Holding

The appellants are entitled to additional market value and interest at 15% per annum from 16 March 1979 to 22 December 1991, and Section 25 does not have retrospective effect.

Summary

The appellants, owners of 4 acres 10 guntas of land, were dispossessed after a notification dated 16‑03‑1979 and possession taken on 18‑05‑1979. The first award covered only 1 acre 5 guntas, and the remaining 3 acres 5 guntas were later found to belong to the appellants. A second notification was issued on 23‑12‑1991 and a new award was made, but it omitted additional market value (AMV). The reference court awarded compensation, AMV and interest from the date of possession (1979). The High Court limited AMV and interest to the date of the second notification (1991). The Supreme Court examined whether AMV and interest should run from 1979 and whether Section 25 of the Land Acquisition Act, 1894, applied retrospectively. It held that the first notification lost its force, the possession taken under it was illegal, and the appellants were entitled to AMV and interest from 16‑03‑1979, with interest at 15% per annum up to 22‑12‑1991. The Court also held that Section 25 is substantive, not retrospective, and therefore does not affect the award. The appeal was partly allowed, granting the additional interest.

Issues considered

Whether the appellants are entitled to additional market value and interest from the date of taking possession (1979) despite a later valid notification in 1991.
Whether Section 25 of the Land Acquisition Act, 1894, applies retrospectively to the award made before its amendment.
Whether the possession taken under the first notification was lawful.

Legislation cited

Land Acquisition Act, 1894s. 11, s. 16, s. 17, s. 23, s. 25, s. 28, s. 30, s. 34, s. 4, s. 48, s. 9
Land Acquisition (Amendment) Act, 1984

Subjects

Land acquisitionAdditional market valueInterest on compensationSection 25Notification validityPossessionCompensation awardRetrospective legislation

Judgment

A MADISHETTI BALA RAMUL (D) BY LRS.
v.
THE LAND ACQUISITION OFFICER

MAY 17,2007

B [S.B. SINHA AND MARKANDEY KATIU, JJ.]

Land Acquisition Act, 1894:

ss. 23 and 34-Compensatio"n-Additional market value-Grant of-
C Notification published on l 6-3-1979 for_ acquisition of land-Possession
taken on 18-5-1979-However, notification not given effect-Another
notification published on 23-12-1991-Award by Land Acquisition Officer-
All statutory benefits granted except additional market value-Reference
Court awarded compensation, also granted additional market value and
D interest w.ej 18-5-1979-However, High Court granted additional market
value and interest w.ej 23-12-1991-Held: High Court may be correct in its ·
interpretation, but same would not mean that Appellants-land owners would
not get anything for being out of possession from I 979 to I 99 I-In interest
ofjustice, Appellants granted additional interest @ l 5% p.a. on the amount
awarded for the period 16-3-1979 to 22-12-1991.
E
s.25-Applicability of-Discussed.

Notification was published under Section 4 of the Land Acquisition Act,
1894 on 16-03-1979 for acquisition of 4 acres 10 guntas of land. Possession
of the said land was taken over on 18-05-1979. Respondent-Land Acquisition
F Officer passed award, which however, was confined to 1 acre? guntas only as
the balance 3 acres 5 guntas of land was held to be belonging to the State
Government. However, later on, it was found by the Respondent that the entire
4 acres 10 guntas of land belonged to the Appellants ..

G In respect of the said 3 acres 5 guntas of land, another notification was
issued on 23-12-1991 for which another award was passed by the Land
Acquisition Officer with all the statutory benefits except additional market
value. Appellants approached the Reference Court in terms of Section 18 of
the Act which vide its judgment dated 2-1-1999 awarded compensation and
also granted additional market value and interest from the date of taking
H 222
MADISHEITI BALA RAMUL (D) BY LRS. ,._ LAND ACQUISmON OFFICER 223
possession till the date of award. High Court however held that Appellants A
__,,,, are not entitled to additional market value and interest from the date of taking
of the possession till the date of the award.

