Whether landlord is entitled to enhancement of interim compensation?


CIVIL APPEAL NO.    5084              OF 2013
(arising out of SLP(C)No.31318  of 2011)




Leave granted.

The appellant is aggrieved by impugned order   dated   15th  September,   2011   passed   by   the   Division Bench of the High Court of Bombay, Nagpur Bench, Nagpur in a   Review   Application,   MCA   No.774/2011.   By   the   impugned order the Division Bench reviewed and recalled the judgment and order dated 5th  October, 2010  passed in Writ Petition No.3883/2010(D)   filed   by   the   appellant.   The   High   Court further directed the State of Maharashtra to deposit rental compensation   at   the   rate   of   8%   of   the   amount   of Rs.1,07,82,270/­ as enhanced and awarded by the Reference Court,   in   First   Appeal       No.06/2010,     as   the   same   is pending   against   the   award   passed   by   the   Reference   Court. The   High   Court   by   the   impugned   order   also   allowed   the appellant to withdraw only half of the amount deposited by the State upon furnishing security to the satisfaction of the   Registrar   and   to   keep   remaining   amount   in   FDR   of   a Nationalised Bank pending the litigation.

2. The only question involved in this appeal is whether the   High   Court   of   Bombay,   Nagpur   Bench   was   justified   in directing the State to deposit the rental compensation with the Appellate Court at the rate of 8%   per annum on the award value passed by the Reference Court for the period of occupation   before   formal   acquisition,   allowing   the appellant to withdraw only 50% of such rental compensation during the pendency of the appeal.

3. The factual matrix giving rise to this appeal are as follows:­

The   matter   relates   to   payment   of   rental   compensation with   regard   to   land   occupied   by   State   before   the   formal acquisition.     The   Land   Acquisition   Act,   1894   does   not contemplate   the   payment   of   any   rental   compensation.   The entitlement   of   rental   compensation   is   on   the   basis   of resolutions   and   instructions   issued   by   the   State   of Maharashtra   from   time   to   time   since   7th  February,   1949 including   Resolutions   dated   2nd  May,   1961,   1st  December, 1972,  2nd April, 1979 and 24th March, 1988.

4. By the aforesaid Resolutions, the State of Maharashtra has empowered the Irrigation and Power Department/Buildings and Communication Department Officers to take possession of lands   required   for   its   development   works   by   private negotiations, wherever possible, as it was apprehended that the   speed   of   acquisition   of   lands   under   the   Land Acquisition   Act,   1894(hereinafter   referred   to   as   the ‘Act’),   would   not   be,   in   view   of   its   procedural requirements, commensurate with   the speed of work planned by the Department, thus resulting in delay in execution of works.   It was also indicated that prompt payment of such compensation should be done.

5. By Resolution dated 2nd May, 1961 it was decided by the State   Government   that   in   cases   where   awards   have   been declared   by   the   Revenue   authorities,   rental   compensation should be paid at the rate of 4% per annum on the award value   for   the   period   of   occupation   before   the   formal acquisition plus the adjustment which has been paid by the owner of the land for that period in respect of that land. Subsequently, by Resolution dated 1st   December, 1972 while procedure   for   taking   possession   of   the   land   by   private negotiations   were   notified,   the   determination   of   rental compensation   was   enhanced   to         6­1/2%   per   cent   of   the final award value, as apparent from the paragraph 6 of the said Resolution quoted hereunder:

“6 .Payment   of   rental   compensation:   The
responsibility   of   payment   of   rental
compensation of to  the title holder of  the
lands   taken   over   by   I.&   P.D./B   &   C.D.
officers   through   private   negotiations   rests
with   I.&P.D.   /B.&C.D.   Officers   for   the
period from the date on which possession of
the   land   is   taken   over   till   the   date   on
which   the   full   amount   of   final   Award   is
paid.   Government has now decided that  the
rental compensation payable shall be       6­
1/2% of the final award value in respect of
both   Non­Agricultural   land   and   Agricultural
land.   With   a   view   to   avoiding   any
inconvenience to the owners of the land who
have willingly parted   with their land  and
to   ensure   timely   and   regular   payments   of
rental compensation, the following procedure
should be adopted.”

