1. The question referred to us by Sadasivam and Mudaliyar, JJ. is:--
"Whether an appellant should pay court-fee on the interest payable to him under section 28 of the Land Acquisition Act, and if so, on what basis?"
The appellant whose land had been acquired compulsorily under the provisions of the Land Acquisition Act was, on a reference under Section 18 of the Act, granted by the City Civil Court a sum of Rs. 1570-62 as enhanced compensation with interest at 4 per cent, from 20-7-1959, the date on which the State had taken possession of the land. Sadasivam and Srinivasan, JJ. allowed the claimant's appeal and granted a further sum of Rs. 1570-62 together with solatium at the prescribed percentage. Though in the memorandum of appeal the appellant had undertaken to pay court-fee on the interest over the further enhanced compensation that might be allowed, actually the learned Judges said nothing about interest while disposing of the appeal. The appellant, therefore, sought by a petition to get the decree amended so as to have the interest on such compensation included in the decree. When this petition came up before Sadasivam and Mudaliyar, JJ. they were not inclined to concur with the view of Krishnamurthi v. Revenue Divisional Officer,that as interest formed part of compensation for acquisition of land an appellant was liable to pay court-fee on the amount payable to him as interest. The learned Judges have, therefore, made this reference to a Fuller Bench. In doing so, they have opined that interest payable under Section 28 of the Land Acquisition Act is not part of the compensation awarded for compulsory acquisition of land and that as such Section 51 of the Madras Court-fees and Suits Valuation Act. 1955 would have no application. They have added that such interest is not t paid for acquiring title to the property from the owner, but for compensating him for depriving his possession before payment of compensation.
2. Section 51 of the Madras Court fees and suits Valuation Act reads:--
"The fee payable under this Act on a Memorandum of appeal against an order relating to compensation under any act for the time being in force for the acquisition of property for public purposes shall be computed on the difference between the amount awarded and the amount claimed by the appellant."
Section 4 is the charging section., It requires that no document which is chargeable with fee under the Act shall be filed, exhibited or recorded in, or be acted on or furnished, by any court including the High Court. unless in respect of such document there be paid a fee of an amount not less than that indicated as chargeable under the Act. Section 21 provides how court-fee should be determined or computed in accordance with the provisions of Chapters IV, VI and VIII and schedules I and II. A memorandum of appeal against an order relating to compensation under any Act for the time being in force for acquisition of property should be valued in accordance with Section 51. That means court-fee shall be charged on the difference between the amount awarded and the amount claimed by the appellant and computed and paid as prescribed by Schedule I Art 1. There is no dispute that the appeal before this court which was disposed of by Sadasivam and Srinivasan, JJ. was one within the purview of Section 51. But the point is whether interest payable on the enhanced compensation awarded in the appeal is part of the compensation itself. The word 'compensation' by itself may de hors the context, be of wide import. In its ordinary significance. it means to counter balance make up for make amends for. In that sense, compensation is an equivalent or something to make an equal return to or recompense for. Interest payable for use of money may, therefore, be compensation in the wider sense of the term. Inglewood Pulp and Paper Co. v. New Brunswick Electric Power commission, 1928 AC 492 = (AIR 1928 PC 287), warrants this view. There it was observed that the right to receive interest takes the place of the right to retain possession. This observation was made in the context of compulsory acquisition of land. But the word 'compensation' in Section 51 does not stand by itself. it should be compensation under the relative Act for the purpose of Section 51 and it should be for the acquisition of property. There should be, therefore, a direct relation between compensation and acquisition of property under the relative Act. The further words ' the difference between the amount awarded and the amount claimed by the appellant' also govern the scope and content of compensation mentioned in Section 51. The difference claimed by the appellant should be of the same nature as the compensation itself for acquisition of property. It is therefore, necessary to ascertain whether the interest payable under Sec. 28 of the Land Acquisition Act can be treated as compensation under that Act for acquisition of the property.
