1. This appeal arises out of proceedings for the acquisition of 10,900 Sq. feet of land in T. S. No. 79 of Guntur town. The said land was required by the Guntur Municipality for the High level Service Reservoir for Guntur Water Supply Scheme. The Commissioner of the Guntur Municipality by his letter D/- 16-9-1953 applied for the acquisition of that land for the above purpose. Even prior to the request by the Commissioner the Municipality seems to have taken possession of the land on 30-11-1950. In response to the Commissioner's request, proceedings for the acquisition of the land were started under the Land Acquisition Act (hereinafter referred to as 'the Act') and notification under Section 4(1) of the Act was published on 12-4-1956. The Land Acquisition Officer gave his award on 31-3-1958, whereby he assessed the value of the land at Rs. 8 per sq yard. he awarded 15 per cent solatium on the said amount and awarded interest on the compensation at 6 per cent from 30-11-1950 when the land was taken possession of by the Municipality till 31-3-1958, the date of award. The total compensation awarded was Rs. 16,044-80 . As the respondents herein requested that a reference be made under S. 18 of the Act as they claimed compensation at the rate of Rs. 18 per Sq. yard and also disputed the extent of the site acquired the Land Acquisition Officer made a reference to the Court of the Subordinate Judge. Guntur and that reference was numbered as O. P. No. 33/59.
2. The learned Subordinate Judge after considering the evidence oral and documentary, in the case came to the conclusion that the reasonable price payable for the site was Rs. 8 per sq. yard for a small triangular bit of an extent of 208 sq yards and Rs. 15 per sq. yard for the remaining area.
3. The contention regarding the difference in extent was given up before the learned subordinate Judge. On the above valuation he held that the enhanced compensation payable was Rs. 7021-78 and solatium on this amount was Rs. 1053-25. He awarded interest at 6 per cent per annum on the enhanced compensation from 30-11-1950 till the date of payment. The referring officer, namely the Revenue Divisional Officer Guntur has preferred the above appeal against the judgment of the learned Subordinate Judge. Three contentions are raised in the appeal, namely.
1. that the rate awarded by the court is excessive and it should have adopted the rate of Rs. 8 per sq. yard as given in the award;
2. interest ought to have been granted on the enhanced compensation from the date of award only and not from 30-11-1950, and
3. the rate of interest should have been 4 per cent and not 6 per cent per annum.
4. The appeal first came up before our learned brother Krishna Rao J. It was contended before him by the learned Government Pleader that the Government had not taken possession in pursuance of the acquisition though the award was passed on 31-3-1958 and therefore there is no liability at all on the part of the Government to pay interest. He agreed with that contention but his attention was drawn to an unreported decision of a bench of this Court in F. A. No. 78/1/1958 D/- 23-8-1966 (Andh Pra) dealing with a case under the Hyderabad Land Acquisition Act where it was held that the claimant was entitled to interest at least from the date of notification under section 4(1) of the Act. As it was contended that this ruling is opposed to the plain language of the Act and requires reconsideration he referred this case for decision by a Division Bench. The appeal, thereupon came up for hearing before a Division Bench consisting of Mr. Justices Barasimham and Mr. Justice Vaidya.
5. As they felt that the question regarding interest requires consideration by a Full Bench they formulated the following points for decision by the Full Bench:
'Whether the claimants are entitled to interest under the Act from 30-11-1950 when the Municipality is said to have taken possession 'not under the Act but by private negotiation' (vide the Reference to Court) or from the date of Notification under section 4(1) of the Act, Viz., 12-4-1956 or from the date of making the award viz., 31-3-1958 or from any subsequent date under the Act?'
6. They however added that as the main question is being referred to the Full Bench it was expedient to refer the entire case for decision by the Full Bench. In the above circumstances the entire appeal is before us.
