Andhra HC (Pre-Telangana)
I.D.L. Chemicals Ltd., Balanagar, ... vs K. Viswanadham And Anr. on 24 February, 1998
Equivalent citations: 1998(2)ALD625, 1998(2)ALT307, AIR 1998 ANDHRA PRADESH 332, 1998 A I H C 4161, (1998) 1 LACC 595, (1998) 2 ANDHLD 625, (1998) 2 CURCC 531, (1999) 3 LANDLR 644, (1998) 2 RECCIVR 618, (1998) 3 CIVLJ 872, (1998) 1 APLJ 395, (1998) 2 ANDH LT 307, (1998) 3 ICC 82, (1998) 1 LS 400
Author: P. Venkatarama Reddi
Bench: P. Venkatarama Reddi
ORDER
P. Venkatarama Reddi, J
1. We are left to the unenviable task of explaining apparently conflicting judgments of the Supreme Court in this case coming up before the Full Bench on a reference by the Division Bench.
2. The question posed by the Division Bench in the reference order is "whether the claimant is entitled to interest on solatium under Section 28 of the Land Acquisation Act?. Solatium obviously is referable to the amount payable under sub-section (2), of Section 23 of the Land Acquisition Act (hereinafter referred to as the Act). In the light of the decree passed in this case, we may have to recast and formulate the question as follows:
"Whether the claimant is entitled to interest under Section 28 on solatium payable under sub-section (2) of Section 23 and the additional amount payable under subsection (1-A) of Section 23 ?
3. At the outset, we must mention that the appellant is the Company for whose banefit the land acquisition proceedings were initiated. It was not a party before the reference Court. With the leave of this Court, the Company has preferred the appeal. While granting leave, the Court permitted the appellant only to the extent of canvassing the correctness of the decree granting additional benefits under the Land Acquisition (Amendment) Act, (68 of 1984). It must be clarified that the only dispute centres round the award of interest on the additional amounts payable under Section 23(1 -A) and 23(2) and the entitlement or otherwise to the other benefits under the Amendment Act 68 of 1984 is not in issue in the appeal. One more aspect to be clarified is that the trial Court granted interest under Section 28 "on the amount awarded by the Court". Whether the learned trial Judgment to give interest on the amount payable under sub-section (1-A) and (2) of Section 23 as well is not very clear from the judgment and decree; but in order to obviate any doubt and in view of the reference order, we will proceed on the basis that the interest was in fact awarded in respect of the amounts payable under sub-section (1-A) and (2) of Section 23 of the Act.
4. Section 28 of the Act lays down that if the sum which, in the opinion of the Court, the Collector ought to have awarded as compensation is in excess of the sum which the Collector did award as compensation, the award of the Court may direct payment of interest on such excess at the rate of 9% from the date on which possession of the land was taken till the date of payment of the differential amount in the Court. However, where such excess or any part (hereof is paid into Court after the date of expiry of a period of one year from the date on which the possession is taken, interest at the enhanced rate of 15% is payable from the date of expiry of the period of one year till the date the amount has been paid into Court. The crucial question is whether the word 'compensation' occuring in Section 28 embraces within its scope and ambit, the amounts which the claimant is entitled to under sub-sections (1-A) and (2) of Section 23 of the Act. The question is, practically, no longer res Integra. It is concluded by two recent decisions of Supreme Court in favour of the appellant. However, deference to the observations made by the learned Judges that the apparent conflict between two decisions has to be resolved by the Full Bench, we shall deal with the relevant issue in detail with reference to the relevant decisions.
5. We would first refer to the decision which according to the learned Judges has laid down the proposition that the claimant is entitled to interest on solatium. In Union of India v. Ram Mehar, , their lordships were concerned with the question whether interest under Section 4(3) of the Land Acquisition (Amendment and Validation) Act of 1967 was payable to the claimants. Sub-section (3) of Section 4 of the said Act made a provision for payment of interest on the market value of the land at the prescribed percentage and with effect from the prescribed period. The question arose whether by virtue of the aforesaid provision, interest was payable on the solatium which the claimant was entitled to get under Section 23(2). The Supreme Court answered the question in the negative holding that the expression 'Market Value' does not take within its fold the additional amount or solatium which is payable under sub-section (2) of Section 23 of the Act. The Supreme Court took the view that the expression 'market value' should be confined to the open market value as contemplated by clause firstly of sub-section 23(1). Whether or not the compensation payable under the other clauses of Section 23(1) is also part of the market value was a question left open by their Lordships. While reaching the conclusion, their Lordships pointed out that there is a well-marked distinction between the market value and the compensation in the Act itself, the term 'compensation' being used in a wider sense and the 'market value' being a component thereof This is what their Lordships held:
"Since under Section 4(3) of me Amending Act it is only the market value of land on which interest has to be paid solatium cannot form part of the market value of the land".
