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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 ..... ranted interest at the rate of 6% per annum on the excess of the sum 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 case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral relies on the decision of the Supreme Court reported in AIR 1952 Supreme Court, 324. We 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar (1943) II ITR 470, at page 477, (AIR 1943 Madras 682 at p. 683 observed............with great respect 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be guided by the provisions of Sections 23 and 24 of the Act, which lay down various standards which have to be considered 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been used, the purpose and the advantages sought to be achieved by the use of this word and the like. It is equally well settled that where the word "May" involves a discretion 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (iii) The payment of interest for the detention of the compensation with the Collector as stipulated in section 35 of the Act. ( 7. ) It would thus appear that the Act has made a marked distinction between these three different kinds of rights which are given to the owner and which are clearly 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, bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces therefore, we are clearly of the opinion that the word "may" used in section 28 does not invest a mere discretion in the court but imposes a duty on it to pay interest at the rate mentioned in the section and must, there -fore, be held to have a mandatory force. ( 8. ) In this view of the matter, 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 Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nference that Ss. 28 and 34 of the Act which deal with the payment of interest are not intended to apply to the proceedings under it. In our opinion, this conclusion is not well founded ( 9. ) It would be legitimate to hold that by the application of S, 23 (1) in terms the provision of section 23 (2) are by necessary implication excluded. 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 purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principles set out in those Acts and not in accordance with the principles set out in the later Act of 1953. This position is not disputed by either party in the present proceedings..." In AIR 1957 Punjab, 209, a Full Bench of that court clearly held that a right to compensation for property actually taken for public use is clearly a vested right and this 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent was entitled to succeed. The main ground for their reasoning turned on the ambit and scope of S. 17. "It cannot be contended, said the Chief Justice, and it is not contended that it is retrospective in its operation so as to affect the rate at which interest was payable before it came into operation but the question is whether the direction that 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 limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is held to be of a retrospective nature, it curtails the vested right of the owner to receive interest on the compensation awarded to him at a higher rate, according to the Act which was in force when the proceedings were started. More over, the facts of the case before the Supreme Court are clearly distinguishable from the facts of the present case because the grant of interest is not a matter of form but one of substance. On a consideration of the authorities mentioned above, we are clearly of the opinion that the provisions of section 28 of the Land Acquisition Act are mandatory, and we accordingly record our respectful dissent with the authorities taking a contrary view. We hold therefore the Amendment does not apply to proceedings which were pending before coming into force ( 12. ) Of the Act ; nor would it apply to the lands which had been acquired before the Amendment was passed. ( 13. ) For these reasons, therefore, we would answer the question of law, referred to us in the affirmative and hold that the amendment in section 28 by virtue of Act No. XXXIV of 1960 is prospective in character and would not apply to the proceedings out of which the cases before us arise, and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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