In appeal to this Court it is contended that the Appellants were entitled
to grant of additional market value with effect from the date of taking
possession i.e. 18-5-1979. A further question arose as to whether Section 25 B
of the Act had any application in the facts and circumstances of the present
case.
... Partly allowing the appeal, the Court

HELD: 1.1. Two notifications were issued separately. The second c
notification was issued as the first notification did not survive. Valuation of
the market rate for the acquired land, thus, was required to be determined on
the basis of the notification dated 23.12.1991. The earlier notification dated
16.03.1979 lost its force. As the said market value has been determined having
regard to the notification issued on 23.12.1991, possession taken over by
D
Respondent in respect of 3 acres 5 guntas of land, pursuant to the said
notification dated 16.03.1979 was in the eye of law, therefore, illegal. The
".... High Court evidently directed grant of additional market value@ 12% per
annum on the enhanced market value from the date of the publication of the
notification dated 23.12.1991 as also interest thereupon from the said date
instead and place of the date of taking possession i.e. 18.05.1979. This Court E
generally agrees therewith. The findings of the High Court cannot be faulted
in strict sense of the law. [Paras 9 and 10) (227-B-E]

1.2. However, Appellants were dispossessed pursuant to a notification
which for one reason or other could not be given effect to. The Land
Acquisition Officer took possession of the land on the basis ofa notification F'
-/._
which did not survive. Respo~dent could not have continued to hold possession
of land despite abatement of the proceeding under the Act. The State itself
realized that its stand in regard to the ownership of 3 acres and 5 guntas of
land was not correct. It, therefore, had to issue another notification having
regard to the provisions contained in the Land Acquisition (Amendment) Act,
G
1984. Whereas the High Court may be correct in its interpretation, but the
same would not mean that Appellants would not get anything for being out of
possession from 1979 to 1991. [Paras 14 and 15) (230-D-G)

--1- R.L. Jain (D) By Lrs. v. DDA and Ors., (2004) 4 SCC 79 and Lila Ghosh
(Smt.) (Dead) Through L.R. Tapas Chandra Roy etc. v. State of West Bengal HI
-I
./
224 SUPREME COURT REPORTS [2007) 7 S.C.R.

A etc., (2004) 9 sec 337, referred to.
2.1. Section 25 of the Act merely prohibits that total amount of the award
granted by the Collector cannot be reduced. Section 25 which has undergone
an amendment in the year 1984, merely lays down that the amount of
compensation awarded by the reference court shall not be less than the amount
B awarded by the Collector, and in no circumstances the amount awarded by the
Collector can be reduced. What is an award is a total sum and not the
ingredients contained therein. An award made by the Collector is in the form
I.._
of an offer. It is in that sense only that the amount contained therein cannot ~
be reduced. (Para 171f231-B)
c 2.2. In the case at hand, it is not the case of the appellants that the total
amount of compensation stands reduced. If it had not been, one fails to
understand as to how Section 25 will have any application. Furthermore,
Section 25 being a substantive provision will have no retrospective effect. The
original award was passed on 08.02.1981, Section 25, as it stands now, may,
D therefore, not have any application in the instant case. [Para 18) [231-C-D)

Land Acquisition Officer-cum- DSWO, A.P. v. B. V. Reddy and Sons, [2002)
3 sec 463, referred to.
..
x

· 3. In the peculiar facts and circumstances of the case, although the
E proper course would be to remand the matter back to the Collector to
determine to amount of compensation to which the Appellants would be entitled
for being out of possession since 1979, the interest of justice would be met if
this appeal is disposed of with a direction that additional interest@ 15% per
annum on the amount awarded in terms of award dated 02.01.1999 passed by
the Reference Court for the period 16.03.1979 till 22.12.1991, should be
F granted. (Para 20) [231-G-H; 232-A]
\--
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2693 of2007.

From the Final Judgment and Order dated 16.11.2004 & 09.02.2005. of
the High Court of Judicature of Andhra Pradesh at Hyderabad in First Appeal
G No. 694of1999.

K. Amreshwari, Sr. Adv., P. Venkiat Reddy and Anil Kumar Tandale for ~
the Appellants.
\-
Rahul Shukla, Manoj Saxena and Rajnish Kr. Singh (for T.V. George) for
H ""'
~
MADISHEm BALA RAMUL (D) BY LRS. 1•. LAND ACQUISIDON OFFlcER (S.B. SINHA, J.) 22 5

the Respondent. A
-1-
The Judgment of the Court was delivered by

S.B. SINHA, J. 1. Leave granted.

2. This appeal is directed against a judgment and order 09.02.2005 B
passed by a Division Bench of the Andhra Pradesh High Court whereby and
whereunder the appeal preferred by the respondent herein under Section 54
of the Land Acquisition Act, 1894 (for short, 'the Act') against a judgm~nt
-\
~ and award dated 02.01.1999 passed by the Principal Senior Civil Judge,
Warangal in O.P. No. 72 of 1997 was allowed in part.
c
3. Certain basic fact of the matter is not in dispute.

