HON’BLE SRI JUSTICE GODA RAGHURAM W.P.Nos.2010 and 2558 of 2005 DATE: 28.01.2008 W.P.No.2010 of 2005 Between: V.Balakrishna Reddy and 2 others. … Petitioners and The Special Deputy Collector, Land Acquisition (Industries), Hyderabad and another. … Respondents W.P.No.2558 of 2005 Between: Kaushalya Giri and 5 others. … Petitioners and The Special Deputy Collector, Land Acquisition (Industries), Hyderabad and another. … Respondents HON’BLE SRI JUSTICE GODA RAGHURAM Writ Petition Nos.2010 and 2558 of 2005 COMMON ORDER: The petitioners are aggrieved that the first respondent is not awarding interest on solatium, additional market value, compensatory interest and for deducting a sum of Rs.70,045/- as income tax deduction at source from the interest in Award No.C/322/04 dated 16-11-2004 (in W.P.2010/2005) and Award No.C-1/2096/81 dated 08-08-2003 (in W.P.No.2558 of 2005). The grievances as presented in these writ petitions have a meandering and chequering history. The petitioners’ lands were initially notified on 25-03-1971 along with other lands under the provisions of the Land Acquisition Act, 1894 (for short ‘the Act’) and possession was taken on 15-01-1978. The notification dated 29-03-1984 was issued after the lapse of an earlier notification and possession taken, but neither an award was passed nor compensation paid. Therefore, the petitioners filed these writ petitions. The petitioners in W.P.No.2010 of 2005 earlier filed W.P.No.7496 of 1999 seeking initiation of land acquisition proceedings afresh after a declaration that the proceedings initiated by the notification dated 29-03-1984 had lapsed. In the alternative, they prayed for compensation as paid to the land owners in similar Sy.Nos. 28/1 and 28/2, as per the directions of this Court in W.A.No.1226 of 1994 dated 04-07-1996. W.P.No.7496 of 1999 was disposed of by an order dated 05-04-2004 directing passing of an award within two months. The respondents passed an award dated 16-11-2004 fixing the market value at Rs.25/- per square yard besides additional market value and 7½% interest from 25-03- 1971 to 29-03-1984. Aggrieved that interest on 30% solatium, 12% additional market value and the compensatory interest as directed by the Division Bench in W.A.No.1226 of 1994 are not paid, W.P.No.2010 of 2005 is filed. In so far as the other W.P.No.2558 of 2005 is concerned, the petitioners herein filed W.P.No.1663 of 1998 seeking passing of an award. The learned Single Judge allowed the writ petition on 12-11-1998 directing the Land Acquisition Officer to pass an award treating the date of the judgment in W.P.No.1663 of 1998 as the date of notification under Section 4(1) of the Act besides directing the respondents to pay interest @ 7½% from 25-03-1971(the date of the initial notification under Section 4(1) of the Act) to 15-05- 1978 (the date of taking of the possession), as compensatory interest. Against this judgment the Union of India, on behalf of the second respondent-beneficiary, carried the matter by way of W.A.No.1226 of 1994. The Division Bench partly allowed the appeal directing the Land Acquisition Officer to take the date of acquisition notification as 29-03-1984(the date of the later notification under Section 4(1) of the Act) and to pay compensatory interest at 7½% per annum from 25-03-1971 till 29- 03-1984. There is no dispute that the parties are bound by the judgment of the Division Bench in W.A.No.1226 of 1994, dated 04- 07-1996. The order of the Division Bench enjoins that the land owners are entitled to interest and the respondents are obligated to the corollary objection and therefore, should pay interest from the date of the earlier notification under Section 4(1) of the Act (25-03- 1971) till the date of the subsequent notification under Section 4(1) of the Act in 1984 i.e. 29-03-1984. The Court also made it clear that though possession was taken on 15-07-1998 for the purpose of determination of the market value of the lands the relevant date is the later of the notification under Section 4(1) of the Act namely 29-03-1984. The Bench further made it clear that it does not interfere with he direction of the learned Single Judge with regard to payment of compensatory interest, at 7½% per annum. It requires to be noticed that the learned Single Judge had directed the respondents to pay the petitioners equitable interest for the period 25-03-1971 to 15-05-1978 at 7½% per annum for the market value prevalent as on 12-11-1998, being the date on which the writ petition was disposed of. If the authorities had taken care to understand the chronology of events leading to the judgment of the Division Bench, dated 04-07-1996, instead of sui juris exercising themselves over the issue, particularly, since they had been parties to the judgment, it would have perhaps occurred to these respondents that as a consequence of the judgment dated 04-07- 1996 in W.A.No.1226 of 1994, clearly, categorically and without a scintilla of doubt the obligation was to pay equitable interest at the rate of 7½ % from 25-03-1971 to 29-03-1984, the two dates representing the dates of the initial notification under Section 