IMPORTANT POINT
Where the statute is silent about interest, and there is no express bar about payment of interest, any delay in paying the compensation or enhanced compensation for acquisition would require award of interest at a reasonable rate on equitable grounds.

JUDGMENT

R.V. Raveendran, J. —

The lands of respondents in village Mola Agri (now district Ghaziabad) were requisitioned by the Central Government in 1963 under section 29 of the Defence of India Act, 1962 (for short the ‘Act’). The said requisitioned lands were subsequently acquired under section 36 of the Act in the year 1965. The Special Land Acquisition officer, Meerut, determined the compensation payable to the respondents in the year 1966 (varying between Rs.2400 and Rs.3625 per bigha by adopting belting method of valuation). Not being satisfied with the compensation determined by him, the respondents sought reference to arbitration under section 37(2) of the Act, for determination of proper compensation. The Central Government appointed different Arbitrators to decide their claims. In one arbitration, an award dated 16.3.1979, was made awarding compensation at the rate of Rs.2.60 per sq.yd with interest at 6% per annum from the date of acquisition till date of deposit. In another arbitration, an award dated 8.9.1986 was made awarding compensation at Rs.2.60 per sq. yd. with solatium at the rate of 30% and interest at 9% per annum on the additional amount from the date of acquisition till date of payment. Not being satisfied with the compensation, respondents filed writ petitions challenging the awards of the arbitrators before the Allahabad High Court. The High Court by its orders dated 1.4.1999 increased the compensation to Rs.3.60 per sq. yd. Wherever solatium had been awarded, the High Court set aside the same. Wherever interest had been awarded at a rate in excess of six percent per annum, the High Court reduced the rate and awarded a uniform interest at the rate of 6% per annum from the date of acquisition till the date of payment/deposit.

2. Union of India has filed these appeals by special leave against the said orders of the High Court, challenging the award of interest at 6% per annum. It has not challenged the enhancement of compensation from Rs.2.60 to Rs.3.60 per sq. yd. Appellant contends that as the Act provides for payment of only compensation and does not provide for either solatium or interest, interest could not have been awarded. Reliance is placed on the decisions of this Court in Union of India Vs. Hari Krishan Khosla,1 [1993 Supp (2) SCC 149] and Union of India Vs. Chajju Ram,2 [2003 (5) SCC 568].

3. The learned counsel for respondents submitted that there has been enormous delay at every stage. He pointed out that the acquisition was of the year 1965; that there was delay in appointing arbitrator; that only the amount awarded by the arbitrator has been paid; and that neither the enhancement in compensation (from Rs.2.60 to Rs.3.60 per sq. yd.) made by the High Court, nor the interest has been paid. Learned counsel for the respondents submitted that the decisions in Chajju Ram and Hari Krishan Khosla did not prohibit award of interest on equitable grounds when there was inordinate delay. He drew attention to the fact that ultimately in the said two decisions, the amount already paid as interest was directed not to be recovered. He also placed reliance on two other decisions of this Court namely Prabhu Dayal v. Union of India,3 [1995 Supp (4) SCC 221] and Girdhari v. Union of India,4 [2005 (11) SCC 291] relating to acquisitions under the Requisitioning and Acquisition of Immovable Property Act, 1952 (‘RAIP Act’ for short, provisions of which, relating to acquisition and compensation are in pari materia with the provisions of the Act), to show that interest can be awarded from the date of acquisition till the date of payment.

4. On the contentions urged, the only question that arises for consideration is whether award of interest by the High Court on the compensation for acquisition of requisitioned property under Defence of India Act, 1962 is impermissible.

5. Section 36 of the Act provides for the manner of acquisition of requisitioned property. Section 37 of the Act deals with determination of co