CHANABASAPPA versus KARNATAKA NEERAVARI NIGAM LTD. & ANR.
[2020] 5 S.C.R. 24, Supreme Court of India, 2020
Outcome: Disposed off
Segment: Ratio
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CHANABASAPPA
v.
KARNATAKA NEERAVARI NIGAM LTD. & ANR.
(Civil Appeal No. 475 of 2020)
JANUARY 21, 2020
[ARUN MISHRA AND INDIRA BANERJEE, JJ.]
Land Acquisition Act, 1894:
s. 34  – Payment of interest under  – Whether from the date
of award or from the date prior thereto – Construction of dam after
acquisition of land – Submergence of land in question after the
full reservoir level breached in the year 1991 – Acquisition process
of land in question started in the year 2007 – Award of
compensation – High Court enhanced the compensation amount
and directed payment of interest from the date of award i.e.
23.7.2009 – Appeal to Supreme Court seeking interest w.e.f. 1991
– Held: Interest u/s. 34 can start only  from the date the possession
of the acquired land is taken – No interest can be claimed for the
period prior to s. 4 Notification – When possession is taken prior
to issuance of preliminary Notification, land-owner is only entitled
to rent or damage for use and occupation – In the present case
submergence/possession of the land is disputed – Claim of damages
would depend upon the factum whether the land has come under
submergence in the year 1991 – The Collector is directed to
examine whether the land in question came under submergence in
1991 and thereupon determine the quantum of damages to be paid
from 1991 till the date of Notification u/s. 4 – If submergence
proved, the land-owner shall be entitled to interest u/s.
34  also
from the date of s. 4 Notification till the date of award.
Disposing of the appeal, the Court
HELD:  1. Interest under Section 34 or Section 28 of Land
Acquisition Act, 1894 can start only from the date the possession
of the land is taken. Unless there is a case of urgency under
Section 17(1) of the Act where possession has been taken, or
the acquisition process is initiated, in such cases, compensation
would be payable by virtue of provisions of Section 17 of the Act.
[Para 6] [28-E-F]
   [2020] 5 S.C.R. 24
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Lila Ghosh v. State of West Bengal (2004) 9 SCC
337 : [2003] 5  Suppl.  SCR 599 – relied on.
2. In a case where the land-owner is dispossessed prior
to the issuance of preliminary notification under Section 4 of the
Act, it is open to the land-owner to recover the possession of
his land by taking appropriate legal proceedings.  Therefore, he
is only entitled to get rent or damage for use and occupation
for the period the Government retains possession of the
property. When possession is taken prior to issuance of
preliminary notification, the Collector may also determine the
rent or damages. [Para 7] [29-C-E]
R.L. Jain v. DDA & Ors. (2004) 4 SCC 79 : [2004] 2
SCR 1156 – relied on.
3. No interest can be claimed for the period prior to the
Section 4 notification. Where possession has been lost prior to
initiation of the acquisition proceedings, the land-owners can
claim rent or damages before the Collector. [Para 9] [30-D-E]
Special Land Acquisition Officer v. Karigowda & Ors.
(2010) 5 SCC 708 : [2010] 5 SCR 164 – relied on.
4. On considering the provisions of Section 23, while
determining the compensation under Section 23(1) of the Act,
the Court shall take into consideration firstly, the market value
of the land on the date of publication, secondly, the damage
sustained by reason of taking of any standing crops or trees and
other damages at the time of taking possession. Under Section
23(1)(A) of the Act, the additional compensation is awarded at
the rate
of twelve percent per annum on the market value from
the date of notification under Section 4. Under Section 23(1A)
of the Act, in addition to the market value, thirty percent
solatium is awarded on such market value. [Para 11] [31-F-H]
Siddhappa Vasappa Kuri & Anr. v. Special Land
Acquisition Officer & Anr. (2002) 1 SCC 142 : [2001]
4 Suppl. SCR 236 – relied on.
5. Under Section 34, nine percent interest is payable for
the first year from the date of taking possession, and in case it
is not paid within one year from the date of possession, the
CHANABASAPPA v. KARNATAKA NEERAVARI
NIGAM LTD. & ANR.
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interest at the rate of fifteen percent per annum is payable. [Para
13] [32-D]
6. In the instant case, the date of taking of the possession/
submergence is disputed, and there is no categorical finding
recorded that area in question came under submergence with
effect from the year 1991 and was not as a matter of fact in
possession of the appellant. Certain documentary evidence has
been pointed out, indicating that the land was in cultivating
possession of the appellant.  It is also not clear for how much
period of a year the area in question remained in submergence.
