Case Note & Summary
The dispute arose out of acquisition of land under the Requisition and Acquisition of Immovable Property Act, 1952. The Special Land Acquisition Collector, as the competent authority, made an award in 1970 determining compensation at Rs.375 per kanal. The respondents, who were interested persons, did not communicate their acceptance or otherwise of the offer in writing as required under Rule 9(5)(i) of the Rules framed under the Act. In 1986, the respondents filed a writ petition for appointment of an arbitrator, and the High Court directed the appellants to appoint one on July 28, 1986. The arbitrator passed an award on December 12, 1991, determining compensation at Rs.150 per marla, along with solatium at 30% and interest at 9% per annum for one year and 15% thereafter on the enhanced compensation. The appellants filed an appeal before a single Judge of the High Court, which was dismissed on May 20, 1992. A Letters Patent Appeal, being LPA No.392 of 1992, was filed and remained pending. In the impugned order dated March 5, 1993, the High Court directed the release of payment of compensation forthwith, prompting the Union of India to file the present appeal by special leave. The central legal issues were whether the appellants were liable to pay interest for the delay in appointment of arbitrator when the respondents had not communicated their non-acceptance; whether the arbitrator had the power to award solatium and interest under the Act; and whether the High Court's direction to release payment was proper. The appellants contended that no duty to appoint arbitrator arose because the respondents never communicated acceptance or otherwise, hence there were no laches. They argued that the arbitrator had no power to award solatium and interest under the Act and that the Land Acquisition Act had no application. The respondents relied on Union of India v. Hari Krishan Khosla and Smt. Seeto Devi v. Union of India, arguing that the 16-year delay in appointing arbitrator obligated the appellants to pay interest and that the competent authority had a duty to appoint arbitrator even in the absence of communication. The Court examined Sections 8 and 9 of the Act and Rule 9 of the Rules. It noted that Rule 9(3) required the competent authority to communicate an offer, Rule 9(5)(i) required the interested person to communicate acceptance or otherwise within 15 days in writing, and Rule 9(6) required the competent authority to submit a report and deposit the amount if the person did not accept or did not communicate. The Court held that the obligation to appoint arbitrator arose only when the interested person communicated non-acceptance. The mere non-communication under Rule 9(6) did not require the Central Government to appoint arbitrator; something more was needed, namely, a communication of non-acceptance. Since that was absent in this case, no laches could be attributed to the appellants. The Court distinguished Hari Krishan Khosla on the ground that laches had been assumed there due to 16 years of delay, whereas no such laches existed here. The Court also found Seeto Devi inapplicable because in that case the claimant had accepted the amount under protest. The Court reiterated the general ratio of Hari Krishan Khosla that the provisions of the Land Acquisition Act did not apply and that solatium and interest could not be awarded under the Act. Accordingly, the award of solatium and interest was set aside. Since the determination of compensation by the arbitrator was the subject matter of the pending Letters Patent Appeal, the Court declined to go into the merits and expressed no opinion on other aspects. The appeal was allowed with no order as to costs.
Headnote
A) Property Law - Acquisition and Requisition - Communication of Acceptance or Non-acceptance - Requisition and Acquisition of Immovable Property Act, 1952, Sections 8 and 9 read with Rule 9(5)(i) - The interested person was required to communicate in writing within 15 days his acceptance or otherwise of the offer made by the competent authority; mere non-communication under Rule 9(6) did not require the Central Government to appoint arbitrator, as something more was needed, namely, communication of non-acceptance. Held that since the respondents had not communicated their acceptance or otherwise, no duty to appoint arbitrator arose and no laches could be attributed to the appellants. B) Compensation - Solatium and Interest - Arbitrator's Power - Requisition and Acquisition of Immovable Property Act, 1952 - The arbitrator had no power to award solatium and interest on the compensation determined under Section 8 because the Act did not provide for such payments, and the Land Acquisition Act provisions were not applicable. Held that the award of solatium at 30% and interest at 9% for one year and 15% thereafter was set aside. C) Precedent - Distinguishing Prior Decisions - Hari Krishan Khosla and Seeto Devi - Requisition and Acquisition of Immovable Property Act, 1952 - The ratio in Smt. Seeto Devi v. Union of India was inapplicable because there the claimant had accepted the amount under protest, whereas in the present case there was no communication at all; Union of India v. Hari Krishan Khosla assumed laches due to delay in appointment of arbitrator, but no such laches existed here. Held that general ratio of Hari Krishan Khosla that solatium and interest cannot be fastened under the Act applied to this case.
Issue of Consideration
Whether the Union of India was liable to pay interest for delay in appointment of arbitrator when the interested persons had not communicated acceptance or non-acceptance of the compensation offer in writing as required under Rule 9(5)(i) of the Requisition and Acquisition of Immovable Property Rules; Whether the arbitrator had the power to award solatium and interest on compensation determined under Section 8 of the Requisition and Acquisition of Immovable Property Act, 1952; Whether the High Court's direction to release payment of compensation forthwith was justified given the pending Letters Patent Appeal on merits.
Final Decision
The appeal was allowed. The award of the arbitrator awarding solatium @ 30% and interest @ 9% for one year from the date of taking possession and @ 15% thereafter till the date of deposit was set aside. In other respects, the Court expressed no opinion, and there was no order as to costs.
Law Points
- Interested person must communicate acceptance or otherwise in writing within 15 days under Rule 9(5)(i) of Requisitioning and Acquisition of Immovable Property Rules
- non-communication alone does not trigger duty to appoint arbitrator
- arbitrator lacks power to award solatium and interest under Requisition and Acquisition of Immovable Property Act
- 1952
- Land Acquisition Act provisions do not apply
- no laches on state when no communication of non-acceptance.
