Union of India Vs. Shri Ram Mehar
& ANR [1972] INSC 262 (26 October 1972)
GROVER, A.N.
GROVER, A.N.
MATHEW, KUTTYIL KURIEN MUKHERJEA, B.K.
CITATION: 1973 AIR 305 1973 SCR (2) 720 1973
SCC (1) 709
ACT:
Land Acquisition (Amendment and Validation)
Act 1967--S.
4(3)--Whether interest was payable on the
market value of the land acquired, and also on the amount of 15% payable on
such market value under Sub. S. (2) of the Section.
HEADNOTE:
Section 4(3) of the Land Acquisition
(Amendment and Validation) Act, 1967 provides that where acquisition of any
particular land has been made under the Land Acquisition Act 1894, a simple
interest at the rate of six per cent per annum on the market value of such land
as determined under S. 23 of the Land Acquisition Act 1894 from the date of
expiry of three years to the date of tender of payment of compensation, shall
be paid and Section 23(1) of the Land Acquisition Act provides for the various
factors to be considered by Court in determining the amount of compensation,
such as, the market value of the land at the date of publication under S. 4 of
the Act, the damage sustained by the person etc., and S. 23(2) provides that in
addition, to the market value of the land, the Court shall award in every case,
a sum of 15% on such market value for compulsory acquisition.
On question whether interest was payable
under S. 4(3) of the Amending Act, not only on the market value of the land as
determined under s. 23(1); but also on the additional amount of 15% (solatium)
payable on such market value under Sub. Section (2) of that Section,,
HELD : (1) The additional amount of 15%
certainly forms part of the amount of compensation because under S. 23, the
compensation is to consist of what is provided for in Subsection (1); plus the
additional amount of 15% on the market value of the land acquired. But
'compensation' and 'market value' are distinct expressions and have been used
as such in the Land Acquisition Act. The key to the meaning of the word
"compensation" is to be found in S. 23(1) and it consists of the
market value of the land and 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 the determination of the amount of compensation. If the
legislature has used the word "market value" in S. 4(3) of the
Amending Act, 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., [725F] Raja Vyringharla Narayana
Gajapatiraju v. The Revenue Divisional Officer, Vizagapatam 66 I.A. 104;
Chaturbhuj Pandri & Ors. v. Collector, Rajgarh [1969] 1 S.C.R. 412;
Sub-Collector of Godavari v. Saragam I.L.R.
30 Mad. 151 and Krishna Bai v. The Secretary of State for India in Council;
I.L.R. 42 All. 555 referred to.
Union of India v. Nathu R.F.A. 104 of 1968
decided on 21-1268 of the Delhi High Court is over-ruled.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 1014 of 1971.
Appeal by special leave from the judgment and
order dated December 24, 1970 of the Delhi High Court at New Delhi in R.F. No.
279 of 1969.
721 L. N. Sinha, Solicitor-General of India,
S.N. Prasad and R. N. Sachthey, for the appellant.
V. C. Mahajan, for the respondents.
The Judgment of the Court was delivered by
GROVER, J. The sole point for determination in this appeal by special leave
from a judgment of the Delhi High Court relates to the true meaning and
construction of the expression "market value" employed in s. 4(3) of
the Land Acquisition (Amendment and Validation) Act, 1967, hereinafter called
the 'Amending Act'.
The facts may be briefly stated. By a
notification dated' October 24, 1961 issued under s. 4 of the Land Acquisition
Act 1894, hereinafter called the 'Principal Act' certain land in the revenue
estate of Shakurpur was sought to be acquired. The Land Acquisition Collector
gave an awarddated March 1, 1967 fixing compensation at the rate of Rs. 3500
per Bigha. The respondents being dissatisfied with the award applied for a
reference under s. 18 of the Principal Act claiming enhancement in
compensation. The Additional District Judge held that the market value of the
land on the relevant, date was Rs 5,000 per Bigha and the claimants were
entitled to enhancement at the rate of Rs. IS 00, per Bigha. He also directed
that interest should be awarded at 6% per annum on the market value of the land
from October 24, 1964 till the date of tender of the payment of the amount
awarded by the Collector. This was in view of s. 4 (3) of the Amending Act
since the date of the notification under s. 6 of the Principal Act was August
16, 1966 which was more than three years from the date of the notification
under s. 4 of the principal Act. He also awarded interest on the enhanced
amount from the date of dispossession till the date of payment of the amount in
court. The Union of India filed an appeal to the Delhi High Court. No dispute
was raised with regard to the interest awarded under s. 28 of the Principal
Act. The controversy was confined only to the question of interest under s.
4(3) of the Amending Act.
In view of a previous decision of the Delhi
High Court in Union of India v. Nathu(1) a learned single judge dismissed the
appeal.
Before us the correctness of the decision of
the Division Bench mentioned above on the interpretation of s. 4(3) of the
Amending Act particularly with reference to the true meaning of the expression
"market value" has been challenged.
