KALAWATHI BAI v. STATE OF KARNATAKA — 1991 DIGILAW 61 (KAR)

N. Y. HANUMANTHAPPA, J. ( 1 ) THIS revision is directed against order passed by the Additional Civil Judge, Gulbarga, in Execution no. 168 of 1989, dated 13-12-1990 rejecting the petitioner's contention that he is entitled for interest on the enhanced compensation from the date of taking possession of the land in question. ( 2 ) A few facts are: The petitioner herein was the owner of land measuring 11 acres and 20 gunttas in Survey Nos. 24/3-B and 24/3-C which acquired by the respondent. Possession was also taken On the reference under Section 18 of the lead Acquisition Act, 1894, in L. A. C. No. 99 of 36, the Additional Civil Judge, Gulbarga, made an order enhancing the compensation that was earlier awarded by the Land Acquisition Officer. The same came to be confirmed by this court in M. FA. No. 1813 of 1989 on 26-2-1990. After confirming the award passed, a fresh memo of calculation was filed by the petitioner before the Executing Court on 20-3-1990 by deleting 12% additional amount. In the meanwhile the Judgment-debtor/land Acquisition officer deposited Rs. 3,20,827-25 ps. on 5-1-1990 and that amount was to be paid to the decree-holder. It was contended by the decree- holder before the Executing Court that the Judgment-Debtor/land acquisition Officer is liable to pay the balance of Rs. 1,77,081-27 ps. to him as mentioned in the Memo of calculations dated 20- 3-1990. In support of his memo it was contended by the decree-holder that, as the entire amount of compensation was not paid to him on the date of taking possession of the land acquired, he is entitled under Section 28 of the Act interest on the entire amount of compensation as enhanced by the Court and whatever amount paid by the Land acquisition Officer and received by the claimant under protest before the reference is liable to be adjusted towards interest. In support of this contention, the learned counsel for the decree- holder brought to the notice of the Executing court the provision of Section 28 read with Section 34 of the Amendment Act 68/1894. Section 28 of the Act reads as follows:"28. Collector may be directed to pay Interest on excess compensation. In support of this contention, the learned counsel for the decree- holder brought to the notice of the Executing court the provision of Section 28 read with Section 34 of the Amendment Act 68/1894. Section 28 of the Act reads as follows:"28. Collector may be directed to pay Interest on excess compensation. If the sum which, in the opinion of the Court, the Collector ought to have awarded as compensation is in excess of the sum which the Collector did award as compensation, the award of the court may direct that the Collector shall pay interest on such excess at the rate of nine per centum per annum from the date on which he took possession of the land to the date of payment of such excess into Court: "provided that the award of the Court may also direct that where such excess or any part thereof is paid into Court after the date of expiry of 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 such excess or part thereof which has not been paid into Court before the date of such expiry. "section 34 of the Act reads thus:"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 possion 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. "he also brought to the notice of the Executing court in support of his contention some of the decisions of this Court and the Supreme court as well. "he also brought to the notice of the Executing court in support of his contention some of the decisions of this Court and the Supreme court as well. But, the Executing Court rejected the petitioner's contention and held that the decree-holder/petitioner is entitled to interest on the enhanced amount as provided under Section 28 of the Act and not on the entire amount of compensation fixed by the Court. The Executing court also held that the amount paid by the Land acquisition Officer is not liable to be adjusted towards interest as calculated by the decree- holder/petitioner. These reasons prompted the executing Court to apply the method of calculation as held by the Division Bench of Bombay high Court in State of Maharashtra and Another v nanabhai Rathod and Others, AIR 1989 Bombay 9. and thus held that the decree-holder is entitled to interest admissible as on 5-1-1990 and ordered that the balance compensation amount due to the decree-holder as on 5-1-1990 was Rs. 1,45,428/- with 15% interest on the said amount from 6-1-1990 till the date of payment. Challenging the same the petitioner filed this revision petition, 2 Sri Shankar, learned counsel for the petitioner, contends that the approach of the Executing court in not accepting the Memo of Calculations filed by the decree-holder is not correct. According to him, as the Award was confirmed by this