IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA RFA No. 301 of 2003 Reserved on : 16th September, 2008 Date of Decision: 16th October, 2008 State of Himachal Pradesh and another Appellants Versus Shri Surinder Singh and others Respondents Coram The Hon’ble Mr. Justice Sanjay Karol,J. Whether approved for reporting1? Yes. For the appellants: Mr. Ajay Jaswal, Deputy Advocate General. For the respondents: Mr.Ramakant Sharma, Advocate. Sanjay Karol, J. The State has filed the present appeal assailing the judgment and decree dated 16.8.2003 passed by District Judge, Solan, H.P. in Civil Suit No.2-S/1 of 2001, titled as Shri Surinder Singh and others vs. State of H.P. and another, whereby the District Judge passed a decree for a sum of Rs.2,10,000/- plus interest @ 12% per annum from December, 1998 till the date of payment. The plaintiffs – respondents herein (hereinafter referred to as the plaintiffs) filed a suit for recovery of Rs.4,76,614/- against the defendants – appellants herein (hereinafter referred to as the defendants). The plaintiffs owned land comprised in Khasra No.4, Khata Khatauni No. 50 min/87 min, measuring 14 biswas, situated in Mauza Kasauli, Tehsil Whether the reporters of Local Papers are allowed to see the Judgment? 2 Kasauli, District Solan, H.P. (hereinafter referred to as the suit land). In order to augment water supply scheme, in July, 1998 the defendants started constructing a pump house on the suit land. The construction activity carried on till June, 1999 and the plaintiffs were promised adequate compensation in accordance with the provisions of law. Since no compensation for the land was paid by the State till the year 2000, the plaintiffs were constrained to issue a legal notice claiming damages @ Rs.20,457/- per Biswa alongwith interest @ 18% per annum. In the absence of any response to the notice or action on the part of the authorities, on 17.3.2001 the plaintiffs were constrained to file a suit for recovery of Rs.4,76,614/- as per the following break up:- a) Market value of the suit land i.e. 14 biswas @ Rs.20,457/- per biswa Rs.2,86,398/- b) Interest wef July 99 to March 2001 @ 18% per annum Rs. 90,216/- c) Damages on account of damage to the adjoining land on which debris has been thrown Rs.1,00,000/- Total: Rs.4,76,614/- In response, the defendants filed written statement virtually admitting the plaintiffs’ case which is evident from para 2 of the written statement reproduced as under:- “The construction work of pump house has been taken up by the I&PH department with the prior verbal consent of the plaintiff and work for construction of pump house has been completed during the month of May, 2001. The land measuring 14 biswa is likely to be acquired by the I&PH Department for the construction of various components. The case of Acquisition of land measuring 14 biswas has been moved to the Govt. of H.P. for necessary acquisition under the provision of law and payment shall be made accordingly. 3 It is also mentioned that plaintiffs has never objected/demanded for compensation at the time of construction of pump house and even consented/ agreed verbally to execute the scheme.” Since the acquisition proceedings did not take place, the suit was pursued and the Court below framed the following issues:- 1. Whether the defendants have constructed the pump house on the land owned and possessed by the plaintiffs? OPP 2. If issue No.1 above is held in affirmative, what appropriate amount of damages or compensation to which the petitioners are entitled to? OPP 3. Relief. In order to prove their case, plaintiffs examined four witnesses, namely, Shri Dalip Singh, plaintiff No.2, (PW-1), Shri Damodar Verma (PW-2), Shri Shiv Nath (PW-3) and Smt. Ram Pyari (PW-3) and proved on record revenue record Ext.PW-1/A, legal notice Ext.PW-1/B and exemplar sale deeds Ext.P-1 to P-6. In rebuttal, the defendants examined two witnesses, namely, Shri Satish Chander (DW-1) and Shri Atma Ram (DW-2), and proved on record demarcation report and other related documents Ext.DW-2/A to Ext.DW2/E and copy of letter of Chief Engineer Ext.DX. Appreciating the material on record, the Court below came to the conclusion that the defendants had constructed the pump house on the suit land and not on Khasra No.3 of the said revenue estate as was urged by the defendants. On Issue No.2, the Court below after appreciating the exemplar sale deeds, determined the market value of the land to be Rs.15000/- per biswa and total value to be Rs.2,10,000/-. 