Karnataka High Court
B. Vasantharam Sheety vs State Of Karnataka And Others on 13 July, 1998
Equivalent citations: 1998(6)KARLJ493, 1998 A I H C 4738, (1998) 6 KANT LJ 493
Author: N.S. Veerabhadraiah
Bench: N.S. Veerabhadraiah
JUDGMENT Y. Bhaskar Rao, J.
1. The appellant has filed this appeal assailing the judgment of the learned Single Judge, in not granting adequate interest at the rate of 16% per annum on the compensation paid for the lands which vested in the Government by virtue of Section 44 of the Karnataka Land Reforms Act ('the Act' for short).
2. The facts of the case are that appellant's mother was the widow and she was the owner of the lands bearing Sy. Nos. 46/6, 46/7, 46/8, 46/28 and 80/3 of Kannur Village. The Karnataka Land Reforms Act as amended came into force on 1-3-1974. The disputed lands are agricultural lands. There is a tenant on the land. Section 44 of the Act contemplated that all the lands in possession of the tenants immediately prior to the date of commencement of the Amendment Act other than the lands held by them under leases permitted under Section 5, shall stand transferred to and vest in the State Government. In this case there is no dispute that there is a tenant and the same is admitted by the owner of the land and the land is vested in the State and ultimately occupancy rights were granted in favour of the tenants as per Section 45 of the Act. Section 47 deals regarding the amount payable to the owner. The land owner, landlord and all other persons interested in the land whose rights are extinguished by vesting of the land in the State are entitled to an amount determined with reference to the net annual income derivable from the land or all the lands. Section 48 deals with constitution of Tribunals dealing with the Land Reforms Cases under the Act including the determination of the amount payable to the land owner. Section 48A contemplates enquiry to be conducted by the Land Tribunal regarding occupancy rights of the tenants in the land. Section 48B contemplates that the Tahsildar on receipt of the orders passed under sub-section (4) or sub-section (5) of Section 48A has to determine the amount payable under Section 47 to the land owner and prepare a statement showing the apportionment of the amount so determined among the persons entitled to it, in accordance with the value of their respective interest in the land. Section 51 deals with mode of payment. It is relevant to extract sub-section (1)(b) of Section 51 as under:
"51. Mode of payment of the amount:
(1) Save as provided in Section 106, the amount payable to any person under Section 47 shall be subject to the provisions of Section 50
(a) xxx xxx xxx.
(b) If the amount payable exceeds two thousand rupees the amount upto two thousand rupees shall be paid in cash and the balance shall be paid in non-transferable and non-negotiable bonds carrying interest at the rate of five and a half per cent per annum and of guaranteed face value maturing within a specified period not exceeding twenty years".
Sub-section (1)(b) of Section 51 provides that where the amount exceeds more than two thousand rupees it is payable by bonds in the form of National Savings Certificate with interest at the rate of five and half per cent will be given to them. Section 52 of the Act contemplates the payment of compensation to be a full discharge, Thus the above provisions contemplate that when the land of the owner is vested in the State Government, the Tahsildar has to determine the rights of the tenants on the lands under Section 45 of the Act. After he decides the right and sends the report, the Tribunal will decide the granting of occupancy rights under Section 48A of the Act to the tenant. After receipt of that report the Tahsildar decides the amount payable to the landlord as envisaged in the provisions of the Act. After determination of the amount, the amount is payable as contemplated under Section 51 of the Act. That is if the amount is less than rupees two thousand to pay the cash in lump sum or if the amount is more than two thousand he is entitled for the cash of Rs. 2,000/- remaining amount shall be paid in bonds in the form of National Savings Certificate payable with 5 1/2% interest. This is the mode of payment contemplated under the Act. In the present case where the amount is paid to the widow and minors, the Act contemplated the lump sum amount upto Rs. 50,000/- and the remaining amount in the form of bonds.
3. In the present case the appellant is a widow and she is entitled for payment of Rs. 50,000/-. The Tahsildar decided that the appellant-mother is entitled to Rs. 49,555/- by order dated 27-2-1986. The amount was paid on the same day. The question now that arises for consideration is whether the appellant is entitled for interest on the said amount. As per Section 51 of the Act where the amount is paid in cash there is no provision providing for payment of interest. Where the bonds are issued instead of cash, Section 51 contemplates payment of 5 1/2% interest and bonds to be taken as National Savings Certificate.
