IMPORTANT POINT
Land Acquisition Act does not provide for payment of any rental compensation and liability for rental compensation created by State Government by resolution could not be said to have its source under the Act.

Headnote:Land Acquisition Act, 1894-Sections 17(3-A), 23(1-A) and 28-Land acquired by private negotiation and possession was taken prior to issuance of notification u/s 4 of the Act-State by several resolution provided for rental compensation payable to title holders of lands-Writ petition praying interest on rental compensation amount for delayed period-High Court allowed interest at 12% on the amount-State appeal-Liability for rental compensation did not have its source under the Act-Logic of Sections 17(3-A), 23(1-A) and 28 of the Act and Section 34 IPC had no application-Question of equities however required that appellant should pay interest at 6% p.a. from 1.4.2000.
       Held : It is to be noted that the resolutions adopted by the Government were intended to benefit the land owners whose lands were acquired. To avoid unnecessary delays in payment urgency for follow up action was indicated in the resolutions. To that extent, learned counsel for the land owners are on terra firma. But legally the land owners are not entitled to any interest. There is no provision either in the resolutions or in the statutes concerned which entitles the land owners to payment of interest. Whatever is statutorily payable has been clearly indicated in the Act itself. Section 23(1-A) of the Act was introduced by Amendment Act of 1984. There is no dispute, and in our opinion rightly that rental compensation is not relatable to the Act. The entitlement of the claimants is on the basis of Government s resolutions i.e. on the basis of executive orders. It is crystal clear from a bare reading of the provisions of the Act that it does not provide for payment of any rental compensation. Therefore, the appellants are correct in their stand to the extent that the liability for rental compensation does not have its source under the Act. Therefore, the logic of Sections 17(3-A), 23(1-A), Section 28 of the Act and Section 34 has no application in law to rental compensation. That being the position, the High Court was not justified in relying on Sections 17(3-A), 23(1-A) or Section 28 of the Act to grant interest. (Paras 7 and 8)
       Further held : The crucial question is whether there can be any direction for interest on rental compensation once it is held that the same has to be paid within the time frame, notwithstanding the fact that there is no statutory obligation. It is not in dispute that in certain cases payments have already been made. Though the inevitable conclusion is that the High Court is not justified in directing grant of interest on the logic of various provisions contained in the Act, yet there is an element of equity in favour of the land owners. It is, however, seen that the writ applications were filed long after the possession was taken. This factor cannot be lost sight of while working out the equities. It would therefore be appropriate if appellants pay interest @ 6% from 1.4.2000 till amounts payable as rental compensation are paid to the concerned land owners. (Paras 10 and 11)

JUDGMENT

Arijit Pasayat, J.-The only point involved in these cluster of appeals is whether the High Court of Bombay was justified in directing payment of interest on rental compensation awarded to persons whose lands were acquired under the Land Acquisition Act, 1894 (in short the Act ).

2. Factual matrix giving rise to these appeals is almost undisputed except that the dates in regard to the notifications issued under Section 4 and 6 of the Act are different, Lands of the respondents were acquired by the appellant-State by private negotiations and accordingly possession was taken prior to issuance of notification under Section 4 of the Act. Subsequently, notification under Section 6 of the Act was also issued. The Land Acquisition Officer fixed the compensation payable and the statutory entitlements. The State of Maharashtra by several resolutions and instructions contained in Circulars dated 1.12.1972, 17.9.1977, 2.4.1979 and 24.3.1988 provided for rental compensation payable to title holders of lands. The resolutions in question, inter alia, provided that where possession of lands is taken by private negotiations a certain percentage of the estimated value of the land was to be paid as rental compensation. It was also indicated that prompt payment of such compensation should be done.

3. The land owners approached the High Court by filing writ petitions making a grievance that after taking possession of the land no rental compensation was either being paid, or, there was abnormal and unusual delay in making payment thereof. They claim interest for such delayed payment. The High Court by impugned judgment held that the non payment of rental compensation within the time prescriptions indicated in the resolutions amounted to deprivation of valuable property without due payment therefor. It was directed that State authorities have to pay the compensation and interest thereon at the rates prescribed in the Government resolution dated 24th March, 1988 and the payment was to be released as expeditiously as possible but in no case beyond the period of six months from the date of judgment by the Collector concerned. It was held that land owners will be entitled to raise demand of rental compensation as well as the interest thereon before the Collector when the award under Section 11 of the Act is passed or before the Reference Court, as the case may be. In case the concerned Owner has not been paid 80% of the compensation as calculated by the Collector while taking possession of the land without issuing notice under Section 4(1) of the Act, the Government was directed to review its policy for higher rate of rental compensation as well as interest thereon in the light of provisions contained in Sections 17(3-A), 23(1-A) and 28 of the Act. The rate of interest was stipulated to be 12% on the rental compensation amount. The High Court with reference to various resolutions noted above accepted the prayer and directed as noted above.

4. In support of the appeals, learned counsel for the appellant-State and its functionaries submitted that there was no question of granting any interest on the rental compensation. The High Court clearly erred in relying on provisions like Section 17(3-A) or 23(1-A) to grant interest by analogy. There is no statutory entitlement for any rental compensation. But with a view to eliminate difficulties of the land owners whose claims get locked up in the litigation and with a sense of benevolence, the novel concept of rental compensation was introduced by the State. When there is no statutory entitlement, the question of granting any interest does not arise. It is pointed out that in most of the cases payment of the rental compensation has been made. It is also submitted that when there is no statutory liability there is no question of paying any interest on assumed equitable grounds. The rate of 12% it is submitted is clearly without any basis and cut off date fixed whereafter the interest starts running is withou

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2003 Supreme(SC) 718

IMPORTANT POINTLand Acquisition Act does not provide for payment of any rental compensation and liability for rental compensation created by State Government by resolution could not be said to have its source under the Act.

Cases Referred (2)

IMPORTANT POINT
Land Acquisition Act does not provide for payment of any rental compensation and liability for rental compensation created by State Government by resolution could not be said to have its source under the Act.