' MIAN ALLAH NAWAZ, J.---Regular First Appeals bearing Nos.142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159, 160, 161, 162 and 163 of 1987 and Regular First Appeals Nos.8, 9, 10, 11, 12, 13, 15, 16 and 17 of 1988 are. Being disposed of by single judgment as all of these appeals arise from the award of reference Court dated 21-9-1987. The first group of these appeals bearing Nos.142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159, 160, 161, 162 and 163 of 1987 are by Islamia University, Bahawalpur the beneficiary of acquisition proceedings while the appeals bearing Nos.8, 9, 10, 11, 12, 13, 15, 16 and 17 of 1988 are by owners of the land. These appeals arise out of acquisition proceedings under Land Acquisition Act (herein referred as Act) and [arise out] of following circumstances:-
(1) The District Collector, Bahawalpur issued notification under section 4 of the Act for compulsory acquisition of agricultural land measuring 2016 Kanals 2 Marlas for the construction/establishment of Islamia University, Bahawalpur in Chak No,8/BC Tehsil and District Bahawalpur. This notification was published in extraordinary Gazette of Government of Punjab dated 24-2-1979.
(2) Notification under section 17 of the Act was issued by the Commissioner, Bahawalpur Division, Bahawalpur and was published in the Gazette of Government of Punjab dated 29-3-1980. Islamia University (hereinafter referred as University) obtained the possession of the land acquired on 22- 11-1980. Accordingly in pursuance of these notifications notices were issued to the owners of land under section 9 of the Act, land owners appeared before the Land Acquisition Collector and claimed that the land acquired was situated in prohibited Zone, was extremely valuable, was situated near the Bahawalpur Town and had potential of becoming site for residential schemes; and the market value of the land was Rs,35,000 to Rs,40,000 per acre. They also claimed 8% compound interest from the date of taking over possession.
2. After taking into consideration the pleas of both the parties, the Land Acquisition Collector assessed the compensation at the rate of Rs,9,936.21 per acre by means of award dated 31-8-1981.
3. Feeling dissatisfied with this award Khadim Hussain son of Allah Ditta, Mst.Mai Noor Khatoon Mst.Sukhu Mai, Mst.Phapha Mai, Mst. Maraj Mai (hereinafter referred as owner) filed application under section 18 of the Act for sending the reference to the Civil Court for determination of correct compensation on 12-10-1981. Applications were filed separately by land owners. The Collector vide consolidated order referred these applications to the learned Senior Civil Judge for decision of reference. The learned Senior Civil Judge on the pleadings of the parties framed the following issues:-
(i) Whether the land, trees, superstructure have not been properly valued for the purpose of compensation to the owners and hence the compensation is liable to be enhanced? OPP
(ii) What was the market value of the land, trees and the superstructure at the land, trees and the superstructure at the time of their acquisition? OP. Parties.
(iii) How much compensation the petitioners are entitled to get in each case? OPP.
(iv) Relief.
4. The learned reference Court vide order dated 21-9-1987 accepted the references, enhanced the award from Rs,9,936.21 per acre to Rs,20,000 per acre with 15% compensation of compulsory charges for land along with 8% compound interest from the date of possession of the land. Hence these two groups of appeals by the University and owners of the land.
5. Learned counsel for the appellant (Islamia University, Bahawalpur) raised the following points:--
(1) It was contended that in accordance with the rule laid down in Pir Khan's case PLD 1987 SC 485, the private owners as well as University had no right to file appeal against the award of reference Court. On the basis of this rule it was suggested with emphasis that appeals filed by the owners of the land were not maintainable.
(2) It was next contended that the owners of the land herein appellant did not file objection under section 9 of the Act. According to him the owners on account of this omission were precluded to challenge the award rendered by the Land Acquisition Collector before the reference Court under section 25 of the Act. Strength was sought from Arura and others v. Wadhawa and others AIR 1929 Lah.10. Therefore, the award given by reference Court was without any legal efficacy. On the basis of this argument it was stressed that the learned reference Court had entertained invalid reference and the reference Court had rendered the award without any lawful authority.
(3) In the third instance, it was urged that the reference Court had granted interest under section 28 of the Act. According to him that Article 2-A has been made substantive part of the constitution and so the Courts were bound to follow the mandates of divinity contained in the Holy Qur'an and Sunnah. It was further submitted that the interest was unIslamic doctrine and had to be eliminated.
On the basis of this argument it was represented that the reference Court had no authority to grant award of interest under section 28 of the Act. The reliance was placed on Messrs Bank of Oman Ltd. v. Messrs East Trading Co. Ltd. And others PLD 1987 Kar.404; Habib Bank Ltd. v. Muhammad Hussain and others PLD 1987 Kar.612; Shahbazud Din Chaudhry and 27 others v. Messrs Services Industries Textiles Limited PLD 1988 Lah.1; Sardar Ali and others v. Muhammad Ali and others PLD 1988 SC 287 and Tyeb v. Messrs Alpha Insurance Co. Ltd. And another PLD 1990 CLC 428.
(4) In the fourth instance, it was contended that the award of interest under section 28 was in the exercise of discretionary authority of the reference Court, before awarding interest the reference Court had the power to examine the various circumstances and facts of the case and was not under any compulsion to grant it. On the basis of this argument it was contended that the reference Court must have been dictated by Rules of Muslim Common Law and must have sought guidance ,from the provisions relating to interest in the Holy Qur'an and Sunnah. The learned reference Court had not done so and therefore, the award of interest by the reference Court is thoroughly illegal and cannot be sustained. The reliance was placed on Mian Aziz A.Shcikh. v. The Commissioner of Income-tax Investigation Lahore PLD 1989 SC 613.
