KERALA STATE HOUSING BOARD & ORS.versusKERALA STATE HOUSING BOARD, NELLIKODE HOUSING COLONY ALLOTTEES ASSN. & ORS.

                        [2011] 11 S.C.R. 390


A          KERALA STATE HOUSING BOARD & ORS.
                                  v.
        KERALA STATE HOUSING BOARD, NELLIKODE
        HOUSING COLONY ALLOTIEES ASSN. & ORS.
               (Civil Appeal No.7835 of 2011)
B                      SEPTEMBER 14, 2011
         [R.V. RAVEENDRAN AND A.K. PATNAIK, JJ.]

        Land Acquisition:
c
        Interest on differential amount betweef/ tentative price and
  final price - Land acquired - Reference for enhancement of
  compensation pending - Sale deed in favour of allottees with
  stipulation to pay differential between tentative price and final
D price and to pay interest @ 15% on differential amount within
  30 days of demand notice - Enhanced compensation
  deposited in 1997 - Demand notice served in 1999 - Claim
  for 15% interest - HELD: Interest till the date of deposit in
  1997 would be payable@ 15%, and thereafter 8% - It is not
  disputed that notices of demand were served on the allottees
E not immediately after finalization of the compensation by the
  court and payment or deposit of the enhanced amount by the
  Board in the year 1997, but after a period of more than a year
  some time in 1999 - The respondents will be liable to pay
  interest to the appellant-Board on the differential amount
F between the tentative price and the final price at the rate of
  8% per annum from the date of deposit or payment of the
  enhanced compensation by the Board in 1997 till payment
  of the differential amounts by the allottees.

G        Chandigarh Housing Board, Chandigarh v. K.K. Kalsi &
    Ors. (2003) 12 SCC 734 - relied on

                         Case Law Reference:
        (2003) 12 sec 734         relied on              para 6
H                                390
 KERALA STATE HOUSING BOARD v. KERALA STATE               391
         HOUSING BOARD, NHCAASSN.

    CIVIL APPELLATE JURISDICTION : Civil Appeal No.              A
7835 of 2011.               ·

    From the Judgment & Order dated 28.02.2006 of High
Court of Kerala at Ernakulam in W.A. No. 1760 of 2004.
                              WITH                               B

C.A. Nos. 7836 & 7837 of 2011.

    M.T. Greorge for the Appellants.

    P. Vishwanatha Shetty, A. Raghunath, K. Rajeev for the       C
Respondents.

    The Judgment of the Court was delivered by

    A. K. PATNAIK, J. 1. Leave granted.
                                                                 D
     2. Civil Appeal arising out of S.L.P.(C) No.10580 of 2006
is against the judgment dated 28.02.2006 in Writ Appeal
No.1760 of 2004 of the Div_ision Bench of the Kerala High
Court. Civil Appeal arising out of S.L.P.(C) No.21478 of 2008
is against the order dated 13.06.2008 in Writ Appeal No.1968     E
of 2007 disposing of the Writ Appeal in terms of the judgment
dated 28.02.2006 in Writ Appeal No.1760 of 2004. Civil
Appeal arising out of S.L.P.(C) No.21817 of 2008 is against
the order 13.06.2008 in Writ Appeal No.1940 of 2008 disposing
of the Writ Appeal in terms of the judgment dated 28.02.2006     F
in Writ Appeal No.1760 of 2004. These three appeals are
being disposed of by this common order as common questions
of fact and law arise in the appeals.

     3. The facts very briefly are that in the years 1984 and
1985 land was acquired for allotment of plots under the          G
Chevayur Housing Scheme and the Nellikode Housing Scheme
respectively undertaken by the Kerala State Housing Board (for
short 'the Board'). The landowners did not accept the
compensation offered for the acquired land and sought a
reference to the Civil Court under Section 18 of the Land        H
    392      SUPREME COURT REPORTS                  [2011] 11 S.C.R.