6. By the subsequent Resolution dated 2nd  April, 1979 the State Government decided to increase the percentage from 6­ 1/2%     to   8%   for   working   out   the   amount   for   payment   of rental compensation, which reads as follows:

Irrigation Department,
Resolution No.IND.1078/1014/IMG­(3)
Sachivalaya, Bombay 400032,
Dated 2nd April, 1979.
Read: Government   Resolution,   Irrigation
and   Power   Department,   No.IPM.
1069/20083/I(5), dated Ist December, 1972
Resolution:   The   question   of   raising   the
percentage of rental compensation admissible
to the title holders of the lands during the
period   from   the   date   of   taking   over   the
possession   of   their   lands   by   private
negotiations till the payment of final award
was   under   the   consideration   of   Government
for   some   time   past.   Government   is   now
pleased   to   increase   the   percentage   from   6­
1/2%   to   8%   laid   down   for   working   out   the
amount for payment of rental compensation in
paras   6   and   7   of   Government   Resolution,
Irrigation   and   Power   Department,
No.IPM.1069/20083­I(5),   dated   Ist   December,
1972 with effect from Ist January, 1979.”

7. The State Government by its Resolution dated 24th March, 1988 directed the authorities to pay rental compensation on time   else   the   amount   is   payable   towards   interest.   The relevant   portion   of   the   said   Resolution   is   quoted hereunder:

“3. It   has   come   to   the   notice   of   the
Government  that the directions given in the
aforesaid   Government   Resolutions   are   not
being   followed   properly.   As   a   result,   the
land   owners   are   facing   harassment   and
inconvenience.   Due   to   the   delay   in   sending
proposal   for   acquisition   of   lands   where
possession   has   been   taken   through   private
negotiations,   the   amounts   payable   towards
interest   and   rental   compensation   have

4. In   view   of   the   amendment   of   the   Land
Acquisition   Act,   1894   and   the   time   limits
specified for the acquisition of land as also
in view of Section 4(1) of the Act and the
increase in the amount of solatium from 15%
to 30%, special attention is required to be
given   to   the   completion   of   process   of
acquisition quickly.”

8. The respondent­State required the land of the appellant for construction of flood protection wall for the city of Akola and after negotiations the appellant handed over the possession of his land on 15th November, 1998 to the State. Subsequently,   Notification   under   Section   4   of   the   Land Acquisition Act,  1894,  was published on 3rd  June,  1999 in respect   of   said   land,   followed   by   Notification   under Section 6 of the Act published on 18th  November, 1999. The Special   Land   Acquisition   Officer   by   his   award   dated   4th August,   2000   determined   the   compensation   at   the   rate   of Rs.5,61,000/­ per hectare and awarded total compensation of Rs.9,45,173/­ in favour of  appellant.

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9. Aggrieved   by   the   award,   the   appellant   filed   an application under Section 18 of the Act which on reference registered   as   LAC   No.140/2000   in   the   Court   of   District Judge,   Akola.   During   the   pendency   of   the   said   reference case,   the   appellant   received   a   sum   of   Rs.59,998/­   on   7th August,   2001   towards   rental   compensation.   The   amount   was calculated at the rate of 8% of the compensation awarded by the Land Acquisition Officer.   The Reference Court by its award   dated   2nd  August,   2008   allowed   the   application   and enhanced   the   rental   compensation   @   8%   per   annum   on Rs.1,07,82,270/­ with interest at the rate of 9% from 12th October, 2000 to 11th October, 2001 that is for one year and interest at the rate of   15% per annum, thereafter, till the date of actual payment.

10. Aggrieved   by   the   enhancement,   the   State   Government preferred First Appeal No.06/2009 before the High Court of Bombay. In the said appeal, the High Court passed interim order   on   28th  January,   2009   staying   operation, implementation   and   execution   of   the   order   passed   by   the Reference Court on the condition of depositing 50% of the amount   granted   by   the   Reference  Court.    The  First   Appeal No.06/2009 is still pending before the High Court for its decision.

