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Interest on Solatium : a Judicial Controversy
by K.C. Jain*

Cite as : (1997) 3 SCC (Jour) 1

A controversy has arisen as a result of two recent decisions of the Supreme Court on the issue "whether interest under Section 28 or Section 34 of the Land Acquisition Act, 1894 is payable on the amount of solatium?" These two verdicts are in conflict with the view consistently followed by the Supreme Court in a catena of decisions.

In Yadavrao P. Pathade v. State of Maharashtra1, a three-Judge Bench of the Supreme Court, headed by Hon'ble K. Ramaswamy, J., ruled thus:

"... Section 28 does not comprehend payment of interest on solatium when it expressly mentions payment of interest on compensation under Section 28 referable to Section 23(1) of the Act. Thus the High Court was right in not awarding interest on solatium...."2

While taking the above view, the Bench referred to another recent three-Judge Bench decision in Prem Nath Kapur v. National Fertilizers Corpn. of India Ltd.3, wherein Hon'ble K. Ramaswamy, J., speaking for the Bench, stated thus:

"Equally, the contention that the claimant is entitled to interest on solatium is also not warranted by express provisions under Section 23(2), i.e., 'in addition to' market value, solatium was required to be paid. Section 34 or Section 28, as the case may be, fastens liability to pay interest only on amount of compensation or such excess amount of compensation or part thereof determined under Section 23(1). In other words, by virtue of the language of Section 23(2), viz., 'in addition to the market value', as provided in Section 23(1), solatium becomes payable. Compensation under Section 23(1), by necessary implication, excludes the liability to pay interest on solatium...."4

This view runs counter to the statement of law by an earlier coordinate Bench of the Supreme Court in Union of India v. Ram Mehar5, which was not cited at the bar. A.N. Grover, J., speaking for the Court in Ram Mehar, observed thus:

"... The additional amount of 15% certainly forms part of the amount of compensation because under Section 23 the compensation is to consist of what is provided for in sub-section (1) and the additional amount of 15% on the market value of the land acquired...."6

It was, further, ruled:

"... interest is payable on such amount which is either a part of compensation or is the total compensation payable itself...."7

A subsequent two-Judge Bench decision in Narain Das Jain v. Agra Nagar Mahapalika8, reiterating the view, was also not cited in either of the recent cases. In this case, Hon'ble M.M. Punchhi, J., categorically ruled:

"... solatium in the scheme of Section 23(2) of the Land Acquisition Act is part of the compensation and Sections 28 and 34 of the said Act provided payment of interest on the amount of compensation.... Solatium being part of the compensation must fetch statutory interest from the date of dispossession of the landowner till date of payment."9

This conflict would not have arisen, had the three-Judge Bench decision in Ram Mehar5 been cited at the bar. The coordinate Bench of the Court would then have had no option but either to follow Ram Mehar5 or to refer it to a larger Bench for its reconsideration.

The conflict has now to be resolved and so the two decisions in Pathade1 and Prem Nath Kapur3 have to be referred to a larger Bench of the Supreme Court. Keeping that in view, a scanning of various facets of the issue would be fruitful.

The issue of interest cannot be gone into without knowing the meaning and nature of "compensation" under the statutory scheme. Let's, therefore, first consider Sections 28 and 34 of the Act, being the relevant statutory provisions relating to payment of interest.

Section 28 contemplates payment of interest by the Collector on the direction of the Court on the difference of the amount, which the Collector ought to have awarded as "compensation" and the sum which the Collector did award as "compensation".

Similarly, Section 34 of the Act enjoins the Collector to pay interest, if the amount of "such compensation" is not paid or deposited on or before taking possession of the land. The expression "such compensation", evidently refers to Section 31 of the Act, which, inter alia, deals with payment of compensation or deposit of the same in Court on making an award under Section 11. Section 31(1) of the Act mandates that on making an award under Section 11, the Collector shall tender payment of the compensation awarded by him to the persons interested and entitled thereto according to the award and shall pay it to them unless prevented by some of the contingencies mentioned in Section 31(2).

