MIS. KALIMPONG LAND AND BUILDING LTD. AND ANR.

A v.

STATE

10F WEST BENGAL AND ORS.

SEPTEMBER 16, 1994

[R.M. SARAI AND N.P. SINGH, JJ.] B

Rt; quisitioning and Acquisitioning of Immovable Property Act. 1952 :

Section 8(1)-Sub-clauses (d) and (e)-'Fair amount of compensation'-Arbitrator to award an amount 'which appears to him just'-Meaning C of-Property r.equisitioned three decades ago-Detennination of compensation-Delayed due to various reasons though the owner has been taking all possible steps-Compensation and interest detennined by the Solicitor

General on Court's orders-Award of interest disputed-Held : Interest justified and could be read into the said provision.r-l'ayf!lent of compensation and interest-Ordered.

A godown owned by the appellant comprising of a three storeyed building with a constructed area of about 53,000 sq. ft. and open space of about 4.9 acres were requisitioned in July, 1964 under the Requisitioning and Acquisitioning of the immovable Property Act, 1958. The possession E of the property was taken by the competent authority on 19th July, 1964 under the Requisition and Acquisitioning of the Immovable property Act, 1958, and a sum of Rs. 834 per month was determined as its rent. In 1967 the appellant filed an arbitration case before the District Judge. However, till 1980 his application remains pending due to frequent transfers and non-filling up the post of District Judge. Thereafter the appellant had to F approach the High Court twice and ultimately a retired Judge was ap pointed as Arbitrator. The award was made and signed on 11th August,

1988. After issuing notice to the parties, the District Judge passed an exparte order in terms of the arbitration award.

Since no payment was forthcoming, the appellant approached the G High Court in October, 1988 for necessary directions to respondents to make immediate payment. Respondents filed an application under Order 9 Rule 13 C.P.C. for setting aside the exparte order. The District Judge set aside the exparte order. However this order was recalled on the ground that the arbitrator could have been appointed by the Central Government H 589

A alone. The appellant challenged this order by filing a revision before the High Court and the same was dismissed. Hence this appeal.

' ' This Court considered that it would be expedient if the matter was examined by the Attorney General in view of the long delay that had taken place in the determination of compensation, but since he was not available, the Solicitor General was requested to do so and he submitted a report according to which the appellant was entitled to a compensation of Rs. 30,91,711 with interest at 81/3%. The interest calculated upto 30th April, 1994 was Rs. 29,45,032.86.

C On behalf of Respondents, it was contended that this Court having directed the Solicitor General to determine the compensation only, the award of interest was contrary not only to the said order but also to the statutory provisions of the Arbitration Act.

On behalf of the appellant, it was contended that the dispute about D interest was not raised earlier and it cannot be raised at this stage especially when the compensation is now determined for a property which was acquired as far back as 1964.

Allowing the appeal, this Court

HELD : 1. When this Court requested the Solicitor General of India. to submit a report it was clearly understood that no party shall be permitted to raise any objection. Since the submission inade on the report amounts to objection against the report, it is not expedient to permit it to be raised. Further, the objection to award interest was raised under misapprehension that the Solicitor General was appointed as arbitrator.

In fact as is clear from the order, he was requested to look into the matter and submit the report to enable this Court to do justice. In any case, this Court does not find any good reason for not awarding interest to the appellant. Interest is to make good the loss suffered by the person on G delayed payment of compensation. When the appellant has been taking all ·

possible steps for determination of compensation, the denial of interest would not be in the interest of justice. This Court, therefore, in exercise of its power to do substantial justice considers it expedient to accept the report in its entirely. [597-B-D]

2. Although there is no provision in the Arbitration Act for award of

KALIMPONG LAND AND BLDG. LTD. v. STAIB [SARAI, J.] 591

interest, the power to determine compensation under the Requisitioning A and Acquisitioning of Immovable Property Act, 1952 is unlike Land Acquisition Act or Arbitration Act. Sub-clause (d) 'of S.8(1) of the Act uses the expression 'fair amount of compensation' whereas sub-clause (e) thereof widens it further by empowering the arbitrator to award an amount which appears to him to be just having regard to the circumstances of each B case. What is just and fair in the circumstances of each case cannot be laid down with any precision. In the instant case, the recommendation in the report for payment of interest would be included in the expression 'which appears to him to be just' used in clause (e) of the sub-section.