7. The first contention that is ruged by the learned government pleader is that the proper value of the land on the date of acquisition is Rs. 8 per sq. yard as stated in the award and thatthe granting of Rs. 15 per sq. yard for a major portion of the site is not warranted by the evidence on record. The learned Subordinate Judge made an inspection of the acquired site. He found that the land was attractive as a house site and there was possibility of the property being used as such site and several buildings were likely to be constructed upon it in the near future. He, therefore, held that the land was not to be valued merely by reference to the use to which it was being put to at the time of acquisition but also by reference to the uses to which it was capable of being put in the near future. The site in question abuts two roads running north and south and is very near the ring road which is a very important road running round Guntur. The value of the land has naturally to be ascertained with reference to the sale deeds of sites situate near the locality and executed at or about the time of the acquisition. Ex. A-1 is a sale -deed dated 16-10-1950 in respect of a site about one furlong to the north of the acquired site, the value of which works out at Rs. 13-8-0 per sq. yard. The Court below felt that on this basis, the rate of Rs. 15 per sq. yard on 12-4-1956, the date of acquisition for the site acquired would not be unreasonable. In this connection it has to be noticed that the High Court of Andhra was located in Guntur in July, 1954, and the value of the sites at Guntur began to raise very much by about that time. Even subsequently the town of Guntur has been extending year by year and the value of the sites has been increasing steadily.
8. Another sale-deed relied on by the claimants was Ex. A-3, dated 22-4-1956. The rate according to this sale-deed is Rs. 30 per sq. yard. Though this sale-deed is nearer in date to the date in question, the court below did not take this as a basis as these is related to shopping locality though only one furlong from the acquired site. The learned Government pleader's main objection to the judgment of the court below on this aspect of the matter is that the court below ignored Exs. B-1 & B-2 dated 30-11-1953 and 15-4-1954 respectively which are much nearer in date to the date of acquisition than Ex. A-1 dated 16-10-1950.
9. We do not agree that these two sale-deeds relied on by the learned Government Pleader were not considered by the Court below. The court below referred to Ex. B-2 and stated that this is a vacant site and low-lying area and that on the site under Ex. B-1 there are small huts. The rate for the site under Ex. B-2 is Rs. 8-6-0 per sq. yard and B-1 is Rs. 8.
10. The Court below pointed out that the locality of the site in question is a neat one unlike the locality of the sites covered by Exs. B-1 and B-2. The learned Judge was therefore right in not proceeding on the basis of Ex. B-1 and B-2. In considering the adequacy of the amount that has been awarded by a court or tribunal which has got to assess the exact amount, it is a well settled principle that an appellate court ought not to interfere except on the basis of a fundamental or radical error of principle made by the trial court (Vide decision in Venkamma v. Collector West Godavari, : AIR1950Mad650 . This decision was followed by this court in Revenue Divisional Officer v. Appalaswami, : AIR1967AP56 ).
11. We are not satisfied that there has been any error on principle justifying any interference by the appellate Court. On the other hand, we are of the opinion that the compensation awarded by the court below is just and reasonable in the circumstances of the case.
12. The next contention which as has already been observed necessitated the reference to a Full bench is that interest can be awarded on the enhanced amount of the compensation awarded by the Court only form the date of the award. Though it seems to have been argued before Mr. Justice Krishnarao that as the possession was taken only by the Municipality under private negotiations and that the Government has not taken possession under the Act, no interest at all was payable by the Government for any period. The argument before us it that interest should have been awarded from the date of the award. To appreciate this contention it is necessary to set out the relevant provisions of the Act.
'When the Collector has made an award under Section 11 he may take possession of the land, which shall thereupon vest absolutely in the Government free from all encumbrances.'
'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 that the Collector shall pay interest on such excess at the rate of four per cent per annum from the date on which he took possession of the land to the date of payment of such excess into court.'