A conjoint reading of Sections 34 and 31(1) would lead one to the conclusion that the amount of compensation awarded by the Collector shall be tendered for payment by him to the persons interested or deposited in the Court, failing which the Collector shall be liable to pay interest under Section 34.

Thus, both Sections 28 and 34, though operating in different contexts, envisage payment of interest on the amount of "compensation", which is ex facie the keyword in both the provisions.


The expression "compensation" is not defined in the Act. Its ordinary and literal meaning in common parlance has therefore to be accepted. This is the consistent practice in statutory interpretation.10

Common Parlance connotation

In common parlance, "compensation", with reference to an exproprietary legislation, means and implies the amount payable in lieu of acquisition of a land or interest therein, though such amount may consist of several components which may be legally or popularly known by different names. Such components/constituents, put together, are "compensation".

The dictionary meanings also support it. The expression "compensation" has been defined in Black's Law Dictionary11 thus:

"... Equivalent in money for a loss sustained; equivalent given for property taken or for an injury done to another; giving back an equivalent in either money which is but the measure of value, or in the actual value otherwise conferred; recompense in value; ...."

In Stroud's Judicial Dictionary12, "compensation" is defined as including not only the value of the land taken but also damage for severance or injuriously affecting other lands belonging to the owner of the land taken, although the Act contained no such clause as Land Clauses Consolidation Act, 1945.

Accordingly, the term "compensation", as is commonly understood and also as defined and explained in the above legal dictionaries, means money under the scheme of an enactment, which would consist of not only the value of a land but also various kinds of damages, etc.

Contextual Interpretation

Sections 28 and 34 of the Act, by their plain reading, clearly indicate that expression "compensation" used therein is neither artificial nor ambiguous. Still, with a view to ascertain whether there exists adequate grounds to justify the inference that the legislature intended a meaning other than a common parlance meaning, a glance over the scheme of the Act would be useful.

Let's peruse the relevant provisions. Sections 23 and 24 lay down the various matters, which are to be taken or not to be taken into consideration in determining "compensation" by the Court. The same guidelines equally apply to the Collector also vide Section 15 of the Act.

Sub-section (1) of Section 23 of the Act enumerates six clauses, which, inter alia, provide for determination of the market value of a land as on the date of the publication of the notification under Section 4(1) and various kinds of damages, besides expenses (if any) incidental to change of residence or place of business consequent to the acquisition of the land by the Collector. Each kind of damages, as stated in various clauses, is intended to recompense a particular kind of damage as mentioned therein.

Significantly, besides sub-section (1), sub-sections (1-A) and (2) are also the integral parts of Section 23 of the Act. While sub-section (2) of Section 23 of the Act enjoins the Court to award a sum of 30 per centum of the market value "in every case" in consideration of compulsory nature of acquisition, sub-section (1-A), in an identical legislative mandate, obligates the Court to award "in every case" an amount calculated at the rate of 12 per centum on the amount of market value for the period as specified therein. The amounts payable under the scheme of both of the sub-sections (1-A) and (2) are "in addition to the market value" and are awardable as a fixed percentage of the market value. Award of the amounts under both of the sub-sections is also intended to recompense the landowners and to enhance the amount payable to him.

"Determination" qua "Computation"

A close reading of Section 23 of the Act further reveals that the six items, mentioned therein, are to be taken into consideration in "determining" the amount of "compensation" by the Court. "Determination" implies "adjudication" in the light of evidence adduced by the parties. Whether it is market value or damages, proof thereof by the claimant by adduction of evidence is ordinarily necessary and then the Court would make its "determination" by appraisal of the evidence. In contrast to such requirement of proof and determination of various amounts referred to and prescribed in sub-section (1), the amounts payable under sub-sections (1-A) and (2) are statutory in nature, involving no element of "determination", but requiring only "calculation"/"computation". The legislative mandate for award of such statutory allowances under sub-sections (1-A) and (2) is explicit and a duty to award them is cast upon the Court.

