SC Judgements

Union of India v Parmal Singh & Ors. Civil Appeal Nos. 2319-2327 of 2001 decided by R.V. Raveendran and Lokeshwar Singh Panta, JJ. on 25.11.2008.

Case relates to payment of interest due to delay in payment of compensation for acquisition of requisitioned property. The Court held:

When a property is acquired, and law provides for payment of compensation to be determined in the manner specified, ordinarily compensation shall have to be paid at the time of taking possession in pursuance of acquisition. By applying equitable principles, courts have always awarded interest on the delayed payment of compensation in regard to acquisition of any property. When a requisitioned property is acquired, as possession had already been taken from the landholder, the compensation becomes payable from the date of acquisition. When a property is requisitioned, the land owner is compensated for the denial of possession by paying compensation based on the rent it would have fetched had it not been requisitioned. But once the property is acquired, the rent is stopped, as compensation based on open market value becomes payable against acquisition. Therefore while interest is payable, it is not awarded from the date of requisition (taking over of possession) but only from the date of acquisition. This principle has been recognized and applied by courts consistently. Whenever the Arbitrator or High Court increases the compensation for the acquired land, the increase relates back to the date of acquisition as they are merely doing what the Special Land Acquisition Officer ought to have done in the first instance. Therefore, interest is awardable on the increased amount also from the date of acquisition. The said general principle will not apply in two circumstances. One is where a statute specifies or regulates the interest. In that event, interest will be payable in terms of the provisions of the statute. The second is where a statute or contract dealing with the acquisition specifically bars or prohibits payment of interest on the compensation amount. In that event, interest will not be awarded. 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. We are fortified in this view by the enunciation in Satinder Singh v. Umrao Singh MANU/SC/0292/1961, which has been reiterated in Hirachand Kothari v. State of Rajasthan 1985 (Supp.) SCC 17.

[The Respondent's land was requisitioned in 1963. The same land was acquired in 1965. The Special Land Acquisition officer, Meerut, determined the compensation which was not to the satisfaction of the Respondent. Therefore the matter was referred to arbitrator as per the concerned statute. Award for compensation was made by the arbitrator on 16.3.1979. Writ was filed by the Respondent for increasing the compensation. the Allahabad decided the matter and gave the Order on 1.4.1999. An appeal was filed to the Supreme Court which decided the matter on 25.11.2008. Thus, it has taken decades to resolve a simple land acquisition compensation dispute. Solutions for such delays, anyone?]