4 In so far as the interest is concerned, the Court noticed that the defendants had started digging the plot in the year 1998, therefore, the plaintiff would be entitled to simple interest @ 12% per annum from December, 1998. I have heard the learned counsel for the parties and also gone through the record. The evidence led by the defendants is primarily to prove that the pump house was constructed on Khasra No.3. In this regard, they have exhibited the report of demarcation of the land. The fact that the pump house was constructed by the defendants as alleged by the plaintiffs is not in dispute. In the plaint, the plaintiffs categorically mentioned that the pump house was constructed on Khasra No.4 which fact was not denied by the defendants. It is a matter of record that the demarcation report was got prepared by the defendants without the plaintiffs being associated with the same. The Court below has given four reasons for disbelieving the said demarcation report. With approval the findings on this question are reproduced as under:- “Though in evidence, they have deviated and have come with a different plea that the pump house was constructed over Khasra No.3 as stated by DWs 1and 2., Shri Atma Ram (DW-2) has placed on record the demarcation report Ext.DW-2/C which cannot be taken into consideration for various reasons, firstly, it was not a case of the defendants that they had constructed the house over Khasra No.3, secondly, the defendants did not plead that the area was ever demarcated and the pump house fell in Khasra No.3., thirdly, the perusal of the demarcation report does not show as to whom had applied for the demarcation, fourthly, the Tatima Ext.PW-2/B prepared by PW-2 was not attested by the Field Kanungo and the Patwari who had prepared it, has not been 5 examined and lastly, the demarcation report does not show that it was done on the spot in accordance with the law. Therefore, it deserves to be ignored from consideration. As discussed above, the defendants have deviated from the pleadings which has weakened the credibility of their case instead of giving it a base.” In any event, there is nothing on record to show that the State had acquired the land and paid the compensation to the plaintiffs either for the land comprising in Khasra No.3 or part of Khasra No.4. The plaintiffs through their witnesses and revenue record Ext.PW-1/A have proved the suit land is on Khasra No.4. Therefore, it is evident that the plaintiffs were deprived of their constitutional right as the State trespassed into their property and constructed a pump house without payment of adequate compensation. The plaintiffs through PW-2, PW-3 and PW-4 have proved on record the exemplar sale deeds for the period 1998-99. As per sale deed Ext.P-2, six biswas of land was sold for Rs.1,00,000; vide sale deed Ext.P-3 1 biswa 10 biswanis land was sold for Rs.28,000/-; sale deed Ext.P-5 depicts that 10 biswas of land was sold for Rs.4,45,000/- and vide sale deed Ext.P-6, 3 biswas of land was sold for Rs.43,000/-. All the aforesaid sale transactions pertain to Mauja Kasauli, where the suit land is situated. The mean of all the sale transactions comes to about Rs.15,790/- per biswa. Same is the position with regard to other exemplar sale deeds. Taking into account, the same, I find no error in valuation carried out by the Court below and assessing the market value of the land to be Rs.15,000/- per biswa. As far as the payment of interest is concerned, the Court below has awarded the same @ 12% per annum from December, 1998. 6 There is no dispute that the work for construction of the pump house commenced in the year 1998. However, in the plaint, the plaintiffs have specifically asked for interest w.e.f. July, 1999 to March, 2001, the date of filing of the suit. The plaintiffs have also paid the court fee on the same. A Constitution Bench of the Apex Court in The Union of India v. The West Punjab Factories, Ltd., AIR 1966 SC 395, has held that in the absence of any usage, contract express or implied or of any provision of law to justify the grant of interest, it is not possible to grant interest by way of damages. The relevant passage of the aforesaid decision is reproduced as under:- “16. The next contention is that no interest could be awarded for the period before the suit on the amount of damages decreed. Legal position with respect to this is well settled: (see Bengal Nagpur Rly. Co. Ltd. vs. Ruttanji Ramji, 65 Ind App 66: (AIR 1938 PC 67). That decision of the Judicial Committee was relied upon by this Court in Thawardas Pherumal v. Union of India, 1955-2 SCR 48: ((S) AIR 1955 SC 468). The same view was expressed by this Court in Union of India v. A.L.Rallia Ram, (1964) 3 SCR 164 : (AIR 1963 SC 1685). In the absence of any usage or contract, express or implied, or of any provision of law to justify the award of interest, it is not possible to award interest by way of damages. Also see recent decision of this Court in Union of India v. Watkins Mayor and Co., Civil appeals Nos. 43 and 44 of 1963, dated 10.3.1965: (reported in AIR 1966 SC 275). In view of these decisions no interest could be awarded for the period upto the date of the suit and the decretal amount in the two suits will have to be reduced by the amount of such interest awarded.” 