3. Part II of the Land Acquisition Act provides for acquisition and the proceedings start with a preliminary investigation, the first step being a notification under Section 4(1). After enquiry under Section 5-A, a declaration under S. 6(1) follows. Thereafter a public notice is required to be given as well as a notice on the occupier intimating that the Government intended to take possession of the land and that claims to compensation for all interests in the land might be made to the Collector. An enquiry by the Collector is enjoined by Section 11 into the measurements of the land, its value and the claims in respect of it. The Collector shall make an award in the light of the findings in the enquiry. In making an award, he should have regard, as mentioned by Sec. 15 to Ss. 23 and 24. Among the factors which go into the determination of the compensation is the market value of the land as by the date of the publication of the notification under Section 4(1). But be it noted that interest payable under Section 28 is not among them. We may mention that because of Section 15 read with S. 23(2), he is bound to include the solatium is part of the compensation is another matter. When the Collector has made an award under Section 11, as authorised by Section 16, he may take possession of the land, which then shall vest in the Government free from encumbrances. The Act indicates that he should pay or deposit the compensation determined and awarded by him for acquisition of the land before taking possessions of it. If he fails to do so,. Section 34 makes it compulsory for him to pay interest at the rate mentioned on the amount awarded. He is required to pay both the compensation and the interest thereon from the date of taking possession until payment. Any person who has not accepted the award may ask for a reference to the court, whether his objection be to the measurement of the land or the amount of compensation. In disposing of such a reference the court shall take into consideration the matters mentioned in Section 23. We have already pointed out that among the matters covered by Section 23, interest payable under S. 34 or S. 28 is not one. But in disposing of the reference, the court may, under Section 28 direct the Collector to pay interest on the excess compensation awarded by it. The order made in the reference, though referred to as an award, is to be regarded as a decree. Section 54 provides for an appeal from such decree. The form of the award by the court indicated by Section 26 is somewhat important. It is evident from this provisions that an award shall specify the amount awarded under C1. (1) of sub-section (1) of S. 23, and that has reference to the market value of the land, and also the amount if any, respectively awarded under each of the other clauses of the same sub-section, together with the grounds of awarding each of the said amounts. The form of an award to be given by court does not include interest payable under Section 28. If it is included, it is by virtue of Section 28. That can make no difference to its character as interest even as Section 27 enjoins that every award shall also state the amount of costs incurred in the proceedings under Part III.
4. What emerges from the scheme of the sections which we have just referred to in the context of the question we are called upon to answer The reference contemplated by Section 18 is as to the amount of the compensation, and that necessarily can have reference only to the items contemplated by Section 23, which do not include interest under Section
28. Compensation is what is paid for the land compulsorily acquired. That is clear from Item (ii) mentioned in Section 11. The objection contemplated by Section 18(1) as to the amount of compensation must necessarily have reference only to such compensation as has been considered and granted under Item (ii) of S. 11 Section 34 itself makes this clear that interest payable under that provision cannot be part of the compensation, which is the equivalent to the value of the land. The moment an award is made by the Collector, he is entitled as of right to take possession. The right of the collector does not depend upon whether he has paid the compensation on awarded by him. It follows. therefore, that interest is required to be paid under Section 34 not as a kind of compensation for taking possession, but because the amount of compensation to which the claimant is entitled, is not paid or deposited on or before taking possession. The implication is that interest is related to the amount of compensation and not to deprivation of possession, which as a matter of right follows the moment an award has been made. When the matter comes in the form of an appeal before court under Section 54 of the Act, we fail to see why a different result should follow merely because section 28 makes the power of the court to allow interest on the excess compensation granted by it discretionary. In fact, but for Raghubans Narain v. Govt., of Uttar Pradesh, AIR 1967 SC 465, we would be inclined to think that the power under Section 28 should not be read in any way differently from the power under Section 34, notwithstanding the use of the word 'may' in Section 28. Anyway the discretion contemplated by Section 28 is judicial discretion which naturally cannot be exercised arbitrarily. Once it is found that a claimant is entitled to a sum of money and for its payment on or before the date of delivery of possession and there is a default. he will more often than not, be entitled to interest thereon. There may, however in a few cases be circumstances which may indicate that the claimant is not entitled to interest. It is perhaps for this reason the Supreme Court was inclined to think that the power under S. 28 was discretionary. Even so, we think that in the absence of special reasons, where excess compensation has been awarded by the court, interest thereon cannot reasonably be denied. In our opinion, interest under Section 28 is not awarded as part of the compensation for acquisition of land, but only as interest on the amount of compensation for acquisition of land, but only as interest on the amount of compensation for the land which the owner is entitled to payment when possession is taken but which the Collector has failed to pay on the due date.