Certain documents have been filed by the appellant in this Court
in the form of correspondence showing that certain survey
numbers in various villages came under submergence, which
was required to be acquired.  The claim of damages would
depend upon the factum whether the land has come under
submergence in the year 1991 for which adequate directions have
been issued by the High Court to the Collector. [Para 15] [12-
F-H]
7. In these circumstances, the Collector is directed to
examine whether the area had come under submergence and
shall determine the quantum of damages to be paid from 1991
till the date of notification under Section 4. In case the area has
come in submergence, then the appellant shall be entitled to the
interest under Section 34 from the date of notification under
Section 4 till award also. [Para 16] [33-B-D]
Case Law Reference
[2003] 5
Suppl. SCR 599  
relied on
Para 6
[2004] 2 SCR 1156 
relied on
Para 7
[2001] 4 Suppl. SCR 236 
relied on
Para 8
[2010] 5 SCR 164
relied on
Para 9
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 475
of 2020.
From the Judgment and Order dated 17.02.2016 of the High
Court of Karnataka, Circuit Bench at Dharwad in M.S.A. 552 of 2012
(LAC).
Gourab Banerji, Sr. Adv., Arjun Krishnan, Ankur Singh,
Ms. Shourya Bari, Raka Chatterjee, Ms. Ishita Mishra, Advs. for the
Appellant.
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Naveen R. Nath, Mrs. Lalit Mohini Bhat, Rahul Jain, Advs. for
the Respondents.
The Judgment of the Court was delivered by
ARUN MISHRA, J.
1. This appeal has been preferred by the appellant-claimant
aggrieved by the judgment and order dated 17.02.2016 passed by the
High Court of Karnataka, Circuit Bench at Dharwad, enhancing the
compensation to Rs.3,00,000/- per acre.  Interest under section 34 of
the Land Acquisition Act, 1894 (for short, ‘’the Act”) has also been
awarded from the date of the award, i.e. 23.07.2009 and not for the
period prior thereto.
2. Notification under section 4 was issued on 7.6.2007 for
acquiring inter alia the land belonging to the appellant, and the award
was passed on 23.7.2009.  It was submitted that under Malprabha
Reservoir Project, a dam was constructed in the district of Belgaum
across the Malprabha river by the Government of Karnataka.  The
original height of the dam was 2074.5 feet.  This was raised to 2079.5
feet.  However, while raising the height, a proper survey was not
conducted as to the land which would come under submergence.  As
a result thereof, in the year 1991 when the full reservoir level breached,
water entered into those lands which were not acquired.  The issue
was raised in the Karnataka Legislative Assembly on 6.9.1991; however,
the acquisition process was initiated belatedly in the year 2007.
3. Notification under section 4 of the Act was issued on 7.6.2007.
Declaration under section 6 of the Act was
issued on 15.12.2007.  The
award was passed on 23.7.2009, awarding a sum of Rs.56,672/- per
acre.  Reference was sought on 1.9.2009, claiming compensation at
the rate of Rs.5,00,000/- per acre.  The Senior Civil Judge, Bailhongal,
awarded a sum of Rs.2,70,000/- per acre.  Aggrieved by the decision,
an appeal was preferred before the District Court.  The District Court
reduced the compensation to Rs.2,25,000/- per acre by applying the
capitalization method.  Aggrieved thereby, Misc. Second Appeal was
preferred in the High Court.  The High Court awarded compensation
at the rate of Rs.3,00,000/- per acre.  By the impugned order, the High
Court ordered payment of interest from the date of award, i.e.
23.7.2009, and not from the date of notification issued under section 4
or w.e.f. 1991.  Hence this appeal has been preferred.
CHANABASAPPA v. KARNATAKA NEERAVARI
NIGAM LTD. & ANR.
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4. It was submitted by Shri Gaurav Banerjee, learned senior
counsel appearing on behalf of the appellant that, as a matter of fact,
the area came under submergence in the year 1991. Thus, the damages
ought to have been awarded from the year 1991 till the date of
notification under section 4, and interest under section 34 should have
been awarded with effect from the date of notification under section
4. It was submitted that rent or damages may be awarded as the
amount of interest to be awarded under section 34 of the Act.
5. On the other hand, Shri Naveen R. Nath, learned counsel
appearing for the respondent submitted that no case is made out to award
the compensation from 1991 or from the date of notification under
section 4.  He also disputed that the area came under submergence
from the year 1991 and submitted that several documents from the year
1993 to 2005 had been placed on record showing cultivation on the
disputed land. Inquest conducted in the presence of panchas dated
9.6.2009 is on record in which crops of sugarcane, wheat, jwar, cotton
are shown.  An inspection of the land was conducted on 20.07.2008,
which shows the existence of open well, borewell in the said land. Thus,
having claimed to be in cultivation possession of the land, the appellant
cannot be said to be entitled for any compensation for the period 1991
till the date of the notification.  Interest has been awarded from the
date of the award.
