*THE HON’BLE SRI JUSTICE C.V. NAGARJUNA REDDY +WRIT PETITION No.9819 of 2000 % Dated: 08-09-2008 # V.V.V.R.K. Yachendra Petitioner VERSUS $ The Special Commissioner and Director of Settlements, Govt., of A.P., Hyderabad, & another. Respondents ! Counsel for Petitioner: Mr. V. Rajagopal Reddy ^Counsel for the Respondents: GP for Revenue. <GIST: > HEAD NOTE: ? Cases referred 1. AIR 1994 SC 1377 2. AIR 1963 SC 1171 3. 1970 (1) The Madras Law Journal Reports (SC) 39 IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE EIGHTH DAY OF SEPTEMBER, TWO THOUSAND EIGHT ONLY PRESENT: THE HON’BLE MR. JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.9819 of 2000 Between: V.V.V.R.K. Yachendra … Petitioner AND The Special Commissioner and Director of Settlements, Govt., of A.P., Hyderabad, & another. … Respondents Counsel for the petitioner : Sri V. Rajagopal Reddy Counsel for the respondents: GP for Revenue This Court made the following: THE HON’BLE SRI JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.9819 of 2000 ORDER:- This is yet another writ petition and hopefully the last in the series of writ petitions ﬁled by the petitioner, who is the erstwhile Zamindar of Venkatagiri estate. The dispute pertains to payment of compensation and interim payments till the determination of the compensation under the provisions of the Andhra Pradesh (Andhra Area) Estates (Abolition and Conversion into Ryotwari) Act, 1948 (for short, ‘the Act’) along with interest. The Act abolished all the estates in the State and provided for payment of compensation to the estate holders due to such abolition. By notiﬁcation dated 11.11.1959, the Director of Settlements called upon all the estate holders to apply for copies of data on the basis of which he proposed to determine the basic annual sum. On the ground that such a data applied for by the petitioner was not furnished, he ﬁled WP.No.376 of 1960. The said writ petition was disposed of by judgment dated 21.11.1962 with the direction to the Director to supply the data and give the petitioner an opportunity to make his representation before determining basic annual sum under Section 39 of the Act. By proceedings dated 21.06.1960, the Director determined basic annual sum at Rs.2,35,785=52 paise and total compensation at Rs.29,49,819/-. Interim payments were deposited from Faslis 1369 to 1372 @ Rs.64,633=60 paise and the interim payment was stopped from the Fasli 1369. This compelled the petitioner to ﬁle WP.No.496 of 1965. The petitioner also ﬁled WP.No.1100 of 1968 to quash the proceedings dated 21.06.1960 of the Director of Settlements. By its order dated 05.09.1969, a Division Bench of this Court quashed the order of ﬁnal determination made by the Director of Settlements and directed the Board of Revenue to determine the ﬁnal compensation within three months. The Bench further observed that the Government was under a statutory obligation to deposit interim payments till compensation was ﬁnally determined by the Board of Revenue under Section 39 of the Act. As the interim payments were not being made, the petitioner ﬁled another writ petition, namely, WP.No.4709 of 2007 for a writ of Mandamus to direct the Government to implement judgment dated 05.09.1969 of this Court. The State Legislature passed Act 3 of 1971. The petitioner ﬁled WP.No.1744 of 1971 for a writ of Certiorari to quash Section 4(a), 6(a) and (b) and Section 9 of the said Act. Both the said writ petitions were heard together by a Division Bench and disposed of by striking down Section 6 of Act 3 of 1971 insofar as it is applicable to the petitioner and issued mandamus directing the respondents to make interim payments till the date of the said Act. As the compensation was not ﬁnally determined despite the earlier direction given by this Court, the petitioner again approached this Court by way of WP.No.5181 of 1971. The petitioner also ﬁled WP.No.1820 of 1972 with the complaint that he was not permitted to argue about the individual items. Both the writ petitions were disposed of by order, dated 13.10.1972. Thereafter, the Director of Settlements made ﬁnal determination of compensation by order, dated 12.12.1972. In order to see that interim payments were conﬁned only to the initial date of determination, the State Government issued ordinance No. 5 of 1972 amending Section 50 of the Act. Questioning the vires of the said ordinance, the petitioner ﬁled WP.No.2038 of 1973. The said writ petition was allowed by a Division Bench of this Court by judgment dated 08.04.1975 by declaring Section 2 of Act 1 of 1973 as null and void and directing the respondents to make interim payments up to 12.12.1972 in accordance with the determination made by this Court on 01.02.1973. Civil Appeal No.398 of 1972 ﬁled by the State against judgment dated 22.09.1971 in WP.No.4709 of 1970 was disposed of by the Supreme Court on 06.02.1986, wherein it inter alia made clear that the period during which the interim payments are payable ends with the date of original determination made by the Director of Settlements under Section 39 (1) and directed the State to accordingly compute the interim payments. In purported compliance of the said judgment of the Supreme Court, the Director of Settlements passed order dated 03.07.1986 by holding that no payments either towards interim payments or by way of compensation are legally due to the petitioner