PETITIONER: PREM NATH KAPUR & ANR. ETC. Vs. RESPONDENT: NATIONAL FERTILIZERS CORPORATION DATE OF JUDGMENT29/11/1995 BENCH: [ENTITY], K. BENCH: [ENTITY], [ENTITY] B.L. (J) [ENTITY] V. (J) CITATION: 1996 SCC (2) 71 JT 1995 (9) 23 1995 SCALE (7)109 ACT: HEADNOTE: JUDGMENT:
WITH [CASE NUMBER] [Arising out of [CASE NUMBER]] J U D G M E N T [ENTITY], J.
Leave granted.
Notification under [SECTION] of the [ACT] [for short, "the Act"] acquiring large track of land including the land belonging to the appellants, was published on February 5, 1973. On October 9, 1975, the Collector made his award determining compensation @ Rs. 10,080/- per acre. On reference under [SECTION], the Civil Court, by award and decree dated January 2, 1979, confirmed the award of the Collector. In another reference of the cosharers, the District Judge by his award and decree dated January 24, 1980 enhanced the compensation. On further revision, the High Court by order dated May 23, 1983 determined the compensation @ Rs.24,000/- per acre while dismissing the appeal of the respondent-Corporation. On January 9, 1975, after the award was made, the Collector paid the compensation including solatium and interest determined thereon. After the High Court enhanced the compensation in revision, the same was deposited on January 14, 1984. It is not necessary to dilate but suffice it to mention that the appellants by way of revision claimed compensation for damages for severance of other lands from acquired land as provided under [SECTION]. In another revision, the appellants claimed solatium and interest on damages for severance of the lands which was also granted by the High Court. In yet another revision, the High Court enhanced solatium and interest and additional amount under [SECTION], [SECTION] and [SECTION] as amended by [ACT]. The appellants laid execution, firstly, after appropriating the amount received towards costs, then towards interest on the total compensation and solatium and then for compensation in respect of the lands. Executing Court granted the relief, but the High Court in revision set aside the order dated March 11, 1987 in [CASE NUMBER] and directed the Executing Court to dispose of the matter in the light of the law laid down therein. Thus these appeals by special leave. Another Bench of this Court issued notice suo motu on the amounts awarded towards severance charges, interest and solatium thereon and additional benefits under under the Amendment Act.
Shri [ENTITY], learned counsel for the appellants contended that the present controversy having been concluded by a recent judgment of this Court in [ENTITY] v. Hindustan Organic Chemicals [JT 1995 (4) SC 233], is no longer res integra. He further contended that the appellants are entitled to appropriate the costs from the principal amount of compensation, then towards interest on total amount of compensation from the date of taking possession till date of payment as determined by the Collector as well as the High Court. The hierarchy of courts would determine the compensation after considerable delay and the owner or interested person is entitled to be compensated for loss in value of their land. On determination thereof, the State as judgment-debtor is liable to restitute the owner with just compensation by way of principal amount and interest accrued thereon. The owner of the land as judgment-creditor is entitled to appropriate the principal amount deposited by the Collector, in the first instance, towards costs, then towards interest on total amount and the balance amount and interest accrued thereon is entitled to be recovered in execution. Therefore, the High Court was not right in holding that the appellants were entitled to the interest only from the respective dates of the award of the Collector or the orders of the court. The direction not to appropriate the amount deposited by the Collector first towards costs and then interest is clearly illegal. In support thereof, Shri [ENTITY] placed strong reliance on the judgment of this Court in [PRECEDENT].
The question, therefore, is when does the liability of the State to pay interest ceases? Whether the owner of the land is entitled to appropriate from the amount deposited towards costs and then towards interest and then principal amount and again interest on total amount?
