Case Note & Summary
The dispute arose from a compensation claim following the acquisition of land by the Union of India for military purposes under the Requisition and Acquisition of Immovable Property Act, 1952. The respondents, whose land was acquired, contested the compensation amount, leading to the appointment of an arbitrator. The Arbitral Tribunal awarded compensation at Rs.2000 per decimal of land, with a solatium of 20% and interest at 9% per annum, mandating payment within three months, failing which interest would rise to 12%. The High Court upheld this award but later reduced the post-award interest to 9%, extending the payment deadline. The Union of India’s special leave petition against this order was dismissed due to delay. Subsequently, the respondents filed a contempt petition, claiming non-compliance with the award. The High Court ordered the Union of India to pay interest at 12% per annum on the awarded amount from June 22, 2003, to November 25, 2006. The Union of India appealed this decision. The respondents argued for entitlement to the higher interest rate due to delayed payment, while the appellants contended that they had complied with the award and that the interest should remain at 9%. The Supreme Court referenced a precedent that clarified the legal standing of landowners under the RAIP Act and concluded that the High Court's order effectively mandated interest on interest, which is not permissible under the Act. Consequently, the Supreme Court set aside the High Court's order and allowed the appeal, directing each party to bear its own costs.
Headnote
A) Contempt of Court - Compliance with Arbitral Award - Interest Payment - Requisition and Acquisition of Immovable Property Act, 1952, Section Not Mentioned - The High Court directed payment of interest at 12% per annum on the awarded amount, which was contested by the Union of India. The Supreme Court held that such payment constituted interest on interest, which is impermissible under the RAIP Act, and set aside the High Court's order (Paras 8-12).
Issue of Consideration
Whether the High Court's order directing payment of interest at the rate of 12% per annum on the awarded amount was justified.
Final Decision
The Supreme Court set aside the High Court's order directing payment of interest at 12% per annum, ruling that such payment constituted interest on interest, which is impermissible under the RAIP Act. The appeal was allowed, and the parties were directed to bear their respective costs.
Law Points
- Interest on compensation
- Requisition and Acquisition of Immovable Property Act
- 1952
- Contempt of Court
- Arbitral Tribunal awards
- Payment of interest on interest
