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  • Hon'ble Mr. Justice Akbar Sharafali Sarela
  • Hon'ble Mr. Justice Nanoobhai Gaurishanker Shelat
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  • Hon'ble Mr. Justice Akbar Sharafali Sarela
  • Hon'ble Mr. Justice Nanoobhai Gaurishanker Shelat
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Smart Summary

Summary of Opinion — Shelat, J.

Factual and Procedural Background

These two appeals arise from the judgment dated 31 December 1959 of Mr. H.M. Kadri, Civil Judge (Senior Division), Mehsana, in Land Acquisition Reference No. 1 of 1954. Two other references (Nos. 2 and 3 of 1954) were heard together and produced appeals Nos. 821 of 1960 and 822 of 1960.

Land Acquisition Reference No. 2 concerned 1 bigha 6 vasas out of Survey No. 12 in Visnagar, District Mehsana; Reference No. 3 concerned 2 bighas 14 vasas of Survey No. 8 in Visnagar. Both parcels were notified under Section 4(1) of the Land Acquisition Act on 30 April 1949 and possession was taken on 16 May 1949.

The Land Acquisition Officer (LAO) awarded compensation at Rs. 3,000 per bigha plus solatium at 15% under Section 23(2). That produced totals of Rs. 4,485 (Ref. No. 2) and Rs. 9,315 (Ref. No. 3). The claimants made references under Section 18 to the District Court. The learned District Judge awarded compensation at Rs. 4,500 per bigha and added solatium on the additional compensation, producing totals of Rs. 6,727.55 nP (Ref. No. 2) and Rs. 13,972.50 nP (Ref. No. 3). The excesses thereby awarded were Rs. 2,342.50 nP and Rs. 4,657.50 nP respectively.

The trial Judge did not make any order as to interest on the solatium component. The claimants appealed seeking (a) interest on the solatium portion and (b) interest at 6% instead of the 4% awarded by the trial Court on the amount of compensation.

Legal Issues Presented

  1. Whether the claimants are entitled to receive interest on the amount awarded by way of solatium (15% under Section 23(2)) on the compensation for the lands acquired.
  2. If interest on solatium is payable, at what rate should interest be awarded (whether 6% claimed by appellants, 4% earlier awarded by trial Court, or another rate)?

Arguments of the Parties

Appellants' Arguments (as advanced by Mr. Patel)

  • At the time possession was taken (16-5-1949) the Baroda Land Acquisition Act was in force; Section 32(3)(k) of that Act entitled claimants to interest at 6% per annum on any excess sum which the Court finds ought to have been awarded by the Vahivatdar/Land Acquisition Officer.
  • The 6% interest under the Baroda Act runs from three months after possession was taken until the excess is paid into Court; therefore the appellants claim interest at 6% on the excess amount awarded by the trial Judge.

Respondent / Government's Arguments (as advanced by Mr. Choksi)

  • By 30 July 1949 the Land Acquisition Act, 1894 (as applied to the Province of Bombay) was extended to the Baroda State under the Baroda State (Application of Laws) Order, 1949; the Baroda Land Acquisition Act provisions were thereby repealed.
  • The Bombay Amending Act No. 18 of 1938 governed Section 34 (reducing interest to 4%); consequently the provisions of the Baroda Act (including 6% under Section 32(3)(k)) do not apply after the extension of the Bombay enactments to Baroda State.
  • Even on the appellants' own case, the 6% under Baroda Act would run only after three months from possession (i.e., from 16-8-1949); by that date the Bombay provisions had already been applied (30-7-1949), so the 6% claim cannot prevail.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Nilkanth Ganesh Naik v. Collector of Thana, (1898) ILR 22 Bom 802 (FB) Interpreting the expression "amount awarded" to include the amount of compensation together with statutory allowances (such as solatium), and that interest is payable on the aggregate amount. The Court relied on this authority to conclude that interest must be payable on the solatium component as part of the "amount awarded."

Court's Reasoning and Analysis

1. Entitlement to interest on solatium:

- The Court examined Section 23(1) and (2) and Section 34 of the Land Acquisition Act. Section 23(2) requires the Court to award a sum of 15% on the market value as solatium in every case. Section 34 provides that when the amount of compensation is not paid or deposited on or before taking possession, the Collector shall pay the amount awarded with interest at a specified rate from the time of taking possession until payment.