Compensation is paid to indemnify a person and it sh'ould normally be an equivalent or substitute of equal values. The payment of compensation of C Rs. 30,00,000 for three storeyed building in Calcutta with 4.9.acres open space in 1994 without interest, when possession was taken in. 1964 would amount to being unjust and unfair to the appellant. (598-D-E] ·

3. So far as the claim of the respondent No.3 about the adjustment for repairs is concerned, suffice it to say that the Act itself contemplates D a procedure under which the person in possession is required to give notice to the landlord and thereafter approach the prescribed authority who is empowered to permit repair. Since admittedly the respondent never approached the appropriate authority under the Act and did not obtain any order, the claim of repair cannot be accepted. (598-G] E

[The report submitted by the Solicitor General shall form part of the decree of this Court. The respondents shall pay the remaining amount within a period of two months. The amount which has been deposited. by respondent no. 1, if withdrawn by the appellant, shall be adjusted towards payment of balance amount, namely, the interest.] (599-A-Bf

CIVIL APPELLATE JURISDiqTION: Civil Appeal No. 3011 of 1990.

I .

From the Judgment and Ordef dated 23.6.89 of the Calcutta High G Court in C.O. No. 720 of 1989. /

V.A. Bobde and AniI Kumar Sharma for the Appellants.

V.C. Mahajan, Ms. Indra Sawhney and B.K. Prasad for the Respon- H

A Rathin Das for the Respondent in No. 1.

Dr. V. Gauri Shankar and S. Rajappa for the Respondents in No. 3.

The Judgment of the Court was delivered by

B R.M. SABAi, J. The question of law raised on behalf of the respon-

- dents assailing the legality and propriety of recommendation to award interest in the report submitted on 26th April, 1994 by the learned Solicitor General of India appointed by this Court on 4th December, 1992 to determine compensation under the Requisitioning and Acquisitioning of C the Immovable Property Act, 1952 (hereinafter referred to as 'the Act') was little surprising as when a bench of this court, of which one of us was a member (R.M. Sahai, J.), after hearing the appeal for quite sometime rather on number of days., requested the learned Attorney General of India initially to look into the matter and report, but ultimately appointed the learned Solicitor General of India, with common consent of all parties D and explicit understanding that the determination by him would not be challenged, it was though that the curtain on the long drawn and chequered history of litigation has been finally drawn.

Before considering the submission on merits, it may be mentioned E that basic object against the award by a retired Judge of the High Court was that the power to pointed arbitrator under the Act vested in the Central Government alone. This objection might have been taken even against the report submitted by the learned Solicitor General of India and was in fact suggested, though feebly, by the learned counsel for the State p of West Bengal but the learned senior counsel Dr. Gauri shankar who appeared for respondent no. 3 and led the arguments in his usual characteristic fairness brushed aside the suggestion as the order had been passed by this Court and the officer was no one else than the learned Solicitor General of India whose impeccable integrity and fairness was given a word of praise by him. Yet the law must take its course even when a litigant like G State insists and instructs the counsel to fight it out, presumably, because the enormous expenditure involved in such exercise in public money for which no one is accountable:

Reverting to the facts, the premises known as "White Wool" Godown, H owned by the appellant situated at 11 Mile Kalimpong comprising of a

....

KALIMPONGLANDANDBLDG.LTD. v.STATE[SAHAI, J.] 593

three storeyed building with a total constructed area of about 53,000 sq. ft. A and open space of about 4.9 acres were requisitioned under the Act in July,

1964. The possession was taken by the competent authority on 19th July, 1964 and sum of Rs. 834 per month was determined as its rent. In 1967 the appellant filed an arbitration case before the District Judge of Darjeeling, under the provisions of Section 8{1)(b) of the Act for determining the B amount of compensation to be paid to the appellant. Since 1967 to 1980 the proceedings, before arbitrator, remained pending on account of transfer of the District Judges from time to time and the delay by the Government in issuing necessary notifications in the appointment of fresh

incumbent~ under Section 8 of the Act. In 1981 the appellant approached C the High Court for the appointment of an arbitrator and expeditious disposal of the arbitration case. In March 1981 the High Court decided the writ petitions by accepting the second prayer of the appellant and directing the arbitrator to decide the dispute within six months. But the same position continued and the proceedings remained pending due to transfer of District Judges from 1981to1985. In September 1985 a consent order D was passed directing the arbitrator to dispose of the case within 90 days.

When no order was passed the appellant again approached the High Court in May 1986 and the High Court directed that the arbitrator was at liberty to proceed from the stage the proceedings had been left at by the previous arbitrator so that the proceedings may be decided expeditiously. Even E though the High Court had passed the order in May 1986 the arbitrator was appointed by the appropriate Government in February 1987 who, too, was transferred in March 1987. Consequently the appellant again approached the High Court and on 7th September 1987 it, in exercise of its writ jurisdiction, appointed a retired judge of the Calcutta High Court to p act as an arbitrator in terms of the provisions of Section 8(1)(b) of the Act.

Before the arbitrator the Union of India Central Tibetan Schools Administration that is, the body for whom the premises had been requisitioned were also impleaded as respondent nos.2 and 3 apart from the State of West Bengal. The award was made and signed on 11th August 1988. The G sealed cover was opened by the District Judge on 17th August 1988.