It is necessary to refer to the provisions of
the Principal Act and the Amending Act to the extent they are material and
relevant for the purpose of this appeal. Clause (a) of s. 3 of the Principal
Act defines the expression "land" as including benefits to arise out
of land and things attached to the earth or permanently (1) R.F.A. 104 of 1968
decided on 21-12-1968.
722 fastened to anything attached to the
earth. Section 4 of that Act provided for publication of preliminary
notification. Section 5A provides for hearing of objections and s. 6 for declaration
of intended acquisition. Section 6(1) provides, inter alia, that subject to the
provisions of Part VII of the Principal Act when the appropriate government is
satisfied, after considering the report, if any, made under s. 5 (A) sub-s. (2)
that any particular land is needed for a public purpose or for a company a
declaration shall be made to that effect. In that subsection the following was
inserted by S. 3 of the Amending Act:
"And different declarations may be made
from time to time in respect of different parcels of any land covered by the
same notification under s.4 sub-s. (1) irrespective of whether one report or
different reports has or have been made (wherever required) under s. 5-A,
subsection (2)".
In place of the proviso the following proviso
was substituted:
"Provided that no declaration in respect
of any particular land covered by a notification under s. 4, sub-s. (1)
published after the commencement of the Land Acquisition (Amendment and
Validation) Ordinance. 1967 shall be made after the expiry of three years from
the date of such publication".
Section 4 of the Amending Act is as follows:
"4. Validation of certain acquisitions.
(1)..........
(2)..........
(3)Where acquisition of any particular land
covered by a notification under sub-s. (1) of s. 4 of the Principal' Act,
published before the commencement of the Land Acquisition (Amendment and
Validation) Ordinance 1967, is or has been made in pursuance of any declaration
under section 6 of the Principal Act, whether made before or after such
commencement, and such declaration is or has been made after the expiry of
three years from the date of publication of such notification, there shall be
paid simple interest, calculated at the rate of six percentum per annum on the
market value of such land, as determined under section 23 of the Principal Act,
from the date of expiry of the said period of three years to the date of tender
of payment of compensation awarded by the Collector for the acquisition of such
land :
Provided......................." 723
Section 11 of the principal Act provides for inquiry and award by the
Collector. The award has to include the compensation which, in the opinion of
the Collector, should be allowed for the land. Section 18 enables any person
interested who has not accepted the award of the Collector to make a written
application to him requiring him to refer the matter for the determination of
the court when his objection relates to the amount of compensation apart from
other matters. Section 23 of the Principal Act must be reproduced in its
entirety.
S.23 "(1) In determining the amount of
compensation to be awarded for land acquired under this Act, the Court shall
take into consideration-First, the market value of the land at the date of the
publication of the notification under s. 4, sub-s. (1).
Secondly, the damage sustained by the person
interested by reason of the taking of any standing crops or trees which may be
on the land at the time of the Collector's taking possession thereof.
Thirdly, the damage (if any), sustained by
the person, at the time of the Collector's taking possession of the land, by
reason of severing such land from his other land;
Fourthly, the damage (if any), sustained by
the person interested, at the time of the Collector"s taking possession of
the land, by reason of the acquisition injuriously affecting his other
property, movable or immovable, in any other manner, or his earning;
Fifthly, if, in consequence of the
acquisition of the land by the Collector, the person interested is compelled to
change his residence or place of business, the reasonable expenses (if any)
incidental to such change;
and Sixthly, the change (if any) bona fide
resulting from diminution of the profits of the land between the time of the
publication of the declaration under s. 6 and the time of the Collector's
taking possession of the land.
(2)In addition to the market value of the
land as above provided, the Court shall in every case award a sum of fifteen
per centum on such market value in consideration of the compulsory nature of
the acquisition", Sections 28 and 34 of the Principal Act provided for
payment of interest on the excess amount of compensation as directed by the
court and when the amount of compensation is not paid or deposited on or before
taking possession of the land.
724 In the case decided by the Division Bench
of the Delhi High Court one of the main points which arose was whether the
market value on which interest has to be awarded in the circumstances mentioned
in s. 4(3) of the amending Act would include the statutory charge of 15% on
that market value as provided for by s. 23(2) of the Principal Act. The
decision of the Division Bench on this point was as follows "It therefore
appears to us that while dealing with the question of market value of the land
the statutory charge of 15% on such market value as provided for in sub-s. (2)
of s. 23 has got to be added to the market value of the land, although it may
still be regarded as an additional charge to the market value of the land. The
addition of this amount to the market value of the land as defined in s. 3 (a)
of the principal Act, is therefore a part of the market value of the land
"as determined under s. 23 of the Principal Act" mentioned in sub-s.
(3) of s. 4 of the Validating Act, 1967. Section 23 is wide enough not only to
include the "market value" of the land as defined in S. 3 (a) of the
Act but also the additional 15% under sub-s. (2) of s. 23 which by all
accounts, becomes a part of the market value of the land. Without that addition
there can be no determination of the market value of the land as "under
section 23 of the Principal Act".
The Division Bench of the High Court thus
came to the conclusion that interest was payable under s. 4(3) of the Amending
Act not only on the market value of the land as determined under s. 23(1) but
also on the additional amount of 15% payable on such market value under sub-s.
