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2024 DIGILAW 1183 (ALL)

Ghaziabad Development Authority v. State Of Up

2024-05-02

KSHITIJ SHAILENDRA, MANOJ KUMAR GUPTA

body2024
JUDGMENT : Manoj Kumar Gupta, J. 1. The moot question which arises for consideration in the instant petition is whether the Collector, while making award under Section 28-A of the Land Acquisition Act, 1894 is competent to award interest on the compensation amount re-determined by him thereunder. Facts 2. The factual matrix of the case lies in a narrow compass. The land of the third respondent was acquired by the State under the provisions of the Land Acquisition Act, 1894 (for short, hereinafter referred to as “the Act”) for planned development of the area by the petitioner. The award under Section 11 of the Act was declared on 20.9.1986 at uniform rate of Rs. 3.47 per sq. yard. Some of the tenure holders, feeling aggrieved by the award, sought reference under Section 18 of the Act. The Court decided Reference No. 71 of 1987 and 64 of 1988 by a common order dated 28.8.1998 and the compensation for the acquired land was enhanced to Rs. 90 per sq. yard apart from 30% solatium. The Court also granted 12% interest from the date of preliminary notification, i.e. 7.7.1984, till the date of taking possession as per Section 23(1A) of the Act and interest at the rate of 9% per annum for period of one year from the date of possession and 15% per annum for the subsequent period till the date of actual payment as per Section 28 of the Act. The third respondent, who had not sought reference under Section 18 of the Act, on basis of the award of the Court dated 28.2.1998, sought enhancement of the compensation by invoking Section 28-A of the Act. The application was filed on 22.5.1998, well within three months from the date of award of the Court dated 28.2.1998. The Collector, by impugned order dated 2.5.2022, has passed award in favour of the third respondent, enhancing the compensation amount to Rs. 90 per sq. yard, along with other benefits as had been granted by the Court in the aforementioned references. Resultantly, the award of the Collector also includes interest for the period post taking over of the possession. Aggrieved thereby, the instant petition has been filed. Submissions of Counsel for the Parties 3. 90 per sq. yard, along with other benefits as had been granted by the Court in the aforementioned references. Resultantly, the award of the Collector also includes interest for the period post taking over of the possession. Aggrieved thereby, the instant petition has been filed. Submissions of Counsel for the Parties 3. Sri G.K. Singh, learned Senior Counsel, assisted by Sri Mahesh Narain Singh, appearing for the petitioner, contended that the Collector, while deciding application under Section 28-A of the Act, is not competent to award interest. The said power is vested solely in the Court by virtue of Section 28 of the Act. In support of his contention, he has placed various provisions of the Act to emphasize that under the scheme of the Act, the Collector has power to award interest only under Section 34. It is confined to cases where the compensation amount determined by the Collector under Section 11 while passing the award is not paid or deposited on or before taking possession of the land. It does not extend to award made by the Collector under Section 28-A of the Act. It is also urged that it is only the Court which could award interest in case any reference is made to it under Section 28-A(3), as in such an eventuality, it can take recourse to the powers conferred upon it under Section 28, but which is not available to the collector. 4. On the other hand, learned counsel for the third respondent submitted that the purpose of inserting Section 28-A was to ensure award of compensation at uniform rate to all persons who are deprived of their land by the State exercising its power of eminent domain. The object of the said provision inserted through amendment was to remove discrimination in grant of award for lands acquired under the same notification. The Collector under Section 28-A of the Act is required to re-determine the compensation amount on basis of the amount of compensation awarded by the Court under Section 18 of the Act. Resultantly, all benefits which have been given by the Court while passing the award would also be admissible to the person invoking Section 28-A of the Act. The Collector under Section 28-A of the Act is required to re-determine the compensation amount on basis of the amount of compensation awarded by the Court under Section 18 of the Act. Resultantly, all benefits which have been given by the Court while passing the award would also be admissible to the person invoking Section 28-A of the Act. The contention that although the Collector would not have such power, but the Reference Court while deciding reference under Section 28-A(3) would have such power, would not advance the object with which Section 28-A was inserted. Such an interpretation would also lead to multiplicity of litigations which is not in public interest and should be avoided. Analysis 5. The award of the Collector is made under Section 11 of the Act. Section 11A was inserted in the Act w.e.f. 24.9.1984 and it mandates that award under Section 11 shall be made within a period of two years from the date of publication of the declaration, failing which, the acquisition proceedings would lapse. Section 12 contemplates that as soon as the award is made, the Collector shall give immediate notice of his award to the persons interested as are not present personally or by their representatives when the award is made. Section 16 empowers the Collector to take possession after making award under Section 11 and whereupon the land vests absolutely in the Government free from all encumbrances. Section 17(1) of the Act empowers the Collector, in cases of urgency, to take possession on expiration of fifteen days from the publication of notice under Section 9(1) of the Act. Such land shall thereupon vest absolutely in the Government free from all encumbrances. 