Case details

Court: Supreme Court of India
Decided: 21 January 2020
Bench: Arun Mishra
Citations: 2020 INSC 64[2020] 5 S.C.R. 24
Type: Judgment (Disposed off)

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Citation: [2020] 5 S.C.R. 24 (search it on the Supreme Court's e-SCR portal)

Supreme Court of India

CHANABASAPPA versus KARNATAKA NEERAVARI NIGAM LTD. & ANR. on 21 January 2020

Cites 7, Cited by 1

SUPREME COURT REPORTS

[2020] 5 S.C.R.

CHANABASAPPA

KARNATAKA NEERAVARI NIGAM LTD. & ANR.

(Civil Appeal No. 475 of 2020)

BJANUARY 21, 2020

[ARUN MISHRA AND INDIRA BANERJEE, JJ.]

Land Acquisition Act, 1894:

s. 34 – Payment of interest under – Whether from the dateCof award or from the date prior thereto – Construction of dam afteracquisition of land – Submergence of land in question after thefull reservoir level breached in the year 1991 – Acquisition processof land in question started in the year 2007 – Award ofcompensation – High Court enhanced the compensation amountand directed payment of interest from the date of award i.e.D23.7.2009 – Appeal to Supreme Court seeking interest w.e.f. 1991– Held: Interest u/s. 34 can start only from the date the possessionof the acquired land is taken – No interest can be claimed for theperiod prior to s. 4 Notification – When possession is taken priorto issuance of preliminary Notification, land-owner is only entitledEto rent or damage for use and occupation – In the present casesubmergence/possession of the land is disputed – Claim of damageswould depend upon the factum whether the land has come undersubmergence in the year 1991 – The Collector is directed toexamine whether the land in question came under submergence in1991 and thereupon determine the quantum of damages to be paidFfrom 1991 till the date of Notification u/s. 4 – If submergenceproved, the land-owner shall be entitled to interest u/s. 34 alsofrom the date of s. 4 Notification till the date of award.

Disposing of the appeal, the Court

HELD: 1. Interest under Section 34 or Section 28 of LandGAcquisition Act, 1894 can start only from the date the possessionof the land is taken. Unless there is a case of urgency underSection 17(1) of the Act where possession has been taken, orthe acquisition process is initiated, in such cases, compensationwould be payable by virtue of provisions of Section 17 of the Act.H[Para 6] [28-E-F]

Lila Ghosh v. State of West Bengal (2004) 9 SCC337 : [2003] 5 Suppl. SCR 599 – relied on.

2. In a case where the land-owner is dispossessed priorto the issuance of preliminary notification under Section 4 of theAct, it is open to the land-owner to recover the possession ofhis land by taking appropriate legal proceedings. Therefore, heis only entitled to get rent or damage for use and occupationfor the period the Government retains possession of theproperty. When possession is taken prior to issuance ofpreliminary notification, the Collector may also determine therent or damages. [Para 7] [29-C-E]

R.L. Jain v. DDA & Ors. (2004) 4 SCC 79 : [2004] 2SCR 1156 – relied on.

3. No interest can be claimed for the period prior to theSection 4 notification. Where possession has been lost prior toinitiation of the acquisition proceedings, the land-owners canclaim rent or damages before the Collector. [Para 9] [30-D-E]

Special Land Acquisition Officer v. Karigowda & Ors.(2010) 5 SCC 708 : [2010] 5 SCR 164 – relied on.

4. On considering the provisions of Section 23, whiledetermining the compensation under Section 23(1) of the Act,the Court shall take into consideration firstly, the market valueof the land on the date of publication, secondly, the damagesustained by reason of taking of any standing crops or trees andother damages at the time of taking possession. Under Section23(1)(A) of the Act, the additional compensation is awarded atthe rate of twelve percent per annum on the market value fromthe date of notification under Section 4. Under Section 23(1A)of the Act, in addition to the market value, thirty percentsolatium is awarded on such market value. [Para 11] [31-F-H]

Siddhappa Vasappa Kuri & Anr. v. Special LandAcquisition Officer & Anr. (2002) 1 SCC 142 : [2001]4 Suppl. SCR 236 – relied on.

