GODAVARI SUGAR MILLS LTD.versusTHE STATE OF MAHARASHTRA & ORS.

                        [2011] 2 S.C.R. 180


A                 GODAVARI SUGAR MILLS LTD.
                                  V.
             THE STATE OF MAHARASHTRA & ORS.
                  (Civil Appeal No.819 of 2011)
                         JANUARY 20, 2011
B
          [R.V. R"\VEENDRAN AND A.K. PATNAIK, JJ.]

       Constitution of India, 1950: Article 226 - Scope of -
  Acquisition of land - Writ petition seeking declaration that total
C uompensation including interest for acquisition @ 3% per
  annum was unjust and unreasonable and seeking mandamus
  to pay the compensation with interest at 9% per annum from
  the date of surrender of possession to date of actual payment
  - Maintainability of - Held: Writ petition is of a public law
o character as it related to the public law functions on the part
  of the state government and its officers, and therefore
  maintainable.
        Maharashtra Agricultural Lands (Ceiling on Holdings)
E Act, 1961: s.26- Award of interest@ 3% per annum on the
  compensation - Held: s. 26 contemplates the payment of
  compensation with interest at 3% per annum in annual
  instalments spread over a period of 20 years or at the end of
  20 years - Rate of interest can be only at 3% per annum for
  a period of 20 years from the date of taking possession - s. 26
F is silent about the rate of interest payable, if the compensation
  is not paid within 20 years - For the period beyond 20 years,
  the said provision regarding interest will cease to apply and
  the general equitable principles relating to interest will apply;
  and interest can be awarded at any reasonable rate, ii, the
G discretion of the court - In the instant case, interest @ 6% per
  annum, beyond 20 years found to be appropriate.
        The appellant was the owner of large extent of
    sugarcane land. A Notification was issued on 15.6.1961
H                                180
    GODAVARI SUGAR MILLS LTD. v. STATE OF              181
           MAHARASHTRA & ORS.
under Section 21 of the Maharashtra Agricultural Lands        A
(Ceiling on Holdings) Act, 1961 declaring that the
appellant held surplus agricultural land. The possession
of surplus land was thereafter taken. On 13.11.1978, the
appellant submitted its claim in regard to the said land
with interest @ 9% per annum. On 13.12.2001,                  B
proceedings for determination of compensation were
commenced and award was made on 30.3.2005 with
interest @ 3% per annum. Aggrieved by the interest rate,
the appellant filed writ petition. The High Court dismissed
the writ petition on the ground that since the prayer was     c
made only for payment of money by way of interest, the
writ petition was not entertainable.
    The questions which arose for consideration in the
instant appeal was whether the writ petition -was· for
"recovery of money" and therefore not maintainable; and D
whether the authority was justified in awarding interest
@ 3% per annum only on the compensation payable
under Sect!on 25 of the Act.
    Partly allowing the appeal, the Court                     E
     HELD: 1.1. The wri~ petition was for a declaration that
the Notice dated 30.3.2005 informing the appellant that
total compensation including interest for acquisition of
12127.4 acres of land as Rs.88,77,538/- was unjust and
arbitrary and discriminatory insofar as it offered interest F
only at the rate of 3% per annum on the compensation
amount and for a mandamus to pay the compensation
with interest at 9% per annum from the date of surrender
of possession to date of actual payment. The writ petition
was of a public law character as it related to the public G
law functions on the part of the state government and its
officers, and, therefore, maintainable. [Para 6) [187-G-H;
188-A-B, E]
    Suganmal v. State of MP • AIR 1965 SC 1740; UP            H
    182      SUPREME COURT REPORTS              [2011] 2 S.C.R.

