Page 1 1

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 7034-7037 OF 2015

(Arising out of S.L.P. (C) NOS. 29463-29466 of 2012)

M/S PERIYAR & PAREEKANNI RUBBERS LTD. …… APPELLANT

VERSUS

STATE OF KERALA …… RESPONDENT

J U D G M E N T

V. GOPALA GOWDA, J.

Leave granted.

2. These appeals by special leave are directed

against the impugned common judgment and order

dated 07.04.2010 passed by the High Court of Kerala

at Ernakulam in Civil Revision Petition Nos. 196,

199, 205 and 208 of 2009 (filed against the order

dated 15.10.2008 of the learned Sub-Judge,

Ernakulam-the Execution Court), wherein the dispute

between the parties related to the claim of

REPORTABLE

Page 2 2

solatium for the enhanced amount of compensation

and interest thereon in respect of the acquired

land. The High Court has confirmed that solatium is

payable on that portion of land value based on

capitalization method of yielding rubber trees and

directed to compute balance amount payable under

the decree, but awarded the interest on solatium

from 19.09.2001, the date when judgment by the

Constitution Bench in the case of Sunder v. Union

of India

1

was delivered by this Court and not for

the prior period. The legality and validity of the

impugned judgment and order is seriously challenged

urging various legal contentions as the appellant

is aggrieved by the denial of the interest payable

on the component of solatium under Sections 23(1A),

23(2) read with Sections 28 and 34 of the Land

Acquisition Act, 1894 (for short “the Act”). The

solatium being the component of compensation

payable to the claimant/decree holder, the

restriction upon its payment by the High Court

1

(2001) 7 SCC 211

Page 3 3

placing reliance upon another subsequent

Constitution Bench judgment of this Court in the

case of Gurpreet Singh v. Union of India

2

is

hereby challenged.

3. The brief facts of the case are stated

hereunder:-

Various portions of rubber estate of the

appellant situated in village Kuttamangalam was

acquired by the State Government in exercise of its

eminent domain power pursuant to the notification

dated 10.10.1978 issued under Section 4(1) of the

Act for the purpose of Periyar Valley Irrigation

Project.

4. In 1980 and 1981 Awards were passed by the

Land Acquisition Officer awarding compensation, on

the market value of land which were partly based on

capitalization method of the yielding rubber trees

for the planted area and partly based on the value

of bare land on which there were no yielding rubber

plantation. Awards included solatium and interest

on compensation including solatium.

5. Being dissatisfied with the compensation, the

2

(2006) 8 SCC 457

Page 4 4

appellant filed Land Acquisition Reference (LAR)

Nos. 425, 427, 428, 429, 432, 434, 435, 456, 458

and 463 of 1988 before the Court of III Additional

Sub-Judge, Ernakulam (the Reference Court) under

Section 18 of the Act.

6. The Reference Court after perusal of the

record, by its common judgment, passed an Award on

19.11.1992 by enhancing the compensation partly

based on capitalization method of the yielding

rubber trees for the planted area and partly based

on the value of bare land on which there were no

rubber trees. The Reference Court held that the

claimant is entitled to get 30% solatium, 12%

additional market value from the date of the

notification i.e., 10.10.1978 till the date of

Award passed against it and they are also entitled

to get 9% interest for the first one year from the

date of dispossession and thereafter at 15% till

realization of the compensation awarded in favour

of the claimant/decree holder.

7. In some of the abovesaid LARs, payments were

made by respondent-State in full and final

Page 5 5

settlement of the enhanced compensation, solatium

and interest on compensation including solatium.

With respect to the remaining cases, the appellant

filed Execution Petition Nos. 152, 147, 146, 149

and 145 of 1996 before the Execution Court for

execution of the Award/decree passed by the

Reference Court.

8. The Execution Court on 15.10.2008 passed an

order fixing balance amount payable by the State

government after excluding solatium on that portion

of the market value of the acquired land based on

capitalization method of the yielding rubber trees

for the planted area.

9. Being aggrieved by the said order of the

Execution Court, the appellant filed Civil Revision

Petition (CRP) Nos. 196, 199, 201, 205 and 208 of

2009 before the High Court of Kerala.

10.The High Court on 07.04.2010 passed the

common impugned judgment and order in the said CRPs

confirming that the solatium is payable by the

state government for the enhanced compensation

awarded for the market value of the entire land.

Page 6 6

Thus, it provided solatium for that portion of land

the value of which was based on the capitalization

method of yielding rubber trees and directed the

respondents to compute balance amount payable under

the decree. However, the High Court awarded the

interest on solatium w.e.f. 19.09.2001, the date of

judgment delivered by Constitution Bench in

Sunder’s case (supra) instead of from the date of

acquisition of the land of the appellant. Hence,

these appeals are filed by the appellant urging

various grounds.

