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CASE NO.:

Appeal (civil) 967-970 of 1990

PETITIONER:

Union of India

RESPONDENT:

Chajju Ram (Dead) by Lrs. And Ors.

DATE OF JUDGMENT: 16/04/2003

BENCH:

CJI., R.C. Lahoti, B.N. Agrawal, S.B. Sinha, AR Lakshmanan.

JUDGMENT:

J U D G M E N T

S.B. SINHA, :

The core question, involved in this batch of appeals which arise from

the judgment and order dated 13.09.1982 passed by the High Court of

Punjab and Haryana, relates to the constitutional validity of the Defence of

India Act, 1971 (The Act) on the premise that absence of any provision for

payment of solatium and interest therein for acquisition of land is hit by

Article 14 of the Constitution of India.

The respondents were owners of several tracts of lands situated in or

around the town of Bhatinda in the State of Punjab. For the purpose of

establishing a military cantonment, the said lands were requisitioned by the

District Magistrate, Bhatinda in terms of the provisions of the Act in the year

1971.

On or about 15.1.1975, proceedings were initiated for compulsory

acquisition of the said lands in terms of Section 30 of the Act. The

competent authority determined the amount of compensation payable for

such acquisition on 28.7.1975. However, the respondents being dissatisfied

with the amount of compensation offered to them asked the competent

authority to refer the matter to an arbitrator in terms of Section 31 of the said

Act. Allegedly, such reference was not made.

Questioning the validity of the Act on the ground that their claim of

interest at the rate of 6% and solatium at the rate of 15% had not been

granted, writ petitions came to be filed. The High Court by reason of the

impugned judgment held that Section 31 of the Act is ultra vires Article 14

of the Constitution of India, as a result whereof the respondents became

entitled to claim and recover from the Central Government solatium at the

rate of 15% on the amount of compensation as also the interest thereupon at

the rate of 6% per annum. Several matters came up before this Court

wherein acquisitions have been made under the provisions of various

Improvement Trust Acts and other Acts. A question arose as to whether the

provisions of the Land Acquisition Act as regards solatium and interest are

to be read into the other Acquisitioning Acts or not. A question also arose in

some appeals as to whether the provisions of Section 28A of the Land

Acquisition Act are to be read into the Act. A further question arose as to

whether in the event, it be held that the provisions of Land Acquisition Act

regarding payment of solatium and interest cannot be read into the said Act,

the same would be declared ultra vires Article 14 of the Constitution of

India.

A Constitution Bench of this Court by an order dated 12.12.2001

while referring back the matters to 3-Judge Bench as regards the first group

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and the second group of cases thought it expedient to direct that these

matters wherein the question as to whether the said Act violates Article 14 of

the Constitution of India for the reason that it makes no provisions for

solatium and interest should remain before it awaiting decisions on the first

and second group of cases.

The first group of cases wherein the question as to whether the

provisions regarding solatium and interest contained in the Land Acquisition

Act are to be read into the provisions of various Improvement Acts arose for

consideration has since been answered in the affirmative by a 3-Judge Bench

of this Court in Nagpur Improvement Trust etc. vs. Vasantrao and Others

etc. [(2002) 7 SCC 657] (Second Nagpur Improvement Trust).

The second group of cases relating to the question as to whether the

provisions of the Land Acquisition Act are to be read into the Defence of

India Act were considered in Dayal Singh and Others vs. Union of India and

Others [(2003) 2 SCC 593] wherein this Court held that the provisions of

Section 28A of the Land Acquisition Act cannot be read into the said Act.

The question as regards the constitutionality of the Act on the touch-

stone of Article 14 of the Constitution of India is required to be considered

by us in the aforementioned backdrop.

Mr. Soli J. Sorabjee, the learned Attorney General appearing on

behalf of the appellant submitted that the question is squarely covered by

two decisions of this Court in Union of India vs. Hari Krishan Khosla

(Dead) by L.Rs. [(1993) Supp.2 SCC 149] and Union of India and Others

vs. Dhanwanti Devi and Others [(1996) 6 SCC 44]. The learned Attorney

General would contend that the respective schemes for acquisition of the

said Act and the Land Acquisition Act are absolutely distinct and different.

