Case: Union Of India Vs. Shri Ram Mehar &amp; Anr

2. The facts may be briefly stated. By a notification, dated October 24, 1961, issued under Section 4 of the Land Acquisition Act, 1894, hereinafter called the â€˜principal Actâ€™ certain land in the revenue estate of Shakurpur was sought to be acquired. The land Acquisition Collector gave an award, dated March 1, 1967, fixing compensation at the rate of Rs. 3, 500/per Bigha. The respondents being dissatisfied with the award applied for a reference under Section 18 of the principal Act claiming enhancement in compensation. The Additional District Judge held that the market value of the Land on the relevant date was Rs. 5, 000/per Bigha and the claimants were entitled to enhancement at the rate of 1, 500/per Bigha. He also directed that interest should be awarded at 6% per annum on the market value of the land from October 24, 1964 till the date of tender of the payment of the amount awarded by the Collector. This was in view of Section 4(3) of the Amending Act since the date of the notification under Section 6 of the Principal Act was August 16, 1966 which was more than three years from the date of the notification under Section 4 of the Principal Act. He also awarded interest on the enhanced amount from the date of dispossession till the date of payment of the amount in court. The Union of Indian filed an appeal to the Delhi High Court. No dispute was raised with regarded to the interest awarded under Section 28 of the principal Act. The controversy was confined only to the question of interest under Section 4(3) of the Amending Act. In view of a previous decision of the Delhi High Court in Union of India v. Nathu, (RFA 101 of 1968, decided ona learned single Judge dismissed the appeal.

Court's reasoning:
6. High Court relied on certain decisions of different High Courts which turn on what was included in the expression "land" as defined in Section 3(a) of the principal Act and for determining the market value of all those things that fall within that expression. The High Court appears to have read those judgments in a way which would justify the conclusion that the word "market value" as used in(2) of the Section 23 of the principal Act was not confined only to the market value mentioned in Section 23(1) "first" but it also included the various items which have to be taken into consideration and which are covered by clauses "secondly" to "sixthly" in Section 23(1). This Court had occasion in Chaturbhuj Panda & Others v. The Collector, Raigarh, ((1969) 1 SCR 412   : AIR 1969 SC 255   : (1969) 1 SCJ 344) to consider the question whether the value of trees standing on the land was to be added to the market value of the land for the purpose of the addition of 15% solatium. Referring to some of the judgments on which the High Court relied i.e.,of Godavari v. Saragam (ILR 30 Mad 151  ), and Krishna Rai v. The Secretary of State of India in Gouncil, (ILR 42 All 555) it was observed that the law laid down by these cases was correct but the question which was considered by this Court was confined only to the point whether the value of trees was to be included in the market value for the purpose of awarding the 15% solatium. This court held that the statutory allowance under Section 23(2) had to be given on the value of the trees because under Section 3(a) of the principal Act the expression "land" includes benefits to arise out of land and things attached to the earth. In other words the decision rested on the meaning of the expression "land" and not on the fact that clause "secondly" in Section 23(1) refers to the damage sustained by reason of taking any trees which may be on the land. It is altogether unnecessary in the present case to determine the question whether the market value on which 15% solatium is to be awarded by the court would include the various items given in clause "Secondly" to "sixthly" in Section 23(1) of the principal Act. What we are concerned with is whether the expression "market value" in Section 4(3) of the Amending Act will take in the additional amount of 15% which is to be awarded on the market value of the land acquired under Section 23(2) of the principal Act. We can find no warrant for the view which appealed to the High Court that market value would consist of not only the market value of the land but also the 15% solatium which is to be granted under Section 23(2) in consideration of the compulsory nature of acquisition. The additional amount of 15% certainly forms part of the amount of compensation because under Section 23 the compensation to is consist of what is provided for in(1) and the additional amount of 15% on the market value of the land acquired. But compensation and market value are distinct expressions and have been used as such in the Acquisition Act. It is not possible for anyone to contend that solatium falls within the expression "land" within the meaning of Section 3(a) of the Principal Act. Since under Section 4(3) of the Amending Act it is only the market value of land on which interest has to be paid solatium cannot form part of the market value of the land.It seems to us that the term "market value" has acquired a definite connotation by judicial decisions. Any addition to the value of the land to the owner whose land is compulsorily acquired which addition is the result of such factors as are unrelated to the open market cannot be regarded as a part of the market value. It is significant and has been noticed at an earlier stage also that according to the other sections which appear in the principal Act interest is payable on such amount which is either a part of compensation or is the total compensation which is payable itself. If market value and compensation were intended by the legislature to have the same meaning it is difficult to comprehend why the word "compensation" in Section 28 and 34 and not "market value" was used. The key to the meaning of the word "compensation" is to be found in Section 23(1) and that consists (a) of the market value of the land and (b) the sum of 15% on such market value which is stated to be the consideration for the compulsory nature of the acquisition. Market value is therefore only one of the components in the determination of the amount of compensation. If the Legislature has used the word "market value" in Section 4(3) of the Amending Act of 1967 it must be held that it was done deliberately and what was intended was that interest should be payable on the market value of the land and not on the amount of compensation otherwise there was no reason why the Parliament should not have employed the word "compensation" in the aforesaid provision of the Amending Act.