Appeals Nos
396 to 398 and 419 to 421 of 1959 and 152 of 1960
Appeals by special leave from the judgment and order dated November 5 1958 of the Punjab High Court in First Appeals from Orders Nos
42 to 44 60 to 62 and 55 of 1955 respectively
M C Setalvad Attorney General for India section N Andley J B Dadachanji and Rameshwar Nath for the appellants in C As
396 to 398 of 59 and Respondent No 2 in C As
419 to 421 of 59 and 152 of 60
A V Viswanatha Sastri and G C Mathur for the appellant In C As
419 to 421 of 59 Respondent No 1 In C As
396 to 398 of 59 and Respondent No 3 In C A No 152 of 60
G C Mathur for the appellant In C A No 152 of 60
Gopal Singh and D Gupta for Respondent No 2 In C As
396 to 398 of 59 and Respondent No 1 In C As
419 of 59 and 152 of 60
February 2
The Judgment of the Court was delivered by 679 GAJEMDRAGADKAR J
This is a group of seven appeals all of which arise from the same land acquisition proceedings in respect of which the Punjab Government originally issued a notification under section 4 of the Land Acquisition Act 1894 on March 23 1948
By this notification the State Government declared its intention to acquire land in the Ambala District for the construction of the new Capital for East Pun ab
No action was however taken in pursuance of this notification
Meanwhile the Punjab Legislature passed the East Punjab Requisition of Immovable Property Temporary Powers Act 48 of 1948
Under the provisions of this Act the Government requisitioned the land in question for the purpose of resettling the persons who were likely to be evicted from their fands as a result of the construction of the new Capital
The said land was actually acquired on May 201951
This land forms part of a Jagir known as Singh Purian  and comprises the areas of villages Mataur Dhirpur Saneta and Giddarpur in the District of Ambala
It appears that these villages originally formed part of the area covered by the Cls Sutlej States
section Amrao Singh was entered as owner of the land thus acquired
His wife is Sardarani Gurdial Kaur and his son is Satinder Singh
The estate of Amrao Singh was at the relevant time being managed by the Court of Wards
Pursuant to the provisions of the Act compensation was assessed by the estate officer and was accordingly offered by the State Government to the Court of Wards
The Court of Wards agreed to the amount of compensation thus offered and Amrao Singh himself did not object to it
Satinder Singh however was not willing to accept the said compensation and he raised several objections contending that it was wholly inadequate
He also objected to the compensation being paid either to the Court of Wards or to his father Amrao Singh and in support of this contention he urged that since the estate once formed part of Cis Sutlej States Amrao Singh was entitled only to its usufruct for his life and had no right to alienate or otherwise deal with its corpus
Satinder Singh s plea was that after the 87 680 amount of compensation was finally determined it should be deposited in Government Securities or alternatively a part of it should be paid to him as compensation for the land of his reversionary rights
This plea applied to the three villages of Mataur Saneta and Giddarpur
In regard to the village of Dhirpur Amrao Singh s wife Sardarani Gurdial Kaur claimed that she was in possession of the said village as it was charged for the payment of her maintenance by a compromise decree passed in her favour and against her husband Amrao Singh
She therefore claimed for herself the entire amount of compensation
Thus the contest about the apportionment of the compensation amount took a triangular form
At this stage it would be convenient to refer to the relevant provisions of the statute under which the present proceedings have been taken
In 1948 the relevant Punjab statute was East Punjab Act 48 of 1948
Section 2 of the said Act deals with the requisitioning of property and section 3 empowers the State Government to acquire requisitioned properties
Section 5 prescribes the principles according to which compensation had to be paid in regard to acquired properties
Section 5e provides that the arbitrator in making his award shall have regard to the provisions of sub section
1 of section 23 of the Land Acquisition Act 1894 1 of 1894 so far as the same can be made applicable
This Act was followed by the Punjab Requisitioning of Immovable Property Amendment and Validation Act 1951 President s Act No 2 of 1951
By section 5 of this Act section 5 of the earlier Act was amended inter alia by adding one provision
This provision provides that where any property is acquired in connection with the new Capital of the State of Punjab compensation may be paid whether by agreement or by award of the arbitrator either in money or in kind or partly in money and partly in kind and where there is no person competent to alienate the property or there is a person with limited interest in such property or there is any dispute as to the persons entitled to receive the compensation or as to the apportionment thereof the arbitrator shall make an award in such a manner or 681 make an arrangement in such a way as may be equitable having regard to
