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2001 DIGILAW 573 (CAL)

Union of India v. Sudhangshu Kumar Mukherjee

2001-09-04

Hrishikesh Banerji, Samaresh Banerjea

body2001
Judgment Samaresh Banerjea, J. The present appeal has been filed by Union of India against the judgment and order dated 22.3.90 passed by the Arbitrator appointed under the Requisitioning and Acquisition of Immovable Property Act, 1952, (hereinafter referred to as the said Act). The primary question which has come up for our consideration is whether the Arbitrator could have also allowed payment of solatium to the claimant, no provision thereof having been made under the said Act itself. 2. Before going into the question it is necessary to record that the appellant Union of India has also urged before us that in the matter of computing the amount of compensation to which the claimant will be entitled, the learned Arbitrator should not have valued different kinds of rates for garden, bastu and danga. 3. The appellant has also contended that the learned Arbitrator in the matter of fixation of such valuation of land for the purpose of assessment of compensation overlooked that large plots of land is likely to fetch lesser value than the smaller plots of land. Reliance has been placed in this connection by the learned counsel for Union of India in the case of Rao Narain Singh vs. Union of India, reported in A.I.R. 1993 S.C. 1557, wherein it was held that the prices fetched under sale deeds of small bits ought not to be made basis for determination of large extents of acquired land. 4. We are, however, not inclined to refer to in detail the submission of the appellant relating to the merits of such award for the reasons stated hereinafter. 5. It appears to us that although the claimant in their written statement gave the detailed basis of their claim and clearly stated inter alia that for the purpose of assessment of compensation the land should be valued at the rate of Rs.1,50,000/- per acre as the acquired area was fully developed as Bastu/Bagan recorded as such and it will remain as such for all material time, the appellant in their written statement apart from bold denial of the averment made in the petition of the claimant did not specifically deny such valuation of land made by the respondents, nor did it in his written statement state what should be the valuation of such land. 6. 6. At the time of hearing also Union of India did not adduce any evidence whatsoever, oral or documentary, to indicate what should be valuation of such acquired land. 7. The claimants although did not adduce oral evidence produced documentary evidence to substantiate their claim as to the valuation of the land and on the aforesaid basis and considering thereof, the Arbitrator ultimately came to its finding. 8. Union of India thus never having denied the valuation of the land made by the claimants and never having adduced any evidence contrary to the evidence of the claimants, it will be deemed that they admitted the valuation made by the claimants. 9. It is, therefore, now not open to Union of India at this stage before us in this appeal to reopen such question and to argue that the valuation of such land was not properly made by the Arbitrator. We, ourselves, have gone through the award for the purpose of examining whether the valuation of land made by the Arbitrator can be said to be unreasonable or arbitrary. We find that the Arbitrator in his impugned judgment and award has given detailed reasons for coming to his finding. It also appears for the purpose of coming to his finding he relied on documentary evidence produced by the claimant. It also appears to us that the Arbitrator has taken all relevant matters into consideration which are required to be taken for assessing the valuation of the land and we are of the view that such valuation of the land in the manner aforesaid by the Arbitrator can neither be said to be unreasonable or arbitrary. We, therefore, do not find any reason whatsoever to interfere with the award of the Arbitrator regarding the valuation of such land. 10. This now takes us back to the primary question which has been raised by Union of India as to the legality and propriety of allowing payment of solatium and interest to the claimant by the Arbitrator although the said Act does not make any provision in respect thereof. 11. Both the parties have addressed the court on this question in full citing a number of judgments of the Supreme Court. 11. Both the parties have addressed the court on this question in full citing a number of judgments of the Supreme Court. On consideration of all such judgments it appears to us, it is more or less consistent view of the Supreme Court that in case of acquisition made under any Act other than Land Acquisition Act, which does not make any provision for payment of solatium and interest, the court can grant such solatium and interest when special circumstance exist, for example, when there has been delay in appointment of Arbitrator even though the same was prayed for by the claimant at appropriate time and although the claimant might have accepted the compensation, the same was done without prejudice to his rights and contentions. 