The principle underlying award of solatium is best expressed by Hon'ble M.M. Punchhi, J., in Narain Das Jain8 thus:

"The importance of the award of solatium cannot be undermined by any procedural blockades. It follows automatically the market value of the land acquired, as a shadow would to a man. It springs up spontaneously as a part of the statutory growth on the determination and emergence of market value of the land acquired. It follows as a matter of course without any impediment. That if falls to be awarded by the court 'in every case' leaves no discretion with the court in not awarding it in some cases and awarding in others. Since the award of solatium is in consideration of the compulsory nature of acquisition, it is hanging mandate for the court to award and supply the omission at any stage where the court gets occasion to amend or rectify. This is the spirit of the provision, wherever made...."13

This explains the reason for the marked difference in the language of sub-section (1) of Section 23 on the one hand and sub-sections (1-A) and (2) of Section 23 on the other. It also establishes that various amounts payable under different clauses of Section 23 of the Act, in aggregate, constitute "compensation", and are integral parts thereof.

Significance of phrase "In addition to market value" in sub-sections (1-A) and (2) of Section 23

The other significant and noticeable feature in the language, as employed in sub-sections (1-A) and (2) of Section 23, is the use of the phrase "in addition to the market value of the land". If the draftsman had employed the clause "in addition to compensation of the land" in sub-sections (1-A) and (2) instead of the above phrase, it would have been justifiable to treat the amount mentioned in these sub-sections as amounts other than "compensation". Designedly, the term "market value" instead of the term "compensation" has been employed both in sub-sections (1-A) and (2). This reinforces the view that "market value" is only a part of "compensation".14

One may ask as to the reason for the employment in sub-sections (1-A) and (2) of the phrase "in addition to the market value of the land". The answer is obvious. Such amounts are computable with reference to the "market value" as a fixed percentage thereof, and are also over and above the "market value". To obviate any misgivings, the amounts under sub-sections (1-A) and (2) have been particularised as "in addition to the market value of the land". It, thus, clinches the issue.

Section 15 of the Act also fortifies this standpoint. It does not restrict application of Section 23 to sub-section (1) only. Its plain language indicates that all matters mentioned in Section 23 of the Act, including sub-sections (1-A) and (2), would be relevant for "compensation".

Section 11(1) of the Act requires the Collector to make an award of what is specified in clauses (i) to (iii) therein. Clause (ii) enjoins the Collector to make award of "the compensation which in his opinion should be allowed for the land". Such "compensation" is to obviously include all payable amounts, including solatium. If it is not so, there may not be any provision in the scheme of Section 11 for inclusion solatium in the award.

Section 31(1) postulates that on making an award under Section 11, the Collector shall tender payment of "compensation" awarded by him, unless prevented by some one or more of the contingencies mentioned in the next sub-sections. If such "compensation" is not to include the amount of solatium, there would be no provision, which obligates the Collector to pay solatium. Can one comprehend a provision for solatium without there being a corresponding requirement on the part of the Collector to pay it? This shows that "compensation" used in Section 31(1) also includes solatium.

Sub-section (3-A) of Section 17 also requires that before taking possession of the land, the Collector shall tender payment of eighty per centum of "compensation for such land estimated by him to the persons entitled thereto". This provision is in substance for advance payment of a part of the estimated compensation before dispossession. There appears no convincing reason why a person interested should be paid advance compensation without taking into account the amount of solatium.

Section 18(1) of the Act may also be looked into. It empowers a person interested, who has not accepted the award, to require the Collector to refer the matter for the determination of the Court, whether his objection be to the "amount of compensation" or to other three grounds mentioned therein. If the "amount of compensation" were not to include "solatium", it leads to an anomalous situation that a person would have no right, in a given case, to seek a reference against the Collector's denial of solatium. Countenance cannot be given to such a view.

