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Thursday, September 24, 2015

whether in the light of the decision in Sunder [(2001) 7 SCC 211], the awardee/decree- holder would be entitled to claim interest on solatium in execution though it is not specifically granted by the decree. Learned counsel for the appellants relied upon Land Acquisition Officer and Asstt. Commnr. Vs. Shivappa Mallappa Jigalur[17] laying down as follows : “13. Coming now to the stipulation that any interest on solatium can only be granted for the period subsequent to 19-9-2001, the date of the decision in Sunder, it is evident that this again, is a limitation on the power of the execution court. The direction is actually referable to those cases in which the award of the Reference Court or the appellate court being silent, it is left open to the execution court to give direction for the deposit of interest on solatium. In such cases, the Reference Court can ask for interest only for the period subsequent to 19-9-2001. The direction in no way circumscribes the power of the court dealing with the main proceeding relating to enhancement of the compensation The matter can be looked at from another angle. The appeal being the continuation of the original proceeding, in the facts of the cases in this sub-group, there can be no question of accrual of interest only after the date of the decision in Sunder. At this stage, it may be recalled that the civil court had awarded solatium @ 30% and interest @ 9% for the first year and @ 15% from second year onwards till the date of realisation. The State’s appeal against the judgment of the civil court was dismissed. Thus, the direction for payment of solatium with interest at the rates indicated had become final. The High Court enhanced the rate of compensation. This would inevitably lead to an increase in the amount of solatium and consequently in the amount of interest on the unpaid amount of solatium. Thus, looked at from any point of view, the question of payment of interest subsequent to 19-9-2001 does not arise.” On the other hand, learned counsel for the State submitted that the judgment in Shivappa (supra) does not apply to the present case as the award dated 19th November, 1992 has attained finality. She also relied upon Chimanlal Kuberdas Modi vs. Gujarat Industrial Development Corpn.[18] laying down as follows : “15. It is no doubt true that the execution court cannot examine the reasons so as to go behind the decree but if in the award passed, the Reference Court makes a specific reference to payment of interest but without any such reference to the payment of interest on solatium and merely payment of interest on compensation is granted, then it would be open to the executing court to apply the ratio of Sunder and declare that the compensation awarded includes solatium, and consequently, interest on the amount could be directed to be deposited in execution. That being the legal position as prevailing today, we cannot ignore the observations made in para 54 of the aforesaid judgment in Gurpreet Singh and we order accordingly that compensation awarded includes solatium and therefore interest on the said amount shall be paid by the respondent in the pending execution.” In view of divergence of opinion in terms of separate judgments pronounced by us in these appeals today, the Registry is directed to place the papers before Hon'ble the Chief Justice of India for appeals being assigned to an appropriate Bench.




                         IN THE SUPREME COURT OF INDIA
                          CIVIL APPELLATE JURISDICTION

                     CIVIL APPEAL NOS. 7034-7037 OF 2015
  (Arising out of S.L.P. (C) NOS. 29463-29466 of 2012)

M/S PERIYAR & PAREEKANNI RUBBERS LTD.  …… APPELLANT

                                   VERSUS

STATE OF KERALA                        …… RESPONDENT

                               J U D G M E N T

V. GOPALA GOWDA, J.


      Leave granted.
These appeals by special leave are  directed  against  the  impugned  common
judgment and order dated 07.04.2010 passed by the High Court  of  Kerala  at
Ernakulam in Civil Revision Petition Nos. 196, 199,  205  and  208  of  2009
(filed  against  the  order  dated  15.10.2008  of  the  learned  Sub-Judge,
Ernakulam-the Execution Court), wherein  the  dispute  between  the  parties
related to the claim of solatium for the  enhanced  amount  of  compensation
and interest thereon in respect of the acquired land.  The  High  Court  has
confirmed that solatium is payable on that portion of land  value  based  on
capitalization method of yielding  rubber  trees  and  directed  to  compute
balance amount payable  under  the  decree,  but  awarded  the  interest  on
solatium from 19.09.2001, the date when judgment by the  Constitution  Bench
in the case of Sunder v. Union of India[1] was delivered by this  Court  and
not for the  prior  period.  The  legality  and  validity  of  the  impugned
judgment and order is seriously challenged urging various legal  contentions
as the appellant is aggrieved by the denial of the interest payable  on  the
component of solatium under Sections 23(1A), 23(2)  read  with  Sections  28
and 34 of the  Land  Acquisition  Act,  1894  (for  short  “the  Act”).  The
solatium being the component of compensation payable to the  claimant/decree
holder, the restriction upon its payment by the High Court placing  reliance
upon another subsequent Constitution Bench judgment of  this  Court  in  the
case of Gurpreet Singh v. Union of India[2]  is hereby challenged.

3. The brief facts of the case are stated hereunder:-

   Various portions of rubber estate of the appellant  situated  in  village
Kuttamangalam was acquired by  the  State  Government  in  exercise  of  its
eminent domain power pursuant to the notification  dated  10.10.1978  issued
under Section 4(1) of the Act for the purpose of Periyar  Valley  Irrigation
Project.

In 1980 and  1981  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   Land
Acquisition Reference (LAR) Nos. 425, 427, 428, 429,  432,  434,  435,  456,
458 and 463 of 1988 before the Court of III Additional Sub-Judge,  Ernakulam
(the Reference Court) under Section 18 of the Act.