6. Section 17(3A) mandates that the Collector, before taking possession of any land in exercise of emergency power, shall ensure payment of 80% of the compensation for such land as estimated by him to the persons interested entitled thereto and pay it to them, unless prevented by some one or more of the contingencies mentioned in Section 31(2) of the Act. 7. Any person aggrieved by the award can seek reference of the dispute relating to the amount of compensation, the persons to whom it is payable, or the apportionment of the compensation amongst the persons interested, by moving a written application to the Collector. 7. Any person aggrieved by the award can seek reference of the dispute relating to the amount of compensation, the persons to whom it is payable, or the apportionment of the compensation amongst the persons interested, by moving a written application to the Collector. Such application has to be made by person present or represented before the Collector at the time of making of award, within six weeks from the date of the Collector’s award and, in other cases, within six weeks of receipt of notice from the Collector under Section 12(2) or within six months from the date of Collector’s award, whichever period shall first expire. 8. The factors to be considered by the Court while determining compensation are provided under Section 23 of the Act. Under sub- section (1A), the Court shall, in every case, award an amount calculated @ 12% per annum on such market value for the period commencing on or from the date of publication of notification under Section 4, sub-section (1) in respect of such land to the date of award of the Collector or the date of taking of the possession, whichever is earlier. In addition to the market value of the land as provided above, the Court shall, in every case, award a sum of 30% on such market value in consideration of the compulsory nature of the acquisition. Section 23(1A) which enjoins the Court to award interest @ 12% per annum on the market value determined by him under the forgoing provisions, is extracted below: - 23(1A) In addition to the market value of the land, as above provided, the Court shall in every case award an amount calculated at the rate of twelve per centum per annum on such market value for the period commencing on and from the date of the publication of the notification under section 4, sub-section (1), in respect of such land to the date of the award of the Collector or the date of taking possession of the land, whichever is earlier. Explanation.- In computing the period referred to in this sub- section, any period or periods during which the proceedings for the acquisition of the land were held up on account of any stay or injunction by the order of any Court shall be excluded. 9. Explanation.- In computing the period referred to in this sub- section, any period or periods during which the proceedings for the acquisition of the land were held up on account of any stay or injunction by the order of any Court shall be excluded. 9. A combined reading of the aforesaid provisions shows that the compensation for land acquired is determined by the Court taking into consideration the market value of the land on the date of the publication of the notification under Section 4, sub-section (1). In the interval between the date of publication of notification under Section 4(1) and making of the award, there would be enhancement in the market value of the land. The purpose of inserting sub-section (1A) is to adequately compensate the land owners for rise in market value during the said period. 10. Section 25 stipulates that the amount of compensation awarded by the Court shall not be less than the amount awarded by the Collector under Section 11. The award is declared as per the procedural requirements stipulated under Section 26 and it is deemed to be a ‘decree’ within the meaning of Section 2 Clause (2) and Section 2 Clause (9), respectively, of the Code of Civil Procedure, 1908. Section 27 empowers the Court to award costs incurred in the proceedings by any person. 11. Section 28 empowers the Court to award interest on excess amount of compensation as is determined by him. Section 28 is as follows: 28. Section 27 empowers the Court to award costs incurred in the proceedings by any person. 11. Section 28 empowers the Court to award interest on excess amount of compensation as is determined by him. Section 28 is 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. 12. 12. Section 28-A of the Act, which was invoked by the third respondent in seeking enhancement of compensation, is extracted below: 28-A. Re-determination of the amount of compensation on the basis of the award of the Court.