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J&K High Court · body

2005 DIGILAW 265 (JK)

Defence Estate v. Mohd. Sultan Malik

2005-09-29

S.N.JHA

body2005
1. A short but significant question - whether interest under section 28 of the J&K Land Acquisition Act, 1990 (1934 AD) (hereinafter referred to as the J&K Act) is payable from the date of notification under section 4 or the date of declaration under section 6 - is involved in this civil revision. The court below by the impugned order has held that the awardee - decree holder - is entitled to interest from the date of notification under section 4. Contending to the contrary, the Defence Estates Officer - judgment debtor no.2 - has come in revision. The plea is supported by the Collector / Assistant Commissioner, Land Acquisition, Srinagar - judgment debtor no.1 - respondent no.2 herein. 2. As the question involved is a pure question of law it is not necessary to state facts of the case. Suffice it to say that the notification under section 4 of the Act was issued on 15th December 1978 followed by declaration under section 6 on 30th June 1986, award of the Collector and reference to the civil court culminating in judgment dated 2nd February 1998 giving rise to executing case no.3/1998. Application in terms of section 47 of the Code of Civil Procedure was filed on behalf of the petitioner raising a number of objections - one of them was that interest is payable from the date of declaration under section 6. The court below held that interest is payable from the date of taking possession, and though in the present case possession had been taken prior to initiation of the proceedings i.e. notification under section 4 of the Act, but as the decree-holder himself claimed interest from the date of notification under section 4, namely 15th December, 1978, he was entitled to interest @ 6% per annum from that date. 3. Before noticing the provisions relating to interest, it may be appropriate to briefly notice the scheme of the Land Acquisition Act in order to decided the question as to whether interest is payable from the date of notification under section 4 or date of declaration under Section 6. The Act provides a complete mechanism for acquisition of land, taking possession thereof and payment of compensation to the land owner. Sub-section (1) of Section 4 provides for publication of preliminary notification. The Act provides a complete mechanism for acquisition of land, taking possession thereof and payment of compensation to the land owner. Sub-section (1) of Section 4 provides for publication of preliminary notification. It lays down that whenever land in any locality is needed or is likely to be needed for any public purpose, notification in the manner laid down shall be published. Under sub-section (2) after such notification is made by the Collector in the manner prescribed, it shall be lawful for any officer, either generally or specially authorised by the government in this behalf, and for his servants and workmen, to enter upon and survey the land and to do certain other things as mentioned in the sub-section. Under section 5A any person interested in the land notified under section 4(1) may file objection against acquisition of the land. After hearing the objections and making further enquiry, if any, the Collector shall submit the case for decision of the Government. On receipt of report, if the State Government is satisfied that the land is needed for public purpose, a declaration is made to that effect. Public notice is thereafter issued under section 9 to the effect that the government intends to take possession of the land and that claims to compensation may be made to the Collector. After making enquiry into the objections, if any, the Collector makes an award under section 11. After making the award the Collector may take possession of the land under section 16 which thereafter vests in the State Government free from all encumbrances. The Act contains special provisions relating to emergency acquisition which need not be noticed in the present case. After making the award, under section 32 the Collector is required to tender the compensation determined by him to the persons interested and entitled thereto. If they decline to receive the payment, the Collector is required to deposit the amount in the court to which a reference under section 18 would be submitted. Where the amount of such compensation is not paid or deposited on or before taking possession, section 35 provides for interest on the amount awarded @ 6% per annum from the time of taking possession. Any person feeling aggrieved by the award so made by the Collector meanwhile may apply for reference to the civil under section 18 for determination of compensation. Any person feeling aggrieved by the award so made by the Collector meanwhile may apply for reference to the civil under section 18 for determination of compensation. The civil court would then determine the compensation taking into consideration factors specified in section 23 and 24. Section 28 provides for compensation on the excess amount of compensation so determined by the court. 4. It would thus appear that there are two separate provisions relating to award of interest. Whereas section 35 provides for interest on the unpaid/un-deposited amount of compensation determined by the Collector, section 28 provides for interest on the enhanced amount of compensation determined by the court. Though the dispute in the instant case relates to interest on the enhanced amount of compensation both sections 28 and 35 may be quoted, for the sake of convenience, as under: 28. 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 six per centum per annum from the date on which he took possession of land to the date of payment of such excess into Court. 