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A.S. Krishnamurthi Vs. Revenue Divisional Officer - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1970)2MLJ692
AppellantA.S. Krishnamurthi
RespondentRevenue Divisional Officer
Cases ReferredBrahmanandam v. Secretary of State
Excerpt:
- .....application under sections 141 and 152 of the code of civil procedure, read with section 53 of the land acquisition act. the respondent's case was that by a clerical error the provision regarding interest was omitted in the decree and that as he was entitled to interest on the excess compensation from the date of possession to date of deposit, the court may correct the error and grant the same bringing it in conformity with the judgment. the argument on behalf of the state was that the use of the word ' etc.' has no significance and the court by not expressly providing for interest should be deemed to have refused it. the lower court did not accept the contention of the state and granted relief and ultimately awarded interest. as against this, this appeal has been preferred. before us.....
Judgment:

T. Ramaprasada Rao, J.

1. A.S. No. 414 of 1964 is an appeal directed against the order of the learned Subordinate Judge of Tiruchirapalli, who in an interlocutory application before him, in a Land Acquisition case which was originally referred to Court under Section 18 of the Act, allowed interest on the excess compensation granted, but in accordance with Section 28 of the Act. When the reference was disposed of in the first instance, the Court in its judgment fixed the compensation in the instant case at the rate of four annas per square foot with solatium etc. He granted three months' time for deposit of the excess. In the decree which followed, no interest was provided. The claimant (respondent) filed an application under Sections 141 and 152 of the Code of Civil Procedure, read with Section 53 of the Land Acquisition Act. The respondent's case was that by a clerical error the provision regarding interest was omitted in the decree and that as he was entitled to interest on the excess compensation from the date of possession to date of deposit, the Court may correct the error and grant the same bringing it in conformity with the judgment. The argument on behalf of the State was that the use of the word ' etc.' has no significance and the Court by not expressly providing for interest should be deemed to have refused it. The lower Court did not accept the contention of the State and granted relief and ultimately awarded interest. As against this, this appeal has been preferred. Before us the argument of the learned Government Pleader was that the grant of interest being in the discretion of the Court, the judgment of the lower Court is wrong. Mr. K. S. Desikan, learned Counsel for the respondent, contending contra, sustained the legality and propriety of the order of the Court below. Mr. V. V. Raghavan, at whose instance A.S. No. 203 of 1964 was set for being spoken to, urged that interest is not part of the compensation awarded in a Land Acquisition case and therefore it has to be granted independently whether claimed or not and without being subject to the payment of court-fee in accordance with the Madras Court-fees Act. Incidentally we negatived such a claim for interest in A.S. No. 203 of 1964, since it was not claimed and no Court-fee was paid for the relief. Many citations were made by the Bar.

2. We shall examine the scope and nature of the entitlement for interest on the amount awarded either by the Land Acquisition Officer or the Court, as the case may be, in the course of the application and implementation of the machinery for compulsory acquisition as envisaged in the Land Acquisition Act (I of 1894) as amended in Madras. The Land Acquisition Act as any other similar enactment, brought into the anvil by legislative wisdom, projects, the police power or according to American Jurispurdence, the power of eminent domain of the State. Acquisition or requisition is made for a public purpose or in an emergency. In either case, expropriation of property becomes necessary by force of public good. In such cases the owner is deprived of his property by compulsion and is kept out of it in consideration of a substituted payment, which represents the real and fair market value of the property taken and the fair rent or income derived therefrom. In acquisition, it is a permanent divestiture of rights in property; whereas in requisition it would be a temporary phase. In both events the owner is deprived either for ever or for a period from enjoying his property. Such deprivation obviously is compensable, unless otherwise unequivocally stated by the Legislature, whose plenary authority to fix the formula of compensation has certain broad advances and narrow outlets. We are not concerned in this appeal with such issues. As in acquisition or requisition, the rights over the properties in others are purchased and the intermediary proprietorship removed in the name of public purpose, it follows that the vendor should be paid a willing price or compensation for such deprivation. Thus has been evolved the salutary rule of justice, equity and good conscience about the payment of interest on the compensation payable to the owner. This is intended as legitimate panacea for the necessitous loss sustained by the owner who has lost the property permanently in acquisition temporarily during requisition. As acquisition for a public purpose springs from the concept of a socialistic pattern of society, it cannot be a one-way traffic, and the person deprived has got to be recompensed as well towards the fair and real income from which he has been kept away. Such is the force of the conscience of Courts that notwithstanding the absence of a specific provision for interest, Courts are prompted to grant it, as for example in cases of a delayed payment of rent in requisition, in exercise of its equitable jurisdiction as the right to retain possession has been taken away. Under the Land Acquisition Act, however there are specific provisions for the grant of interest under stated circumstances.

