TMI Blog1996 (8) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of notification under Section 7 of the Act on his award dated November 3, 1986 awarded compensation @ ₹ 21,000/- in respect of lands situated in villages Rampur and Talwal and ₹ 10.000/- per kanal in respect of land situated in village Goverdhan Pain with 10% escalation on accordingly paid but feeling dissatisfied therewith, the claimants-landowners sought reference under Section of the Act to the arbitrator who by his award dated March 8, 1987 enhanced the compensation to ₹ 60,000/- per kanal in respect of lands in villages Rampur and Talwal and ₹ 40.000/- per kanal in respect of land in village Goverdhan Pain; he also awarded 15% solatium and 4% interest per annum on the enhanced compensation. When the High Court, it by impugned judgment and order dated September 29, 1992 confirmed the same and dismissed the appeal holding that no discrimination could be made between the owners whose lands are acquired under the Land Acquisition Act, 1894 and owners whose lands are acquired under the Act and hence the arbitrator was justified in awarding solatium and interest to the land-owner-respondents. Hence this appeal by special leave. The admitted position i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under Section 34 and 28 and additional amount under Section 23 [1-A]. The denial of payment of solatium and interest, therefore, is discriminatory violating Article 14 of the Constitution. The very concept of market value is a price which is agreed upon by a willing purchaser as consideration for purchase of the property from a willing seller. Compulsory purchase is a hypothetical sale. Based on the above premises, it is contended, a purchaser on taking possession of the property has to pay the entire consideration forthwith but the quantification of compensation under the Acquisition Act, 1894 [for short, the Acquisition Act ] takes place at hierarchical stages. Until quantification is done, the claimant-owner is entitled to interest for the interregnum between the date of taking possession and the date of determination and deposit of the compensation so determined. Applying the above principles, this Court repeatedly has held that payment of solatium and interest is an integral part of the compensation. In support thereof, Shri Vaidyanathan placed reliance on the ratio decidendi in R.B. Lala Narsingh Das vs. Secy. of State for India [AIR 1925 PC 91 at 92], Raghubans Narain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be acquired. It is true that by process of compulsory acquisition, the owner is deprived of his possession and enjoyment and in lieu thereof compensation be awarded as per the principles laid down in the Act. The determination of the compensation is done at hierarchical stages as per law. Before adverting to and considering whither solatium and interest would be payable under the Act, at the outset, we will dispose of the objection raised by Shri Vaidyanathan that Hari Kishan Khosla's case is not a binding precedent nor does it operate as ratio decidendi to be followed as a precedent and per se per incuriam. It is not everything said by a Judge who giving judgment that constitutes a precedent. The only thing in a Judge's decision binding a party is the principle upon which the case is decided and for this reason it is important to analyse a decision and isolate from it the ratio decidendi. According to the well settled theory of precedents, every decision contain three basic postulates -[i] findings of material facts, is the inference which the Judge draws from the direct, or perceptible facts; [ii] statements of the principles of law applicable to the legal problems dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yable to an owner whose land was acquired under the provisions of the Central Act? On consideration of the facts, the relevant provisions in the Central Act and the previous precedents bearing on the topic the Court had held that solatium and interest are not a part of compensation. It is a facet of the principle in the statute. The Central Act omitted to provide for payment of solatium and interest since preceding the acquisition the property was under was under requisition during which period compensation was under requisition during which period compensation was paid to the owner. The position obtained and enjoyed by the Government during the period of requisition continued after acquisition. The same principle was applied without further elaboration on entitlement to payment of interest of an owner. It is true that the decisions relied on by Shri Vaidyanathan on the principle of payment of interest as part of compensation in respect of land acquired were brought to the attention of this Court for discussion. What would be considered a little later. Suffice it to say for the present that the finding that solatium and interest are not payable for the lands acquired under the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contrary intention. It is on this premise that the right to receive interest takes the place of right to retain possession and its enjoyment. It is equally settled law that equity operates where statute does not occupy the field. Conversely, when the statute occupies the field the equity yields place to the statute. The question, therefore, is whether the Act expresses any intention to exclude payment of interest and solatium in respect of the property acquired thereunder? It is not in dispute that the property was initially under requisition whereunder possession thereof was taken from the respondents. During