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TMI Blog1966 (9) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... granted under the award of the Collector. Under Section 28 of the Land Acquisition Act, as it stood before the amendment the District Judge was required to grant interest at the rate of 6% per annum but this rate of interest was reduced to 4% per annum by virtue of the amendment. The Amendment was passed in I960 and having received the assent of the then Sadar -i -Riyasat was published in the Government gazette on 19th October 1960 The relevant amendment of Section 28 is to be found in section 7 of the Amending Act which runs a follows : - Amendment of sections 28 and 35, Act X of 1990 In section 28 and 35 of the said Act, for the words and figures six per centum and 6 per centum the words four per centum shall be substituted. ( 3. ) A bare perusal of the amendment would clearly show that it does not contain any word or phrase to indicate that the amendment should run retrospectively so as to apply even to pending proceedings before the judgment by the District Judge is given. It was, however, contended by the Advocate General for the State, who is appellant in all these cases that since the District Judge passed his order enhancing the compensation when the amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall take up this contention little later. The Advocate General further argued that the provisions of section 28 were purely directory in nature and the court was only given a discretion to grant interest and not a duty to do so. It is however manifest that if it is held that the provisions of sections 28 are mandatory and the granting of interest in not a matter of discretion, but a question of duty, then undoubtedly the effect of the Amendment will be to take away a vested right of the persons whose lands were acquired and the language of the Amendment does not justify its being treated to be retrospective in operation. In these circumstances, we would first take up the question as to whether the provisions of section 28 are mandatory or directory in nature. A review of the entire authorities on the question shows that there are two sets of authorities on this point One class of authorities lay down that section 28 is discretionary but interest must be allowed by the court unless there are special circumstances to negative this relief. The other class of authorities have not dealt with the question as to whether provisions of section 28 are mandotary or directory but have laid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect we find ourselves unable to follow the reasoning. Certainly we are not prepared to accept the judgment as a guide to the decision in the present case. But in a case where title passes to the State, the statutory interest provided thereafter can only be regarded either as representing the profit which the owner of the land might made if he had the use of the money or the loss he suffered because he had not that use. In no sense the terms can it be described as damages or compensation for the owners right to retain possession for he has no right to retain possession after possession was taken under S. 16 or S. 17 of the Act. Apart from this, two decisions reported in AIR 1953Patna, 217 and AIR 1943 Madras, 682 have dissented from the view taken by the Allahabad High Court in AIR 1941 Allahabad, 135 and in fact doubted the correctness of this decision. In view of these circumstances, the authority of the Allahabad High court appears to us have been considerably weakened, and we are not prepared to follow the same and for the same reasons AIR 1931 Allahabad, 135 cannot be held to be good law. In other cases, namely those reported in 40 Indian Cases, and 1962 Patna, 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered and which have to be neglected in determining compensation. It may be noticed that both the court mentioned in section 18 for the purpose of reference and the Collector have to take into consideration the very same factors and standards in order to determine the compensation. Thus it would appear that the power of the Collector and that of the court to whom the reference is to be made under section 18 are the same regarding the fixing of compensation Under section 26 the award is to be given by the Judge which has the force of a decree. Section 35 lays down that where the amount of compensation is not paid or deposited on or before taking possession of the land, the Collector shall pay the amount awarded with interest at the rate of 6% per annum from the date of possession until the date of payment. It would be seen, therefore, that the language of section 35 is clearly mandatory in nature and imposes a duty on the Collector to pay interest on the amount which has been detained by him (the collector). Furthermore, sub. clause 2 of section 23 enjoins on the court that a sum of 15% as solatium (Jabrana) should be paid on the market value of the compensation awarded. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on coupled with an obligation or where it confers a positive benefit to a general class of subjects in a Utility Act, or where the court advances a remedy and suppresses the mischief or where giving the word a directory significance would defeat the very object of the Act, the word May should be interpreted to convey a mandatory force. In AIR 1963 Supreme Court, 1618, their Lordships of the Supreme Court clearly held that where the word may indicated a discretion coupled with an obligation, it should be given a mandatory force. In this connection, their Lordships of the Supreme Court, observed, as follows : - The question for our decision is whether like the word may in R. 4 (1) which confers the direction on the Governor, the word may in sub -r. (2) confers the discretion on him or does the word may in sub -rule 2 really mean shall or must ? There is no doubt that the word may generally does not mean must or Shall. But it is well settled that the word may is capable of meaning must or shall in the light of the context. It is also clear that where a discretion is conferred upon a public authority coupled with an