A Acquisition Act, 1894. While the dispute in regard to quantum
  of compensation was pending, the Board entered into
  agreements of sale with various allottees of the plots of land
  during the years 1988-1990 and made a provision therein that
  the Board shall be entitled to re-fix the final price of the property
B agreed to be sold to the allottees taking into account inter alia
  the enhanced compensation awarded by the Courts and
  Tribunals and that the decision of the Board in fixing the revised
  price of the property shall be conclusive and final. It was also
  expressly agreed in the agreements of sale that after finalization
c of the price of the property agreed to be sold by the Board, the
  allottee shall pay to the Board together with interest at the rate
  of 15% per annum, the difference between the tentative price
  fixed and the price finally fixed for the property by the Board
  within thirty days of the date of a registered notice demanding
  the payment thereof or in such quarterly installments over a
0
  period not exceeding two years to be determined by the Board.
  After the reference cases were finalized and disposed of in the
  year 1997, the Board deposited the enhanced compensation
  with interest, but did not promptly serve the demand notices on
  the allottees for payment of the difference between the tentative
E price and the final price with interest and it was only in the year
  1999 that the Board served the notices on the allottees to pay
  the said difference with interest at the rate of 15% per annum.

       4. The allottees then filed Writ Petitions before the Kerala
F High Court and the learned Single Judge passed orders
  refusing to interfere with the claim of interest on the enhanced
  amounts of compensation on the differential amount till 1997
  when the references were finally disposed of by the Court and
  the Board deposited the enhanced compensation with interest.
G The learned Single Judge, however, found that individual
  account statements giving the relevant details and calculations
  of the amounts demanded had not been served on the allottees
  and held that this was on account of the lethargy of the officials
  of the Board and, therefore, the Board was not entitled to any
H interest on the differential amount from the allottees for the
  KERALA STATE HOUSING BOARD v. KERALA STATE 393
   HOUSING BOARD, NHCAASSN. [A.K. PATNAIK, J.]

period from 1997 till the date of service of individual account A
statements on the allottees.

     5. Aggrieved by the orders of the learned Single Judge,
the Board filed Writ Appeals before the Division Bench of the
Kerala High Court and by the impugned judgments and orders B
the Division Bench dismissed the appeals. In the impugned
judgments and orders, the Division Bench of the High Court
agreed with the view taken by the learned Single Judge that
the Board was not entitled to claim any interest and that too at
the rate of 15% per annum for the period from the date of
deposit of enhanced compensation in 1997 till the date of C
service of the individual account statements saying that the
Board cannot punish the allottees for its own lethargies.
Aggrieved, the Board is in appeal before us.

       6. Learned counsel for the appellant-Board submitted that        D.
 there was a clause in the agreements of sale executed between
 the Board and the allottees that after finalization of the price of
 the property agreed to be sold by the Board, the allottee shall
 pay to the Board together with interest at the rate of 15% per
 annum, the difference between the tentative price fixed and the        E
 price finally fixed for the property by the Board within thirty days
 of the date of a registered notice demanding the payment
 thereof or in such quarterly installments over a period not
 exceeding two years to be determined by the Board. He
 submitted that it was only in the year 1998 that the price was         F
 finalized and the demand notices were served in the year 1999
  on the allottees to pay the difference between the tentative price
  and the final price together with interest at the rate of 15% per
 annum as per the aforesaid clause in the agreements. He further
 submitted that till the allottees paid the difference between the
 tentative price and the final price, they retained the differential    G
  amount with them and made use thereof while the appellant-
  Board was deprived of the use of the money. He relied on the
·decision of this Court in Chandigarh Housing Board,
  Chandigarh v. K.K. Kalsi & Ors. [(2003) 12 SCC 734] wherein
                                                                        H
    394      SUPREME COURT REPORTS                   [2011] 11 S.C.R.


A   it has been held that in such cases where the allottees have
    retained the money with them and made use thereof while the
    Board has been deprived of the use of the money, it will be
    equitable for the allottees to pay a reasonable interest to the
    Board on such money.
B
          7. Learned counsel appearing for the respondents, on the
    other hand, supported the orders of the learned Single Judge
    and the impugned judgment and orders of the Division Bench
    of the Kerala High Court contending that there was no
    justification whatsoever for the appellant-Board to claim any
C   interest on the differential amount between the tentative price
    and the final price from 1997 till the date of service of individual
    account statements on the allottees.

