- Bookmark
- Share
- CaseIQ
Yadavrao P. Pathade (Dead) By Lrs. And Others v. State Of Maharashtra .
Factual and Procedural Background
The reference court, by an award dated 15-12-1979, enhanced the compensation payable to the appellants for land acquired under the Land Acquisition Act, 1894. On 4-12-1995 the High Court further increased the compensation to Rs 42,056.15 but declined the appellants’ request for interest on the solatium component (Rs 6,308.42) calculated for the period 1-1-1967 to 31-12-1971. The present appeal challenges that refusal.
Legal Issues Presented
- Whether, under the Land Acquisition Act, 1894, interest is payable on the solatium awarded under Section 23(2) when compensation is enhanced by a court.
Arguments of the Parties
Appellants’ Arguments
- Relied on the Supreme Court decision in Periyar and Pareekanni Rubbers Ltd. v. State of Kerala (1991) 4 SCC 195, asserting that interest on solatium forms part of the compensation under Section 23(1).
- Contended, therefore, that the High Court erred in refusing to grant interest on the solatium amount.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Periyar and Pareekanni Rubbers Ltd. v. State of Kerala (1991) 4 SCC 195 | Held that interest on solatium is part of compensation under Section 23(1). | The bench declared that this view was taken per incuriam because the statutory distinction between Sections 23(1), 23(2) and 28 had not been examined. |
| Prem Nath Kapur v. National Fertilizers Corpn. of India Ltd. (1996) 2 SCC 71 | Affirmed that Section 28 allows interest only on compensation under Section 23(1), not on solatium under Section 23(2). | The Court followed this decision and treated it as laying down the correct position of law. |
Court's Reasoning and Analysis
The Court examined the textual scheme of the Land Acquisition Act:
- Section 28 authorises courts to award interest on the “compensation” enhanced under Section 23(1); it does not mention solatium.
- Section 23(1) lists factors for computing market value; this is the “compensation” to which Section 28 interest attaches.
- Section 23(2) adds solatium—15% before, and 30% after, the 1984 amendment—“in addition” to the market value, evidencing legislative intent to treat solatium separately.
Because the statute differentiates between compensation and solatium, the Court concluded that interest under Section 28 cannot extend to solatium. The contrary observation in Periyar was found to be erroneous, having been rendered without analysing these provisions. Consistent with the three-Judge Bench decision in Prem Nath Kapur, the Court affirmed that interest is confined to the enhanced compensation alone, while directing the State to deposit any outstanding interest on that enhanced compensation up to the date of deposit in court.
Holding and Implications
APPEALS DISPOSED OF without costs; the appellants are not entitled to interest on solatium. The State must pay interest only on the enhanced compensation as prescribed by Section 28 until the amount is deposited in court.
The decision reinforces the statutory distinction between compensation and solatium and clarifies that Section 28 interest does not cover solatium, thereby curtailing the applicability of Periyar and affirming the precedent set in Prem Nath Kapur.
Order
1. Leave granted.
2. The only question is: whether the appellants are entitled to payment of interest on solatium payable under Section 23(2) of the Land Acquisition Act (Act 1 of 1894) (for short “the Act”). The additional amount was awarded by the reference court on 15-12-1979 enhancing the compensation. The High Court by its judgment dated 4-12-1995 has further enhanced the compensation to Rs 42,056.15. The appellants claimed interest on solatium of Rs 6308.42 which was disallowed by the High Court. The interest on solatium was calculated from 1-1-1967 to 31-12-1971. The appellants placed reliance on a judgment of this Court in Periyar and Pareekanni Rubbers Ltd. v. State of Kerala (1991) 4 SCC 195, AIR 1990 SC 2192 contending that interest on solatium is a part of the component under Section 23(1) of the Act and that, therefore, they are entitled to payment of the interest. The High Court, therefore, was not right in refusing interest on solatium. To appreciate the contention it is necessary to look to the provisions of the Act.
3. Section 28 gives power to the court to award interest when the court enhances the compensation in excess of amount awarded by the Collector at the rate specified therein, namely, preceding the Amendment Act 68 of 1984, at 6% per annum under the Central Act or at the rates as per the appropriate Act amended by the local amendments to the Act. After the Amendment Act coming into force w.e.f 24-9-1984 the claimants would be entitled to interest at 9% p.a for one year from the date of taking possession and on expiry thereof, at 15% p.a till the date of the deposit into the court.
4. Section 23(1) envisages that in determination of compensation to be awarded for the land acquired under the Act, the court shall take into consideration the respective criteria laid in clauses (1) to (6) applicable to the given facts of the case. Therefore, the court is empowered under Section 23(1) to determine compensation to be awarded to the claimant.
5. Section 23(2) provides that “in addition” to the market value of the land as above provided, the court shall in every case award a sum at 15% preceding the Amendment Act and after the Amendment Act, 30% on such market value in consideration of the compulsory nature of the acquisition. The legislature, therefore, made a distinction between compensation under Section 23(1) and the additional amount on such market value as solatium in consideration of compulsory nature of acquisition. In other words, Section 28 does not comprehend payment of interest on solatium when it expressly mentions payment of interest on compensation under Section 28 referable to Section 23(1) of the Act. Thus the High Court was right in not awarding interest on solatium. Similar view was taken by this Court after Periyar case (1991) 4 SCC 195, AIR 1990 SC 2192 by a three-Judge Bench in Prem Nath Kapur v. National Fertilizers Corpn. of India Ltd. (1996) 2 SCC 71, AIR 1990 SC 2192
6. It is true that in Periyar case (1991) 4 SCC 195, AIR 1990 SC 2192 this Court had held that interest on solatium is part of the component under Section 23(1). Unfortunately, neither the provisions were considered nor the distinction of the above provisions had been brought to the notice of this Court at that time. Therefore, mistaken view was taken to hold that interest on solatium is part of the component of compensation under Section 23(1) of the Act. It is needless to mention that under Section 28 the claimants will be entitled to the interest on enhanced compensation from the date of the award of the court under Section 26 and on appeal under Section 54 on the respective compensation, if enhanced, till date of deposit in the court. Therefore, the State is required to deposit the balance of interest on the enhanced compensation till date of deposit into the court.
7. The appeals are accordingly disposed of but, in the circumstances, without costs.
Alert