11. The appellant was also not happy with the award passed by   the   Reference   Court,   therefore,   he   preferred   First Appeal No.1210/2008, which is also pending before the High Court.

12. During   the   pendency   of   the   appeals,   the   appellant applied   to   the   3rd  respondent   for   grant   of   rental compensation on the basis of enhanced compensation awarded by the Reference Court by its order dated 2nd August, 2008. As no reply was received by the appellant he filed a Writ Petition   No.2763/2009   before   the   High   Court   of   Bombay, Bench at Nagpur.  The said writ petition was disposed of on 6th  July,   2009   recording   the   statement   of   the   Assistant Government   Pleader   that   the   application   of   the   appellant would   be   decided   on  merits   at   the   earliest.     Thereafter, the 3rd respondent on consideration of the said application, by his letter dated 5th October, 2009 rejected the prayer on the   ground   that   the   order   of   Reference   Court   was   under challenge   before   the   High   Court.   Against   the   order   of rejection   the   appellant   preferred   Writ   Petition No.3883/2010,   before   the   High   Court   of   Bombay,   Bench   at Nagpur.   In   the   said   case,   the   Special   Land   Acquisition Officer,   4th  respondent   filed   an   affidavit   assailing   the order   passed   by   Reference   Court.   According   to   the appellant,   there   is   no   statement   made   in   the   said   reply that   the   appellant   was   not   entitled   for   enhanced   rental compensation   on   the   basis   of   compensation   awarded   by   the Reference   Court.     The   High   Court   allowed   the   said   writ petition by order dated 5th  October, 2010 referring to the decision of this Court in  State of Maharashtra and others vs.   Maimuma   Banu   and   others,   (2003)   7   SCC   448.  As   the Division Bench ordered to pay enhanced rental compensation to   the   appellant   as   per   award   passed   by   the   Reference Court,   the   respondents   filed   a   review   petition   for recalling   the   order   dated   5th  October,   2010.     It   was submitted that the order was passed by the High Court on wrong   interpretation   of   decision   in  Maimuma   Banu   (supra) and   that   there   is   an   error   apparent   on   the   face   of   the record.

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13. On   notice   and   hearing   the   parties,   the   High   Court passed   the   impugned   order   dated   15th  September,   2011, recalling   its   earlier   order   dated   5th  October,   2010.   The following   direction   has   been   issued   in   place   of   earlier order:

“In the result, the judgment and order dated
5/10/2010 is reviewed and set aside. Instead
we   direct   the   State   of   Maharashtra   to
deposit   as   rental   compensation   8%   of   the
amount of Rs.1,07,82,270/­, in First Appeal
No.6/2010,   which   is   the   compensation   as
enhanced   by   the   Reference   Court   in   this
Court   for   the   period   from   15/11/1998   i.e.
the date of taking possession till the date
of   the   award   i.e.   4/8/2000.   The   original
petitioner   Kazi   Akiloddin   Sujaoddin   may
withdraw   the   half   amount   deposited   by   the
State   upon   furnishing   security   to   the
satisfaction of the Registrar. The remaining
amount   shall   be   kept   in   F.D.R.   of   a
nationalized bank pending the litigation.
6. Four   weeks   time   is   granted   to   deposit
the above said amount.
7. Order accordingly.”

14. Learned   counsel   for   the   appellant   contended   that   the appellant is entitled for the enhanced rental compensation proportionate   to   the   increase   in   compensation   awarded   by the Reference Court. As per the policy of the respondentState, the claimant is entitled to rental compensation at the rate of 8% of the amount of compensation awarded to the claimant for acquisition of his land.  Circulars issued by the State do not limit the rental compensation to 8% of the amount   awarded   by   the   Land   Acquisition   Officer.   The resolutions do not stipulate that the rental compensation should not be enhanced proportionate to the enhancement of compensation   awarded   by   the   Reference   Court   or   higher courts.

15. Learned   counsel   for   the   appellant   further   contended that   the   High   Court   committed   a   grave   error   in   deciding against the appellant by   reviewing its own order on the basis of judgment of this Court in State of Maharashtra and others vs. Maimuma Banu and others, (2003) (7) SCC 448.