It is therefore argued that Section 28 directs the award of interest of the enhanced compensation only from the date when the Collector took possession of the land to the date of payment of such excess into court. It is argued that taking possession of the land under this section could only mean taking possession of the land in pursuance of or under the Act and it is only from the date of taking such possession that interest becomes payable under this section. Even tough the Government according to the Government pleader did not take possession of the land under the act at any time it was submitted that having regard to Section 16 of the Act it must be deemed that the Government took possession of the land only immediately after the Collector made the award i.e. on 31-3-1958. We do not see any force in this submission. Section 28 of the Act states that the collector shall pay interest from the date on which he took possession of the land. It does not say that the collector should pay interest only from the date on which he takes possession under the Act. On a plain reading of the section it appears to us that the interest is payable from the date when the Collector takes possession, whether he takes possession under any of the provisions of the Act or by private negotiations or otherwise in anticipation of valid proceedings under the Act for the acquisition of the land in question. That section 28 of the Act has been so understood is also clear form the provision of Chapter XXVI of the Land Acquisition Manual relating to payment of interest on the compensation awarded. Under paragraph 3 or the said Chapter it is stated as follows:
' Independently of the Land Acquisition Act, it may become necessary to take possession of a land urgently. . . The Officer entering upon the land should record a statement from the owner agreeing to his entry. When he takes possession he should if possible obtain a further statement that the owner will not claim interest form the date of taking possession. In cases in which the owner declines to give such further statement interest on the amount of compensation should be included in the award.'
Even assuming that the expression 'taking possession of the land' under Section 28 of the Act, would only mean taking possession of the land under or in pursuance of the Act we do not see any reason why the taking of possession of the land prior to the Land Acquisition proceedings without any objection by the owner (in this case by private negotiation with his consent) followed by valid proceedings under the Act should not be held to be taking possession of the land under the Act. The Act does not prescribe when the Collector representing the Government should take possession of the land under the Act. The Act does not prescribe when the Collector representing the Government should take possession of the land. Under Section 16 of the Act he may take possession after he has made an award, but there is nothing in that section or in any other provision of the Act, which prevents the collector form taking possession of the land earlier with the consent of the owner. On the other hand there are provisions in the Act, for instance, S. 17 which authorises the Collector, in case of urgency to take possession of any waste or arable land needed for public purposes, after expiration of fifteen days from the publication of the notice mentioned in Section 9(1) of the Act. The fact that on 30-1-1950 it was the Municipality that took possession and not the Government would not make any difference as the acquisition of the land by the government was at the instance and for the purpose of the Municipality and it is also stated in the award that the cost of acquisition would be met from the amount deposited by the Municipality under Works Deposit in the name of the Revenue Divisional Officer, Guntur. Therefore no distinction can be made between the possession of the Municipality and the possession of the Government in the circumstnaces of this case.
13. At any rate we are of the opinion that interest is payable on equitable principles on the compensation amount form the date when the owner was deprived of his possession on 30-11-1950. There is abundant authority which will be refereed to presently, for the award of interest from the date of taking possession, even though the possession was taken long prior to the date of notification for acquisition or of the award. It is a well established principle that on a contract for sale and purchase of land, the purchaser has to pay interest on the purchase money from the date of taking possession. This principle is recognised by S. 55(4) of the Transfer of Property Act, which states that where the ownership of the property has passed to the buyer he is bound to pay interest on the purchase money or nay part thereof remaining unpaid from the date on which the possession has been delivered. Even in cases to which S. 55(4)(a) of the Transfer of Property Act is, in terms not applicable it has been held that interest in payable form the date of taking possession on equitable principles. This is State v. A. P. Mills Co., Air 1957 Andh pra 34 where in anticipation of the transfer of the property the prospective buyer was put in possession of the property it was held that Section 55(4)(a) of the T. P. Act has no application as there was no completed transfer. Nevertheless it was held that the situation I governed by the equitable principle which requires the buyer to pay interest on his purchase money from the date of taking possession and which is based on an implied agreement arising out of the fact of taking over possession without paying the consideration amount. The Division Bench consisting of Subbarao, C. J., (as he then was) and Bhimasankaram J., pointed out that this principle is quite independent of the provisions of the transfer of Property Act. After referring to the English decisions on this subject, they pointed out that this equitable principle was applied in India under similar circumstances. In particular, they referred to the decision of the Privy Council in Ratanalal Chunilal v. Municipal Commissioner for the City of Bombay, ILR 43 Bom 181 = (AIR 1918 PC 129 ) where the Judicial Committee observed as follows:
'The Board is of opinion that the right to interest depends upon the following broad and clear consideration. unless there be something in the contract of parties which necessarily imports the opposite, the date when one party enters into possession of the property of another is the property date from which interest on the unpaid price should run. On the one hand the new owner has possession, use and fruits, on the other the former owner, parting with these has interest on the price. This is sound in principle and authority fully warrants it.'