(5) In the fifth place assault was made on the compensation determined by the reference Court. It was contended that the owners have not established by adequate evidence that the market value of land was Rs,20,000 per acre. According to him the transaction of sale embodied in Ex.P.5, Ex.P.6, Ex.P.7, Ex.P.9 and Ex.P.10 related to urban areas and were irrelevant for the purpose of consideration of compensation of land in dispute which was rural agricultural land. The transaction of sale incorporated in sale-deeds bearing Ex.P.18, Ex.P.17, Ex.P.11, Ex.P.12 also related to sale of land in residential purpose. These transactions were not of help for the purpose of computation of market value. Ex.13, and Ex.p.14, related to sale in Mauza Ghangiwala for Industrial purposes. The land sold in these documents was neither in the vicinity of land in dispute nor tht sale was made for agricultural purpose. So no reliance can be placed on these documents for the purpose of deducting market value of land in dispute. As far as the land in Chak No,9/BC is concerned thcre was sufficient evidence that it was within municipal limits, accordingly the only relevant documents arc Exs.P.3, P.4 and P.2. The learned reference Court has committed errors of law by assessing the compensation of Rs,2,000 without any factual basis. On the basis of this argument it was suggested that this award rendered by the Land Acquisition Collector was correct and just.
6. On the other hand, learned counsel . For appellant-owners raised the following points:--
(1) It was contended that the ratio laid down in Pir Khan's case was applicable to appeals filed by the University. Elaborating the contentions, it was contended that the award made by the Land Acquisition Collector becomes final, as far as local authority and University was concerned under section 50(2) of Act neither the Islamia University nor the Land Acquisition Collector has right to file the reference and so the University had no locus-standi to file the appeals.
(2) As far as the objection with respect to non-filing of claims under section 9 of the Act was concerned, it was stated that the owners appeared before the Land Acquisition Collector and laid the claim that the market value of the land was between Rs,35,000 and Rs,40,000 per acre. It was urged that this objection was recorded by the Land Acquisition Collector in his award.
' According to the learned counsel the objection on behalf of the University in this respect was totally unfounded and baseless.
' It was further asserted that neither this objection was taken in written statement nor this objection was taken in memo. Of appeal. So the University was precluded to raise this question in this appeal.
7. It was finally submitted that the provisions of section 9 of the Act were directory in nature and were not of vitiative consequences. Reliance was placed on Lalsaheb Nabin Chandra Bhani Deo and others v. The State of Orissa AIR 1975 Orissa 126, Province of Punjab and others v. Mufti Muhammad Ishaq and others PLD 1984 Lah.261.
8. On the question of interest, learned counsel appearing on behalf of owners of land contended that the award by reference Court rendered on 21-9-1987. The appeals were admitted and this Court suspended the execution/operation of the award subject to condition that the .Government shall furnish adequate security in respect of award. Neither the University nor the Government did comply with this order and deprived the owners from the use of land as well as use of the value of the land. On the basis of this narrative it was contended that the University was precluded by conduct to raise this question in this Court on account of their conduct which was visibly contumacious and mala fide. Continuing this submission on this question it was submitted that the mandate in section 28 was mandatory in nature and not directory.
9. It was next contended that the award of interest under section 28 and section 34 was not repugnant to injunctions of the Holy Qur'an and Sunnah. The award of interest under sections 28 and 34 was made in lieu of the wrongful deprivation of land to owners, therefore, it fell within the meaning of compensation and not within the meaning of "Riba". The reliance was placed on Behari Lal Bhargava v. Commissioner of Income-tax AIR 1941 Allahabad 135.
10. Elaborating the contention it was further urged that section 28 of the Act was mandatory in nature. It was urged that the award of interest as a matter of fact was decreeing of compensation on account of deprivation to the use of land of owners in lieu of compulsory acquisition proceedings. On the basis of this argument it was suggested that the provisions of sections 28 and 34 of the Act were pre-emptory in nature.
11. Dealing with the question of impact the Article 2-A of the Constitution of Islamic Republic of Pakistan, 1973 it was contended that the term interest embodied in sections 28 and 34 in fact meant the compensation for the use of land of owners acquired compulsorily under the Act. It was neither fixed profit on loan nor it was accretion on a k)an investment. According to him, therefore, it was not within the meaning of "Riba" as enshrined in the Holy Qur'an and Sunnah.
12. It was submitted that the Federal Shariat Court had found the Land Acquisition Act in accord with the injunction of Islam in Mohsan A.RahmaA and another v. Federal Government and another PLD 1982 F SC 233. On the basis of this argument it was contended that the rule laid down in Karachi cases was not correct. The reliance was placed on Karachi Development Authority v. Haji Ghulam Ali etc. 1989 MLD 2238 and Land Acquisition Collector v. Ch.Muhammad Ali PLD 1978 Lah.1372.