3. Before the provisions relating to interest in the Act are examined, the general scheme of the Act, in so far as it is relevant for purposes of this case, may be briefly noticed. Part II of the Act is captioned as ' acquisition,' The Collector or the Land Acquisition Officer after due enquiry in the prescribed manner, makes an award whereby he grants the compensation to the person interested Section 11 provides for such an enquiry and the award to be made shall inter alia contain the compensation which in his opinion shall be allowed for the land, in accordance with Sections 23 and 24 of the Act. The Collector shall thereafter take possession of the land unless under Section 17, such possession was taken before the passing of the award by invoking the urgency provisions. Section 34 which occurs in Part V regarding ' payment' of compensation says:

Payment of interest.--When the amount of such compensation is not paid or deposited on or before taking possession of the land, the Collector shall pay the amount awarded with interest thereon at the rate of six per centum per annum from the time of so taking possession until it shall have been so paid or deposited.

4. Part III relates to reference to Court and procedure thereon. At the instance of the aggrieved party, a reference to Court under Section 18 can be made. A valid reference has to be enquired into by the Court as if it is a normal legal proceeding and thereafter the Court shall pass its award which shall substitute the one already given by the Collector. Under Section 26 every award under this part shall be in writing signed by the Judge. What is an award and what are its contents? The decree of Court on a reference made to it under Section 18 of the Act is primarily the award though fictionally it is called a decree and the statement of the grounds of such an award a judgment. Such a statutory fiction, treating the award as a decree within the meaning of Section 2 (2), Civil Procedure Code, has to be fully implemented and given effect to as if such a putative fact exists and there is no scope to boggle with one's imagination, while interpreting such a deemed decree. This is so provided in Section 26 (2) of the Act. The award shall specify the amount awarded as prescribed in Section 23, together with the grounds for awarding such amounts. This is treated as a judgment. This is contemplated in Section 26 (1) and (2) of the Act. Section 27 thereto makes it incumbent upon the Court to state the costs payable by one party to the other unless it, for valid reasons fails to make a provision for the same. Thus costs awarded are made a part of the ' award.' Section 28 which ex facie vests a discretion in Court, provides for the payment of interest at 4 per cent. per annum (according to the Madras Amendment), over the excess compensation awarded by Court for the delay in payment of the compensation. Section 28 reads:

Collector may be directed to pay interest on excess compensation.--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 six per centum per annum from the date on which he took possession of the land to the date of payment of such excess into Court.

5. The word 'interest' here denotes the additional yardstick to measure compensation awardable. It is not ' interest on money' as is popularly understood. This also is to be part and parcel of the award. It is an integral part of the compensation as it becomes merged in the award by force of statute or the impact of equity. Though Section 28 projects a discretion with the Court to award interest, it appears to be more or less mandatory, as it is now settled law to provide the same equitably as well, in lieu the deprivation of the right to possession of the acquired property. The quality of the money paid under Section 28 is not strictly interest as understood in the law merchant but additional compensation estimated and measured in terms of interest. We have already referred to Section 34 of the Act whereunder the Collector is bound to award interest under certain circumstances stated therein-We are not strictly concerned with such interest here.

6. We shall now refer to the judicial procedure closely connected with the subject, as to the scope, content and nature of such interest granted vis-a-vis the compensation awarded. In an early case reported in Rangaswami Chetty v. Collector of Coimbatore (1910) 7 Mad. Law Times 78 (2) : 5 Ind.Cas. 744 (1), a Division Bench of our Court was of the view that the claimant in a Land Acquisition case is entitled to interest as of right, although apparently he did not press for it in the lower Court. The Privy Council in Lala Narasingh Das v. Secretary of Stale for India in Council (1925) 48 M.L.J. 386 : 1925 L.R. 52 IndAp 133, while parting with the case, observed that the appellant was ' entitled to interest,' which was omitted to be provided by the High Court. Though the above two precedents were noticed by the learned Judges in Subramania Aiyar v. Collector of Tanjore : (1926)51MLJ309 , they were not sure whether the Court is bound to award interest under Section 28 and felt that the matter was not free from doubt. After the latest pronouncement of the Supreme Court in Satinder Singh v. Umrao Singh : [1961]3SCR676 . National Insurance Co., Ltd. v. Life Insurance Corporation of India : AIR1963SC1171 and Raghubans Narain Singh v. Government of Uttar Pradesh : [1967]1SCR489 , the position is crystal clear and in our view, interest which ought to be provided in the award or the deemed decree forms part of it and hence it is woven into the fabric of compensation awardable under the Act and thus integrated with it. The two age-old rules approved by the Supreme Court and propounded originally by either the House of Lords or the Privy Council can be reproduced thus:

(a) In a case where the State or the promoter, in an acquisition or requisition enters into possession without paying the just compensation, then interest is awarded on the general rule of equity which reads:

The parties change characters, the property remains at law just where it was, the purchaser has the money in his pocket, and the seller still has the estate vested in him; but they exchange characters in a Court of Equity, the seller becomes the owner of the money and the purchaser becomes the owner of the estate.' Vide Birch v. Joy (1852) 3 H.L.C. 565.(b) But for all that, the owner is deprived of his property in 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 right to receive interest takes the place of the right to retain possession and is within rule.

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 the right to retain possession.' Vide Inglewood Pulp and Paper Co., Ltd. v. New Brunswick Electric Power Commission L.R. (1928) A.C. 492.

7. Thus the right to claim interest is an adjunct to the right to retain possession. Compensation is only the money equivalent of the total loss of the right to retain possession. The import of the word ' compensation ' is something that makes good a lack or something that equalises or makes things equivalent. This being the popular meaning of the word, and the same having been understood in that light by established judicial precedents, interest which is also irretrievably a component of such an equaliser for the rights divested in compulsory acquisition, it has a nexus to the word 'compensation' and is only another phase of it. The Privy Council in Inglewood Pulp and Paper Co., Ltd. v. New Brunswick Electric Power Commission L.R. (1928) A.C. 492, which stated the second of the rules as above, has made it explicit that right to interest springs from the right to retain possession, for which deprivation compensation is awardable under the Act.

8. In Raghubans Narain Singh v. Government of Uttar Pradesh (1967) 2 S.C.J. 214 : A.I.R. 1967 S.C. 465 , the following two questions arose for consideration:

(1) Whether in the absence of a specific objection as to interest in the appellant's cross-objections, the High Court ought to have gone into that question, and

(2) Whether on a proper interpretation of Section 28 the Court has a discretion to grant interest at a rate less than 6 per cent.

9. The Supreme Court held that the award of interest under Section 28 of the Act raised a question of interpretation of that section and was therefore a question of law, which can be raised even for the first time in the Court of last resort. Reliance was placed upon the following statement of law by Lord Watson in Connecticut Fire Insurance Co. v. Kavanagh L.R. (1892) A.C. 473:

When a question of law is raised for the first time in a Court of last resort upon the construction of a document or upon facts either admitted or proved beyond controversy, it is not only competent but expedient in the interests of justice to entertain the plea.

10. But it should be noted, however, that the learned Judges of the Supreme Court were concerned with the main question whether the Court had a discretion to provide a rate per cent. of interest other than that provided in the Land Acquisition Act. Negativing it, their Lordships said that where the Court exercises its discretion under Section 28 and grants interest, the interest has to be at the rate prescribed. Even such a discretion in Section 28 has now been held to be only in form, but in substance it is a mandate. But it was not necessary for them to consider the import and content of the word ' interest' in juxtaposition to the word ' compensation.' This was done in the earlier Supreme Court cases cited above. Thus ' interest' is a species of compensation, the genus of which is the substitute for the right to retain possession from which again emanates the right to claim compensation and the right to claim the statutory solatium, in the case of compulsory acquisition. In fact this is what the Privy Council did in Lala Narasingh Das v. Secretary of State for India in Council (1925) 48 M.L.J. 386 : L.R. 52 IndAp 133. In fact, interest has been awarded by way of compensation in cases which arose under the Land Acquisition Act. The Privy Council did so in Vallabhadas Naranji v. Development Officer, Bandra I.L.R.(1929) 53 Bom 589 : L.R 56 IndAp 259 : 57 M.L.J. 139 , Cornish and Varadachariar, JJ., in Revenue Divisional Officer, Trichinopoly v. Venkalarama Ayyar : (1936)71MLJ69 , quoting with approval the principle in Inglewood Pulp and Paper Co. Ltd. v. Mew Brunswick Electric Power Commission L.R. (1928) A.C. 492, observed that the right to receive interest takes the place of the right to retain possession and that the right to award interest by way of compensation is well founded. They placed 'interest' on a par with compensation. A question arose in the Allahabad High Court whether interest paid in land acquisition proceedings is assessable income exigible to income-tax. After elaborately considering the English precedents, a Division Bench of the Allahabad High Court in Behari Lal Bhargava v. Commissioner of Income-tax C.P. and U.P. : [1941]9ITR9(All) held:.it follows that interest awarded under Section 28 of the Land Acquisition Act is in the nature of compensation for the loss of the late owner's right to retain possession of the property acquired. In other words it is damages assessed in terms of interest for loss of possession of property upto the date of receipt of its consideration.