Mr. Sorabjee would urge that the provision for grant of solatium and interest

in the Land Acquisition Act, 1894 was inserted as great delay used to be

caused in payment of the amount of compensation determined on the basis

of valuation of land from an anterior date, namely the date of publication of

notification under Section 4 thereof.

Mr. O.P. Sharma, learned Senior Counsel appearing on behalf of the

respondents, on the other hand, would submit that the classification so far as

acquisition of land under the Land Acquisition Act vis--vis the Act cannot

be said to be rational so far as the matter relating to payment of

compensation is concerned, inasmuch as the owner of the land is not at all

concerned as regard the purpose of acquisition. He would, therefore, submit

that non-payment of solatium and interest where acquisition is made under

the Act would clearly be discriminatory and, thus, violative of Article 14 of

the Constitution of India. The learned counsel would contend that even for

the purpose of computing the amount of compensation, when acquisition is

made under the said Act, the criteria therefor would also be as per the

provisions of the Land Acquisition Act. Strong reliance in this behalf has

been placed by the learned counsel on Haji Mohammad Ekramul Haq vs.

The State of West Bengal [AIR 1959 SC 488] and Nagpur Improvement

Trust and Another vs. Vithal Rao and Others [(1973) 1 SCC 500] (First

Nagpur Improvement Trust).

Mr. Sharma urged that having regard to the decision of this Court in

the second Nagpur Improvement Trust case (supra), there is absolutely no

reason as to why the provisions of the Land Acquisition Act for the purpose

of payment of compensation should not be read into the Act.

Mr. Sharma would also submit that the decisions of this Court in Hari

Krishan Khosla (supra) and Dhanwanti Devi (supra) do not lay down the

law correctly and, thus, are required to be overruled.

Mr. Rajiv Garg and other counsel appearing on behalf of the

respondents in connected appeals, inter alia, would submit that even if the

constitutionality of the said Act is upheld by this Court; equity demands that

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the amounts paid to the respondents by way of solatium and interest about

twenty years back should not directed to be refunded.

The said Act was enacted to provide for special measure to ensure the

public safety and interest, the defence of India and civil defence and the trial

of certain offences and for matters connected therewith. Chapter V of the

said Act provides for requisitioning and acquisition of immovable property.

Section 23 of the Act which begins with a non abstante clause enables the

Central Government or the State Government, as the case may be, to

requisition any immovable property and make such further orders, if in their

opinion it is expedient so to do, inter alia, for securing the defence of India

and other purposes engrafted therein. Section 24 of the said Act entitles the

owner of the property to receive compensation on requisitioning of the

property; the determination whereof is required to be made upon taking into

consideration the factors enumerated therein. In the event any person

interested in the lands is aggrieved by the amount of compensation so

determined, he may make an application within the prescribed time to the

Central Government or the State Government, as the case may be, for

referring the matter to an arbitrator who is empowered to determine the

same. Section 29 provides for release from requisition. Section 30 of the

said Act provides for acquisition of requisitioned property which reads thus :

"30. Acquisition of requisitioned property. (1)

Any immovable property which has been

requisitioned under Section 23 may, in the manner

hereinafter provided, be acquired in the

circumstances and by the Government specified

below, namely :-

(a) where any works have, during the period of

requisition, been constructed on, in or over the

property wholly or partly at the expense of any

Government, the property may be acquired by that

Government if it decides that the value of or the

right to use, such works shall, by means of the

acquisition of the property, be preserved or secured

for the purposes of any Government, or

(b) where the cost to any Government of restoring

the property to its condition at the time of its

requisition as aforesaid would, in the

determination of that Government, be excessive

having regard to the value of the property at that

time, the property may be acquired by that

Government.

(2) When any Government as aforesaid decides to

acquire any immovable property, it shall serve on

the owner thereof or where the owner is not readily

traceable or the ownership is in dispute, by

publishing in the Official Gazette, a notice stating

that the Government has decided to acquire it in

pursuance of this section.