13. Coming to the contention, that the Objectives Resolution had been made substantive part of the Constitution and the Court was bound to deny the award of interest under section 28 and section 34 of the Act, it was replied that the Act was found not repugnant to injunctions of Islam. It was contended that the rule laid down in Irshad H.Khan v. Mrs.Parveen Ajaz PLD 1987 Kar.466 and Habib Bank Ltd. v. Muhammad Hussain and others PLD 1987 Kar.612 was not applicable to this case.
Secondly these provisions related fiscal matters which were protected under Article 203 of the Constitution.
14. We have heard the arguments of both the parties and examined the record with their assistance. The question emerging for consideration from the submissions of the parties are:--
(1) Whether the appeals filed by the owners and by the University are incompetent?
(2) Whether the finding of the reference Court on the question of compensation is correct?
(3) Whether the provisions of section 28 and section 34 of the Act are hit by the principle of `Riba' as enshrined in the Holy Qur'an and Sunnah?
(4) Whether the provisions of section 28 and section 34 are discretionary and so the Court is not obliged to award, interest in view of commandments in the Holy Qur'an and Sunnah?
(5) Whether the owners did not file any objection under section 9 of the Act and so were precluded to challenge the award of Land Acquisition Collector before the reference Court.
15. We herein proceed to determine these questions one by one. We take up first the question No,1.
Both the parties have pressed this contention on the basis of rule laid down in Pir Khan's case. It will be instructive to examine the Pir Khan's case. In this case the land was acquired under the Act for the purpose of construction of Pakistan Ordnance Factory, Havclian. The owners of the land submitted objection petition under section 18 read with section 30 of the Act. The learned reference Court after considering the evidence of the parties assessed market value of the land as Rs,3,000 and Rs,2,000 per kanal. The Military Estate Officer, Hazara Circle, Abbottabad and the Central Government of Pakistan through Defence Secretary, filed appeal before the High Court of West Pakistan. The owners thereof respondents took up a preliminary objection that neither the Military Estate Officer nor the Central Government had a locus-standi to file appeal. The Division Bench of the High Court Peshawar rejected the contention and proceeded to accept the appeal to the extent of compensation awarded by reference Court by reducing the rate of compensation. The owners of land filed appeal under Article 185 (2)(e) of Constitution of Pakistan. Accepting the contentions of owner-appellant, it was held by Supreme Court PLD 1987 SC 485, that the appeal filed by the Military Estate Officer and the Central Government was incompetent. It will be relevant to notice the rule laid down by the Supreme Court in this case:-- "We agree and would add that the order of the Civil Court on reference made to it by the Land Acquisition Collector is not an independent order but merely a substitutive order, whereby the award of the Land Acquisition Collector is substituted by the order of the Civil Court, which order then becomes the award. Since, by virtue of subsection (2) of section 50 of the Act, the award made by the Land Acquisition Collector is final and cannot be challenged except by a party which has expressly been conferred the right of appeal, hence respondents Nos.] and 2 who did not have any such right expressly conferred on them, did not have any locus standi to file an appeal. As already observed, no such right is to be assumed on any a priori ground and a right of appeal can be exercised only if it has been expressly conferred on a party by statute.
' Furthermore, neither the Central Government nor the Military Estate Officer can be deemed to be parties who have been adversely affected by the order of the Civil Court. If the Central Government or the Militaty Estate Officer could get the land in question more cheaply by private negotiations they can refuse to accept the land at the price determined by the Court. They cannot have it both ways. Having chosen to set in motion the special powers given to the Government to acquire land under the Land Acquisition Act for public purposes they are to be confined to those provisions and cannot claim further rights and higher privileges than those provided for under the provisions of the said Act. Since under the provisions of the Act only a special and limited appeal is provided for against the award of the Court, which in the facts and circumstances of this case would be availed of by the Provincial Government nor the Collector chose to file an appeal, the appeal filed by the Central Government and the Military Estate Officer was indeed an appeal filed. By "strangers", having no locus standi to file it."
' The same principle was reaffirmed in Behram Khan and 54 others v. Military Estate Officer and 2 others 1988 SCMR 1160 in Pakistan Steel Mills Corporation Limited and others v. Deputy Commissioner (East) Karachi and others 1989 SCMR 812. In this case the Pakistan Steel Mills Corporation Limited a company for whose benefit land was acquired under Act filed an appeal against the order of reference Court under section 18 of the Act. The High Court relying upon the rule laid down in Pir Khan's case dismissed the appeal. The Pakistan Steel Mills Corporation instituted a civil petition for leave against the order of the High Court. The Supreme Court re- affirmed rule laid down in Pir Khan's case and dismissed the petition.
' In this sequence is the case of WAPDA v. Muhammad Farid and others 1990 SCMR 98, in which case the WAPDA filed civil appeals against the judgment of High Court. In this case the learned Attorney-General took up the point that in Pir Khan's case certain provisions of the Constitution of Pakistan were over-looked namely Article 152 which inter-alia provides that "the Federation may, if it deems necessary to acquire any land situate in a Province for any purpose connected with a matter with respect to which Parliament has power to make laws require the province to acquire the land on behalf and at the expense of the Federation", Article 149 empowers the Federal Government to give all necessary directions to a Province. Therefore, it was contended that the Federal Government in view of these constitutional provisions was a necessary party in proceedings relating to acquisition made by the Province on its, behalf. The Supreme Court granted leave and held that Pir Khan's case was decided by the three Judges of the Supreme Court. The rule laid down in Pir Khan's case was approved by a Bench comprising of 5 Judges of Supreme Court. It was, therefore, necessary that this case be placed before a larger Bench of 7 Judges.