Court in M. FA. No. 1831 of 1989 he is entitled for interest at the rate of 9% per annum on the compensation award from 3-8-1981 on which date the possession of the land was taken for a period of one year and at the rate of 15% per annum beyond one year, i. e. , from 3-8-1982 till the date of deposit and onwards till the date of execution of the petition. He further contends that the plea of the Judgment-debtor that the sum of Rs, 12,650/- paid by the Land Acquisition officer on 7-4-1983 should have been appropriated towards the principal and not towards interest as incorrect. He further contends that the plea of the Judgment-debtor that the sum of Rs, 12,650/- paid by the Land Acquisition officer on 7-4-1983 should have been appropriated towards the principal and not towards interest as incorrect. The points which sri Shankar, learned counsel for the decree-holder/petitioner, requests to formulate for consideration are:i)IRRESPECTIVE of the nature of the claim before award was passed, the jural relationship that obtains between the parties herein is that of a creditor and debtor and in such an event whenever amount is paid without stipulating as to how it is to be appropriated, the decree-holder has the right to appropriate such payment towards cost and interest; ii) The decree-holder is entitled to claim interest on the enhanced amount from the date of taking possession and not that the decree-holder is entitled to interest only from the date of enhancement; iii) Nextly, he contends that the authorities cited at the Bar, namely, that of the supreme Court and the Ruling of a division Bench of this Court not having been followed, an act of impropriety is committed by the trial Court and that the same is in excess of jurisdiction-vested in him calling for interference by this Court. ( 3 ) IN support of these contentions Sri Shankar, learned counsel for the petitioner relied upon the decision of this Court and also the decisions of the Supreme Court. According to him, in view of Sections 28 and 34 of the Act read with Sections 59 and 60 of the Indian Contract act, the petitioner/decree-holder has right to first adjust the amount deposited by the Judgment-debtor/land acquisition Officer towards interest. Secondly, he has also right in claiming interest on the entire amount of compensation as re-fixed by way of enhancement from the date of taking possession of the land and not from the date of the award passed by the Civil Court which came to be confirmed by this Court in M. FA no. 1813 of 1989. According to him, the compensation, even if it has been enhanced subsequently by the appellate Court, shall be construed to be from the date of taking possession of the land. 1813 of 1989. According to him, the compensation, even if it has been enhanced subsequently by the appellate Court, shall be construed to be from the date of taking possession of the land. ( 4 ) REGARDING the first contention, Sri Shankar relies upon the decision of the Supreme Court in meghraj and Others v Bhyabai and Others, AIR 1970 SC 161 wherein it is held as follows:"but the normal rule is that in the case of debt due with interest any payment made by the debtor is in the first instance to be applied towards satisfaction of interest and thereafter to the principal. It was for the mortgagors to plead and prove an agreement that the amounts which were deposited in Court by the mortgagors were accepted by the mortgagees subject to a condition imposed by the mortgagors. In the present case there is no evidence which supports the contention raised by the counsel for the appellant. "further in Life Insurance Corporation of india v B. R. Honnappa and Another, 1972 (2) mys. LJ. 169 the Division Bench of this Court held that whenever a Judgment-debtor makes payment or deposits any amount, it is the right of the decree-holder to appropriate the said amount towards costs and interest. What is held therein by this Court is as follows:"in cases where the decretal amount includes costs and interest which do not carry interest and the amounts paid by the Judgment-debtors carry counter-interest, the proper method is to appropriate the payments made by the Judgment-debtors first towards cost and interest payable under the decree and if any balance remains after such appropriation, towards the discharge of the principal amount. " ( 5 ) REGARDING the second contention, Sri Shankar relies upon the decision of the Supreme court in founder Singh and Others v State of Punjab and Another, AIR 1985 SC 382 which is appropriate and direct on the point. It is held therein while interpreting the scope of Sections 28 and 34 of the Act as amended by Haryana Act no. 8 of 1967, that the right to claim interest on the enhanced compensation dates back to the date of taking possession and not from the date of rendering Judgment. It is held therein while interpreting the scope