Thus, from all points of view, the term "compensation" in the context of the Act, should mean and include all amounts, referred to in Section 23 of the Act, which are payable in lieu of acquisition of a land, whether on one count or the other and be called by the name given by the legislature or otherwise; such amounts may be computable whether by adopting an artificial measure such as fixed percentage or be determinable on realistic scale on the basis of evidence more particularly as the Act unfolds its own scheme of compensation and does not envisage a "restitutive approach" or provide for "reinstatement value". Broadly stated, whatever is payable under the scheme of the Act consequent to the acquisition of a land or interest therein, be it less or more, is "compensation" under the Act. Obviously, it is not to include amount of "interest", which is paid not in lieu of acquisition of land, but for withholding the amount of compensation or part thereof and designedly described by the legislature as "interest" in contradiction to "compensation".

Construction of the term "compensation" by adopting the above line of reasoning also conforms to the cardinal rule of interpretation stated in Darshan Singh v. State of Punjab15 that words and phrases occurring in a statute are to be taken not in an isolated or detached manner dissociated from the context, but are to be read together and construed in the light of the purpose and object of the Act itself.

Legislative background of solatium

The legislative background for introduction of sub-section (2) throws some more light on the issue.

Sub-section (2), dealing with the statutory allowance, is analogous to Section 42 of the old Act of 1870 (except rate, which stood modified by Act No. 68 of 1984). The Select Committee in its preliminary report on the Land Acquisition Act remarked with reference to Section 42 thus:

"It appears more convenient to insert here than in a later part of the Act, the instruction contained in Section 42 of the Act, that in addition to the amount of any compensation due to the owner of the land acquired 15 per centum on the market value shall be given in consideration of the compulsory nature of the acquisition. We have accordingly added a clause to this effect in the section by which we amend Section 42 of the Act (X of 1870) and the Collector or Judge making the award will find embraced in a simple section the whole of the detail required for the completion of his estimate of compensation."16

The "Report of the Law Commission of India", submitted in 1957, on the Need for Reform in the Land Acquisition observed as follows:

"We are not also in favour of omitting Section 23(2) so as to exclude solatium of 15 per cent for the compulsory nature of the acquisition. It is not enough for a person to get the market value of the land as compensation in order to place himself in a position similar to that which he could have occupied had there been no acquisition, he may have to spend a considerable further amount for putting himself in the same position as before.... As pointed out by Fitzerald the community has no right to enrich itself by deliberately taking away the property of any of its members in such circumstances without providing adequate compensation for it. This principle has been in force in India ever since the Act of 1870. The Select Committee which examined the Bill of 1893 did not think it necessary to omit the provision but on the other hand transferred it to Section 23."17

As seen above, the Law Commission retained the provision for payment of solatium since it was considered that payment of market value was not enough to rehabilitate/reinstate the landowner in the same position without expenditure of a considerable sum. Payment of solatium was, accordingly, intended to make good the amount needed for his rehabilitation and was to take care of such damages, which otherwise remain unaccounted for.

Compensation and market value

As has been stated above, the opinion of the Court prior to Pathade1 and Prem Nath Kapur3 has been to treat "solatium" as part of "compensation".

