Madishetti Bala Ramul (D) By Lrs Vs. The Land Acquisition Officer  Insc 617
(17 May 2007)
S.B. Sinha & Markandey Katju
CIVIL APPEAL NO. 2693 OF 2007 [Arising out of S.L.P. (Civil) No. 17397 of
2005] S.B. SINHA, J :
1. Leave granted.
2. This appeal is directed against a judgment and order 09.02.2005 passed by
a Division Bench of the Andhra Pradesh High Court whereby and whereunder the
appeal preferred by the respondent herein under Section 54 of the Land
Acquisition Act, 1894 (for short, 'the Act') against a judgment and award dated
02.01.1999 passed by the Principal Senior Civil Judge, Warangal in O.P. No. 72
of 1997 was allowed in part.
3. Certain basic fact of the matter is not in dispute.
42 acres 08 guntas of land situated in Hanamkonda Village was acquired for a
public purpose, namely, excavation of Kakatiya canal. A draft notification was
published in the District Gazette under Section 4 of the Act for acquisition of
4 acres 10 guntas of the land in Survey No.622 on 16.03.1979. Possession of the
said land was taken over on 18.05.1979. An award was passed by the Land
Acquisition Officer on 12.06.1988 fixing the market value of the acquired land
@ Rs.75,000/- per acre. The said award, however, was confined to 1 acre 5
guntas only as the balance 3 acres 5 guntas of land was held to be belonging to
the Government of Andhra Pradesh. A writ petition filed thereagainst, which was
marked as Writ Petition No. 10387 of 1989, was allowed by the High Court of
Andhra Pradesh by a judgment and order dated 17.11.1989 directing the Collector
to refer the dispute to the Court in terms of Section 30 of the Act. However,
later on, it was found by the respondent that the entire 4 acres 10 guntas of
land belonged to the appellants.
4. The Parliament enacted the Land Acquisition (Amendment) Act, 1984 which
came into effect on or about 24.09.1986. As in terms of the said amendment, an
award was to be passed within a period of two years from the date of issuance
of the notification, another notification was issued by the Collector in
respect of the said 3 acres 5 guntas of land on or about 23.12.1991. In respect
of the said area, another award was passed by the Land Acquisition Officer at
the same rate, namely, Rs.75,000/- per acre with all the statutory benefits
except additional market value. When a writ petition was filed before the High
Court by Appellants, which was marked as Writ Petition No. 16220 of 1994, by
its judgment dated 18.12.1995 the High Court directed the Land Acquisition
Officer to grant additional market value in terms of Section 23(1)(a) of the
Act and interest as per Section 34 thereof from the date of taking possession,
pursuant whereto and in furtherance whereof a supplemental award was passed on
12.06.1998. A reference was made by Appellants in terms of Section 18 of the
Act and by a judgment and order dated 02.01.1999, the Principal Senior Civil
Judge awarded compensation for acquisition of the said land @ Rs.60/- per
square yard as against the claim of Rs.150/- per square yard. However, the learned
Judge granted additional market value and interest from the date of taking
possession till the date of award, holding :
"In the result it is ordered as follows :
i) The Claimant is entitled to market value of the acquired land at Rs. 60/-
per sq. yard.
ii) The Claimant is entitled to solatium at 30% on the enhanced market
iii) The Claimants are also entitled to additional market value at 12% P.A.
on the enhanced market value from 1.05.1979 to 06.05.1994.
iv) The Claimants is entitled to interest @ 9 % p.a. for one year from
18.05.1979 and @ 15% p.a., thereafter on the enhanced market value till the
payment is made or deposited The reference is answered accordingly."
5. An appeal was preferred thereagainst by Respondent and by reason of the
impugned judgment, the High Court held that Appellants are not entitled to
additional market value and interest from the date of taking of the possession
till the date of the award.
6. Mrs. K. Amareshwari, the learned Senior Counsel appearing on behalf of Appellants,
would submit that having regard to the fact that Section 23(1)(a) of the Act
was introduced by the Amending Act 68 of 1994 providing for additional market
value @ 12% per annum from the date of taking possession till the date of the
award whichever is earlier, Appellants became entitled thereto with effect from
7. It was contended that possession having been taken in terms of the
provisions of the Act, and furthermore having regard to the fact that the High
Court of Andhra Pradesh issued a direction in that behalf in its judgment dated
28.12.1995 passed in Writ Petition No. 16220 of 1994 and the Land Acquisition
Officer having granted the same, amount could not have been reduced in view of
Section 25 of the Act.
8. Mr. Rahul Shukla, learned counsel appearing on behalf of the respondent,
on the other hand, submitted that no compensation is payable for taking
possession of the land de'hors a valid notification under the Act.