    .
A Pollution Control Board v. Kanoria Industrial Ltd. 2001 (2)
  SCC 549; ABL International Ltd v. Export Cr.edit Guarantee
  Corporation of India Ltd. 2004 (3) SCC 553 .., referred to.
       1.2. Normally a petition under Article 226 of the
  Constitution of India will not be entertained to enforce a
8
  civil liability arising out of a breach of a contract or a tort
  to pay an amount of money due to the claimants. The
  aggrieved party will have to agitate the question in a civil
  suit. But an order for payment of money may be made in
C a writ proceeding, in enforcement of statutory functions
  of the State or its officers. [Para 7(i)] [189-8-C]

        Burmah Construction Co. v. State of Orissa (1962) Supp
    1 SCR 242 - relied on.
D      1.3. If a right has been infringed - whether a
  fundamental right or a statutory right - and the aggrieved
  party comes to the court for enforcement of the right, it
  will not be giving complete relief if the court merely
  declares the existence of such right or the fact that
E existing right has been infringed. The High Court, while
  enforcing fundamental or statutory rights, has the power
  to give consequential relief by ordering payment of
  money realized by the government without the authority
  of law. [Para 7(ii)] [189-C-O]
F       State of Madhya Pradesh v. Bhailal Bhai AIR 1964 SC
    1006 - relied on.
       1.4. A petition for issue of writ of mandamus will not
  normally be entertained for the purpose of merely
  ordering a refund of money, to the return of which the
G petitioner claims a right. The aggrieved party seeking
  refund has to approach the civil court for claiming the
  amount, though the High Courts have the power to pass
  appropriate orders in the exercise of the power conferred
  under Article·226 for payment of money. [Para 7(iii)] [189-
H E-F]                                                  .
    GODAVARI SUGAR MILLS l TD: v. STATE OF            183
           MAHARASHTRA & ORS, .
    Suganmfl/ v. State of Madhya Pradesh AIR 1965 SC         A
1740 -.relied on.
    : 1.5. There is a distinction between cases where a
claimant approaches the High Court seeking the relief of
obtaining only refund and those where refund is sought
                                                             8
as a consequential relief after striking down the order of
assessment etc. While a petition praying for mere issue
of. a writ of mandamus to the state to refund the money
alleged to have been illegally collected is n9t ordinarily
maintainable, if the allegation Is that the assessment was   C
without a jurisdiction and the taxes collected was without
authority of law and, therefore, the respondents had no
authority to .retain the money collected without any
authority of law, the High Court has the power to direct
refund in a writ petition. [Para 7{iv)] [189-G-H; 190-A-B]
                                                             D
   Salonah Tea Co. Ltd. v. Superintendent of Taxes,
Nangaon (1988) 1 SCC 401 - relied on. ·

      1.6. It is one thing to say that the High Court has no .
power under Article 226 of the Constitution to issue a writ E
of mandamus for making refund of the money illegally
collected. It is yet another thing to say that such power
can be exercised sparingly depending on facts and
circumstances of each case. For instance, where the
facts are not in dispute, where the collection of money
was without the authority of law and there was no case F
of undue enrichment, there is no good reason to deny a
relief of refund to the citizens. But even in cases where
collection of cess, levy or tax is held to be
1...:i;onstitutional or invalid, refund is not an automatic
cons,.quence but may be refused on several grounds G
depend ... ., on facts and circumstances of a given case.
[Para 7(v)] [190-C-E)
    U.P. Pollution Control Board v. Kanoria Industrial Ltd
2001 (2) sec 549 - relied on.                                H
    184     SUPREME COURT REPORTS              [2011] 2 S.C.R.

A       1.7. Where the lis has a public law character, or
    involves a question arising out of public law functions on
    the part of the State or its authorities, access to justice
    by way of a public law remedy under Article 226 of the
    Constitution will not be denied. [Para 7(vi)] [190-F]
B
        Sanjana M. Wig v. Hindustan Petroleum Corporation Ltd.
    (2005) a sec 242 "'.' relied on.