- The Court concluded that the words "amount awarded" (and "amount of such compensation") in Section 34 refer to the whole compensation determined under Section 23, which includes the solatium. The Court cited Nilkanth Ganesh Naik to support the proposition that interest must be paid on the aggregate amount (market value plus statutory allowances such as solatium).

- Therefore the trial Judge erred in not awarding interest on the solatium component; claimants are entitled to interest on the solatium (15% component) as part of the compensation.

2. Proper rate of interest and which statutory regime governs:

- The central dispute on rate required determining whether the Baroda Land Acquisition Act (with a provision for 6% under Section 32(3)(k)) or the Land Acquisition Act, 1894 as applied to the Province of Bombay (as amended by Bombay Amending Act No. 18 of 1938) governed the case.

- The Court reviewed the administrative steps by which Baroda State came under the authority of the Government of Bombay and the Government of India: (a) from 1 May 1949 administration was taken over; (b) the Administration of Baroda State Order (1 May 1949) preserved pre-existing laws until altered; (c) the Baroda State (Application of Laws) Order (effective 30 July 1949) extended enactments in force in the Province of Bombay to Baroda State and provided for repeal of certain Baroda enactments (Schedule III), subject to savings and a qualification that saved rights inconsistent with the enactments extended under paragraph 3 would not continue.

- The Court held that paragraph 3 of the Order extends to Baroda those enactments in force in the Province of Bombay immediately before the Order, subject to amendments generally applicable in the Province. As regards Section 34, what was in force in the Province of Bombay was Section 34 as governed by Amending Act 18 of 1938 (reducing the interest rate to 4%). Thus, the Land Acquisition Act as in force in the Province of Bombay, with the 1938 amendment, was made applicable to Baroda State from 30 July 1949.

- Because the Baroda Act's 6% provision (Section 32(3)(k)) is inconsistent with the Bombay-amended Section 34 (4%), the protection for pre-existing rights in paragraph 5(iii)(a) of the Order did not preserve the Baroda Act rate of 6% where inconsistent with enactments extended under paragraph 3. Therefore the Baroda Act did not govern this proceeding after 30 July 1949 for the purpose of the rate of interest.

- The Court further observed that even if the Baroda Act were treated as applicable, Section 32(3)(k) conditioned the 6% interest on (a) the Court finding that the Vahivatdar ought to have awarded a greater sum, and (b) the interest would begin only three months after the date of possession. Since the excess was not adjudicated until the reference (decision given in 1959), and in any event the three-month period would run to 16 August 1949 (after 30 July 1949 when the Bombay provisions applied), the Baroda 6% cannot be invoked.

- The Court also addressed later legislative changes: while the Bombay Amending Act 18 of 1938 had reduced the rate to 4%, Clause 16 of Act No. 20 of 1965 (made by the State Government of Gujarat) changed the rate to 4½ per cent. The Court treated the applicable law as the Land Acquisition Act, 1894 read with Amending Act 18 of 1938 and subsequently Clause 16 of Act 20 of 1965, which made 4½% the appropriate rate to be applied.

Holding and Implications

APPEALS PARTLY ALLOWED

Holding — (direct relief ordered)

  • The claimants are entitled to interest on the solatium component (15% under Section 23(2)) because solatium forms part of the "amount awarded" under Section 34; the trial Judge erred in not awarding interest on that amount.
  • The applicable statutory regime for determining the rate of interest is the Land Acquisition Act, 1894 as applied to the Province of Bombay with Amending Act 18 of 1938, and subsequently Clause 16 of Act 20 of 1965; consequently the appellants are not entitled to interest at 6% per annum.
  • The correct rate to be applied to the excess solatium awarded is 4½% per annum (as affected by Clause 16 of Act 20 of 1965). Interest shall run from the date of possession, 16 May 1949, until payment.