9. The short question which, therefore, arises for consideration is as to
whether Section 25 of the Act will have any application in the fact of the
present case. Two notifications were issued separately. The second notification
was issued as the first notification did not survive. Valuation of the market
rate for the acquired land, thus, was required to be determined on the basis of
the notification dated 23.12.1991. The earlier notification lost its force. If
the notification issued on 16.03.1979 is taken into consideration for all
purposes, the subsequent award awarding market value of the land @ Rs. 65/- per
square yard cannot be sustained. As the said market value has been determined
having regard to the notification issued on 23.12.1991, possession taken over
by Respondent in respect of 3 acres 5 guntas of land, pursuant to the said
notification dated 16.03.1979 was in the eye of law, therefore, illegal. The
High Court evidently directed grant of additional market value @ 12% per annum
on the enhanced market value from the date of the publication of the notification
dated 23.12.1991 as also interest thereupon from the said date in stead and
place of 18.05.1979. We generally agree therewith.
10. The findings of the High Court cannot be faulted in strict sense of the
law. We generally agree therewith.
11. In R.L. Jain (D) By L.Rs. v. DDA and Others [(2004) 4 SCC 79], a
three-Judge Bench of this Court, opined :
"11. In order to decide the question whether the provisions of Section
34 of the Act regarding payment of interest would be applicable to a case where
possession has been taken over prior to issuance of notification under Section
4(1) of the Act, it is necessary to have a look at the scheme of the Land
Acquisition means taking not by voluntary agreement but by authority of an
Act of Parliament and by virtue of the compulsory powers thereby conferred. In
case of acquisition the property is taken by the State permanently and the
title to the property vests in the State"
12. Noticing the provisions of the Act it was held that possession can be
taken over only after an award is made. It was observed :
"Section 17 is in the nature of an exception to Section 16 and it
provides that in cases of urgency, whenever the appropriate Government so
directs, the Collector, though no such award has been made, may, on the
expiration of fifteen days from the publication of the notice mentioned in
Section 9(1), take possession of any land needed for a public purpose and such
land shall thereupon vest absolutely in the Government, free from all
encumbrances. The urgency provision contained in Section 17(1) can be invoked
and possession can be taken over only after publication of notification under
Section 9(1) which itself can be done after publication of notification under
Sections 4(1) and 6 of the Act. Even here in view of sub-section (3-A) the
Collector has to tender 80 per cent of the estimated amount of compensation to
the persons interested/entitled thereto before taking over possession. The
scheme of the Act does not contemplate taking over of possession prior to the
issuance of notification under Section 4(1) of the Act and if possession is
taken prior to the said notification it will be dehors the Act. It is for this
reason that both Sections 11(1) and 23(1) enjoin the determination of the
market value of the land on the date of publication of notification under
Section 4(1) of the Act for the purpose of determining the amount of
compensation to be awarded for the land acquired under the Act"
It was furthermore held :
"12. The expression the Collector shall pay the amount awarded with
interest thereon at the rate of nine per centum per annum from the time of so
taking possession until it shall have been so paid or deposited should not be
read in isolation divorced from its context.
The words such compensation and so taking possession are important and have
to be given meaning in the light of other provisions of the Act. Such
compensation would mean the compensation determined in accordance with other
provisions of the Act, namely, Sections 11 and 15 of the Act which by virtue of
Section 23(1) mean market value of the land on the date of notification under
Section 4(1) and other amounts like statutory sum under sub- section (1-A) and
solatium under sub-section (2) of Section 23. The heading of Part II of the Act
is Acquisition and there is a sub-heading Taking Possession which contains
Sections 16 and 17 of the Act. The words so taking possession would therefore
mean taking possession in accordance with Section 16 or 17 of the Act. These
are the only two sections in the Act which specifically deal with the subject
of taking possession of the acquired land. Clearly, the stage for taking
possession under the aforesaid provisions would be reached only after
publication of the notification under Sections 4(1) and 9(1) of the Act. If
possession is taken prior to the issuance of the notification under Section
4(1) it would not be in accordance with Section 16 or 17 and will be without
any authority of law and consequently cannot be recognised for the purposes of the
Act. For parity of reasons the words from the date on which he took possession
of the land occurring in Section 28 of the Act would also mean lawful taking of
possession in accordance with Section 16 or 17 of the Act. The words so taking
possession can under no circumstances mean such dispossession of the owner of
the land which has been done prior to publication of notification under Section
4(1) of the Act which is dehors the provisions of the Act."
It was observed :
"18. In a case where the landowner is dispossessed prior to the
issuance of preliminary notification under Section 4(1) of the Act the
Government merely takes possession of the land but the title thereof continues
to vest with the landowner. It is fully open for the landowner to recover the
possession of his land by taking appropriate legal proceedings. He is therefore
only entitled to get rent or damages for use and occupation for the period the
Government retains possession of the property. Where possession is taken prior
to the issuance of the preliminary notification, in our opinion, it will be
just and equitable that the Collector may also determine the rent or damages
for use of the property to which the landowner is entitled while determining
the compensation amount payable to the landowner for the acquisition of the
property. The provisions of Section 48 of the Act lend support to such a course
of action. For delayed payment of such amount appropriate interest at
prevailing bank rate may be awarded."