12. In the case of Abhay Singh Surana and Ors. vs. Secretary, Ministry of Communication and Ors., reported in AIR 1987 SC 2177 , Sabyasachi Mukherjee, J. (as His Lordship then was) speaking for the court held that claim for interest proceeds on the demand when the owner of immovable property losses possession of it. He is entitled to claim interest in place of his right 'to retain possession. His Lordship followed the decision of the Privy Council reported in AIR 1928 PC 287, the decision of the Supreme Court reported in AIR 1963 SC 1171 and the decision of the House of Lords reported in (1925) AC 520. In the case of N.D. Jain vs. Agra Nagar Mahapalika, reported in 1991(4) SCC 212 , two Judges' Bench of the Supreme Court held that solatium is 'money comfort' quantified by the statute and given as a conciliatory measure for the compulsory acquisition of the land of the citizen by a welfare State such as ours. The importance of the award of solatium cannot be undermined by any procedural blockades. It was further held that it leaves no discretion with the court in the matter of grant of such solatium. 13. The relevant paragraph of the said judgment being paragraph 7 may be quoted hereunder :- "7. The importance of the award of solatium cannot be undermined by any procedural blockades. It follows automatically the market value of the land acquired as a shadow would to a man. It springs up spontaneously as a part of the statutory growth on the determination and emergence of market value of the land acquired. The importance of the award of solatium cannot be undermined by any procedural blockades. It follows automatically the market value of the land acquired as a shadow would to a man. It springs up spontaneously as a part of the statutory growth on the determination and emergence of market value of the land acquired. It follows as a matter of course without any impediment. That it falls to be awarded by the court 'in every case' leaves no discretion with the court in not awarding it in some cases and awarding in others. Since the award of solatium is in consideration of the compulsory nature of acquisition, it is a hanging mandate for the court to award and supply the omission at any stage where the court gets occasion to amend or rectify. This is the spirit of the provision wherever made". 14. In the case of Kalimpong Land and Building Ltd. and Anr. vs. State of W.B. & Ors., reported in (1994) 6 Supreme Court Cases 720, a two Judges Bench of the Supreme Court held that although there was no provision under the Act which was under consideration before Their Lordships for award of interest but the power to determine compensation under the Act is unlike Land Acquisition Act or Arbitration Act and payment of compensation in the said case without interest when possession was taken in the year 1964 would amount to unjust and unfair to the appellant. In this connection relevant paragraphs being paragraphs 4 to 7 are quoted below: "4. Dr. Gauri Sankar, 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 provision of the Act. He urged that interest is not a 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 vs. Hari Krishan Khosla. He urged that interest is not a 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 vs. Hari Krishan Khosla. It was also claimed that the respondent was entitled for adjustment of Rs.4,00,000/- deposited by the State of West Bengal in pursuance of the order passed by this court and yet another amount of approximately Rs.4,00,000/- which was spent by respondent No. 3 on the repair of the building. The learned counsel for the State of West 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 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 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 which was acquired as far back as 1964. 5. The argument 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 4.12.1992 was passed, the court was aware of difficulties in law 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 have 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 given by an Arbitrator who was not appointed by the Central Government. 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 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 implicity faith. The order passed by this court thus, was not an order 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 is for this court alone to be satisfied about it. Neither party could raise any objection against the report. 6. However, let us examine whether the recommendation for interest 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 his 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 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 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 delayed payment of the compensation. As is clear from narration of facts, the appellant has been taking all possible steps for determination of compensation. 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 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 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 entirety. 7. Even otherwise it may be examined if determination of compensation under the Act includes payment of interest also. For this purpose, relevant part of section 8(1) of the Act is extracted below: '8. Principles and method of determining compensation.