Supreme Court of India
UNION OF INDIAversusPARMAL SINGH & ORS.
- Citation
- 2008 INSC 1349
- Decided
- 25 November 2008
- Disposal
- Dismissed
- Bench
- R V RAVEENDRAN
Holding
Interest on compensation for acquisition of requisitioned property may be awarded on equitable grounds from the date of acquisition unless the statute expressly prohibits it, so the award of 6% interest is upheld.
Summary
The lands of Parmal Singh and others were requisitioned by the Central Government in 1963 under the Defence of India Act, 1962 and subsequently acquired in 1965. The Special Land Acquisition Officer fixed compensation, which the owners contested, leading to arbitration awards that included interest. The Allahabad High Court later increased the compensation and fixed a uniform interest rate of 6% per annum from the date of acquisition, which the Union of India challenged on the ground that the Act does not provide for interest. The Supreme Court examined whether, in the absence of a statutory bar, interest may be awarded on equitable grounds for delayed payment of compensation for requisitioned land. Relying on earlier decisions that allow interest when a statute is silent, the Court held that interest is payable from the date of acquisition and that any increase in compensation also attracts interest from that date. Consequently, the Court upheld the High Court’s award of 6% interest and dismissed the appeals.
Issues considered
- Whether interest can be awarded on compensation for acquisition of requisitioned land under the Defence of India Act, 1962 when the statute is silent on interest.
- Whether the High Court’s award of interest at 6% per annum from the date of acquisition is permissible.
- Whether an increase in compensation awarded by the High Court or arbitrator must be backdated to the date of acquisition for the purpose of interest.
Legislation cited
- Defence of India Act, 1962s. 29, s. 36, s. 37
- Defence of India Act, 1971s. 30, s. 31
- Interest Act, 1978s. 4(1)
- Land Acquisition Act, 1894s. 23(2), s. 28, s. 34
- Requisitioning and Acquisition of Immovable Property Act, 1952s. 8(3)
Subjects
land acquisitionrequisitioncompensationinterestequitable principlesDefence of India Actarbitrationdelaysolatiumstatutory interpretation
Judgment
UNION OF INDIA v. PARMAL SINGH & ORS LOHIA 675
for payment of compensation to be determined in the A
manner specified, ordinarily compensation shall have to
be paid atthe·time of taking possession in pursuance of
acquisition. By applying equitable principles, courts have
.always awarded interest on the delayed payment of
compensation with regard to acquisition of any property. B
When a . requisitioned property is acquired,_ as
possession had already been taken from the landholder,
the compensation becomes payable from the date of
acquisition. When a property is requisitioned, the land .
owner is compensated for the denial of possession by c
paying compensation based on the rent it would have
fetched, had it not _been requisitioned. But once the
property is acquired, the rent is stopped, as
compensation base_d on open market value becomes
payable against acq_uisition. Therefore while interest is o
payable, it is not awarded from the date of requisition
(taking over of possession) but only from the date of
acquisition. Whenever the Arbitrator or High Court
increases the compensation for the acquired land, the
increase relates back to the date of acquisition as they E
are merely doing ·what the Special Land Acquisition
Officer ought to have done in the first instance. Therefore,
interest is awardable ·on ·the increased amount also from
the date of acquisition. [Para 9] [681-D-H; 682-A]
. 1.3. In the instant case, the acquisition is of the year F
1965. Though more than four decades have elapsed, the
land owners are yet to get the compensation in entirety.
When the Arbitrator awarded interest, it was not
challenged by the appellant. It accepted the award of
interest. Only when the High Court increased the amount G
of compensation in the appeals filed by the landowners,
the appellant chose to challenge, not the increase in
compensation, but the award of interest. Therefore, the
award of interest at 6% per annum on the compensation
amount is upheld. [Paras 11 and 12] [684-F-H] H
676 SUPREME COURT REPORTS [2008] 16 S.C.R.
..._
,:
A Prabhu Dayal v. Union of India 1995 Supp (4) SCC 221;
Girdhari v. Union of India 2005 (11) SCC 291; Satinder Singh . cot-
v. Umrao Singh AIR 1961 SC 908; Hirachand Kothari. v. State
of Rajasthan 1985 (Supp.) SCC 17, relied on.