7 However, while dealing with a specific question as to whether the purchaser who had entered into possession without payment of purchase money to the seller, interest thereupon is liable to be paid or not, another Constitution Bench of the Apex Court in The National Insurance Co. Ltd., Calcutta v. Life Insurance Corporation of India, AIR 1963 SC 1171, noticing the English law and the earlier decisions of the Privy Council observed that::- “25. The last question is whether interest was payable. The Tribunal held that it had no jurisdiction to award interest because there is no provision in the Act. It followed its own decision in the order passed in an earlier case and declined to grant interest. During the arguments before us the Corporation agreed that interest is awardable and the dispute only centred round the rate of interest, the amount on which it is payable and the date from which it should be given. There is no doubt that the Life Insurance Corporation Act and the Rules do not contain any expression provisions for grant of interest. The Company relied on cases of purchases of immovable property where interest is awarded as a general rule of equity if the purchaser enters into possession without having paid the purchase-money to the seller. The reason of the rule was stated a long time ago by Lord St. Loenards L.C. in Birch v. Joy, (1852) 3 H.L.C. 565 : 10 ER 222, as follows:- ‘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.’ 26. On entering possession the purchaser becomes entitled to the rents but if he has not paid the price, interest in equity is deemed payable by him on the purchase price which 8 belongs to the seller. This principle was applied by the House of Lords in cases of compulsory purchases. In Swift and Co. vs. Board of Trade, (1925) AC 520, Viscount Cave L.C. gave the reason that the practice rests upon the principle that the taking of possession is an implied agreement to pay interest which was stated by Sir William Grant M.R. in Fludyer v. Cocker, (1805) 33 ER 10. This principle was further extended by the Privy Council to the compulsory taking over of a business as a going concern in Intentional Railways Co. v. Niagara Parks Commission, 1941 AC 328 : (AIR 1941 PC 114). 27. In this Court also the principle was applied to the East Punjab Requisition of Immovable Property Act (Temporary Powers Act) (Pun. 48 of 1948) replaced by the Punjab Requisition and Acquisition of Immovable Property Act (Pun.11 of 1953). Under that Act though compensation was payable there was no provision for the payment of interest. This Court approved the decision of the Privy Council in Inglewood Pulp and Paper Co. Ltd. v. New Brunswick Electric Power Commission, (1928) AC 492, where the Judicial Committee had 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 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 the rule.’ This Court observed as follows:- ‘It would thus be noticed that the claim for interest proceeds on the assumption that when the owner of immoveable property loses possession of it he is entitled to claim interest in place of the right to retain possession.’” 9 No doubt, the Court did not go into the question in view of the agreement between the parties, but, however, it took into account the law on the issue. In the written statement, the defendants themselves had admitted the construction of pump house and the matter being recommended to the authorities for initiating action under the provisions of the Land Acquisition Act. Unfortunately, nothing was placed on record to prove the finalization of the contemplated action. Therefore in my view, based on the principle of equity, the plaintiffs having been deprived of their Constitutional right would be entitled to interest at the rate awarded by the Court below. However, since the plaintiffs have themselves claimed interest w.e.f. July, 1999, therefore, the impugned decree is modified to the extent that the plaintiffs shall be entitled to interest at the rate awarded by the Court below from July, 1999, and not December, 1998, till the date of payment. For the aforesaid reasons and observations, the appeal is partly allowed and the impugned decree is modified accordingly. October 16, 2008 (Sanjay Karol), (C) Judge.