9.1977, 2.4.1979 and 24.3.1988 provided

for rental compensation payable to title holders of lands.

The resolutions in question, inter alia, provided that

where possession of lands is taken by private negotiations

a certain percentage of the estimated value of the land was

to be paid as rental compensation. It was also indicated

that prompt payment of such compensation should be done.

The land owners approached the High Court by filing

writ petitions making a grievance that after taking

possession of the land no rental compensation was either

being paid, or, there was abnormal and unusual delay in

making payment thereof. They claim interest for such

delayed payment. The High Court by impugned judgment held

that the non payment of rental compensation within the time

prescriptions indicated in the resolutions amounted to

deprivation of valuable property without due payment

therefor. It was directed that State authorities have to

pay the compensation and interest thereon at the rates

prescribed in the Government resolution dated 24th March,

1988 and the payment was to be released as expeditiously as

possible but in no case beyond the period of six months

from the date of judgment by the Collector concerned. It

was held that land owners will be entitled to raise demand

of rental compensation as well as the interest thereon

before the Collector when the award under Section 11 of the

Act is passed or before the Reference Court, as the case

may be. In case the concerned Owner has not been paid 80%

of the compensation as calculated by the Collector while

taking possession of the land without issuing notice under

Section 4(1) of the Act, the Government was directed to

review its policy for higher rate of rental compensation as

well as interest thereon in the light of provisions

contained in Sections 17(3-A), 23(1-A) and 28 of the Act.

The rate of interest was stipulated to be 12% on the rental

compensation amount. The High Court with reference to

various resolutions noted above accepted the prayer and

directed as noted above.

In support of the appeals, learned counsel for the

appellant-State and its functionaries submitted that there

was no question of granting any interest on the rental

compensation. The High Court clearly erred in relying on

provisions like Section 17(3-A) or 23(1-A) to grant

interest by analogy. There is no statutory entitlement for

any rental compensation. But with a view to eliminate

difficulties of the land owners whose claims get locked up

in the litigation and with a sense of benevolence, the

novel concept of rental compensation was introduced by the

State. When there is no statutory entitlement, the question

of granting any interest does not arise. It is pointed out

that in most of the cases payment of the rental

compensation has been made. It is also submitted that when

there is no statutory liability there is no question of

paying any interest on assumed equitable grounds. The rate

of 12% it is submitted is clearly without any basis and cut

off date fixed whereafter the interest starts running is

without any rationale. The claim for interest has been made

after unusually long periods, and the High Court should

have thrown out the writ petitions on the ground of delay

and laches.

Per contra, learned counsel for the respondents

submitted that the true essence of the resolutions and the

purpose for which rental compensation was granted is sought

to be over looked on the technical plea that the amount of

rental compensation is not under the Act. Even if it is not

under the Act, the spirit behind statutory prescriptions

under Sections 17(3-A) and 23(1-A) read with Section 28 of

the Act cannot be lost sight of. It was submitted that the

decisions relied upon by the High Court in Gadag Sub-

Division, Gadag v. Mathapathi Basavannewwa and Ors (1995

(6) SCC 355) and Executive Engineer, Irrigation Division v.

Laghubhai Nanubhai and Ors. (1995 Supp (4) SCC 583) clearly

indicate the logic of the claim made by the land owners and

accepted by the High Court. The High Court took note of

the fact that in some cases interest has been granted and

therefore a departure cannot be made in respect of the

present respondents.

It was pointed out by learned counsel for the

appellants that there was no resolution adopted for

granting interest and even if in some cases interest has

been held to be payable by a person whose competence to

give such direction is not free from doubt, the land owners

cannot lay claims for amounts which are not statutorily

payable to them. Merely because in single case or two

interest was directed to be paid, it has no binding force.

It is to be noted that the resolutions adopted by the

Government were intended to benefit the land owners whose

lands were acquired. To avoid unnecessary delays in payment

urgency for follow up action was indicated in the

resolutions. To that extent, learned counsel for the land

owners are on terra firma. But legally the land owners are

not entitled to any interest. There is no provision either

in the resolutions or in the statutes concerned which

entitles the land owners to payment of interest. Whatever

is statutorily payable has been clearly indicated in the

Act itself. Section 23(1-A) of the Act was introduced by

Amendment Act of 1984. There is no dispute, and in our

opinion rightly that rental compensation is not relatable

to the Act. The entitlement of the claimants is on the

basis of Government's resolutions i.e. on the basis of

executive orders.

It is crystal clear from a bare reading of the

provisions of the Act that it does not provide for payment

of any rental compensation. Therefore, the appellants are

correct in their stand to the extent that the liability

for rental compensation does not have its source under the

Act. Therefore, the logic of Sections 17(3-A), 23(1-A),

Section 28 of the Act and Section 34 has no application in

law to rental compensation. That being the position, the

High Court was not justified in relying on Sections 17(3-

A), 23(1-A) or Section 28 of the Act to grant interest.

But the problem does not end there. Admittedly, the

possession of land was taken long years back. Thereafter,

the land owner does not practically possess any right over

the land in question except to the compensation as

statutorily provided for. But it would be illogical and

improper to turn Nelson's eye to the factual position as

highlighted by the respondents. It is not in dispute that

in most of the cases the rental compensation has not been

paid. If that factual position continues it clearly is a

case where the amount to which a person is entitled is

withheld without any legitimate excuse. Learned counsel

for the appellants strenuously urged that in most of the

cases the proceedings have not yet attained finality and

are pending either before Reference Court or in appeal.

That does not provide a legitimate excuse to the appellants

to withhold payment of the rental compensation. The amount

calculated on the basis of award by the Land Acquisition

Officer cannot be below than the amount to be ultimately

fixed. If in appeal or the reference proceeding, there is

any variation, the same can be duly taken note of as

provided in law. There is no difficulty and we find none as

to why the compensation on the basis of value determined by

the Land Acquisition Officer cannot be paid. If there is

upward revision of the amount, the consequences will follow

and if necessary re-determination of the rental

compensation can be made and after adjustment of the amount

paid, if any, balance can be paid. If however the Land

Acquisition Officer's award is maintained then nothing

further may be required to be done. In either event,

payment of the rental compensation expeditiously would be

an appropriate step. Looking at the problem from another

perspective, one thing is clear that authorities have

clearly ignored the sense of urgency highlighted in the

various resolutions.

The crucial question is whether there can be any

direction for interest on rental compensation once it is

held that the same has to be paid within the time frame,

notwithstanding the fact that there is no statutory

obligation.

It is not in dispute that in certain cases payments

have already been made. Though the inevitable conclusion is

that the High Court is not justified in directing grant of

interest on the logic of various provisions contained in

the Act, yet there is an element of equity in favour of the

land owners. It is, however, seen that the writ

applications were filed long after the possession was

taken. This factor cannot be lost sight of while working

out the equities. It would therefore be appropriate if

appellants pay interest @6% from 1.4.2000 till amounts

payable as rental compensation are paid to the concerned

land owners. This direction shall not apply to those cases

where the payments have already been made prior to

1.4.2000. Appeals are allowed to the extent indicated

without any stipulation of costs.