         2.1. Section 24 of the Act requires the Collector, after
    possession of surplus land was taken over under Section
C   21(4) of the Act, to cause public notice requiring persons
    interested to lodge their claims. Section 25 of the Act
    provides for determination of compensation and
    apportionment thereof. Section 26 deals with mode of
    payment of amount of compensation. The S"' 1" section
D   contemplates the payment of compensation with interest
    at 3% per annum in annual instalments spread over a
    period of 20 years or at the end of 20 years. It also
    contemplates payment being made either by transferable
    bonds or in cash. Sub-section (3) of Section 26 enabling
E   payment of compensation by cash, in cases where it
    could not be paid by such bonds, does not disturb the
    rate of interest, which is 3% per annum for 20 years,
    provided In sub-section (1) thereof. Whether the payment
    is made by transferable bonds or by cash, the rate of
F   interest can be only at 3% per annum for a period of 20
    years from the date of taking possession. [Para 11] [192-
    G-H; 193-F-H]

       2.2. Section 26 is silent about the rate of interest
  payable, if the compensation is not paid within 20 years.
G Section 26 contemplates payment of the compensation
  within 20 years from the date of taking possession with
  interest at 3% per annum; and for the period beyond 20
  years, the said provision regarding interest will cease to
  apply and the general equitable principles relating to
H
    GODAVARI SUGAR MILLS LTD. v. STATE OF                185
           MAHARASHTRA & ORS.
interest will apply; and interest can be awarded at any         A
reasonable rate, in the discretion of the court. Interest at
the rate of 6% per annum, beyond 20 years would be
appropriate and payable, on equitable principles. [Para
12] [194-A-C]
                                                                B
    Union of India v. Parma/ Singh (2009) 1 SCC 618 -
relied on.

     2.3. The respondents are directed to pay interest on
the compensation amount from the date of taking
possession to date of payment, at the rate of 3% per            C
annum for the first twenty years and thereafter (that is
from the date of expiry of the period of 20 years) to
31.3.2005 (date of payment) at the rate of 6% per annum.
Out of the interest so calculated, the sum of Rs.45,54,881/
84 already paid towards interest on 31.3.2005 shall be          D
deducted and the balance shall be paid by the
respondents to the appellants within three months from
today. [Para 13) [194-D-H; 195-A-B]
                  Case Law R:...~erence:
                                                                E
    AIR 1965 SC 1740      referred to             Para 7
    2001 (2) sec 549      referred to             Para 7
    2004 (3) sec 553      referred to             Para 7
    (1962) Supp 1 SCR 242 relied on               Para 7(i)
                                                                F
    AIR 1964 SC 1006           relied on          Para7(ii)
    AIR 1965 SC 1740           relied on          Para 7(iii)
    (1988) 1 sec 401           relied on          Para 7(iv)
    2001 (2) sec 549           relied on          Para 7(v)
                                                                G
    c2005) s sec 242           relied on          P<>na 7{vi)
    c2oos) 1 sec 618           relied on          Para 10
     CIVIL APPELLATE JURISDICTION : Civil Appeal No. 819
of 2011.                                                        H
    186       SUPREME COURT REPORTS              [2011] 2 S.C.R.


A       From the Judgment & Order dated 04.10.2005 of the High
    Cout of Judicature at Bombay in Writ Petition No. 6375 of 2005.

        P.H. Parekh, Sumit Goel, Anand Jha, Shivani B. (for
    Parekh & Co.) for the Appellant.
B        Madhavi Divan, Sanjay V. Kharde, Asha Gopalan Nair for
    the Respondents.

          The Judgment of the Court was delivered by

c         R.V.RAVEENDRAN, J. 1. Leave granted.
       2. The arpellant was the owner of a large extent of
  sugarcane land. The Special Deputy Collector, Ahmednagar
  issued a notification dated 15.6.1961 under section 21 of the
  Maharashtra Agricultural Lands (Ceiling on Holdings)'"'"'• 1961
D ('Act' for short) declaring that the appellant held 12127.4 acres
  as surplus agricultural land. In pursuance of it, possession of
  7407 acres and 33 Y2 guntas of land at Sakarwadi and 2910
  acres and 4 guntas in Lakshmiwadi was taken over on
  25.5.1968. Possession of another 608 acres and 38 Y2 guntas
E in Sakarwadi and 525 acres 1% gunta in Lakshmiwadi was
  takem on 23.1.1976. Ultimately possession of the remaining 99
  acres 13 guntas at Lakshmiwadi was taken on 6.4.1990.

