Award Of Interest Obligatory Under S.34 Of Land Acquisition Act Can Be Claimed At Any Stage: Bombay HC [Read Judgment]

The Bombay High Court has held that claimants of compensation under the Land Acquisition Act can claim award of interest at any stage as the payment of the same is obligatory under Section 34.

Justice Shalini Phanslakar Joshi dismissed an appeal filed by the State of Maharashtra against an order by the reference court of joint district judge, Nashik, correcting its award dated September 11, 1984, and directing the state to pay the interest at 15 per cent per annum from February 19, 1992, until the entire compensation amount is paid to the claimants, under the Land Acquisition Act, 1984.

The state government acquired the said land under Section 4 of the Land Acquisition Act 1894. Thereafter, the Special Land Acquisition officer granted an award, which was challenged by the claimants (original owners of the said land) and the joint district judge passed an award dated February 24, 1992, enhancing the market value of the said land.

While the said reference was pending before the joint district judge, Nashik, the Land Acquisition Act, 1894 came to be amended by an Amending Act of 1984, with effect from September 24, 1984. By the said Amending Act, certain additional benefits were given.

By addition of Section 23 (1A), an additional component at the rate of 12% p.a. of the market value was provided for the first time. Similarly, by way of amendment in Section 23(2), the amount of solatium was increased from 15 per cent to 30 per cent.

By making amendment to Section 34, the rate of interest was also increased from 6 per cent to 9 per cent for the first year after taking possession of the land, and 15 per cent beyond the period of one year after taking possession till the payment of compensation amount.

Thus, in light of these amendments claimants filed another application before the trial court seeking additional benefits under the Amended Act.

This application was allowed.

Appearing on behalf of the state, additional government pleader Ameet Palkar argued that the trial court has no power either to review or amend its own award substantially by increasing the amount of interest, as the award was converted into decree under Section 26(2) of the Land Acquisition Act.

This argument was rejected by Justice Joshi, who observed that the Supreme Court in the case of Shree Vijay Cotton & Oil Mills Ltd vs State of Gujarat, had held that interest can be claimed by the claimants at any stage of the proceedings under the Land Acquisition Act.

“Award of interest being obligatory and consequential to the application of Section 34 of the Land Acquisition Act, such interest can be claimed even in the Appeal filed by the State and it is not necessary to file separate Appeal or Cross Objection. That according to the  Apex Court, substantive right, under the Land Acquisition Act, to get the interest cannot be affected by the procedural rules, as procedural rules are, after all, hand-maiden of justice.”

Thus, the court upheld the trial court’s order by correcting its earlier award and dismissed the state’s appeal.

Read the Judgment here.