5. On the observations we have just made, two results follow. On is that interest, if any, payable under Section 28 is not part of the compensation for acquisition of the land in the sense that it is quid pro quo for the value of the land taken. The other is that unless there is a special circumstance indicating to the contrary, interest will invariably have to be paid under Section 28 on the excess compensation by the court. That being the case, in our view there is no need at all for the appellant to make a claim for interest on the excess compensation to be allowed in the appeal and, therefore no court-fee will be payable under Sec. 51 of the Madras Court-fees and Suits valuation Act on the interest payable under Section 28 of the Land Acquisition Act.
6. The view we have expressed is not merely in accordance with the scope of the statutory provisions which we have considered. but also with the decided cases: Anandilal v. Addl. Special Land Acquisition Officer. and Suryanarayana Rao v. Revenue Divisional Officer, Guntur. (FB) are directly in point. In the first of these cases, on a consideration of Section 5(2) of the Bombay Court-fees Act and also the scheme of the Land Acquisition Act, Bhagwati and Mehta. JJ. held that interest payable under Section 28 of the Land Acquisition Act could in no sense be regarded as compensation for acquisition of the land. Bhagwati J. who spoke for the Division Bench, observed:
"It is now well settled that the right to receive interest is in substitution of the right to retain possession of the land and when a claim for payment of interest is made by a person whose immoveable property has been acquired compulsorily, he does not make a claim for damages properly or technically so called but he bases his claim on the general rule that if he is deprived of his land, he should be put in possession of compensation immediately................ It will thus be seen that interest claimed on the amount of compensation does not form part of compensation."
7. While, with respect, we concur with this view, we are not to be understood as accepting the view that the interest payable under S. 28 is in lieu of the right of retain possession. As we have mentioned, the moment an award has been made. the Collector is by law entitled under S. 16 to take possession of the land. It cannot, therefore be said that the claimant after the award by the Collector is entitled to continue in possession, but because he is deprived of possession, therefore he will be entitled to compensation for deprivation of possession. But the point is the court held that interest paid under Section 28 is not part of the compensation for acquisition of the land. It is something which is paid not for the land, nor even for deprivation of possession, but on the amount of compensation for the land which he is entitled to payment of immediately possession is taken but the same has not been paid or deposited.
8. The other decision of the Andhra Pradesh High Court was of a Full Bench of three learned Judges. That High Court also took the view that interest payable under Section 28 is not part of the compensation for the land. After examining the relative sections of the Land Acquisition Act, the court said-
"It will be observed that compensation to be awarded for the land acquired under the Act is the market value of the land together with damages or expenses or the loss of profits occasioned by the acquisition of the said land or property. The compensation as computed under Section 23(1) is the amount which has to be set out in the award passed under Section 26(1) and it is that award which is deemed to be a decree under sub-sec. (2) of S. 26. it may be pertinent to notice that neither solatium under sub-sec. (2) of Section 23, nor interest under Sec. 34 forms part of the award. Though in respect of solatium, the court is enjoined in every case to award a sum of 15 per cent. on the market value of the subject-matter in consideration of the compulsory nature of the acquisition, there is no such duty on the court to award interest on that amount, but a statutory liability is imposed on the Collector to pay the amount awarded with interest thereon from the time of taking possession until such time as it shall have been paid or deposited."