16. We have considered the rule propounded in Pir Khan's case. We are clear in our mind that the University for whom the land was acquired is stranger to acquisition proceedings. It has a right of filing cross objection under section 21 of the Act but has no right to file appeal under section 54 of the Act. If it is aggrieved of the award rendered by the reference Court it can straightaway decline to purchase the land acquired. Accordingly we are of considered opinion that in view of the rule laid down in Pir Khan's case, the University had no locus standi to file appeals. Accordingly appeals filed by the University are dismissed.
17. Now it is appropriate to examine the second question as to whether the finding of the reference Court on question of compensation is correct. It is a settled principle of law that Act is founded upon the doctrine of "salus populi suprema lex "that the interests of the public are supreme and that the private interests are subordinate to the interests of the State, therefore, it is a well established canon of interpretation that in construing the provisions of this Act, the benefit is to be given to subject. The law dealing with the circumstances to be considered for determination of compensation is contained in sections 23 and 24 of the Act. A bare reading of section 23 and section 24 of the Act indicates that neither the value of the land nor the market value of the land is defined in it. In sections 23 and 24 the circumstances are provided for the purpose of computing the compensation. The sections 23 and 24 have engaged the attention of the superior judiciary in a number of cases. It was laid down by the Privy Council in Fraser v. City of Fraserville (L.R.(1917) A C 194) that:- "It is the value to the seller of the property in its actual condition at the time of expropriation with all its existing advantage and with all its possibilities, excluding any advantage due to the carrying out of the scheme for the purpose for which the property is compulsorily acquired."
18. The same principle was reaffirmed in R.B. Lala Narsingh Das v. Secretary of State of India (1925 Privy Council 91). This principle was again reaffirmed in Atmaram Bhagwant Ghadgay v. Collector of Nagpur AIR 1929 Privy Council 92, Vyricherla Narayana Ajapatiraju v. Revenue Divisional Officer- VI, Gapatam AIR 1939 Privy Council 98; Malik Abdul Qayyum etc. v. Punjab Province etc. PLD 1979 Lah.853.
19. The same golden principles for the purpose of assessing the compensation/market value of the land were followed with enough emphasis in Secretary of State v. Naresh Char ra Bose AIR 1926 Calcutta 1000, Collector of Chingleput District, Saida v. Kadir Mohideem AIR 1926 Madras 732 and Secretary of State v. Chuni Lal and others AIR 1931 Lahore 207.
20. In Fazalur Rehman and others v. General Manager, S.I.D.B. And another PLD 1986 SC 158, in this case the circumstances of future use of property was also taken into consideration while considering this question, his Lordship MrJustice Aslam Riaz Hussain observed as follows:- "I would, therefore, like to emphasise that while determining the value of the land acquired by the Government and the price which a willing purchaser would give to the willing seller, only the "past sales" would not be taken into account but the value of the land with all its potentialities may also be determined by examining (if necessary as a Court-witness) local property dealers or other persons who are likely to know the price that the property in question is likely to fetch in the open market. In appropriate case there should be no compunction even on relying upon the oral testimony with respect to the market value of the property intended to be acquired, because even while deciding cases involving questions of life and death, the Courts rely on oral testimony alone and do not insist on the production of documentary evidence. The credibility of such witnesses would, however, have to be kept in mind and it would be for the Court in each case to determine testimony. It would be useful and even necessary, to examine such witnesses while determining the market price of the land in question, because of the prevalent tenancy that in order to save money on the purchase of stamp papers and to avoid the imposition of heavy gain tax levied on sale of property, people declare or show a much smaller amount as the price of the land purchased by them the price actually paid. The 'previous sales' of the land cannot, therefore, be always taken to be an accurate measure for determining the price of the land intended to be acquired."
21. In R.FA. No,77 of 1973 a Division Bench of this Court after surveying the entire case law laid down the following principles in respect of assessment of a compensation:--
(1) The market value or market price means the price property would fetch in the market. The price will be highest price a willing buyer would pay a willing seller would accept both being fully informed and the property being exposed for a reasonable period of time.
(2) The market value may be a different from the price a property can actually be sold at a given time. The market value is that price which might be expected to bring if offered for sale in a fair market.
(3) In assessing the compensation the potential value i,e, the benefits, advantages arising from the present use and future use are to be taken into consideration.
(4) The inflationary trend and depreciation in currency of the country between the date of acquisition under section 4 of the Act and the date of award also should not be totally ignored and be taken into consideration.