42 acres 08 guntas of land situated in Hanarnkonda Village was acquired
for a public purpose, namely, excavation ofKakatiya canal. A draft notification
was published in the District Gazette under Section 4 of the Act for acquisitio11
of 4 acres 10 guntas of the land in Survey No.622 on 16.03.1979. Possession D
of the said land was taken over on 18.05.1979. An award was passed by the
-f..
.. Land Acquisition Officer on 12.06.1988 fixing the market value of the acquired
land@Rs.75,000/- per acre. The said award, however, was confined to l acre
5 guntas only as the balance 3 acres 5 guntas of land was held to be
belonging to the Government of Andhra Pradesh. A writ petition filed
E
thereagainst, which was marked as Writ Petition No. 10387 of 1989, was
allowed by the High Court of Andhra Pradesh by a judgment and order dated.
17 .11.1989 directing the Collector to refer the dispute to the Court in terms of
Section 30 of the Act. However, later on, it was found by the respondent that
the entire 4 acres l 0 guntas of land belonged to the appellants.
F
~ " 4. The Parliament enacted the Land Acquisition (Amendment) Act, 1984
~.
which came into effect on or about 24.09.1986. As in terms of the said
~·
amendment, an award was to be passed within a period of two years from the
date of issuance of the notification, another notification was issued by the
Collector in respect of the said 3 acres 5 guntas of land on or about 23 .12.1991.
In respect of the said area, another award was passed by the Land Acquisition G
Officer at the same rate, namely, Rs.75,000/- per acre with all the statutory
benefits except additional market value. When a writ petition was filed before
the High Court by Appellants, which was marked as Writ Petition No. 16220
4f of 1994, by its judgment dated 18.12.1995 the High Court directed the Land

- Acquisition Officer to grant additional market value in tenns of Section 23(l)(a)
H
226 SUPREME COURT REPORTS (2007) 7 S.C.R.

A of the Act and interest as per Section 34 thereof from the date of taking
possession, pursuant whereto and in furtherance whereof a supplemental
award was passed on 12.06.1998. A reference was made by Appellants in
tenns of Section 18 of the Act and by a judgment and order dated 02.01.1999,
the Principal Senior Civil Judge awarded compensation for acquisition of the
said land @ Rs.60/- per square yard as against the claim of Rs.150/- per square
B yard. However, the learned Judge granted additional market value and interest
from the date of taking possession till the date of award, holding :
MADISHETTI BALA RAMUL(D) BY LRS. 1•. LAND ACQUISffiON OFFICER [S.B. SINHA, J.] 227

reduced in view of Section 25 of the Act. A
8. Mr. Rahul Shukla, learned counsel appearing on behalf of the
respondent, on the other hand, submitted that no compensation is payable
for taking possession of the land de'hors a valid notification under the Act.

9. The short questipn which, therefore, arises for consideration is as to B
whether Section 25 of the Act will have any application in the fact of the
present case. Two notifications were issued separately. The second notification
~ . was issued as the first notification did not survive. Valuation of the market
.I

rate for the acquired land, thus, was required to be determined on the basis
of the notification dated 23 .12.1991. The earlier notification lost its force. If
the notification issued on 16.03 .1979 is taken into consideration for all c
purposes, the subsequent award awarding market value of the land @ Rs.
651- per square yard cannot be sustained. As the said market value has been
determined having regard to the notification issued on 23.12.1991, possession
taken over by Respondent in respect of 3 acres 5 guntas of land, pursuant
to the said notification dated 16.03.1979 was in the eye of law, therefore, D
illegal. The High Court evidently directed grant of additional market value @
12% per annum on the enhanced market value from the date of the publication
of the notification dated 23 .12.1991 as also interest thereupon from the said
date in stead and place of 18.05.1979. We generally agree therewith.

10. The findings of the High Court-:cannot be faulted in strict sense of E
the law. We generally agree therewith.

11. In R.L. Jain (D) By L.Rs. v. DDA and Ors., [2004] 4 SCC 79, a three-
Judge Bench of this Court, opined :

"11. In order to decide the question whether the provisions of F
Section 34 of the Act regarding payment of interest would be applicable
to a case where possession has been taken over prior to issuance of
notification under Section 4(1) of the Act, it is necessary to have a
look at the scheme of the Land Acquisition Act. Acquisition means
taking not by voluntary agreement but by authority of an Act of G
Parliament and by virtue of the compulsory powers thereby conferred.
In case of acquisition the property is taken by the State permanently
and the title to the property vests in the State"

12. Noticing the provisions of the Act it was held that possession can
be taken over only after an award is made. It was observed : H
228 SUPREME COURT REPORTS (2007) 7 S.C.R.