In Ram Mehar5, a three-Judge Bench of the Apex Court highlighted the distinction between the expressions "compensation" and "market value". The precise controversy therein was as to the true meaning and construction of the expression "market value" appearing in Section 4(3) of the Land Acquisition (Amendment and Validation) Act, 1967 (Act No. 13 of 1967), which too was a Central Act. The Bench ruled therein that such interest under Act No. 13 of 1967 was payable only on the market value and not on solatium, as the said Act contemplated payment of interest on "market value" and not "compensation". A.N. Grover, J., speaking for the Court, observed thus:

"... It is significant and has been noticed at an earlier stage also that according to the other sections which appear in the principal Act interest is payable on such amount, which is either a part of compensation or is the total compensation which is payable itself. If market value and compensation were intended by the legislature to have the same meaning, it is difficult to comprehend why the word 'compensation' in Sections 28 and 34 and not 'market value' was used. The key to the meaning of the word 'compensation' is to be found in Section 23(1) and that consists (a) of the market value of the land, and (b) the sum of 15% of such market value, which is stated to be the consideration for the compulsory nature of the acquisition. Market value is, therefore, only one of the components in determination of the amount of compensation. If the legislature has used the word 'market value' in Section 4(3) of the Amending Act of 1967, it must be held that it was done deliberately and what was intended was that interest should be payable on the market value of the land and not on the amount of compensation otherwise there was no reason why Parliament should not have employed the word 'compensation' in the aforesaid provision of the amending Act."18

The ratio of Ram Mehar5, on its face, applies with full force to the issue relating to interest under Sections 28 and 34 of the Principal Act on the amount of solatium. The use of expression "compensation" in Sections 28 and 34 instead of "market value" is to signify that solatium, being a part of compensation, must also fetch interest.

Further, the statement of law in Ram Mehar5 conforms to the scheme of the Act, as throughout the Act, the legislature has maintained the distinction between "market value" and "compensation", as apparent from Sections 11, 15, 17(3-A), 18, 25, 28, 28-A, 29, 30, 31 and 33 of the Act. This distinction was maintained by the legislature, while amending the Act from time to time. Unfortunately, this conspicuous distinction in the said expressions was not placed for consideration by the Supreme Court.

In Narain Das Jain8, the two-Judge Bench, while awarding interest on the amount of solatium, clarified: (at p. 217, para 11)

"... solatium in the scheme of Section 23(2) of the Land Acquisition Act is a part of compensation and Sections 28 and 34 of the said Act provided payment of interest on the amount of compensation."

In Periyar and Pareekanni Rubbers Ltd. v. State of Kerala19, a two-Judge Bench of the Court considered Section 25(3) of Travancore Land Acquisition Regulation, 1089, analogous to Section 28 of the principal Act and K. Ramaswamy, J., for the Court, ruled thus:

"... we have no hesitation to hold that Section 25(3) contemplates payment of interests on solatium to recompensate the owner of the land or loss of user of the land from the date of taking possession till date of payment into Court. The word compensation has been advisedly used by the Legislature. Accordingly we hold that the appellant is entitled to interest on solatium."20

The view taken in this case was overturned in Pathade1 thus: (at p. 572, para 6)

"... neither the provisions were considered nor the distinction of the above provisions had been brought to the notice of this Court at that time. Therefore, mistaken view was taken to hold that interest on solatium is part of the component of compensation under Section 23(1) of the Act."

Now, it has been the consistent opinion of the various High Courts in India that solatium is part of compensation, which must fetch statutory interest under Sections 28 and 34 of the Act.

As back as in the year 1893, a Full Bench of the Bombay High Court in Nilkantha Ganesh Naik v. Collector of Thana21 ruled that the expression "amount awarded" signified the amount of compensation awarded for the land along with the statutory allowance as provided in Section 23(2) and that it was on the aggregate amount that interest would have to be paid. Similar views were expressed by the High Courts of Gujarat, J&K, Karnataka, A.P., etc.22

Rationale of interest on solatium

"Reason is the life of law" and so, whether the "rule of reason" enjoins payment of interest on solatium?

This significant issue requires examination from two standpoints: Firstly, "the point of time", when a landowner gets a vested right to receive compensation amount including solatium; and secondly, the "concept and principles of interest".

There is a line of authorities for the view that "right to compensation" and its "quantification" are two distinct concepts; although the process of quantification may pass through several stages and fora of the judicial hierarchy, yet the right to compensation dates back to the taking of possession.