The same principle holds good in the case of compulsory purchase also. In Inglewood Publp Co. v. New Brunswick Electric Power Commission. AIR 1928 PC 287 possession was taken on 13-19-1920 in pursuance of the New Brunswick Electric Power Act, 1920. The award was made on the 30th October 1926, and on appeal from the award the Supreme Court of New Brunswick awarded interest from the date of taking possession i.e., from 13-10-1920. The allowance of interest from that date was questioned before the privy Council. Lord Warrington of Clyffee delivering the judgment of the Board stated as follows:
'it is true that the appropriation under the Act in question is not effected for private gain, but for the good of the public at large, but for all this the owner is deprived of his property n this case as much as in the other, and the rule has long been 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 clear. The statute in the present case contains nothing which indicates such an intention. The right to receive interest takes the place of the right to retain possession and is within the rule.
The respondents in their case state that they expropriated the land on 13-10-1920, the date from which the appeal division directed the interest to be calculated and that date may be taken as correct.'
In Vallabhadas v. Development Officer, Bandra, AIR 1929 PC 163 the Government took possession on 27-11-1919 and proceeded to erect certain building without the necessary notification which was not served until 4-11-1920 when the Government notified under S 6 of the Act, a declaration that the land was required for a public purpose. The main question for consideration before their Lordship of the Privy Council was whether the appellant was entitled to have the building erected by the Government included in the valuation. The Assistant Judge held that the appellant was not so entitled but that he was entitled to compensation for the occupation of the lands by the officials in 1919 before notification on 4-11-1920 and awarded such compensation in the form of interest on the value of the land computed from 27-11-1919 when the Government took possession. Their Lordships of the Privy Council held that under the circumstances of this case the Government Officials were in possession 'not as mere trespassers' but under such a colour of title that the buildings erected by them on the land ought not to be included in the valuation as having become the property of the landowner. Regarding interest they observed as follows;
'the justice of the case was met by holding that the appellant was entitled to compensation for the occupation of the land by the officials before the notification on 4-11-1920 which as before stated, was awarded in the form of interest in the value of the land computed from 27-11-1919 when the Government took possession.'
14. It is therefore seen that even in the above case the Privy council considered it just to award interest from the date of taking possession by the Government even though the award was passed much later. it is no doubt true, as submitted by the Government Pleader that there was no argument addressed on the right to award such interest from that date. But it is to be observed that their Lordships of the Privy Council did not consider the award of interest from the date of taking possession as possession as opposed to the Provisions of the Act.
15. In revenue Divisional Officer v. Venkatarama. AIR 1936 Mad 1999 the Subordinate Judge granted interest at 6% as compensation for the period of occupation by the Public Works Department Officers prior to the award, that is, from 16-1-1925 to 31-12-1927. In that case as urgent possession was required the consent of the owner had been obtained. it was contended before their Lordships that the award of interest was contrary to the revisions of the Act. After referring to the decision of the Privy Council in Air 1929 PC 163 their Lordships stated---
'That furnishes a precedent for the award of interest by way of compensation in the circumstances which are very similar to the present case.'