A " .... Section 17 is in the nature of an exception to Section 16 and '
it provides that in cases of urgency, whenever the appropriate
Government so directs, the Collector, though no such award has been.
made, may, on the expiration of fifteen days from the publication of
the notice mentioned in Section 9( l ), take possession of any land
needed for a public purpose and such land shall thereupon vest
B absolutely in the Government, free from all encumbrances. The urgency
provii:ion contained in Section l7(1) can be invoked and possession
can be taken over only after publication of notification under Section L
9(1) which itself can be done after publication of notification under
Sections 4( I) and 6 of the Act. Even here in view of sub-section (3-
c A) the Collector has to tender 80 per cent of the estimated amount of
compensation to the persons interested/entitled thereto before taking
over possession. The scheme of the Act does not contemplate taking
over of possession prior to the issuance of notification under Section
4( l) of the Act and if possession is taken prior to the said notification
it will be dehors the Act. It is for this reason that both Sections 11(1)
D and 23(1) enjoin the determination of the market value of the land on
the date of publication of notification under Section 4(1) of the Act
for the purpose of determining the amount of compensation to be
.....'-'(
awarded for the land acquired under the Act"

It was furthermore held :
E
"12. The expression the Collector shall pay the amount awarded
with interest thereon at the rate of nine per centum per annum from ,,.._

the time of so taking possession until it shall have been so paid or
I
deposited should not be read in isolation divorced from its context. t-
The words such compensation and so taking possession are important
F
and have to be given meaning in the light of other provisions of the \;.-
Act. Such compensation would mean the compensation determined in
accordance with other provisions of the Act, namely, Sections 11 and
15 of the Act which by virtue of Section 23(1) mean market value of
the land on the date of notification under Section 4( l) and other -
I

G '~._
amounts like statutory sum under sub-section (1-A) and solatium
under sub-section (2) of Section 23. The heading of Part II of the Act
,,'
is Acquisition and there is a sub-heading Taking Possession which
contains Sections 16 and 17 of the Act. The words so taking possession
\.-
would therefore mean taking possession in accordance with Section ·
16 or 17 of the Act. These are the only two sections in the Act which
H
MADISHETil BALA RAMUL(D) BY LRS. v. LAND ACQUISITION OFFICER (S.B. SINHA, J.) 229

specifically deal with the subject of taking possession of the acquired A
land. Clearly, the stage for taking possession under the aforesaid
provisions would be reached only after publication of the notification
under Sections 4(1) and 9( 1) of the Act. If possession is taken prior
to the issuance of the notification under Section 4(1) it would not be
in accordance with Section 16 or 17 and will be without any authority B
of law and consequently cannot be recognised for the purposes of the
Act. For parity of reasons the words from the date on which he took
possession of the land occurring in Section 28 of the Act would also
mean lawful taking of possession in accordance witl: Section 16 or 17
of the Act. The words so taking possession can under no circumstances
mean such dispossession of the owner of the land which has been C
done prior to publication ofnotification under Section 4(1) of the Act
which is dehors the provisions of the Act."

It was observed :

"18. In a case where the landowner is dispossessed prior to the D
issuance of preliminary notification under Section 4(1) of the Act the
Government merely takes possession of the land but the title thereof
continues to vest with the landowner. It is fully open for the landowner
to recover the possession of his land by taking appropriate legal
proceedings. He is therefore only entitled to get rent or damages for
use and occupation for the period the Government retains possession E
of the property. Where possession is taken prior to the issuance of
the preliminary notification, in our opinion, it will be just and equitable
that the Collector may also determine the rent or damages for use of
the property to which the landowner is entitled while determining the
compensation amount payable to the landowner for the acquisition of F
the property. The provisions of Section 48 of the Act lend support to
such a course of action. For delayed payment of such amount
appropriate interest at prevailing bank rate may be awarded."

13. Yet again in Lila Ghosh (Smt.) (Dead) Through L.R. Tapas Chandra
Roy etc. v. State of West Bengal etc. [2004] 9 SCC 337, this Court held: G ,
"19. Even though the authority in Shree Vijay Cotton & Oil Mills
Ltd. appears to support the claimants, it is to be seen that apart from
mentioning Sections 28 and 34, no reasons have been given to justify
the award of interest from a date prior to commencement of acquisition
proceedings. A plain reading of Section 34 shows that interest is H
230 SUPREME COURT REPORTS (2007) 7 S.C.R.

