Holding

The right to compensation vests at the date of acquisition, and the enhanced interest rate of 6% per annum under the Haryana Act applies from the date of possession to the date of payment for the entire compensation, including the amount awarded by the High Court.

Summary

The appellants' land was acquired under the Land Acquisition Act, 1894, and initial compensation of Rs.27,992.84 was fixed by the Land Acquisition Officer. Subsequent enhancements by the District Judge (Rs.11,307.10) and the High Court (Rs.17,919.30) raised the issue of the rate of interest payable, after the Haryana Act No. 8 of 1967 increased the statutory interest from 4% to 6% per annum. The High Court applied 4% on the amount it enhanced and 6% on the earlier amounts, reasoning that the higher rate applied only from the date of its judgment. The Supreme Court held that the right to compensation arises at the date of acquisition, so the enhanced 6% rate must apply from the date possession was taken for the entire compensation, including the High Court's enhancement. Consequently, the appeal was allowed, the High Court order was modified, and the respondents were ordered to pay costs.

Issues considered

The amendment to the Land Acquisition Act (Haryana Act No. 8 of 1967) increasing interest to 6% per annum is applicable retrospectively to compensation proceedings initiated before its commencement.
The rate of interest on the compensation amount enhanced by the High Court should be 6% per annum from the date of acquisition (possession) rather than from the date of the High Court's judgment.

Legislation cited

Haryana Act No. 8 of 1967
Land Acquisition Act, 1894s. 28, s. 34, s. 4

Subjects

land acquisitioncompensationinterest rateretrospective amendmentHaryana ActSupreme Courtcivil appeal

Judgment

682

A

'
JOG!NDFR SINGH AND ORS.
v.
B
STATE OF PUNJAB AND AN'R.

[R.S. PATHAK AND M.P. THAKKAR, JJ.J

c August 29, 1984

Land Acquisition Act, 1894-Ss. 28 and 34-Amended by Haryana Art No.8
of 1967 enhancing rate of interest payable on compensation-Compensation
fixed by Land Acquisition Officer enhanced by Court-Enhanced rate of interest
to be paid on amount of enhanced co1npensation from date of possession of /and
and not from date when co1r1pensation was enhanced by Court.
D •
The appellants were awarded certain amount of compensation by the Land
Acquisition Officer which was later enhanced by the District Judge and the
High Court. On being pointed out that ss. 28 and 34 of the Land Acquisition
Act had been amended by the Haryana Act No. 8 of 1967 which enhanced the
rate of interest payable on the amount of compensation from 4 to 6 per cent
per annum, the High Court awarded interest at the rate of 4 per cent per •
annum on the amount of compensation awarded by the Land Acquisition
E Officer and enhanced by the District Judge from the date possession was taken
and 6 per cent per annum on the amount of compensation enhanced by it from
the date of its judgment. In this appeal Hie appellants challenged the rate of
interest as determined by the High Court. '
Allowiog the appeal,

F HELD : The right to compensation arises when the land is acquired, and
the judgment of the High Court merely represents a stage in the process of
•
quantifying the compensation. The right to compensation and the quantifica.
tion thereof are two distinct concepts. Although the process of quantification
may pass though several stages, the process of quantification is merely one of
computing the value of the land, on the principles enacted in the Land
Acquisition Act. All along, however, the right to the compensation so
G quantified refers back to the date of acquisition. The additional amount of
compensation awarded by the District Judge or by the F.[igh Court represents
the difference between the true value of the land on the one hand and the
actual amount awarded on the other which fell short of the true value. The •
owner of the land is entitled to be paid the true value of the land on the date
of taking over of possession. The fact that the true value is determined later
does not mean that the right to the aJDount comes into existence at a later

"
JOG!NDER v. PUNJAB (Pathak, J.) 683
date. And if, as the High Court has held, interest at 6 per cent per annum
from the date possession was taken in the case of co1npensation deter~ A
mined by the learned District Judge, there is no reason why the san1e rate
should not be applied from the date possession was taken in the case of the
enhancement effected by the High Court. [684H;685 A-DJ

B
C1v1L APPEAL Jua1so1cnoN : Civil AppealNo. 2293 of 1978

From the Order dated 21.4.77 of the Punjab and Haryana
Higb Court in Civil Misc. No. 508-C-l/77.
G
Ram/al for the Appellants.

The Order of the Court was delivered by

PATHAK, J. This appeal by special leave is directed against the
order dated April 21, 1977 of the High Court of Punjab and u
• Haryana determining the interest payable on the compensation
awarded to the appellants for the acquisition of their land by the
State Government.

