Case Note & Summary
The Supreme Court of India dealt with a land acquisition compensation dispute arising from a notification under Section 4(1) of the Land Acquisition Act, 1894 published in 1981. The Land Acquisition Officer made an award on May 9, 1984, fixing compensation at Rs.110 per square yard. On a reference under Section 18, a learned single Judge enhanced the compensation to Rs.300 per square yard by an award and decree dated February 19, 1992, but disallowed interest in view of an agreement between the parties. The landowners, dissatisfied with the High Court order dated July 14, 1994 in Appeal No.114/92, approached the Supreme Court by special leave. The sole question before the Supreme Court was whether the appellants were entitled to interest as amended under the Land Acquisition (Amendment) Act 68 of 1984, despite their prior agreement with the Municipal Corporation of Greater Bombay. The agreement provided that the Corporation would pay Rs.98,480 being two-thirds of the compensation calculated at interim rates of Rs.40 per square yard on execution of the agreement, and the balance amount as may be awarded under the Land Acquisition Act would be paid with interest at 4% per annum from the date of possession. The appellants argued that they were entitled to enhanced interest under the Amendment Act 68 of 1984, which had come into force and provided higher rates. The respondent Corporation contended that the contractual agreement bound the parties to 4% interest, and Section 11(2) of the Land Acquisition Act, 1894 permitted the Land Acquisition Officer to make an award according to such agreement. The Supreme Court examined the agreement and Section 11(2), which states that notwithstanding anything contained in sub-section (1), if all persons interested agree in writing on matters to be included in the award, the Collector may make an award according to the terms of such agreement. The Court held that the explicit contract for 4% interest per annum from the date of possession was binding on the parties. Although the Amendment Act 68 of 1984 provided enhanced interest rates, the appellants could not claim the enhanced benefit because they had contracted otherwise. Accordingly, the Supreme Court dismissed the appeal with no order as to costs, affirming that the contractual rate of 4% interest applied.
Headnote
A) Land Acquisition - Interest on Compensation - Contractual Agreement Overrides Enhanced Statutory Interest - Land Acquisition Act, 1894, Sections 11(2) and 18 - Landowners entered into an agreement with the Municipal Corporation accepting payment at interim rate and 4% interest per annum on balance compensation from date of possession. The Land Acquisition (Amendment) Act 68 of 1984 increased interest rates but the Supreme Court held that the explicit agreement under Section 11(2) of the 1894 Act binds the parties and excludes the enhanced statutory interest. Held: the appeal was dismissed and the contractual 4% interest applied.
Issue of Consideration
Whether landowners are entitled to enhanced interest under the Land Acquisition (Amendment) Act 68 of 1984 despite an agreement specifying 4% interest per annum.
Final Decision
The Supreme Court dismissed the appeal, holding that the appellants were bound by their agreement and not entitled to enhanced interest under Amendment Act 68 of 1984. No costs.
Law Points
- Interest on land acquisition compensation is governed by agreement under Section 11(2) of Land Acquisition Act
- 1894
- parties cannot claim enhanced statutory interest under Amendment Act 68 of 1984 when contract specified lower rate
- agreement under Section 11(2) is binding on parties