16.   Per   contra,   according   to   the   respondents,   the Reference   Court   enhanced   the   compensation   exorbitantly. Therefore,   the   State   Government   was   left   with   no   other option   but   to   challenge   the   award   by   filing   the   first appeal, registered as First Appeal No.06/2009.

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17. In  Maimuma   Banu   (supra)  this   Court   noticed   that   the State of Maharashtra by   its resolutions and instructions, contained   in the circulars dated 1st  December, 1972, 17th September,   1977,   2nd  April,   1979   and   24th  March,   1988 provided   for   rental   compensation,   payable   to   the   title­ holders  of   the   lands.     Apart   from   those  resolutions,   the provisions   of   the   Land   Acquisition   Act,   1894     do   not contemplate   payment   of   any   rental   compensation.     In   the said   case   of  Maimuma   Banu   (supra)  the   Court   decided   the question   relating   to   the   ‘payment   of   interest   on   rental compensation’awarded   to   the   persons   whose   lands   were acquired under the Land Acquisition Act, 1894; this Court in the said case also held as follows:

“9………….It   is   not   in   dispute   that
in most of the cases the rental compensation
has not been paid. If that factual position
continues,   it   clearly   is   a   case   where   the
amount   to   which   a   person   is   entitled   is
withheld without any legitimate excuse. The
learned   counsel   for   the   appellants
strenuously urged that in most of the cases
the   proceedings   have   not   yet   attained
finality   and   are   pending   either   before   the
Reference Court or in appeal.  That does not
provide   a   legitimate   excuse   to   the
appellants to withhold payment of the rental
compensation.   The   amount   calculated   on   the
basis   of   award   by   the   Land   Acquisition
Officer cannot be below than the  amount to
be   ultimately   fixed.   If   in   appeal   or   the
reference   proceeding,   there   is   any
variation,  the same can be  duly taken note
of   as   provided   in   law.   There   is   no
difficulty   and   we   find   none   as   to   why   the
compensation   on   the   basis   of   value
determined   by   the   Land   Acquisition   Officer
cannot be paid. If there is upward revision
of the amount, the consequences will follow
and   if   necessary,   redetermination   of   the
rental   compensation   can   be   made   and   after
adjustment   of   the   amount   paid,   if   any,
balance can be  paid.  If, however, the Land
Acquisition   Officer’s   award   is   maintained
then nothing  further may  be required  to be
done. In either event, payment of the rental
compensation   expeditiously   would   be   an
appropriate   step.  Looking   at   the   problem
from another perspective, one thing is clear
that   authorities   have   clearly   ignored   the
sense of urgency highlighted in the various

18. From the aforesaid decision of this Court, it is clear that   during   the   pendency   of   a   reference   proceeding   or appeal before a Higher Court the rental compensation is to be     determined   on   the   basis   of   award   passed   by   the   Land Acquisition   Officer.   Subsequently,   if   there   is   upward revision   of   amount,   consequences   will   follow   and   if necessary,                     re­determination   of   the   rental compensation can be made and after adjustment of the amount paid, if any, balance can be paid.

19. In the present case, we find that the State Government along   with   the   appellant   is  not  satisfied   with   the   award passed   by   the   Reference   Court   and   hence,   two   appeals against the said award by both parties are pending before the High Court of Bombay, Nagpur Bench for determination. Giving reference to the decision in Maimuma Banu (supra) it was not open to the High Court to direct the authorities to pay   rental   compensation   as   per   award   passed   by   the Reference   Court.   For   the   reason   aforesaid,   if   the   High Court   recalled   the   order   dated   5th  October,   2010   and directed   the   State   Government   to   deposit   rental compensation at the rate of 8% of the amount awarded by the Reference   Court   with   the   appellate   Court,   allowing   the appellant   to   withdraw   the   half   of   the   amount,   no interference is called for.   However, this order will not stand in the way of appellant to claim proportionate higher rental compensation, if the order of the Reference Court is upheld   or   further   enhancement   of   compensation   is   made   by the Appellate Court.

20.   We find no merit in this appeal. It is, accordingly, dismissed with observations as made above. No costs.

JULY 3,  2013.

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