11.Mr. V. Giri, learned senior counsel on behalf

of the appellant contended that the Awards in the

instant case were passed in 1980 and 1981 and the

Reference Court judgment and Award was passed in

1992, the time when there was no dispute regarding

the payment of interest on solatium. It is only in

1995 when this Court passed a judgment in the case

of Prem Nath Kapur v. National Fertilizers

Corporation. Of India Ltd.

3

which barred the

payment of interest on solatium. But the decision

3

(1996) 2 SCC 71

Page 7 7

in Prem Nath Kapur’s case was subsequently reversed

in Sunder’s (supra) case. Therefore, there was no

justification and reason for the High Court to

restrict the payment of interest on solatium prior

to 19.09.2001 by applying the observations made at

paragraph 54 in the case of Gurpreet Singh (supra).

12.The learned senior counsel has further

contended that the respondent-State has already

settled few cases covered by the Reference Court

judgment by paying the full compensation, solatium

and interest on compensation including solatium

without any dispute. It shows that there was no

dispute between the parties as to the payment of

interest on solatium by the respondents. Before the

Execution Court, the dispute raised by the

respondent-State was as to the amount of land value

on which solatium was to be computed.

13.On the other hand, Ms. Bina Madhavan, learned

counsel on behalf of the respondent-State

government sought to justify the impugned common

judgment and order by placing strong reliance upon

paragraph 54 of Gurpreet Singh’s case (supra),

Page 8 8

which is extracted in the reasoning portion of this

judgment.

14.She further contended that the interest on

solatium can be claimed only in pending execution

cases and not in the closed cases and the execution

courts are entitled to permit its recovery by the

claimant/decree holder from 19.09.2001 i.e., from

the date of judgment in Sunder’s case and not for

any prior period.

15.With reference to the aforesaid rival legal

submissions urged by the learned counsel on behalf

of the parties, this Court is required to examine

the correctness of the impugned common judgment

order passed in the aforesaid CRPs by the High

Court in restricting the payment of statutory

interest payable on the solatium component by

placing reliance upon the cases of Sunder and

Gurpreet Singh (supra). In this connection, this

Court is required to find out as to whether the

payment of interest on solatium is the legislative

statutory right conferred upon the land

Page 9 9

loser/claimant recognised by the Constitution Bench

in Sunder’s case. The High Court in the light of

observations made in Gurpreet Singh’s case (supra)

at paragraph 54 has fixed the date of payment of

interest payable on the solatium to the

claimant/decree holder with effect from 19.09.2001.

The correctness of the same is also required to be

examined by this Court.

16.For the aforesaid purpose, it would be

necessary to refer to the question of law as

referred to in Sunder’s case (supra) wherein this

Court deals with the conflicting decisions rendered

on one hand in Union of India v. Ram Mehar

4

(three

Judge Bench) and on the other, in later decisions

of co-equal Benches of this Court viz., Mir

Fazeelath Hussain v. Special Deputy Collector, Land

Acquisition

5

, Prem Nath Kapur (supra) and Yadavrao

P. Pathade v. State of Maharashtra

6

.

17.In the case of Union of India v. Ram Mehar

(supra) this Court after examining the scope of the

expression “market value” in Section 4(3) of the

4

(1973) 1 SCC 109

5

(1995) 3 SCC 208

6

(1996) 2 SCC 570

Page 10 10

Land Acquisition (Amendment and Validation) Act,

1967, held that solatium cannot form part of the

market value of the land, rather the “market value”

is only one of the components to be reckoned with

in the determination of the amount of compensation.

The relevant para 7 of the decision reads thus :

“7…..If market value and compensation

were intended by the legislature to have

the same meaning it is difficult to

comprehend why the word “compensation” in

Section 28 and 34 and not “market value”

was used. The key to the meaning of the

word “compensation” is to be found in

Section 23(1) and that consists ( a) of

the market value of the land and ( b) the

sum of 15% on such market value which is

stated to be the consideration for the

compulsory nature of the acquisition.

Market value is therefore only one of the

components in the determination of the

amount of compensation. If the

Legislature has used the word “market

value” in Section 4(3) of the Amending

Act of 1967 it must be held that it was

done deliberately and what was intended

was that interest should be payable on

the market value of the land and not on

the amount of compensation otherwise

there was no reason why the Parliament

should not have employed the word

“compensation” in the aforesaid provision

of the Amending Act.”

(emphasis supplied)

Thus, it provides for the payment of interest on

the market value of the land. The said judgment is

Page 11 11

later followed by two Judge Bench of this Court in

Periyar & Pareekanni Rubbers Ltd. v. State of

Kerala

7

. The relevant para 24 of which reads thus:-

“24. ….Therefore, we have no hesitation

to hold that Section 25(3) contemplates

payment of interests on solatium to

recompensate the owner of the land for

loss of user of the land from the date of

taking possession till date of payment

into court. The word compensation has

been advisedly used by the legislature.