the interests of the persons concerned in other words the principle of equitable apportionment which had been recognised by section 32 of the Land Acquisition Act of 1894 has in effect been added by this amending Act
In 1953 the Punjab Requisitioning and Acquisition of Immovable Property Act 1953 XI of 1953 came into force
Section 24 of this Act repeals the two earlier Acts of 1948 and 1951 and after this Act came into force it was the provisions of this Act that governed the proceedings relating to the requisitioning and acquisition of immovable properties in Punjab
The equitable principle which was inserted in the Act of 1948 by the amending Act of 1951 has been retained in the present Act under section 8 3
Section 23 1 of this Act validates requisitions and acquisitions of properties there specified while sub section
2 of the said section provides inter alia that acquisition of immovable property purporting to have been made before the commencement of this Act shall be deemed for all purposes to have been validly made as if the provisions of the said enactment or order had been included and enacted in this section and this section had beenin force on and from the date of the acquisition
It has been held by a Full Bench of the Punjab High Court in Colonel His Highness Raja Sir Harindar Singh Brar Bans Bahadur Ruler Faridkot State vs The State of Punjab 1 that compensation for property acquired under the Land Acquisition Act 1894 or under the Punjab Act of 1948 must be paid in accordance with the principles set out in those Acts and not in accordance with the principles set out in the later Act of 1953
This position is not disputed by either party in the present proceedings
Thus it is common ground that for determining the amount of compensation and its apportionment amongst the rival claimants the provisions of the relevant Act of 1948 are applicable though the proceedings were held under the relevant provisions of the later Act of 1953
In fact the appointment of the arbitrator who conducted the proceedings 1 682 in the present case was made by the State Government under section 81b of the Act of 1953
We have already noticed that the provisions of section 8 3 of this Act were included by an amendment in the earlier Act of 1948 by the amending Act of 1951
Before the arbitrator the acquisition proceedings were dealt with in four different cases each one being related to the lands in one of the four villages in question
On the contentions raised by the parties the arbitrator first considered two preliminary issues
They were 1 Is Satinder Singh competent to object to the amount of compensation awarded in the case and 2 Is the appointment of the arbitrator invalid on account of the agreement between the State and the Court of Wards about the amount of compensation payable by the State to the Court of Wards
It appears that Amrao Singh contended that his son Satinder Singh had no locus standi in the matter and that since he and the Court of Wards had agreed to the amount of compensation offered by the State the arbitrator had no jurisdiction to hold any enquiry on the claim put forward by Satinder Singh
The arbitrator however rejected Amrao Singh s pleas and held that he was entitled and bound to hold the proceedings and to consider the merits of the pleas raised by Satinder Singh
The arbitrator then proceeded to examine the merits of the rival contentions
He found that the property in suit was a part of Cis Sutlej States and so Amrao Singh had only a limited interest in it and had no right to alienate it
As a result of this conclusion the arbitrator held that Satinder Singh who was the next heir was entitled to contest the amount of compensation and was also entitled to claim a share in the distribution of the amount
In regard to Dhirpur land he held that Sardarani Gurdial Kaur was entitled to retain the possession of the village for her maintenance under a compromise decree and that both Amrao Singh and Satinder Singh were bound by the said decree
In the result the arbitrator determined the amount of compensation and directed that the entire amount of compensation in regard to Dhirpur 683 should be invested in Government Securities in the name of the holder of Manauli Estate with a charge in favour of Gurdial Kaur which would entitle her to its annual profits in lieu of maintenance
He also directed that on the death of Gurdial Kaur the amount should be divided half and half between the then holder of the Estate and the next heir or heirs taken together
In regard to the lands in the three other villages the arbitrator directed that the amount of compensation determined by him should be paid in cash 34ths to Amrao Singh and 14th to the next sole heir Satinder Singh
The amount originally offered by the Government and ultimately awarded by the arbitrator were as follows Village Govt
Offer Award Mataur Plus Rs 9330900 Rs 18281300 15 acquisi tion charges Saneta Rs 4217900 Rs 5537700 Giddarpur Rs 1572600 Rs 2764000 Dhirpur Rs 11791200Rs