Union of India v. Hari Krishan Khos/a 1993 Supp (2) I-
B
SCC 149 and Union of India v. Chajju Ram 2003 (6) SCC I.-
~
568, distinguished. ..
Union of India v. Dhanwanti Devi 1996 (6) SCC 44,
~
--J._
referred to.
c
Case law Reference:
1995 Supp (4) SCC 221 Relied on. Para 3
L
2005 (11) sec 291 Relied on. Para 3
D
AIR 1961 SC 908 Relied on. Para 3
1985 (Supp.) sec 11 Relied on. Para 3 ... i-
1996 (6) sec 44 Referred to. Para 6 + I
E
1993 supp (2) sec 149 Distinguished. Para 6
2003 (5) sec 568 Distinguished. Para 7
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
F 2319-2327 of 2001. 1.
I-
From the final Order dated 1.4.1999 of the High Court' of
'
4--
~
Judicature at Allahbad in C.M.W.P. Nos. 24667, 24668, 24669 I
of 1988 and 557, 560, 4939, 4940, 4941 and 11436 of 1990.
G
r•
WITH
I-
C.A. Nos. 332-336, 354-359 Nos. 6789-6790, 6792-6296, --(
6791, 6804-6806, 6826-6839, 6798-6803, 6808-6824 of 2008. r-
I
'
H
'~
I
J
UNION OF INDIA v. PARMAL SINGH & ORS LOHIA 677
t" S.P. Singh, Sunil Gupta, Rekha Pandey, Rajni Ohri Lal, Raj A
Kumar Tanwar, S.W.A. Qadri, B.K. Prasad, Shreekant N. Terdal,
Sushma Suri, Anil Katiyar, Shakeel Ahmed, Devendra Kumar,
K.K. Mohan, T.N. Singh, Manoj Dwivedi, G.V. Rao and
Kamlendra Mishra for the appearlng parties.
B
..,, The Judgment of the Court was delivered by
R.V. RA VEENDRAN, J. 1. The lands of respondents in.
'X
village Mola Agri (now district Ghaziabad) were reqaisitioned
by the Central Government in 1963 under section 29 of the
Defence of India Act, 1962 (for short the 'Act'). The said c
requisitioned lands were subsequently acquired under section
36 of the Act in the year 1965. The Special Land Acquisition
officer, Meerut, determined the compensation payable to the
respondents in the year 1966 (varying between Rs.2400 ~nd
Rs.3625 per bigha by adopting belting method of valuation). D
Not being satisfied with the compensation determined by him,
<( the respondents sought reference to arbitration under section
~ 37(2) of the Act, for determination of proper compensation. The
Central Government appointed different Arbitrators to decide
their claims. In one arbitration, an award dated 16.3.1979, was E
made awarding compensation at the rate of Rs.2.60 per sq.yd
with interest at 6% per annum from the date of acquisition till
date of deposit. In another arbitration, an award dated 8.9.1986
was made awarding compensation at Rs.2.60 per sq. yd. with
solatium at the rate of 30% and interest at 9% per annum on F
>-
the additional amount from the date of acquisition till date of
~·
payment. Not being satisfied with the compensation,
respondents filed writ petitions challenging the awards of the
arbitrators before the Allahabad High Court. The High Court by
its orders dated 1.4.1999 increased the compensation to
G
Rs.3.60 per sq. yd. Wherever solatium had been awarded, the
"I High Court set aside the same. Wherever interest had been
r
awarded at a rate in excess of six percent per annum, the High
Court reduced the~ate and awarded a uniform,interest at the
rate of 6% per annum from the date of acquisition till the date
H
678 SUPREME COURT REPORTS [2008] 16 S.C.R.
..
A of payment/deposit: ·~
2. Union· of India has filed these appeals by special leave
against the said orders of the High Court, challenging the award
of interest at 6o/~ per annum. It has not chaUenged. the
B enhancement cf compen$ation from Rs.2.60 to Rs.3.60 per sq.
yd. Appellant contends that as the Act provides for payment of
~
only compensation and does not provide foreither solatium or
interest, interest could not have been awarded. Reliance is
~
placed on the dedsions of this Court in Union of India Vs. Hari
Krishan Khosla [1993 Supp (2) SCC 149] and Union of India
c Vs. Chajju Ram. [2003 (5) SCC 568].
