Supreme Court Clarifies Remedy for Non-Award of Interest in Land Acquisition Cases: Union of India vs. Pushpavathi (2018) INSC 113

Date of the Judgment: February 06, 2018
Citation: (2018) INSC 113
Judges: R.K. Agrawal, J., Abhay Manohar Sapre, J. (authored the judgment)
Can a landowner, aggrieved by the Collector’s failure to award interest on compensation in land acquisition cases, directly approach the Civil Court through a reference under Section 28A(3) of the Land Acquisition Act, 1894? The Supreme Court of India, in this case, addressed this crucial question, clarifying the appropriate legal remedy available to landowners. The court held that a writ petition under Article 226 of the Constitution is the correct avenue, and not a reference to the Civil Court. This judgment clarifies the scope of remedies available to landowners in land acquisition matters.

Case Background

The Government of Pondicherry issued a notification on December 22, 1986, under Section 4 of the Land Acquisition Act, 1894 (“the Act”), to acquire land in Pillaichavadi village for the establishment of a Central University. This was followed by a declaration under Section 6 of the Act on March 12, 1987. The Land Acquisition Officer (LAO) determined compensation at Rs. 318 per Are through an award on June 30, 1987.

One landowner, Govindammal, dissatisfied with the compensation, sought a reference under Section 18 of the Act. The Reference Court enhanced the compensation to Rs. 1868 per Are on May 9, 1989. Subsequently, other landowners, the respondents in this case, applied to the Collector (LAO) on August 8, 1991, under Section 28A of the Act for re-determination of their compensation.

Although the Collector conducted an inquiry, no final orders were passed. The landowners then filed writ petitions in the High Court at Madras, which directed the Collector to dispose of the Section 28A applications. The Collector re-determined the compensation but did not award any interest. The landowners then filed a representation for interest, which was rejected by the Collector on December 14, 1998, leading to further writ petitions in the High Court.

Timeline

Course of Proceedings

The landowners filed writ petitions in the High Court at Madras after the Collector failed to award interest on the re-determined compensation. The Union of India raised a preliminary objection that the landowners should have sought a reference to the Civil Court under Section 28A(3) read with Section 18 of the Act, instead of filing writ petitions. The Single Judge overruled this objection, allowed the writ petitions, and awarded interest. The Union of India appealed to the Division Bench, which dismissed the appeals and affirmed the Single Judge’s order.

Legal Framework

The Supreme Court examined several key sections of the Land Acquisition Act, 1894:

• Section 11: Deals with the Collector’s inquiry and award, specifying the area of land, compensation, and apportionment.
• Section 18: Provides a remedy for those who have not accepted the Collector’s award, allowing them to seek a reference to the Civil Court for issues related to measurement, compensation amount, and apportionment.
• Section 23: Lists the factors to be considered by the Court when determining compensation, including market value, damages, and additional amounts.
• Section 26: Specifies the form of awards, stating that they should be in writing and specify the amounts awarded.
• Section 28: Empowers the Civil Court to award interest on excess compensation.
  “If the sum which, in the opinion of the Court, the Collector ought to have awarded as compensation is in excess of the sum which the Collector did award as compensation, the award of the Court may direct that the Collector shall pay interest on such excess at the rate of nine per centum per annum from the date on which he took possession of the land to the date of payment of such excess into Court”
• Section 28A: Allows for re-determination of compensation based on a court award, enabling other landowners to claim the same compensation.
  “(1) Where in an award under this Part, the Court allows to the applicant any amount of compensation in excess of the amount awarded by the Collector under section 11, the persons interested in all the other land covered by the same notification under section 4, sub-section (1) and who are also aggrieved by the award of the Collector may, notwithstanding that they had not made an application to the Collector under section 18, by written application to the Collector within three months from the date of the award of the Court require that the amount of compensation payable to them may be re-determined on the basis of the amount of compensation awarded by the Court”
• Section 34: Mandates the Collector to pay interest on compensation if it is not paid or deposited before taking possession of the land.
  “When the amount of such compensation is not paid or deposited on or before taking possession of the land, 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”