as the constitution validity of the amendment Act 1 of 1973 was upheld by the Supreme Court. The said order was assailed by the petitioner in WP.No.10619 of 1986, which was allowed by this Court on 12.07.1989 to the extent of quashing of the order relating to interim payments by holding that 12.12.1972 is the due date on which basic annual sum and total compensation has been determined and thereby the petitioner’s right to receive interim payments continued till that date. WA.No.133 of 1990 ﬁled against the said order was dismissed by the Division Bench on 16.03.1999. Special leave petition ﬁled against the said judgment was dismissed by the Supreme Court on 04.10.1999. Consequently, respondent No.1 issued notice dated 22- 1-2000 to ﬁle objections, if any, to the proposal to deposit the sum of Rs.3,00,855-09 paise, which includes Rs.2,67,875/- towards additional compensation determined as payable by respondent No.1, vide his proceedings C2/848/81, dated 9-12-1982. After considering the objections ﬁled by the petitioner, the Special Commissioner and Director of Settlements, respondent No.1, held that the petitioner is entitled to payment of Rs.3,00,855=09 paise towards additional compensation and net interim payments as shown in Annexures I and II enclosed to his notice. It is this order, which is questioned in this writ petition. At the hearing, Sri V. Rajgopal Reddy, learned counsel for the petitioner conﬁned his attack to the impugned order only to the extent of respondent No.1 denying interest to the petitioner on the compensation and interim payments from the due dates till the date of payment. While dealing with the claim of the petitioner for payment of interest on interim payments, respondent No.1 rejected the request of the petitioner for payment of interest at 12% or 18%. He held that the petitioner is entitled to payment of interest at 3%. As regards the claim for payment of interest on the balance compensation amount found payable to the petitioner, the same was rejected on the ground that the Act does not provide for payment of such interest. Section 50 of the Act provides for payment of interim payments to the principal landholder and other persons referred to in Section 44 (1) of the Act. Section 50 (7) (b) envisages that if the aggregate interim payment determined, less the deductions already made under sub-sections (3) and (4) exceeds, or is less than, aggregate of the amounts already deposited under sub- section 5, the balance with interest thereon at 3% per annum shall be deposited by the Government with the Tribunal, after deducting the amounts of the nature speciﬁed in the proviso to sub-section (3) and still due to the Government, or as the case may be, the amount of deﬁciency shall be intimated by the Government to the Tribunal. Thus, this provision ﬁxes the rate of interest at 3% per annum on the balance of the interim payments due to the principal landholder. Therefore, to the extent of interest payable on the interim payment, rejection of higher rate of interest by respondent No.1 is in conformity with the statutory provision and the order of respondent No.1 in this regard cannot be interfered with. Insofar as interest payable on the balance compensation (additional compensation) is concerned, respondent No.1 rejected the claim of the petitioner for payment of interest on the ground that the provisions of the Act do not provide for payment of such interest. As evident from Annexure-I to the notice issued by respondent No.1, the additional compensation amount to the tune of Rs.2,67,875/- was determined as payable by him, vide his proceedings C2/848/81 dated 09.12.1982 and the said sum has fallen due for payment from that date. The question is whether the petitioner is entitled to payment of interest on the said amount till the same is deposited by the State? As observed by respondent No.1, payment of interest on this component is not governed by the substantive law, namely, the Andhra Pradesh (Andhra Area) Estates (Abolition and Conversion into Ryotwari) Act, 1948. In the absence of such a statutory provision, the provisions of Section 3(1) of the Interest Act, 1978 (for short, ‘the 1978 Act’) apply. Section 2 (c) of the 1978 Act deﬁnes ‘debt’ as any liability for an ascertained sum of money and includes a debt payable in kind, but does not include a judgment debt. Section 3(1) inter alia provides that in a proceeding for recovery of a debt, the Court may, if it thinks ﬁt, allow interest to the person entitled to the debt at a rate not exceeding the current rate of interest, for the whole or part of the period from the date the debt is payable to the date of institution of the proceedings. As noted earlier, the amount of Rs.2,67,875/- was determined on 09.12.1982 and it has parttaken the character of ‘debt’ within the deﬁnition of Section 2(c) of the 1978 Act from the date of its determination. The petitioner is therefore entitled to payment of interest under Section 3(1)(a) of the 1978 Act not exceeding the current rate of interest from the date it has fallen due till the date of institution of the proceedings, namely, the present writ petition. Even de hors the provisions of the 1978 Act, the constitutional Courts have been directing payment of interest where amounts have fallen due but were not paid. I n Union of India vs. S.S. Sandhawalia and others[1] the Supreme Court