A notification under Section 4 of th" land Acquisition Act was
• made on August 31, 1961 in respect of land belonging to the appel-
lants and in the proceedings which followed the land Acquisition.
Officer determined a sum of Rs. 27,992.84 as compensation payable
therefor. Possession of the land was taken thereafter. On reference
made at the instance of the appellants, the learned District Judge
held by his judgment dated November 30, 1963 that the appellants F
were entitled to a further sum of Rs. 11,307.10 as compensation.
Dissatisfied with that determination, the appellants proceeded in
appeal to the High Court, and on March 8, 1977 the High Court
• held that the appellants were entitled to a furth~r amount of
Rs. 17,919.30 as compensation. The High Court also held that the
appellants were entitled to interest at the rate of 4 per cent per G
annum on the enhanced amount of compensation awarded by it,
• the interest to run from the date possession of the land was taken .
The appellants then applied to the High Court for a review of its
order in so far as it had determined the rate of interest. The appel-
lants pointed out that s. 28 and s. 34 of the Land Acquisition Act,
1894 had been amended by the Haryana Act No. 8 of 1967 in
consequence of which the rate of interest payable on the compensa~ H.
684 SUPl\EME COuRT REPOl\TS tt985J 1 S.C.R.

A tion was awarded for acquisition of land had been enhanced from 4
per cent to 6 per cent per annum from the date possession was
taken tcthe date of payment. The claim was resisted by the State,
which contended that the Haryana Act No. 8 of 1967 had been
brought into force with effect from July I. 1967 and proceedings for
the determination of compensation initiated before the enforcement
B of that Act were liable to be governed by the original rate of interest
at 4 per cent per annum, and no advantage could be taken of the
higher rate enacted later. By its Order dated April 21, \977 the
High Court ruled in favour of the appellants and held that the
higher rate of interest should be available to the appellants even
though the proceedings for determination of compensation were
c already pencling before t':le amending Act was brought into force.
A curious inconsistency, however, entered thereafter in the judgment
of the High Court. On the amount determined as compensation by
the Land Acquisition Officer and the learned District Judge the
High Court held that the higher rate of interest at 6 per cent per
D annum was attracted, and interest at that rate ruled from the date •
possession was taken to the date of payment. But on the amount
of Rs. 17,919.30 representing the enhancement by it the High
Court applied the rate of 4 per cent per annum from the date
possession was taken and 6 per cent per annum from the date of its
judgment awarding that amount. The High Court seems to have
E proceeded on the view that the right to this amount of Rs. 17,919.30
as compensation arose to the appellants only from date of its
judgment. ·
,_
We are of op1mon that the High Court has erred. It is '
F apparent from the impugned order of the High Court that it has
found the appellants entitled to interest at the rate of 4 per cent per
annum on the sum of Rs. 17,919.30 from the date possession was
taken. In so far that the High Court recognises the appellants'
claim to interest from that date the High Court is right, because
the right to compensation arises when the land is acquired, and the
G judgment of the High Court merely represents a stage in the process
of quantifying the compensation. The right to compensation and •
the quantification thereof are two distinct concepts. The right to
compensation arises when the land vests in the State while its
quantification may be concluded much later. Although the process
of quantification may pass through several stages, from the Land
•
H Acquisition Officer to the District Judge and thereafter to the High
loGiNDER v. PUNJAB (Pathak, J.) 685
Court, the process of quantification is merely one of computing the
A
value of the land, on the principles enacted in the Land Acquisition
Act. All along, however, the right to the compensation so quantifi-
• ed refers back to the date of acquisition. The additional amount
of compensation awarded by the District Judge or by the High
· Court represents the difference between the true value or' the land
B
on the one hand and the actual amount awarded on the other which
fell short of the true value. The owner of the land is entitled to be
paid the true value of the land on the date of taking over of
possession. Since, however, the true value is usually determined
only after it is computed through a multi-tiered process passing c
through different levels of a hierarchical judicial structure by the
very nature of things it take sometime before the true value canbe
finally determined. The fact that it is determined later does not
mean that the right to the amount comes into existence at a later/
date. And if, as the High Court has held, interest at 6 per cen_t D
per annum rules from the date prossession was taken in the case of
• compensation determined by the learned District Judge, there is no
reason why the same rate should not be applied from the date
possession was taken in the case of the enhancement effected by the
High Court. E

We hold that the appellants are entitled to interest at 6 per
cent per annum on the amount of Rs. 17,919.30 for the entire period
from the date possession of the land was taken to the date of
payment. F

The appeal is allowed, and the order dated April 21, 1977
passed by the High Court is modified accordingly. The respondents
will pay the costs of the appellants .

.•

H.S.K. Appeal allowed.

•