11. Our conclusion is that interest, though named as such, truly constitutes a part of the compensation discerned (sic) for, which is attributable to the fact that the claimant has been kept out of his property for a length of time, namely, from, date of taking possession to the date of deposit of the amount.

12. But the learned Counsel for the claimant strenuously contended that interest : is not part of compensation and that it should be granted whether claimed or not and whether Court-fee on such a claim is paid or not. In Suryanarayana Rao v. Revenue Divisional Officer, Guntur : AIR1969AP55 the learned Judges relied on the dicta of Bhagwati, J., in Anandilal v. Additional Special Land Acquisition Officer : AIR1965Guj212 , and differed from the ratio of its Court in Dodla Malliah v. State of Andhra Pradesh : AIR1964AP216 , a Division Bench consisting of Satyanarayana Raju and Venkatesam, JJ. observed:

The appellants also claim 15 per cent. statutory solatium besides the compensation amount. It was laid down in Brahmanandam v. Secretary of State : AIR1930Mad45 , that where a person being dissatisfied with the amount of compensation awarded to him under Section 18, Land Acquisition Act, wants to appeal, insisting in ease of his' success that not only the excess market value but also 15 per cent. of the same should be decreed in his favour, he must pay Court-fees not only on the excess market value, but also on 15 per cent. thereon. It is also needless to point out that since the appellants are claiming interest on that amount, they are bound to pay Court-fee on that amount as well.

13. As a matter of fact, in Brahmanandam v. Secretary of State for India in Council : AIR1930Mad45 , it was held that solatium granted by an independent provision of the Land Acquisition Act forms part of compensation, and is therefore to be treated as part of the amount awarded by Court. But the Full Bench in Suryanarayana v. Revenue Divisional Officer Guntur : AIR1969AP55 considered the later part of the above excerpt as obiter and observed that they were not called upon to decide in that case whether solatium is part of compensation or not. With the utmost respect to the learned Judges who decided the Full Bench case, we are unable to be persuaded to hold a similar view. If according to our High Court, solatium is indeed part of compensation and stems out of it then it reasonably follows that interest, though provided in Section 28 of the Act which is yet again an advantage which slopes down from such compensation, is also an integral part of it. As already discussed in full such interest is awarded in lieu of the deprivation of the right to retain possession of the acquired property and in this view, interest gets impregnated with compensation. In fact, Gajendraeadkar J. in Satinder Singh v. Umrao Singh : [1961]3SCR676 categorically says:

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.

14. The underlining is ours. Compensation under Section 23 also springs from such a right, which is lost due to compulsory acquisition. Both are in the same plane and similarly placed. Again the learned Judges of the Andhra Pradesh High Court in deciding Suryanarayana Rao v. Revenue Divisional Officer, Guntur : AIR1969AP55 , also the Division Bench who decided Anandilal v. Additional Special Land Acquisition Officer : AIR1965Guj212 did not consider the import of Section 28 of the Act which makes the interest granted as part of the award. This apart, if once it is irrefutable that the to receive interest is in substitution of the right to retain possession, then we unable with respect, to agree with Bhagwati, J., in Anandilal v. Additional Special Land Acquisition Officer : AIR1965Guj212 , when he concludes that interest claimed on the amount of compensation does not form part of compensation, for, in our view, compensation also is paid in lieu of possession, being taken by compulsory acquisition. Title in the acquired land passes to the Government not by any overt act of parties, but because of the statutory prescription in Section 16 which provides:

When the Collector had 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.