35. 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 six 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 ten per centum 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 the date of such expiry.� 5. Adverting to the question which arises for consideration, it maybe observed that interest is always paid to compensate a person for some loss. Adverting to the question which arises for consideration, it maybe observed that interest is always paid to compensate a person for some loss. In the context of Land Acquisition Act interest is paid to compensation the loss caused due to delay in payment of compensation - whether on the unpaid/un-deposited amount of compensation as determined by the Collector under Section 35 or on the enhanced amount of compensation as determined by the court under section 28. The answer to the question formulated would thus lie in the answer to another question as to when compensation becomes payable under the Land Acquisition Act? Though brief reference has been made to the relevant provisions of the Act above, it may be appropriate to quote some of them verbatim as under: 11. Enquiry and award by the Collector. - (1) On the day so fixed or any other day to which the enquiry has been adjourned, the Collector shall proceed to enquire into the objections, (if any), ¦ (a) ¦ ¦ and into the value of the land at the date of the publication of the notification under sub-section (1) of Section 4 ¦ ¦ ¦ ¦ ¦ 15. Matters to be considered and neglected. - In determining the amount of compensation, the Collector shall be guided by the provisions contained in Sections 23 and 24. 16. Power to take possession. - When the Collector has made an award under section 11, he may take possession of the land, which shall thereupon vest absolutely in the Government free from all circumstances. 23. Matters to be considered in determining compensation. - (1) In determining the amount of compensation to be awarded for land acquired under the Act, the Court shall take into consideration - first, the market value of the land at the date of the publication of the declaration relating thereto under section 6; ¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦ 32. Payment of compensation or deposit of same in Court. - (1) On making an award under section 11, the Collector shall tender payment of the compensation awarded by him to the persons interested entitled thereto according to the award, and shall pay it to them unless prevented by some one or more of the contigencies mentioned in the next sub-section. Payment of compensation or deposit of same in Court. - (1) On making an award under section 11, the Collector shall tender payment of the compensation awarded by him to the persons interested entitled thereto according to the award, and shall pay it to them unless prevented by some one or more of the contigencies mentioned in the next sub-section. (2) If they shall not consent to receive it, or there be no person competent to alienate that land, or if there be any dispute as to the title to receive the compensation or as to the apportionment of it, the Collector shall deposit the amount of the compensation in the Court, to which a reference under section 18 would be submitted; Provided ¦� 6. The question as to from which date or time interest is payable on the amount of compensation - awarded by the Collector or determined by the court - is to be considered on the basis of the afore quoted provisions. On a combined reading of the above provisions it would appear that possession of the land can be taken in the eye of law after award is made by the Collector under section 11 of the Act which amounts to absolute vesting of the land free from any encumbrance in the government. After the award is so made, section 32 enjoins upon the Collector to tender payment of the compensation awarded by him� and to pay to the persons interested and entitled thereto unless prevented by any contingency mentioned in sub-section (2) in which case he is required to deposit the amount in the court. Thus, compensation becomes payable only after the award is made under section 11 of the Act. 7. Though we are not concerned in the instant case with the scope of section 35 which relates to interest on the unpaid/un-deposited amount of compensation, the provision has to be understood in this background. In other words, under section 35 where the amount of compensation awarded by the Collector is not paid or deposited on or before taking possession of the land, interest is to be paid on such amount @ 6% per annum from the time of taking possession. In other words, under section 35 where the amount of compensation awarded by the Collector is not paid or deposited on or before taking possession of the land, interest is to be paid on such amount @ 6% per annum from the time of taking possession. It is to be borne in mind that possession can be taken in the eye of law only after making of award and vesting the land in the government in terms of section 11. 8. Section 28 also refers to interest from the date of taking possession of the land as under section 35. A question arose in R. L. Jain v D. D. A, (2004) 4 SCC 79, that when possession is taken before issuance of notification under section 4(1) of the Act, whether interest for the period anterior to the publication of notification is payable under the Act? Answering the question in the negative, the Supreme Court held that if possession is taken prior to the issuance of notification under section 4(1) it is not is accordance with section 16 and will be without any authority of law and consequently it cannot be recognized for the purpose of the Act. Taking such possession would be de hors the provisions of the Act which may entitle the person to damages but not interest. 