22. In the light of aforesaid principle we herein proceed to examine the evidence produced by the parties. It is apparent from the record that the land at the time of acquisition was being used for the purpose of agriculture. There is no evidence on the record as to whether the chak in which the land was situated had a civic amenities like electricity, sewerage, therefore, we have no evidence except the evidence that the nature of the land was purely agricultural. Neither it was being used for any residential purpose nor had any potential for becoming site for residential schemes. Having concluded that it was purely agricultural land at the time of acquisition, we herein proceed to assess the documentary evidence produced by the owners. Exs.P.5, P.6, P.7, P.8, P.9, P.10, P.17 and P.18 are the registered sale-deeds which related to land situated in urban areas and were made for residential purposes, therefore, they are not relevant for the purpose of the case. The documents bearing Exs.P.11 and P.12, also related to urban areas while the documents bearing Exs.P.13 and P.14 related to Mauza Ghangiwala where the land was sold for the purpose other than agriculture. We are, not, inclined to place reliance upon the documents noted above. Similarly Exs.P.2, P.3 and P.4 do not shed much light on question of assessment of compensation. However, the documents of sale bearing Ex.P.19 stand on distinguishable footing. It relates to sale of agricultural land measuring 32 Kanals in Chak No,10/BC b means of a registered sale-deed dated 15-11-1980. The rate given in this documents is Rs,21,250 per acre. Neither the Land Acquisition Collector nor the reference Court had taken notice on this document. This document clearly relate to land situated in contiguous chak, the sale is in respect of agricultural land There was no dispute with respect to this document at the time of sale. Therefore, we are of considered view that this document can be taken into consideration as reasonable basis for determining compensation of land in dispute in this case. We accordingly on the basis of this document accept the appeals by the owners, enhance the compensation from Rs,20,000 to Rs,21,250 per acre. As there is no evidence with respect to circumstances of inflationary trends, we are not able to examine the case of the owners from this perspective.
23. Having determined the first two questions, now we propose to examine the remaining questions 3 and 4. The contentions of both the parties have to be examined in the first instance by examining the doctrine of the "Riba" enshrined in the Holy Qur'an and Sunnah. The clear and unequivocal commandments of the Holy Qur'an on the subject of elimination of "Riba" (Interest) are as under:-
(1) First Revelation (Surah al-Rum, verse 39)
' That which you give as interest to increase the peoples' wealth increases not with God; but that which you give in charity, seeking the goodwill of God, multiplies manifold (30:39).
(2) Second Revelation (Surah Al-Nisa, verse 161)
' And for their taking interest even though it was forbidden for them, and their wrongful appropriation of other peoples' property. We have prepared for those among them who reject faith a grievous punishment (4:161).
(3) Third Revelation (Surah Al-Imran, verse 130-2)
' 0 believers, take not doubled and redoubled interest, and fear God so that you may prosper Fear the fire which has been prepared for those who reject faith, and obey God and the Prophet so that you may receive mercy (3:130-2).
(4) Fourth Revelation (Surah al-Baqarah, verses (275-81).
Those who benefit from interest shall be raised like those who have been driven to madness by the touch of the Devil; this is because they say: Trade is like interest' while God has permitted trade and forbidden interest. Hence those who have received the admonition from their Lord and desist, may have what has already passed, their case being entrusted to God; but those who revert shall be the inhabitants of the fire and abide therein forever (275). 0 Believers, fear God, and give up the interest that remains outstanding if you are believers. (278). If you do no do so, then be sure of being at with God and His messenger. But, if you repent, you can have your principal. Neither should you commit injustice nor should you be subjected to it (279).
If the debtor is in difficulty, let him have respite until it is easier, but if. You forego out of charity, it is better for you if you realise (280).
65. On this very subject the Traditions of the Holy Prophet (May peace be upon him) may also be quoted:--
(1) From Jabir: The Prophet, (May peace be upon him) cursed the receiver and the payer of interest, the one who records it and the two witnesses to the transaction and said: 'They are all alike (in guilt)' (Muslim, Kitab alMusaqat, Bab L la-ni akili al-riba wa mu`kilihi; also in Tirmidhi and Musnad Ahmad).
(2) Jabir inb `Abdallah, giving a report on the Prophet's Farewell Pilgrimage, said: The Prophet (May peace be upon him) addressed the people and said 'All of the riba of Jahiliyyah is annulled. The first riba that I annul is our Riba, that according to 'Abbas ibn Abd al-Muttalib (the Prophet's uncle); it is being cancelled completely (Muslim, Kitab alHajj, Bab Hajjati al-Nabi, May peace be upon him, also in Musnad Ahmad).
(3) From Abdallah ibn Hanzalah: The Prophet (May peace be upon him) said: "A dirham of riba which a man receives knowingly is worse than committing adultery thirty six times" (Mishkat al- Masabih Kitab alBayhaqi as also reported the authority of hadith in Shu'ab al-iman with the addition that 'Hell befits him whose flesh has been nourished by the unlawful' (Ibid).
(4) From Abu Hurayrah. The Prophet (May peace be upon him) said; On the night of Ascension I came upon people whose stomachs were like houses with snakes visible from the outside. I asked Gabreil who they are? He replied that they were people who had received interest (ibn Majah, Kitab al-Tijarat, Bab al-taghlizifi al-riba, also in Musnad Ahmad).
(5) From Abu Huryrah: The Prophet (May peace be upon him) said `Riba has seventy segments, the least serious being equivalent to a man committing adultery with his own mother: (Ibn Majah, ibid).
(6) From Abu Hurayrah: The Holy Prophet (May peace be upon him), said `There will certainly come a time for mankind when everyone will take riba and if he does not do so its dust will reach him'
(Abu Dawud Kitab Al-Byuu, Bab fi ijtinabi al-shubuhat; also in Ibn Majah).
(7) From Abu Hurayrah, The Holy Prophet (May peace be upon him) said `God would be justified in not allowing four persons to enter paradise or to taste its blessings; he who drinks habitually, he who takes riba, he who usurps an orphan's property without right and he who is undutiful to his parents' (Mustadrakal-Hakim al-Byua).