(2) of that section. This additional payment is popularly called the
"solatium". On behalf of the Union of India the correctness of the
view of the Delhi High Court has been strongly assailed. It has been urged by
the learned Solicitor General that market value cannot possibly include the
"solatium" which is a payment which does not form part of the market
value of the land. It is an additional amount which the court has to award in
every case on the market value in consideration of the compulsory nature of the
acquisition.
The High Court relied on certain decisions of
different High Courts which turn on what was included in the expression
"land" as defined in s. 3(a) of the principal Act and for
deter-mining the market value of all those things that fall within that
expression. The High Court appears to have read those judgments in a way which
would justify the conclusion that the word "'market value" as used in
sub-s. (2) of s. 23 of the principal Act was not confined only 725 to the
market value mentioned in s. 23(1) "first" but it also included the
various items which have to be taken into consideration and which are covered
by clauses "secondly" to "sixthly" in s. 23(1). This Court
had occasion in Chaturbhuj Panda & Others v. The Collector, Rajgarh(1) to
consider the question whether the value of trees standing on the land was to be
added to the market value of the land for the purpose of the addition of 15%
solatium. Referring to some of the judgments on which the High Court relied
i.e. Sub-Collector of Godavari v. Saragam(2) and Krishna Bai v.The Secretary of
State for India in Council (3) it was observed that the law laid down by these
cases was correct but the question which was considered by this Court was
confined only to the point whether the value of trees was to be included in the
market value for the purpose of awarding the 15% solatium. This Court held that
the statutory allowance under s. 23 (2) had to be given on the value of the
trees because under s. 3 (a) of the Principal Act the expression
"land" includes benefits to arise out of land and things attached to
the earth. In other words the decision rested on the meaning of the expression
"land" and not on the fact that clause "secondly" in s.
23(1) refers to the damage sustained by reason of taking any trees which may be
on the land. It is altogether unnecessary in the present case to determine the
question whether the market value on which 15% solatium is to be awarded by the
court would include the various items given in clauses "secondly" to
"sixthly" in s. 23(1) of the Principal Act. What we are concerned
with is whether the expression "market value" in s. 4(3) of the
Amending Act will take in the additional amount of 15% which is to be awarded
on the market value of the land acquired under s. 23(2) of the Principal Act.
We can, find no warrant for the view which appealed to the High Court that
market value would consist-of not only the market value of the land but also
the 15% solatium which is to be granted under s. 23(2) in consideration of the
compulsory nature of acquisition. The additional amount of 15% certainly forms
part of the amount of compensation because under s. 23 the compensation is to
consist of what is provided for in sub-s. (1 ) and the additional amount of 15%
on the market value of the land acquired. But compensation and market value are
distinct expressions and have been used as such in the Acquisition Act. It is
not possible for anyone to contend that solatium falls within the expression
"land" within the meaning of, s. 3(a) of the Principal Act.
Since under s. 4(3) of the Amending Act. It
is only the market value of land on which interest has to be paid solatium
cannot form part of the market value of the land.
In the well known decision of the Privy
Council in Raja Vyrigherla Narayana Gajapatiraju v. (1) [19691 1 SCR. 412. (3)
ILR 42. All 555.
(2) ILR 30 Mad. 151.
726 The Revenue Divisional Officer,
Vizagapatam(1) it was laid down that market value is the price which a willing
vendor might reasonably expect to obtain from a willing purchaser.
Disinclination of the vendor to part with his
land and the urgent necessity of the purchaser to buy must alike be disregarded
and both must be treated as persons dealing in the matter at arms length and
without-compulsion. It is somewhat interesting that the Law Commission of India
in its report submitted in 1957 on the need for reform in the law of land acquisition
observed:
"We are not also in favour of omitting
Section 23 (2) so as to exclude solatium of 15%. 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 considerable. further amount for putting himself in the same position as
before.........As pointed out by Fitzgerald 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".
It seems to us that the term "market
value" has acquired a definite connotation by judicial decisions. Any
addition to the value of the land to the owner whose land is compulsorily
acquired' which addition is the result of such factors as are unrelated to the
open market cannot be regarded as a part of the market value. 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 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 s. 28 and 34 and not
"market value" was used. The key to the meaning of the word
"compensation" is to be found in s. 23(1) and that consists (a) of
the market value of the land and (b) the sum of 1501, on 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 the determination of the amount of compensation. If the legislature
has used the word "market value" in s. 4(3) of the Amending Act 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 (1)66 I.A. 104.
727 otherwise there was no reason why the
Parliament should not have employed the word "compensation" in the
aforesaid provision of the Amending Act.
For the reasons given above we are unable to
accept the view of the High Court that market value in s. 4(3) of the Amending
Act means the same thing as compensation and includes the amount of 15% payable
under s. 23(2) on the market value of the land. This appeal, therefore,
succeeds to the extent that the amount awarded to the claimants shall be computed
in accordance with our decision. In all other respects the appeal is dismissed.
The parties are left to bear their own costs in this Court.
S.N. Appeal partly allowed.
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