5. Under Section 34, nine percent interest is payable forthe first year from the date of taking possession, and in case itis not paid within one year from the date of possession, the A

26SUPREME COURT REPORTS

Ainterest at the rate of fifteen percent per annum is payable. [Para13] [32-D]

6. In the instant case, the date of taking of the possession/submergence is disputed, and there is no categorical findingrecorded that area in question came under submergence withBeffect from the year 1991 and was not as a matter of fact inpossession of the appellant. Certain documentary evidence hasbeen pointed out, indicating that the land was in cultivatingpossession of the appellant. It is also not clear for how muchperiod of a year the area in question remained in submergence.Certain documents have been filed by the appellant in this CourtCin the form of correspondence showing that certain surveynumbers in various villages came under submergence, whichwas required to be acquired. The claim of damages woulddepend upon the factum whether the land has come undersubmergence in the year 1991 for which adequate directions havebeen issued by the High Court to the Collector. [Para 15] [12-DF-H]

7. In these circumstances, the Collector is directed toexamine whether the area had come under submergence andshall determine the quantum of damages to be paid from 1991till the date of notification under Section 4. In case the area hasEcome in submergence, then the appellant shall be entitled to theinterest under Section 34 from the date of notification underSection 4 till award also. [Para 16] [33-B-D]

Case Law Reference

Gourab Banerji, Sr. Adv., Arjun Krishnan, Ankur Singh,Ms. Shourya Bari, Raka Chatterjee, Ms. Ishita Mishra, Advs. for theHAppellant.

Naveen R. Nath, Mrs. Lalit Mohini Bhat, Rahul Jain, Advs. forthe Respondents.

The Judgment of the Court was delivered by ARUN MISHRA, J.

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1. This appeal has been preferred by the appellant-claimantaggrieved by the judgment and order dated 17.02.2016 passed by theHigh Court of Karnataka, Circuit Bench at Dharwad, enhancing thecompensation to Rs.3,00,000/- per acre. Interest under section 34 ofthe Land Acquisition Act, 1894 (for short, ‘’the Act”) has also beenawarded from the date of the award, i.e. 23.07.2009 and not for theperiod prior thereto.

2. Notification under section 4 was issued on 7.6.2007 foracquiring inter alia the land belonging to the appellant, and the awardwas passed on 23.7.2009. It was submitted that under MalprabhaReservoir Project, a dam was constructed in the district of Belgaumacross the Malprabha river by the Government of Karnataka. Theoriginal height of the dam was 2074.5 feet. This was raised to 2079.5feet. However, while raising the height, a proper survey was notconducted as to the land which would come under submergence. Asa result thereof, in the year 1991 when the full reservoir level breached,water entered into those lands which were not acquired. The issuewas raised in the Karnataka Legislative Assembly on 6.9.1991; however,the acquisition process was initiated belatedly in the year 2007.

3. Notification under section 4 of the Act was issued on 7.6.2007.Declaration under section 6 of the Act was issued on 15.12.2007. Theaward was passed on 23.7.2009, awarding a sum of Rs.56,672/- peracre. Reference was sought on 1.9.2009, claiming compensation atthe rate of Rs.5,00,000/- per acre. The Senior Civil Judge, Bailhongal,awarded a sum of Rs.2,70,000/- per acre. Aggrieved by the decision,an appeal was preferred before the District Court. The District Courtreduced the compensation to Rs.2,25,000/- per acre by applying thecapitalization method. Aggrieved thereby, Misc. Second Appeal waspreferred in the High Court. The High Court awarded compensationat the rate of Rs.3,00,000/- per acre. By the impugned order, the HighCourt ordered payment of interest from the date of award, i.e.23.7.2009, and not from the date of notification issued under section 4or w.e.f. 1991. Hence this appeal has been preferred.

A4. It was submitted by Shri Gaurav Banerjee, learned seniorcounsel appearing on behalf of the appellant that, as a matter of fact,the area came under submergence in the year 1991. Thus, the damagesought to have been awarded from the year 1991 till the date ofnotification under section 4, and interest under section 34 should havebeen awarded with effect from the date of notification under sectionB4. It was submitted that rent or damages may be awarded as theamount of interest to be awarded under section 34 of the Act.

5. On the other hand, Shri Naveen R. Nath, learned counselappearing for the respondent submitted that no case is made out to awardthe compensation from 1991 or from the date of notification underCsection 4. He also disputed that the area came under submergencefrom the year 1991 and submitted that several documents from the year1993 to 2005 had been placed on record showing cultivation on thedisputed land. Inquest conducted in the presence of panchas dated9.6.2009 is on record in which crops of sugarcane, wheat, jwar, cottonDare shown. An inspection of the land was conducted on 20.07.2008,which shows the existence of open well, borewell in the said land. Thus,having claimed to be in cultivation possession of the land, the appellantcannot be said to be entitled for any compensation for the period 1991till the date of the notification. Interest has been awarded from thedate of the award. As such no interference is called for in the matter.E