-(1) Where any property is requisitioned or acquired under this Act, there shall be paid compensation the amount of which shall be determined in the manner and in accordance with the principles hereinafter set out, that is to say- (a) to (c) ***** (d) at the commencement of the proceedings before the Arbitrator, the Central Government and the person to be compensated shall state what in their respective opinion is a fair amount of compensation. (e) the Arbitrator shall after hearing the dispute, make an award determining the amount of compensation which 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-sections (2) and (3), so far as they are applicable; (f) to (g) Although there is no provision in the Act for award of 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 amount of compensation' whereas 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 cannot be laid down with any precision. Compensation is paid to indemnify a person and it should normally be an equivalent or substitute of equal values. What is just and fair in the circumstances of each case cannot be laid down with any precision. Compensation is paid to indemnify a person and it should normally be an equivalent or substitute of equal values. The payment of compensation of Rs.30,00,000/- for a three storied 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 included in the expression 'which appears to him to be just' used in clause (e) of the sub-section". 15. In the case of Prabhu Dayal and Ors. vs. Union of India, reported in 1995 Supp.(4) Supreme Court Cases 221, where Supreme Court was considering self same question it was held that claimants were entitled to solatium at the rate of 15 percent on the market value. The offer in the said case was made and rejected on 13.10.1961 and the Arbitrator was appointed on 22.9.66 i.e. after 5 years. The relevant paragraph being paragraph 4 of the said judgment is quoted hereunder: "4. It is next contended that the appellants are entitled to the solatium though in law they are not entitled but in equity they are entitled to the solatium for the reason that for 22 years Arbitrator was not appointed to determine the market value. In support they relied upon the judgment of this court in Union of India vs. Hari Krishan Khosla. Therein, this court relied upon another judgment in Harbans Singh vs. Union of India. In that judgment this court said that having regard to the peculiar facts and circumstances of the present case and in view of the fact that the appointment of the Arbitrator was not made by the Union of India for period of 16 years, this court considered in equity to give solatium at the rate of 30 percent of the amount of compensation and interest at the rate of 9 percent. per annum should be awarded to the appellants there in. In this case, the question of appointing the Arbitrator would arise only when the market value offered was rejected by the claimants. The offer was made and rejected on 13.10.1961 and the Arbitrator came to appoint on 22.9.1966 after five years. per annum should be awarded to the appellants there in. In this case, the question of appointing the Arbitrator would arise only when the market value offered was rejected by the claimants. The offer was made and rejected on 13.10.1961 and the Arbitrator came to appoint on 22.9.1966 after five years. Under these circumstances the claimants are entitled to solatium at the rate of 15 percent on the market value. The appellants did not challenge the rate of interest granted at 6 percent. Accordingly they are also entitled to the interest at the rate of 6 percent per annum. The appeals are accordingly allowed. The appellants are entitled to the relief as stated above. No costs." 16. A three Judge Bench of the Supreme Court in the case of Harbans Singh Shani Devi and Ors. vs. Union of India and Ors. allowed payment of solatium although the Act did not permit for the same, in view of the peculiar facts and circumstances of the case viz. the appointment of Arbitrator was not made by Union of India for a period of 16 years, for the same reason interest was also awarded at the rate of 9 percent. 17. A two Judge Bench of the Supreme Court in the case of Union of India vs. Dulal Chandra Ghosh, reported in (1996) 7 Supreme Court Cases 331, following the decision of Harbans Singh vs. Union of India allowed solatium although the Act did not make any provision for the same. The claimant in the said case made an application on 23.8.77 for appointment of an Arbitrator but the said Arbitrator was appointed in 1988. 18. In the case of Union of India vs. Ajaib Singh and Ors., reported in (1996) 9 SCC 638 , a two Judges Bench of the Supreme Court held that when State is not in any responsible for delay in appointing Arbitrator, the claimants are not entitled to the payment of interest. When the State is responsible in delaying the appointment of Arbitrator, necessarily the State has to bear the burden of paying the interest to the claimants. 19. Two Division Benches of our High Court following the aforesaid decision of the Supreme Court held in the same manner. Reference may be made in this connection to the case of Union of India vs. Sk. 19. Two Division Benches of our High Court following the aforesaid decision of the Supreme Court held in the same manner. Reference may be made in this connection to the case of Union of India vs. Sk. Ajim Md., FA 282 of 1987 with C.O.T. 443 of 1992 disposed of on 30.4.92 (unreported) and in the case of Union of India vs. Rajlaxmi Saha, FA 143 of 1986 (disposed of on 29.6.2000) (unreported). Mrs. Sengupta, learned senior counsel appearing on behalf of Union of India, however, has relied on the sole exception made to such series of Supreme Court decision, in a decision of the Supreme Court in the case of Union of India vs. Sher Singh and Anr., reported in (1996)(4) SCC 549. It has been held in the aforesaid case by Justice K. Ramaswamy speaking for the court that the claimants are not entitled to solatium and interest since the Act does not permit payment for the same. It, however, appears to us in coming to such decision. Their Lordships relied on a decision of the Supreme Court in the case of Union of India vs. Hari Krishan Khosla, reported in 1993 Supp. (2) SCC 149. In the said case of Hari Krishan Khosla it was held by the Supreme Court that claimants are not entitled to payment of solatium and interest as the Act does not permit the same and therefore, it will be without jurisdiction to award such solatium. 