- (1) Where in an award under this part, the Court allows to the applicant any amount of compensation in excess of the amount awarded by the Collector under section 11, the persons interested in all the other land covered by the same notification under section 4, sub-section (1) and who are also aggrieved by the award of the Collector may, notwithstanding that they had not made an application to the Collector under section 18, by written application to the Collector within three months from the date of the award of the Court require that the amount of compensation payable to them may be re- determined on the basis of the amount of compensation awarded by the Court: Provided that in computing the period of three months within which an application to the Collector shall be made under this sub- section, the day on which the award was pronounced and the time requisite for obtaining a copy of the award shall be excluded. (2) The Collector shall, on receipt of an application under sub-section (1), conduct an inquiry after giving notice to all the persons interested and giving them a reasonable opportunity of being heard, and make an award determining the amount of compensation payable to the applicants. (3) Any person who has not accepted the award under sub- section (2) may, by written application to the Collector, require that the matter be referred by the Collector for the determination of the Court and the provisions of sections 18 to 28 shall, so far as may be, apply to such reference as they apply to a reference under section 18. 13. Section 31 requires the Collector to ensure payment of the compensation awarded by him under Section 11 to the persons entitled thereto according to the award, unless prevented by one or more of the contingencies mentioned in the next sub-section. 14. Section 32 requires the Collector to invest the money deposited in respect of lands belonging to persons incompetent to alienate in government securities as the Court shall think fit. In certain other cases stipulated under Section 33, the same course has to be followed. 15. 14. Section 32 requires the Collector to invest the money deposited in respect of lands belonging to persons incompetent to alienate in government securities as the Court shall think fit. In certain other cases stipulated under Section 33, the same course has to be followed. 15. The payment of interest by the Collector on the amount of compensation awarded by him is regulated by Section 34 which stipulates as follows: - 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 possession is taken, interest at the rate of fifteen per centum per annum shall be payable from the date or 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. 16. Section 34 was amended by Act No. 68 of 1984 w.e.f. 24.9.1982 and the rate of interest was increased from 6% to 9% per annum for the first year and by inserting a proviso, the rate of interest has been further enhanced to 15% per annum beyond one year from the date on which possession is taken. By the same Act, similar amendments were made in Section 28 prescribing the same rates of interest. 17. The scheme of the Act reveals that both the Court and the Collector are invested with the power to award interest. The power of the Collector to award interest, as noted above, is contained in Section 34 of the Act. He is enjoined with the duty to award interest on the compensation amount determined by him under Section 11, if it is not paid or deposited on or before taking possession of the land. The rate of interest is 9% for the first year and 15% beyond one year from the date on which possession is taken until it shall have been so paid or deposited. 18. The rate of interest is 9% for the first year and 15% beyond one year from the date on which possession is taken until it shall have been so paid or deposited. 18. In case the Court enhances the compensation, it is invested with power to award interest on enhanced amount by virtue of Section 28. A conjoint reading of Section 28 and 34 reveals that the intent of the legislature is to ensure award of interest for the entire period starting from the date of dispossession until the amount is deposited in the Court or paid to the person entitled. The award of interest on the amount originally awarded by the Collector under Section 11 is taken care of by Section 34 by investing the power with the Collector who at that stage is in seisin over the matter. The power to award interest on the excess sum of compensation awarded in a reference by a Court is conferred on the Court before whom only such an eventuality may arise. There was no occasion to confer such a power on the Collector, before whom such situation would never arise. 19. Thus, there are two mandates of the legislature. First, to award interest on the compensation amount to the land owners without any break, except for the period during which any delay had occurred on account of stay of proceedings. Second, the rate of interest should be 9% for the first year from the date of dispossession and 15% for the subsequent period. 20. The object of inserting Section 28-A by Act No. 68 of 1984 w.e.f. 24.9.1984 was to do away with inequality in payment of compensation to land owners covered by the same notification. The purpose of grant of interest is to compensate an unpaid land owner who had been deprived of possession of his land in pursuance of the power of compulsory acquisition by the State Government. The liability to pay interest is incurred on the date Government takes possession, or in other words, the tenure holder is dispossessed. The rationale behind the same is plain and simple. The dispossession of the owner of the land by the State Government in exercise of its power of eminent domain, deprives him of the usufructs and benefits accruing to him from the acquired land. The rationale behind the same is plain and simple. The dispossession of the owner of the land by the State Government in exercise of its power of eminent domain, deprives him of the usufructs and benefits accruing to him from the acquired land. While the compensation determined is the value of land, in case compensation is not paid before depriving him of his land, the interest is recompense for depriving a person of the income from his property/compensation amount. 