In this behalf, it is appropriate to notice relevant provisions of the Act. [SECTION], clause firstly, envisages that in determining the amount of compensation to be awarded for land acquired under the Act, the Court shall take into consideration "the market-value of the land" at the date of the publication of the notification under [SECTION]. [SECTION] provides that "in addition to the market-value" of the land, the Court shall "in every case award a sum of thirty per centum on such market-value, in consideration of the compulsory nature of the acquisition"; preceding September 24, 1984, at 15% on such market-value. Similarly, under [SECTION], as inserted by [ACT], "in addition" to the market- value of the land, the Court shall in every case award an amount calculated at the rate of twelve per centum per annum "on such market-value" for the period commencing on and from the date of publication of [SECTION] notification to the date of the award of the Collector or the date of taking possession of the land, whichever is earlier. [SECTION] enjoins that the Collector on making the award under [SECTION], shall tender payment of the compensation to the persons interested entitled thereto according to the award. He shall also pay the same to them, unless prevented by one or more contingencies mentioned in sub-section (2). In that event, he "shall deposit the amount of compensation in the court to which a reference under [SECTION] would be submitted". [SECTION] directs that when the amount of compensation is not paid or deposited on before the taking possession of the land, the Collector "shall pay the amount awarded with interest thereon" at the rates preceding [ACT] at six per centum per annum or as per the rates prescribed by local Amendments made by the appropriate State Legislatures, from the date of taking possession "until it shall have been so paid or deposited". After the Amendment Act came into force on September 24, 1984, the rate of interest was revised as 9 per centum per annum. The [SECTION] further enjoins that if such compensation or any part thereof "is not paid or deposited" within a period of one year from the date of taking possession, interest at the rate of 15 per centum per annum shall be payable from the date of expiry of one year on the amount of compensation or part thereof which has not been "paid or deposited"
before the date of such expiry.
In the event of the amount having been deposited into the court in the contingencies specified in [SECTION] or on reference under [SECTION], [SECTION] gives power to the Court, on an application by a party interested or claiming an interest in such money, to pass an order to invest the money so deposited in such Government or other approved securities as it may think proper, and may direct the interest or other proceedings of any such investment to be accumulated and paid in such manner as it may consider proper so that the parties interested therein may have the benefit therefrom as they might have had from the land in respect whereof such money shall have been deposited or as near thereto as may be.
On reference under [SECTION] and after enquiry made by the Court under [SECTION] and [SECTION], [SECTION] declares that the award made shall be deemed to be "decree" under [SECTION] of [ACT] (for short, "[ACT]"] and the statement of grounds as "judgment" under [SECTION] of the [ACT]. [SECTION] enjoins that the award of the Court may direct that the Collector "shall pay interest on such excess or part thereof" (emphasis supplied), at the rates similar to those mentioned in [SECTION] from "the date on which he took possession of the land to the date of payment of such excess into Court". The duty to pay enhanced rate of interest as provided in the [SECTION] is similarly provided in the proviso to [SECTION] as per [SECTION] of the [ACT]. [SECTION] of the Act makes [ACT] applicable to the proceedings before the court under the Act. It provides that "save in so far as they may be inconsistent with anything contained in this Act" [emphasis supplied], the provisions of the [ACT] shall apply to all proceedings before the Court under the Act.
A reading of the above provisions would establish that the award consists of (a) the compensation determined under [SECTION] solatium on the market-value determined under [SECTION], as additional sum for compulsory nature of acquisition, and (c) payment of interest on the amount of compensation under [SECTION], on excess or part thereof under [SECTION] awarded by court from the date of taking possession till date of payment or deposit into the court at the rates specified under the respective provisions of [SECTION] and [SECTION]. Under [SECTION], additional amount at 12 per centum per annum shall be paid or deposited from the date of notification under [SECTION] till date of award or taking possession of land, whichever is earlier. The additional amount under [SECTION] and solatium under [SECTION] are in addition to the compensation under [SECTION] and excess amount determined under [SECTION] or [SECTION]. Equally, under [SECTION] of the Act award is deemed to be a decree under [SECTION] of the [ACT] for the excess amount determined by the Court; this would be so proprio vigore, when the appellate court under [SECTION] has further enhanced the compensation.
After notification under [SECTION] was published in the Gazette and an enquiry under [SECTION] conducted, publication of the declaration under [SECTION] in the Gazette gives conclusiveness to the public purpose. The State is authorised to empower a specified officer to proceed for taking steps under the Act to determine the compensation. On service of notice under [SECTION] read with [SECTION], enquiry under [SECTION] would be conducted and the Collector/Land Acquisition Officer makes an award thereunder. [SECTION] enjoins him to serve notice, unless the party is present either in person or through counsel at the time of making of the award, to the claimant or the persons interested or known to be interested, of his making of the award. [SECTION] empowers him to take possession of the land which shall thereupon "vest absolutely in the Government free from all encumbrances". In case of urgency, [SECTION] empowers the appropriate Government to dispense with the enquiry under [SECTION] and thereafter declaration under [SECTION] would be published. Under [SECTION], appropriate Government, in cases of urgency, is empowered to direct the Collector, though no award under [SECTION] has been made, to take possession of the lands after service of notice under [SECTION] and on the expiration of 15 days from the publication of such notice. Such land shall thereupon vest absolutely in the Government free from all encumbrances.