Their Lordships further observed ;
"It seems to us that the term "market value" has acquired a definite connotation by judicial decisions. Any addition to the value of the land to the owner whose land is compulsorily acquired which addition is the result of such factors as are unrelated to the open market cannot be regarded as a part of the market value.'' In order to reinforce the above conclusion, their Lordships made a reference to the language employed in Sections 28 and 34 of the Act and remarked as follows:
"'If market value and compensation were intended by the legislature to have the same meaning, it is difficult to comprehend why the word 'compensation' in Sections 28 and 34 and not 'market value' was used. The key to the meaning of the word 'compensation is to be found in Section 23(1) and that consists (a) of the market value" of the land (b) the sum of 15% on such market value which is staled to be the consideration for the compulsory nature of the acquisition. Market value is therefore only one of the components in the determination of the amount of compensation. If the Legislature has used the words 'market value' in Section 4(3) of the Amending Act of 1967 it must be held that it was done deliberately and what was intended was that interest should be payable on the market value of the land and not on the amount of compensation; otherwise, there was no reason why the Parliament should not have employed the word compensation in the aforesaid provision of the Amending Act."
6. The observations extracted above no doubt support the contention of the respondents that the word 'compensation' is used in a wider sense under Section 28 of the Act and takes within its fold not only the market value determined under Section 23(1) but also the other components such as those provided by sub-sections (1-A) and (2) of Section 23 of the Act. It should however be noticed that the Supreme Court did not hold, as was assumed by the learned Judges who made the reference, that the claimant is entitled to interest on solatium, because that question did not arise for consideration.
7. The observations of the Supreme Court in Ram Mehar 's case (supra) were cited with approval by a two Judge Bench of the Supreme Court in Perlyar and Pareekannt Rubbers Ltd v. State ofKerala, AIR 1991 SC 2192. It was held therein that the word 'compensation' has been advisedly used by the Legislature is Section 28 and therefore the appellant was entitled to interest on solatium It was observed that the interest on solatium was meant to recompensate the owner for loss of user of land from the date of taking possession till the date of payment of amount into Court. The respondents could have drawn support from the decisions cited above and resisted the appellant's contention but for the march of law as evidenced by two recent three Judge decisions of the Supreme Court which puts the entire issue beyond argument- We have no option but to follow the two authoritative pronouncements of the Supreme Court which have a direct bearing on the point at issue. We shall now advert to them.
8. Premnath Kapur v. National Fertilizers Corporation of India Ltd., was decided by a three Judge Bench of the Supreme Court consisting of K.Ramaswamy, B.LHansaria and Sujatha V. Manohar, JJ. K-Ramaswamy, J. speaking for the Supreme Court repelled the contention of land-holder in the following terms:
"Equally the contention that the claimant is entitled to interest on solatium is also not warranted by express provision under Section 23(2) i.e.," in addition to 'market-value, solatium was required to be paid. Section 34 or Section 28, as the case may be, fastens liability to pay interest only on amount of compensation or such exosess amount of compensation or part thereof determined under Section 23(1). In other words, by virtue of the language of Section 23(2), viz., "in addition to the market value," as provided in Section 23(1), solatium becomes payable. Compensation under Section 23(1), by necessary implication,excludes the liability to pay interest on solatium. Equally, the question of payment of solatium on additional amount was also considered by this Court in P. Ram Reddy v. State of Andhra Pradesh, where it was held that no solarium is payable under Section 23(1-A). So too, no interest is payable on additional amount under Section 23(1-A) on other components except on compensation or excess compensation or part thereof determined under Section 23(1) over and above the award under Section 11 by Civil Court under Section 26 or on appeal under Section 54 respectively."
With great respect, it is difficult to understand how Section 23(1) by necessary implication excludes the liability under Section 28 to pay interest on solatium because Section 23 does not deal with the subject of 'interest' at all. At the same time, we cannot regard this decision as ''per incurium'. The view taken in Prem Nath Kapur case (supra) was reiterated by another three Judge Bench of the Supreme Court speaking through K. Ramaswamy, J vide Yadavmo P. Pathade v. State of Maharashtra, . This is what was observed in paragraph -5.
