Land measuring 109 kanals 15 mamas owned by the petitioner was acquired in 1946 under the Defence of India Act, 1939, by the Collector, Shahpur, for a sum of Ra. 5,259.20. The petitioner challenged the quantum of compensation. The matter was referred to an arbitrator under section 19(l)(b) of the above Act. Fin vide award dated 22nd June 1971, fixed a sum of Rs. 26,296 as the compensation. The actual payment was made on 30th July 1975.
2. According to the contents of paragraph 4 of the writ petition, the petitioner requested the respondents time and again to male payment with compound interest in accordance with sections 28 and 34 of the Land Acquisition Act but of no avail. He is also stated to have instituted a Civil Revision Petition bearing No. 1022-R-75 under section 115 of the C. P. C. But the same was later withdrawn. Ile, therefore, filed the present writ petition on 23rd June 1977.
3. It is contended by the learned counsel that as the claim of the petitioner with regard to compensation of his acquired land had not been paid immediately he is entitled to claim compound interest at the rate of 8 f in view of section 34 of the Land Acquisition !Act, 139-3 from the date of acquisition till the date of payment. Reliance is placed on a judgment of this Court in Writ Petition No. 131-62 and Mian Nizamuddin Hakkr and others v. The Government of West Pakistan ants another (PLD 1960 Lah. 972
4. The learned counsel for the State referred to section 19 of the Defence of India Act and stated that as the acquisition had taken place thereunder, section 34 of the Land Acquisition Act did not apply. Ile further submitted that as the proceedings under the Defence of India Act could not be deemed to have been taken under the Civil Procedure Code, section 34 of that Code was not attracted. Reference was also made to the Interest Act of 1939 (XXXII of 1839) to argue that neither any provision therein nor in any other Act entitled the petitioner to succeed. The learned counsel also cited Bengal Nagpur Railway Co. Ltd. v. Ruttanji Rarnji ((1938) -173:I C 15) . It was held in that case that the petitioner who had come to- the Court to claim interest for the period prior to the filing of the suit, as an equitable relief, cannot be granted the same unless he was also able to show that either the interest was due under the law or under any instrument. It was further held that interest would be decreed even if it was payable under Equity.
5. 'the admitted position of the case in hand is that the acquisition took place under the Defence of India Act and not the Land Acquisition Act. The provisions of the Land Acquisition Act as such or any pronounZ ments made thereunder would not apply directly. The original compensation of Rs.5,259.20 was enhanced by the arbitrator to Rs. 26,295 on 22nd June 1971. While doing so, the arbitrator took into consideration the change of circumstances and reversal of values, since the date of acquisition, and increased the compensation five times. Consequently, the petitioner is not entitled to claim any interest from the date of acquisition till the dated of award.
6. As for the period subsequent to the award, it is not denied that the respondent did neither deposit the compensation with any authority for payment to the petitioner nor did it tender the same to him. Undoubtedly, it was payable immediately. It is also not denied that no alternative form of compensation was offered by the respondent and refused by the petitioner.
In this view of the matter, the question. Falling for. Determination is whether the 'petitioner is entitled to any interest from the date of award to the date of payment of the compensation on 30th July 1975.
'T. Before going straight to the question posed above, it may be useful to consider the nature of the claim of the petitioner. The fact given above show that the sum of Rs. 26,295 was an amount, ascertained as compensation in favour of the petitioner, by way of an award by the arbitrator, appointed under section 19 of the Defence of India Act. The adjudication was final in the eye of law and the respoendent stood in the position of a judgment-debtor thereafter. The respondent, however withheld that amount for about 4 years. A Division Bench of this Court in Piare Mohan Lal v.
Gopal Lal (AIR 1935 Lab. 552) laid down that where the suit is not based on any loan transaction or any dealing between the parties but is one for recovery of amount which had been illegally detained by the defendants, the interest in such a case is legally and equitably claimable by the plaintiff. It was held in Abdul Azlz v. .Alliance Bank of Simla (AIR 1933 Lah. 353) that the future interest is really in the nature of damages granted by the Court for the plaintiffs being kept out,of the money due to them, after the date of the decree.