Accordingly we hold that the appellant is

entitled to interest on solatium.”

18.On the other hand, in the cases of Mir

Fazeelath Hussain (supra), Prem Nath Kapur (supra)

and Yadavrao P. Pathade (supra) this Court held

that interest is not claimable upon solatium.

19.Due to the said conflicting decisions of this

Court, a reference to the Constitution/larger Bench

was made by this Court in the case of Sunder v.

Union of India

8

(two Judge Bench). The relevant

paragraph of reference order reads thus :

“Leave granted on the short question

whether interest can be paid on solatium

under Section 28 read with Section 34 of

the Land Acquisition Act, 1894 on the

7

(1991) 4 SCC 195

8

(2000) 10 SCC 470

Page 12 12

ground that solatium is a part of

compensation. This question squarely

arises for consideration as there is an

apparent conflict between a three-Judge

Bench decision of this Court in the case

of Union of India v. Ram Mehar on the one

hand and the later three-Judge Bench

decisions of this Court in the cases of

Mir Fazeelath Hussain v. Special Dy.

Collector, Land Acquisition , Prem Nath

Kapur v. National Fertilizers Corpn. of

India Ltd. and Yadavrao P. Pathade v.

State of Maharashtra on the other. The

later three-Judge Bench judgments have

taken the view that solatium is not a

part of compensation. However, in none of

the later three-Judge Bench judgments the

earlier view of the three-Judge Bench

judgment in the case of Union of India v.

Ram Mehar that solatium is a part of

compensation, has been noticed or

considered. Consequently, in our view,

this matter requires to be decided by a

Constitution/larger Bench of this Court.

We, therefore, direct that the papers may

be placed before Hon’ble the Chief

Justice of India for placing the appeals

arising out of these proceedings for

final disposal before an appropriate

Constitution/larger Bench of this Court.

Prior to Sunder’s Case (two Judge Bench), similar

reference was made in Kapur Chand Jain & Ors. v.

State Government of H.P. & Ors

9

, the relevant

paras of which read thus :-

“3. Learned counsel for the petitioners

invited our attention to a three-Judge

9

(1999) 2 SCC 89

Page 13 13

Bench judgment of this Court in Union of

India v. Ram Mehar and also later two

decisions of two-Judge Benches of this

Court in Periyar and Pareekanni Rubbers

Ltd. v. State of Kerala and Narain Das

Jain v. Agra Nagar Mahapalika . Relying on

these judgments, he submitted that for

applicability of Section 28 of the Land

Acquisition Act, 1894 solatium has to be

considered as a component of compensation

and interest could be paid thereon; and

that the High Court has wrongly not

granted interest on solatium. However,

there is another three-Judge Bench

judgment of this Court in Prem Nath Kapur

v. National Fertilizers Corpn. of India

Ltd. wherein a contrary view is taken and

it has been held, that no interest is

payable on solatium under Section 23(2)

or on additional amount payable under

Section 23(1-A). For coming to that

conclusion, the Bench of three learned

Judges relied upon another decision of

this Court in P. Ram Reddy v. Land

Acquisition Officer.

4. In view of this conflict of decisions

and also in view of the further fact that

the three-Judge Bench of this Court in

Prem Nath Kapur had no opportunity to

refer to the earlier decision of a

three-Judge Bench in Ram Mehar we direct

that these special leave petitions be

placed for decision before a three-Judge

Bench of this Court. The office may

obtain suitable orders from the Hon’ble

Chief Justice.”

20.The question of reference to Constitution

Bench in Sunder’s case (supra) reads thus :-

“Is the State liable to pay interest on

the amount envisaged under Section 23(2)

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of the Land Acquisition Act, 1894?”

In other words, the question was whether for the

purpose of Section 28 read with Section 34 of the

Act, solatium is a part of compensation. The answer

was in affirmation to the reference question by the

Constitution Bench. By answering the said question

it laid down the law with regard to the question of

payment of interest.

21.From the interpretation of provisions of

Sections 11, 15, 23, 24 and 31 of the Act and after

placing reliance upon the decision of this Court in

State of Gujarat v. Vakhatsinghji Vajesinghji

Vaghela

10

, it is clear that the amount of

compensation in the Collector’s Award includes not

only the amount determined under Section 23(1) of

the Act but also the additional amount of solatium

as stipulated under Section 23(2) of the Act. The

relevant paragraph 9 of the said case reads thus:

“9. ……The collector has to make an award

of compensation under Section 11 and

having regard to Sec. 15 in determining

the amount of compensation, he is guided

by the provisions of Section 23 and 24.