Specific consequences for the two appeals:

  • First Appeal No. 821 of 1960 — excess solatium: Rs. 292.50 P. Interest at 4½% p.a. to be paid by the respondent to the appellant on that amount from 16-5-1949 until payment.
  • First Appeal No. 822 of 1960 — excess solatium: Rs. 607.50 P. Interest at 4½% p.a. to be paid by the respondent to the appellants on that amount from 16-5-1949 until payment.
  • The respondent shall pay the appellants proportionate costs in respect of the claims allowed by this Court; the appellants shall pay the respondent proportionate costs in respect of the claims disallowed.
  • All other claims were dismissed; the appeals are therefore partly allowed.

Final notation in the opinion: "Appeals partly allowed."

Show full summary ...

    Patel Maganbhai Chaturbhai v. Collector

    Shelat, J.:— These two appeals arise out of the judgment passed on 31st December, 1959 by Mr. H.M Kadri, Civil Judge (Senior Division), Mehsana, in Land Acquisition Reference No. 1 of 1954. Along with that Reference two other References Nos. 2 and 3 of 1954 from which these two appeals Nos. 821 of 1960 and 822 of 1960 arise, were heard together and a common judgment was recorded.

    2. Land Acquisition Reference No. 2 was in respect of compensation claimed for the land admeasuring 1 bigha 6 vasas out of S. No. 12 situated within the limits of Visnagar, District Mehsana. Land Acquisition Reference No. 3 of 1954 was in respect of land admeasuring 2 bighas 14 vasas of S. No. 8 situated in Visnagar. Both the lands were notified for acquisition under section 4, sub-section (1) of the Land Acquisition Act on 30th April, 1949. The possession thereof was obtained on 16-5-1949. The Land Acquisition Officer allowed compensation in respect of both the lands at the rate of Rs. 3,000 per bigha of land and solatium at the rate of 15 per cent thereon as contemplated under Section 23(2) of the Act. The total amount that way came to Rs. 4,485 in respect of land comprised in Land Acquisition Reference No. 2 of 1954 and Rs. 9,315 in respect of land comprised in Land Acquisition Reference No 3 of 1954. The references were made to the District Court of Mehsana at the instance of the claimants under Section 18 of the Act. On a consideration of the effect of the evidence, the learned Judge awarded compensation for those lands at the rate of Rs 4,500 per bigha of land. Adding solatium on the amount of additional compensation, the total amount that came to was Rs. 6,727-55 nP. in Land Acquisition Reference No. 2/54 and Rs. 13,972-50 nP in Land Acquisition Reference No. 3/54. Thus, the excess amount awarded to the claimants came to Rs. 2,342-50 nP. in the first case and Rs. 4,657-50 nP in the other. While awarding additional compensation, the learned Judge has not passed any order with regard to the interest on the amount of solatium awarded to the claimants. It is in respect of that claim that the claimants in both the cases have come in appeal. The appellants have also claimed interest at the rate of 6 per cent instead of 4 per cent awarded by the trial Court on the amount of compensation awarded to them. Two questions arise for determination in these two appeals: The first is as to whether the claimants are entitled to get interest on the amount awarded to them by way of solatium at the rate of 15 per cent on the amount of compensation awarded for the lands under acquisition. Section 23, sub-section (1) of the Land Acquisition Act provides a mode for determining the amount of compensation to be awarded for the land acquired under the Act. While determining the amount of compensation the Court has to take into consideration some of the factors set out therein — the first being on the basis of the market value of the land at the date of publication of the notification under Section 4. sub-section (1) of the Act. Then sub-section (2) of Section 23 says that ‘In addition to the market value of the land as above provided, the Court shall in every case award a sum of fifteen per centum on such market value, in consideration of the compulsory nature of the acquisition.” In other words, by reason of sub-section (2) of Section 23 of the Act, on the market value arrived at by the Court, it has to award a sum of 15 per cent on such market value. Such a statutory liability is created in consideration of compulsory nature of the acquisition of the property of any person. Section 34 of the Act relates to the payment of interest on the amount of compensation awarded for the land acquired under the provisions of the Act. It says “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.” Thus, the liability of the Collector to pay the interest on the compensation awarded arises in case the amount of such compensation is not paid or deposited in Court. The interest has to be awarded on the amount of such compensation and the term “such compensation” would obviously relate to the words “amount of compensation” referred to in Setion 23 of the Act. Again the words “the amount awarded with interest thereon” make it abundantly clear that what is required to be paid by way of compensation is not only the market value of the land but also the amount by way of solatium contemplated in sub-section (2) of Section 23 of the Act. It is the combination of both that make the compensation to be awarded to the claimants in respect of the lands acquired and, therefore, the interest to be paid would be on the entire amount awarded though no doubt from the date when the possession was taken over till the amount is paid or deposited. In a case of Nilkanth Ganesh Naik v. Collector of Thana, (1898) ILR 22 Bom 802 (FB), the expression “amount awarded” has been referred to as meaning the amount of compensation awarded for the land along with the statutory allowances as provided in Section 23(2) and that it is on the aggregate amount that interest will have to be paid. It is, therefore, obvious that the claimants would be entitled to interest on the amount awarded by way of solatium at the rate of 15 per cent over the market value of the property. The learned Judge was, therefore, not correct in not having awarded any interest on that amount which obviously was a part of the compensation as provided in the Act.