9. Relying on the above decision, it was submitted on behalf of the decree-holder/respondent that though section 28 of the Act in terms provides for interest from the date of taking possession of the land, in view of the decision there cannot be any doubt that interest is payable from the date of notification under section 4(1) of the Act. That is why, it was stated, the decree-holder moulded the claim for interest from the date of notification under section 4(1) and not the date of taking of possession which was much prior to the notification. 10. The decision at the first sight does appear to support the case of the decree-holder, but on a close reading thereof it transpires that the judgment supports the case of the judgment-debtor rather that the decree-holder. 10. The decision at the first sight does appear to support the case of the decree-holder, but on a close reading thereof it transpires that the judgment supports the case of the judgment-debtor rather that the decree-holder. The first thing which may be pointed out about the decision in R. L. Jain (supra) is that the question which had fallen for consideration was whether the person is entitled to interest from the date of possession even though taking such possession was prior to the date of notification under section 4(1). While answering the question, in the negative, their Lordships went into the rationale of the relevant provisions and observed that if compensation has to be determined on the basis of the market value of the land on the date of notification under section 4(1), interest cannot be claimed for the anterior period. It is relevant to point out that the observations were made in context of the Central Act. Whereas in the Central Act, under section 23(1) compensation is determined taking into consideration the market value of the land at the date of publication of the notification under section 4 sub-section (1)�, in the J&K Act, compensation is to be determined under section 23(1) on the market value of the land at the date of publication of the declaration relating thereto under section 6�. It may be mentioned here that the provision in the Central Act was the same as in the J&K Act until 1923 when by ACT 38 of 1923 the words notification under section 4 sub-section (1)� were substituted for declaration relating thereto under section6�. As seen above, section 15 also provides that in determining the amount of compensation the Collector shall be guided by the provisions contained in section 23 and 24. 11. It was accordingly submitted on behalf of the petitioner that the reckoning date for determining compensation in the J&K Act being the date of declaration under section 6, following the ratio decidendi of the R. L. Jain case (supra) interest cannot be claimed for period prior to the date of declaration under section 6. According to the counsel, if compensation is determinable with reference to date of declaration under section 6., interest can be paid on the amount of compensation so determined or - to be precise - on the excess amount of compensation so determined under section 28. According to the counsel, if compensation is determinable with reference to date of declaration under section 6., interest can be paid on the amount of compensation so determined or - to be precise - on the excess amount of compensation so determined under section 28. The submission appears to be in accord with the observations of the Supreme Court in R. L. Jain v D. D. A (supra) which may usefully be quoted in extenso as under: The expression ˜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™ should not be read in isolation divorced from its context. The words ˜such possession™ (sic for ˜such compensation™) and ˜so taking possession™ are important and have to be given meaning in the light of other provisions of the Act. ˜Such compensation™ would mean the compensation determined in accordance with other provisions of Act, namely, Ss. 11 and 15 of the Act which by virtue of S. 23(1) mean market value of the land on the date of Notification under S. 4(1) and other amounts like statutory sum under sub-section (1-A) and solarium under sub-section (2) of S. 23. ¦� (emphasis added) 12. As indicated at the outset, interest is paid to compensate a person for the loss. In the scheme of things envisaged in the Land. Acquisition Act compensation is determined at two stages: initially by the Collector in the shape of award under Section 11 and then by the court on reference under Section 18. It is only on the unpaid amount or deferred payment of the amount that interest can be claimed. That is evident from a bare reading of Section 35. In the context of Section 28 it is to be understood mutatis mutandis to mean deferred payment of excess amount of compensation determined by the court. 13. It is true that going by the words of the statute at the first sight it does appear that interest is payable on such compensation from the date of taking possession but as interpreted by the Supreme Court ˜such compensation™ means compensation determined in accordance wit the provisions of the Act namely Sections 11 and 15 read with Section 23(1) of the Act. While in the context of the Central Act it is on the basis of, among others things, market value of the land on the date of notification under Section 4(1), in the context of the J&K Act it is on the basis of the market value of the land on the date of declaration under Section 6. If compensation is payable on the basis of market value of the land on the date of declaration under Section 6, how interest can be payable from the date of Section 4 notification or any other earlier date? I am fortified in my views by the decision of the Supreme Court in Lila Ghosh v State of West Bengal, (2004) 9 SCC 337, the relevant observations wherein