the period of requisition the respondents received compensation. The quantum thereof was sought to be put in issue but since that question was neither relevant nor in issue in the courts below, we desist from going into that aspect. Under section 7(1) of the Act. where property is subject to requisition, if the Government is of the opinion that it is necessary to acquire the property for a public purpose, it is empowered tho acquire such property by making publication to that effect in the State Gazette. Preceding thereto, a prior notice of show cause should be given t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Government, the principle for determination of compensation is as per the bi-lateral agreement between the owner and the Government. Where it was not effectuated and no agreement was reached, the arbitrator is empowered tho determine the compensation which the requisitioned property would have fetched in open market, if it had remained in the same condition as it was at the time of its requisition but the prevailing price should be as on the date of acquisition. Had it been sold in the open market to a willing purchaser by a willing vendor, the price offered by a willing purchaser in the open market would be the yardstick. The arbitrator, therefore, is kept in the arm chair of a willing purchaser and should consider the circumstances attending the requisitioned property. Had it remained with the owner in the same condition as it was at the time of its requisition and if it were to be sold on the date of acquisition in that condition, the price a willing purchaser would offer would be just and fair compensation under the Act. The Acquisition Act provides for payment of interest under Section 34 by the Land Acquisition Officer and by the Court under Section 23. Similarly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be understood in the light of the facts found there n . Thus considered, we find that the ratio in Harikishan Khosla's case and in Satinder Singh's case are not in mutual conflict nor the former has the effect of overruling the latter. the difficulty arises in understanding the ratio in proper perspective. In National Insurance co. Ltd., Calcutta vs. Life Insurance Corporation of India [1963 Supp.(2) SCR 9711 the business of insurance carried on by the appellant was nationalised under Life Insurance Corporation Act, 1956 and stood vested in the Life Insurance Corporation of India on and from September 1, 1956, The appointed day. The dispute between the parties related to the compensation payable to the appellant corporation of n such vesting and one of the issues was whether interest was payable on such compensation. There was no express provision for payment of interest as the life insurance business vested in the life Insurance corporation. The Tribunal had held that it had no jurisdiction to award interest since there was no express provision in the act. It was conceded during the hearing in this Court that the corporation agreed to pay interest awardable but t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the appellants. All the decisions cited by Mr. Vaidyanathan in support of his contention on solatium were considered in Harikishan Khosla's case. His repeated attempts failed to persuade us to have that decision referred to a larger Bench of five Judges, we are unable to persuade ourselves to doubt the correctness of the judgment in Harikishan Khosla's case. All the decisions cited by the counsel were considered in extenso bu the Bench in Hari Krishna Khosla's case we are, therefore, of the opinion that it is not necessary to reexamine all the decisions once over,. We are in respectful agreement with the ratio in Harikishan Khosla's case. It would be seen that sub section(2) of Section 23 of the Acquisition Act expressly states that solatium is in addition to the compensation as consideration for compulsory nature of acquisition. This distinction was pointed out n catena of decisions including the one referred by a Bench of three Judges in Prem Nath Kapur Anr. v. National Fertilizers Corporation of India Ltd. ors.[(1996)2 SCC 71] . For parity of reasons, without further discussion it was held that interest also was not payable. We, therefore, respectful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f; appreciation of knowledge by the defendant of the benefit under such circumstances as to make it inequitable for the defendant to retain the benefit without payment of its value. These principles specifically absent in the case of omission by a statute, are made by the competent Legislature to award interest or solatium, in addition to compensation. So it cannot be to characterised as unjust enrichment where such action does not involve violation of law or is not opposed to public policy either directly or indirectly when the statute prescribes the principle for payment of compensation and omits as its policy to provide for the payment of interest and solatium as component of compensation. It is the legislative public policy to provide for acquisition of the private property for a public purpose. The state pays compensation for the acquired land in accordance with the principle laid down in the statute. It would, therefore, be illogical to contend that by legislative omission to pay solatium and interest the State enriches itself unjustly at the expense of the private person. The contention, therefore, is unsustainable in law. Accordingly, we hold that the High court and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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