Section 23 (1) requires an award of the

market value of the land. Section 23 (2)

10

AIR 1968 SC 1481

Page 15 15

requires an additional award of a sum of

fifteen percentum on such market value,

in consideration of the compulsory

nature of acquisition…..”

22.Further, from the reading of Sections 28 and

34 of the Act, it is clear that the ‘purpose of

interest’ is to compensate an unpaid landowner who,

on the one hand has been deprived of the possession

of his land in pursuance of compulsory acquisition

by the State Government in exercise of its eminent

domain power and on the other hand, has also been

kept out of the use of the money due to him for the

acquisition by not being paid the money, in full or

in part, in lieu of taking possession. Reliance is

placed on the decision of this Court in the case of

Satinder Singh v. Umrao Singh

11

at paragraph 19,

which reads thus:

“19.……When a claim for payment of

interest is made by a person whose

immovable property has been acquired

compulsorily he is not making claim

for damages properly or technically so

called; he is basing his claim on the

general rule that if he is deprived of

his land he should be put in

possession of compensation

immediately; if not, in lieu of

11

AIR 1961 SC 908

Page 16 16

possession taken by compulsory

acquisition interest should be paid to

him on the said amount of

compensation…."

23.Section 34 of the Act provides for the

payment of interest on “amount of such

compensation”. The word “ such” makes the reading of

Section 34 read along with Section 31 necessary.

Section 31 of the Act provides for the payment of

compensation or deposit of the same in Court.

Section 31 (1) says “On making an Award under

Section 11, the Collector shall tender payment of

the compensation awarded by him to the persons

interested entitled thereto according to the

Award…..” Further, Section 28 of the Act provides

for the direction which may be made to the

Collector to pay the interest on excess

compensation. It says “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…..”

Thus, it is clear from Section 34 read with Section

31 and the term “ sum” under Section 28 of the Act

Page 17 17

that the Award includes not only the sum as is

determined under Section 23(1) of the Act but also

the amounts payable under Section 23(1A) and

Section 23(2). The same has been held by the

Constitution Bench of this Court in Sunder’s case,

the relevant paragraph 23 of which reads thus:

“23.…We make it clear that the

compensation awarded would include not

only the total sum arrived at as per

sub-section (1) of Section 23 but the

remaining sub-sections thereof as

well. It is thus clear from Section 34

that the expression “awarded amount”

would mean the amount of compensation

worked out in accordance with the

provisions contained in Section 23,

including all the sub-sections

thereof.”

24.After adverting to Sections 34, 28, 23(1),

23(1A), 23(2), 24, 26 and 31 of the Act, the

Constitution Bench in Sunder’s case (supra)

answered the question regarding payment of interest

on solatium in affirmation holding that Section 26

of the Act does not say that the Award would

contain only the amounts granted under Section 23

(1) of the Act. It was further held that there can

be no doubt that all the three heads specified in

Page 18 18

the three sub-sections of Section 23 of the Act are

the sums to be awarded by the court. The words

“every award under this Part” in Section 26(1) of

the Act cannot be treated as the Award after

delinking the amounts awarded under sub-Section

(1A) or sub-Section (2) of Section 23 of the Act.

Further in paragraphs 20, 21 and 23 in Sunder’s

case (supra), the Constitution Bench has held as

under-

“20… whether exclusion of the factor “

any disinclination of the person

interested to part with the land

acquired” from being considered as part

of the compensation indicated in Section

24 of the Act would be of any aid for

excluding solatium from the purview of

interest accrual process….”

“21. It is apposite in this context to

point out that during the enquiry

contemplated under Section 11 of the Act

the Collector has to consider the

objections which any person interested

has stated pursuant to the notice given

to him. It may be possible that a person

so interested would advance objections

for highlighting his disinclination to

part with the land acquired on account of

a variety of grounds, such as sentimental

or religious or psychological or

traditional etc. Section 24 emphasises

that no amount on account of any

disinclination of the person interested

to part with the land shall be granted as

Page 19 19

compensation. That aspect is

qualitatively different from the solatium

which the legislature wanted to provide

“in consideration of the compulsory

nature of the acquisition.”