22786000 It would thus be seen that the contest made by Satinder Singh in respect of the amount of compensation originally offered by the Government substantially succeeded inasmuch as the total amount offered was increased by the arbitrator by Rs 224564 
The order thus passed by the arbitrator was recorded by him in the four cases tried before him in respect of the four villages
These orders became the subject matter of several appeals in the Punjab High Court
The State of Punjab preferred four appeals 67 to 70 of 1955 Satinder Singh preferred three appeals 42 to 44 of 1955 Amrao Singh preferred four appeals 59 to 62 of 1955 and Sardarani Gurdial Kaur preferred Appeal No 55 of 1955
In its appeal the State urged before the High Court that Satinder Singh was not competent to object to the compensation offered by the State and so the proceedings held before the arbitrator were invalid
It was also urged alternatively that Amrao Singh and Sardarani Gurdial Kaur were not entitled to compensation at the higher rates directed by the arbitrator and that the benefit 684 of the award should be available only to Satinder Singh and it was contended that the amount of compensation fixed by the arbitrator was excessive
All these contentions have been rejected by the High Court and the appeals preferred by the State have been dismissed
The State has not challenged the correctness of the decision of the High Court and so we are not concerned in the present appeals with the merits of the pleas raised by the State before the High Court
In the appeals preferred by Satinder Singh the High Court rejected his plea that the valuation fixed by the arbitrator in respect of certain properties was inadequate
It also rejected his plea that the amount of compensation ordered to be divided between him and his father Amrao Singh should be deposited in Government Securities
The High Court held that though equitable considerations would be relevant in deciding the question of apportionment it would be inexpedient to direct that the amount should be deposited in Government Securities because in that case no one will ever be absolutely entitled to it
The High Court also thought that since the State in whose favour the estate may finally lapse owing to escheat did not object to the apportionment made by the arbitrator there was no reason to interfere with the actual order
as to apportionment between father and son which the arbitrator thought was reasonable
In dealing with this question the High Court took the view that the alleged reckless extravagance of the father on which the son relied was not relevant
In the result the three appeals filed by Satinder Singh were dismissed
The High Court then dealt with the appeal preferred by Amrao Singh and it confirmed the finding of the arbitrator that the property acquired originally formed part of Cis Sutlej States and that in regard to the said States the rule is now well settled that the Jagirs large or small in Cis Sutlej States are non transferable and are even exempt from attachment as political pensions the holder for the time being having only life interest in the estate the corpus of which is to be 685 kept intact so that it may pass from heir to heir and lapse in favour of the Government in the absence of any legal heir
The High Court also held that even if the character of the property was considered from the angle of the general custom of Punjab the same conclusion followed because the property in question was undoubtedly ancestral immovable property in the hands of the father qua his son and as such the father had no right to alienate it to the prejudice of his son without legal necessity or any other compelling reason
That is how the principal point urged by the father against the claim set up by his son was rejected and his appeals were dismissed
The appeal preferred by Sardarani Gurdial Kaur also met the same fate and was dismissed
It appears that all the three claimants urged before the High Court that they were entitled to interest at a reasonable rate on the amount of compensation from the time that the property was acquired and they lost possession of it
This contention was likewise rejected by the High Court and it was held that under the relevant Act of 1948 it was not permissible to award interest on the amount of compensation The result was that the decision of the arbitrator was fully confirmed and all the appeals preferred before the High Court were dismissed
This decision of the High Court is challenged by special leave by the three claimants Amrao Singh Satinder Singh and Sardarani Gurdial Kaur respectively
The appeals preferred by Satinder Singh are Civil Appeals Nos 396 to 398 of 1959 Amrao Singh s appeals are Civil Appeals Nos 419 to 421 of 1959 whereas Sardarani Gurdial Kaur s appeal is Civil Appeal No 152 of 1960
That is how this group of seven appeals arises from the same land acquisition proceedings taken by the State of Punjab in respect of the lands situated in the four villages already mentioned
We would hereafter refer to Satinder Singh as the appellant Amrao Singh as respondent 1 the State of Punjab as respondents and Sardarani Gurdial Kaur as Sardarani
