1. This is an appeal against the judgment of the District Judge, Ganjam, refusing to grant interest to the appellants on the compensation amount paid to them in respect of certain lands acquired by the Government for the construction of some quarters of the Superintending Engineer, Western Circle, Berhampur.
2. The appellants owned some A 4.12 cents of land in mouza Bidyadharpur in the town of Berhampur. The Government was in need ot some lands for the construction of staff quarters of the Super-intending Engineer, Western Circle. Before any formal proceeding under the Land Acquisition Act was taken up, the Executive Engineer, P. W. D., Ganjam, made negotiations with the appellants and took possession of the said lands on 28-12-1948 for the aforesaid purpose. After faking over possession, the Government proceeded to construct the necessary quarters in the year 1949-50 and duly let out the same to the staff. While giving over possession, the appellants, however, gave their consent in the following terms :
' We hereby agree to give our consent to make over the following sub-divisions of land of the accompanying plan of village Bidyadharpur, Agra-haram to the Executive Engineer, Ganjam Division, measuring approximately four acres including a well for the construction of Superintending Engineers Staff quarters at Berhampur, pending formal land acquisition proceedings and payment of proper compensation.
Sub-divisions Nos. 40 to 60-24, 27 and 63 to 68.'
This was signed on 28-12-1948 by Sri L. Panigrahi (then a Judge of this Court), and the present appellants. On that very day, i.e., on 28-12-1948, they also delivered possession of the said lands to the officials of the Public Works Department. Formal proceedings under the Iland Acquisition Act (hereinafter called 'the Act') were, however, taken up much later on. The notification under Section 4(1) of the Act was issued on 8-7-1950. After necessary enquiries, the Land Acquisition Officer gave bis award as late as on 25-10-57 fixing the compensation at a sum of Rs. 1,04,100.83 nP. He did not, however, award any interest on the compensation money. The claimants-appellants withdrew the amount under protest the same day and reserved their right to claim interest and made endorsement to that effect in the appropriate voucher.
3. On 12-11-1957, the appellants filed a petition under Section 18 of the Act claiming interest at 6 per cent per annum on the compensation amount from 28-12-48, that is, from the date when they gave up their possession, till 28-10-57, the date of the aforesaid award and requested the Collector to refer the matter to the District Judge for a legal adjudication of their right to claim interest. The matter was referred to the District Judge in the usual course and came up for consideration befors him in Miscellaneous Case No. 5/57. The learned District Judge rejected the claim for interest on two grounds, viz., (i) The appellants not having made any previous claim for interest, shall be deemed to have waived their right to such interest; and (ii) That the possession of land having been taken by negotiation and not under Section 17 of the Act, the appellants were not entitled to any interest under Section 34 of the Act. The correctness of the decision of the learned District Judge is now challenged in this appeal.
4. The only question for consideration in the appeal is whether the appellants are entitled to any interest on the compensation amount and if so, from which date. The admitted position as appears from the Collector's reference to the District, Judge under Section 18 of the Act is as follows :
(i) That the Public Works Department took; possession of the land on 28-12-1948 with the consent of the land owners; (ii) That the appellants accepted the compensation amount without prejudice to their right to claim interest; and (iii) That the officer while taking possession of the land did not obtain a statement from the owners that they will not claim any interest from the owners from the date of taking over possession as envisaged in Rule 3 of Chapter XXVI of the Land Acquisition Manual.
5. Mr. Mohanty, learned counsel for the appellants, contended that at no time did the appellants waive their claim to receive interest on the compensation amount and whether the possession of the land was taken by private negotiation or under the Land Acquisition Act, the appellants are entitled to receive interest as of right from the date of dispossession until the value of the land or the compensation amount was paid. As I shall presently discuss both the contentions are correct.