of Sections 28 and 34 of the Act as amended by Haryana Act no. 8 of 1967, that the right to claim interest on the enhanced compensation dates back to the date of taking possession and not from the date of rendering Judgment. In the said decision it is also explained the right to compensation starts from the date of taking possession and its quantification is the concern of the Court and according to the said authority the right to compensation and the quantifications are two different concepts. The relevant discussion is at para 3 which reads;"the right to compensation and the quantification thereof are two distinct concepts. The right to compensation arises when the land vests in the State while its quantification may be concluded much later. Although the process of quantification may pass through several stages, from the Land Acquisition Officer to the District Judge and thereafter to the High Court, the process of quantification is merely one of computing the value of the land, on the principles enacted in the Land acquisition Act. All along, however, the right to the compensation so quantified refers back to the date of acquisition. The additional amount of compensation awarded by the District judge or by the High Court represents the difference between the true value of the land on the one hand and the actual amount awarded on the other which fell short of the true value. The owner of the land is entitled to be paid the true value of the land on the date of taking over of possession. Since, however, the true value is usually determined only after it is computed through multi-tiered process passing through different levels of a hierarchical judicial structure by the very nature of tilings it takes some time before the true value can be finally determined. The fact that it is determined later does not mean that the right to the amount comes into existence at a later date. And if, as the High Court has held, interest at 6 per cent per annum rules from the date of possession was taken in the case of compensation determined by the learned district Judge, there is no reason why the same rate should not be applied from the date possession was taken in the case of the enhancement effected by the High Court. "apart from these, even Sections 59 and 60 of the Indian Contract Act give power to creditor to adjust the amount paid according to his discretion in the absence of any stipulation. The sections read as follows:"59, Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying, that the payment is to be applied to the discharge of some particular debt, the payment, if accepted, must be applied accordingly. ( 6 ) WHERE the debtor has omitted to intimate,and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits. For these reasons, Sri Shankar submits that the order of the Executing Court be set aside and the interest claimed in the Memo of Calculations be ordered to be paid. 6. Whereas Sri Umashankar, learned High court Government Pleader, submits that the finding given by the Executing Court and the method of calculation adopted by the said Court are quite correct. Thus, he submits that the revision petition be dismissed. ( 7 ) AFTER hearing both sides, I am of the view that the approach of the Executing Court is quite incorrect and runs contrary to the principles laid down by this Court and the Supreme Court in a number of decisions. It is to be borne in mind that compensation is a right a person can claim when his land is acquired. It starts from the date of taking possession of the land. Whereas the quantification may vary from Court to Court in view of the prevailing system of hierarchy of appeals. The award made by the Land Acquisition Officer is nothing but an offer. That is subjected to be again determined by the Civil Court, then by the high Court and lastly by the Supreme Court. Once the matter is concluded finally, the compensation ordered to be paid dates back to the date of taking possession of the land. The award made by the Land Acquisition Officer is nothing but an offer. That is subjected to be again determined by the Civil Court, then by the high Court and lastly by the Supreme Court. Once the matter is concluded finally, the compensation ordered to be paid dates back to the date of taking possession of the land. If that is the correct position, it is incorrect to hold that the decree-holder/petitioner is not entitled for interest on the amount finally quantified by the Court from the date of taking possession. ( 8 ) ACCORDINGLY, this revision petition is allowed and the order of the Executing Court is set aside. It is ordered that the Executing Court shall adopt the method of calculation as mentioned in the Memo filed by the decree-holder/petitioner on 20-3-1990 and in the light of the observations made by the Supreme Court in Joginder Singh's case, AIR 1985 SC 382 . No costs. --- *** --- .