3. The learned counsel for respondents submitted that
there has been enormous delay at every stage. He pointed out
that the acquisition was of the year 1965; that there was delay
D in appointing arbitrator; that only the amount awarded by the
arbitrator has been paid; and that neither the enhancement in
compensation (from Rs.2.60 to Rs;3.60 per sq. yd.) made by )
· the .High Court, nor the. interest has been paid. Learned counsel
-t·
for the respondents submitted that the decisions in Chajju Ram
E and Hari Krishan Khosla did not prohib.it award of interest on
equitable grounds when there was inordinate delay. He drew
attention to the fact that ultimately in the·said two decisions, the
amount already paid as interest was directed not to be
recovered. He also placed reliance on two other decisions of
F this Court namely Prab.lw Dayal v. Union of india (1995 Supp
(4) SCC 221] and Girdhari v. Union of India [2005 (11) SCC ... ir·
291] relating to acquisitions under the Requisitioning and '-*
Acquisition of Immovable Property Act, 1952 ('RAIP Act' for
short, provisions of which, relating to acq1.Hsition and
compensation are in pari materia with the provisions of the
G
Act)._ to show that interest can be awarded from the date of
acquisition till the date of payment. ,..
..,.
4. Ori the contentions urged, the oply question that arises
for consideration is whether award of interest by the High Court
H t=
UNION OF INDIA v. PARMAL SINGH & ORS LOHIA 679
[R.V. RAVEENDRAN, J.]
on the compensation for acquisition of requisitioned property A
under Defence of India Act, 1962 is impermissible.
5. Section 36 of the Act provides for the manner of
acquisition of requisitioned property. Section 37 of the Act deals
with determination of compensation jfor acquisition of
requisitioned property. Sub-section (1) thereof which is relevant
a
•• is extracted below :
)(
"37. (1) The compensation payable for the acquisition of
any property under section 36 shall be -
t
(a) the price which the requisitioned property would have
fetched in the open market if it had remained in the.same
ondition as it was at the time of requisitioning and been
sold on the date of acquisition, or
(b) twice the price which the requisitioned property would D
have fetched in the open market if it had been sold on the
1( date of the requisition,
~
whicheve!" is less."
E
Sub-section (2) of section 37 provides for reference of
applications for enhancement of compensation filed by a
persons interested, to an Arbitrator appointed by the Central
Government. Sections 36 and 37 of the ACt correspond to.
sections 30 and 31 of Defence of India Act, 197f ('DI Act of 'F
~
1971' for short) which replaced the Act. Section 37(1) of the
~ Act is also in pari materia with section 8(3) of the RAIP Act.
One significant common feature of these enactments is that they
provide for acquisition of requisitioned land and do not contain
any provisions similar to sections 23(2) and 28/34 of the Land
Acquisition Act, 1894 ('LA Act' for short) providing for payment G
~ of solatium or interest.
y
6. The validity of Section 8(3) of RAIP Act came up for
consideration in Union of India v. Hari Krishan Khosla [1993
H
680 SUPREME COURT REPORTS [2008) 16 S.C.R.
A Supp (2) SCC 149]. This Court held that absence of any
provision for payment of solatium and interest, similar to
sections 23 and 34 of Land Acquisition Act, 1894, in regard
to acquisition of requisitioned land under section 8(3)(a) of the
RAIP Act did not render the said provisions invalid. This Court
s held that acquisition of land under the RAIP Act stood on a
different footing when compared to an acquisition under the LA
Act as the property acquired under RAIP Act was subject to a
prior requisition, which was not the case in regard to
acquisitions under the LA ·Act. The decision in Hari Krishan
c Khosla (supra) was followed in Union of India v. Dhanwanti
Devi [1996 (6) sec 44].