6. It is well settled that the burden of proving a waiver is on the party who relies upon the same. Moreover, the waiver must be expressed in clear and unambiguous terms. There is nothing in the case to show that the appellants abandoned any claim for interest. All that was said in the counter filed by the State was that in the agreement dated 28-12-1948 the appellants did not put forth any claim for interest while giving over possession of trie land and thus, their right to claim interest if any is deemed to have been waived. This, however, is not comet There is nothing in the agreement to make out & case of abandonment of any claim for interest On the other hand, from the terms of the agreement a stated above, it is absolutely clear that the appellants gave over possession on the clear understanding that formal Land Acquisition proceedings were to be taken up in due course and proper compensation paid for the land. 'Proper compensation' in its context means only such compensation as is provided under the Land Acquisition Act and such compensation would necessarily convey the statutory interest permissible under Section 34 of the Act, Moreover, by any construction the expression 'proper compensation' can never mean to exclude interest. In a case reported in State of West Bengal v. Mrs. Bela Banerjee, AIR 1954 SC 170 the expression 'compensation' has been construed as the just equivalent of what the owner has been deprived of. In cases where the owner is deprived of his possession of certain property without payment of compensation money, he undoubtedly loses both his interest on the money as also his possession. Justice requires that he should not lose both and to compensate his property is either to pay him immediately the consideration money or to pay interest on the same until the date of payment. In some cases the delay in payment of compensation is so great that without interest the compensation is merely illusory and does not represent the true loss to the owner. One of the grounds that weighed with the learned District Judge in favour of the waiver was that the appellants did not raise their claim for interest prior to the passing of the award. This ground is wholly untenable. Prior to the award there was no scope for any claim. At the stage of the enquiry, prior to the passing of the award, the Collector is concerned with the question of area of the land, the amount of compensation that is to be paid for the same and the apportionment of the same among different claimants and in determining the amount of compensation, he has to take into consideration the directives given in Section 23. Moreover, it is not necessary tot a party to put forth any specific claim for interest which he is otherwise entitled to under the Law. In a case reported in Md. Sajjad Ali Khan v. Secy. of State for India, AIR 1933 All 742 the amount of 15 per cent of solatium as provided under Section 23(2) of the Act was not allowed to the owner on the ground that he did not specifically claim for the same. Their Lordships held that in the case of compulsory acquisition the award of 15 per cent on 'the market value is a statutory amount of compensation in addition to the market value and the Court has no power to deprive a claimant of that amount merely on the ground that he did not put forth any claim for the same. It was contended that the statutory interest of 6 per cent provided in Section 34 of the Act stands absolutely on the same footing as a solatium under Section 23(2) and has to be allowed irrespective of the fact whether the owner claimed for the same or not. There is undoubtedly a good deal of force in this contention.
7. In a case reported in Secy. of State v. Sital Prasad, AIR 1938 Pat 266 their Lordships held that under Section 34 the claimant is entitled to interest at 6 per cent per annum from the date of dispossession by Government until the sum of compensation was paid or deposited and the mere existence of an agreement between the parties that the claimant should take away the materials on land to be acquired does not disentitle the claimant to the statutory interest unless it is shown that the claimant had relinquished his statutory claim of interest. There is nothing on record to show that the claimants had at any stage of the proceedings unequivocally expressed any intention to abandon their claim for interest. All that they did, they agreed to part with possession of the land before the formal land acquisition proceedings were taken up. From this, no case of waiver can be made out. Thus, the contention raised on bdhalf of the State that the appellants waived their right to claim interest must be rejected.
8. Rule 3 of Chapter 26 of the Land Acquisition . v. New Burns-wick Electric Power Commission, AIR 1928 PC 287 their Lordships held that 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 clear. They further held that--
'On a contract for sale and purchase of land it is the practice to require the purchaser to pay interest on his purchase money from the date when he takes possession and the same rule applies even in case of compulsory acquisition as the owner is deprived of his property in this case as much as in the other.'
9. In the case reported in Satinder Singh v. Umrao Singh, AIR 1961 SC 908 their Lordships held that the right to receive the interest takes the place of the right to retain possession and a deprived owner can base his claim for interest on the general rule and if he is deprived of his land, he should immediately put in possession of the compensation money.
10. In a case reported in National Rly. Co. v. Niagara Parks Commission, AIR 1941 PC 114 their Lordships held that when the purchaser obtains possession of the subject-matter of the contract before payment of the purchase-price, he must in the absence of express agreement to the contrary, pay interest on his purchase-money from the date when he gets possession until the date of payment, because it would be inequitable for him to have the benefit of possession of the subject-matter of the contract as also the purchase money. This principle applies not only to sales and purchases of lands, but it applies also to all cases where the courts of equity would grant specific relief and the rule is applicable.
11. It was contended by the learned Advocate-General that Section 34 has no application to the case as possession of the land was not taken under any of the provisions such as Section 16 or Section 17 of the Act, but only by private negotiation. This contention is without any force. Though possession was taken on 20-12-48 through negotiation, it was clearly agreed between the parties that formal land acquisition pro-ceedings were to be taken up and proper compensation was to be paid for the land. Accordingly notification under Section 4(1) was in fact issued on 8-7-1950 and the subsequent proceedings were also taken up and the award was given on 25-10-57 under the Act. Even assuming that the possession of the land was not taken under the Act, but only by private negotiation, it makes no difference so far as the payment of interest is concerned. The owner on general principles of law receives interest because of his deprivation of property and not merely because it was provided in a particular Act. In the case reported in State of Orissa v. Banamali Babu, ILR (1961) Cut 451 it was held by the Division Bench of this Court that the arbitrator appointed under the Orissa Act 18 of 1948 is entitled to award interest to the deprived owner in the manner provided under Section 34 of the Land Acquisition Act even though there was no specific provision for interest in that Act and such interest was made payable from the date of dispossession till the date of payment. That apart, we have already seen that the formal proceedings under the Act were clearly contemplated by the parties though possession was given up beforehand. No doubt, such possession is not contemplated under Section 16 or Section 17 of the Act, but the terms of Section 34 cannot be restricted only to cases of possession under Section 16 or Section 17 and may even conceive of cases of possession prior to the notification under Section 4 of the Act.