Logically then the first point which we must consider is the nature of the property and the title of 686 respondent 1 in relation to it
That is the principal point which Mr Viswanatha Sastri sought to raise before us in the appeal filed by respondent 1
This question has been considered both by the arbitrator and the High Court elaborately and they have concurred in making a finding against respondent 1
As the judgment of the High Court points out the fact that the lands in question originally formed part of the domain of section Budh Singh or of the Cis Sutlej States was not seriously disputed before the High Court
This implied concession naturally makes Mr Sastri s task very difficult
Besides we are not satisfied that there is any substance in the plea which Mr Sastri has raised before us on this point
The history of the property has been considered by the arbitrator and the arbitrator as well as the High Court have placed considerable reliance on the relevant statements made in the Punjab Land Administration Manual compiled by Sir James Mac
Douie and revised in 1931
Reliance has also been placed on the relevant statements in the compilation known as the  Chiefs and Families of Note in the Punjab  published by the Punjab Government in 1940
The pedigree table of the Singh Purian family given in this publication shows that the family was founded by section Kapur Singh who held the title of Nawab
section Budh Singh was his grandson and he was the head of the family in 1809
Amrao Singh is a descendant of Gopal Singh who was one of the seven sons of Budh Singh
The large Jagirs owned by the families are situated in Kharar and Rupar Tehsils of Ambala District and they formed part of the area formerly known as Cis Sutlej States
Paragraphs 100 101 and 102 of Douie s Land Administration Manual give a detailed account of the families and the in properties
The same is also briefly mentioned in the Punjab Gazetteer dealing with Ambala District
It appears from this material that the Sardars in the Cis Sutlej States were independent Rulers whose ancestors ultimately came under the protection of the British Government in about 1809
Between 1809 to 1847 the British Government tried to enforce good 687 government amongst the semi independent States in order to achieve this object the British Government gradually strengthened its hold and tightened the reins with a view to enforce good government
It appears that the Government exercised the right of escheat very freely and whenever there was lapse of heirs it G took up the management and government of the area in its own hands
After 1846 Government began to introduce sweeping measures of reform and with that object Government reduced the privileges and rights of the petty chieftains
In 1849 the chieftains lost their sovereign powers and were deprived of their criminal civil and fiscal jurisdiction so that they became no more than Jagirdars
Their rights in the lands held by them were however left untouched
Rules regarding succession to these Jagirs were framed by the Central Government from time to time and family custom was respected within reasonable limits
One of these rules is to be found in paragraph III of Douie s Manual
Clause c of this paragraph laid down  that alienations by a Jagirdar or pattidar of portions of his holding whether to his relations or strangers shall neither be officially recognised nor officially recorded
 Similarly paragraph 164 emphasised the inalienable character of the Jagirs and referred to the opinion expressed by the Court of Directors whereby the said character was clearly and unambiguously notified
 We should have supposed  said the Court of Directors  that there could be no necessity for notifying this as a rule since it follows from the very nature of a Jagir which cannot be alienated and can only be attached for the life of the holder
 There is thus no doubt that the statements in the authorised publications to which we have just referred and on which the High Court and the arbitrator have relied conclusively show that the holder of property which was a part of Cis Sutlej States did not own the property absolutely but held it as a limited owner
The Kaiflat Taluka of Singh Purian family which has been produced in these proceedings supports the same conclusion
688 Mr Sastri however wanted to contend that the evidence on the record was insufficient to justify the conclusion that the lands under acquisition formed part of the original estate of section Budh Singh but he fairly conceded that respondent 1 had not gone into the witness box and had not purported to justify his plea that any of the lands in dispute have been acquired either by him or by his ancestors in such manner that they could be treated as the absolute properties of the holder
The circular issued by the Office of the Commissioner and Superintendent of Cis Sutlej States on February 26 1857 unambiguously shows that  all proprietary right to any part of the lands forming a part of the Jagir which may be held by the Jagirdar will be considered as pertaining to the Jagir and will go to the holder of the Jagir for the time being This principle was applicable even to houses and other buildings standing on the Jagir which are in the nature of forts and may be considered to appertain to the estate
