Gopal Gowda and AK Goel JJs differs on ‘Date of payment of Solatium in Land Acquisition Matters’; Refers to larger Bench

In a split verdict, relating to payment of compensation under the Land Acquisition Act, 1894 for the solatium should be from the date of acquisition or from date of pronouncement of the constitution bench judgment in Sunder [2001], a bench of Justices V. Gopala Gowda & Adarsh Kumar Goel referred the matter to a 3 judge bench. However, no terms of reference were pronounced.

The matter pertains to acquisition of appellants land by the Kerala Government in 1978 issued under Section 4(1) of the Act for the purpose of Periyar Valley Irrigation Project. Subsequently, Awards were passed by the Land Acquisition Officer awarding compensation, on the market value of land which were partly based on capitalization method of the yielding rubber trees for the planted area and partly based on the value of bare land on which there were no yielding rubber plantation. Awards included solatium and interest on compensation including solatium. Being dissatisfied with the compensation, the appellant filed number of Land Acquisition Reference (LAR) in Ernakulam  under Section 18 of the Act which by a common judgment, passed an Award in 1992. It also held that the claimant was entitled to get 30% solatium, 12% additional market value from the date of the notification i.e., 1978 till the date of Award passed against it and they are also entitled to get 9% interest for the first one year from the date of dispossession and thereafter at 15% till realization of the compensation awarded in favour of the claimant/decree holder. In some of the LARs, payments were made by respondent-State in full and final settlement of the enhanced compensation, solatium and interest on compensation including solatium.

With respect to the remaining cases, the appellant filed Execution Petition  for execution of the Award/decree passed by the Reference Court. The Execution Court in 2008 passed an order fixing balance amount payable by the State government after excluding solatium on that portion of the market value of the acquired land based on capitalization method of the yielding rubber trees for the planted area. This was challenged before the High Court of Kerala. The High Court in 2010 passed the common impugned judgment and order confirming that the solatium is payable by the state government for the enhanced compensation awarded for the market value of the entire land.  However, the High Court awarded the interest on solatium w.e.f. 19.09.2001, the date of judgment delivered by Constitution Bench in Sunder’s case (2001) 7 SCC 211 instead of from the date of acquisition of the land of the appellant.

This was challenged before the Supreme Court. Justice Gowda in his judgment relied on case laws and the submission that the state govt. was earlier in consonance with the dates as in few cases it paid fully. He ordered state govt. to pay the compensation & gave the following order –

“In view of the aforesaid reasons assigned by me with reference to Sunder and Gurpreet Singh cases (supra), I am of the view that the impugned common judgment and order with regard to awarding interest payable on solatium w.e.f. 19.09.2001 is vitiated in law. Accordingly, that portion

of the impugned judgment and order is hereby set aside.

1. b) The civil appeals are allowed. The respondent-State Government is directed to pay interest as provided under Section 23(1A) of the Act on the solatium component of the Award under Section 23(2) of the Act in the

reference Award in the earlier decisions and the interest payable under Sections 28 and 34 of the Act. The respondent-State Government is further directed to compute the same with reference to the compensation awarded by the Reference Court from the date when the claimant decree holder is entitled strictly in accordance with the abovesaid provisions of the Act including the solatium and pay to the appellant within 8 weeks from the date of receipt of copy of this judgment. No order as to costs.” 

Justice Goel however declined the petition relying on Para 54 of Gurpeet Singh (2006) 8 SCC 457. Therefore the matter was placed before a larger bench.

Read the Judgment here.