6. In Lila Ghosh v. State of West Bengal (2004) 9 SCC 337,this court held that interest under section 34 or section 28 can startonly from the date the possession is taken. Unless there is a case ofurgency under section 17(1) of the Act where possession has beentaken, or the acquisition process is initiated, in such cases, compensationFwould be payable by virtue of provisions of section 17 of the Act. ThisCourt observed :

“19. Even though the authority in Shree Vijay Cotton & Oil MillsLtd (1991) 1 SCC 262 appears to support the claimants, it is tobe seen that apart from mentioning Sections 28 and 34, noGreasons have been given to justify the award of interest from adate prior to commencement of acquisition proceedings. A plainreading of Section 34 shows that interest is payable only if thecompensation, which is payable, is not paid or deposited beforetaking possession. The question of payment or deposit ofHcompensation will not arise if there is no acquisition proceeding.

CHANABASAPPA v. KARNATAKA NEERAVARINIGAM LTD. & ANR. [ARUN MISHRA, J.]

In the case where possession is taken prior to acquisitionproceedings, a party may have a right to claim compensation orinterest. But such a claim would not be either under Section 34or Section 28. In our view, interest under these sections can onlystart running from the date the compensation is payable. Normallythis would be from the date of the award. Of course, there maybe cases under Section 17, whereby invoking urgency clausepossession has been taken before the acquisition proceedings areinitiated. In such cases, compensation, under the Land AcquisitionAct, would be payable by virtue of the provisions of Section 17.As in cases under Section 17, compensation is payable; interestmay run from the date possession was taken. However, this casedoes not fall into this category.”

(emphasis supplied)

7. In R.L. Jain v. DDA & Ors. (2004) 4 SCC 79 this Court heldthat in a case where the landowner is dispossessed prior to the issuanceof preliminary notification under section 4 of the Act, it is open to thelandowner to recover the possession of his land by taking appropriatelegal proceedings. Therefore, he is only entitled to get rent or damagefor use and occupation for the period the Government retains possessionof the property. When possession is taken prior to issuance ofpreliminary notification, the Collector may also determine the rent ordamages. This Court has observed thus:

“18. In a case where the landowner is dispossessed prior to theissuance of preliminary notification under Section 4(1) of the Act,the Government merely takes possession of the land, but the titlethereof continues to vest with the landowner. It is fully open forthe landowner to recover the possession of his land by takingappropriate legal proceedings. He is therefore only entitled to getrent or damages for use and occupation for the period theGovernment retains possession of the property. Where possessionis taken prior to the issuance of the preliminary notification, inour opinion, it will be just and equitable that the Collector mayalso determine the rent or damages for use of the property towhich the landowner is entitled while determining thecompensation amount payable to the landowner for theacquisition of the property. The provisions of Section 48 of theAct lend support to such a course of action. For delayed payment AB

30SUPREME COURT REPORTS

Aof such amount appropriate interest at prevailing bank rate maybe awarded.”

8. In Siddhappa Vasappa Kuri & Anr. v. Special LandAcquisition Officer & Anr. (2002) 1 SCC 142 this Court has laid down:

“6. It is, as we see it, clear from Section 23(1-A) that the startingBpoint for the purposes of calculating the amount to be awardedthereunder, at the rate of 12 per centum per annum on the marketvalue, is the date of publication of the Section 4 notification. Theterminal point for the purpose is either the date of the award orthe date of taking possession, whichever is earlier. In the presentCcase, possession of the land having been taken prior to thepublication of the Section 4 notification, that terminal is notavailable. The only available terminal is the date of the award.The High Court, therefore, was in no error in holding that theappellants were entitled to the additional compensation underSection 23(1-A) for the period 8-3-1991 to 6-2-1993.”D

9. In the Special Land Acquisition Officer v. Karigowda &Ors. (2010) 5 SCC 708 has observed that no interest can be claimedfor the period prior to the Section 4 notification. Where possession hasbeen lost prior to initiation of the acquisition proceedings, the landownerscan claim rent or damages before the Collector. Following observationsEhave been made in Karigowda supra:

“101. As is evident from the above dictum of the Court, despitedispossession, the title continues to vest in the landowners and itis open for the landowners to take action in accordance with law.Once notification under Section 4(1) of the Act has been issuedFand the acquisition proceedings culminated into an award in termsof Section 11, then alone the land vests in the State free of anyencumbrance or restriction in terms of provisions of Section 16of the Act. The court, in situations where possessions have beentaken prior to issuance of notification under Section 4(1) of theGAct, can direct the Collector to examine the extent of rent ordamage that the owners of land would be entitled to, theprovisions of Section 48 of the Act would come to aid and thecourt would also be justified in issuing appropriate direction. Thiswas the unequivocal view expressed by the Court in R.L. Jaincase as well. This legal question is no more open to controversyHand stands settled by this Court. We would follow the view taken and accept the contention of the appellant State that theReference Court as well as the High Court could not havegranted any interest under the provisions of the Act, for a dateanterior to the issuance of notification under Section 4 of the Act.However, following the dictum of the Bench in R.L. Jain case,we direct the Collector to examine the question of payment ofrent/damages to the claimants, from the period when theirrespective lands were submerged under the backwater of theriver, till the date of issuance of the notification under Section4(1) of the Act, from which date, they would be entitled to thestatutory benefits on the enhanced compensation.”

10. In Karigowda supra, the question came up for considerationas to interest payable on taking of possession. This Court consideredvarious issues and observed that the decision of Larger Bench in R.L.Jain‘s case (supra) is binding. It has been observed that oncenotification under section 4(1) has been issued and the award has beenpassed, then only the land will vest in the State. In case its possessionhas been taken earlier to the issuance of notification under section 4(1)of the Act, the Court can direct the Collector to examine the extent ofrent or damage that the owners of the land would be entitled to. TheCollector was directed to examine the question of payment of rent/damages from the period their respective lands were submerged in thebackwater of the river, till the date of issuance of notification undersection 4(1) from which date, they would be entitled to claim benefitson the enhanced compensation. The question of interest arises afterthe date of notification under Section 4 and not prior to under section28 or 34 of the Act.

11. When we consider the provisions of section 23, whiledetermining the compensation under section 23(1) of the Act, the Courtshall take into consideration firstly, the market value of the land on thedate of publication, secondly, the damage sustained by reason of takingof any standing crops or trees and other damages at the time of takingpossession. Under section 23(1)(A) of the Act, the additionalcompensation is awarded at the rate of twelve percent per annum onthe market value from the date of notification under section 4. Undersection 23(2) of the Act, in addition to the market value, thirty percentsolatium is awarded on such market value.

12. In the present matter, we are concerned with the questionof interest to be awarded under section 34. Section 34 of the Act isextracted hereunder:

“34. Payment of interest – When the amount of suchcompensation is not paid or deposited on or before takingBpossession of the land, the Collector shall pay the amountawarded with interest thereon at the rate of [nine per centum]per annum from the time of so taking possession until it shall havebeen so paid or deposited:

[Provided that if such compensation or any part thereof is notCpaid or deposited within a period of one year from the date onwhich possession is taken, interest at the rate of fifteen percentum per annum shall be payable from the date of expiry ofthe said period of one year on the amount of compensation orpart thereof which has not been paid or deposited before the dateof such expiry.]”D

13. Under section 34, nine percent interest is payable for the firstyear from the date of taking possession, and in case it is not paid withinone year from the date of possession, the interest at the rate of fifteenpercent per annum is payable.

E14. In the present matter, interest has been awarded from thedate of the award under section 34, not from the date of notificationunder section 4. It was submitted on behalf of the respondents that itwas not claimed before the reference court that possession wasdeprived of in the year 1991. Compensation / Damages were notclaimed from the year 1991 and the factum of submergence has beenFdisputed.

15. In the instant case, the date of taking of the possession/submergence is disputed, and there is no categorical finding recordedthat area in question came under submergence with effect from theyear 1991 and was not as a matter of fact in possession of the appellant.GCertain documentary evidence has been pointed out, indicating that theland was in cultivating possession of the appellant. It is also not clearfor how much period of a year the area in question remained insubmergence. Certain documents have been filed by the appellant inthis Court in the form of correspondence showing that certain surveyHnumbers in various villages came under submergence, which was required to be acquired. The question is, which were those surveynumbers that came under submergence has to be examined by theCollector. The claim of damages would depend upon the factumwhether the land has come under submergence in the year 1991 forwhich adequate directions have been issued by the High Court to theCollector.

16. In these circumstances, we direct the Collector shall examinewhether the area had come under submergence and shall determinethe quantum of damages to be paid from 1991 till the date of notificationunder section 4. In case the area has come in submergence, then theappellant shall be entitled to the interest under Section 34 from the dateof notification under Section 4 till award also. Interest under Section34 at the most can follow from the date of notification under section 4,in case the area had come under submergence at any point of timebefore the notification was issued. The Collector shall determine theaforesaid aspect within six months after hearing the parties and theevidence as may be adduced. The appeal is accordingly disposed of.

Kalpana K. Tripathy

Appeal disposed of.