The Reference Court after perusal of the record,  by  its  common  judgment,
passed an Award on 19.11.1992 by enhancing the compensation 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 rubber  trees.
The Reference Court held that the claimant is entitled to get 30%  solatium,
12% additional  market  value  from  the  date  of  the  notification  i.e.,
10.10.1978 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 abovesaid 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 Nos. 152, 147,  146,  149  and
145 of 1996 before the Execution Court for  execution  of  the  Award/decree
passed by the Reference Court.
The Execution Court on 15.10.2008 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.

Being aggrieved by the said order of  the  Execution  Court,  the  appellant
filed Civil Revision Petition (CRP) Nos. 196, 199, 201, 205 and 208 of  2009
before the High Court of Kerala.

The High Court on 07.04.2010 passed the common impugned judgment  and  order
in the said CRPs confirming that  the  solatium  is  payable  by  the  state
government for the enhanced compensation awarded for  the  market  value  of
the entire land. Thus, it provided solatium for that  portion  of  land  the
value of which was based on the capitalization  method  of  yielding  rubber
trees and directed the respondents to compute balance amount  payable  under
the decree. 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 (supra) instead of from the date of acquisition  of  the  land
of the appellant. Hence, these appeals are filed  by  the  appellant  urging
various grounds.

Mr. V. Giri, learned senior counsel on behalf  of  the  appellant  contended
that the Awards in the instant case were passed in 1980  and  1981  and  the
Reference Court judgment and Award was passed in 1992, the time  when  there
was no dispute regarding the payment of interest on solatium. It is only  in
1995 when this Court passed a judgment in the case of  Prem  Nath  Kapur  v.
National Fertilizers Corporation. Of India Ltd.[3] which barred the  payment
of interest on solatium. But the decision in  Prem  Nath  Kapur’s  case  was
subsequently reversed in Sunder’s (supra)  case.  Therefore,  there  was  no
justification and reason for the High  Court  to  restrict  the  payment  of
interest on solatium prior to 19.09.2001 by applying the  observations  made
at paragraph 54 in the case of Gurpreet Singh (supra).

The learned senior counsel has further contended that  the  respondent-State
has already settled few cases covered by the  Reference  Court  judgment  by
paying  the  full  compensation,  solatium  and  interest  on   compensation
including solatium without any dispute. It shows that there was  no  dispute
between the parties as to  the  payment  of  interest  on  solatium  by  the
respondents.  Before  the  Execution  Court,  the  dispute  raised  by   the
respondent-State was as to the amount of land value on  which  solatium  was
to be computed.

On the other hand, Ms. Bina Madhavan,  learned  counsel  on  behalf  of  the
respondent-State government sought to justify the impugned  common  judgment
and order by placing strong reliance upon paragraph 54 of  Gurpreet  Singh’s
case (supra), which is extracted in the reasoning portion of this judgment.

She further contended that the interest on solatium can be claimed  only  in
pending execution cases and not  in  the  closed  cases  and  the  execution
courts are entitled to permit its recovery  by  the  claimant/decree  holder
from 19.09.2001 i.e., from the date of judgment in  Sunder’s  case  and  not
for any prior period.

With reference to  the  aforesaid  rival  legal  submissions  urged  by  the
learned counsel on behalf of the parties, this Court is required to  examine
the correctness  of  the  impugned  common  judgment  order  passed  in  the
aforesaid CRPs by the High Court in restricting  the  payment  of  statutory
interest payable on the solatium component  by  placing  reliance  upon  the
cases of Sunder and Gurpreet Singh (supra). In this connection,  this  Court
is required to find out as to whether the payment of  interest  on  solatium
is the legislative statutory right conferred upon  the  land  loser/claimant
recognised by the Constitution Bench in Sunder’s case.  The  High  Court  in
the  light  of  observations  made  in  Gurpreet  Singh’s  case  (supra)  at
paragraph 54 has fixed the date  of  payment  of  interest  payable  on  the
solatium to the claimant/decree holder with  effect  from  19.09.2001.   The
correctness of the same is also required to be examined by this Court.

For the aforesaid purpose, it would be necessary to refer  to  the  question
of law as referred to in Sunder’s case  (supra)  wherein  this  Court  deals
with the conflicting decisions rendered on one hand in  Union  of  India  v.
Ram Mehar[4]  (three Judge Bench) and on the other, in  later  decisions  of
co-equal Benches of this  Court  viz.,  Mir  Fazeelath  Hussain  v.  Special
Deputy Collector, Land Acquisition[5], Prem Nath Kapur (supra) and  Yadavrao
P. Pathade v. State of Maharashtra[6].