It would thus be seen that [SECTION] of the Act fastens liability on the Collector to pay interest on the amount of compensation determined under [SECTION] with interest under [SECTION] from the date of taking possession till date of payment or deposit into the court to which reference under [SECTION] would be made. After the enquiry under [SECTION] read with [SECTION] on determination of excess amount of compensation, [SECTION] empowers the court, if in its opinion the Collector ought to have awarded compensation as determined by him, to award interest "in excess of sum which the Collector did award as compensation"
The award of the court may direct the Collector to a pay interest on such excess or part thereof from the date on which he took possession of the land to the date of payment of such excess "into Court" at the rates specified thereunder. In other words, [SECTION] and [SECTION] fasten the liability on the State to pay interest on the amount of compensation or on excess compensation under [SECTION] from the date of the award and decree but the liability to pay interest on the excess amount of compensation determined by the Court relates back to the date of taking possession of the land to the date of the payment of such excess "into the court". [SECTION] when contrasted with [SECTION], visualises payment of interest from the date of taking possession when enquiry under [SECTION] was dispensed with and possession was taken under [SECTION] till date of payment or deposit into the court while [SECTION] enjoins the Collector to make payment of interest at the specified rates "on such excess or any part thereof" from the date of taking possession of the land to the date of payment of such excess amount or part thereof into the court. [SECTION] specifically envisages that to the extent of any inconsistency in the provisions of the Act, the applicability of [ACT] to the proceedings under the Act stands excluded and the provisions of the Act shall prevail. In other words, to the extent of the specific provisions provided in the Act when found inconsistent with the [ACT], only the provisions in the [ACT] which are consistent with the provisions of the Act, would stand attracted to the proceedings under the Act. By necessary exclusion, the inconsistent provisions of [ACT] stand excluded.
The basic question, therefore, would be whether the claimant is entitled to appropriate from the principal amount of compensation determined under [SECTION] towards costs, and then towards interest payable under either [SECTION] or [SECTION] or after Amendment Act came into force w.e.f. September 24, 1984, additional amount under [SECTION]. Even in general principles of law, [SECTION] of the [ACT] provides that where the debtor has omitted to intimate and there are no other circumstances indicating as to which debt the payment is to be applied, the creditor may apply it at his discretion, to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being, as to the limitation of suits. It would, therefore, be clear that the debtor may indeed exercise that right and may specify his appropriation expressly or his intention may be implied as shown by other circumstances, indicating that his intention at the time of payment was to appropriate the amount deposited by him to a specific debt or account towards the debt.
It is clear from the scheme of the Act and the express language used in [SECTION] and now [SECTION] of the Act that each component is a distinct and separate one. When compensation is determined under [SECTION], its qualification, though made at different levels, the liability to pay interest thereon arises from the date on which the qualification was so made but, as stated earlier, it relates back to the date of taking possession of the land till the date of deposit of interest on such excess compensation into the court. Equally, when the appellate court under [SECTION] further enhances the compensation, interest is payable on such excess amount determined under [SECTION]. In other words, the liability to pay interest arises as and when the compensation is further enhanced and liability to pay interest would be co-terminus with the payment of the amount under [SECTION] from the date of taking possession till date of payment or deposit or under [SECTION] or [SECTION] from the date of taking possession till the date of deposit of such excess amount into the court. The liability to pay interest is only on the excess amount of compensation determined under [SECTION] and not on the amount already determined by the Land Acquisition Officer under [SECTION] and paid to the party or deposited into the court or determined under [SECTION] or [SECTION] and deposited into the court or on solatium under [SECTION] and additional amount under [SECTION].
Thus we hold that the liability to pay interest on the amount of compensation determined under [SECTION] continues to subsist until it is paid to the owner or interested person or deposited into court under [SECTION] read with [SECTION]. Equally, the liability to pay interest on the excess amount of compensation determined by the Civil Court under [SECTION] over and above the compensation determined by the Collector/Land Acquisition Officer under [SECTION] subsists until it is deposited into court. Proprio vigore in case of further enhancement of the compensation on appeal under [SECTION] to the extent of the said enhanced excess amount or part thereof, the liability subsists until it is deposited into court. The liability to pay interest ceases on the date on which the deposit into court is made with the amount of compensation so deposited. As held earlier, the computation of the interest should be calculated from the date of taking possession till date of payment or deposit in terms of [SECTION] or deposit into court in terms of [SECTION], as the case may be.