XXX XXX XXX

23. In deciding the question as to what

amount would bear interest under Section

34 of the Act, a peep into Section 31(1)

of the Act would be advantageous. That

sub-section says:-

31. (1) On making an award

under Section 11, the

Collector shall tender payment

of the compensation awarded by

him to the persons interested

entitled thereto according to

the award, and shall pay it to

them unless prevented by some

one or more of the

contingencies mentioned in the

next sub-section……”

Further, in the said case, after adverting to

Section 34 of the Act, this Court held thus:-

“24. The proviso to Section 34 of the Act

makes the position further clear. The

proviso says that “if such compensation”

is not paid within one year from the date

of taking possession of the land,

interest shall stand escalated to 15% per

annum from the date of expiry of the said

period of one year “on the amount of

compensation or part thereof which has

not been paid or deposited before the

date of such expiry”. It is inconceivable

that the solatium amount would attract

only the escalated rate of interest from

Page 20 20

the expiry of one year and that there

would be no interest on solatium during

the preceding period. What the

legislature intended was to make the

aggregate amount under Section 23 of the

Act to reach the hands of the person as

and when the award is passed, at any rate

as soon as he is deprived of the

possession of his land. Any delay in

making payment of the said sum should

enable the party to have interest on the

said sum until he receives the payment.

Splitting up the compensation into

different components for the purpose of

payment of interest under Section 34 was

not in the contemplation of the

legislature when that section was framed

or enacted.”

25.The judgment rendered by the Constitution

Bench of this Court in Sunder’s case (supra) is the

binding precedent on the question of payment of

legislative statutory interest payable on solatium

under Sections 23(1A), 28 and 34 of the Act which

cannot be deprived to the claimant/decree holder by

the court. As the said judgment is binding upon the

State Government it cannot contend that it is not

liable from the date as provided under the

provisions of the Act.

26.The Constitution Bench judgment in Sunder’s

case (supra) is aptly applicable to the fact

Page 21 21

situation of the present case for the reason that

the enhanced compensation includes the solatium @

30% as provided under Section 23(2) of the Act.

Therefore, the claimant/decree holder is entitled

for the interest on the solatium component which is

part of the compensation payable by the State

government to the claimant. The Execution Court

held that the claimant/decree holder company is

entitled to claim solatium only in respect of the

enhanced compensation provided for the land alone

which has been separately fixed, but, not in

respect of that portion of market value of the land

based on capitalization method of the yielding

rubber trees for the planted area which was

separately fixed by the Reference Court in its

Award. The High Court was right in holding that the

claimant is entitled for the interest not only in

respect of the land but also with respect to the

trees standing on the land of which the market

value is determined by the Reference Court.

However, it awarded the interest on solatium from

19.09.2001 and not for the prior period by placing

Page 22 22

reliance on Gurpreet Singh case (supra), the

relevant paragraph 54 of which is extracted

hereunder:-

“54. One other question also was sought

to be raised and answered by this Bench

though not referred to it. Considering

that the question arises in various

cases pending in courts all over the

country, we permitted the counsel to

address us on that question. That

question is whether in the light of the

decision in Sunder, the

awardee/decree-holder would be entitled

to claim interest on solatium in

execution though it is not specifically

granted by the decree. It is well

settled that an execution court cannot

go behind the decree. If, therefore, the

claim for interest on solatium had been

made and the same has been negatived

either expressly or by necessary

implication by the judgment or decree of

the Reference Court or of the appellate

court, the execution court will have

necessarily to reject the claim for

interest on solatium based on Sunder on

the ground that the execution court

cannot go behind the decree. But if the

award of the Reference Court or that of

the appellate court does not

specifically refer to the question of

interest on solatium or in cases where

claim had not been made and rejected

either expressly or impliedly by the

Reference Court or the appellate court,

and merely interest on compensation is

awarded, then it would be open to the

execution court to apply the ratio of

Sunder and say that the compensation

awarded includes solatium and in such an

Page 23 23

event interest on the amount could be

directed to be deposited in execution.

Otherwise, not. We also clarify that

such interest on solatium can be claimed

only in pending executions and not in

closed executions and the execution

court will be entitled to permit its

recovery from the date of the judgment

in Sunder (19-9-2001) and not for any

prior period. We also clarify that this

will not entail any reappropriation or

fresh appropriation by the

decree-holder. This we have indicated by

way of clarification also in exercise of

our power under Articles 141 and 142 of

the Constitution of India with a view to

avoid multiplicity of litigation on this

question.”

27.The decision of this Court in Gurpreet

Singh’s Case (supra), upon which the strong

reliance is placed by learned counsel on behalf of

respondent, is totally inapplicable to the fact

situation of the instant case for the reason that

the question that arose in the said case was

distinct, which reads thus:-

“What is the rule of appropriation

in execution of money decrees? Is

the rule the same in the case of an

award-decree under the Land

Acquisition Act or, is there

anything in the Land Acquisition

Act, 1894 as amended by the Land

Acquisition (Amendment) Act (68 of

1984) making that rule inapplicable

Page 24 24

or not wholly applicable?”

The issue in the said question was examined and

answered by the Constitution Bench with reference

to Prem Nath Kapur’s case (supra) regarding the

rule of appropriation in execution of money

decrees. The examination of Sections 23(1), 23(1A),

23(2), 28, 31, 34 and 11 of the Act was made in

this regard.