'As pointed out in 1928 A. C. 492 = (AIR 1928 PC 287) the right to receive interest takes the place of the right to retain possession. We think that the principle of those cases can be applied to the present case. Section 34 of the Act says that the amount of compensation if knot paid on or before taking possession of the land, shall carry interest at rate of 6% per annum from the time of taking possession until the compensation money is paid.'
Their Lordships added;
'No doubt Section 34 contemplates an award having been made. But the foundation of the section is that when compensation is payable and has not been paid, interest for on-payment must be given from the date of taking possession.'
Though this decision is with respect to interest awarded by the Officer under Section 34 with regard to compensation awarded by him. we do not think that there is any difference in principle between the case of interest payable under section 34 of the Act, on the compensation awarded by the officer and the interest payable on the excess compensation awarded by the court under S. 28 of the Act, as in both cases the language is similar.
16. In Satinder Singh v. Umarao Singh, : 3SCR676 it was held that---
'Where the lands are acquired under the Land Acquisition Act and the claimants are awarded compensation, the claimants are entitled to interest on the amount of the compensation for the period between the taking of the possession of the land by the State and the payment of compensation by it to the claimants.'
In that case a notification for the acquisition was made on 23rd March, 1948 but no action was taken in pursuance of the notification. Meanwhile the Punjab legislature passed the East Punjab Requisition of Immovable Property (Temporary Powers) Act 48 of 1948. Under the provisions of that Act the Government requisitioned the land in question for the purpose of resettling the persons who were likely to be evicted from their lands as a result of the construction of the new Capital. It was contended that under this act it was not permissible to award interest on the compensation and this contention was rejected by the High Court. Their Lordships of the Supreme Court, however held that there was nothing in the act which excludes the application of the general rule in the matter of payment of interest. Discussing the general grounds and principles regarding awarding of interest, their Lordships stated as follows:
'What then 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 the income from the property and there is a time lag between the taking of the possession by the State 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 receive interest from the amount of compensation. Stated broadly the act of taking possession of immovable property generally implies an agreement to pay interest on the value of the property and it is on this principle that a claim for interest is made against the State.'
Then they proceeded to refer to the decisions of the House of Lords and the Privy Council in Swift and Co. v. Board of Trade, 1925 AC 520, Birch v. Joy (1852) 3 HLC 565 and AIR 1928 PC 287 and observed:
'it would 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.'
In province of Bengal v. Pawn Kissen Law & Co., : AIR1950Cal498 where the land was acquired under the Defence of India Act (1939) it was held that the arbitrator can award interest to the person whose land has been acquired, on the price of the land and the interest will urn from the date when the land is taken possession of till the date on which the Land Acquisition Collector draws up the award and makes an offer to the person.
17. In Smt. Swarnamayi v. land Acquisition Collector, : AIR1964Ori113 it was held that so far as interest is concerned, it makes no difference whether the possession is taken under the land Acquisition Act or independently of it. In either case the owner becomes entitled to interest on the basis of deprivation of his property without immediate payment of compensation. After referring to several of the decisions on this subject, their Lordships said---
'The learned Advocate General argues that the State had taken possession of the acquired land in 1948 not under the Act and as such the claim for interest is not tenable. This argument is not admissible and the matter is no longer res integra. Authorities are one sided that even if possession is taken prior to the commencement of the land acquisition proceedings the owner is entitled to interest from the date of taking possession on the theory that it comes within the meaning of compensation which is equivalent of what the owner had been deprived of.'