This has been succinctly brought out by Subba Rao, J., in Shamlal Narula (Dr) v. CIT23, wherein he explained:

"... As the land acquired vests absolutely in the Government only after the Collector has taken possession of it, no interest therein will be outstanding in the claimant after the taking of such possession: he is divested of his title to the land and his 'right to possession' thereof, and both of them vest thereafter in the Government. Thereafter he will be entitled only to be paid compensation that has been or will be awarded to him. He will be entitled to compensation, though the ascertainment thereof may be postponed, from the date his title to the land and the right to possession thereof have been divested and vested in the Government. It is as it were that from that date the Government withheld the compensation amount which the claimant would be entitled to under the provisions of the Act...."24

Concept of interest

What is the true nature of interest? Subba Rao, J., in Shamlal Narula (Dr)23 described interest thus:

"... a consideration paid either for use of money or forbearance from demanding it after it has fallen due...."

It was, further, observed thus:

"Interest, whether it is statutory or contractual, represents the profit the creditor might have made if he had the use of the money or the loss he suffered because he had not used...."

In Ferro Alloys Corpn. v. A.P. State Electricity Board25, the Court explained 'interest' as follows:

"... The word 'interest' would apply only to two cases where there is a relationship of debtor and creditor. A lender of money who allows the borrower to use certain funds deprives himself of the use of those funds. He does so because he charges interest which may be described as a kind of rent for the use of the funds. For example, a Bank or a lender lending out money on payment of interest...."26

A Constitution Bench of the Supreme Court in Secretary Irrigation Department, Government of Orissa v. G.C. Roy27 succinctly summarized the concept of interest thus:

"A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages... ."28

To sum up: The consistent judicial opinion has been that amount of compensation including solatium becomes due to landowner/person interested on taking possession of land. If solatium is not paid simultaneously with possession, it can be taken as that the Collector has withheld the same, though lawfully fallen due. Solatium or any of the constituents of "compensation", whichever remains unpaid, must, therefore, fetch statutory interest. The statement of law in Ram Bai v. CIT29, reinforces the legal position by declaring that the interest under Sections 28 and 34 of the Act

"cannot be taken to have accrued on the date of the order granting enhanced compensation but has to be taken as having accrued year after year from the date of delivery of possession of the lands till the date of such order."30

This reasoning is in tune with the rule of reason, as giving a different connotation to interest on solatium in contrast to other constituents of compensation, may run counter to reason.

Equitable considerations

Compulsory acquisition, being akin to a statutory compulsory purchase, the relationship between the State and the landowner is similar to that of the vendor and the purchaser who are in the position of creditor and debtor on acquisition of land. If compensation amount remains due in such relationship, equity considerations would help the landowner to claim the amount with interest.

In Swift & Co. v. Board of Trade31, the House of Lords held:

"... on a contract for the sale and purchase of land it is the practice of the Court of Chancery to require the purchaser to pay interest on his purchase money from the date when he took, or might safely have taken, possession of the land."32

The rule that an act of taking possession has an implied agreement to pay interest was extended to the cases of compulsory purchase under the Lands Clauses Consolidation Act, 1845. The Privy Council had occasion to deal with that issue. In Inglewood Pulp and Paper Co. Ltd. v. New Brunswick Electric Power Commission33, their Lordships of Privy Council held thus:

"... the rule has long been accepted in the interpretation of statutes that they are not to be held to deprive individuals of property without compensation unless the intention to do so is made quite clear. The statute in the present case contains nothing which indicates such an intention. The right to receive interest takes the place of the right to retain possession and is within the rule."34

A three-Judge Bench of the Supreme Court in Satinder Singh v. Amrao Singh35 in a case under the East Punjab Acquisition and Requisition of Immovable Property (Temporary Powers) Act, 1948, which contained no provision for payment of interest on compensation, awarded interest and observed:

"... when a claim for payment of interest is made by a person whose similar property has been acquired compulsorily he is not making claim for damages properly or technically so called; he is basing his claim on the general rule that if he is deprived of his land, he should be put in possession of compensation immediately; if not, in lieu of possession taken by compulsory possession, interest should be paid to him on the said amount of compensation...."36

The Court further went on to describe this right as equitable and explained:

"... we have already seen that the right to receive interest in lieu of possession of immovable property taken away either by private treaty or by compulsory acquisition is generally regarded by judicial decisions as an equitable right; ...."37

In Mir Fazeelath Hussain v. Special Deputy Collector38, a three-Judge Bench of the Apex Court reiterated the above view with reasons thus:

"... had the present been a case of non-awarding of any interest, we would have done so, because, interest in such cases may become payable on equity, for it is meant to make good the loss suffered by a person due to delayed payment. This view has been reiterated recently by this Court in Kalimpong Land & Building Ltd. v. State of W.B., in which payment of interest was ordered even when acquisition was under Requisitioning and Acquisition of Immovable Property Act, 1952, which statute has made no specific provision...."39

More recently, in Union of India v. Dhanwanti Devi40, the Supreme Court dealt with the equity principles and requirement of payment of interest on solatium thus:

"... In a court of equity, when the seller parts with possession of immovable property, the purchaser becomes its owner while the seller receives money as consideration in lieu of the property. The seller, therefore, is entitled to claim interest in place of his retaining possession of the property from the date the purchaser takes possession of the property till date of payment. On this premise, claim for interest is sought against the State when it exercises its power of eminent domain and acquires the property of a citizen for public purpose. This principle was extended in equity to recompensate the owner for deprivation of his possession and enjoyment thereof in accordance with law. It was, therefore, held in equity that the owner is entitled to interest on the principal amount of award from the date of taking possession unless the statute under which the land was acquired expresses a contrary intention. It is on this premise that the right to receive interest takes the place of right to retain possession and its enjoyment."41

The Act, nowhere, excludes in positive terms payment of interest on solatium. Silence of the Act for payment of interest on solatium, if so assumed, would not make the equity principles inapplicable. If the statute is not mentioning interest on solatium, it can be assumed that on equity, interest on solatium is necessarily to be implied as there is nothing to exclude equity principles. Any other view would run contra to the ratio of Satinder Singh35 and Mir Fazeelath Hussain38. However, equity principles have been rightly held inapplicable, where the claims sought to be made were for higher rate of interest, or for compound interest or interest for a larger period in face of clear and specific legislative intent expressed in the Act in that regard.


It cannot be gainsaid that the previous decisions of Ram Mehar5 and Narain Das Jain8 were not noticed in Pathade1 and Prem Nath Kapur3; several patent aspects of Section 23 were unfortunately not placed before the Court; and the issue is of public importance relating to the matters connected with the exercise of power of eminent domain.

Delays in the determination of compensation at various stages coupled with delayed actual payment to the landowners are common phenomena and, therefore, payment of interest gives a healing touch, which partially recompenses the decline of the intrinsic worth of money. For compulsorily acquired lands, non-payment of interest on any part of its compensation is unjust and harsh. For plurality of reasons, and particularly in view of the conflicting ratio of Ram Mehar5 and Narain Das Jain8, the issue needs reconsideration by a larger Bench of the Supreme Court to dispel doubts and to ensure certainty in this regard.