28.At paragraph 54 of Gurpreet Singh’s case,

certain observations are made regarding the payment

of interest on solatium. The interest on solatium

can be awarded at execution stage if the Reference

Court or the Appellate Court does not specifically

refer to the question of interest on solatium or

cases wherein claim had not been made and rejected

either expressly or impliedly by the Reference

Court or the Appellate Court and merely interest on

compensation is awarded. But where the Reference

Court or appellate court has negatived the same

either expressly or by implication then such

interest on solatium cannot be awarded as it is a

Page 25 25

well settled rule of law that the execution court

cannot go behind the decree. Another point which is

clearly made in the said judgment is that the

interest on solatium can be claimed only in pending

execution cases and not in closed execution cases,

recoverable from the date of the judgment in

Sunder’s case i.e., 19.09.2001 and not for any

prior period. It is also held in this case that

this will not entail any appropriation or

reappropriation by the claimant/decree holder. But,

it is noteworthy that this was not the question

which was referred to the Court for consideration

in the said case. Therefore, it is merely an

observation of the court which cannot be applied as

binding precedent in the instant case with regard

to the entitlement of statutory interest payable

under Sections 23(1A), 28 and 34 of the Act on the

solatium. If applied, it would be contrary to the

doctrine of stare decisis. In this regard, it is

necessary to advert to the Constitution Bench (11

Judge Bench) judgment of this Court in H.H.

Maharajadhiraja Madhav Rao Jivaji Rao Scindia

Page 26 26

Bahadur & Ors. v. Union of India

12

, wherein at

paragraph 138, it is held that it is not proper to

regard a word, a clause or a sentence occurring in

a judgment of the Supreme Court, divorced from its

context, as containing a full exposition of the law

on a question when the question did not even fall

to be answered in that judgment. The relevant

portion of the paragraph reads as under:-

“138 …The question as to the

jurisdiction of the Courts to entertain

a claim for payment of Privy Purse did

not fall to be determined in Nawab

Usman Ali Khan case . The only question

raised was whether the Privy Purse was

not capable of attachment in execution

of the decree of a Civil Court, because

of the specific exemption of political

pensions under Section 60(1)( g) of the

Code of Civil Procedure. In Kunvar Shri

Vir Rajendra Singh’s case, the Court did

not express any opinion that Article

366(22) was a provision relating to a

covenant within the meaning of Article

363. In that case the petitioner who was

not recognised as a Ruler by the

President abandoned at the hearing of

his petition his claim to the Privy

Purse payable to the Ruler of Dholpur,

and pressed his claim by succession

under the Hindu Law to the Private

property of the former Ruler. The Court

was not called upon to decide and did

not decide that Article 366(22) was a

provision relating to a covenant within

12

AIR 1971 SC 530

Page 27 27

the meaning of Article 363. It is

difficult to regard a word, a clause or

a sentence occurring in a judgment of

this Court, divorced from its context,

as containing a full exposition of the

law on a question when the question did

not fall to be answered in that

judgment.”

[Emphasis supplied]

The said view has been followed and reiterated

subsequently by this Court in a catena of cases

regarding the distinction between ratio of a case

and obiter dicta.

29.In the case of Director of Settlement v. M.R.

Apparao

13

, this Court extensively elaborated upon

the principle of binding precedent. The relevant

para 7 is reproduced hereunder:

“7…Article 141 of the Constitution

unequivocally indicates that the law declared

by the Supreme Court shall be binding on all

courts within the territory of India. The

aforesaid Article empowers the Supreme Court

to declare the law. It is, therefore, an

essential function of the Court to interpret

a legislation. The statements of the Court on

matters other than law like facts may have no

binding force as the facts of two cases may

not be similar. But what is binding is the

ratio of the decision and not any finding of

facts. It is the principle found out upon a

reading of a judgment as a whole, in the

light of the questions before the Court that

forms the ratio and not any particular word

13

(2002) 4 SCC 638

Page 28 28

or sentence. To determine whether a decision

has “declared law” it cannot be said to be a

law when a point is disposed of on concession

and what is binding is the principle

underlying a decision. A judgment of the

Court has to be read in the context of

questions which arose for consideration in

the case in which the judgment was delivered.

An “obiter dictum” as distinguished from a

ratio decidendi is an observation by the

Court on a legal question suggested in a case

before it but not arising in such manner as

to require a decision . Such an obiter may not

have a binding precedent as the observation

was unnecessary for the decision pronounced,

but even though an obiter may not have a

binding effect as a precedent, but it cannot

be denied that it is of considerable

weight….”

[Emphasis supplied]

The decision of this Court in the case of Deena v.