A payable only if the compensation, which is payable, is not paid or
deposited before taking possession. The question of payment or
deposit of compensation will not arise if there is no acquisition
proceeding. In case· where possession is taken prior to acquisition
proceedings a party may have a right to claim compensation or interest.
But such a claim would not be either under Section 34 or Section 28.
B In our view interest under these Sections can only start running from
the date the compensation is payable. Normally this would be from the
date of the Award. Of course, there may be cases under Section 17
,l_
where by invoking urgency clause possession has bean taken before
:L?•·,_ the acquisition proceedings are initiated. In such cases, compens~tion,
~ ~. ~

c under the Land Acquisition Act, would be payable by virtue of the
provisions of Section 17. As in cases under Section 17 compensation
is payable interest may run from the date possession was taken.
However, this case does not fall into this category."

14. In this case, however, the appellants herein were dispossessed
D pursuant to a notification which for one reason or other could not be given
effect to. Another notification under Section 4 of the Act had to be issued.
The said notification· was held to be not invalid. The State put forward the .;
claim in respect of a portion of a property which.it could not do. Possession
must be obtained under a valid notification.
t
E 15. The Land Acquisition Officer took possession of the land on the
basis of a notification which did not survive. Respondent could not have
continued to hold possession of land despite abatement of the proceeding
under the 1984 Act. It was directed to be d~ciqed by the High Court upon
a reference made by the Collector in terms of Section 30 of the Act. The State,
F therefore, itself realized that its stand in regard to the ownership of 3 acres
and 5 guntas of land was not correct.· It, therefore, had to issue another
notification having regard to the provisions contained in the Land Acquisition y
'

(Amendment) Act, 1984. Whereas the High Court may be correct iii interpreting
the question of law in view of the decision of this Court, but the same would
not mean that Appellants would not get anything for being remaining out of
G possession from ·1979 to 1991.

16. Mrs. Amareshwari relied upon Section 25 of the Act which is· as
under:
'\-
"25. Amount of compensation awarded by court not to be lower than
H the amount awarded by the Collector. The amount of compensation
MADISHE111 BALA RAMUL(D) BY LRS. 1•. LAND ACQUISmON OFFICER (S.B. SINHA, J.) 231 ·

awarded by the court shall not be less than the amount awarded by A
-, the Collector under section 11."

17. Section 25 of the Act merely prohibits that total amount of the award
granted by L'le Collector cannot be reduced. Section 25 which has undergone
an amendment in the year 1984, thus, merely lays down that the amount of
compensation awarded by the reference c~urt shall not be less than the B
amount awarded by the Collector, and in no circumstances the amount awarded
by the Collector can be reduced. What is an award is a total sum and not the
ingredients contained therein. An award made by the Collector is in the fonn
of an offer. It is in that sense only that the amount contained therein cannot
be reduced.
c
18. It is not the case of the appellants that the total amount of
compensation stands reduced. If it had not been, we fail to understand as to
how Section 25 will have any application in the instant case. Furthermore,
Section 25 being a substantive provision will have no retrospective effect.
The original award was passed on 08.02.1981, Section 25, as it stands now, D
may, therefore, not have any application in the instant case.

19. In Land Acquisition Officer-cum-DSWO, A.P. v. B. V. Reddy and Sons
[2002] 3 SCC 463, this Court opined that Section 25 being not a procedural
provision will have no retrospective effect, holding :
E
"6. Coming to the second question, it is a well-settled principle of
construction that a substantive provision cannot be retrospective in
nature unless the provision itself indicates the same. The amended
provision of Section 25 nowhere indicates that the same would have
any retrospective effect. Consequently, therefore, it would apply to all
acquisitions made subsequent to 24-9-1984, the date on which Act 68 F
. --/.
of l 984 came into force. The Land Acquisition (Amendment) Bill of
1982 was introduced in Parliament on 30-4-1982 and came into operation
with effect from 24-9-1984"

20. In the peculiar facts and circumstances of the case, although the
proper course for us would have to remand the matter back to the Collector G
to determine the amount of compensation to which the Appellants would be
entitled for being remained out of possession since 1979, we are of the
opinion that the interest of justice would be met if this appeal is disposed of
with a direction that additional interest @ 15% per annum on the amount
awarded in terms of award dated 02.0 l.l 999 for the period 16.03 .1979 till H
232 SUPREME COURT REPORTS [2007) 7 S.C.R.

A 22.12.1991, should be granted, which, in our opinion, would meet the ends of
justice.

21. The appeal is allowed in part and to the extent mentioned hereinbefore.
Appellant shall not be entitled to costs. Counsel's fee is assessed at
Rs.50,000/-·
B·
B.B.B. Appeal partly allowed.