21. The Supreme Court, in Union of India and Another vs. Pushpavathi and Others, (2018) 3 SCC 28 held that the liability of the State to pay interest on the compensation amount is statutory in character and can be claimed at any stage of the proceedings under the Act. The award of interest is not bound by rules of procedure and limitation. The remedy of reference under Sections 18 is limited to the measurement of the land or to the amount of compensation or as to the person(s) to whom the compensation is payable and lastly, regarding the apportionment of compensation amongst the persons interested in claiming compensation. The simpliciter dispute relating to non- award of interest is not capable of being referred by the Collector to the Civil Court under Section 18 of the Act as payment of interest is statutory in character and once the conditions specified under the statute are fulfilled, it acquires a mandatory character. The relevant extract from the said judgment in relation to the statutory character of the interest payable under the Act is as follows: - “29. There are two sections, which deal with the payment of interest, namely, Section 28 and Section 34. So far as Section 28 is concerned, it deals with the payment of interest on excess compensation. It empowers the Civil Court to award interest on the excess amount awarded over and above the amount by the Collector. It empowers the Court to direct the Collector to pay interest at the rate of 9% p.a. on such excess amount awarded by the Court from the date on which the Collector took possession of the land to the date of payment of such excess amount into Court. The proviso to Section 28 further enables the Court to award interest on such excess amount if the conditions specified in the proviso are fulfilled in any acquisition proceedings in relation to the land. The proviso to Section 28 further enables the Court to award interest on such excess amount if the conditions specified in the proviso are fulfilled in any acquisition proceedings in relation to the land. 30. So far as Section 34 is concerned, it deals with another mode of payment of interest to the landowners. It provides that if compensation is not paid or deposited on or before taking possession of the land, the Collector shall pay interest at the rate of 9% per annum from the time of so taking possession until it shall have been so paid or deposited. Proviso to this section, however, empowers the Collector to pay interest at the rate of 15% p.a., if the conditions specified therein are fulfilled in any acquisition case. 31. Section 28-A provides for re-determination of the amount of compensation on the basis of the award of the Court. It enables the landowners to approach the Collector to re-determine the amount of compensation payable to them on the basis of the award passed by the Court in the cases of other persons alike them whose lands were also acquired under the same notification of Section 4 and who approached the Court for re-determination of the amount of compensation payable to them whereas other landowners did not approach the Court along with them. Such landowners are given a right to make an application within 3 months from the date of such award of the Court to the Collector and claim therein the same compensation which was awarded to other landowners by the Court. Sub-section(2) of Section 28-A empowers the Collector to conduct an inquiry and make an award determining the amount of compensation payable to such landowners. Sub-section(3) of Section 28-A empowers the landowners to approach the Collector to refer his/their case to the Court in case he/they is/are aggrieved by the award passed by the Collector under sub-section(2) of Section 28-A of the Act. 36. A dispute relating to non-award of interest payable to the landowners under Section 28 or/and Section 34 of the Act is not specified under Section 18 and hence it is not capable of being referred by the Collector to the Civil Court under Section 18 of the Act. 36. A dispute relating to non-award of interest payable to the landowners under Section 28 or/and Section 34 of the Act is not specified under Section 18 and hence it is not capable of being referred by the Collector to the Civil Court under Section 18 of the Act. It is also for the reason that payment of interest is statutory in character and being statutory, it is mandatory for payment once conditions specified under Section 28 or/and 34 are fulfilled.” 22. The Supreme Court in the said judgment relied on its previous judgment in Shree Vijay Cotton & Oil Mills Ltd. vs. State of Gujarat, (1991) 1 SCC 262 . For ready reference, the same is extracted below: - “16. There is inherent evidence in the wording of Sections 28 and 34 to show that the framers of the Act intended to assure the payment of interest to the person whose land was acquired and it was not the intention to subject the said payment to procedural hazards. Section 34 lays down that “the Collector shall pay the amount awarded with interest at 6 per cent per annum….”