Union of India

14

is also pertaining to the extension

of ratio of a decision to cases involving identical

situations, be it factual or legal, but the same

should not be mechanically applied to the facts of

a case, the relevant para 15 reads thus:

“15. …It is permissible to extend the ratio

of a decision to cases involving identical

situations, factual and legal, but care must

be taken to see that this is not done

mechanically, that is, without a close

examination of the rationale of the decision

which is cited as a precedent . Human mind,

trained even in the strict discipline of

law, is not averse to taking the easy course

14

(1983) 4 SCC 645

Page 29 29

of relying on decisions which have become

famous and applying their ratio to

supposedly identical situations ….”

(emphasis supplied)

The binding effect of judgment of this Court

vis-à-vis State and Central Government circulars is

considered in the case of CCE v. Ratan Melting &

Wire Industries

15

, wherein it is held that the law

laid down by this Court is the law of the land. The

law so laid down is binding on all Courts/Tribunals

and bodies and that the circulars issued by the

State or the Central Government cannot prevail over

the law laid down by this Court.

30.From the facts of the present case and in the

light of law laid down on the question of payment

of interest on solatium by the Constitution Bench

in Sunder’s case, it is amply clear that the said

case is the binding precedent. As far as Gurpreet

Singh’s case is concerned, the question which arose

for its consideration was only with regard to the

rule of appropriation in execution of the Award

passed under the provisions of the Act. While

15

(2008) 13 SCC 1

Page 30 30

answering the said question of law after referring

to the relevant provisions of the Act, at paragraph

54, it has incidentally made some observation with

regard to the payment of interest on solatium which

is only an obiter but not the binding precedent as

that question did not fall for consideration before

the Constitution Bench. Therefore, in view of the

foregoing reasons, I hold that there is no need to

advert to the other judgments upon which reliance

was placed by the learned counsel for both the

parties. For the reason that the binding precedent

laid down by the Constitution Bench of this Court

in Sunder’s case on the question of payment of

interest on the solatium to the claimant/decree

holder from the date of entitlement as provided

under the provisions of the Act. Accordingly, I

pass the following order:-

a) In view of the aforesaid reasons

assigned by me with reference to Sunder and

Gurpreet Singh cases (supra), I am of the

view that the impugned common judgment and

order with regard to awarding interest

payable on solatium w.e.f. 19.09.2001 is

Page 31 31

vitiated in law. Accordingly, that portion

of the impugned judgment and order is hereby

set aside.

b) The civil appeals are allowed. The

respondent-State Government is directed to

pay interest as provided under Section 23(1A)

of the Act on the solatium component of the

Award under Section 23(2) of the Act in the

reference Award in the earlier decisions and

the interest payable under Sections 28 and 34

of the Act. The respondent-State Government

is further directed to compute the same with

reference to the compensation awarded by the

Reference Court from the date when the

claimant decree holder is entitled strictly

in accordance with the abovesaid provisions

of the Act including the solatium and pay to

the appellant within 8 weeks from the date of

receipt of copy of this judgment. No order as

to costs.

…………………………………………………………………… J.

[V.GOPALA GOWDA]

New Delhi,

September 14, 2015

Page 32 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 7034-7037 OF 2015

(ARISING OUT OF SLP (CIVIL) NOS.29463-29466 OF 2012)

M/S. PERIYAR & PAREEKANNI RUBBERS LTD. …APPELLANT

VERSUS

STATE OF KERALA ...RESPONDENT

J U D G M E N T

ADARSH KUMAR GOEL, J.

1.I have perused the proposed judgment prepared by my learned

brother V. Gopala Gowda, J. I am in respectful disagreement with the

same. The facts have been broadly mentioned in the judgment of

Gopala Gowda, J. and need not be repeated.

2.The award of the Reference Court is dated 19

th

November, 1992

which did not expressly award interest on solatium. In the impugned

order, the High Court restricted the interest on solatium to the period

post 19

th

September, 2001, following the Constitution Bench judgment of

Page 33 2

this Court in Gurpreet Singh vs. Union of India

16

directing as follows :

“54. One other question also was sought to be raised and

answered by this Bench though not referred to it.