As such no interference is called for in the matter.
6. In Lila Ghosh v. State of West Bengal (2004) 9 SCC 337,
this court held that interest under section 34 or section 28 can start
only from the date the possession is taken.  Unless there is a case of
urgency under section 17(1) of the Act where possession has been
taken, or the acquisition process is initiated, in such cases, compensation
would be payable by virtue of provisions of section 17 of the Act.  This
Court observed :
“19. Even though the authority in Shree Vijay Cotton & Oil Mills
Ltd (1991) 1 SCC 262 appears to support the claimants, it is to
be seen that apart from mentioning Sections 28 and 34, no
reasons have been given to justify the award of interest from a
date prior to commencement of acquisition proceedings. A plain
reading of Section 34 shows that interest is payable only if the
compensation, which is payable, is not paid or deposited before
taking possession. The question of payment or deposit of
compensation will not arise if there is no acquisition proceeding.
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In the case where possession is taken prior to acquisition
proceedings, a party may have a right to claim compensation or
interest. But such a claim would not be either under Section 34
or Section 28. In our view, interest under these sections can only
start running from the date the compensation is payable. Normally
this would be from the date of the award. Of course, there may
be cases under Section 17, whereby invoking urgency clause
possession has been taken before the acquisition proceedings are
initiated. In such cases, compensation, under the Land Acquisition
Act, would be payable by virtue of the provisions of Section 17.
As in cases under Section 17, compensation is payable; interest
may run from the date possession was taken. However, this case
does not fall into this category.”
(emphasis supplied)
7. In R.L. Jain v. DDA & Ors. (2004) 4 SCC 79 this Court held
that in a case where the landowner is dispossessed prior to the issuance
of preliminary notification under section 4 of the Act, it is open to the
landowner to recover the possession of his land by taking appropriate
legal proceedings.  Therefore, he is only entitled to get rent or damage
for use and occupation for the period the Government retains possession
of the property. When possession is taken prior to issuance of
preliminary notification, the Collector may also determine the rent or
damages. This Court has observed thus:
“18. In a case where the landowner is dispossessed prior to the
issuance of preliminary notification under Section 4(1) of the Act,
the Government merely takes possession of the land, but the title
thereof continues to vest with the landowner. It is fully open for
the landowner to recover the possession of his land by taking
appropriate legal proceedings. He is therefore only entitled to get
rent or damages for use and occupation for the period the
Government retains possession of the property. Where possession
is taken prior to the issuance of the preliminary notification, in
our opinion, it will be just and equitable that the Collector may
also determine the rent or damages for use of the property to
which the landowner is entitled while determining the
compensation amount payable to the landowner for the
acquisition of the property. The provisions of Section 48 of the
Act lend support to such a course of action. For delayed payment
CHANABASAPPA v. KARNATAKA NEERAVARI
NIGAM LTD. & ANR. [ARUN MISHRA, J.]
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of such amount appropriate interest at prevailing bank rate may
be awarded.”
8. In Siddhappa Vasappa Kuri & Anr. v. Special Land
Acquisition Officer & Anr. (2002) 1 SCC 142 this Court has laid down:
“6. It is, as we see it, clear from Section 23(1-A) that the starting
point for the purposes of calculating the amount to be awarded
thereunder, at the rate of 12 per centum per annum on the market
value, is the date of publication of the Section 4 notification. The
terminal point for the purpose is either the date of the award or
the date of taking possession, whichever is earlier. In the present
case, possession of the land having been taken prior to the
publication of the Section 4 notification, that terminal is not
available. The only available terminal is the date of the award.
The High Court, therefore, was in no error in holding that the
appellants were entitled to the additional compensation under
Section 23(1-A) for the period 8-3-1991 to 6-2-1993.”
9. In the Special Land Acquisition Officer v. Karigowda &
Ors. (2010) 5 SCC 708 has observed that no interest can be claimed
for the period prior to the Section 4 notification. Where possession has
been lost prior to initiation of the acquisition proceedings, the landowners
can claim rent or damages before the Collector.  Following observations
have been made in Karigowda supra:
“101. As is evident from the above dictum of the Court, despite
dispossession, the title
continues to vest in the landowners and it
is open for the landowners to take action in accordance with law.
Once notification under Section 4(1) of the Act has been issued
and the acquisition proceedings culminated into an award in terms
of Section 11, then alone the land vests in the State free of any
encumbrance or restriction in terms of provisions of Section 16
of the Act. The court, in situations where possessions have been
taken prior to issuance of notification under Section 4(1) of the
Act, can direct the Collector to examine the extent of rent or
damage that the owners of land would be entitled to, the
provisions of Section 48 of the Act would come to aid and the
court would also be justified in issuing appropriate direction. This
was the unequivocal view expressed by the Court in R.L. Jain
case as well. This legal question is no more open to controversy
and stands settled by this Court. We would follow the view taken
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and accept the contention of the appellant State that the
Reference Court as well as the High Court could not have
granted any interest under the provisions of the Act, for a date
anterior to the issuance of notification under Section 4 of the Act.