7. The decision in Hari Krishan Khosla was also followed
by a Constitution Bench of this Court in Union of India v. Chajju
Ram [2003 (5) SCC 568] dealing with the challenge to the
D validity of Sections 30 and 31 of the Defence of India Act, 1971
(which replaced the Act) on a ground simil~r to what was urged
in Hari Krishan Khosla with reference to section 8(3)(a) of
RAIP Act. Accepting the challenge, the High Court had held tha~
section 31 of the DI Act of 1971 was violative of Article 14 of
E the Constitution of India and the land owners were entitled to
claim solatium at 15% and interest at 6% per annum on the
lines of what was provided under the LA Act. This Court
reversed the decision of the High Court and upheld the validity
of sections 30 and 31 of the DI Act of 1971. This Court held
F that the DI Act of 1971 was a self-contained Code and that
adoption of different classifications for determination of
compensation for acquisition of requisitioned land under the
Defence of India Act, 1971 and acquisition of non-requisitioned
land under the Land Acquisition Act, 1894, was reasonable and
G valid.
8. But what is relevant for our purpose is that both in Hari
Krishan Khosla and Chajju Ram, the question considered was
whether the provisions relating to acquisition of requisitioned
land under the provisions of the RAIP Act and DI Act of 1971,
H
UNION OF INDIA v. PARMAL SINGH & ORS LOHIA 681
, [RV. RAVEENDRAN, J.)
were invalid for not providing for payment of solatium and A
interest, similar to the LA Act. In neither of those two cases,
this Court CQnaidered whether interest could be awarded or not,
on ~elated payment of compensation amount for acquisitions
under the relevant Acts, on equitable grounds. In fact, in both
Hari Krishan Khos/a and Chajju Ram, this court after B
upholding the validity of provisions relating to acquisition and
'" determination of compensation, directed the Union of India not
x to recover back the interest which had already been paid to the
land owners. This direction was on equitable grounds. In
Prabhu Dayal and Girdhari, this Court awarded interest on c
equitable grounds, though the RAIP Act did not contain any
provision for award of interest.
9. 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 D
time of taking possession in pursuance of acquisition. By
,,(_
applying equitable principles, courts have always awarded
~
interest on the delayed payment of compensation in regard to
acquisition of any property. When a requisitioned property is
acquired, as possession had already been taken from the E
landholder, the compensation becomes payable from the date
of acquisition. When a property is requisitioned, the land owner
is compensated for the denial of possession by paying
compensation based on the rent it would have fetched had it
~ not been requisitioned. But once the property is acquired, the F
I>- rent is stopped, as compensation based on open market value
becomes payable against acquisition. Therefore while interest
is payable, it is not awarded from the date of requisition (taking
over of possession) but only from the date of acquisition. This
principle has been recognized and applied by courts G
-'
consistently. Whenever the Arbitrator or High Court increases
·y the compensation for the acquired land, the increase relates
back to the date of acquisition as they are merely doing what
the Special Land Acquisition Officer ought to have done in the
first instance. Therefore, interest is awardable on the increased H
682 SUPREME COURT REPORTS [2008] 16 S.C.R.
A amount also from the date of acquisition. The said general 1
principle will not apply in two circumstances. One is where a
statute specifies or regulates the interest'. In that event, interest
will be payable in terms of the provisions of the statute. The
second is where a statute or contract dealing with the
B 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 there
is no express bar about payment of interest, any delay in paying
the compensation or enhanced compensation for acquisition """
c would require award of interest at a reasonable rate on
equitable grounds: We are fortified in, this view by the
enunciation in Satinder Singh v. Umrao Singh [AIR 1961 SC
908, which has been reiterated in Hirachand Kothari v. State
of Rajasthan [1985 (Supp.) SCC 17).
D 10., In Satinder Singh, this Court while considering
acquisition of land under the East Punjab Requisition of
Immovable Property (Temporary Powers) Act, 1948, held that ')o
,).-
interest can be awarded on equitable grounds. The following
observatio_ns throw light on the issue:
E
"(17) Whatthen is the contention raised by the claimants?
They contend that their immovable property has been
acquired ,by the State and the State has taken possession
of it Thus they have been deprived of the right to receive
F the income, from the property and there is a time lag
....
between the taking of the possession by the St~te and the
~
payment of compensation by it to the, claimants. During this
period they have been deprived of the income of the
property and they have not been able to recejve interest
from the amount of compensation. Stated broadly the act
G
of taking possession of immovable property generally
,_
implies an agreement to pay interest on the value of the
i'
property and it is on this principle that a claim for interest
is made against the State. This question has been
considered on several occasions and the general principle
H ,.