       3. On 13.11.1978 the appellant submitted its claim in
F regard to the entire lands (except the 99 acres 13 guntas which
  was taken subsequently) under Section 24(1) of the Act. Several
  reminders were sent by the appellant wherein the delay was
  highlighted and demand was made for payment of interest at
  9% per annum. Ultimately on 13.12.2001 proceedings for
  determination ot compensation were commenced by issue of
G notices for enquiry under Section 24(1) and (2) of the Act. The
  second respondent made an award dated 30.3.2005
  determining the amount due as Rs.88,77,538.49 comprising
  Rs.43,22,656.65 as compensation and Rs.45,i.14,881.84 as
  interest thereon at 3% per annum from the date of possession
H
    GOD.A.VARI SUGAR MILLS LTD. v. STATE OF                 187
 . MAHARASHTRA & ORS. [R.V. RAVEENDRAN, J:]
to 31.3.2004. The said payment was·· accepted under protest ·. A
by the appellant on 31.3.2005.
     4. Aggrieved by the interest awarded only a.Uhe rate of · ·
3% per annum, the appellant filed ·a writ petition (WP Nq.6375/.
2005). The appellant sought quashing the .award insofar as it 8
awarded interest at 3% Per anrium and prayed for award of
interest at 9% from the date of delivery of possession till date
of actual payment According to th~ appellant, a sum of
Rs.97,66, 189.16' was due as on the date of writ petition (WP
No,6375/2005) being. the difference iri interest on calculating C
interest at 9% per annum on .the principal amount ins~ead .of
3% awarded. The High Court dismissed the said pe~ition at
admission stage by the impugned order dated 4.10.~005 on
the ground that the prayer bei.ng only for payment of money (by
way of interest), .the writ petition was not entertainable and it
was open to the appellant to pursue any other remedy that may D
be available. The said order is challenged in this appeal by
special leave.
      5. The foilowing two questions arise for our ~onsideration
in this appeal:      ·                ·                            E
      (i)    Whether the writ petition was for "recovery of
             money" and therefore not maintainable?
      (ii)   Whether the seco'nd respondent was justified in
             awarding interest only at the rate of 3% per annum    F
             on the compensation payable under Section 25 of
             the Maharashtra Agricultural Lands (Ceiling on
             Holdings) Act, 1961?
Re: Question No.(i)                                                'G
    6. The writ petition was fora declaration that the Notice
dated 30.3.2005 informing the appellant that total
compensation including interest for acquisition of 12127.4
                                                                   H
     188      SUPREME COURT REPORTS                [2011) 2 S.C.R.

 A acres of land as Rs.88,77,538/- was unjust and arbitrary and .
   discriminatory insofar as.·it offered interest only.at the rate of .
   3% per annum on the compensation amount and for a
   mandamus to pay the compensation with interest at 9% per
   annum from the date of surrende.r of possession to date of
 B actual payment. The appellant contended in th~ writ petition that
   having r~gard to decisions of the Bombay High Court in
   Krishnakumar Vithalrao Jamdar vs. State of Maharashtra
   (WP No.83 of 1986 decided on 29.6.1991) and Shree
   changdeo Sugar Mills vs. State of Maharashtra .(WP No.3805/
 c 2000 decided on 7.7.2000) wherein interest was awarded at
   the rate of 9% per annum in regard to compensation payable
   under the said Act, the second respondent acted illegally in
   awarding interest at a lesser rate of 3% per annum. Therefore,
   the writ petition filed by appellant did not relate to a simple
 0 money claim. It required adjudication in regard to the
   allegations of arbitrariness and discrimination on the part of the
   state government and its officers in the exercise of their statutory
   functions, before the issue of rate of interest· could be examined
   or determined. Primarily, therefore the writ petition was of a
 E public law character as it related to the public law functions on
   the part of the state government and its officers, and therefore
   maintainable,