Equally, the right to make appropriation is indicated by necessary implication, by the award itself as the award or decree clearly mentions each of the items. When the deposit is made towards the specified amounts, the claimant/owner is not entitled to deduct from the amount of compensation towards costs, interest, additional amount under [SECTION] with interest and then to claim the total balance amount with further interest. The ratio of [PRECEDENT] has no application to the facts of this case. Right to compensation and the qualification thereof are two distinct concepts. The right to compensation arises when the land vests in the State while its qualification may be concluded at a later stage through several hierarchical stages referred to hereinbefore. The question therein was whether the High Court while enhancing the compensation would direct payment of interest on enhanced amount at 4 per cent per annum. This Court held that the distinction made by the High Court in payment of interest from date of taking possession till date of its judgment was incorrect. Accordingly, it directed payment of interest @ 6 per cent per annum on the enhanced compensation from the date of taking possession of the land till date of payment.
Equally, the contention that the claimant is entitled to interest on solatium is also not warranted by express provisions under [SECTION], i.e., "in addition to"
market-value, solatium was required to be paid. [SECTION] or [SECTION], as the case may be, fastens liability to pay interest only on amount of compensation or such excess amount of compensation or part thereof determined under [SECTION]. In other words, by virtue of the language of [SECTION], viz., "in addition to the market-value", as provided in [SECTION], solatium becomes payable. Compensation under [SECTION], by necessary implication, excludes the liability to pay interest on solatium. Equally, the question of payment of solataium on additional amount was also considered by this Court in [PRECEDENT] where it was held that no solataium is payable on additional amount payable under [SECTION]. So too, no interest is payable on additional amount under [SECTION] on other components or part thereof determined under [SECTION] over and above the award under [SECTION] by Civil Court under [SECTION] or on appeal under [SECTION], respectively.
The ratio in [ENTITY] case [supra] is equally inapplicable to the appropriation of debt under the Act. It is seen that by operation of [SECTION] of the Act, [SECTION], [SECTION] being inconsistent with the express provisions contained in [SECTION] and [SECTION], stands excluded. The ratio therein, therefore, is applicable only to a debtor and creditor in an ordinary civil suit governed by the provisions of the [ACT]. [SECTION] being inconsistent with the express provisions contained in [SECTION] and [SECTION] of the Act, it cannot stand extended to the cases covered by the Act. It is unfortunate that these provisions were not brought to the attention of this Court when it decided [ENTITY] case [supra], which make all the deference. With due respect to our learned brethren who decided that case, we are, therefore, constrained to observe that [ENTITY] case cannot be taken to have laid down the correct law.
Counsel appearing for the respondents in fairness has conceded that since the respondents did not file any appeal against the order passed by the High Court allowing damages for severance of the land and solatium and interest thereon, is not in a position to assail the correctness thereof. However, the revisional order for payment of additional benefits and enhanced solatium and interest under the [ACT] is clearly in excess of the power or jurisdiction of the High Court. The power to award additional amount under [SECTION] and solatium under [SECTION] are in addition to the marketvalue determined under [SECTION]. Equally, interest under [SECTION] is on excess amount. In other words, the power and jurisdiction to award amounts under [SECTION], [SECTION] and [SECTION] would arise only when the Court or High Court under [SECTION] enhanced compensation. There was no error in the original order for amendment of it under [SECTION] or [SECTION] of the [ACT], as, when enhancement of compensation was made in revision in 1984, the [ACT] could not apply as held by this Court in [PRECEDENT] and [PRECEDENT]. This Court in catena of decisions, to name a few, [PRECEDENT] through Lrs. & Anr. etc. [[PRECEDENT]], [PRECEDENT], [PRECEDENT]. [C.A. Nos. 3[SECTION]7-95 of 1995] decided on February [SECTION], 1995 and [PRECEDENT]] decided on October 30, 1995, has laid the above ratio and the same are applicable to the facts of the case.
The appeals are dismissed accordingly. The Executing Court shall now proceed with the execution in accordance with law declared hereinbefore. No costs.