TaxTMI 
TaxTMI 
2008 (11) TMI 608
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....tion, an award dated 16.3.1979, was made awarding compensation at the rate of Rs.2.60 per sq.yd with interest at 6% per annum from the date of acquisition till date of deposit. In another arbitration, an award dated 8.9.1986 was made awarding compensation at Rs.2.60 per sq. yd. with solatium at the rate of 30% and interest at 9% per annum on the additional amount from the date of acquisition till date of payment. Not being satisfied with the compensation, respondents filed writ petitions challenging the awards of the arbitrators before the Allahabad High Court. The High Court by its orders dated 1.4.1999 increased the compensation to Rs.3.60 per sq. yd. Wherever solatium had been awarded, the High Court set aside the same. Wherever interest had been awarded at a rate in excess of six percent per annum, the High Court reduced the rate and awarded a uniform interest at the rate of 6% per annum from the date of acquisition till the date of payment/deposit. 2. Union of India has filed these appeals by special leave against the said orders of the High Court, challenging the award of interest at 6% per annum. It has not challenged the enhancement of compensation from Rs.2.60 to Rs.3.6....
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....of requisitioning and been sold on the date of acquisition, or (b) twice the price which the requisitioned property would have fetched in the open market if it had been sold on the date of the requisition, whichever is less." Sub-section (2) of section 37 provides for reference of applications for enhancement of compensation filed by a persons interested, to an Arbitrator appointed by the Central Government. Sections 36 and 37 of the Act correspond to sections 30 and 31 of Defence of India Act, 1971 (`DI Act of 1971' for short) which replaced the Act. Section 37(1) of the Act is also in pari materia with section 8(3) of the RAIP Act. One significant common feature of these enactments is that they provide for acquisition of requisitioned land and do not contain any provisions similar to sections 23 (2) and 28/34 of the Land Acquisition Act, 1894 (`LA Act' for short) providing for payment of solatium or interest. 6. The validity of Section 8(3) of RAIP Act came up for consideration in Union of India v. Hari Krishan Khosla [1993 Supp (2) SCC 149]. This Court held that absence of any provision for payment of solatium and interest, similar to sections 23 and 34 of Land Acquisition....
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....ck the interest which had already been paid to the land owners. This direction was on equitable grounds. In Prabhu Dayal and Girdhari, this Court awarded interest on equitable grounds, though the RAIP Act did not contain any provision for award of interest. 9. When a property is acquired, and law provides for payment of compensation to be determined in the manner specified, ordinarily compensation shall have to be paid at the time of taking possession in pursuance of acquisition. By applying equitable principles, courts have always awarded interest on the delayed payment of compensation in regard to acquisition of any property. When a requisitioned property is acquired, as possession had already been taken from the landholder, the compensation becomes payable from the date of acquisition. When a property is requisitioned, the land owner is compensated for the denial of possession by paying compensation based on the rent it would have fetched had it not been requisitioned. But once the property is acquired, the rent is stopped, as compensation based on open market value becomes payable against acquisition. Therefore while interest is payable, it is not awarded from the date of re....
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....made against the State. This question has been considered on several occasions and the general principle on which the contention is raised by the claimants has been upheld. In Swift and Co. v. Board of Trade, (1925) A C 520 at p. 532, it has been held by the House of Lords that "on a contract for the sale and purchase of land it is the practice of the Court of Chancery to require the purchaser to pay interest on his purchase money from the date when he took, or might safely have taken, possession of the land. (18) In Inglewood Pulp and Paper Co. Ltd. v. New Brunswick Electric Power Commission [1928 A.C. 429], it was held by the Privy Council that "upon the expropriation of land under statutory power, whether for the purpose of private gain or of good to the public at large, the owner is entitled to interest upon the principal sum awarded from the date when possession was taken, unless the statute clearly shows a contrary intention." Dealing with the argument that the expropriation with which the Privy Council was concerned was not effected for private gain, but for the good of the public at large, it observed "but for ....