          7. The High Court relying upon the decision of this court
    in Suganmal v. State of MP-AIR 1965 SC 1740 has held that
  F the prayer in the writ petition being one for payment of interest,
    it should be considered to be a writ petition filed to enforce a
    money claim and therefore, not maintainable. The observations
    in Suganmal related to a claim for refund of tax and have to
    be understood with reference to the nature of claim made
  G therein. The decision in Suganmal has been explained and
    distinguished in several subsequent cases, including in UP
    Pollution Control Board vs. Kanoria Industrial Ltd - 2001 (2)
    SCC 5'49 and ABL International Ltd vs. Export Credit
    Guarantee Corporation of India Ltd. - 2004 (3) SCC 553. The
1 H legal position becomes clear when the decision in Suganmal
     GODAVARI SUGAR MILLS LTQ. v. STATE OF.                      189 .
   ·MAHARASHTRA & ORS. [R.V. RAV£:ENDRAN, J.]
 read with the other decisions of this .Court on the issue, referred     A
 to below:                             .       .                .
                                  .            .   .   .     .     .
      (i) Normally a petition· under Article 226 of the· Constitution
 of India will not be entertained to enforce a civil liability arising
 out of a breach of a contract or a tort to pay an amount of
                                                                       8
 money due to the claimants. The aggrieved party wiil have to ·
 agitate the question in a civil suit. But an order for payment
1 of money may be made in a writ proceeding, in enforcement
 of statutory functions of the State or its officers. [vide Burmah
 Construction Co. v. State of Orissa - (1962) Supp 1 SCR 242].           C
      (ii) If a right has been infringed - whether a fundamental
 right or a statutory right - and the aggrieved party comes to
 the court for enforcement of the right, it will not be giving
 complete relief if the court merely declares the existence of such
 right or the fact that existing right has been infringed. The High      D
 Court, while enforcing fundamental or statutory rights, has the
 power to give consequential relief by ordering payment of
 money reaUzed by the government without the authority of law
 (vide State of Madhya Pradesh v. Bhaila/Bhai -AIR 1964
 SC 1006).                                               .               E

       (iii) A petition for issue of writ of mandamus will not
 normally be entertained for the purpose of merely ordering a
 refund of money, to the return of which the petitioner claims a
 right. The aggrieved party seeking refund has to approach the
 civil court for claiming the amount, though the High Courts             F
 have the power to pass appropriate orders in the exercise of
 the power conferred under Article 226 for payment of money.
 (vide Suganmal v. State of Madhya Pradesh - AIR 1965 SC
 1740).
                                                                         G
      (iv) There is a distinction between cases where a.
 claimant approaches the High Court seeking the relief of
 obtaining only refund and those where refund is sought as a
 consequential relief after striking down the order of
 assessment etc. While a petition praying for mere issue of a            H
    190       SUPREME COURT REPORTS                 [2011] 2 S.C.R.


A writ of mandamus to the state to refund the money alleged to ·
  have been illegally collected is no.t ordinarily: maintainable, if the
  allegation is that the assessment was without a jurisdiction and ·
  the taxes collected was without authority of law and therefore
  the respondents had no authority to retain the money collected
B without any authority of law, the High Court has the power to
  direct refund in a writ petition [vide Salonah Tea Co.Ltd. v.
  Superintendent of Taxes, Nangaon (1988) 1 SCC 401].

         (v) It is one thing to say that the High Court has no power
C under Article 226 of the Constitution to issue a writ of
   mandamus for making refund of the money illegally collected.
   It is yet another thing to say that such power can be exercised
   sparingly depending on facts and circumstances of each case.
   For instance, where the facts are not in dispute, where. the
   collection of money was without the authority of law and there
0 was no case of undue enrichment, there is no good reason to
   deny a relief of refund to the citizens. But even in cases where
   collection of cess, levy or tax is held to be unconstitutional or
   invalid, refund is not an automatic consequence but may be
   refused on several grounds depending on facts and
E ·Circumstances of a given case. (Vide U.P. Pollution Control
   Board vs. Kanoria Industrial Ltd - 2001 (2) SCC 549).
       (vi) Where the lis has a public law character, or involves a
  question arising out of public law functions on the part of the
F State or its authorities, access to justice by way of a public law
  remedy under Article 226 of the Constitution will not be denied.
  [Vide Sanjana M. Wig v. Hindustan Petroleum Corporation
  Ltd. c2oos) 8 sec 242.J
      We are therefore of the view that reliance upon Suganmal
G was misplaced, to hold that the writ petition filed by the
  appellant was not maintainable.
    Re : Question (ii)