Arguments

Appellants’ Arguments (Union of India):

• The High Court should not have entertained the writ petitions.
• The issue of non-award of interest should be decided by the Reference Court under Section 28A(3) read with Section 18 of the Act.
• Non-award of interest is part of the award and is subject to Section 18 of the Act.
• The Act is a complete code and provides a statutory remedy of reference under Section 18 read with Section 28A(3) for all compensation-related issues.

Respondents’ Arguments (Landowners):

• Supported the High Court’s reasoning and conclusion.
• The High Court was correct in entertaining the writ petitions.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue:

1. If the Collector declines to award interest on the compensation under Section 28A proceedings, what is the legal remedy available to the landowners? Should they approach the Civil Court in reference under Section 28A(3) read with Section 18 of the Act, or should they file a writ petition under Article 226 of the Constitution?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court held that the High Court was correct in entertaining the writ petitions. The court reasoned that:

The court clarified that a reference under Section 18 can only be made for issues specified under that section, and non-award of interest is not one of them. The court emphasized that interest payment is statutory and mandatory once conditions under Sections 28 or 34 are met.

The court cited Shree Vijay Cotton & Oil Mills Ltd. vs. State of Gujarat, (1991) 1 SCC 262* to emphasize that interest payment is distinct from compensation and is not subject to procedural hurdles. It also cited Delhi Development Authority vs. Mahender Singh & Anr., (2009) 5 SCC 339* to support the view that Article 226 cannot be used to direct payment of interest in a manner not contemplated by Sections 28 or 34.

The Court’s reasoning was as follows:

The court quoted:

• “There is inherent evidence in the wording of Sections 28 and 34 to show that the framers of the Act intended to assure the payment of interest to the person whose land was acquired and it was not the intention to subject the said payment to procedural hazards.”
• “The legislative mandate is clear. It is a directive to the collector to pay the interest in a given circumstance.”
• “In view of what has been indicated above, the conclusion is irresistible that while exercising jurisdiction under Article 226 of the Constitution there is no scope for direction to pay interest in a manner not contemplated by either Section 28 or 34.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the statutory nature of interest payments under the Land Acquisition Act and the specific issues that can be referred under Section 18. The court emphasized that interest is a mandatory payment once conditions are met, and disputes regarding non-award of interest do not fall under the purview of Section 18.

Key Takeaways

• Landowners aggrieved by the non-award of interest on compensation in land acquisition cases cannot seek a reference to the Civil Court under Section 28A(3) read with Section 18 of the Land Acquisition Act, 1894.
• The appropriate remedy for such grievances is to file a writ petition under Article 226 of the Constitution of India.
• The Supreme Court has clarified that the issue of non-award of interest is not a dispute that falls under Section 18 of the Act.
• The judgment emphasizes the statutory and mandatory nature of interest payments under Sections 28 and 34 of the Act.

Directions

No specific directions were given by the Supreme Court in this judgment.

Development of Law

The ratio decidendi of this case is that the remedy for non-award of interest under the Land Acquisition Act, 1894 lies in a writ petition under Article 226 of the Constitution, and not a reference under Section 18 or 28A(3) of the Act. This clarifies the legal position and provides a clear path for landowners to seek redressal in such cases. There is no specific change in the previous position of law, but the court has clarified the interpretation of the relevant sections of the Act.

Conclusion

In conclusion, the Supreme Court dismissed the appeals, affirming the High Court’s decision that landowners must file a writ petition under Article 226 of the Constitution to challenge the non-award of interest on compensation in land acquisition cases. The court clarified that a reference to the Civil Court under Section 18 or 28A(3) of the Land Acquisition Act, 1894, is not the correct remedy for this particular issue.