12. It was further contended that assuming that Section 34 has application to the case the appellant will not be entitled to get any interest prior to 5-7-50, the date of the notification under Section 4(1) of the Act and as such the appellants are not entitled to any interest from 23-12-48 to 5-7-1950. This contention advanced on behalf of the State is again misconceived, inasmuch as the owner, as already stated, becomes entitled to interest by reason of deprivation of his property without immediate payment of compensation, from the date of dispossession whether such dispossession was the result of notification under Section 4(1) or the outcome of private negotiation. That a dispossessed owner is entitled to the interest on the compensation money even for the period prior to the notification, has been made clear in a decision of the Privy Council reported in Vallabdas Narainji v. Development Officer Bandra, AIR 1929 PC 163. In that case the Government resolved in 1919 to acquire the claimant's land under the Land Acquisition Act and by arrangement with the Suti-dars took possession of such lands and erected certain buildings prior to the notification under the Act, which was made sometime in November 1920, declaring that the land was necessary for some public purposes. There the question was whether the dispossessed owner was entitled to compensation for the period of occupation of the land by the officials before the formal notification of November 1920. Their Lordships held that the Government officials were in possession 'not as mere trespassers' but under such colour of title that the buildings erected by them ought not to be included in the valuation as the property of the land-owner. It was held that the justice of the case was met by holding that the appellant was entitled to compensation for the occupation of the lands by the officials before the notification of 4th November 1920 which was in the form of interest in the value of the land computed from 27th November 1919, the date of dispossession. This case fully supports the claim of the appellants that they are entitled to get the interest even for the period prior to the actual notification dated 8-7-1950.
13. In a case reported in Revenue Divisional Officer v. Venkatarama Ayyar, AIR 1936 Mad 199 their Lordships following the aforesaid Privy Council decision AIR 1929 PC 163 held that the right to receive interest takes the place of the right to retain possession and awarded interest in accordance with Section 34 of the Act from the date on which the Govt. Officer actually took possession. In a Bench decision of this Court, reported in Collector of Puri v. Hrushikesh Mitra, AIR 1961 Orissa 135 their Lordships followed the principle of law laid down in the aforesaid Privy Council decision and directed compensation to be paid from the date of taking over possession which was anterior to the date of the commencement of the proceeding under the Land Acquisition Act. The Calcutta High Court in a case reported in Province of Bengal v. Pawn Kissen Law and Co., AIR 1960 Cal 498 also followed the same principle. In view of this position in law, it must be held that the appellants are entitled to receive interest at the rate of 6 per cent from 28-12-1948 the date of giving up the possession, till 25-10-57 the date of the award.
14. The appellants' claim for the interest of Rs. 55,000/- (Fifty five thousand) must be allowed. The appeal is thus allowed with costs throughout.
15. I agree.
16. In the course of hearing I expressed the view that the Government was ill advised to resist the claim of interest. I would briefly state the reasons in support of my view.
17. For clear appreciation of the legal principle, the undisputed facts may be stated. The acquired land was taken possession of on 28-12-1948 by the Executive Engineer, Ganjam Division, for the construction of the staff quarters of the Superintending Engineer, subject to the formal land acquisition proceeding and payment of proper compensation. A consent statement was taken in writing from the claimants to that effect. In 1949-50 residential quarters were constructed on the land and tenanted to the staff. The land acquisition proceedings were started on 8-7-1950 when the notification under Section 4(1) of the Land Acquisition Act, hereinafter to be referred to as the Act, was published. On 25-10-1957 the award was made. Rs. 1,04,120.83 nP. was awarded as compensation including solatium of 15 per cent on the market value under Section 23(2) in consideration of the compulsory nature of the acquisition. No interest was, however, given. On the very day the compensation was paid to the claimants who accepted the same without prejudice to their right to claim interest. The subject-matter of the appeal is whether the claimants are entitled to interest from 28-12-1948, when the possession was delivered, till 25-10-1957 when the compensation was paid. The claim is laid at Rs. 55,000/-.