24. We have taken the translation of commandments in the Holy Qur'an from the judgment of his Lordship Mr. Justice Khalil-ur-Rehman Khan Shahbazud Din Chaudhry and 27 others v. Messrs Services Industries Textiles Limited and 4 others PLD 1988 Lah.
1. The problem of Riba had engaged the attention of the companions of the Holy Prophet (May peace be upon him), Muslim Jurists and the Interpreters of the Holy Qur'an.
25. The word `Riba' literarily means increase, addition, additional amount. The institution of `Riba' was prevalent in Arabia before the dawn of Islam and so the injunctions of the Holy Qur'an were revealed from time to time to eliminate this hideous institution.
26. It will be appropriate at this stage to examine the historical background of the commandments relating to `Riba' in the Holy Qur'an. There is no dispute that the verse in Surah Rum came first on this subject. The verse contained in Surah Nisa Al-Imran and Surah Baqra were revealed later on during the Madni period of the Holy Prophet (May peace be upon him). It is also clear that the commandments in the Holy Qur'an relating to Riba are unequivocal, express and without any doubt. In these commandments a warning is given to those who were thriving on `Riba' that they were in fact waring with Allah the Lord of universe. Accordingly this subject merited attention of the companion of the Holy Prophet (May peace be upon him), the Jurists and Interpreters of the Holy Qur'an. We proceed to start with the sayings of Hazrat Farooq-e-Azam (be God pleased with him) the second Khalipha of Islam:- {{ARABIC TEXT}} (See page 18 by Mufti-e-Azam Maulana Muhammad Shafi, published by Adaratul Moarif Karachi No,18.
27. In short the number of renowned Muslim Jurists and the Interpreters of the Holy Qur'an spared no efforts to examine the meanings of Riba and its scope in depth.
28. This problem was examined by Hazrat Imam Razi in his Tafseer known Tafseer Kabeer in scientific manner. The relevant portion of in page-21 by Mufti-e-Azam Maulana Muhammad Shafi, published by Adaratul Moarif Karachi No,18 is as follows:- {{URDU TEXT}}
29. The views of Hazrat Imam Razi on interest have also been quoted in a book "Islam and the Theory of Interest" by Anwar Iqbal Qureshi published by Sh.Muhammad Ashraf, Kashmiri Bazar, Lahore page-50 are as follows:-
(1) According to Imam Razi the word Riba means and indicates 'increase or addition. But it does not mean that every kind of increase is unlawful. What is, however, illegalised is that particular contract which the Arabs called `Riba'. This is exactly what they named Riba Nasia ( What, therefore, has been declared illegal or unlawful in the Holy Qur'an is the same Riba Nasia.
(2) Another reason for the unlawfulness of Riba is that such transaction necessitates the exacting of another's wealth without legal consideration or return. One who extorts this does so without consideration. This amounts to exploitation and reduces the debtor to poverty which is a colossal inequity. The Prophet (on him be peace) has said that a man's wealth is as unlawful to another as his blood. And it is on account of this that extortion of wealth without lawful consideration is illegalised. If it is argued that in so far as the debtor keep; in his possession and uses the creditor's (principal) amount for a stated time in return or as a compensation for using the said amount for the stated time, there appears to be no obvious reason for illegalizing this 'additional money', for had the principal amount, which the creditor hands over to or allows the use of it to the debtor, been in his own possession, he (the creditor) might with advantage invest it in some business from which certain profit would naturally accrue to him. But as he (the creditor) has been restrained from investing this (Principal) money on account of his having parted with it to the debtor, he cannot derive from it that profit which would otherwise accrue to him through business. If, therefore, the debtor, pays him 'something additional' by way of a 'return' for the use of the creditor's loan to him, it should be quite lawful for the creditor to receive it. Against this view, it might be pointed out that if the creditor, instead of loaning out his principal to his debtor, were to invest it in some business, it is not always necessary that he would derive profit from it. On the other hand, it is quite possible that he might suffer a loss thereby. Thus the creditor's deriving a 'profit' from every investment in business is uncertain, whereas this 'additional amount' from the debtor to the creditor is certain.
(3) Another reason advanced for the illegality of 'interest' is the fact that income by way of 'interest' prevents the receiver (creditor), from indulging in any occupation or profession, for the creditor would certainly find it easy to acquire his livelihood from interest on cash or deferred loans. He would thus, loathe engaging himself in some business or occupation which entails labour or hardship. This would give a setback to public utility, in so far as it is an accepted fact that wordly affairs cannot progress satisfactorily without trade, arts and crafts.
(4) Another reason for the illegalization of interest is that 'debt' cuts at the very root of one's honor and respect in society. If interest is declared illegal, people would naturally abstain from borrowing and squandering money. On the other hand if it be made lawful, people with a view to gratifying their growing needs, would not hesitate in borrowing at any rate. This would bring to an end mutual sympathy, human godliness and obligation.
(5) Another reason for illegalizing all transactions for interest appears to be this that in all probability the debtor might become rich, while the creditor, poor. If, therefore, Riba transactions are declared lawful the rich will seek poor people's money more and more. The final reason is that the Holy Qur'an which is the highest authority on Islamic Law, lays down clear and unambiguous orders against all Riba transactions. It is not necessary, therefore, that reasons must be advanced for orders enjoined in it, and since Riba transaction have been declared illegal by the Holy Qur'an, it is quite probable that we may not be able to know the reasons which necessitated, this order.
