[Land Acquisition Act] Interest Added To Compensation Becomes Part Of Awarded Sum, Cannot Be Segregated For Further Calculation: Jharkhand HC

The Jharkhand High Court, in a recent judgment, has observed that in land acquisition cases, there is no distinction between the sum and sum without interest, and once the interest is included in the sum for which the Award is made, that cannot be segregated.Justice Sanjay Kumar Dwivedi presiding over the case, observed, “There is no distinction between the sum and sum without interest and it has been held that once the interest is included in the sum for which the Award is made that cannot be segregated, meaning thereby that once in the Award interest is added that cannot be segregated.”The above ruling came in a petition filed under Article 227 of Constitution of India for quashing an order passed by the trial court in a Land Acquisition Execution Case whereby the objection to calculation of the decree holder against the calculation chart, which was based upon the judgment passed by the Supreme Court was rejected.As argued by petitioner, his land was acquired by the Bharat Coking Coal Limited (BCCL) and an award was prepatred in his name. Being aggrieved with the amount and compensation, reference was made under section 18 of the Land Acquisition Act, 1894 which was registered as Land Acquisition Reference Case in which the Court enhanced the compensation amount to Rs. 625/- per decimals. However, due to the petitioner's non-appearance, an application related to the compensation was dismissed for non-prosecution. The petitioner thereafter filed an execution case before the Land Acquisition Judge praying for compensation at the enhanced rate along with interest accrued.The petitioner, therefore, submitted during the execution proceeding that the compensation, along with interest, had accrued to Rs. 6,03,661.78, comprising Rs. 2,75,896.66 as the principal amount and Rs. 3,27,765.12 as interest at 15% per annum from May 1, 2013, to August 31, 2020. But BCCL prepared a calculation chart in which interest at 15% w.e.f. May 1, 2013, to January 31, 2023, was calculated only on the principal sum of Rs. 2,75,896.66, thus excluding a part of interest already accrued in the total award amount.The petitioner placed reliance on the Supreme Court's ruling in Hyder Consulting (UK) Limited v. Governor, State of Orissa (2015) 2 SCC 189, whereby it was held that once the interest is added in the compensation that interest is also included in the sum. The petitioner also referred to the judgement in the case of Sunder Vs. Union of India (2001) 7 SCC 211and submitted that once the compensation on different component is made the component cannot be splitted.It was submitted that BCCL's method of computation was flawed as it failed to account for the accrued interest that had already been merged with the principal sum, thus violating established legal principles. The petitioner argued that he was entitled for interest on the amount of Rs. 2,75,896.66 which is the awarded amount which is combined component on the issue in questionThe Court in its judgement, observed, "In the case in hand coming to the facts of the present case, it is an admitted position that Award was enhanced on the reference under section 18 at the rate of Rs. 625/- per decimal and what has been discussed hereinabove particularly in the case of Sunder(supra) and Hyder Consulting (UK) Limited (supra) it cannot be segregated. There is no dispute till the calculation to the tune of Rs. 2,75,896.66."The Court further observed that the dispute was with regard to calculation w.e.f. 01.05.2013 to 31.01.2023 which was made Rs. 81146.26. "Once the two components 9 %, 15 % with effect from 24.11.1996 to 23.11.1997 and 24.11.1997 to 30.04.2013 is included in the principal as Rs. 81146.26/- that will a sum including the interest and if such a situation is there than on interest from 01.05.2013 to 31.01.2023 is required to be calculated on sum of Rs. 2,75,896.66," the Court added while placing reliance on the judgment of the Supreme Court in Sunder v. Union of India whereby the apex court had held that that splitting up the compensation into different components for the purpose of payment of interest under Section 34 was not in the contemplation of the legislature when that section was framed or enacted.Thus, the Court held that in the light of the Award once the sum is included in the principal, calculation was required to be made on that. "As such the order dated 18.05.2023 passed by the learned Civil Judge (Senior Division)-II, Dhanbad in Land Acquisition Execution Case No. 01/2020 is modified to the effect that 15% from 01.05.2013 to 31.01.2023 will be calculated on a sum of Rs. 2,75,896.66," the Court concluded.Case Title: Awadh Kishore Sahay vs. The State of JharkhandLL Citation: 2025 LiveLaw (Jha) 8Click here to Read Judgement

[Land Acquisition Act] Interest Added To Compensation Becomes Part Of Awarded Sum, Cannot Be Segregated For Further Calculation: Jharkhand HC

Bhavya Singh

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