Case Note & Summary
The appeal arose from land acquisition proceedings in which a dispute existed among claimants regarding apportionment of compensation. The Special Land Acquisition Officer referred the dispute to the civil court under Section 30 of the Land Acquisition Act, 1894, and deposited the compensation in court as required under Section 31(2). The Reference Court, while apportioning compensation, awarded interest at 9% per annum on the amount of compensation from the date of deposit by the Collector till the decision of the reference. The High Court dismissed the State's revision and confirmed the interest, following an Andhra Pradesh High Court decision in Purushotham Haridas v. Amruth Ghee Co. The State appealed to the Supreme Court. The Collector had made an award under Section 11 of the Act, but due to a dispute regarding apportionment, made a reference under Section 30. The Reference Court framed the issue: 'Who among the claimants are entitled to receive compensation and to what extent?' It apportioned the compensation and awarded 9% interest. The State challenged this in Civil Revision Petition No. 1148/87, but the High Court affirmed following the Andhra Pradesh High Court. The respondents did not appear before the Supreme Court. The core legal issue was whether the Reference Court and High Court could award interest on compensation deposited under Section 31(2) pending a Section 30 reference. The State contended that once compensation was deposited in court, its liability to pay interest ceased. No contrary arguments were presented as respondents remained absent. The Supreme Court examined Sections 11, 30 and 31(2) of the Land Acquisition Act, 1894. Section 11 requires the Land Acquisition Officer to enquire into respective interests and apportion compensation. Section 30 enables the Collector to refer disputes as to apportionment to court. Section 31(2) mandates that if there is a dispute as to apportionment, the Collector shall deposit the compensation in the court to which reference under Section 18 would be made. The Court reasoned that upon making a Section 30 reference, the Collector is enjoined to deposit the compensation under Section 31. Once deposited, the State's liability to pay interest on the amount ceases from the date of deposit. Therefore the Reference Court and High Court committed an obvious illegality in directing payment of interest from the date of deposit till decision. The Andhra Pradesh High Court decision relied upon was declared clearly illegal. The appeal was allowed and the direction to pay interest was set aside.
Headnote
A) Land Acquisition - Apportionment of Compensation - Cessation of Interest Liability on Deposit - Land Acquisition Act, 1894, Sections 11, 30, 31(2) - The Collector made a reference under Section 30 due to dispute on apportionment and deposited the compensation in court under Section 31(2). The Reference Court and High Court awarded 9% interest from the date of deposit until decision under Section 30. The Supreme Court held that upon deposit in court, the State's liability to pay interest ceases from the date of deposit, and the direction to pay interest was illegal. Held that the appeal was allowed and the interest direction was set aside.
Issue of Consideration
Whether the Reference Court and High Court can award interest on compensation amount deposited by the Collector under Section 31(2) of the Land Acquisition Act, 1894 pending determination of a Section 30 reference.
Final Decision
Appeal allowed; direction to pay interest set aside. The Reference Court and High Court erred in directing payment of 9% interest from date of deposit till decision under Section 30. The State's liability to pay interest ceased on deposit.
Law Points
- Under Section 31(2) of Land Acquisition Act
- 1894
- liability of State to pay interest on compensation ceases from date of deposit in court
- Section 30 reference for apportionment
- Section 11 provides for apportionment by Land Acquisition Officer
- courts cannot award interest on deposited compensation
- Andhra Pradesh High Court view in Purushotham Haridas v. Amruth Ghee Co. declared illegal