(3) Where a notice of acquisition is served on the

owner of the property or is published in the

Official Gazette, under sub-section (2), then, at the

beginning of the day on which the notice is so

served or published, the property shall vest in the

Government free from any mortgage, pledge, lien

or other similar encumbrances and the period of

requisition thereof shall come to an end.

(4) Any decision or determination of a

Government under sub-section (1) shall be final,

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and shall not be called in question in any court.

(5) For the purposes of this section, "works"

includes every description of buildings, structures

and improvements of the property."

Section 31 provides for compensation for acquisition of requisitioned

property. The compensation payable for the acquisition of any property

under Section 30 shall be the price which the requisitioned property would

have fetched in the open market if it had remained in the same condition as it

was at the time of requisitioning and been sold on the date of acquisition.

The said Act is a self-contained code. It lays down the procedure as

well as machinery for determining the amount of compensation. It is not in

dispute that the provisions for payment of compensation under the Land

Acquisition Act would not ipso facto apply to the acquisition made under

the said Act. The provisions of the two Acts do not also provide for the

same scheme for acquisition.

In Hari Krishan Khosla (supra), a Bench of 3-Judges of this Court

while considering the provisions of the Requisitioning and Acquisition of

Immovable Property Act, 1952 clearly held that the provisions for grant of

solatium and interest under the Land Acquisition Act cannot be read into the

provisions of the said Act. Having regard to the provision of Section 8(3) of

the 1952 Act, this Court opined that that the provisions thereof should be

aimed at for giving the owner just compensation on the acquisition of his

land whereas under the Land Acquisition Act, lands can be acquired in

terms of the doctrine of Eminent Domain so long there exists an underlying

purpose therefor and in that view of the matter the factors for determination

of compensation thereunder need not be similar.

In Dhanwanti Devi's case (supra), a Bench of this Court agreeing with

Hari Krishnan Khosla (supra), stated the law thus :

"The question, therefore, emerges whether it

is necessary for the State legislature to expressly

specify that interest or solatium shall not be

payable for the lands or property acquired under

Section 7(1) of the Act. Sub silentio is eloquent.

It would further be seen that Section 8 of the

Central Act equally does not provide for payment

of solatium and interest. The Act was passed in

the year 1968 while the Central Act was passed in

1952. It would, therefore, be reasonable to

conclude that the State legislature was cognizant of

the express provisions for payment of interest and

solatium available in the Acquisition Act. The Act

omitted similar provisions for payment of interest

and solatium as part or component of

compensation, obviously to fall in line with the

Central Act."

In First Nagpur Improvement Trust (supra) the question which arose

therein was as to whether the State Government being the acquiring

authority for the acquisition of lands, be it under the Improvement Trust Act

or the Kanpur Urban Development Act, or the Land Acquisition Act, any

discrimination can be made as regards formulation of different principles of

compensation and such classification would be violative of Article 14 of the

Constitution of India. It was held :

"It is equally immaterial whether it is one

Acquisition Act or another Acquisition Act under

which the land is acquired. If the existence of two

Acts could enable the State to give one owner

different treatment from another equally situated

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the owner who is discriminated against, can claim

the protection of Article 14."

(Emphasis Supplied)

Sikri, C.J., speaking for the Bench, however, observed that the State

can make a reasonable classification for the purpose of legislation. The

learned Chief Justice held that that the classification in order to be

reasonable must satisfy two tests : (i) the classification must be founded on

intelligible differentia and (ii) the differentia must have a rational relation

with the object sought to be achieved by the legislation in question.

However, he hastened to add that the object therefor itself must be lawful

and cannot be discriminatory.

This Court in the second Nagpur Improvement Trust (supra) came to

the conclusion that all the statutes providing for acquisition of land lay down

a common scheme and pattern as the state legislation relate to the town

planning and development and in terms of which the provisions of the Land

Acquisition Act were made applicable with certain modifications, the

provisions relating to solatium and interest contained therein shall be read

into the State Acts.