Imam Razi then tries to explain the Quranic verse referring to Riba which contains the phrase and in so doing he enters into a very interesting discussion about the 'Devil's ability or power' to harm human beings. In his conclusion he points out that Arabs of the pagan- days used to attribute 'Epilepsy' as having been caused by the Devil's touch. When, therefore, they were addressed in the Holy Qur'an it was abundantly necessary to employ and refer to such ideas which were commonly entertained by them."
30. We have taken into consideration the commandments in the Holy Qur'an and Sunnah, the opinion of the Religious Scholars on the subject of Riba and have come down the following conclusions:-
(1) The doctrine of Riba means the increase addition, additional amount on the principal which is loan
(i) The transactions of Riba is made between lender and borrower. The loan is made with stipulation of repayment of principal amount along with fixed amount of accretion, additional amount. The transaction is not subject to concept of profit and loss as ordained in the Holy Qur'an.
(2) This type of accretion repayment is known as Riba-ul-Nasia, Riba-ulNaqid.
(3) The Riba-ul-Fazal is the second class of Riba which contains a transaction of exchange of articles enumerated in the Hadith of the Holy Prophet (May peace be upon him) which is as follows:- {{URDU TEXT}} at page 17 by Mufti-e-Azam Maulana Muhammad Shafi, published by Adaratul Moarif Karachi No,18.
' These transactions were made to coerce other party to give the articles at a highly exhorbitant and oppressive manner. The Riba-ul-Fazal is made by a dominent party who force the needy party to accept such exhorbitant and oppressive terms.
31. In the light of fore-going discussion we are clear in our mind that doctrine of Riba has following requisites:--
(1) Advancement of loan by the lender.
(2) Receipt of loan by the borrowers.
(3) Stipulation of repayment of loan (principal amount) along with the fix rate of profit/return.
These commandments placed emphasis on the principle of profit and loss in commercial transactions in order to save the human being from exploitation and from instinct of aggrandizement, loot and plunder.
(4) Speculative transactions routed in the instinct of exploitation of human being by human being.
32. Having examined the scope of Riba in detailed we now proceed to examine whether this principle is applicable to the provisions contained in sections 28 and 34 of the Act. Sections 28 and 34 of the Act are as follows:-
28. 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, the award of the Court may direct that the Collector shall pay compound interest on such excess at the rate of eight per centum per annum from the date on which he took possession of the land to the date of payment of such excess into Court.
34. When the amount of such compensation is not paid or deposited on or before taking possession of the land, the Collector shall pay the amount award with compound interest at the rate of eight per centum "per annum from the time of taking possession until it shall have been so paid or deposited.
33. There is no dispute that the Land Acquisition Act is colonial legacy. It was enacted for the purpose of compulsory acquisition of land needed for public urpose and for determination of amount of compensation to be made on account of such acquisition. The question to be noticed is whether the word `interest' embodied in section 28 and section 34 is synonymous with the term Riba contained in the Holy Qur'an and Sunnah. The word interest is from English language. It is contained in the Act which was enacted by foreign masters in their mother language. It is a word of more than so many meanings. It is necessary to notice the different meanings of the word interest given in Corpus Juris Secundum Volume 47 page-1 are as follows:- ' Interest A term which has been various defined as meaning advantage, something good; also concern; claim to advantage or benefit from a thing; anything that is profitable or beneficial. In a somewhat different sense, the word has been held to mean right, title, also part; portion; some of the parts, but not all; a partial or undivided right; title to a share; participation; share; undefined share.
' Commercially, the terms 'interest' and 'principal' are correlative; and sometimes 'interest' is used as synonymous with the plural, 'Interests' under some circumstances the term has been held equivalent to, or synonymous with, bonus, 'estate'.
Definitions.
' Interest is the compensation allowed by law, or fixed by the parties, for the use of forbearance of money, or as damages for its detention. Interest a loan, and it need not be paid in money. Interest is not analogous to attorney's fees.
34. Now we herein proceed to examine the meanings of "compensation" contained in the preamble and section 28 and section 34 of the Act. The definition of compensation given in Black's Law Dictionary Fifth Edition page 256 is as follows:-- Compensation Indemnification; payment of damages; making amends; making whole; giving an equivalent or substitute of equal value. That which is necessary to restore and injured party to his former position. Remuneration for service rendered, whether in salary fees or commissions. Consideration or price of a privileges purchased.
' Equivalent in money for the loss sustained; equivalent given for property taken or for an injury done to another, giving back an equivalent in either money is but the measure of value or in actual value or in actual otherwise conferred; recompense in value, recompense or reward for some loss injury or service, especially when it is given by statute; remuneration for the injury directly and proximately caused by a breach of contract or duty; remuneration or satisfaction for injury or damage of every description. An act which a Court orders to be done, or money which a Court or other tribunal orders to be paid, by a person whose acts or omissions have caused loss or injury to another, in order that thereby the persons damnified may receive equal value for his loss, or be made whole in respect of his injury.