8. The House of Lords considered the same question in Westminster Bank Ltd. v. Riches ((1947) 28 Tax Cas. 159),, Lord Wright observed "The appellant's contention is in any case artificial and is, in my opinion, erroneous, because the essence of interest is that it is a payment which becomes due because the creditor has not had his money at the due date. The general idea is that he is entitled to compensation for the deprivation.
From that point of view it Would seem immaterial whether the money was due to him under a contract express or implied, or a statute, or whether the money was due for any other reason in law. In either case the money wag due to him and was not paid or, in other words, was withheld from him by the debtor after the time when payment should have been made, in breach of his legal rights, and interest was a compensation, whether the compensation was liquidated under an agreement or statute, as for instance under section 57 of the Bills of Exchange Act, 1882, or was unliquidated and claimable under the Act as in the present case. The essential quality of the claim for compensation is the same, and the compensation is properly described as interest."
Indian Supreme Court in Dr. Sham Lal Narula v. C. L.T. (AIR 1964 SC 1878) observed that "The Scheme of the (Land Acquisition) Act and the express provisions thereof establish that the statutory interest payable under section 34 is not compensation paid to the owner for depriving him of his right to possession of the land acquired, but that given to him for the deprivation of the use of the money representing the compensation for the land acquired . . . ."
But in a case where title passes to the State, the statutory interest provided thereafter can only be regarded eithcr as representing the profit which the owner of the land might have made if he had the use of the money or the loss he suffered because he had not that use. In no sense of the term can it be described as damages or compensation for the owncr's right to retain possession, for he has no right to retain possession after possession was taken under seection 16 or section 17 of the Act. We, therefore, hold that the statutory interest paid under section 34 of the Act is interest paid for the delayed payment of the compensation amount and, therefore, is a revenue receipt liable to tax under the Income-tax Act. The order of the High Court is therefore, correct."
10. The above discussion makes it clear that after comonsatian had been awarded for the property acquired or an amount is determined as payable by one to the other, the award or decree-holder becomes entitled to interest on the amount not for the reason that he had been deprivedof the right of thepossession of the propertybut because he was being deprived of the use of money to which he was entitled. The question whether the amount representing interest is liquidated ornot is immaterial as his right to recover interest under law and equity s there.
11.. The Bengal Nagpur Railway case cited by the learned counsel for the respondent and referred to .In para. 4 above would rpther help . The petitioner. The case of Bengal and :'Vagpur Railway was note by the Indian Supreme Court in Mahabir PrasaJ Rungla v. Durga Dalla (A UR 1961 SC 990). The learned Judges made the following observations : "There remains the question of interest. Interest for a period prior to the commencement of suit is claimable either under an agreement, or usage of trade or under a statutory provision or under the Interest Act, for a sum certain where notice is given. Interest is also awarded in some cases by Courts of equity. Bengal Nagpur Ry. Co. Lid. v. Rullanji Ram/1 61 I A 66 : A t R 1938 P C 67."
The rule laid down by the Privy Council and approved by the Indian Supreme Court is that plaintiff must show that there is either usage or any contract, express or implied, to Justify the award of interest or that tine interest is payable, for the period prior to the filing of the suit, by virtue of any provision in the law governing the case. This requirement is for the period prior to the filing of the suit. The claim in the present case is for the period after the award had been made on proceedings initiated under a special law. _ The Privy Council also considered the applicability of Interest Act XXXII of 1839 to say that the Court may allow interest to the plaintiff, if the amount claimed is a sum certain which is payable at a certain time, by yirture of a written instrument. In the case in hand, it is established that the compensation awarded to the petitioner was an ascertained amount and it was payable immediately. The interest was thus payable in this case on that basis alone. The conclusions derived in para. 10 above from the cases cited also show that interest on such amounts is payable both under law and equity. The other important aspect of this case is that here the claim of interest is for the period after the award. There is thus neither any law nor usage to support the case of the respondent and he is liable both under law and equity.