In the second Nagpur Trust's case (supra), having regard to the

scheme of acquisition sought to be achieved, it was held :

"It may be noticed that in U.P. Avas Evam

Vikas Prashad vs. Jainul Islam, this Court

highlighted the fact that though under the Land

Acquisition Act as amended in its application to

the State of U.P. there was no provision for grant

of solatium, by the U.P. Act such solatium was

provided for. The intention of the legislature was

apparent that it wanted to confer the benefit of

solatium by modifying Section 23(2), which

benefit was not available under the provisions of

the Land Acquisition Act as it was applicable in

the State of U.P. at the time of enactment of the

U.P. Act. So far as the Punjab Act and the Nagpur

Act are concerned, the schedules do not modify the

provisions of Section 23(2) of the Land

Acquisition Act which provides for payment of

solatium. However, a proviso was added to the

effect that sub-section (2) shall not apply to any

land acquired under the State Acts in question.

The added proviso is identical in both the State

Acts. This clearly implies that where acquisition

was made under the provisions of the Land

Acquisition Act, as modified, the legislature did

not intend to deprive the claimants of solatium as

provided under the Land Acquisition Act. But

solatium was not payable in cases of acquisition

under the State Acts. There are provisions in both

the State Acts which permit the State to acquire

lands for the purposes of the scheme without

resorting to the provisions of the Land Acquisition

Act such as acquisition by purchase, lease,

exchange, or otherwise, or acquisitions

contemplated under deferred street scheme,

development scheme and expansion scheme. In

respect of such acquisitions solatium is not

payable. Such cases are similar to the acquisitions

under Section 53 of the Bombay Town Planning

Act which was considered by this Court in Prakash

Amichand Shah vs. State of Gujarat. In these

circumstances with a view to save the law from the

vice of the arbitrary and hostile discrimination, the

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provisions must be construed to mean, in the

absence of anything to the contrary, that the

provisions of the Land Acquisition Act as

amended by the 1984 Act relating to determination

and payment of compensation would apply to

acquisition of land for the purposes of the State

Acts. It must, therefore, be held that while

incorporating the provisions of the Land

Acquisition Act in the State Acts, the intention of

the legislature was that amendments in the Land

Acquisition Act relating to determination and

payment of compensation would be applicable to

acquisition of lands for the purposes of the State

Acts. Consequently, the claimants are entitled to

the benefits conferred by Section 23(1-A), if

applicable, and Sections 23(2) and 28 of the Land

Acquisition Act as amended by the 1984 Act for

acquisition of land for the purposes of the State

Acts under Section 59 of both the Nagpur and

Punjab Acts."

(Emphasis Supplied)

It is now well-settled that a decision is an authority for what it decides

and not what can logically be deduced therefrom. It is equally well-settled

that a little difference in facts or additional facts may lead to a different

conclusion.

The question, therefore, which arises would be, as to whether the

owners of the lands sought to be acquired under the Act vis-a-vis Land

Acquisition Act are similarly situated?

Here it is not a case where existence of the Acquisition Act enables

the State to give one owner different treatment from another equally situated

owner on which ground Article 14 was sought to be invoked in the first

Nagpur Improvement Trust's case (supra). The purposes for which the

provisions of the said Act can be invoked are absolutely different and

distinct from which the provision of Land Acquisition Act can be invoked

for acquisition of land. In terms of the provisions of the said Act, the

requisition of the land was made. During the period of requisition the owner

of the land is to be compensated therefor. Section 30 of the said Act, as

referred to hereinbefore, clearly postulates the circumstances which would

be attracted for acquisitioning of the requisitioned land.

The purposes for which the requisitioning and consequent acquisition

of land under the said Act can be made, are limited. Such acquisitions, inter

alia, can be made only when works have been constructed during the period

of requisition or where the costs to any Government of restoring the property

to its condition at the time of its requisition would be excessive having

regard to the value of the property at the relevant time.

One of the principles for determination of the amount of

compensation for acquisition of land would be the willingness of an

informed buyer to offer the price therefor. In terms of the provisions of the

said Act acquisition of the property would be in relation to the property

which has been under requisition during which period the owner of the land

would remain out of possession. The Government during the period of

requisition would be in possession and full enjoyment of the property.