* Advocate, Supreme Court of India, New Delhi Return to Text

  1. (1996) 2 SCC 570 Return to Text
  2. Id. at 572 Return to Text
  3. (1996) 2 SCC 71 Return to Text
  4. Id. at 79 Return to Text
  5. (1973) 1 SCC 109 Return to Text
  6. Id. at 114 Return to Text
  7. Ibid Return to Text
  8. (1991) 4 SCC 212 Return to Text
  9. Id. at 217-218 Return to Text
  10. The oft-quoted legal maxims are: "Index animi sermo" - Language is the exponent of the intention; "Quoties in verbis nulla est ambiguitas, ibi nulla expositio contra verba fienda est" - When in the words there is no ambiguity, then no exposition contrary to the words is to be made. In Kasturi v. Gaon Sabha, (1989) 4 SCC 55 also, it was ruled: "In the absence of statutory definitions, the terms would have common parlance meanings." Return to Text
  11. Black's Law Dictionary (Sixth Edn.) at p. 283 Return to Text
  12. Stroud's Judicial Dictionary (4th Edn.) Vol. 1 at p. 523 Return to Text
  13. (1991) 4 SCC 212 at 215-216, para 7 Return to Text
  14. In this context, it may be mentioned that the Supreme Court has, of late in Union of India v. Dhanwanti Devi, (1996) 6 SCC 44 has interpreted Section 23(2) as prescribing solatium "in addition to compensation" as consideration for compulsory acquisition. This does not seem to be correct. Section 23(2) speaks about "in addition to market value" and not "in addition to compensation". Nor does it mention the amount payable thereunder as "solatium". Return to Text
  15. AIR 1953 SC 83 at 86. Same views are expressed in Popat Lal Shah v. State of Madras, AIR 1953 SC 274 Return to Text
  16. Para 7 of the Report on the Bill to amend the Land Acquisition Act of 1890 presented to the Council of the Governor-General of India on February 2, 1893. Return to Text
  17. Quoted in supra 5 and 8 Return to Text
  18. Id. at 114-115 Return to Text
  19. (1991) 4 SCC 195 Return to Text
  20. Id. at 211 Return to Text
  21. (1893) ILR 22 Bom 802 (FB) Return to Text
  22. See Patel Maganbhai Chaturbhai v. Collector, Mehsana District, AIR 1968 Guj 1; Deep Raj v. State of J&K, AIR 1969 J&K 142; G. Venkatesh v. Spl. LAO, AIR 1975 Kant 95; Naraindas Bapalal Dandwala v. Land Acquisition Officer, AIR 1976 Guj 142; Union of India v. Harbans Lal, ILR (1977) 1 Del 330; State of Punjab v. Kailashwati, AIR 1980 P&H 117; B. Ravindra Reddy v. Spl. Dy. Collector, AIR 1981 AP 381; State of W.B. v. Belarani Devi, (1984) 1 Cal LJ 60; Raghuvir Singh v. Union of India, AIR 1985 Del 228; CIT v. M. Subaida Beevi, (1986) 160 ITR 557 (Ker) and Vadilal Soda Ice Factory v. CIT, (1971) 80 ITR 711 Return to Text
  23. (1964) 7 SCR 668 Return to Text
  24. Id. at 672. In this connection see: Joginder Singh v. State of Punjab, (1985) 1 SCC 321, wherein the Supreme Court reiterated these views. Also see Khorshed Shapoor Chenai, (1980) 2 SCC 1 Return to Text
  25. (1991) Supp SCC 136 Return to Text
  26. Id. at 179 Return to Text
  27. (1992) 1 SCC 508 Return to Text
  28. Id. at 532 Return to Text
  29. 1990 Supp SCC 699 Return to Text
  30. Id. at 700 Return to Text
  31. (1925) AC 520 Return to Text
  32. Id. at 532 Return to Text
  33. AIR 1928 PC 287 Return to Text
  34. Id. at 290, C2 Return to Text
  35. (1961) 3 SCR 676 Return to Text
  36. Id. at 695 Return to Text
  37. Id. at 696 Return to Text
  38. (1995) 3 SCC 208 Return to Text
  39. Id. at 213 Return to Text
  40. (1996) 6 SCC 44 Return to Text
  41. Ibid at 315, 316. In this case, the Apex Court has conceded the authority of the legislature to override the right (to get interest) in equity. Return to Text
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