    3. The next question that arises to be considered is as to at what rate the interest should be awarded to the claimants on the amount of compensation inclusive of the amount by way of solatium under Section 23(2) of the Act. The learned Judge has awarded interest on the amount of compensation at the rate of 4 per cent on the basis of the amending Act No. 18 of 1938 which provided interest at the rate of 4 per cent in place of 6 per cent referred to in Section 34 of the Land Acquisition Act. By Cl. 16 of Act No. 20 of 1965 passed by the State Government of Gujarat that rate, however, is changed to 4½ per cent instead of 4 per cent provided in the earlier Act referred to above.

    4. The claim of interest at the rate of 6 per cent is based by Mr. Patel, the learned advocate for the appellants, on the ground that at the time when the possession of the lands acquired was taken by the Government, viz., 16-5-1949, the Baroda Land Acquisition Act was in force and as provided in Section 32, sub-section (3), clause (k?) thereof, if the Court is of opinion that the Vahivatdar ought to have awarded a greater sum as compensation than the sum which he did award, the Court may direct that the Vahivatdar shall pay interest on such excess at the rate of six per cent per annum from three months after the date on which he took possession of the land to the date on which he pays such excess into Court. In other words, according to him, the present proceeding would stand governed by the provisions contained in the Land Acquisition Act which was in force in the State of Baroda, (Act No. XX of Samvat 1985) hereafter to be referred to as Baroda Act, and that on the excess amount that the Court awarded to the claimants in respect of the lands acquired, the Land Acquisition Officer was bound to pay interest at the rate of six per cent per annum though no doubt that would come in effect from three months after the date on which the possession of the land was taken to the date on which he pays excess into Court. It, is that way that Mr. Patel claims interest at the rate of six per cent per annum on the excess amount awarded by the learned trial Judge in respect of the lands acquired. On the other hand, it was urged by Mr. Choksi, the learned Government Pleader, that with effect from 30-7-1949, the date of the application of various enactments including the Land Acquisition Act, 1894, this proceeding, hereafter to be referred to as the ‘Act’ would stand governed by the provisions contained in that Act which obviously has to be read with any amending Act made by the State Government in relation to the amount of interest to be awarded under Section 34 of the Act. According to him, the provisions of the Baroda Land Acquisition Act have come to be repealed and no such right can be said to have survived to the claimants under the provisions of that Act. His further contention was that even on a perusal of Section 32(3)(k?) of the Baroda Land Acquisition Act since the right to recover interest at the rate of six per cent per annum accrued to the claimants only at the time when the Court decides that greater sum as compensation has to be awarded than what the Land Acquisition Officer had given, and since that came to be decided so late as in 1959, obviously the provisions of the Land Acquisition Act as in force in this State were applicable. His further contention in that respect was that the liability to pay interest at that rate had again arisen three months after the possession of the land was taken over and that again subject to the condition that excess amount was awarded by the Court. Even if, therefore, the right to get interest arose at the time when the possession was taken over, viz., on 16-5-1949, that right would come into effect after the period of three months, i.e, on 16-8-1949. By that time, already the Act as in force in the State of Bombay had come to be applied with effect from 30-7-1949 and consequently the provisions of this Act would govern the present case, and in no case the provisions of the Land Acquisition Act in force in the State of Baroda would apply.