It is therefore clear from the catena of decision discussed above that the claimant is entitled to interest on equitable principles from the date he is deprived of possession even if it be prior to the land acquisition proceedings. Reliance however is placed by the learned Government Pleader on an unreported decision of a bench of this court in F. A. 78/1 of 1956 D/- 23-8-1965 Andh Pra. In that case possession was taken in 1337 F. but proceedings under the Act were not however, taken till 1351F. when the file was transferred to the Talukudar's Office for that purpose. A declaration under Section 5 of the Hyderabad Land Acquisition Act (Corresponding to S. 4 of the Act was made on 7-7-1956 F. The learned District Judge awarded interest at 6% per annum on the total compensation as found by him from the date of notification till the date of final payment. it was argued that the claimant was entitled to interest from the date of taking possession. it was held by this court that under Section 29 of the Hyderabad Act (corresponding to S. 34 of the Act) the claimant would be entitled to interest only from the time of taking possession under the Act, that though the Military authorities were already in possession, they must be deemed to have taken possession under the Act only on the date of notification but not earlier. Hence interest was awarded only from the date of notification. No arguments were addressed in that case that on equitable principles based upon implied agreement the claimant is entitled to interest from the date of taking possession. The various decision of the Privy Council, the Supreme Court and of number of High Courts referred to above, in which it has been uniformly held that the claimant is entitled to interest from the date when the Government takes possession, even if it has been taken prior to initiation of land acquisition proceedings, were not placed before this court. Therefore this court had no occasion to consider whether interest should be awarded from the date of taking possession on principles of justice and equity.
18. Another decision relied on by the learned Government Pleader is Hamberger v. R. D. O. Bandar, : AIR1964AP504 . In that case the notification under s. 4 of the Act was published on 7-10-1955 in respect f certain lands and buildings. They were already in possession of the Government form 1941 as the Mission Society which was the owner had leased the builds on rent to the Government for a favourable rent of Rs. 200/- In that case it was held that the interest on enhanced compensation given by the Subordinate Judge was payable from the date or award inasmuch as the possession as tenant must be deemed to have changed into possession of the Government as owner from that date, till the date of deposit or realisation, as the case may be. The question of interest from the date of compensation to the date of award was not considered or decided by this Court, presumably because throughout that period the owner was getting rent from the Government. There was therefore no question of deprivation of the possession by the land-owner without being compensated for such deprivation. This decision cannot be treated as authority for the proposition that no interest is payable from the date of deprivation of possession, if possession is taken prior to the proceedings under the Act.
19. Having regard to the series of decisions referred to earlier to the effect that the claimant would be entitled to interest from the date when he is deprived of this possession, even if it be before the initiation of the proceedings under the Act we are of the opinion that the claimant in this case will be entitled to interest as and from 30-11-1950.
20. It was next argued that the rate of interest is 4% and not 6%. Under Section 28 of the Central act, the rate of interest stipulated is 6% but by reason of Madras Amendment (Madras Act 12/53) the interest payable is 4% and the argument that the rate should be 4% only is based on this amendment. There is however a proviso introduced by the same amending Act to the following Effect:
'Provided that where such possession is taken before the commencement of the Land Acquisition (Madras Amendment) Act 1953, the foregoing provision shall have effect as if for the rate of four percent per annum specified therein, the rate of six per cent per annum had been substituted.'
As possession was taken in this case on 30-11-1950, that is before the commencement of the amending Act, it follows that the rate of 6% awarded by the court below is correct. In any event as we have held that the interest is payable under principles of equity from the date of taking possession, the rate of 6% which has always been regarded as just and equitable and has even been taken as the proper rate under the Civil Procedure Code will in our opinion meet the ends of justice.
21. It was then argued that this interest should be calculated on the value of the property as on the date of taking possession, that is 30-11-1950. We have held that interest is payable on equitable principles by way of compensation for deprivation of possession without payment of the value thereof. In order to give effect to that principle completely perhaps the logical and proper course would be to calculate the value at the end of each year and award interest thereon up to the date of payment. That result is achieved in effect by the grant of interest on the value as on the date of acquisition, that is 1956 which is somewhere midway between taking possession and the award of compensation, and calculating interest at 6% on that date.
22. For all the reasons stated above, we are of the opinion that the judgment of the court below is correct in every respect and the appeal is therefore dismissed with costs.
23. Appeal dismissed.