2008 (11) TMI 608 - SC - Indian Laws

Whether award of interest by the High Court on the compensation for acquisition of requisitioned property under Defence of India Act 1962 is impermissible? Held that - As the acquisition is of the year 1965. Though more than four decades have elapsed the land owners are yet to get the compensation in entirety. It is also relevant to note that when the Arbitrator awarded interest it was not challenged by the appellant. It accepted the award of interest. Only when the High Court increased the amount of compensation in the appeals filed by the landowners the appellant chose to challenge not the increase in compensation but the award of interest. Be that as it may. Thus for the reasons aforesaid the award of interest at 6% per annum on the compensation amount upheld. Appeal dismissed.

Summary

Issues Involved:
1. Legality of awarding interest on compensation for the acquisition of requisitioned property under the Defence of India Act, 1962.
2. The applicability of equitable principles in awarding interest on delayed compensation.
3. Validity of the provisions of the Defence of India Act, 1962 in light of previous judgments.

Detailed Analysis:

1. Legality of Awarding Interest on Compensation:
The core issue was whether the award of interest by the High Court on the compensation for the acquisition of requisitioned property under the Defence of India Act, 1962, was permissible. The appellants argued that the Act did not provide for either solatium or interest, relying on precedents such as Union of India v. Hari Krishan Khosla and Union of India v. Chajju Ram. The Supreme Court noted that Sections 36 and 37 of the Act did not contain provisions similar to Sections 23(2) and 28/34 of the Land Acquisition Act, 1894, which provide for solatium and interest. However, it was highlighted that the absence of such provisions did not invalidate the Act, as established in Hari Krishan Khosla and Chajju Ram.

2. Applicability of Equitable Principles:
The respondents argued for the application of equitable principles due to the inordinate delay in compensation payment. The Court acknowledged that while the Act did not explicitly provide for interest, equitable principles could justify such an award. It was emphasized that courts have consistently awarded interest on delayed compensation based on equitable grounds, citing cases like Prabhu Dayal v. Union of India and Girdhari v. Union of India. The Court reiterated that interest should be awarded from the date of acquisition, not requisition, to compensate for the loss of possession and income.

3. Validity of Provisions of the Defence of India Act, 1962:
The Court examined the validity of the provisions under the Defence of India Act, 1962, in light of previous judgments. It was noted that the validity of similar provisions under the Requisitioning and Acquisition of Immovable Property Act, 1952, and the Defence of India Act, 1971, had been upheld in previous cases. The Court referenced the Constitution Bench decision in Chajju Ram, which upheld the validity of Sections 30 and 31 of the Defence of India Act, 1971, affirming that the Act was a self-contained code and that different classifications for compensation were reasonable.

Conclusion:
The Supreme Court upheld the award of interest at 6% per annum on the compensation amount, emphasizing that equitable principles justified such an award in the absence of explicit statutory provisions. The appeals were dismissed, and the decision was applied to other related cases, ensuring uniformity in the application of the law.

Separate Judgments:
The judgment did not involve separate opinions by different judges. The decision was delivered collectively, and the analysis and conclusions were uniformly applied to all related appeals and special leave petitions.