    5. It would, thus, be necessary to find out as to which of the Act, namely, the Land Acquisition Act of Baroda or the Land Acquisition Act as applied to the State of Bombay or Gujarat would govern the case. In order to consider that aspect of the case, we have to set out how the provisions of the Land Acquisition Act came to be applied to the State of Bombay From 1st of May 1949 full and exclusive authority, jurisdiction and powers for and in relation to the governance of Baroda State were ceded by the Ruler of Baroda State to the Government of India and the administration of Baroda State was taken over by the Government of Bombay as the delegate of the Government of India in exercise of authority delegated to it under Section 3(2) of the Extra-Provincial Jurisdiction Act, 1947. The Government of Bombay in exercise of powers conferred on it by Section 4 of the Extra-Provincial Jurisdiction Act, 1947, made the Administration of the Baroda State Order which came into force on 1st May, 1949. Clause 4 of that Order in so far as it is material for the purpose of these appeals, was in the following terms:—

    “4. Application and Continuance of Laws:

    (i) Subject to the provisions of this Order, such provisions, or such parts of provision—

    (a) of any law, or

    (b) of any notification, order, scheme, rule, form or bye-law issued, made or prescribed under any law

    as were in force immediately before the appointed day in the Baroda State shall continue in force until altered, repealed or amended by an order under the Extra-Provincial Jurisdiction Act, 1947 (XLVII of 1947).

    6. Only some enactments specified in the Schedule were extended to the Baroda State by sub-clause (ii) of clause 4 but the Land Acquisition Act was not included therein. Then came the Baroda State (Application of Laws) Order, 1949 which was also made by the Government of Bombay in exercise of its powers under section 4 of the Extra-Provincial Jurisdiction Act, 1947. This Order came into force from 30th July, 1949. Paragraphs 3 and 5 are material for the purposes and they can be set out as under:—

    “3. Application of enactments of Baroda State:

    (i) All enactments specified in Parts I and II of Schedule I and all notifications, orders, schemes, rules and bye-laws issued, made and prescribed under such enactments and in force in the Province of Bombay immediately before the coming into force of this Order shall extend to and be in force in the Baroda State subject to any amendments to which the said enactments are for the time being generally subject to the Province of Bombay.

    (ii) All references to the Province of Bombay in the enactments, notifications, orders, schemes, rules and by-laws mentioned in subparagraph (i) shall be construed as including references to the Province of Bombay and the Baroda State.

    (iii) The enactments (including rules) specified in Schedule II and all other enactments not repealed under paragraph 5 and the notifications, orders, schemes, rules and by-laws issued, made or prescribed thereunder and in force in the Baroda State immediately before the coming into force of this Order shall continue in force in the territories of the said State and shall have application, until altered, repealed or amended by a competent authority.”

    7. Then paragraph 4 provides as under:—

    “4. Commencement of enactments in the Baroda State.

    8. Notwithstanding anything in the said enactments defining the extent of and appointing the date for commencement, the said enactments except where expressly provided shall apply to the territories of the Baroda State, and shall come into force on the date on which this Order comes into force”

    9. As stated in clause (iii) of paragraph 1, this Order came in force on the 30th day of July 1949. Then comes paragraph 5 whereby various enactments (including the rules) came to be repealed, namely, (a) all the enactments specified in Schedule III in force in the Baroda State immediately before the coming into force of the Order, (b) Sections 1, 2 and 36 to 45 (both inclusive) of the Government of Baroda Act (VI of 1940), and (c) all other enactments in force in the Baroda State and corresponding to the enactments in force in the Province of Bombay and extended to the Baroda State under paragraph 3. Then by clause (iii) it has been provided that the repeal by this Order of any such enactment, notification, scheme, rule, by-law or order shall not (a) affect the validity, invalidity, effect or consequence of anything already done or suffered or any right, title, obligation or liability already acquired, accrued or incurred, or any release or discharge of or from any debt, penalty, obligation, liability, claim or demand, or any indemnity already granted or the proof of any past act or thing; Then comes clause (iv) which lays down that nothing in the preceding sub-paragraph shall be deemed to save or continue in force any right, title, obligation, liability, any principle or rule of law, jurisdiction, form, practice or procedure, usage, custom, privilege, restriction, exemption, office or appointment, if the same is anyway inconsistent with any of the enactments extended or continued in force under paragraph 3.