        8. We have considered the submissions of the learned
o counsel for the parties and we find that the reason why a clause
  in the agreements of sale executed by the Board and the
  allottees for payment of interest at the rate of 15% per annum
  on the differential amount between the tentative price and the
  final price of the land allotted to the allottees was inserted was
E that in the proviso to Section 34 of the Land Acquisition Act,
  1894 it is provided that if the compensation for the acquired
  land or any part thereof is not paid or deposited within a period
  of one year from the date on which possession of the acquired
  land is taken, interest at the rate of fifteen per centum per
F annum shall be payable 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. Since references under Section 18 of the Land
  Acquisition Act, 1894 were pending in the Civil Court when the
  agreements of sale were executed by the Board and the
G allottees, a stipulation had to be made in the agreements of
  sale that as and when the Court finally determines the
  compensation and the Board becomes liable to pay enhanced
  compensation, the Board will have to deposit not only the
  enhanced compensation but also interest at the rate of 15%
H
 KERALA STATE HOUSING BOARD v. KERALA STATE                   395
  HOUSING BOARD, NHCAASSN. [A.K. PATNAIK, J.]

per annum on such enhanced compensation. If this was the             A
purpose of the clause in the agreements of sale between the
Board and the allottees, once the compensation was finalized
by the Court and the enhanced compensation was paid or
deposited in the year 1997, the Board was not liable for any
interest under the proviso to Section 34 of the Land Acquisition     B
Act, 1894 from the date of such payment or deposit. Since the
purpose of stipulating the rate of interest of 15% per annum was
to take care of the liability on the enhanced compensation
provided in the Land Acquisition Act, 1894 and not to enrich
the Board by recovery of high rate of interest from the allottees,   C
we agree with the view taken by the High Court that the Board
was not entitled to interest at the rate of 15% per annum on
the difference between the tentative price and the final price
after the finalization of the compensation and payment· or
deposit of the enhanced compensation by the Board in the year        D
1997.

     9. We, however, do not think that the High Court was right
in taking a view that the appellant-Board was not entitled to any
interest for the period from the date of payment or deposit of E
the enhanced compensation in 1997 till the date of service of
individual account statements on the allottees. The relevant
clause in the agreements of sale requires the Board to serve
only a notice of demand on the allottee and such no.tice of
demand must obviously indicate the tentative price and the final
price as determined by the Board and the differential amount F
between the tentative price and the final price, which the allottee
was required to pay along with interest. The clause did not
stipulate that the individual account statements giving the details
and calculations as enumerated in the orders of the learned
Single Judge were also required to be served on the allottees G
by the Board. It is not disputed that notices of demand were
served on the allottees not immediately after finalization of the
compensation by the Court and payment or deposit of the
enhanced a·mount by the Board in the year 1997, but after a
period of more than an year some time in 1999. During the H
   396      SUPREME COURT REPORTS                 [2011] 11 S.C.R.


A period the allottees did not make payment of the differential
  amount between the tentative price and the final price, they
  retained the differential amount in their hands and used the
  same and the Board lost the opportunity to utilize this for its
  activities, the Board would be entitled to interest on tlie
B differential amount at a reasonable rate as has been held by
  this Court in Chandigarh Housing Board, Chandigarh v. K.K.
  Kalsi & Ors. (supra). In our considered opinion, interest at the
  rate of 8% per annum on such differential amount between the
  tentative price and the final price would be reasonable, which
c the allottees must pay to the Board.
        10. We accordingly set aside the order passed by the
  learned Single Judge and the impugned judgment and orders
  of the Division Bench of the High Court and dispose of the Writ
  Petitions of the respondents with the direction that the
D respondents will· be liable to pay interest to the appellant-Board
  on the differential amount between the tentative price and the
  final price at the rate of 8% per annum from the date of deposit
  or payment of the enhanced compensation by the Board in
  1997 till payment of the differential amounts by the allottees.
E The appeals are allowed to the extent indicated above with no
  order as to costs.

   R.P.                                           Appeals allowed