. The legislative mandate is clear. It is a directive to the collector to pay the interest in a given circumstance. Section 34 nowhere says that the interest amount is to be included in the award-decree as prepared under Section 23(1) read with Section 26 of the Act. Similarly Section 28 provides “the award of the court may direct that the Collector shall pay interest”. Here also the award under Section 23(1) read with Section 26 has been kept distinct from the payment of interest under the section. The interest to be paid under Section 34 and also under Section 28 is of different character than the compensation amount under Section 23(1) of the Act. Whereas the interest, if payable under the Act, can be claimed at any stage of the proceedings under the Act, the amount of compensation under Section 23(1) which is an award-decree under Section 26, is subject to the rules of Procedure and Limitation. The rules of procedure are hand-maiden of justice. The procedural hassle cannot come in the way of substantive rights of citizens under the Act.” 23. The rules of procedure are hand-maiden of justice. The procedural hassle cannot come in the way of substantive rights of citizens under the Act.” 23. Once it is established that the legislative intent is to ensure award of interest on the compensation amount from date of dispossession until it is paid or deposited, it inheres in an award envisaged under Section 28-A(1) that an affected person taking recourse to such provision, inserted with the sole object of ensuring equality, cannot be deprived of the interest. The mere fact that no separate provision has been made under Section 28-A would not denude the Collector of the power to award interest which he automatically derives on the strength of the award which forms the foundation of the proceedings. 24. If the situation is viewed in the context of the argument advanced on behalf of the petitioner that interest could be awarded by Court only in reference under Section 28-A(3) as Section 28 has been specifically made applicable for Court only, it would be self- defeating and paradoxical. The legislature never countenanced a situation where the Collector would not have power to award interest on the compensation amount re-determined by him under Section 28- A and for getting the said relief, a person should approach the Court by invoking Section 28-A(3) of the Act. 25. A Three-Judge Bench of Supreme Court in Union of India and Another vs. Pradeep Kumari and Others, (1995) 2 SCC 736 held that at the stage of proceedings under Section 28-A, the Collector would act under Section 34 in awarding interest on the additional amount of compensation awarded by him. 25. A Three-Judge Bench of Supreme Court in Union of India and Another vs. Pradeep Kumari and Others, (1995) 2 SCC 736 held that at the stage of proceedings under Section 28-A, the Collector would act under Section 34 in awarding interest on the additional amount of compensation awarded by him. Para 13 of the Law Report is quoted below: - “Shri Goswamy has next contended that while re-determining the amount of compensation under Section 28-A it is not permissible for the Collector to award interest on the additional amount of compensation awarded by him for the reason that under Section 28 of the Act only the court can direct payment of interest on the excess amount awarded as compensation and no such power is conferred on the Collector and, therefore, interest cannot be awarded by the Collector on the additional amount of compensation determined under Section 28-A. It is no doubt true that under Section 28 only the court can direct payment of interest on the excess amount awarded as compensation and the Collector is not competent to award interest on the additional amount of compensation under the said provision. But sub-section (2) of Section 28-A provides that after an application has been submitted under sub-section (1) of Section 28-A the Collector after conducting an inquiry makes an award determining the amount of compensation payable to the applicants and under sub-section (3) of Section 28-A any person who has not accepted the award under sub-section (2) may move the Collector requiring that the matter be referred for determination to the court and the provisions of Sections 18 to 28 have been made applicable to such reference. This would show that after an application has been submitted under Section 28-A(l) for re-determination of the amount of compensation the process of such re-determination results in making of an award by the Collector and a person not accepting the said award can move the Collector to refer the matter to the Court for determination and such reference is governed by Sections 18 to 28. If that is so, Section 34 of the Act would be applicable to the award that is made by the Collector under sub-section (2) of Section 28-A and it would be permissible for him to award interest under Section 34 on the additional amount of compensation awarded by him. If that is so, Section 34 of the Act would be applicable to the award that is made by the Collector under sub-section (2) of Section 28-A and it would be permissible for him to award interest under Section 34 on the additional amount of compensation awarded by him. The second contention urged by Shri Goswamy is, therefore, rejected.” 26. In our opinion, viewed from any angle, the irresistible conclusion is that the Collector shall have full power to award interest on the enhanced compensation amount awarded by him under Section 28-A of the Act. 27. In view of the foregoing discussions, the contention on behalf of the petitioner does not merit acceptance and, consequently, the writ petition is dismissed. 28. No order as to costs.