JUDGMENT

1. The appellants are aggrieved by the order of the Calcutta High Court, which annulled the invoking of Section 17 of the Land Acquisition Act, 1894 (for short, "the Act") by the State Government for the acquisition of premises No. 14 and 12/1, Hare Street, Calcutta.

2. There is no dispute between the parties that possession of the premises in question was taken by the Government before independence in March, 1944 by invoking the provisions of the Defence of India Act. After 15 years, the State Government issued order dated 30.9.1959 under Section 3(1) of the West Bengal Premises Requisition and Control (Temporary Provisions) Act, 1947 (for short, "the 1947 Act") for requisition of the premises.

3. After 31 years, the respondents filed Writ Petition No.3601 of 1990 questioning the continued possession of the premises by the appellants. The learned Single Judge of the High Court allowed the writ petition and issued a mandamus for restoration of the premises to the respondents. Notification dated 27.8.1990, issued by the State Government under Section 4(1) of the Act for acquisition of the premises, was quashed by the High Court in Writ Petition No. 1382 of 1991. Thereafter, the respondents filed Writ Petition No. 3790 of 1993 and reiterated their prayer for restoration of possession.

4. The learned Single Judge allowed the writ petition and directed that the possession of the premises be delivered to the writ petitioners within four months. At the same time, he made it clear that during this period the concerned authorities may acquire the property in accordance with law and observed that if the property is acquired within that period, the question of handing over the possession will not arise. The respondents challenged the latter part of the order of the learned Single Judge in Appeal No. 35 of 1994, which was disposed of by the Division Bench vide order dated 18.4.1994, the relevant portions of which are extracted below:

"We are conscious of the contentions raised by the appellants in this regard, but we think that we cannot prevent the State authorities to acquire the premises in question in accordance with the law after ad-hearing to the proper formulates as delineated in the statute. Some steps have already been taken in this regard in the meantime. Till such time the acquisition proceedings are complete, the respondents cannot however take advantage of the situation and continue at the old rate of compensation which was fixed amount 40 to 50 years before. In one case the requisition was made in 1944 and in other case it was in 1956.

We would, accordingly, direct the respondent authorities to pay by way of ad-interim measure a monthly compensation at the rate of Rs.10/- per sq.ft. confirming to the market rate for their occupation with a further direction upon the State respondents to complete the acquisition proceeding within a period of six months from this date. If this proceeding are not complete by that date, the mandate as passed by the learned trial Judge should definitely be operative and the writ petitioners, the present appellants, would be entitled to get back the possession of the disputed premises in accordance with law."

5. Special Leave Petition (C) No. 4899 of 1996 filed by the respondents was dismissed by this Court on 28.2.1996 with liberty to them to claim damages for the occupation of the premises for the period between the date on which the term of requisition came to an end and the date on which the acquisition proceedings were initiated.

6. In the meanwhile, the State Government issued notification dated 19.7.1994 under Section 4(1) read with Section 17(4) of the Act for acquisition of the premises in question for the purpose of providing permanent accommodation to the unit of Cottage and Small Scale Industries, Bangasree and also for West Bengal Ceramic Development Corporation. This was followed by notification under Section 6, which