Holding

Interest on the balance of the compensation award is payable from the date of possession, at 6% per annum up to 28 February 1985 and at 12% per annum thereafter, until the award is fully paid.

Summary

The Supreme Court considered an appeal by Abhay Singh Surana & Ors. against the Secretary, Ministry of Communication & Ors. concerning interest on compensation awarded by an arbitrator for the requisition of premises under the Requisitioning and Acquisition of Immovable Property Act, 1952. The Court reiterated established principles that a landowner is entitled to interest from the date possession is taken unless the statute expressly excludes it. Relying on precedents such as Satinder Singh v. Amrao Singh, National Insurance Co. Ltd. v. Life Insurance Corp., and Hirachand Kothari v. State of Rajasthan, the Court held that interest was payable on the balance of the award. It fixed the rate at 6% per annum from 7 March 1975 to 28 February 1985 and 12% per annum from 8 August 1985 to 31 July 1987, payable only on the unpaid balance. The respondents were directed to pay the calculated interest within three months, and the appellants were awarded costs of the appeal.

Issues considered

Whether the appellants are entitled to interest on the compensation awarded for requisition of premises under the Requisitioning and Acquisition of Immovable Property Act, 1952, and if so, at what rate and for what period

Legislation cited

Land Acquisition Act, 1894s. 23(1)
Requisitioning and Acquisition of Immovable Property Act, 1952s. 5(3)

Subjects

interest on compensationrequisition of immovable propertystatutory acquisitioncompensation awardinterest ratesSupreme Court of India

Judgment

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ABHAY SINGH SURANA & ORS
A
v.
SECRETARY MINISTRY OF COMMUNICATION & ORS.

AUGUST 19, 1987
.+·
[SABYASACHI MUKHARJI AND G.L. OZA, JJ.] B
\r Interest on the amount awarded by Arbitrator for requisition of
premises under Requisitioning and Acquisition of Immovable Property

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Act, 1~52-Entitlement of.

This appeal by special leave was commed solely to the question of
entitlement of interest on the amount awarded by tbe Arbitrator for the
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requisition of the premises under the Requisitioning and Acquisition of
Immovable Property Act, 1952.

Disposing of the appeal, the Court,
"'( D
HELD: The principles U!lllD which the compensation on Ibis
aspect is payable are by now well-settled. This Court reiterated the
principles in Satinder Singh and Ors. v. Amrao Singh and Ors., [1961]
3 SCR 676 at 694; National Insurance Co. Ltd. Calcutta v. Life lnsu-
ranee Corporation of India- [1963] Supp. 2 SCR 971 at 992 and
~,
\.. Hirachand Kothari (dead) through Lrs."v. State of Rajasthan & Anr., E
[1985] Suppl. I SCR 644 at 655. [1046F; IOOC]

In the light of the aforesaid decisions, the Court was of the ophtion
1 that the appellants herein were entitled to the interest for the period
from March 1975 to the 31st July, 1987, when the principal amount of
compensation had been paid and/or when the premises in question had F
been de-requisitioned and handed back to the owner, on the amount
awarded. The Court was of the opinion that for the period from March
7, 1975 to February 28, 1985 being the date on which the judgment of
the High Court was pronounced in this case, the appellants were en-
titled to the interest on the amount awarded at the rate of 6 per cent per
\ annum, and for the period from August 8, 1985 to July 31, 1987-for (}
that period only-at the rate of 12 per cent per annum. The interest
would be payable only on the balance amount which remained to be
paid to the appellants i.e. the amount due minus what bad been paid
from the respective dates. The Court directed that the amount be paid
by the respondents within three months from the date of this judgment,
and that in case there was any difficulty in calculating the amount, the H

1045
1046 SUPREME COURT REPORTS [1987] 3 S.C.R. ~

A parties would be at liberty to apply to the High Court. [1048C-H]

Satinder Singh & Ors. v. Amrao Singh & Ors., [1961] 3 S.C.R.
676; National Insurance Co. Ltd. Calcutta v. Life Insurance Corpora-
tion of India, [1963] Supp. 2 S.C.R. 971 at 992; Hirachand Kothari
(dead) through Lrs. v. State of Rajasthan & Ors., [1985] Supp. 1 +
B S.C.R. 644 and Inglewood Pulp and Paper Co." Ltd. v. New Burnswick
Electric Power Commission, A.I.R. 1928 Privy Council 287, referred v
to.

c
CIVIL APPELLATE JURISDICTION: Civil Appeal l'{o. 859
of 1987.

From the Judgment and order dated 8.8. 1985 of the Calcutta
y
-
High Court in Appeal No. 329 of 1982.

Shankar Ghosh and L.P. Aggarwal for the Appellants.

D V.C. Mahajan, B. Parthasarhti and C. V. Sobba Rao for the y
Respondents.