13. Yet again in Lila Ghosh (Smt.) (Dead) Through L.R. Tapas Chandra Roy
etc. v. State of West Bengal etc. [(2004) 9 SCC 337], this Court held :
"19. Even though the authority in Shree Vijay Cotton & Oil Mills
Ltd. appears to support the claimants, it is to be seen that apart from mentioning
Sections 28 and 34, no reasons have been given to justify the award of interest
from a date prior to commencement of acquisition proceedings. A plain reading
of Section 34 shows that interest is payable only if the compensation, which is
payable, is not paid or deposited before taking possession. The question of
payment or deposit of compensation will not arise if there is no acquisition
proceeding. In case where possession is taken prior to acquisition proceedings
a party may have a right to claim compensation or interest. But such a claim
would not be either under Section 34 or Section 28. In our view interest under
these Sections can only start running from the date the compensation is
payable. Normally this would be from the date of the Award. Of course, there
may be cases under Section 17 where by invoking urgency clause possession has
bean taken before the acquisition proceedings are initiated. In such cases,
compensation, under the Land Acquisition Act, would be payable by virtue of the
provisions of Section 17. As in cases under Section 17 compensation is payable
interest may run from the date possession was taken. However, this case does
not fall into this category."
14. In this case, however, the appellants herein were dispossessed pursuant
to a notification which for one reason or other could not be given effect to.
Another notification under Section 4 of the Act had to be issued.
The said notification was held to be not invalid. The State put forward the
claim in respect of a portion of a property which it could not do. Possession
must be obtained under a valid notification.
15. The Land Acquisition Officer took possession of the land on the basis of
a notification which did not survive. Respondent could not have continued to
hold possession of land despite abatement of the proceeding under the 1984 Act.
It was directed to be decided by the High Court upon a reference made by the
Collector in terms of Section 30 of the Act. The State, therefore, itself
realized that its stand in regard to the ownership of 3 acres and 5 guntas of
land was not correct. It, therefore, had to issue another notification having
regard to the provisions contained in the Land Acquisition (Amendment) Act,
1984. Whereas the High Court may be correct in interpreting the question of law
in view of the decision of this Court, but the same would not mean that
Appellants would not get anything for being remaining out of possession from
1979 to 1991.
16. Mrs. Amareshwari relied upon Section 25 of the Act which is as under :
"25. Amount of compensation awarded by court not to be lower than the
amount awarded by the Collector.The amount of compensation awarded by the court
shall not be less than the amount awarded by the Collector under section
17. Section 25 of the Act merely prohibits that total amount of the award
granted by the Collector cannot be reduced. Section 25 which has undergone an
amendment in the year 1984, thus, merely lays down that the amount of
compensation awarded by the reference court shall not be less than the amount
awarded by the Collector, and in no circumstances the amount awarded by the
Collector can be reduced. What is an award is a total sum and not the
ingredients contained therein. An award made by the Collector is in the form of
an offer. It is in that sense only that the amount contained therein cannot be
18. It is not the case of the appellants that the total amount of
compensation stands reduced. If it had not been, we fail to understand as to
how Section 25 will have any application in the instant case. Furthermore,
Section 25 being a substantive provision will have no retrospective effect.
The original award was passed on 08.02.1981, Section 25, as it stands now,
may, therefore, not have any application in the instant case.
19. In Land Acquisition Officer-cum-DSWO, A.P. v. B.V. Reddy and Sons
[(2002) 3 SCC 463], this Court opined that Section 25 being not a procedural
provision will have no retrospective effect, holding :
"6. Coming to the second question, it is a well- settled principle of
construction that a substantive provision cannot be retrospective in nature
unless the provision itself indicates the same. The amended provision of
Section 25 nowhere indicates that the same would have any retrospective effect.
Consequently, therefore, it would apply to all acquisitions made subsequent to 24-9-1984, the date on which Act 68 of 1984 came into force. The Land Acquisition
(Amendment) Bill of 1982 was introduced in Parliament on 30-4-1982 and came into operation with effect from 24-9-1984"
20. In the peculiar facts and circumstances of the case, although the proper
course for us would have to remand the matter back to the Collector to
determine the amount of compensation to which the Appellants would be entitled
for being remained out of possession since 1979, we are of the opinion that the
interest of justice would be met if this appeal is disposed of with a direction
that additional interest @ 15% per annum on the amount awarded in terms of
award dated 02.01.1999 for the period 16.03.1979 till 22.12.1991, should be
granted, which, in our opinion, would meet the ends of justice.