In the case of Union  of  India  v.  Ram  Mehar  (supra)  this  Court  after
examining the scope of the expression “market value” in Section 4(3) of  the
Land Acquisition (Amendment and Validation) Act, 1967,  held  that  solatium
cannot form part of the market value of the land, rather the “market  value”
is only one of the components to be reckoned with in  the  determination  of
the amount of compensation. The relevant para 7 of the decision  reads  thus
:
“7…..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 Section 28 and 34 and not “market  value”  was  used.  The
key to the meaning of the word “compensation” is  to  be  found  in  Section
23(1) and that consists (a) of the market value of the land and (b) the  sum
of 15% 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  Section  4(3)  of  the
Amending Act of 1967 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 otherwise  there  was  no  reason
why the Parliament should not have employed the word “compensation”  in  the
aforesaid provision of the Amending Act.”
                          (emphasis supplied)
Thus, it provides for the payment of interest on the  market  value  of  the
land. The said judgment is later followed by two Judge Bench of  this  Court
in Periyar & Pareekanni Rubbers Ltd. v. State  of  Kerala[7].  The  relevant
para 24 of which reads thus:-
“24.  ….Therefore,  we  have  no  hesitation  to  hold  that  Section  25(3)
contemplates payment of interests on solatium to recompensate the  owner  of
the land for loss of user of the land from the  date  of  taking  possession
till date of payment into court. The word compensation  has  been  advisedly
used by the legislature. Accordingly we hold that the appellant is  entitled
to interest on solatium.”


On the other hand, in the cases of Mir Fazeelath Hussain (supra), Prem  Nath
Kapur  (supra)  and  Yadavrao  P.  Pathade  (supra)  this  Court  held  that
interest is not claimable upon solatium.

Due to the said conflicting decisions of this  Court,  a  reference  to  the
Constitution/larger Bench was made by this Court in the case  of  Sunder  v.
Union of India[8] (two Judge Bench). The  relevant  paragraph  of  reference
order reads thus :

“Leave granted on the  short  question  whether  interest  can  be  paid  on
solatium under Section 28 read with Section 34 of the Land Acquisition  Act,
1894 on the ground that solatium is a part of  compensation.  This  question
squarely arises for consideration as there is an apparent  conflict  between
a three-Judge Bench decision of this Court in the case of Union of India  v.
Ram Mehar on the one hand and the later three-Judge Bench decisions of  this
Court in the cases of Mir Fazeelath Hussain v. Special Dy.  Collector,  Land
Acquisition, Prem Nath Kapur v. National Fertilizers Corpn.  of  India  Ltd.
and Yadavrao P. Pathade v. State of Maharashtra  on  the  other.  The  later
three-Judge Bench judgments have taken the view that solatium is not a  part
of compensation. However, in none of the later three-Judge  Bench  judgments
the earlier view of the three-Judge Bench judgment in the case of  Union  of
India v. Ram Mehar that  solatium  is  a  part  of  compensation,  has  been
noticed or considered. Consequently, in our view, this  matter  requires  to
be decided by a Constitution/larger Bench  of  this  Court.  We,  therefore,
direct that the papers may be placed before Hon’ble  the  Chief  Justice  of
India for placing the appeals arising out of  these  proceedings  for  final
disposal before an appropriate Constitution/larger Bench of this Court.

Prior to Sunder’s Case (two Judge Bench),  similar  reference  was  made  in
Kapur Chand Jain & Ors. v. State Government of H.P. & Ors[9] , the  relevant
paras of which read thus :-

“3. Learned counsel for the petitioners invited our attention  to  a  three-
Judge Bench judgment of this Court in Union of India v. Ram Mehar  and  also
later two decisions of two-Judge  Benches  of  this  Court  in  Periyar  and
Pareekanni Rubbers Ltd. v. State of Kerala  and  Narain  Das  Jain  v.  Agra
Nagar  Mahapalika.  Relying  on  these  judgments,  he  submitted  that  for
applicability of Section 28 of the Land Acquisition Act, 1894  solatium  has
to be considered as a component of compensation and interest could  be  paid
thereon; and that the  High  Court  has  wrongly  not  granted  interest  on
solatium. However, there is  another  three-Judge  Bench  judgment  of  this
Court in Prem Nath Kapur  v.  National  Fertilizers  Corpn.  of  India  Ltd.
wherein a contrary view is taken and it has been held, that no  interest  is
payable on solatium under Section 23(2)  or  on  additional  amount  payable
under Section 23(1-A). For coming to that conclusion,  the  Bench  of  three
learned Judges relied upon another decision of this Court in  P.  Ram  Reddy
v. Land Acquisition Officer.

4. In view of this conflict of decisions and also in  view  of  the  further
fact that the three-Judge Bench of this Court in  Prem  Nath  Kapur  had  no
opportunity to refer to the earlier decision of a three-Judge Bench  in  Ram
Mehar we direct that these special leave petitions be  placed  for  decision
before a three-Judge Bench of this Court. The  office  may  obtain  suitable
orders from the Hon’ble Chief Justice.”

The question of reference to Constitution Bench  in  Sunder’s  case  (supra)
reads thus :-
“Is the State liable to pay interest on the amount envisaged  under  Section
23(2) of the Land Acquisition Act, 1894?”

In other words, the question was whether for the purpose of Section 28  read
with Section 34 of the Act, solatium is a part of compensation.  The  answer
was in affirmation to the reference question by the Constitution  Bench.  By
answering the said question  it  laid  down  the  law  with  regard  to  the
question of payment of interest.