obligation, the word may which denotes discreti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incorporated in the Statute. It may further be noticed that section 35, makes it incumbent on the Collector to pay interest at a particular rate on the amount of compensation which is kept back with him. It is also clear that the Legislature has not made the award of the Collector absolutely final but it is subject to a right of review by way of reference to the Court. We have already indicated above, that the court to whom the case is referred while determining the compensation awarded by the Collector has to consider the very facts namely the standards mentioned in sections 23 and 24 of the Act, which the Collector has to keep in mind in determining the compensation. Thus the Legislature gives equal powers both to the Collector and the court in respect of granting of compensation. Furthermore, the Award of the Collector is open to review by the court on a reference being made to it, both on questions of fact and law. In these circumstances, therefore, it is unreasonable to infer that the court would not possess the same powers and the same obligations for awarding interest to the owner as the Collector To accept the argument of the Advocate General and also of the authorities fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is manifest that under section 28 as it stood before the amendment, the owner had a vested right to receive interest from the court at the rate of 6% per annum on the excess of the sum awarded by the Collector as found by the court. Such a vested right could not be taken away, curtailed, or impaired by the Amendment unless there were strong words in the amendment to indicate that it was to apply retrospectively. A perusal of the amendment, as already indicated above, does not show that it is intended to operate retrospectively so as to apply to pending proceedings before the Amendment came into force and thus interfere with the existing rights of the owner. We might further indicate that in AIR 1964 S. C, 1878, referred to above, their Lordships of the Supreme Court, clearly held that the right to receive interest was a statutory right conferred by the Land Acquisition Act and their Lordships have equated section 28 and section 35 (section 34 of the Indian Act) although in section 28 the word is may and in section 35 the word is shall . Thus Their Lordships have impliedly held that the provisions pf section 28 ,are also as mandatory as section 35 (34 of the Indian Act). Apar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded. If the Legislature has provided that only one part of S. 23 should be applied it would be reasonable to hold that the other part of S 23 was not intended to be applied ; but we do not see how it would be reasonable to hold that by the application of S. 23 (1) the principles underlying the provisions of Ss. 28 and 34 are also excluded. Stated broadly the act of taking possession of immovable property generally implies an agreement to pay interest on the value of the property and it is on this principle that a claim for interest is made against the state.This question has been considered on several occasions and the general principle on which contention is raised by the claimants has been upheld. In Swift and Co. v. Board of Trade (1926) AC 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 its purchase money from the date when he took or might safely have taken, possession of the land. This principle has been recognized ever since the decision in Birch v. Joy (1852) 3 HLC, 565. In this speech Viscount Cave L. C. added tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his right accrues when the property is acquired by the State. In this connection, their Lordships observed as follows : - This is particularly so when a stature impairs vested rights or the legality of past transactions or the obligations of contract. Such rights cannot be taken away by implication. In order to take away the right, observed Lord Watson in Western Counties Rly Co. v. Windsor and Annapolis Rly Co. (1882) 7 AC 178, at p. 189 (F) it is not sufficient to show that the thing sanctioned by the Act, if done will of sheer physical necessity put an end to the right it must also be shown that the Legislature have authorised the thing to be done at all events and irrespective of its possible interference with existing rights...... It is well known that a right to continue a duly instituted suit is a vested right, that it cannot be taken away except by a clear indication to that effect, AIR 1943 FC 24 at p. 27 (B) and that where a statute is passed while an action is pending strong words are necessary to alter the vested rights of any litigant as they stood at the time of the commencement of the action. AIR 1952 Punj. 103(FB)at p. 105 (A). It is equally clear that whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest thereafter is to be at the rate of 6% per annum applies only to subsequent acquisition of land, or applies as well to prior acquisition of land, the compensation for which was still unpaid when it came into force. The words used are perfectly general. What is spoken of is the rate of interest payable on compensation for land acquired by the Council. No distinction is made between land acquired before the Act and that acquired after and to give effect to the contention of the Municipal Council it would be necessary to substitute for the wide and general word acquired some such word as to be acquired or hereafter acquired. I can find nothing in the section to justify the imposition of any such limitation and there is no rule or presumption which requires that the word should be so limited in its meaning. The learned Chief Justice goes on to say that it is plain that the purpose of the section was to bring up the rate of interest from one which was too low to 6 percent, the lower rate being inadequate to the ruling rate of interest. Their Lordships find themselves in full agreement with the conclusion thus expressed. On 6th June 1924, the entire title to the piece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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