The Judgment of the Court was delivered by

SABY ASACHI MUKHARJI, J. This appeal by special leave is
.ir'
E confined solely to the question of interest. In other words, the entitle-
ment of interest on the amount awarded by Arbitrator for the requisi- .....
tion of the premises under the Requisitioning and Acquisition of
Immovable Property Act 1952 is the issue. The principles upon which
the compensation on this aspect is payable are by now well settled. In r
Satinder Singh & Ors. v. Amrao Singh & Ors., [1961] 3 SCR 676 this
F Court reiterated the principles at page 694 of the report as follows:

"In Inglewood Pulp and Paper Co. Ltd. v. New Burnswick
Electric Power Commission [ 1928] A.C. 429 it was held by
the Privy Council that "upon the expropriation of land
under statutory power, whether for the purpose of private f
G gain or of good to the public at large, the owner is entitled
to interest upon the principal sum awarded from the date
when possession was taken, unless the statute clearly shows
a contrary intention."' Dealing with the argument that the
expropriation with which the Privy Council was concerned
was not effected for private gain, but for the good of the
H public at large, it observed "but for all that, the owner is
A.S. SURANA v. COMMUNICATION MINISTRY [MUKHARJI, J.} 1047
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deprived of his property in this case as much as in the A
other, and the rule has long been accepted in the interpre-
talion of statutes that they are not to be held to deprive
individuals of property without compensation unless the
intention to do so is made quite clear. The right to receive
the interest takes the place of the right to retain possession
and is within the rule". It would thus be noticed that the B
claim for interest proceeds on the assumption that when
the owner of immovable property loses possession of it, he
is entitled to claim interest in place of right to retain posses-

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sion. The question which we have to consider is whether
the application of this rule is intended to be excluded by the
Act of 1948, and as we have already observed, the mere
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fact that section 5(3) of the Act makes s. 23( 1) of the Land
Acquisition Act, 1894 applicable we cannot reasonably
infer that the Act intends to exclude the application of this
general rule in the matter of the payment of interest. That
is the view which the Punjab High Court has taken in Sur-
jan Singh v. The East Punjab Government, (AIR 1957 Punj. D
265) and we think rightly."
•
_The same principle was reaffirmed not in the context of Acquisi·
tion of Immovable Property, which Mr. Mahajan, learned counsel for ,

-
the respondents tried to make a point before us, was highlighted in
'-- National Insurance Co. Ltd. Calcutta v. Life Insurance Corporation of E
India, [1963] Supp. 2 SCR 971. at 992 where speaking for the court Mr.
Justice Hidayatullah, as learned Chief Justice of India then was
observed:
1
"The reason of the rule was stated a long time ago by Lord
St. Leonard L.C. Birch v. Joy, [1852) III H.L.C. 565: 10 F
E.R. 222 as follows:

"The parties change characters, the property remains
at law just where it was, the purchaser has the money
in his pocket, and the se!ler still has the estate vested
in him; but they exchange characters in a Court of G
Equity, the seller becomes the owner of the money
and the purchaser becomes the owner of the estate."

On entering possession the purchaser becomes entitled to
the rents but if he has not paid the price, interest in equity
is deemed payable by him on the purchase price which H
1048 SUPREME COURT REPORTS [1987] 3 S.C.R. .(
belongs to the seller. This principle was applied by the
A
House of Lords in cases of compulsory purchases. In Swift
& Co. v. Board of Trade, [1925] A.C. 520 Viscount Cave
L.C. gave the reason that the practice rests upon the princi-
pie that the taking of possession is an implied agreement to
pay interest which was stated by Sir William Grant M.R. in f
Fludyer v. Cocker, [1805] 33 E.R. 10. This principle was
further extended by the Privy Council to the compulsory
taking over of a business as a going concern in International
.
Railway Co. v. Niagara Parks Commission, [1944] A.C.

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328.
It was noted by Justice Hidayatullah that this principle has also
b~en accepted by this Court in SatinderSingh v. Amrao Singh (supra). )'
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The principle stated was followed in Hirachand Kothari (dead)
through Lrs. v. State of Rajasthan & Anr., [1985] Suppl. 1 SCR 644
where this court noted the principle at page 655 of the report.

In the light of the aforesaid decision we are of the opinion that
J)
the appellants herein are entitled to the interest for the period from
March 1975 to 3 lst July, 1987 when principal amount of compensation
had been paid and/or when the premises in question had been de-
requisitioned and handed back to the owner, on the amount awarded.

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As to how the interest would vary, but the right of interest was well
avered and also should have been considered in the light of the obser- ~
E vations of Privy Council in Inglewood Pulp and Paper Co. Ltd. v. New
Burnswick Electric Power Commission, AIR 1928 Privy Council 287.
We are of the opinion that from the period from March 7, 1975 to
February 28, 1985 being the date on which the judgment of the High T
Court was pronounced in this case the appellants are entitled to the
interest on the amount awarded at the rate of 6% per annum and from
F the period from August 8, 1985 to July 31, 1987 and for that period
only at the rate of 12% per annum. Interest will be payable only on the
balance amount which remained to be payable to the appellants i.e.
the amount due minus what has been paid from the respective dates.
The appellants are entitled to the costs of this appeal.
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G The amount is directed to be paid within \}tree months from this
date by the respondents. In case, there is any difficulty in calculating
the amount, the parties will be at liberty lei apply to the High Court of
Calcutta. The appellants are entitled to costs of this appeal. The
appeal is thus disposed of.
H Appeal disposed of.
S.L.