21.   From the interpretation of provisions of Sections 11, 15, 23,  24  and
31 of the Act and after placing reliance upon the decision of this Court  in
State of Gujarat v. Vakhatsinghji Vajesinghji Vaghela[10], it is clear  that
the amount of compensation in the Collector’s Award includes  not  only  the
amount determined under Section 23(1) of the Act  but  also  the  additional
amount of solatium as  stipulated  under  Section  23(2)  of  the  Act.  The
relevant paragraph 9 of the said case reads thus:
“9. ……The collector has to make an award of compensation  under  Section  11
and having regard to Sec. 15 in determining the amount of  compensation,  he
is guided by the provisions of Section 23 and 24. Section  23  (1)  requires
an award of the market value  of  the  land.  Section  23  (2)  requires  an
additional award of a sum of fifteen percentum  on  such  market  value,  in
consideration of the compulsory nature of acquisition…..”


Further, from the reading of Sections 28 and 34 of  the  Act,  it  is  clear
that the ‘purpose of interest’ is to compensate an unpaid landowner who,  on
the one hand has been deprived of the possession of his  land  in  pursuance
of compulsory acquisition  by  the  State  Government  in  exercise  of  its
eminent domain power and on the other hand, has also been kept  out  of  the
use of the money due to him for  the  acquisition  by  not  being  paid  the
money, in full or in part, in lieu of taking possession. Reliance is  placed
on the decision of this Court  in  the  case  of  Satinder  Singh  v.  Umrao
Singh[11] at paragraph 19, which reads thus:
“19.……When a claim for payment  of  interest  is  made  by  a  person  whose
immovable property has been acquired compulsorily he  is  not  making  claim
for damages properly or technically so called; he is  basing  his  claim  on
the general rule that if he is deprived of his land  he  should  be  put  in
possession of compensation immediately; if not, in lieu of possession  taken
by compulsory acquisition interest should be paid to him on the said  amount
of compensation…."


Section 34 of the Act provides for the payment of  interest  on  “amount  of
such compensation”. The word “such” makes the reading  of  Section  34  read
along with Section 31 necessary. Section 31 of  the  Act  provides  for  the
payment of compensation or deposit of the same  in  Court.  Section  31  (1)
says “On making an Award  under  Section  11,  the  Collector  shall  tender
payment of the  compensation  awarded  by  him  to  the  persons  interested
entitled thereto according to the Award…..” Further, Section 28 of  the  Act
provides for the direction which may be made to the  Collector  to  pay  the
interest on excess compensation. It says “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…..”  Thus,
it is clear from Section 34 read with Section 31 and the  term  “sum”  under
Section 28 of the Act that the  Award  includes  not  only  the  sum  as  is
determined under Section 23(1) of the  Act  but  also  the  amounts  payable
under Section 23(1A) and Section 23(2).  The  same  has  been  held  by  the
Constitution Bench of this Court in Sunder’s case,  the  relevant  paragraph
23 of which reads thus:
“23.…We make it clear that the compensation awarded would include  not  only
the total sum arrived at as per  sub-section  (1)  of  Section  23  but  the
remaining sub-sections thereof as well. It is thus  clear  from  Section  34
that the expression “awarded amount” would mean the amount  of  compensation
worked out in accordance  with  the  provisions  contained  in  Section  23,
including all the sub-sections thereof.”

After adverting to Sections 34, 28, 23(1), 23(1A), 23(2), 24, 26 and  31  of
the Act, the Constitution  Bench  in  Sunder’s  case  (supra)  answered  the
question regarding payment of interest on solatium  in  affirmation  holding
that Section 26 of the Act does not say that the Award  would  contain  only
the amounts granted under Section 23 (1) of the Act.  It  was  further  held
that there can be no doubt that all the three heads specified in  the  three
sub-sections of Section 23 of the Act are the sums  to  be  awarded  by  the
court. The words “every award under this Part” in Section 26(1) of  the  Act
cannot be treated as the Award after delinking  the  amounts  awarded  under
sub-Section (1A) or sub-Section (2) of Section 23 of  the  Act.  Further  in
paragraphs 20, 21 and 23 in Sunder’s case (supra),  the  Constitution  Bench
has held as under-

“20… whether exclusion of the factor “  any  disinclination  of  the  person
interested to part with the land acquired” from being considered as part  of
the compensation indicated in Section 24 of the Act would be of any aid  for
excluding solatium from the purview of interest accrual process….”

“21. It is apposite in this context to point out  that  during  the  enquiry
contemplated under Section 11 of the Act the Collector has to  consider  the
objections which any person interested has stated  pursuant  to  the  notice
given to him. It may be possible that a person so interested  would  advance
objections for  highlighting  his  disinclination  to  part  with  the  land
acquired on account  of  a  variety  of  grounds,  such  as  sentimental  or
religious or psychological or traditional etc. Section  24  emphasises  that
no amount on account of any disinclination of the person interested to  part
with  the  land  shall  be  granted  as   compensation.   That   aspect   is
qualitatively different from the solatium which the  legislature  wanted  to
provide “in consideration of the compulsory nature of the acquisition.”