9. Overruling the earlier decision in Dodla Mallian v. State of Andhra Pradesh , the Full Bench ruled that the appellant in that case who claimed interest on the excess compensation was not bound to pay court-fee thereon.
10. That interest is not part of compensation for acquisition of land has also been held by the Supreme Court in Shamlal v. Commr, of Income-tax, . The question there of course, was as to the character of the receipt of interest under Section 34, whether it was of a capital or revenue character. But in that connection, the Supreme Court examined the scheme of the Land Acquisition Act and held:--
"The scheme of the land Acquisition Act and the express provisions thereof thus establish that the statutory interest payable under Section 34 is not compensation paid to the owner for depriving him of his right to possession of the land acquired, but is given to him for the deprivation of the use of the money representing the compensation for the land acquired."
On the view, it was held that interest paid under Section 34 was a revenue receipt liable to tax. Though the Supreme Court made the observation with reference to Section 34 of the Land Acquisition Act, it has been equally applied in Govindaraju Chetty v. Income-tax Commr. Madras, to interest payable under Section 28.
11. Relying on Brahmanandam v. Secy. of State. AIR 1930 Mad 45 and certain other decisions in which it was held that solatium was a part of compensation for the land acquired, the learned Additional Government Pleader contended that if solatium could be regarded as part of compensation, there was no reason why interest under Section 34 should not be regarded in the same way. In our view, we are not called upon to decide in the instant case whether solatium is part of compensation. But even so, we are inclined to think that the character of solatium is identical with that of the compensation proper paid or payable for the land acquired. This is clear from Section 23(2) itself, for, it says that in addition to the market value of the land, the court shall award a certain percentage on such market value "in consideration of the compulsory nature of the acquisition."
In , the Supreme Court considered solatium as of a
capital character which implies it is in no way distinguishable from the compensation for the land. The cases relating to solatium are, therefore, distinguishable.
12. Learned Additional Government Pleader further contended that if, as was held in AIR 1930 mad 45, solatium should be included in the claim on which court-fee should be paid, equally interest should have been included in the claim and court-fee thereon paid, But the answer is that under Section 51 a memorandum of appeal against an order relating to compensation is not required to include interest. The learned Additional Government Pleader next urged on the principle ofMohamed Ali Amjad Khan v. Secy of State of India, (1903) ILR 30 Cal 501 and Percival v. Collector of Chittagong (1903) ILR 30 Cal 516 that if a decree should be granted for money, it could be done only if court-fee had been paid thereon. As an abstract proposition, there can be no objection to it. But the question whether court-fee is payable or not will depend upon the charging sections in the Court-fees Act. We have already held that Section 51 of the Court-fees Act. which applies to an appeal, does not require interest payable under Section 28 to be included in the claim. As we said, it is normally awarded by the court on the excess compensation found payable to the claimant.
13. One other argument which we have to notice is with reference to Section 52, Explanation (3) of the Madras Court-fees and Suits Valuation Act. For the appellant reliance was placed on the Explanation to contend that since Sec. 51 did not make a similar provision, no court-fee would be payable on the interest payable under Section 28. But the contention proceeds on the wrong assumption that Section 52 is identical with Sec. 51. Section 52 is applicable to suits and not to appeals arising out of a decree made in a reference under Section 18 of the Land Acquisition Act. In this context, learned Additional Government Pleader referred us to State of Maharashtra v. Mishrilal Tarachand. . But that case related to interest which accrued during the pendency of the suit.
14. We answer the first part of the question referred to us in the negative and in view of it no answer is required for the second part of the question.
15. Answered accordingly.