    10. The effect of these provisions would, therefore, be that with effect from 30th July, 1949 all enactments specified in Schedule III which were in force in the State of Baroda came to be repealed. However, that repealing was not to affect, as contemplated in sub-clauses (a), (b) and (c) of clause (iii) of paragraph 5, the validity, invalidity, effect or consequence of anything already done or suffered or any right, title validity, invalidity, effect or any right, title, obligation, or liability already acquired, accrued or incurred, or any remedy or proceeding in respect thereof. If that were to stop at that, it was possible to say that any right already acquired or the liability already incurred would continue to govern if that had arisen out of the provisions of the Act which were in force in the State of Baroda prior to that date. But clause (iv) of paragraph 5 again restricts the protection given thereto by saying that they will not be saved or that they will not continue in force, if the same right, title, obligation, liability, any principle or rule of law, etc., was in any way inconsistent with any of the enactments extended or continued in force under paragraph 3.

    11. Now it is the contention of Mr. Patel that no sooner the claimant parted with possession of the land, the right to claim compensation including interest vested in the appellants and that could not be defeated by any other provision, as such a right vested in them on 16-5-1949 was protected by sub-clause (a) of clause (iii) of paragraph 5 of the Order. We have, therefore, to see as to whether any such right or liability that is said to have arisen in respect of the claim of interest is in any way inconsistent with any of the enactments extended or continued in force under paragraph 5, sub-para (4) of this Order. It was in this connection further said that what was extended was the Land Acquisition Act, 1894, and that at any rate the Bombay Amending Act 18 of 1938 which was in force in the State of Bombay is not shown to have been applied. It cannot, therefore, come in the way so as to say that the provisions of the Land Acquisition Act, 1894, are in any way inconsistent and more so when Section 34 of the Land Acquisition Act provided interest at six per cent per annum on any such amount of compensation. Now, in this connection, it would be useful to turn to paragraph 3 of the Order which relates to application of enactments to Baroda State, which we have already set out here above. It says that all enactments specified in Parts I and II of Schedule I and all notifications, orders, schemes, rules and by-laws issued, made or prescribed under such enactments and in force in the Province of Bombay immediately before the coming into force of this Order shall extend to and be in force in the Baroda State subject to any amendments to which the said enactments are for the time being generally subject in the Province of Bombay. It follows, therefrom, that such enactments which were in force in the Province of Bombay immediately before the coming into force of this Order, were applied and in so far as Section 34 of the Land Acquisition Act, 1894, is concerned, what was in force in Province of Bombay was the section as governed by the Amending Act 18 of 1938. It related to the rate of interest at 4 per cent to be awarded on the amount of compensation instead of 6 per cent under Section 34 of the Land Acquisition Act. What was therefore in force was the Land Acquisition Act read with any amending provisions of the Act in relation thereto made by the Province of Bombay. The sentence cannot be split up in different parts as suggested by Mr. Patel, in which case it cannot give any coherent meaning. Thus, in our view, the Land Acquisition Act as in force with the amending Act No. 18 of 1938 in the State of Bombay was made applicable by reason of the Baroda State (Application of Laws) Order, 1949. When that is so, the right claimed to a rate of interest at six per cent per annum would be obviously inconsistent with the provisions contained in Section 34 as amended by Bombay Act No. 18 of 1938 as laying down interest at the rate of 4 per cent per annum on the amount of compensation to be awarded. Since it is inconsistent, the protection afforded under sub-clause (a) of Clause (iii) of Paragraph 5 of the order cannot help the case of the appellants. In our opinion, therefore, the law that applied for awarding of interest on the amount of compensation including the solatium was the law applicable in the State of Bombay, and now the State of Gujarat, since 30-7-49 and not the Land Acquisition Act of the State of Baroda as was in force before. The appellants are, therefore, not entitled to claim interest at a higher rate of six per cent per annum on the excess amount of compensation awarded to them. They are, however, entitled to the interest at the rate of 4½ per cent per annum on the excess amount of solatium awarded to them.