            XXX         XXX           XXX
23. In deciding the question as to what amount  would  bear  interest  under
Section 34 of the Act, a peep  into  Section  31(1)  of  the  Act  would  be
advantageous. That sub-section says:-

31. (1) On making an award under Section  11,  the  Collector  shall  tender
payment of the  compensation  awarded  by  him  to  the  persons  interested
entitled  thereto according to the award, and shall pay it  to  them  unless
prevented by some one or more of the contingencies  mentioned  in  the  next
sub-section……”

Further, in the said case, after adverting to Section 34 of  the  Act,  this
Court held thus:-

“24. The proviso to Section 34 of the Act makes the position further  clear.
The proviso says that “if such compensation” is not  paid  within  one  year
from the date of  taking  possession  of  the  land,  interest  shall  stand
escalated to 15% per annum from the date of expiry of  the  said  period  of
one year “on the amount of compensation or part thereof which has  not  been
paid or deposited before the date of such expiry”. It is inconceivable  that
the solatium amount would attract only the escalated rate of  interest  from
the expiry of one year and that there  would  be  no  interest  on  solatium
during the preceding period. What the legislature intended was to  make  the
aggregate amount under Section 23 of the Act  to  reach  the  hands  of  the
person as and when the award is passed,  at  any  rate  as  soon  as  he  is
deprived of the possession of his land. Any delay in making payment  of  the
said sum should enable the party to have interest on the said sum  until  he
receives  the  payment.  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.”

The judgment rendered by the Constitution Bench of this  Court  in  Sunder’s
case (supra) is  the  binding  precedent  on  the  question  of  payment  of
legislative statutory interest payable on solatium  under  Sections  23(1A),
28 and 34 of the Act which cannot be deprived to the claimant/decree  holder
by the court. As the said judgment is binding upon the State  Government  it
cannot contend that it is not liable from the date  as  provided  under  the
provisions of the Act.

The  Constitution  Bench  judgment  in  Sunder’s  case  (supra)   is   aptly
applicable to the fact situation of the present case  for  the  reason  that
the enhanced compensation includes the solatium  @  30%  as  provided  under
Section 23(2) of the Act. Therefore, the claimant/decree holder is  entitled
for  the  interest  on  the  solatium  component  which  is  part   of   the
compensation payable by the State government to the claimant. The  Execution
Court held that the claimant/decree holder  company  is  entitled  to  claim
solatium only in respect of the enhanced compensation provided for the  land
alone which has been separately fixed, but, not in respect of  that  portion
of market value of the land based on capitalization method of  the  yielding
rubber trees for  the  planted  area  which  was  separately  fixed  by  the
Reference Court in its Award. The High Court was right in holding  that  the
claimant is entitled for the interest not only in respect of  the  land  but
also with respect to the trees standing on the  land  of  which  the  market
value is  determined  by  the  Reference  Court.  However,  it  awarded  the
interest on solatium from  19.09.2001  and  not  for  the  prior  period  by
placing reliance on Gurpreet Singh case (supra), the relevant  paragraph  54
of which is extracted hereunder:-
“54. One other question also was sought to be raised and  answered  by  this
Bench though not referred to it. Considering that  the  question  arises  in
various cases pending in courts all  over  the  country,  we  permitted  the
counsel to address us on that question. That  question  is  whether  in  the
light  of  the  decision  in  Sunder,  the  awardee/decree-holder  would  be
entitled to claim interest  on  solatium  in  execution  though  it  is  not
specifically granted by the decree. It is well  settled  that  an  execution
court cannot go behind the decree. If, therefore, the claim for interest  on
solatium had been made and the same has been negatived either  expressly  or
by necessary implication by the judgment or decree of  the  Reference  Court
or of the appellate court, the execution  court  will  have  necessarily  to
reject the claim for interest on solatium based  on  Sunder  on  the  ground
that the execution court cannot go behind the decree. But if  the  award  of
the Reference Court or that of the appellate  court  does  not  specifically
refer to the question of interest on solatium or in cases  where  claim  had
not been made and rejected either expressly or impliedly  by  the  Reference
Court or the  appellate  court,  and  merely  interest  on  compensation  is
awarded, then it would be open to the execution court to apply the ratio  of
Sunder and say that the compensation awarded includes solatium and  in  such
an event interest on the  amount  could  be  directed  to  be  deposited  in
execution. Otherwise, not. We also clarify that such  interest  on  solatium
can be claimed only in pending executions and not in closed  executions  and
the execution court will be entitled to permit its recovery  from  the  date
of the judgment in Sunder (19-9-2001) and not for any prior period. We  also
clarify  that  this  will  not   entail   any   reappropriation   or   fresh
appropriation by the  decree-holder.  This  we  have  indicated  by  way  of
clarification also in exercise of our power under Articles 141  and  142  of
the Constitution of India with a view to avoid  multiplicity  of  litigation
on this question.”

The decision of this Court in Gurpreet Singh’s Case (supra), upon which  the
strong reliance is placed by learned counsel on  behalf  of  respondent,  is
totally inapplicable to the fact situation  of  the  instant  case  for  the
reason that the question that arose in the said  case  was  distinct,  which
reads thus:-

“What is the rule of appropriation in execution of  money  decrees?  Is  the
rule the same in the case of an award-decree under the Land Acquisition  Act
or, is there anything in the Land Acquisition Act, 1894 as  amended  by  the
Land Acquisition (Amendment) Act (68 of 1984) making that rule  inapplicable
or not wholly applicable?”