H         8. The appellant contended that the compensation amount
   GODAVARI SUGAR MILLS LTD. v. STATE OF·                     191
  MAHARASHTRA & ORS. [R.V. RAVEENDRAN, J.]
became due when possession of the lands was taken and as A
it was unjustly wittiheld, the appellant was entitled to interest on
the compensation amount at a reasonable rate of 9% per
annum; upto the date of payment. In support of their claim, they
relied upon two decisions of the Bombay High Court in Krishna
Kumar and Shree Changdeo Sugar Mills where interest was B
awarded at 9% per annum in similar matters. The respondents
on the other hand submitted that there was sufficient indication
in section 26 of the Act to indicate that the rate of interest should
be only 3% per annum, and therefore interest can be awarded
only at 3% per annum. The respondents submitted that the two         c
decisions of the Bombay High Court were distinguishable as
they related to cases where compensation had not been paid
at all whereas in this case compensation with interest at 3%
per annum had already been paid on 31.3.2005 and therefore
the said decisions would not apply. It was pointed out that in
                                                                      0
Krishnakumar possession of surplus land were taken in the
year 1973 but till the date of disposal of the writ petition, no
compensation had been paid; in Shree Changdeo Sugar Mills
possession of surplus land had been taken by the State
Government and though compensation payable was
determined on 29.12.1966, 23.2.1967 and 13.12.1968, it was E
not paid; and that in those circumstances, the High Court had
directed payment of compensation with interest at the rate of
9% per annum from the date of taking possession of lands till
date of actual payment. Alternatively it was submitted that the
said decisions not having considered section 26 of the Act, they . F
were not rightly decided.

     9. There is considerable force in the submissions Of Mrs.
Madhavi Divan, the learned counsel for the respondents that
the decisions of Bombay High Court In Krishna kumar and G
Changdeo are not sound, as they completely ignore section 26 ·
of the Act, while awarding interest at 9% per annum on the · ·
belated payment of compensation.

    ·10. The question as to when and what circumstances,
                                                                     H
    192      SUPREME COURT REPORTS                 [2011) 2 S.C.R.

A interest could be awarded on belated payment of
  compensation, was considered by this Court in Union of India
  vs. Parma/ Singh - (2009) 1 SCC 618. This Court first referred
  to the general principle and then the exceptions thereto, as
  under:
B
       "When a property is acquired, and law provides for
       payment of compensation to be determined in the manner
       specified, ordinarily compensation shall have to be paid
       at the time of taking possession in pursuance of
       acquisition. By applying equitable principles, the courts
c      have always awarded interest on the delayed payment of
       compensation in regard to acquisition of any property ...... .
       The said general principle will not apply in two
       circumstances. One is where a statute specifies or
       regulates the interest. In that event, interest will be payable
D      only in terms of the provisions of the statute. The second
       is where a statute or contract dealing with the acquisition
       specifically bars or prohibits payment of interest on the
       compensation amount. In that event, interest will not be
       awarded. Where the statute is silent about interest, and
E      there is no express bar about payment of interest, any
       delay in paying compensation or enhanced compensation
       for acquisition would require award of interest at
       reasonable rates on equitable grounds.•
F This Court, dealing with an acquisition under the Defence of
  India Act, 1962 (which did not contain any provision either
  requiring or prohibiting payment of interest), upheld the award
  of interest at 6% per annum.
       11. Section 24 of the Act requires the Collector, after
G possession of surplus land was taken over under Section 21 (4)
  of the Act, to cause public notice requiring persons interested
  to lodge their claims. Section 25 of the Act provides for
  determination of compensation and apportionment thereof.
  Section 26 deals with mode of payment of amount of
H compensation and the same is extracted below :
   GODAVARI SUGAR MILLS LTD. v. STATE OF                    193
  MAHARASHTRA & ORS. [R.V. RAVEENDRAN, J.]
    "26. (1) The amount of compensati9n may, subject to the         A
    provisions of sub-section (3), be payable in transferable
    bonds carrying interest at three per cent per annum.
           (2) The bonds shall be -