The only exception made was in regard to the shops built or acquired by the Jagirdar in a town apart from his place of residence
Therefore on the material as it stands it is difficult to sustain the plea that the concurrent findings made by the arbitrator and the High Court on the question about the character of the property and the nature of the title held by the holder of the said property are wrong
Incidentally it may be added that the same conclusion has been reached by the High Court on the ground of the customary law prevailing in the Punjab
We must accordingly proceed to deal with the rest of the dispute between the parties on the basis that the respondent 1 is not the absolute owner of the property and that the appellant is entitled to represent the reversionary interest in the present proceedings
That takes us to the pleas raised by the appellant in his appeals
On his behalf it has been urged by the learned Attorney General that the whole amount of compensation in respect of the three villages Matsur Sunets and Giddarpur should be appropriately invested Pond both he and respondent 1 should 689 be allowed to enjoy the income coming from the said investment in the share which may ultimately be fixed between them
In support of this contention he relies on the provisions of section 32 1 b of the Land Acquisition Act 1 of 1894
This provision empowers the Court to direct that the compensation amount payable to the owners should be invested either in Government or approved securities and the payment of interest or other proceedings arising from such interest should be directed to the person or persons who would for the time being have been entitled to the possession of the lands under acquisition
The argument is that since respondent 1 was not entitled to alienate the property and was under an obligation to keep the corpus in tact for the benefit of the reversioners the compensation amount payable in respect of the acquisition of the said property should be similarly treated and saved for the benefit of the reversioners in other words it is urged that the compensation amount should be treated as a conversion of the corpus of lands and the same should not be distributed as directed by the High Court
Section 32 deals with cases where the land acquired belonged to any person who had no power to alienate the same and since respondent 1 was not entitled to alienate the property the principle enunciated by section 321 b is pressed into service as an equitable principle which should be applied to the present case
In support of this argument the learned Attorney General has relied on decisions of different High Courts where this principle has been extended to watan property Shri Somashekhar Swami vs Bapusaheb Narayanrao Patil 1  to the property belonging to an idol K C Bannerjee Official Receiver In re 2  to the property held by a widow Mt Gangi vs Santu  Others 3 or to land belonging to an impartible estate Special Deputy Collector Ramnad vs Rajah of Ramnad 4 
This contention however ignores that the provisions of section 32 1 b are intended to be applied only provisionally and for a short period
The scheme of 1 AIR 1948 Bom
2 AIR 1928 Cal 402
3 AIR 1929 Lah
4 AIR 1935 Mad
690 section 32 is that in cases to which the said section applies the Court shall order the compensation amount to be invested in the purchase of other lands which would be held under the right title and conditions of ownership as the land in respect of which the compensation amount has been deposited
That is the plain effect of section 321a
Section 32 1 b comes into operation if such purchase cannot be effected forthwith and it has to remain in operation until such purchase is made
In other words if the compensation amount cannot be immediately invested in the purchase of other lands as an interim measure the said amount may be invested in the prescribed securities and income thereof distributed to those who were entitled to it
Therefore even if the principle underlying section 32 is extended to the present case on equitable considerations it would not justify the appellant s claim that the compensation amount should itself be treated as corresponding to the corpus of lands acquired and should be permanently invested in suitable securities leaving to the parties concerned the right to enjoy only its income
Such a course is plainly inconsistent with the principle recognised by section 321a
Therefore we are not prepared to accede to the argument that the compensation amount should not be divided between the parties and should be permanently deposited in the fund set apart in proper investments
If the said amount must therefore be divided between the appellant and respondent 1 how should it be divided That is the next question which calls for our decision
The appellant contends that the fairest way to distribute this amount would be to divide it half and half between him and respondent 1
We are inclined to hold that this contention is well founded