Notices were issued to the parties and on 24th September 1988 the District Judge passed an exparte order in terms of the arbitration award. Since no payment was made by the respondents the appellant once again approached the High Court in Octobet. 1988 for necessary direction to H

A respondents to make immediate paent. Notice on this application was issued on 11th October 1988. In the meantime the respondents had filed an application under Order 9 Rule 13 of the Code of Civil Procedure for setting aside of the exparte order. The ex-parte decree making the award was set aside by the District Judge on 27th February 1989. The order was - B recalled as the arbitrator was appointed following the provisions of the Arbitrator Act, 1940 but there being a special procedure provided under the Act it was incumbent on the Court to have followed the procedure and directed the Central Government to appoint the arbitrator as under the Act the arbitrator could be appointed by the Central Government alone.

C It was further held that if the provisions of the Arbi\ration Act were applicable then it was mandatory on the Court to issue notice under Section 14(2) of the Arbitration Act, 1940. This order was challenged by the appellant in the Court by way of revision which was dismissed by a Division Bench on 23rd June 1989. It was against this order that the appellant approached this Court by way of this petition under Article 136 D of the Constitution of India in which notice was issued on 24th November

1989. It was further directed that all further proceedings in connection with the award shall remain stayed. On 11th December 1989 the Court further directed the State of West Bengal to deposit a sum of Rs. 4,00,000 in the Court within three weeks. The appeal was heard on number of Days.

E Considering the delay which had taken place in the determination of compensation which was payable to the appellant it was considered expedient that instead of delaying the proceedings further it would be expedient if the matter was examined by the Attorney General of India. He agreed to. But later on.he was not available. Consequently, on 4th Decem- F ber 1992 the following order was passed :

"The Solicitor General fairly agrees that he will study the question with reference to the material on record as well as any other document which may be relevant to the matter and submit his G report in respect of the compensation payable for the building in question. The Solicitor General further submits that he will submit his report within two months from the date on which the relevant papers are made available to him by the parties. The parties shall make available to the Solicitor General all necessary papers within

H . 1 week from today."

KALIMPONG LAND AND BLDG. LTD. v. STAIB [SAHAI, J.) 595

In pursuance of this order the learned Solicitor General examined the A matter and submitted a report on 26th April 1994. According to this report the appellant is entitled to a compensation of Rs. 30,91, 711. The Calculation has been done as under:

PRINCIPAL AMOUNT

B Period No. of Rent per Total Amount months month (Rs.)

01.08.1964 to 31.03.1975 128 3,388 4,33,664.00 ( 4,222-834) c 01.04.1975 to 31.03.1980 60 10,882 6,52,920.00 (11,716-834)

01.04.1980 to 31.03.1985 60 11,468 6,88,080.00 (12,302-834) D 01.04.1985 to 30.04.1994 109

U,083 13,17,047.00 (12,917-834)

30,91,711.00

It has further been recommended that the respondents shall be liable to E pay interest@ 8-11.3%. The amount of interest calculated thereon amounts to Rs. 29,45,032.86 upto 30th April 1994. The respondents in pursuance of direction by this Court have deposited a sum of Rs. 30,18,000 which has been withdrawn by the appellant.

Dr. Gauri Shankar, the learned senior counsel appearing for respondent no. 3 did not contest the amount determined by the learned Solicitor General of India. But he vehemently urged that this Court having directed the learned Solicitor General to determine the compensation only the award of interest was contrary not only to the order passed by this Court

but even statutory provisions of the Act. He urged that interest is not a G right. A person. is entitled to it either under an agreement or under the Statute. In absence of any, the award of interest cannot be maintained.

Reliance was placed on Union of India v. Hari Krishan Khosla (dead) by LRs., [1992] 5 JT 574. It was also claimed that the respondent was entitled for adjustment of Rs. 4,00,000 deposited by the State of West Bengal in H

A pursuance of the order passed by this Court and yet another amount of approximately Rs. 4,00,000 which was spent by the respondent no. 3 on the repair of the building. The learned counsel for a State of W e'st , Bengal while supporting the submission advanced on behalf of respondent No. 3 further urged that since Arbitration Act did not apply to the Act the question of B payment of any interest did not arise. On the other hand Shri Bobde, the learned senior counsel for the appellants urged that the dispute about the interest was never raised and it was too late in the day now to claim that the appellant was not entitled to interest and he should be paid only the compensation determined by the learned Solicitor General for a property C which was acquired as far back as 1964.