may usefully by quoted as under: The next question which arises is from what date interest is payable. On behalf of the claimants it was argued that possession was taken as far back as on 24th December 1975. Reliance was placed on S.34 of the Acquisition Act. It was submitted that interest has to be paid from the date of taking possession. It was pointed out that the Reference Court had directed payment of interest from the date of taking possession. However, the High Court has directed payment of interest only from 8th December 1986. In support of this submission, reliance was placed on the case the Shree Vijay Cotton and Oil Mills Ltd. v. State of Gujarat, reported in 1991 (1) SCC 262. In this case the possession had been taken much prior to the acquisition proceedings. This Court directed payment of interest under Ss. 28 and 34 from the date of taking possession. It was submitted that this authority clearly lays down that the interest must be paid from the date of actual possession¦ ¦ ¦ ¦ Even though the authority in Shree Vijay Cotton and Oil Mills Ltd. appears to support the claimants, it is to be seen that apart from mentioning Ss. 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 S. 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 of deposit of compensation will not arise if there is no acquisition proceeding. A plain reading of S. 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 of deposit of compensation will not arise if there is no acquisition proceeding. In 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 S. 34 or S. 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 S. 17 where by 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 S. 17. As in cases under S. 17 compensation is payable interest may run from the date possession was taken. However, this case does not fall into this category.� (emphasis added) 14. Another aspect of the matter is that allowing interest from the date of Section 4 notification would amount to giving double benefit. Determination of compensation on the ˜market value™ of the land on the date of declaration under Section 6 gives as in-built advantage to the land owner compared to determination on the market value on the date of notification under Section 4. It is a common phenomenon that price of the land - even the neighborhood land - shoots up on the eve of acquisition; in fact, as soon as people come to know about the proposed acquisition. That is why, if I may say, in the Central Act, the reckoning date is the date of notification under section 4 of determination of compensation on the market value of the land. After the notification, the rise in value is more perceptible. Thus determining compensation on the market value of the land as on the date of declaration under section 6 gives an additional in-built advantage to the land owner. A judicial notice can be taken of the fact that a considerable time elapses between the date of notification under Section 4 and the date of declaration under Section 6. Thus determining compensation on the market value of the land as on the date of declaration under section 6 gives an additional in-built advantage to the land owner. A judicial notice can be taken of the fact that a considerable time elapses between the date of notification under Section 4 and the date of declaration under Section 6. The land owner already has the advantage of higher compensation if it is determined on the basis of market value on the later date. Allowing interest from an earlier date even though that date is not relevant for determination of compensation and compensation is determinable with reference to a latter date, would not be in consonance with the scheme of the Act in Jammu and Kashmir. 15. It was submitted on behalf of the respondent-decree holder that allowing interest from the date of declaration under Section 6 in the instant case would be going behind the decree which is not permissible because the executing court cannot go behind the decree and it has to execute the same as it is. The submission is attractive but cannot be accepted in the instant case. As a matter of fact, as per the award of the court, interest @ 6% per annum is payable from the date of taking of possession. But this is not what even the decree-holder claims, or allowed by the court by the impugned order. The award of the court is what Section 28 in terms provides. But the same has been interpreted by the Supreme Court in R. L. Jain to mean the date of notification under Section 4 in the context of the Central Act, and by me, the date of declaration under Section 6 in the context of the J&K Act. If that is the true legal import of Section 28, it would follow that the award has to be read down to mean the date of declaration under Section 6. Any other interpretation would render the award - as regards the effective date from which the interest is payable - without jurisdiction and a nullity. The distinction between the illegal decree/award and a decree which is without jurisdiction and nullity is well known, and it is the settled law that a decree which is null and void and without jurisdiction is not binding on the executing court. The distinction between the illegal decree/award and a decree which is without jurisdiction and nullity is well known, and it is the settled law that a decree which is null and void and without jurisdiction is not binding on the executing court. The submission of the counsel for the decree-holder, therefore, is devoid of merit and is accordingly rejected. 16. In the above premises, I hold that the decree-holder respondent is entitled to interest from the date of declaration under Section 6 of the Act, namely, 30th June 1986. The impugned order of the court below to this extent is set aside. In the result, the revision is allowed.