20. Mr. Biswas learned Counsel appearing for the claimant/respondents has taken us through the judgment of Union of India vs. Hari Krishan Khosla for the purpose of contending that in the aforesaid three Judges Bench decision, the Supreme Court was considering different questions viz., whether section 8(3)(a) of the Land (Requisition and Acquisition) Act is violative of Article 14 of the Constitution and what is the effect of the inclusion of the Act in the Ninth Schedule of the Constitution. Ultimately, Their Lordships held that failure to provide solatium at 15 percent or interest at 6 percent under section 8(3)(a) of the said Act does not make it discriminatory. 21. Ultimately, Their Lordships held that failure to provide solatium at 15 percent or interest at 6 percent under section 8(3)(a) of the said Act does not make it discriminatory. 21. Although Their Lordships came to such finding after discussing the matter in detail, we have been unable to find that Their Lordships held that when the Act does not make any provision for payment of solatium and interest, payment of such solatium and interest will by without jurisdiction. On the contrary it appears to us that Their Lordships after taking note of the fact that for 16 years no Arbitrator was appointed held, it was just and proper to apply the principle laid down in the case of Harbans Singh Shani Devi and Ors. vs. Union of India, 1995(Supp)(4) SCC 224, where the Supreme Court allowed solatium and interest although the Act did not make any provision thereof. 22. After considering all such decisions we are firmly of the view that solatium and interest can be granted in case of acquisition under the Act even though no provision thereof has been made and the same is a matter to be decided in the facts and circumstances of each case. Even if the Act does not make any provision thereof, grant of such solatium and interest should be made when special circumstances exist like delay in appointment of Arbitrator or otherwise for which the State is responsible and to deny solatium and interest in such a situation will be unjust and improper. 23. In the instant case it appears that in all the cases which have been heard together by the Arbitrator, objection was raised after accepting the payment without prejudice to the rights and contentions in 1977 and in each of such cases Arbitrator was appointed first on 11.2.87 and thereafter from 6.8.88 to 20.7.89. In each case therefore, there has been delay of at least 10 years in the matter of appointment of Arbitrator. We are, therefore, of the view that this is a fit case where the claimants are entitled to solatium and interest, claimants not being responsible for such delay, but the State being responsible for the same. 24. We, therefore, do not find any reason to interfere with the award of the learned Arbitrator. All the appeals therefore, stand dismissed with cost assessed at 200 G.Ms. 24. We, therefore, do not find any reason to interfere with the award of the learned Arbitrator. All the appeals therefore, stand dismissed with cost assessed at 200 G.Ms. to be paid to the claimant in each of the appeals within four weeks from date. All interim orders stand vacated. The appellants in each of the appeals will be entitled to withdraw the amount which has been deposited by the appellant together with interest, if any, accrued thereon. 25. The learned Advocate, appearing for the claimant respondents draws our attention to the fact that in F.M.A. 254 of 1994, Union of India vs. Annapurna Debi, the appellant deposited only 2/3rd of the total amount of compensation awarded by the Arbitrator, as on the death of Annapurna heirs were not substituted. 26. It appears to us that subsequently in the present appeal the heirs of Annapurna Debi were substituted in place and stead of the deceased. Thereafter, by an order dated 21.11.2000 the Division Bench of this court directed one of the heirs, Anil Mukherjee to pay 1/3rd of the entire award money to Sm. Anima Chatterjee i.e. the married daughter of Annapurna Debi on the basis that the entire amount of compensation was deposited by Union of India and the same have been withdrawn by other heirs. Now that it appears to us that not the entire amount of compensation but 2/3rd was deposited, we direct that 1/3rd of the same be deposited before this court within four weeks from date and one of the respondents viz. Anima Chatterjee, will be entitled to withdraw the amount without furnishing any security. The order dated 21.11.2000 passed earlier stand recalled. 27. Xerox certified copy of the order, if applied for, be supplied expeditiously. Hrishikesh Banerji, J.: I agree. Appeal allowed.