The  issue  in  the  said  question  was  examined  and  answered   by   the
Constitution  Bench  with  reference  to  Prem  Nath  Kapur’s  case  (supra)
regarding the rule of appropriation  in  execution  of  money  decrees.  The
examination of Sections 23(1), 23(1A), 23(2), 28, 31, 34 and 11 of  the  Act
was made in this regard.

At paragraph 54 of Gurpreet Singh’s  case,  certain  observations  are  made
regarding the payment of interest on solatium. The interest on solatium  can
be awarded at execution stage if the Reference Court or the Appellate  Court
does not specifically refer to the  question  of  interest  on  solatium  or
cases wherein claim had not been  made  and  rejected  either  expressly  or
impliedly by the Reference Court or the Appellate Court and merely  interest
on compensation is awarded. But  where  the  Reference  Court  or  appellate
court has negatived the same either expressly or by  implication  then  such
interest on solatium cannot be awarded as it is a well settled rule  of  law
that the execution court cannot go behind the decree.  Another  point  which
is clearly made in the said judgment is that the interest  on  solatium  can
be claimed only in pending execution  cases  and  not  in  closed  execution
cases, recoverable from the date of the  judgment  in  Sunder’s  case  i.e.,
19.09.2001 and not for any prior period. It is also held in this  case  that
this  will  not  entail  any  appropriation  or   reappropriation   by   the
claimant/decree holder.  But,  it  is  noteworthy  that  this  was  not  the
question which was referred to the  Court  for  consideration  in  the  said
case. Therefore, it is merely an observation of the court  which  cannot  be
applied as binding  precedent  in  the  instant  case  with  regard  to  the
entitlement of statutory interest payable under Sections 23(1A), 28  and  34
of the Act on the  solatium.  If  applied,  it  would  be  contrary  to  the
doctrine of stare decisis. In this regard, it is necessary to advert to  the
Constitution  Bench  (11  Judge  Bench)  judgment  of  this  Court  in  H.H.
Maharajadhiraja Madhav Rao Jivaji Rao Scindia Bahadur &  Ors.  v.  Union  of
India[12], wherein at paragraph 138, it is held that it  is  not  proper  to
regard a word, a clause or  a  sentence  occurring  in  a  judgment  of  the
Supreme Court, divorced from its context, as containing  a  full  exposition
of the law on a question when the question did not even fall to be  answered
in that judgment. The relevant portion of the paragraph reads as under:-
“138 …The question as to the jurisdiction  of  the  Courts  to  entertain  a
claim for payment of Privy Purse did not fall  to  be  determined  in  Nawab
Usman Ali Khan case. The only question raised was whether  the  Privy  Purse
was not capable of attachment in execution of the decree of a  Civil  Court,
because of the  specific  exemption  of  political  pensions  under  Section
60(1)(g) of the Code  of  Civil  Procedure.  In  Kunvar  Shri  Vir  Rajendra
Singh’s case, the Court did not express any  opinion  that  Article  366(22)
was a provision relating to a covenant within the meaning  of  Article  363.
In that case the petitioner who  was  not  recognised  as  a  Ruler  by  the
President abandoned at the hearing of his petition his claim  to  the  Privy
Purse payable to the Ruler of Dholpur, and pressed his claim  by  succession
under the Hindu Law to the Private property of the former Ruler.  The  Court
was not called upon to decide and did not decide that Article 366(22) was  a
provision relating to a covenant within the meaning of Article  363.  It  is
difficult to regard a word, a clause or a sentence occurring in  a  judgment
of this Court, divorced from its context, as containing  a  full  exposition
of the law on a question when the question did not fall to  be  answered  in
that judgment.”
                                      [Emphasis supplied]

The said view has been followed and reiterated subsequently  by  this  Court
in a catena of cases regarding the distinction between ratio of a  case  and
obiter dicta.

In the case of Director  of  Settlement  v.  M.R.  Apparao[13],  this  Court
extensively  elaborated  upon  the  principle  of  binding  precedent.   The
relevant para 7 is reproduced hereunder:
“7…Article 141 of the Constitution  unequivocally  indicates  that  the  law
declared by the Supreme Court shall be binding  on  all  courts  within  the
territory of India. The aforesaid Article  empowers  the  Supreme  Court  to
declare the law. It is, therefore, an essential function  of  the  Court  to
interpret a legislation. The statements of the Court on matters  other  than
law like facts may have no binding force as the facts of two cases  may  not
be similar. But what is binding is the ratio of the  decision  and  not  any
finding of facts. It is  the  principle  found  out  upon  a  reading  of  a
judgment as a whole, in the light of the questions  before  the  Court  that
forms the ratio and not  any  particular  word  or  sentence.  To  determine
whether a decision has “declared law” it cannot be said to be a law  when  a
point is disposed of on concession and what  is  binding  is  the  principle
underlying a decision. A judgment of  the  Court  has  to  be  read  in  the
context of questions which arose for consideration in the case in which  the
judgment was delivered. An “obiter dictum” as  distinguished  from  a  ratio
decidendi is an observation by the Court on a legal question suggested in  a
case before it but not arising in such manner  as  to  require  a  decision.
Such an obiter may not have a  binding  precedent  as  the  observation  was
unnecessary for the decision pronounced, but even though an obiter  may  not
have a binding effect as a precedent, but it cannot be denied that it is  of
considerable weight….”
                      [Emphasis supplied]

