Union of India Vs. Kolluni Ramaiah  INSC 491 (16 November 1993)
S. (J) MOHAN, S. (J) VENKATACHALLIAH, M.N.(CJ) ANAND, A.S. (J) CITATION:
1994 AIR 1149 1994 SCC (1) 367 JT 1993 (6) 465 1993 SCALE (4)463
Judgment of the Court was delivered by S.MOHAN, J.- Delay condoned. Permission
to prefer special leave petitions granted.
facts leading to these appeals are as under : An extent of 6.50 acres of land
in village Marripalam Taluk and District Visakhapatnam was requisitioned for defence
purposes in the year 1942. Subsequently they were acquired under the
Requisitioning and Acquisition of Immovable Property Act, 1952 (Central Act 30
of 1952) (hereinafter referred to as the Act) on January 11, 1972 along with adjoining land of an extent of 68.25 acres. The
competent authority fixed compensation at the rate of Rs 10 per square yard
under Section 8(3) read with Rule 9(1) of the Act.
dissatisfied with the compensation, the owners of the property sought a
reference to the arbitrator. By an award dated March 28, 1981, the arbitrator (District Judge) awarded compensation at
the rate of Rs 15 per square yard and solarium at 15 per cent and interest at 6
per cent from the date of publication of Form J. Notification.
the enhanced amount was deposited in court through Special Petition LA (Defence)
not being satisfied with the decision of the arbitrator, the respondent Kolluni
Ramaiah and three sets of landowners went on appeal to High Court of Andhra
Pradesh praying for the enhancement of the rate of compensation fixed by the
arbitrator. The High Court of Andhra Pradesh granted Rs 20 per square yard and
retained the award of arbitrator as regards payment of solatium at 15 per cent
and interest at 6 per cent in all these cases. However, it requires to be
stated that the appellant, Union of India was not a party to the proceedings
either before the arbitrator or before the High Court. It is urged that since
the enhanced compensation and the amount payable as solatium and interest are
substantial, Union of India is the main party which has been affected by this
enhancement. An application was filed before us for preferring the present
petitions for special leave.
C.V. Subba Rao, learned counsel for Union of India urges that the enhancement
of compensation is unwarranted.
otherwise, as on today, in view of the authoritative pronouncement of this
Court in Union of India v. Hari Krishan Khoslal the award of solatium and
interest is not permissible, in a case of acquisition of property under the
Act. Properly speaking, the Union of India ought to have been made a party both
before the arbitrator and the High Court. In fact, when the first respondent (Kolluni
Ramaiah) preferred C.M.A. No. 137 of 1982 before the Andhra Pradesh High Court,
it was held that the non-inclusion of Union of India as a party would be
sufficient ground to dismiss the case. On these grounds, it is prayed that not
1 1993 Supp (2) SCC 149 : JT (1992) 5 SC 574 369 only the permission to prefer
the special leave petitions be granted but also the award be set aside.
pointed question as to how this Court could reach the award of arbitrator by
which alone solatium and interest were granted and they were merely retained by
the High Court, it was submitted that where the award of solatium and interest
is illegal in view of the judgment of this Court, it would be unjust and can be
set aside. Even otherwise, that part of the award gets merged with the judgment
of the High Court and, therefore, this Court could always interfere. However,
it is fairly conceded that Union of India would be satisfied if without
interfering with the actual compensation, the part of the award relating to solatium
and interest is only set aside.
learned counsel for the respondents would submit that the award of arbitrator
becomes final not having been appealed against. It is tinder that award that solatium
and interest were granted. The finality of the award cannot be disturbed in an
appeal filed by the owners in the High Court, unless and until Union of India
had filed a separate appeal complaining of the grant of solatium and interest.
respondents (owners of land) cannot be worse off for having appealed to the
High Court. Merely because of the subsequent decision of this Court holding
that the grant of solatium and interest were impermissible to an acquisition
under the Act, that will not permit the Union of India to reopen the
proceedings. Therefore, the application to prefer special leave petitions will
have to be dismissed.
have given our careful consideration to the above arguments. In view of the categoric
pronouncement of this Court in Hari Krishan Khosla case' the award granting solatium
at the rate of 15 per cent and interest at the rate of 6 per cent under the
case of acquisition is clearly bad in law.
the narration of facts, it is clear that the arbitrator had awarded
compensation at the rate of Rs 15 per square yard together with solatium at the
rate of 15 per cent and interest at the rate of 6 per cent. In an appeal by the
landowners, the amount of compensation was alone enhanced to Rs 20 per square
yard and that part of the award relating to solatium and interest was affirmed.
No doubt, in one sense, the principle of merger would apply. But that will
cause immense prejudice to the respondents (landowners) if we are to interfere
on the basis of that principle. They cannot be worse off for having preferred
appeals to the High Court. If the present special leave petitions are directed
against the ultimate 'Judgment of the High Court in which the award had merged,
what would happen if the respondents were to withdraw the appeals before the
High Court now'? And that is what the respondents want to do with tile leave of
is not correct on the part of the respondents to contend that tile award of the
arbitrator had become final and it cannot be reopened now because the matter is
still kept alive by the Union of India. No doubt, there is a delay of 157 days
which we are prepared to condone in the interests of justice. Once, there is
patent illegality in the award, as pointed above, is this 370 Court powerless
as not to grant any relief to the Union of India which was neither impleaded
before the arbitrator nor before the High Court? 11.Exercising our powers under
Article 142 of the Constitution, we think that these special leave petitions
must be treated as cross-objections before the High Court against the award of
the arbitrator. Under Order 41, Rule 22 of the Code of Civil Procedure,
cross-objections could be filed by a party who might have appealed from the
decree of the court below but has not done so. No appeal was preferred by the
Union of India since it was not a party before the arbitrator. If these special
leave petitions are to be treated as cross-objections, in the appeal before the
Andhra Pradesh High Court, normally, we should remit the matter to the High
Court. In such an event, the enhancement of compensation from Rs 15 to Rs 20
per square yard and the award of solatium and interest will have to be redetermined.
Of course, solatium and interest will go, in any event. Then remains only the
actual quantum of compensation.
as, Mr C.V. Subba Rao, learned counsel for the Union of India fairly concedes
that the award of Rs 20 per square yard by the High Court may not be interfered
with, we think it is unnecessary to remit the matter to the High Court. In our
view, such a course will not only prolong the issue but also would amount to
directing the High Court to do the obvious.
the result, we treat these special leave petitions as cross-objections under
Order 41, Rule, 22 of the Code of Civil Procedure against the award of the
arbitrator for the limited purposes of setting aside that part of the award
relating to solatium at the rate of 15 per cent and interest at the rate of 6
per cent. We make it clear that the enhancement of compensation from Rs 15 per
square yard as awarded by the arbitrator to Rs 20 per square yard by the High Court,
is not interfered with. The civil appeals are ordered accordingly. There shall
be no order as to costs.