"Section 23(2) provides that "in addition " to the market value of the land as above provided, the Court shall in every case award a sum at 15% preceding the Amendment Act and after the Amendment Act, 30% on such market value in consideration of the compulsory nature of the acquisition. The Legislature, therefore, made a distinction between compensation under Section 23(1) and the additional amount on such market value as solatium in consideration of compulsory nature of acquisition. In other words, Section 28 does not comprehend payment of interest on solatium when it expressly mentions payment of interest on compensation under Section 28 referable to Section 23(1) of the Act Thus the High Court was right in not awarding interest on solatium. Similar view was taken by this Court after periyar case by a three-Judge Bench in Prem Nath Kapur v. National Fertilizers Corpn. of India Ltd".
It is interesting to note that the contrary view taken in Periyar case (supra) by a two-Judge Bench consisting of L.M. Sharma and K. Ramaswamy, JJ. has been disapproved in the above case of Yadavrao P.Pathade (supra). K. Ramaswamy, J. graciously said that in the earlier case decided by his Lordship sitting with L.M. Sharma, J. a mistaken view was taken. It was observed:
'' Unfortunately, neither the provisions were considered nor the distinction of the above provisions had been brought to the notice of this Court:"
9. It may be recalled that in Periyar case (supra), the learned Judges relied on the observations in Ram Mehar 's case (supra). Though Ram Mehar's case (1Supra) was decided by a Bench of three Judges, perhaps, the learned Judges, who decided Prem Nath Kapur's case (supra) and Yadavrao Pathade 's case (supra) would not have felt the need to refer the matter to the larger Bench for the reason that the said observations in Ram Mehar's case (supra) were in the ., nature of obiter dicta.
10. The underlying ratio as we cull out from the three-Judge Bench pronouncements in Prem Nath Kapur (supra) and Yadavrao Pathade (supra) is that the expression "compensation" in Section 28 takes colour from Section 23(1) and does not comprehend any and every payment made to the landholder for the deprivation of land. In other words, the word 'compensation' in Section 28 should be restricted and confined only to the elements of compensation embodied in Section 23(1).
11. The learned senior Counsel appearing for the appellant wanted to supplement the reasoning discernible from the aforementioned two decisions of the Supreme Court by drawing our attention to Sections 11 and 26 of the Act. It is pointed that the words 'persons claiming the compensation" occuring in Section 11(1) and the phraseology- "the compensation which in his opinion should be allowed for the land" occuring in sub-clause (ii) of Section 11(1) has to be understood in the limited sense of compensation referable to Section 23(1), that is to say, market price plus other factors mentioned in 'secondly to sixthly' it is submitted that the compensation required to be determined by the Collector under Section 11(1) (ii) is nothing else but the compensation ascertained vis-a-vis various clauses of sub-section(l) of Section 23. The learned Counsel endeavoured to make his submission by just a posing Section 11 with Section 26. Section 26 which deals with 'Form of Awards' passed by Court, requires the Judge to specify the amount awarded under clause first of Section 23(1) and also the amounts (if any) awarded under each of the other clauses of the same sub-section. The argument is thus built up that the expression 'compensation' has been primarily used in the Act in a limited sense with reference to the criteria laid down in Section 23(1) and there is no reason why the same expression 'compensation' occuring in Section 28 should receive a wider meaning as inclusive of amounts outside the scope of Section 23(1). The argument is not without force. However, it is not necessary for us to dilate further on this aspect as nothing more needs to be said after noticing the two pronouncements of the Supreme Court by which we are bound under Article 141 of the Constitution. The point with which we are concerned is identical to the point decided by the Supreme Court, when the contra view taken in Periyar case (supra) based on three Judge Bench decision in Ram Mehar case (supra) was expressly dissented from by the Supreme Court, the controversy cannot still survive as to which decision has to be followed or need not be followed.
12. For the reasons aforesaid and as the law now stands, we have no hesitation in concluding that interest under Section 28 cannot be awarded on the additional amounts payable to the respondent-claimant under sub-section(l-A) and (2) of Section 23 of the Act. The reference made by the Division Bench stands answered accordingly. The appeal is partly allowed and the direction in the decree insofar as it provides for payment of interest under Section 28 on the additional amounts payable under Section 23(1-A) and (2) is set aside. We make no order as to costs.