4. Learned Counsel for the appellant contended that the amount is payable immediately within a reasonable time from the date of vesting of the land. If not paid, the owner is entitled for interest from the date of vesting until the amount is paid.
5. On the other hand, learned Government Advocate contended that there is no provision in the Act for payment of interest when the amount is paid in cash. When the Act is silent regarding the payment, the owners are not entitled for any interest except where the amount is paid in the form of bonds.
6. In view of the above said contention, the main question of law that arises is whether the owners of the land whose lands are vested with the State Government as the lands are tenancy lands, are entitled for interest from the date of vesting for payment of the cash amount when there is a delay in payment of the amount.
7. The Amendment Act came into force on 1-3-1974. The Act provides for the vesting of the land. As per Section 44 of the Act from the date of vesting of the land the land owner is not entitled to receive any amount from the tenant in the shape of the land revenue or other form and the tenant has to pay such amount to the Government. The owner is deprived of the benefits from the date of vesting. The Act provides for the payment of the amount as compensation as determined under the Act. By reading of Sections 48A and 48B and 51 manifest that after the lands vested an enquiry has to be conducted regarding tenancy and regarding occupancy rights that is, occupancy certificate and after deciding them if the report is sent to the Tahsildar he has to determine the amount payable to the owner. Therefore, the amount has to be deter-
mined within reasonable time from the date of vesting. After determination the amount has to be paid in cash and in bonds as provided under the Act. In a given case where the determination is made within a reasonable time there is no need to pay interest on the cash amount paid. As the Act contemplated payment of cash immediately, legislature did not provide for payment of interest. In other words, where it is paid in the form of National Savings Certificate five and half per cent interest is contemplated. In the present case there is no dispute that the amount is paid nearly after about 12 years and the date of vesting is 1-3-1974. Thus, there is unreasonable delay in paying the amount. Therefore, interpretation has to be made by keeping in view the provisions of the Act. The Act is silent regarding paying of cash is concerned. When there is abnormal delay, in our view the owner is entitled for interest. It is also to be noted that where a person's property is deprived of, the said deprivation must be in accordance with the authority of law. It is well-settled wherever the procedure is there affecting the rights of the person such procedure must be fair. Where the procedure is not fair, the Courts have to interpret the provisions in such a way wherever there is deprivation of property and the payments are not made as contemplated under the Act, directing to pay interest will be as a part of fair procedure, where the payments are made after the long delay.
8. Then the question comes what is the rate of interest to be paid. The learned Single Judge, awarded interest at the rate of 5 1/2% p.a. from the date of vesting. There is no dispute that the interest to be paid from the date of vesting as the same is not challenged before us. The question is only what is the rate of interest to be paid. Generally interest is granted at the rate of 12 1/2%. The Land Acquisition Act provides payment of interest at 9% upto the date not in possession and after taking possession at 15%. Therefore, we think it is just and proper that the payment of interest at the rate of 12% per annum will be reasonable and proper. We have also perused the judgment of the Supreme Court in the case of Birdhichand Mishrilal Gothi v State of Maharashtra and Others. In that case bonds were not within the time contemplated under the Act and there was delay for varying periods, maximum being six years. The High Court held that the appellants would be entitled to get interest at the rate of 3 per cent as provided under Section 26 of the Act. The Supreme Court enhanced the interest at 10% as reasonable. It cannot be said that it is a precedent. The fact is that the Supreme Court has awarded 10% interest instead of 3% for the delayed payment of six years. In the present case the delay is about 12 years.
9. Learned Counsel for the appellant submitted that when the amount is paid in the form of National Savings Certificate, the amount becomes double within five years, apart from 5 1/2%. If this principle is kept in view, the appellant is entitled to 16.6% interest. This contention is also not disputed.
10. Learned Government Advocate brought to our notice the judgment of this Court in the case of N.K.S. Murthy v State of Karnataka and Others, wherein the learned Single Judge has held that there is no provision in the Act contemplating payment of interest and where the amount is paid in cash they are entitled for such interest. We do not agree with the said proposition. Particularly in this case the delay is abnormal. When the person is entitled to receive an amount and deprived of that for a longer period atleast under the principle of fair play he is entitled for interest.
11. In view of the above circumstances, we allow the writ appeal as indicated above and the appellant is entitled for 12% interest from the date of vesting i.e., 1-7-1975 on the amount of Rs. 49,555/- cash paid to them on 27-2-1986. The appeal is allowed accordingly. There is no order as to costs.