4(1) of the Act, (which had lapsed) and the date of the later notification under Section 4(1) of the Act, which was treated as the relevant date for eventually determining the market value of the lands acquired. The payment of interest was also on account of the reason that the petitioners were deprived of the benefit of user of their lands on account of the irrational process of acquisition pursued and in allowing the earlier notification to lapse. This Court is dealing with this issue at some length since this is the only remnant issue before this Court now, between the parties apart from a minor issue with regard to an obligation to pay interest from 2003 till the date of actual payment. On behalf of the first respondent, three counter affidavits have been filed. In the counter affidavit dated 07-04-2005, which makes brevity the high point of its virtue at the cost of clarity, it is pleaded that an award was passed wholly in consonance with law and the direction of the High Court. A scrutiny of the award, prima facie, made this Court to conclude at an interlocutory hearing that the award was not passed in consonance with the law declared by a Constitution Bench of the Supreme Court in Sunder v. Union of India[1]. Therefore, on 09- 11-2006 this Court directed the first respondent to file a fresh affidavit explaining why interest was not paid in accordance with the provisions of the Act and as per the law declared in Sunder’s case (supra).. Thereupon the respondent filed a second counter affidavit dated 10-11-2006. In this counter affidavit filed by one P.Ram Gopal Rao, claiming to be the Special Deputy Collector of Land Acquisition, it is asserted that solatium is not payable on the value of the structures acquired, while stating that interest under Section 34 of the Act had been paid by the Land Acquisition Officer. On 29-11-2006 this Court observed that the counter affidavit dated 10- 11-2006 of the first respondent, prima facie, incorporates a deliberate misstatement of the legal principles underlying computation of the compensation payable under the provisions of the Act, and the first respondent is afforded an opportunity to recant from the apparently misleading averments. The third supplement of the first respondent’s counter affidavit is dated 07-06-2007. This incorporates a calculation memo based on the proceedings of the first respondent dated 14- 03-2007 whereunder, after more than 36 years of meandering around the law, the State represented by the first respondent has recognized the glaring error of its earlier computation, which found incorporation in the earlier award and rectified the same in the matter of granting interest on solatium, grant of additional market value as well as solatium and additional market value on the structures acquired besides grant of interest. Thereafter, the first respondent passed another order dated 16-04-2007 making a fresh computation but demanding some refunds. The demand for refund of the amounts already paid is on the premise that the calculation of the 7½ % equitable interest was made for the period from 25-03-1971 to 13-03-1978. The order dated 16-04-2007 shows that the first respondent has reckoned the period for the computation of the 7½ % equitable interest payable, on the basis of the judgment of the learned Single Judge dated 12-11-1993 in W.P.No.1663 of 1988. This is clearly a grossly careless assumption by the first respondent. The judgment of the learned Single Judge in W.P.No.1663 of 1988 stood eclipsed by the Judgment of the Division Bench dated 04-07-1993 in W.P.No.1226 of 1994 to which a reference has already been made herein above. It is rather shocking that the first respondent in 2007 should have eluded to an overruled judgment, ignoring the Division Bench judgment which is inter partes. The judgment of the Division Bench, as already noticed, had directed payment of equitable interest for the period 25-03-1971 to 29-03-1984. The claim of the State as contained in the first respondent’s order dated 16-04-2007 for refund of excess amounts, allegedly paid to the petitioners, is therefore based on a self-induced error of relying on an overruled order of the learned Single Judge of this Court in W.P.No.1663 of 1988 instead of on the basis of the operative order namely of the Division Bench dated 04-07-1996 in W.A.No.1226 of 1994. The claim of the respondents to refund is thus fundamentally misconceived and has no basis whatsoever in law. It is so declared. In the counter affidavit dated 07-06-2007, the first respondent states that since it was noticed that the equitable interest of 7½ % was paid in excess for the period from 14-03-1978 to 28-03-1984 the recalculated payment of compensation inputting the 30% solatium and 10% additional market value, has not been paid. Since this Court on analysis of the chronology of events, and a perusal of the judgment of the Division Bench dated 04-07-1996 in W.A.No.1226 of 1994 has come to the conclusion herein that the 7½ % equitable interest is payable for the period 25-03-1971 to 29- 03-1984, the assumption of the first respondent that excess payment was made to