The decision of this Court in the case of Deena v.  Union  of  India[14]  is
also pertaining to the extension of ratio of a decision to  cases  involving
identical situations, be it factual or legal, but the  same  should  not  be
mechanically applied to the facts of a case,  the  relevant  para  15  reads
thus:
“15. …It is  permissible  to  extend  the  ratio  of  a  decision  to  cases
involving identical situations, factual and legal, but care  must  be  taken
to see that this  is  not  done  mechanically,  that  is,  without  a  close
examination of the rationale of the decision which is cited as a  precedent.
Human mind, trained even in the strict discipline of law, is not  averse  to
taking the easy course of relying on decisions which have become famous  and
applying their ratio to supposedly identical situations….”
                               (emphasis supplied)

The binding effect of judgment of this Court  vis-à-vis  State  and  Central
Government circulars is considered in the case of CCE  v.  Ratan  Melting  &
Wire Industries[15], wherein it is held that  the  law  laid  down  by  this
Court is the law of the land. The  law  so  laid  down  is  binding  on  all
Courts/Tribunals and bodies and that the circulars issued by  the  State  or
the Central Government cannot prevail over the law laid down by this Court.

From the facts of the present case and in the light of law laid down on  the
question of payment of interest on solatium by  the  Constitution  Bench  in
Sunder’s case, it  is  amply  clear  that  the  said  case  is  the  binding
precedent. As far as Gurpreet Singh’s case is concerned, the question  which
arose  for  its  consideration  was  only  with  regard  to  the   rule   of
appropriation in execution of the Award passed under the provisions  of  the
Act. While answering the  said  question  of  law  after  referring  to  the
relevant provisions of the Act, at paragraph 54, it  has  incidentally  made
some observation with regard to the payment of interest  on  solatium  which
is only an obiter but not the binding precedent as  that  question  did  not
fall for consideration before the Constitution Bench.   Therefore,  in  view
of the foregoing reasons, I hold that there is no  need  to  advert  to  the
other judgments upon which reliance was placed by the  learned  counsel  for
both the parties.  For the reason that the binding precedent  laid  down  by
the Constitution Bench of this Court in Sunder’s case  on  the  question  of
payment of interest on the solatium to the claimant/decree holder  from  the
date  of   entitlement  as  provided  under  the  provisions  of  the   Act.
Accordingly, I pass 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.

     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.


                                                ……………………………………………………………………J.
                         [V.GOPALA GOWDA]

New Delhi,
September 14, 2015




                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                   CIVIL APPEAL NOS.  7034-7037   OF 2015
            (ARISING OUT OF SLP (CIVIL) NOS.29463-29466 OF 2012)



 M/S. PERIYAR & PAREEKANNI RUBBERS LTD.                 …APPELLANT

VERSUS

  STATE OF KERALA
...RESPONDENT


                               J U D G M E N T


ADARSH KUMAR GOEL, J.


1.    I have perused the proposed judgment prepared by  my  learned  brother
V. Gopala Gowda, J.  I am in respectful disagreement  with  the  same.   The
facts have been broadly mentioned in the judgment of Gopala  Gowda,  J.  and
need not be repeated.

2.    The award of the Reference Court is dated 19th  November,  1992  which
did not expressly award interest on solatium.  In the  impugned  order,  the
High Court restricted the interest on  solatium  to  the  period  post  19th
September, 2001, following the Constitution Bench judgment of this Court  in
Gurpreet Singh vs. Union of India[16] directing as follows :

“54. One other question also was sought to be raised and  answered  by  this
Bench though not referred to it. Considering that  the  question  arises  in
various cases pending in courts all  over  the  country,  we  permitted  the
counsel to address us on that question. That  question  is  whether  in  the
light of the decision in Sunder [(2001)  7  SCC  211],  the  awardee/decree-
holder would be entitled to claim interest on solatium in  execution  though
it is not specifically granted by the decree. It is  well  settled  that  an
execution court cannot go behind the decree. If, therefore,  the  claim  for
interest on solatium had been made and the same has  been  negatived  either
expressly or by necessary implication by  the  judgment  or  decree  of  the
Reference Court or of the appellate court, the  execution  court  will  have
necessarily to reject the claim for interest on solatium based on Sunder  on
the ground that the execution court cannot go behind the decree. But if  the
award of the Reference Court  or  that  of  the  appellate  court  does  not
specifically refer to the question of  interest  on  solatium  or  in  cases
where claim had not been made and rejected either expressly or impliedly  by
the  Reference  Court  or  the  appellate  court,  and  merely  interest  on
compensation is awarded, then it would be open to  the  execution  court  to
apply the ratio of Sunder and say that  the  compensation  awarded  includes
solatium and in such an event interest on the amount could  be  directed  to
be deposited in  execution.  Otherwise,  not.  We  also  clarify  that  such
interest on solatium can be claimed only in pending executions  and  not  in
closed executions and the execution court will be  entitled  to  permit  its
recovery from the date of the judgment in Sunder  (19-9-2001)  and  not  for
any  prior  period.  We  also  clarify  that  this  will  not   entail   any
reappropriation or fresh appropriation by the decree-holder.  This  we  have
indicated by way of clarification  also  in  exercise  of  our  power  under
Articles 141 and 142 of the Constitution of  India  with  a  view  to  avoid
multiplicity of litigation on this question.”