UNION OF INDIA v. PARMAL SINGH & ORS LOHIA 683
[RV. RAVEENDRAN, J.]
on which the contention is raised by the claimants has been A
upheld. In Swift and Co. v. Board of Trade, ( 1925) A C 520
at p. 532, it has been held by the House of Lords that "on
a contract for the sale and purchase of land it is the
practice of the Court of Chancery to require the purchaser
to pay interest on his purchase money from the date when B
.... he took, or might safely have taken, possession of the
land ........... .
(18) In Inglewood Pulp and Paper Co. Ud.· :v. New
Brunswick Electric Power Commission [1928 A.C. 429],
it was held by the Privy Council that "upon the expropriation : C
of land under statutory power, whether for the purppse of
private 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."-Dealir)g with the D
argument that the expropriation with whicn the Privy
" Council was concerned was not effected for private gain,
but for the good of the public at large, it observed "but for
all that, the owner is deprived of his property in this case
as much as in the other, and the rule has long been E
accepted in the interpretation 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·
cleaL The right to receive the interest takes the place of
the right to retain possession and is within the rule." It would F
thus be noticed that the 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 possession.
G
(19) It is, however, urged by Mr. Gopal Singh for
respondent 2 that what the claimants are entitled to
receive is compensation and since the word
"compensation" is used by s. 5(1) both in respect of
requisition as well as acquisition it would not be fair to H
684 SUPREME COURT REPORTS [2008] 16 S.C.R.
A import the general rule about the payment of interest where -t
property is acquired. Compensation, it is urged, should
represent the price of the property and there is no
justification for adding to the said price any amount by way
of damages. We. are not impressed by this argument.
B When a claim for payment of interest is made by a
person whose "immovable property has been acquired .,.
compulsorily he is not making claim for damages
properly or technically so called; he is basing his claim x
on the general rule that if he is deprived of his land he
c should be put in possession of compensation
immediately; if not, in lieu of possession taken by
compulsory acquisition interest should be paid to him on
. the said amount of compensation. In our opinion,
therefore, the fact that s. 5(1) deals with compensation both
for requisition and acquisition cannot serve to exclude the
·D
application of the general rule to which we have just
referred." )
[emphasis supplied] ~
E Proviso to section 1 of Interest Act, 1839 and section 4(1) of
Interest Act, 1978 also recognize and preserve the power of
court to grant interest in such circumstances.
11. In this case the acquisition is of the year 1965. Though
more than four decades have elapsed, the land owners are yet
F to get the compensation in entirety. It is also relevant to note "'- '
that when th~ Ar-Qitrator awarded Interest. it was not challenged .-1:
by the appe!l?mt. !t accepted the award of interest. Only when
the High Court increased the amount of compensation in the
appeals filed by the landowners, the appellant chose to
G challenge, not the increase in compensation, but the award of
interest. Be that as it may. ~
'{
12. For the reasons aforesaid, we uphold the award of
interest at 6% per annum on the compensation amount. The
H appeals are therefore dismissed.
UNION OF INDIA v. PARMAL SINGH & ORS LOHIA 685
[R.V. RAVEENDRAN, J.]
C.A. Nos.332-336/2008 and CA Nos.354 to 359/2008 A
These appeals involve the same issue. Following the
decision in C.A. Nos.2319-2327/2001, these appeals are
dismissed.
SLP (C) Nos. 4505-4506/2008, SLP (C) Nos. 4632- B
4636/2008), SLP (C) No~ 4637/2008, SLP (C) Nos. 7110-
7112/2008, SLP (C) Nos.9132-9145/2008, SLP (C) Nos.
11266-11271/2008, and SLP (C) Nos. 19273-19289/2003
Delay condoned. Leave granted. These matters are c
covered by the decision rendered in C.A. Nos.2319-2327/
2001. Following the said decision, we uphold the award of
inter~st and dismiss these appeals.
K.K.T. Appeals dismissed.
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