12. As for the period after the commencement of the suit, there has been no dispute to the entitlement of a plaintiff to get interest. In Lola Hakim Rai v. Laid Ganga Ram (AIR 1942 P C 61) the Privy Council held that the plaintiff was entitled to be paid interest on the sum found due to him at the rate of 6 per cent, per annum from the date of the institution of the suit until realization.
Similarly in Municipal Committee Gujranwala v. Charanji Lal (AIR 1935 Lab. 685) the Committee was obliged to pay interest on the sale money wrongly retained by it after it failed to hand over possession of the land sold to the respondent. In Secretary of State v. Gujjar Singh (A 1, R 1935 Lab.
775) the Crown was held liable to pay interest by way of compensation to the respondent contractor whose bills for work done had been unnecessarily delayed.
13. The cases involving payment of interest on the compensation awarded for acquisition of property are a category apart and the payment of interest has even been recognised by law.
Section 34 of the Land Acquisition Act may be referred. The view of the Courts in this regard has also been consistent and firm.
In International Railway Co. v. Niagra Parks Con,wissJbn ((4941) 2 All E R 456) the appellants claimed interest on the amount of cc:-nlpensaiioaa cepaesenting the value of their taken over railway, from the date of taking possession till the date of payment of the amount of the award. The Privy Couna:il held that the purchaser who takes possession is liable to pay interest on the purchase money from that time until it is paid. In another case of acquisition of property an award for compensation was made, It was held by the Privy Council that where property has been compulsorily acquired by the Government or a public body and possession taken by it, it must pay interest on the amount awarded as compensation from the date of taking of such possession.
Reference is made to The inglefvood Pulp & Paper Co. Ltd. v. The New Burnswick Power Commission ((1928) 11111 C 261).
14. The sums required to satisfy a decree or award by any Court or Tribunal is an expenditure charged on the Consolidated Fund in view of Articles 81(d) and 121 (d) of the Constitution. The importance of such a liability can be judged from the fact that it even cannot be put to vote of the National or Provincial Assemblies under Articles 82(1) and 122(1) of the Constitution. It is, therefore, an important legal responsibility of the concerned public functionary to see that such amounts are paid to those to whom they are due and the State is saved from undue litigation expense or interest. It may further be seen that the Courts have acted whenever it was shown that the Government had retained any amounts of the private parties not due to it. Reference be made to the case of Azizuddin Industries Limited v. Collector of Central Excise and Land Custom (PLD 1967 Dacca 58) whereby the respondent was directed to refund the amount illegally realised by him from the petitioner. Reliance was placed by the Court on Queen v. The Commissioner of Special Purposes of the Income-tax ((1888) 21 (1 B D 313) and Messrs Burmah Construction Company v. The State of Orissa (AIR 1962SC1320). The Supreme Court in Province of West Pakistan v. Asghar Ali Muhammad All (1968SCMR417) held that the Government was liable to refund the excess amount paid as the sale price of iron-scrap sold by the Government.
15. The position in the case in hand is that the entitlement of the petitioner to claim interest from 1946 (the time of acquisition of his land) to 1971 (the time of award) had been considered by the arbitrator who determined his compensation as if he was evaluating it on the date of award. The petitioner, therefore, cannot have any claim for that period. As for the period from 23rd June 1971, to 29th July 1975 the respondent undoubtedly retained petitioner's money without any justification whatever. The petitioner in view of the above discussion, is entitled to the payment of interest, and the failure on the part of the respondent to pay.The same is declared to be without lawful authority.
As for the rate of interest it is equitabl o that the petitioner is allowed the same rate as is provided for other owners of the acquired lands in section 34. Of the Land Acquisition Act, i.e. 8--0 compound interest. The respondent shall also pay the costs.
16, 1 may be failing in my duty if I do not observe here that the Governmental agencies are liable to pay amounts due to the public a E promptly as they are obliged to recover the Government dues from the public. Further, the attitude of the Government in such cases should be exemplary and it must show that its dealings are better than that of the public. Any dereliction or wilful omission to do so, on the part of a Government official, costs the Treasury undue amounts in terms of litigation, expenses, interests and costs, which in all fairness should be borne by those responsible and not the State. I am, therefore, sure, the competent authority shall enquire into the omission if any, in this case and fix the responsibility.