Considering that the question arises in various cases

pending in courts all over the country, we permitted the

counsel to address us on that question. That question is

whether in the light of the decision in Sunder [(2001) 7 SCC

211], the awardee/decree-holder would be entitled to claim

interest on solatium in execution though it is not specifically

granted by the decree. It is well settled that an execution

court cannot go behind the decree. If, therefore, the claim

for interest on solatium had been made and the same has

been negatived either expressly or by necessary implication

by the judgment or decree of the Reference Court or of the

appellate court, the execution court will have necessarily to

reject the claim for interest on solatium based on Sunder

on the ground that the execution court cannot go behind the

decree. But if the award of the Reference Court or that of

the appellate court does not specifically refer to the

question of interest on solatium or in cases where claim had

not been made and rejected either expressly or impliedly by

the Reference Court or the appellate court, and merely

interest on compensation is awarded, then it would be open

to the execution court to apply the ratio of Sunder and say

that the compensation awarded includes solatium and in

such an event interest on the amount could be directed to

be deposited in execution. Otherwise, not. We also clarify

that such interest on solatium can be claimed only in

pending executions and not in closed executions and the

execution court will be entitled to permit its recovery from

the date of the judgment in Sunder (19-9-2001) and not for

any prior period. We also clarify that this will not entail any

reappropriation or fresh appropriation by the decree-holder.

This we have indicated by way of clarification also in

exercise of our power under Articles 141 and 142 of the

Constitution of India with a view to avoid multiplicity of

litigation on this question.”

2.Learned counsel for the appellants relied upon Land Acquisition

Officer and Asstt. Commnr. Vs. Shivappa Mallappa Jigalur

17

laying

16

(2006) 8 SCC 457

17

(2010) 12 SCC 387

Page 34 3

down as follows :

“13. Coming now to the stipulation that any interest on

solatium can only be granted for the period subsequent to

19-9-2001, the date of the decision in Sunder, it is evident

that this again, is a limitation on the power of the execution

court. The direction is actually referable to those cases in

which the award of the Reference Court or the appellate

court being silent, it is left open to the execution court to

give direction for the deposit of interest on solatium. In such

cases, the Reference Court can ask for interest only for the

period subsequent to 19-9-2001. The direction in no way

circumscribes the power of the court dealing with the main

proceeding relating to enhancement of the compensation.

14. The matter can be looked at from another angle. The

appeal being the continuation of the original proceeding, in

the facts of the cases in this sub-group, there can be no

question of accrual of interest only after the date of the

decision in Sunder. At this stage, it may be recalled that the

civil court had awarded solatium @ 30% and interest @ 9%

for the first year and @ 15% from second year onwards till

the date of realisation. The State’s appeal against the

judgment of the civil court was dismissed. Thus, the

direction for payment of solatium with interest at the rates

indicated had become final. The High Court enhanced the

rate of compensation. This would inevitably lead to an

increase in the amount of solatium and consequently in the

amount of interest on the unpaid amount of solatium. Thus,

looked at from any point of view, the question of payment of

interest subsequent to 19-9-2001 does not arise.”

3.On the other hand, learned counsel for the State submitted that the

judgment in Shivappa (supra) does not apply to the present case

as the award dated 19

th

November, 1992 has attained finality. She also

relied upon Chimanlal Kuberdas Modi vs. Gujarat Industrial

Development Corpn.

18

laying down as follows :

“15. It is no doubt true that the execution court cannot

examine the reasons so as to go behind the decree but if in

18

(2010) 10 SCC 635

Page 35 4

the award passed, the Reference Court makes a specific

reference to payment of interest but without any such

reference to the payment of interest on solatium and

merely payment of interest on compensation is granted,

then it would be open to the executing court to apply the

ratio of Sunder and declare that the compensation awarded

includes solatium, and consequently, interest on the

amount could be directed to be deposited in execution.

That being the legal position as prevailing today, we cannot

ignore the observations made in para 54 of the aforesaid

judgment in Gurpreet Singh and we order accordingly that

compensation awarded includes solatium and therefore

interest on the said amount shall be paid by the respondent

in the pending execution.”

To the same effect, she also relied upon Nadirsha Shapurji

Patel vs. Collector & LAO

19

and Chhanga Singh vs. Union of

India

20

.

4.So long as judgments relied upon by learned counsel for the State

stand, the appellant cannot succeed. Any contrary view can be taken

only by a larger Bench. It will thus be appropriate that the matter is

placed before a Bench of 3-Judges.

.…..….………………………………..J.

[ ADARSH KUMAR GOEL ]

NEW DELHI

SEPTEMBER 14, 2015

19

(2010) 13 SCC 234

20

(2012) 5 SCC 763

Page 36 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos. 7034-7037 OF 2015

(Arising out of S.L.P. (C) Nos. 29463-29466/2012)

M/S PERIYAR & PAREEKANNI RUBBERS LTD. ... APPELLANT(S)

VERSUS

STATE OF KERALA ...RESPONDENT(S)

COMMON ORDER

In view of divergence of opinion in terms of

separate judgments pronounced by us in these appeals

today, the Registry is directed to place the papers

before Hon'ble the Chief Justice of India for appeals

being assigned to an appropriate Bench.

...........................J.

(V. GOPALA GOWDA)

..........................J.

(ADARSH KUMAR GOEL)

NEW DELHI,

SEPTEMBER 14, 2015