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SUPREME COURT OF INDIA
(From the High Court of Judicature at Bombay at Aurangabad)
A.M. KHANWILKAR, C.T. RAVIKUMAR, JJ.
Gayabai Digambar Puri (Died) through LRs. – Appellant
Versus
The Executive Engineer and Others – Respondents
Civil Appeal No. 2 of 2022, SLP (C) No. 3 of 2022, Diary No. 17566 of 2020
Decided On : 03-01-2022
Interest Liability - Land Acquisition - The court addressed the issue of liability to pay interest, determining that the interest should commence from the date of taking possession of the land, as established in R.L. Jain (D) by LRs. vs. D.D.A. and Others, (2004) 4 SCC 79.
Fact of the Case:
The appeal challenged the judgment regarding the liability to pay interest, specifically whether it commences from the date of taking possession or only from the date of award.
Finding of the Court:
The court partly allowed the appeal, modifying the impugned order and restoring the direction issued by the Reference Court, entitling the appellant to interest from the date of taking possession of the land at the rate specified by the Reference Court.
Issues: The limited issue involved in the appeal was about the liability to pay interest, specifically the commencement date of interest payment.
Ratio Decidendi: The court established that the interest on compensation amount should commence from the date of taking possession of the land, as per the legal precedent in R.L. Jain (D) by LRs. vs. D.D.A. and Others, (2004) 4 SCC 79.
Final Decision: The appeal was disposed of with the court partly allowing the appeal and modifying the impugned order, entitling the appellant to interest from the date of taking possession of the land at the rate specified by the Reference Court.
ORDER :
1. Delay condoned.
2. Leave granted.
3. This appeal takes exception to the judgment and order dated 28.02.2019 passed by the High Court of Judicature at Bombay at Aurangabad in First Appeal No. 692 of 2019.
4. The limited issue involved in this appeal is about the liability to pay interest whether commences from the date of taking possession or only from the date of award. The Court while issuing notice on 13.01.2021 noted thus:
Issue notice on the application for condonation of delay as also on the special leave petition, returnable in four weeks.
Dasti, in addition, is permitted.
Liberty is granted to serve standing counsel for the State of Maharashtra.”
5. It is discerned from the judgment of the Reference Court dated 22.11.2021 that the interest was ordered to be paid from 04.04.1997 when possession was taken until 03.04.1998 for the first year at the rate of 9 per cent per annum and thereafter at the rate of 15 per cent per annum from 04.04.1998 till the date of payment, i.e. 08.09.2004. The relevant part of the operative order of the Reference Court reads thus:
6. The High Court in the impugned judgment and order has not specifically dealt with this aspect whilst overturning the said direction issued by the Reference Court.
7. It is well-settled that the normal rule is that if on account of acquisition of land a person is deprived of possession of his property, he should be paid compensation immediately and if the same is not paid to him forthwith, he would be entitled to interest on the compensation amount from the date of taking possession of the land till the date of payment thereof as expounded in R.L. Jain (D) by LRs. vs. D.D.A. and Others, (2004) 4 SCC 79 (in particular paragraph 17.1).
8. Accordingly, we partly allow this appeal and modify the impugned order passed by the High Court and instead, restore the direction issued by the Reference Court, reproduced above.
9. In other words, the appellant would be entitled for interest on or from date when the possession of the land was taken i.e. 04.04.1997 at the rate specified by the Reference Court.
10. Nothing more needs to be done in this appeal.
11. The appeal is disposed of in the above terms.
12. Pending applications, if any, stand disposed of.
The main legal point established in the judgment is that interest on compensation amount should commence from the date of taking possession of the land.
The liability to pay interest in land acquisition cases commences from the date of taking possession, as clarified by the Supreme Court in Gayabai Digambar Puri v. The Executive Engineer & Ors.
Interest under Section 28 of the Land Acquisition Act is to be granted from the date of award under Section 11 of the Act and not from the date of issuance of Section 4 notification.
The Court ruled that interest payment under the Land Acquisition Act must strictly follow statutory provisions, rejecting equitable claims outside these provisions.
Interest on delayed compensation under the Land Acquisition Act is calculated based on the effective date of possession as per the signed agreement, not earlier notifications.
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....
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