As the High Court has observed it is not at all easy to estimate the relative value of the two interests represented by the appellant and respondent 1
The High Court thought that the ratio may be 23 and 13 or 34 and 14 there being little to choose between the two and so it confirmed the apportionment made by the arbitrator
This decision however suffers from one serious infirmity
The High Court thought that 691 the conduct of respondent 1 which was characterized by the appellant as the conduct of a reckless spend
thrift and squanderer was wholly irrelevant in determining the shares to which the appellant and respondent 1 were respectively entitled
In our opinion in deciding the question of apportionment on equitable grounds it is relevant and material to take into account the grievance made by the appellant that the money which would be left with respondent 1 would be frittered away by him and no part of it would reach the reversioner
In support of this contention the appellant relied on the past conduct of respondent 1
Several alienations made by him are cited and attention is invited to the fact that after respondent 1 became a major his estate has been taken over by the Court of Wards for management under section 52 b of the Court of Wards Act 1903 from 1928 to 1938 1939 to 1947 1948 to 1954
It has also been urged that since 1954 respondent 1 has made several unauthorised alienations
We do not propose to consider the validity of each one of these allegations but we have no hesitation in holding that on the material available on the record it would be difficult to reject as unfounded the apprehensions which the appellant entertains in regard to the fate of the amount which may be given to respondent 1
Besides we are also inclined to take into account the fact that the appellant himself has a son and in apportioning the amount we have to bear in mind the fact that the amount is being paid in respect of the lands which respondent 1 holds as a limited owner and the reversionary interest in respect of which has to be safeguarded
We would therefore direct that the amount of compensation in respect of the three villages should be divided between the appellant and respondent 1 half and half
It is significant that the amount of compensation in respect of the fourth village which is at present charged for the maintenance of Sardarani has been ordered to be divided half and half
Therefore we would uphold the contention raised by the learned Attorney General on behalf of the appellant and direct that the said amount should be divided not as 692 23 and 13 but half and half between the father and son
The next point which the learned Attorney General wanted to urge was that the increase in the amount of compensation directed by the arbitrator should be paid to him exclusively
His case was that the Court of Wards and respondent 1 had accepted the amount offered by the State Government and it was because he raised contentions that the proceedings were referred to the arbitrator whose award ultimately enhanced the compensation amount to a very large extent
This contention was not raised either before the arbitrator or before the High Court and we have therefore not allowed the appellant to raise it before us
That takes us to the question of interest which has been urged before us by all the three claimants alike
The argument is that the amount of compensation awarded should carry a reasonable rate of interest from the date of acquisition when the claimants lost possession of their properties
This argument has been rejected by the High Court principally on the ground that the relevant Act of 1948 makes no provision for payment of interest and omission to make such a provision amounts in law to an intention not to award interest in regard to compensation amount determined under it
In support of this conclusion the High Court has referred to the fact that section 5e of the Act specifically makes applicable the provisions of section 231 of the Land Acquisition Act of 1894 and that it is said inevitably leads to the inference that sections 28 and 34 of the Act which deal with the payment of interest are not intended to apply to the proceedings under it
In our opinion this conclusion is not wellfounded
It would be legitimate to hold that by the application of section 231 in terms the provisions of section 232 are by necessary implication excluded
If the Legislature has provided that only one part of section 23 should be applied it would be reasonable to hold that the other part of section 23 was not intended to be applied but we do not see how it would be reasonable to hold 693 that by the application of section 231 the principles under lying the provisions of sections 28 and 34 are also excluded
Therefore it is necessary to examine this question on general grounds and principles without assuming that the application of these general considerations is excluded by any of the provisions of the Act
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
This question has been considered on several occasions and the general principle on which the contention is raised by the claimants has been upheld