The submission advanced by the learned counsel for the respondent is beset with insurmountable difficulties, in equity and justice of which the Court has been made as much custodian as of law. When the order dated 4th December, 1992 was passed the Court was aware of diffic:Ulties Di law D and, therefore, it took upon itself the responsibility to ensure that no further delay takes place and justice is done to both the parties, as the liability to pay the compensation being undisputed by the respondents, the only area of difference was whether the determination as directed by the High Court was proper or it should be got done afresh. If the appeal would E 1:tave been dismissed, the entire procedure of fresh appointment of an arbitrator under Section 8(1)(b) by the Central Government and then the determination of compensation afresh would have been required to be done. On the other hand, if the appeal would have been allowed, the respondents would have been liable to pay more than a crore on award F given by an Arbitrator who was not appointed by the Central Government.

Therefore, to avoid delay in determination and payment of compensation to the appellant at the same time being just to the respondents this Court in exercise of its power to do substantial justice decided to get a report from a person in whom even the respondents including the Central Government had implicit faith. The order passed by this Court, thus, was G not an appointing any arbitrator but to obtain a report to enable it to do. substantial justice. The report obtained by the learned Solicitor General was for assistance of this Court. The main part of it determining compensation was not challenged as well. And rightly as it for this Court alone to be satisfied about it. Neither party could raise any objection against the H report.

KALIMPONGLANDANDBLDG.LTD. v.STAIB[SAHA1, J.] 597

However, let us examine whether the recommendation for interest A should be accepted or not. In the first instance the recommendation for the award of interest has nothing to do with the provision in the Act as it is for this Court to decide whether it would in its discretion award any interest or not. As stated earlier, when this Court requested the learned Solicitor General of India to submit a report it was clearly understood that B no party shall be permitted to raise any objection. Since the submission on the report by the learned counsel for the respondent amounts to objection against the report, it is not expedient to permit it to be raised. Further, the objection to award interest was raised under misapprehension that the learned Solicitor General of India was appointed as arbitrator. In fact as C is clear from the Order he was requested to look into the matter and submit the report to enable this Court to do justice. In any case, this Court does not find nay good reason for not awarding interest to the appellant. Interest is to make good the loss suffered by the person on delayed payment of the compensation. As is clear from narration of facts, the appellant has been taking all possible steps for determination of compensation. The denial of D interest in the facts and the circumstances of this case would not be in interest of justice. This Court, therefore, in exercise of its power to do substantial justice considers it expedient to accept the report in its entirely.

Even otherwise it may be examined if determination of compensation E under the Act includes payment of interest, also. For the purpose, relevant part of Section 8(1) of the Act is extracted below : -

"8. Principle and method of determining compensation - (1) Where any properties requisitioned or acquired under this Act, there shall be paid compensation the amount of which shall be determined in . F the manner and in accordance with the principles hereinafter set out, that is to say -

(a) ···············

(b) .............. .

(c) .............. .

( d) at the commencement of the proceedings before the arbitrator, the Central Government and the person to be compensated shall H

state what in their respective opinion is a fair amount of compen~ sation.

( e) the arbitrator shall, after hearing the dispute, make an award determining the amount of compensation wlµch appears to him to be just and specifying the person or persons to whom such compensation shall be paid; and in making the award, he shall have regard to the circumstances of each case and the provisions of

sub-section~ (2) and (3), so far as they are applicable;

(f) .............. .

(g) .............. .

Although there is no provision in the Act for award of the interest, but the power to determine compensation under the Act is unlike Land Acquisition Act or Arbitration Act. Sub-clause ( d) uses the expression 'fair D amount of compensation' where as sub-clause ( e) widens it further by empowering the arbitrator to award an amount which appears to him to be just having regard to the circumstances of each case. What is just and fair in the circumstances of each case ot be laid down with any precision. Compensation is paid to indemnify a person and it should E normally be an equivalent or substitute of equal values. The payment of compensation of Rs. 30,00,000 for a three storeyed building in Calcutta with 4.9 acres open space in 1994 without interest when possession was taken in 1964 would amount to being unjust and unfair to the appellant.

The recommendation in the report for payment of interest would be F included in the expression, 'which appears to him to be just' used in clause ( e) of the sub-section.

So far as the claim of the respondent no. 3 about the adjustment for repairs is concerned, suffice it to say that the Act itself contemplates a procedure under which the person in possession is required to give notice G to the landlord and thereafter approach the prescribed authority who is empowered to permit repair. Since admittedly the respondent never approached the appropriate authority under the Act and did not obtain any Order, the claim of repair cannot be accepted.

H In the result this appeal is decided by directing that the report

KALIMPONGLANDANDBLDG.LTD. v.STAIB[S~, J.] 599

submitted by the learned Solicitor General is accepted. It shall form a part A of the decree of this Court. The respondents are directed to pay the remaining amount within a period of two months from today. Th~ amount which has been deposited by respondent no.1., if withdraWn. by the appel~ lant, shall be adjusted towards payment of balance aJJ?.Ount, namely, the interest.

G.N.

Appeal allowed.·