the petitioners is an assumption that is wholly misconceived. There was in fact no excess payment made. The petitioners are, therefore, entitled to be paid by the respondents forthwith the entirety of the compensation as now determined in rectification of the initial award passed and as contained in the proceedings of the first respondent, bearing reference No. C/322/2004, dated 14-03-2007. The writ petitioner in W.P.2558 of 2005 filed W.P.M.P.No.11158 of 2007 seeking amendment of the prayer in the writ petition seeking additional relief, namely payment of the compensation together with interest at 15% per annum from 08-08- 2003 till the date of payment and for a declaration that the proceedings dated 16-04-2007 of the first respondent (with regard to the recoveries of excess payments made) is arbitrary. This Court has already and hereinabove declared that no excess payments were made by the respondents on the aspect of the 7½% equitable interest. The proceedings of the first respondent dated 16-04-2007 bearing No. C/322/2004, which concludes that excess payments were made to the petitioners, is accordingly quashed. With regard to the petitioners’ claim for payment of 15% interest from 08-08-2003 till the date of payment, they are entitled to such payment of interest under proviso to Section 34 of the Act. The first respondent is, therefore, obliged and is directed to expeditiously and in any event, within a period of three weeks from the date of receipt of a copy of this order, pass orders afresh computing the interest payable to the petitioners for the belated payment of the compensation which includes all the components of the compensation as now determined. Before parting with the case and having regard to the convoluted nature of the first respondent’s conduct in this case, this Court feels it appropriate to record an observation. A Land Acquisition Officer functioning under the provisions of the Act is not a mere agent of the State in that narrow sense of having to protect the interests of the State which is the agency acquiring the land. He is a neutral statutory authority who is required to pass an award determining the rights of the land owners, who were deprived of their lands by the process of acquisition and determination of the market value in terms of the provisions of the Act, and as per the established principles derived from a mass of precedential authority on this aspect. He has to function as a neutral arbiter determining the compensation. When he transgress such neutral role and assumes a prejudice or bias either in faovur of the land owners or as happens in most cases on behalf of the State as the acquisition authority, the Land Acquisition Officer betrays the trust that the Act inheres in him along with the concomitant authority to assess the relevant parameters on the basis of which the award should be passed. In the case on hand, a succession of Land Acquisition Officers have become the oblivious to this esteemed, professional and neutral role that Land Acquisition Officers are required to possess appear to have deluded themselves into an assumption that their only purpose is to deny just compensation as is required to be determined by the provisions of the Act even at the cost of the legislative and to the detriment of the land owners, for the purpose of benefiting one of the litigants before the Land Acquisition Officer, namely the State. The Land Acquisition Officers should realize that the State is a party before him though in a constructive sense (when the acquisition is for another instrumentality) and he has to play the exalted role of a neutral arbiter in determining the amount of compensation in accordance with established statutory provisions. As a consequence of the negligent regress from this degree of neutrality by the Land Acquisition Officers, today the State and consequently the tax payer are having to pay huge amounts of compensation by way of interest which could have been avoided if the awards initially passed had been neutral, fair and professionally passed. This is a case where the petitioners had at last got their legal desserts, the only eventual and permanent loser is the tax payer. The Land Acquisition Officers concerned have perhaps earned their career advancement but no respite is available to the tax payer from the economic consequences of inefficient administration. Such is the permanent scar that an incompetent executive impresses upon the civil society. For all the aforesaid reasons, the writ petitions are allowed. The first respondent shall pay to the petitioners the compensation amount or such portion of it as remains unpaid, as per the order of the first respondent. The first respondent shall also pass an order afresh determining the interest payable under Section 34 of the Act for the belated payment of the compensation. Such further order shall be passed by the first respondent within a period of three weeks from the date of receipt of a copy of this order. In the circumstances, there shall be no order as to costs. ------------------------------ GODA RAGHURAM, J Date: 28.01.2008 KLP [1] 2001(7) SCC 211