However, following the dictum of the Bench in R.L. Jain case,
we direct the Collector to examine the question of payment of
rent/damages to the claimants, from the period when their
respective lands were submerged under the backwater of the
river, till the date of issuance of the notification under Section
4(1) of the Act, from which date, they would be entitled to the
statutory benefits on the enhanced compensation.”
10. In Karigowda supra, the question came up for consideration
as to interest payable on taking of possession.  This Court considered
various issues and observed that the decision of Larger Bench in R.L.
Jain‘s case (supra) is binding.  It has been observed that once
notification under section 4(1) has been issued and the award has been
passed, then only the land will vest in the State. In case its possession
has been taken earlier to the issuance of notification under section 4(1)
of the Act, the Court can direct the Collector to examine the extent of
rent or damage that the owners of the land would be entitled to.  The
Collector was directed to examine the question of payment of rent/
damages from the period their respective lands were submerged in the
backwater of the river, till the date of
issuance of notification under
section 4(1) from which date, they would be entitled to claim benefits
on the enhanced compensation.  The question of interest arises after
the date of notification under Section 4 and not prior to under section
28 or 34 of the Act.
11. When we consider the provisions of section 23, while
determining the compensation under section 23(1) of the Act, the Court
shall take into consideration firstly, the market value of the land on the
date of publication, secondly, the damage sustained by reason of taking
of any standing crops or trees and other damages at the time of taking
possession. Under section 23(1)(A) of the Act, the additional
compensation is awarded at the rate of twelve percent per annum on
the market value from the date of notification under section 4.  Under
section 23(2) of the Act, in addition to the market value, thirty percent
solatium is awarded on such market value.
CHANABASAPPA v. KARNATAKA NEERAVARI
NIGAM LTD. & ANR. [ARUN MISHRA, J.]
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12. In the present matter, we are concerned with the question
of interest to be awarded under section 34.  Section 34 of the Act is
extracted hereunder:
“34. Payment of interest – When the amount of such
compensation is not paid or deposited on or before taking
possession of the land, the Collector shall pay the amount
awarded with interest thereon at the rate of [nine per centum]
per annum from the time of so taking possession until it shall have
been so paid or deposited:
[Provided that if such compensation or any part thereof is not
paid or deposited within a period of one year from the date on
which possession is taken, interest at the rate of fifteen per
centum per annum shall be payable from the date of expiry of
the said period of one year on the amount of compensation or
part thereof which has not been paid or deposited before the date
of such expiry.]”
13. Under section 34, nine percent interest is payable for the first
year from the date of taking possession, and in case it is not paid within
one year from the date of possession, the interest at the rate of fifteen
percent per annum is payable.
14. In the present matter, interest has been awarded from the
date of the award under section 34, not from the date of notification
under section 4.  It was submitted on behalf of the respondents that it
was not claimed before the reference court that possession was
deprived of in the year 1991.   Compensation /
Damages were not
claimed from the year 1991 and the factum of submergence has been
disputed.
15. In the instant case, the date of taking of the possession/
submergence is disputed, and there is no categorical finding recorded
that area in question came under submergence with effect from the
year 1991 and was not as a matter of fact in possession of the appellant.
Certain documentary evidence has been pointed out, indicating that the
land was in cultivating possession of the appellant.  It is also not clear
for how much period of a year the area in question remained in
submergence. Certain documents have been filed by the appellant in
this Court in the form of correspondence showing that certain survey
numbers in various villages came under submergence, which was
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required to be acquired.  The question is, which were those survey
numbers that came under submergence has to be examined by the
Collector.  The claim of damages would depend upon the factum
whether the land has come under submergence in the year 1991 for
which adequate directions have been issued by the High Court to the
Collector.
16. In these circumstances, we direct the Collector shall examine
whether the area had come under submergence and shall determine
the quantum of damages to be paid from 1991 till the date of notification
under section 4. In case the area has come in submergence, then the
appellant shall be entitled to the interest under Section 34 from the date
of notification under Section 4 till award also.  Interest under Section
34 at the most can follow from the date of notification under section 4,
in case the area had come under submergence at any point of time
before the notification was issued.  The Collector shall determine the
aforesaid aspect within six months after hearing the parties and the
evidence as may be adduced.  The appeal is accordingly disposed of.
Kalpana K. Tripathy
  Appeal disposed of.
CHANABASAPPA v. KARNATAKA NEERAVARI
NIGAM LTD. & ANR. [ARUN MISHRA, J.]