    12. Even if for a moment, it was thought that the Land Acquisition Act of Baroda State was applicable, a proper analysis of Section 32(3)(k) of the Act would make it clear that it would have no application to this proceeding. Now under Section 32(3)(k) of that Act (which we have set out earlier), the right to get interest at the rate of six per cent per annum would depend upon two facts, before the claimant is entitled to six per cent interest on excess amount. The first is that the Court must find that the Vahivatkar or the Land Acquisition Officer ought to have awarded a greater sum of compensation than the sum which he awarded. The second fact that emerges out of that provision is that on such excess amount, interest at six per cent would begin to run only after three months of the possession of the acquired property taken over. It thus provides for six per cent interest only if excess amount of compensation is awarded and secondly three months after possession is taken over. Now it is not disputed that the reference against the award dated 25-6-52 of the Land Acquisition Officer was made in 1954. In that reference he has been awarded some excess amount of compensation and that was on 31-12-59 the right to claim interest at six per cent thus arose on excess amount of compensation. But under Section 32(3)(k) the interest was not to run at once but after a period of three months after possession of the land acquired is handed over, on which date, the Land Acquisition Officer is required to pay excess amount. In other words, the right to take interest at a particular rate or interest such as six per cent per annum only begins three months after the date on which he parted with possession in favour of the plaintiff and that extends till the date he receives the excess amount or that it was deposited in Court. Looked at from this point of view, it appears clear that even if right for compensation may arise from the date when he parted with possession of the property, but when the question as to the right to claim interest on any such compensation arises, it commences three months after the date of possession he handed over. Till then there is no question of his right to claim interest at a particular rate specified in Setion 32(3)(k) and, therefore, the liability on the part of the Collector to pay interest at the rate of six per cent per annum would only arise three months after 16-5-49 apart from the question as to when the excess amount was determined by the lower Court. It is also clear that the right of a party and the obligation or the liability arising on the part of the opponent would be simultaneous and that can be said to have accrued or arisen in any view of the case not on 16-5-49 but from 16-8-49. Before that date, as already said above, all the enactments in force in the State of Baroda had come to be repealed on 30-7-49 and the Land Acquisition Act, 1894 was made applicable as it was in force in the State of Bombay, to the State of Baroda with effect from 30-7-49. Thus, on that basis, the claimants would not be entitled to interest at the rate of six per cent per annum as urged by Mr. Patel, and that part of the order stands, except in relation to the amount of solatium.

    13. The result, therefore, is that the Land Acquisition Act of Baroda State no longer governed this proceeding and the provisions of the Land Acquisition Act, 1894 read with Amending Act 18 of 1938 of State of Bombay, and later on Clause 16 of Act 20 of 1965 would govern, and that way, interest at a rate of only 4½ per cent would be permissible on the excess amount of compensation awarded by the Court i.e, on the amount of solatium at the rate of 15 per cent as that forms part of compensation under Section 23 of the Land Acquisition Act, 1894.

    14. In First Appeal No. 821 of 1960 the excess amount of solatium would come to Rs. 292-50 P. The interest at the rate of 4½ per cent per annum shall be paid by the respondent to the appellant on that amount from the date of possession i.e 16-5-49 till payment.

    15. In First Appeal No. 822 of 1960 the excess amount of solatium awarded by the trial Court comes to Rs. 607-50 P. The interest at the rate of 4½ per cent per annum shall be paid by the respondent to the appellants on that amount from the date of possession viz., 16-5-49 till payment.

    16. The respondent in both the appeals shall pay to the appellants proportionate costs in respect of the claim allowed by this Court. The appellants shall similarly pay to the respondent proportionate costs in respect of the claim disallowed by this Court in both the appeals.

    17. The rest of the claim is dismissed.

    IK/AGT/D.V.C

    18. Appeals partly allowed.

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    Comments

    Patel Maganbhai Chaturbhai v. Collector
    (Aug 4, 1966)