aﬃrmed the view of the High Court, which directed payment of interest at 12% per annum on the balance amount of death-cum- retirement gratuity payable to a former Chief Justice of the Punjab and Haryana and Patna High Court. In that case, the Supreme Court observed as under: “Since this payment was delayed by a year or so, the original petitioner claimed interest on the balance amount at 12% per annum, which has been rightly allowed by the High Court. Once it is established that an amount legally due to a party was not paid to it, the party responsible for withholding the same must pay interest at a rate considered reasonable by the Court. Therefore, we do not see any reason to interfere with the High Court’s order directing payment of interest at 12% per annum on the balance of the death-cum- retirement gratuity which was delayed by almost a year. We uphold this part of the High Court’s order.”(Emphasis added). I n The National Insurance Co., Ltd., Calcutta vs. Life Insurance Corporation of India[2] the Supreme Court referred to the English and Indian case law on payment of interest to a person, who was deprived of possession of his property for the period of his dispossession till compensation is paid to him and on the concession made by the counsel for the Life Insurance Corporation on the settled legal position it directed the Corporation, which has taken over the assets of the National Insurance Company, following nationalization of the insurance business under the provisions of the Life Insurance Corporation Act, 1956 to pay interest on the delayed payment on the value of the assets at 4% per annum. I n R.V.M. Neeladri Rao and others vs. The Board of Revenue, Hyderabad and others[3], the judgment in The National Insurance Co., Ltd., Calcutta (2 supra) was followed and the Supreme Court directed payment of interest on the rents calculated by the Manager and payable to the landholder both on the analogy of the provisions of Section 55 (1) of the Act and also on the ratio contained in the various decisions referred to and relied on by the Supreme Court in The National Insurance Co., Ltd., Calcutta (2 supra). In that context, the Supreme Court observed as under: “In National Insurance Co. Ltd., Calcutta v. Life Insurance Corporation of India (1963) 2 SCR (Supp.) 971), the appellant carried on life insurance business in addition to other insurance business. On the passing of the Life Insurance Corporation Act, 1956, which was intended to nationalize all life insurance business, “its controlled business’ stood vested in the Life insurance Corporation of India from the appointed date but the company was entitled to compensation. The Life Insurance Tribunal to whom the dispute between the company and the Life Insurance Corporation had been referred awarded certain amount as compensation out of which a set oﬀ was to be allowed on a sum which was speciﬁed. It was held that the company was entitled to interest on the balance at 4 per cent per annum. Reference was made in this case to a number of English and Indian decisions in which the rule has been laid down that though under the statute there is no provision for payment of interest it should, nevertheless, be awarded, the principle being that if the owner of an immovable property loses possession of it he is entitled to claim interest in place of the right to retain possession. It may be mentioned that even under the Interest Act, 1839 the power to award interest on equitable grounds was expressly saved by the proviso to section 1. In our opinion and this position has not been seriously controverted on behalf of the respondents the appellants should have been held entitled to interest at the rate of 6 per cent per annum.” From the discussion undertaken above, I am of the considered opinion that as the petitioner is deprived of the payment of the sum of Rs.2,67,875/- which was ascertained as far back as 09.12.1982, he is entitled to payment of interest from the time it fell due until the amount was deposited before the Tribunal. The next question is what is the reasonable rate of interest. I n The National Insurance Co., Ltd., Calcutta (2 supra) decided in the year 1962, the Supreme Court awarded interest @ 4% while in R.V.M. Neeladri Rao ( 3 supra), which was decided on 23.09.1969, interest @ 6% was awarded. I n Union of India (1 supra) the Supreme Court aﬃrmed interest at 12% per annum awarded by the High Court. As the period for which interest was payable commenced from the year 1982 and extended for about 18 years therefrom, I find 12% per annum as reasonable rate of interest. Accordingly, the respondents are directed to pay the petitioner interest @ 12% per annum on the balance compensation of Rs.2,67,875/- from 09.12.1982 till the same was deposited before the Tribunal. If the interest @ 3% per annum on the interim payments, which was allowed by respondent No.1 has not been paid, the respondents shall deposit the said amount also. They shall deposit these amounts before the Tribunal within a period of eight weeks from today. On such deposit, the petitioner is entitled to withdraw the same. The writ petition is accordingly allowed to the extent indicated above. ____________________________ C.V.NAGARJUNA REDDY, J Date: 08.09.2008 ES LR copies to be marked. [1] AIR 1994 SC 1377 [2] AIR 1963 SC 1171 [3]) 1970(1) T he Madras Law Journal Reports (SC) 39