15. Again in both Anandilal v. Additional Land Acquisition Officer : AIR1965Guj212 , and Suryanarayana Rao v. Revenue Divisional Officer, Guntur : AIR1969AP55 , the question whether solatium granted in acquisition proceedings forms part of compensation or not was left open. Our High Court has taken the view, nearly 30 or 40 years ago, that solatium and interest granted in acquisition proceedings are part of compensation. Interest being yet another spark from the fire of compensation, we are bound to hold that interest is part of compensation awarded by the Court in proceedings under Section 18 of the Act.

16. The further questions are whether such interest should be granted whether claimed by the interested person or not; and whether even if claimed this Court is bound to grant it notwithstanding the non-payment of Court-fee thereon in accordance with law. According to the Supreme Court in Raghubans Narain Singh v. Government of Uttar Pradesh (1967) 2 S.C.J. 214 : A.I.R. 1967 S.C. 465, the grant of interest under Section 28 of the Act raises a question of law and it can be considered by the High Court even when the referred Court has not granted the same. In that case the Supreme Court reviewed the question and granted interest although the High Court did not provide for it. In all the cases including the one before the Andhra Pradesh High Court in the Full Bench case, a claim for interest was however made. Rights vested in individuals whether statutory, equitable or otherwise have to be agitated so as to obtain relief. Suo motu Courts are not expected to take cognizance of such rights in appeal, unless they arc moved for the purpose. In our view, no provision for interest under Section 28 of the Act at the High Court level can be made in an appeal under Section 54 of the Land Acquisition Act unless such interest is asked for and claimed specifically in the memorandum of appeal.

17. Even when such a claim is made, is the Court powerless to grant it, if the necessary Court-fee under the Court-fees Act is not paid? The poser, in our view, has to be answered in the affirmative. An appeal shall lie in any proceeding under the Act to the High Court from the award or part of the award of the referred Court. A further appeal against the decree of the High Court is provided to the Supreme Court. Such appeals are subject to the provisions of the Code of Civil Procedure. We have already expressed that such awards are deemed to be decrees within the meaning of Section 2 (2) of the Code. Section 51 of the Madras Court-fees and Suits Valuation Act, 1955, runs as follows:

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.

18. Thus Court-fee is payable between the amount claimed and the amount awarded. If the appellant in a land acquisition appeal intends to claim interest on the excess compensation, he should ask for it and pay court-fee thereon. Further, as interest forms part of compensation, the payment of court-fees as prescribed is absolutely necessary. A litigant cannot escape the burden of court-fee by omitting to ask for a relief, to which he might ultimately be entitled. This would be evasion and ought not to be encouraged. Explanation (3) to Section 52 of the Court-fees Act, which applies to the generality of appeals filed against decrees and judgments of Courts also lends support to the view that the claim for interest being part of compensation and compensation being the subject-matter of the appeal, shall suffer court-fee as prescribed and in the same manner as the main claim for compensation. Ananthakrishna Aiyar, J., in Brahmanandam v. Secretary of State for India in Council : AIR1930Mad45 , held:

An appellant whose lands were acquired under the Land Acquisition Act but who, being dissatisfied with the amount of compensation awarded to him by the Court on a reference made to it under Section 18 of the Act, appeals to the High Court, is bound to include in the valuation of his appeal the amount of 15 per cent. of the excess market value and pay Court-fee thereon.

19. In land acquisition cases, solatium is a creature of statute; even so in these cases interest is the panacea granted by law and tempered by equity. Both the subjects are to be equally treated and thus understood, both claims ought to be included in the valuation of the appeal and court-fee has to be paid on each of the counts.

20. In A.S. No. 4.14 of 1964 the further question is whether the order of the Court below is wrong. In our view it is not. The learned Subordinate Judge rightly held that the award of interest was accidentally omitted in the decree and that such a decree has to be corrected. The use of the word ' etc. ' is not without significance. There has been an omission which has been relieved by the lower Court exercising jurisdiction under Section 152, Civil Procedure Code. This is not a case where Section 34 Civil Procedure Code, applies. We are inclined to agree with the learned Subordinate Judge. As interest is part of compensation, it cannot be rightly whittled down on technical grounds. The appeal is dismissed. There will be no order as to costs.

21. In the view expressed by us in the main appeal, no further orders are necessary in A.S. No. 203 of 1964, which has been heard by us in Court with the other for convenience.


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