JUDGMENT

A. K. PARICHHA, J. — This is an appeal under Section 54 of the Land Acquisition Act (in short, ‘the Act’) filed by the Special Land Acquisition Officer, Lanjigarh Road-Junagarh Rail link project, Bhawanipatna challenging the award dated 1.9.2001 passed by the learned Civil Judge (Senior Division), Bhawanipatna in M.J.C. No.141 of 1997.

2. On the basis of notification under Section 4 Sub-section (1) of the Act, 1.39 decimals of land in Holding No.14 of Village-Sinangbhata in the district of Kalahandi belonging to the claimant-respondent Nos.1 to 6 (in short “claimants”) was acquired for construction of Lanjigarh Road, Junagarh Rail Link Project, as per Government Notification No.36652 dated 17.4.1995 and declaration No.40941 dated 16.09.1995. After conducting necessary inquiry the appellant awarded a compensation of Rs.21,023.10 paise in favour of the claimants who received that amount under protest claiming higher compensation. On the prayer of the claimants the matter was referred to learned Civil Judge (Senior Division), Bhawanipatna under Section 18 of the Act for adjudication of the dispute regarding quantum of compensation. Learned Civil Judge (Senior Division), Bhawanipatna (hereafter called “reference Court”) received evidence of the parties and by resorting to captilization method fixed the market rate of the “Atta” variety of acquired land at Rs.48,000/- per acre and “Bahal” variety of land at Rs.52,000/- per acre. Challenging that enhancement in the rate of compensation, the present appeal has been preferred.

3. Mr. Sangram Das, learned counsel appearing for the appellant alleges that non-issuance of notice to the Union of India represented by General Manager, East Coast Railways in the reference proceeding was violative of Section 18(1) and Section 20 of the Act because the compensation to the claimants is paya¬ble by the railways and notice to such interested person is mandatory as per the above noted provisions of law. He further contended that when contemporaneous sale statistics indicating market value of the land of the area were available, fixation of market value of the acquired land under capitalization process was not proper. Mr. Das also challenged the legality of the award of compound interest in a land acquisition proceeding. He cited several decisions of the Apex Court in support of the submis¬sions.

4. Mr. A. Pal, learned counsel appearing for the Union of India, which was permitted to be impleaded as respondent No.7, supported the contention of learned counsel for the appellant and specifically argued that the compensation amount being payable by the railways, it was a necessary party and so it should have been noticed and given opportunity of participating in the proceeding. According to him any award passed behind the back of the respon¬dent No.7 becomes unsustainable and non est in the eye of law as such act offends the principles of natural justice and the dictum of the Apex Court in the case of NTPC Ltd. v. State of Bihar and others, reported in (2004) 12 SCC 96.

5. Mr. Milan Kanungo, learned counsel appearing on behalf of Mr. D. Mund, learned counsel for respondent Nos.1 to 6 sup¬porting the impugned order argued that Union of India represented through the railways is not a person interested within the mean¬ing of Section 18(1) of the Act, as ‘State’ is not a person and Section 18(1) refers to persons who are claimants and in whose favour compensation has already been awarded by the Land Acquisi¬tion Collector. He argued that as per the provisions of Section 20(c) of the Act in case of reference relating to quantum of compensation or area of the acquired land no other person except the Collector of the District as defined in Section 3(c) of the Act is to be noticed. According to him, for the above said rea¬sons the reference Court was not obliged to issue notice to respondent No.7 inviting it to participate in the reference proceeding. Mr. Kanungo further argued that when contemporaneou