It is beyond any cavil that the price of the land which a willing and

informed buyer would offer would be different in the cases where the owner

is in possession and enjoyment of the property and in the cases where he is

not. The formulation of the criteria for payment of compensation in terms of

Section 31 of the Act was clearly made having regard to the said factor,

which cannot be said to be arbitrary or unreasonable. The Parliament while

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making the provisions for payment of compensation must have also taken

into consideration the fact that the owner of the property would have

received compensation for remaining out of possession during the period

when the property was under acquisition.

The learned Attorney General appears to be correct in his submission

that the provision for grant of solatium was inserted in the Land Acquisition

Act by the Parliament having regard to the fact that the amount of

compensation awarded to the owner of the land is to be determined on the

basis of the value thereof as on the date of issuance of the notification under

Section 4 of the Act. It has been noticed that the process takes a long time.

Taking into consideration the deficiencies in the Act, the Land Acquisition

Act was further amended in the year 1984. In terms of sub-section (2) of

Section 23 of the Land Acquisition Act, therefore, solatium is paid in

addition to the amount of market value of the land.

We are, therefore, of the opinion that the classification sought to be

made for determination of the amount of compensation for acquisition of the

land under the said Act vis--vis the Land Acquisition Act is a reasonable

and valid one. The said classification is founded on intelligible differentia

and has a rational relation with the object sought to be achieved by the

legislation in question.

It may be true that in Haji Mohammad Ekramul Haq's case (supra),

this Court observed while considering the provisions of the Defence of India

Act, 1939, that the principles on which the compensation was to be

ascertained under Section 19 of the Defence of India Act were the same as

those provided in Section 23(1) of the Land Acquisition Act. Even the

principles of ascertaining the amount of compensation, as it then stood, did

not provide for any payment of solatium. The said decision, however,

having regard to the provisions contained in Section 31 of the Act which

lays down the criteria for determination of the amount of compensation

cannot be said to have any application whatsoever in the instant case.

In Dayal Singh's case (supra) this court held :

"The right to get the amount of

compensation re-determined must expressly be

provided by the statute. Such a right being a

substantive one cannot be sought to be found out

by implication nor can the same be read therewith.

The appellants, thus, cannot invoke a right

by reading the same into a statute although

admittedly there exists none."

We do not agree with the submission of Mr. Sharma that Hari

Krishan Khosla (supra) and Dhanwanti Devi (supra) have wrongly been

decided.

We are, therefore, of the opinion that the impugned judgments cannot

be sustained and are, therefore, liable to be set aside.

The question, however, which remains for consideration is as to

whether the amount of solatium and interest which the appellant has paid to

the respondents should be directed to be refunded. We think not. Even in

Hari Krishan Khosla (supra) this Court noticed :

"This is the case in which for 16 years no

arbitrator was appointed. We think it is just and

proper to apply the principle laid down in Harbans

Singh Shanni Devi vs. Union of India [C.A. Nos.

470 and 471 of 1985 disposed of by this Court on

February 11, 1985]. The Court held as under :-

"Having regard to the peculiar facts and

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circumstances of the present case and

particularly in view of the fact that the

appointment of the arbitrator was not made

by the Union of India for a period of 16

years, we think this is a fit case in which

solatium at the rate of 30 per cent of the

amount of compensation and interest at the

rate of 9 per cent per annum should be

awarded to the appellants. We are making

this order having regard to the fact that the

law has in the meanwhile been amended

with a view to providing solatium at the rate

of 30 per cent and interest at the rate of 9 per

cent per annum.""

In these cases also, it is said that the arbitrators have not yet been

appointed despite the demand made in this behalf by the respondents. The

amount of solatium at the rate of 15% per annum and the interest thereupon

had been paid in early eighties when the Punjab and Haryana High Court

declared the said Act ultra vires Article 14 of the Constitution of India.

In the peculiar fact situation obtaining in these cases and inasmuch as

the amounts sought to be recovered are small which were paid to the

respondents decades back, we are of the opinion that interest of justice shall

be met if the appellants are directed not to recover the amount of

compensation from the respondents pursuant to or in furtherance of this

judgment. However, we hasten to add that this direction shall be not treated

as a precedent.

These appeals are allowed with the aforementioned observations and

directions. No costs.