2.    Learned counsel  for  the  appellants  relied  upon  Land  Acquisition
Officer and Asstt. Commnr. Vs. Shivappa Mallappa  Jigalur[17]   laying  down
as follows :

“13. Coming now to the stipulation that any interest on  solatium  can  only
be granted for the period subsequent to 19-9-2001, the date of the  decision
in Sunder, it is evident that this again, is a limitation on  the  power  of
the execution court. The direction is actually referable to those  cases  in
which the award of the Reference Court or the appellate court being  silent,
it is left open to the execution court to give direction for the deposit  of
interest on solatium. In  such  cases,  the  Reference  Court  can  ask  for
interest only for the period subsequent to 19-9-2001. The  direction  in  no
way circumscribes the power of the court dealing with  the  main  proceeding
relating to enhancement of the compensation.



14. The matter can be looked at from another angle.  The  appeal  being  the
continuation of the original proceeding, in the facts of the cases  in  this
sub-group, there can be no question of accrual of interest  only  after  the
date of the decision in Sunder. At this stage, it may be recalled  that  the
civil court had awarded solatium @ 30% and interest @ 9% for the first  year
and @ 15% from second  year  onwards  till  the  date  of  realisation.  The
State’s appeal against the judgment of the civil court was dismissed.  Thus,
the direction for payment of solatium with interest at the  rates  indicated
had become final. The High Court enhanced the  rate  of  compensation.  This
would inevitably  lead  to  an  increase  in  the  amount  of  solatium  and
consequently in the amount of interest on the  unpaid  amount  of  solatium.
Thus, looked at from any point of view, the question of payment of  interest
subsequent to 19-9-2001 does not arise.”



3.    On the other hand, learned counsel for the State  submitted  that  the
judgment in Shivappa (supra) does not apply to the present case
as the award dated 19th November, 1992  has  attained  finality.   She  also
relied upon Chimanlal  Kuberdas  Modi  vs.  Gujarat  Industrial  Development
Corpn.[18] laying down as follows :

“15. It is no doubt  true  that  the  execution  court  cannot  examine  the
reasons so as to go behind the decree  but  if  in  the  award  passed,  the
Reference Court makes a  specific  reference  to  payment  of  interest  but
without any such reference to  the  payment  of  interest  on  solatium  and
merely payment of interest on compensation is  granted,  then  it  would  be
open to the executing court to apply the ratio of Sunder  and  declare  that
the compensation awarded includes solatium, and  consequently,  interest  on
the amount could be directed to be deposited in execution.  That  being  the
legal position as prevailing today, we cannot ignore the  observations  made
in para 54 of  the  aforesaid  judgment  in  Gurpreet  Singh  and  we  order
accordingly  that  compensation  awarded  includes  solatium  and  therefore
interest on the said amount shall be paid by the respondent in  the  pending
execution.”



               To the same effect, she also relied upon   Nadirsha  Shapurji
Patel vs. Collector & LAO[19] and Chhanga Singh vs. Union of India[20].

4.    So long as judgments relied upon by  learned  counsel  for  the  State
stand, the appellant cannot succeed.  Any contrary view can  be  taken  only
by a larger Bench.  It will thus be appropriate that the  matter  is  placed
before a Bench of 3-Judges.




                       .…..….………………………………..J.          [ ADARSH KUMAR GOEL ]
NEW DELHI
SEPTEMBER 14, 2015





                                                                  REPORTABLE
                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                    CIVIL APPEAL Nos. 7034-7037  OF 2015
              (Arising out of S.L.P. (C) Nos. 29463-29466/2012)

M/S PERIYAR & PAREEKANNI RUBBERS LTD.  ... APPELLANT(S)

     VERSUS

STATE OF KERALA                        ...RESPONDENT(S)


                       COMMON  ORDER


      In view of divergence  of  opinion  in  terms  of  separate  judgments
pronounced by us in these appeals today, the Registry is directed  to  place
the papers before Hon'ble the Chief  Justice  of  India  for  appeals  being
assigned to an appropriate Bench.


                                               ...........................J.
                                         (V. GOPALA GOWDA)



                                                ..........................J.
                                         (ADARSH KUMAR GOEL)
        NEW DELHI,
        SEPTEMBER 14, 2015
-----------------------
[1]


       (2001) 7 SCC 211
[2]     (2006) 8 SCC 457
[3]    (1996) 2 SCC 71
[4]     (1973) 1 SCC 109
[5]      (1995) 3 SCC 208
[6]     (1996) 2 SCC 570
[7]     (1991) 4 SCC 195
[8]     (2000) 10 SCC 470
[9]     (1999) 2 SCC 89
[10]    AIR 1968 SC 1481
[11]    AIR 1961 SC 908
[12]    AIR 1971 SC 530
[13]    (2002) 4 SCC 638
[14]    (1983) 4 SCC  645
[15]    (2008) 13 SCC 1
[16]


       (2006) 8 SCC 457
[17]   (2010) 12 SCC 387
[18]   (2010) 10 SCC 635
[19]   (2010) 13 SCC 234
[20]   (2012) 5 SCC 763

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|REPORTABLE         |





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