18. The learned Advocate General's sole contention may now be noticed. Sections 16 and 17 are the only sections relating to the taking possession of the land. Section 16 envisages taking possession of the land by the Collector after making an award under Section 11. Section 17 conceives of cases of the special powers in case of emergency and that also is to operate after the starting of the land acquisition proceedings with regard to certain classes of land. There is no dispute that possession has not been taken by the Government under Section 16 or Section 17. The learned Advocate General contends that no interest is payable under Section 34 unless possession is taken either under Section 16 or under Section 17.
19. In ILR (1961) Cut 451 a Bench of this Court, consisting of the learned Chief Justice and my learned brother, following AIR 1954 SC 170, held that 'compensation' means 'the just equivalent of what the owner has been deprived of.'
Though under the Orissa Act 18 of 1948 there is no provision for payment of interest corresponding to Section 34 of the Act, interest was allowed to the owner from the date of dispossession till the date of final payment. Interest payable in such cases was held as by way of compensation for the loss of income from the property acquired. This judgment was pronounced on 24-11-1960. The identical view was taken by the Supreme Court in AIR 1961 SC 908, on 2-2-1961. These authorities are by themselves sufficient to hold even if Section 34, in terms, may not apply, the owner is entitled to interest as one of the constituent elements of compensation. The learned District Judge delivered his judgment on 9-5-1961 subsequent to the judgments of the High Court and the Supreme Court. In fadt the Orissa decision was cited before him. The opposition of the Government after these judicial pronouncements can be nothing else other than frivolous.
20. By a series of decisions of the Privy Council and Supreme Court, the following propositions may be taken as well established and apply as such to private sales as to the compulsory acquisition of land--
(1) The act of taking possession is an implied agreement to pay interest.
(2) The right to receive interest takes the place of the right to retain possession.
(3) As a corollary of the aforesaid two propositions, if the owner is deprived of the land, he 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. See Ratanlal Choonilal Pannalal v. Municipal Commr. for City of Bombay, AIR 1918 PC 129; AIR 1928 PC 287; AIR 1929 PC 163; AIR 1941 PC 114 and AIR 1961 SC 908.
21. 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 as was enunciated in ILR (1961) Cut 451 : The decisions, which enunciate this view and are on all fours with the present case, are AIR 1929 PC 163, AIR 1936 Mad 199 and AIR 1950 Cal 498. In AIR 1929 PC 163 the land was taken possession of by way of arrangement as in this case merely on the basis of a resolution passed by the Government prior to the starting of the land acquisition proceed-ings. In AIR 1936 Mad 199 possession was taken on 16-1-1925 though the notification under the Act was made on 28-10-25. In AIR 1950 Cal 498 requisition was made on 15-11-1944, possession was taken on 12-4-1945 and the land acquisition proceedings were started on 21-2-47. In all these cases their Lordships held that interest was payable from the date of taking possession even though the land acquisition proceedings had not been started by then. The matter is very succinctly answered in AIR 1936 Mad 199 thus :
'No doubt Section 34 contemplates of an award having been made, but the foundation of the section is that when the compensation is payable and has not been paid, interest for the non-payment be given from the date of taking possession.'
It is to be emphasised that AIR 1950 Cal 498 was approved and followed in ILR (1961) Cut 451. The learned Advocate General's contention is wholly devoid of merit.
22. I would close the discussion by citing a passage from Fry on Specific Performance and another passage from Cripps on Compulsory Acquisition of Land which elucidate the justice thereby behind the rule as to why interest is payable on the compensation from the date of taking possession even though the title either under the private sale or under compulsory acquisition vests subsequently.
23. The passage from Fry on Specific Performance, Sixth Edition, in para 1299 at page 640 runs thus :
'Now it is obviously inequitable, in the absence of express and distinct stipulation, that either party to the contract should at one and the same time enjoy the benefits flowing from the possession of the property and those flowing from the possession of the purchase-money. The estate and the purchase-money are things mutually exclusive. You cannot have both money and mud. And so neither party can at the same time be entitled both to interest and to rents.'
As I have already said, it is settled by the authorities of the Privy Council and the Supreme Court that this principle, applicable to cases of private sale, has application with full force to cases of compulsory acquisition.
24. Cripps on Compulsory Acquisition of Land, Eleventh Edition, also gives the identical view on para 228, part 3, at p. 567 thus :
4. 'Interest on purchase money or compensation.' 3-323. Where entry made, (i) with consent. Where entry on the lands to be purchased or taken is made by the promoters with the consent of the vendor under Section 84 of the Land Clauses Act, 1845, before the payment of purchase money, the promoters are liable to pay interest at the rate of 4 per cent. From the time of entry, that is, as soon as the vendor ceases to be entitled to the lands and profits, in accordance with the ordinary practice which regulates the liability of a purchaser to a vendor.
25. No other point has been urged by the learned Advocate General and the appeal must be allowed with costs throughout.