           (a) ofthefollowing denominations, namely:- Rs.SO;        8
           Rs.1 OO;Rs.200; Rs.500; Rs. 1,000; Rs. 5,000 and
           Rs. 10,000; and

           (b) of two classes - one being repayable during a
           period of twenty yearsfrom the date of issue by          c
           equat~d annual instalment of principle and interest,
           and the other being redeemable at par at the end
           of twenty years from the date of issue. It shall be at
           the option of the person receiving compensation to
           choose payment in one qr other class of bonds, or        o
           partly in one class and partly in another.
          . (3) Where the amount of compensation or any part ·
           thereof, cannotbe paid in the aforesaid
           denomination, it may be paid in cash." ·
                                                                    E
                                          (emphasis supplied)

The said section contemplates the payment of compensation
with interest at 3% per annum in annual intalments spread over
a period of 20 years or at the end of 20 years. It also             F
contemplates payment being made either by transferable
bonds or in cash. Sub-section (3) of Section 26 enabling
payment of compensation by cash, in cases where it could not
be paid by such bonds, does not disturb the rate of interest,
which is 3% per an.num for 20 years, provided in sub-section        G
(1) thereof. We are therefore of the view that whether the
payment is made by transferable bonds or by cash, the rate of
interest can be only at 3% per annum for a period of 20 years
from the date of taking possession.
                                                                    H
        194        SUPREME COURT REPORTS          {2011] 2 S.C.R.


A       12. The next question that requires consideration is about
  the rate of interest if the payment is not made even after·20
  years, and whether it should be only at the rate of 3% per annum,
  even after 20 years. Section 26 is silent about the rate of
  interest payable, if the compensation is not paid within 20
B years. We are therefore of the view that section 26
  contemplates payment of the compensation within 20 years
  from the date of taking possession with interest at 3% per
  annum; and for the period beyond 20 years, .the said provision
  regarding interest will cease to apply and the general equitable
c principles relating to interest will apply; and interest can be
   awarded at any reasonable rate, in the discretion of the. court.
   Interest at the rate of 6% per annum, beyond 20 years would
  be appropriate and payable, on equitable principles.
        13. We therefore allow this appeal in part and direct the
D respondents to pay interest on the compensation amount from
  the date of taking possession to date of payment, at the rate
  of 3% per annum for the first twenty years and thereafter (that
  is from the date of expiry of the period of 20 years) to 31.3.2005
  (date of payment) at the rate of 6% per annum.
E
        Date of        Principal         Period       Rate of
        taking         Amount                         Interest
        possession

F       20.5.1968      Rs.41,31,821.59   20.5.1968 to 3% per annum
                                         19.5.1988
                                         20.5.1988to
                                         31.3.2005    6% per annum
        23.1.1996      Rs. 1,77,478.61   23.1.1976 to 3% per annum
    G                                    22.1.1996
I
'                                        23.1.1996 to
                                         ~1.3.2005    6% per annum
        6.4.1990      .Rs. 13,365.45     6.4.1990 to
                                         31.3:2005    3%per annum
H
   GODAVARI SUGAR MILLS LTD. v.,STATE OF                195
  MAHARASHTRA & .ORS. [R.V. RAVEENDRAN, J.]

Out of the interest so calculated, the sum ofRs.45,54,881/84   A
already paid towards interest on 31.3.2005 shall be deducted
and the balance shall be paid by the respondents to the
appellants within three months from today.

D.G.                                 Appeal partly allowed.    B