35. Now the stage is set for the examination or words interest and compensation contained in sections 28 and 34 conjunctively for the purpose of examination whether the interest awarded under section 28 and section 34 ibid falls within the meanings of Riba. The word interest and compensation under sections 28 and 34 of the Act came up for consideration in Dehari Lal Bhargava v. Commissioner of Income-tax AIR 1941 Allahabad 135. In this case there was a reference under section S.66(2) Income-tax Act, (XI of 1922), the two houses of assessee's father were acquired under Land Acquisition Act, 1927. The Land Acquisition Collector awarded a sum of Rs,13,225 but the owner did not accept this compensation and got his claim referred to reference Court.' The reference Court enhanced the award to Rs,97,640 and directed the Improvement Trust to pay interest at the rate of 6% from the date of taking possession of the property. The Improvement Trust appealed to the High Court without any success and thereafter a sum of Rs,97,640 plus, Rs,49,660 as interest was paid to the sons of owners. Thereafter the Income-tax Officer took this interest as a profit and assessed the tax accordingly. The assessee appealed without any success and ultimately reference was submitted to the High Court.
36. After taking into consideration the different authorities, the Division Bench of Allahabad High Court gave the opinion in the following words:- "From these authorities it follows that interest awarded under S.28, Land Acquisition Act, is in the nature of compensation for the loss of the late owner's right to retain possession of the property acquired. In other words, it is damages assessed in terms of interest for loss of possession of property up to the date of receipt of its consideration. From another point of view it might be said that the interest so calculated represents the profits which the ex-owner might have made if he had retained the property, and on this view of the matter counsel for the department contends that profits so calculated are chargeable with Income-tax. But the assessce had lost both possession and title on 11th November, 1927 and so it is difficult to see how this money can be treated as profits when the assessee neither owned nor possessed what was, on this view of the matter, the only possible source of such profits. Nor can it very well be said that the money in question represents the interest which the assessee might have received by investing the principal sum, and this for two reasons. In the first police the principal sum which was ultimately found due as at 11th November, 1927 as compensation for the acquisition was not determined and so did not exist until 6th April, 1931, the date of the tribunal's order; and in the second place, as we have already said, the interest awarded is compensation for the loss of the date owner's right to retain the property. If the interest awarded under section 28, Land Acquisition Act, is income, it must have a source. It seems to us that there are only two possible sources, either the property or its equivalent in money, and as we have already said, we do not think that this interest can be said to have arisen from either of these. It is not the "fruit of a tree" to borrow the simile used in 1932 A L J 588 but was compensation or damages for loss of the right to retain possession; and it seems to us that S.28 was designed as a convenient method of measuring such damages in terms of interest. Under S.28 the awarding of interest is not mandatory but is discretionary with the Court; and so the claimant is not entitled to it as of right under any rule of law."
37. A Full Bench of the Patna High Court in AIR 1939 Patna 662 classified the various decisions of the English Courts, on the subject of interest and compensation into two main classes (1) cases where the interest is payable either under a contract or under a rule of law and (2) cases where damages have to apart awarded. In this case a widow had instituted a suit for possession for movable and immovable properties left by her husband and pleaded wrongful possession on the part of defendant. The suit was decreed in favour of widow with interest. It was held by the Bench that the sum received by the widow by way of damages was not an interest for profit and therefore, it was not liable to Income-tax. In Revenue Divisional Officer v. Venkatarama AIR 1936 Madras 199, it was held that right of interest is equivalent to right to retain possession.
38. In the light of fore-gone analysis we have no doubt in our mind that the right to receive the interest under sections 28 and 34 is a right to receive the compensation on account of deprivation of their land under compulsory acquisition proceedings under the Act. We are further of the view that compulsory, acquisition proceedings under the Act are involuntary in nature and result into the loss of use of land acquired. Therefore, applying the principle of beneficial construction, we hold that the interest under sections 28 and 34 does not fall within the meanings of Riba laid down in the injunctions of the Holy Qur'an and Sunnah. The award of interest is neither a repayment of additional amount on loan nor it is a accretion on compensation in favour of land on account of loss of land under coercive statutory proceedings. It is in fact giving an equivalent or a substitute of equal value. It is in fact "that compensation" by which an injured party is restored to its formal position.
39. On the basis of conclusion, we do not find any substance in the contention of the learned counsel appearing on behalf of the University that the discretionary authority of this Court under section 28 of the Act, is not exercised in 'favour of the owners. From the record it is apparent that it was the Government which had declined to make the payment of compensation irrespective of the fact that the Government did not comply with the term of interim order staying the execution/operation of the award of reference Court; that the Government had taken possession of the land in dispute without making the compensation.
40. Now we take up the question No,5. It is very clear from the Act that the Collector had to ask the persons interested to state the nature of their respective interest and the amount of compensation they asked for. It is also to be stated in notice whether the persons interested shall submit their claims in writing or not. It is very clear from the record of the case that the owners of the land did appear before the Collector laid their claims stating the market value of land in dispute. No objection was taken in respect of non-compliance with the provisions of section 9 of the Act in written statement by the respondent. Neither any objection was taken before the reference Court nor in the memo. Of appeal before this was taken before the reference Court nor in the memo. Of appeal before this Court. Accordingly we are convinced that the object of respondents is devoid of any force and is thoroughly untenable. Accordingly this objection is repelled.
41. In result the appeals filed by the Islamia University fail and are dismissed with costs throughout.
The appeals filed by the owners of the land are accepted. The appellants/owners of the land are entitled to receive compensation at the rate of Rs,21,250 per acre with 15% compensation of compulsory charges for land acquisition, with 8% per annum compound interest from the date of possession. They shall be further entitled to receive compensation at the rate of 8% on enhanced compensation from the date of taking possession from owners to the date of payment. The parties are left to bear their own costs.