In Swift  Co vs Board of Trade 1 it has been held by the House of Lords that  on a contract for the sale and purchase of land it is the practice of the Court of Chancery to require the purchaser to pay interest on his purchase money from the date when he took or might safely have taken possession of the land
 This principle has been recognised ever since the decision in Birch vs Joy 2
In his speech Viscount Cave LC added that  this practice rests upon the view that the act of taking possession is an implied agreement to pay interest  and he points out that the said rule has been extended to cases of compulsory purchase under the Lands Clauses Consolidation Act 1845
In this connection distinction is drawn between acquisition or sales of land and requisition of goods by the State
In regard to cases falling under the latter category this rule would not apply
1 532
2   694 In Inglewood Pulp and Paper Co Ltd vs New Brunswick Electric Power Commission 1 it was held by the Privy Council that  upon the expropriation of land under statutory power whether for the purpose of private gain or of good to the public at large the owner is entitled to interest upon the principal sum awarded from the date when possession was taken unless the statute clearly shows a contrary intention
 Dealing with the argument that the expropriation with which the Privy Council was concerned was not effected for private gain but for the good of the public at large it observed  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 inter pretation 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 the interest takes the place of the right to retain possession and is within the 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 right to retain possession
The question which we have to consider is whether the application of this rule is intended to be excluded by the Act of 1948 and as we have already observed the mere fact that section 53 of the Act makes section 231 of the Land Acquisition Act of 1894 applicable we cannot reasonably infer that the Act intends to exclude the application of this general rule in the matter of the payment of interest
That is the view which the Punjab High Court has taken in Surjan Singh vs The East Punjab Government 2 and we think rightly
It is however urged by Mr Gopal Singh for respondent 2 that what the claimants are entitled to receive is compensation and since the word  compensation  is used by section 51 both in respect of requisition as well as acquisition it would not be fair to import the general rule about the payment of interest where property is acquired
Compensation it is urged should represent the price of the property and there is no 1  2 AIR 1957 Punj 265 695 justification for adding to the said price any amount by way of damages
We are not impressed by this argument
When a claim for payment of interest is made by a person whose immovable property has been acquired compulsorily he is not making claim for damages properly or technically so called he is basing his claim on the general rule that if he is deprived of his 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
In our opinion therefore the fact that section 51 deals with compensation both for requisition and acquisition cannot serve to exclude the application of the general rule to which we have just referred
Mr Gopal Singh then relied on some observations made by this Court in Seth Thawardas Pherumal vs The Union of India 1
Bose J who spoke for the Court has set out four conditions which must be fulfilled before interest can be awarded under Interest Act of 1839 and observed that not one of those was present in the case with which the Court was concerned
That is why it was held that the arbitrator had erred in law in thinking that he had the power to allow interest simply because he thought the demand was reason able
Having come to this conclusion the learned Judge proceeded to make certain observations in respect of the applicability of section 34 of the Code of Civil Procedure
He added that section 34 does not apply because the arbitrator is not a Court within the meaning of the Code nor does the Code apply to arbitrators and but for section 34 even a Court would not have the power to give interest after the suit
These observations were considered by this Court in Nachiappa Chettiar vs Subramaniam Chettiar 2 and it was pointed out that they were obviously not intended to lay down any broad and unqualified proposition like the one which is urged before us by Mr Gopal Singh in the present appeal
In this connection we may incidentally refer to Interest Act 1839 XXXII of 1839
Section 2 of this 1 2  696 Act confers power on the Court to allow interest in cases specified therein but the proviso to the said section makes it clear that interest shall be payable in all cases in which it is now payable by law
In other words the operative provisions of section 1 of the said Act do not mean that where interest was otherwise payable by law Court s power to award such interest is taken away
The power to award interest on equitable grounds or under any other provisions of the law is expressly saved by the proviso to section 1
This question was considered by the Privy Council in Bengal Nagpur Railway Co Ltd vs Buttanji Ramji 1
Referring to the proviso to section 1 of the Act the Privy Councilobserved  this proviso applies to cases in which the Court of equity exercises its jurisdiction to allow interest
 We have already seen that the right to receive interest in lieu of possession of immovable property taken away either by private treaty or by compulsory acquisition is generally regarded by judicial decisions as an equitable right and so the proviso to section 1 of the Interest Act saves the said right
We must accordingly hold that the High Court was in error in rejecting the claimants  case for the payment of interest compensation amount and so we direct that the said amount should carry interest at 4 per annum from the date when respondent 2 took possession of the claimants  lands to the date on which it deposited or paid the amount of compensation to them
In the appeal preferred by the Sardarani Mr Mathur attempted to challenge the propriety of the order passed by the High Court directing that the amount of compensation in respect of Dhirpur lands should be invested and that the Sardarani should receive her maintenance from the interest accruing from such investment
Apart from the fact that the order made in that behalf is fair and just it is clear that the learned counsel for the Sardarani himself had suggested that such an order should be passed
Therefore we cannot allow Mr Mathur to raise any contention against the said order in the present appeal
1 1938 LR 65 IA 66 697 Mr Mathur further contended that if we were to award interest on the amount of compensation his client would be entitled to receive the whole of the interest on the compensation amount ordered to be paid in respect of the lands in Dhirpur village
That no doubt is true and indeed Mr Mathur s claim in that behalf is not disputed either by the appellant or by respondent 1
We would accordingly modify the decree passed by the High Court by directing that the amount of compensation payable in respect of the lands in Mathur Saneta and Giddarpur may be divided half and half between the appellant and respondent 1 and that interest should be paid on all the items of compensation determined by the High Court at 4 per annum
The interest in regard to the compensation payable for Dhirpur lands should be paid to the Sardarani whereas the interest in regard to the lands in the three other villages should be paid half and half to the appellant and respondent 1
In making the payments of compensation amounts to the respective parties whatever amounts may have been withdrawn by or on their behalf should be taken into account and their claims should be properly adjusted in that behalf
In the circumstances of this case we direct that the appellant should get half his costs from respondent 1 and the other half from respondent 2 in his three appeals
There will be only one set of hearing costs
The costs in the remaining four appeals should be borne by the parties
C A Nos
396 to 398 of 1959 and C A No 152 of 1960 allowed in part
CA Nos
419 to 421 of 1959 dismissed


Summary:
The appellant entered into an agreement with the respondent who was a building contractor entrusting him with the work of constructing a house and shops
The respondent undertook the work but before it could be completed disputes arose between them and the appellant claimed compensation for effecting repairs to rectify defective work done by the respondent and the respondent claimed compensation at certain rates set up by him for work for which there was no express provision in the written agreement
Suits based on their respective claims were filed by the appellant and the respondent which were partly decreed by the trial court
The High Court dismissed the appellant s suit in its
entirety and remanded the respondent s suit directing the appointment of a qualified engineer for determining according to the directions given in the judgment the amount payable to the respondent for work done in addition to the agreed work under the contract
The appellant contended that the respondent having failed to prove the oral agreement pleaded the respondents  suit should have been dismissed and compensation quantum meruit which was not claimed should not have been awarded
Held that if a party to a contract rendered service to the other not intending to do so gratuitously and the other party had obtained some benefit the former was entitled to compensation for the value of the services rendered by him
The respondent not intending to do gratuitous work was entitled to compensation for additional work not covered by the written agreement
Even if the respondent failed to prove his claim for compensation at the prevailing market rate under an oral agreement the court had jurisdiction to award compensation for work done under section 70 of the Contract Act
The appellant s suit having been dismissed by the High Court and no appeal having been preferred against it it was not open to him to reagitate the same question of compensation in the companion suits in which no equitable set off was claimed