Case Note & Summary
The writ petition was filed under Article 226 of the Constitution of India challenging three administrative measures: G.O.Ms.No.683 dated 21.07.1997, G.O.Ms.No.401 dated 12.10.2018, and Letter No.558(LAI(1) 05-02) dated 11.03.2005, and seeking a direction to the authorities to apply the principles declared by the Supreme Court in Gurpreet Singh v. Union of India (2006) 8 SCC 457 regarding the calculation of interest on compensation under the Land Acquisition Act, 1894. The petitioner, A. Dhanasgopal, contended that these government orders and letter were based on the overruled decision in Prem Nath Kapoor and misinterpreted the law on interest on solatium, causing prejudice to land owners. The Government Order of 1997 and the 2005 letter had directed calculation of interest in terms of Prem Nath Kapoor, which was subsequently overruled by a Constitution Bench in Gurpreet Singh. The 2018 Government Order sought to restrict interest on solatium to from 19.09.2001 in all cases, regardless of the terms of the decree. The petitioner argued that this was contrary to paragraph 54 of Gurpreet Singh, which clarified that interest on solatium could be granted by the execution court only from 19.09.2001 where not awarded in the decree, but where the decree itself included interest on solatium, it must be paid as per the decree. The respondents did not file a counter affidavit and did not seriously contest the matter. The Court, after examining the earlier decision of a coordinate bench in Hemavathy v. Secretary to Government (WP No.446 of 2017) which had already struck down the same letter, held that the impugned G.O.Ms.No.683 and Letter No.558 were invalid as they relied on overruled precedent. It further held that paragraph 6 of G.O.Ms.No.401 was based on a wrong understanding of Gurpreet Singh and could not be sustained. The Court directed the government to issue fresh administrative communication consistent with Gurpreet Singh and clarified that payment of interest on solatium must be governed strictly by paragraph 54 of that judgment. The writ petition was accordingly disposed of with no order as to costs.
Headnote
A) Land Acquisition - Compensation - Interest Calculation - Land Acquisition Act, 1894 - The rule that part payment of compensation must be appropriated first towards interest, then costs, and then principal, and that such appropriation cannot be re-opened, was laid down in Gurpreet Singh v. Union of India (2006) 8 SCC 457, overruling Prem Nath Kapoor. Held that administrative directions contrary to Gurpreet Singh are invalid, and the authorities must follow the principles in Gurpreet Singh. (Paras 2, 6, 7, 8) B) Land Acquisition - Solatium - Interest on Solatium - Land Acquisition Act, 1894, Sections 23(1A), 23(2) - In cases where the decree does not include interest on solatium, the execution court can grant it only from 19.09.2001, the date of Sundar judgment, and not for any prior period; however, if the decree already includes interest on solatium, it cannot be restricted to from 19.09.2001. Held that G.O.Ms.No.401 dated 12.10.2018, which sought to restrict interest on solatium to from 19.09.2001 in all cases, is based on a wrong understanding of Gurpreet Singh and is not valid. (Paras 4, 5, 6, 7) C) Precedent - Overruling - Effect of Constitution Bench - Land Acquisition Act, 1894, Constitution of India, Articles 141, 142 - An administrative order that relies on a decision of the Supreme Court which has been subsequently overruled by a Constitution Bench is not sustainable in law. Held that G.O.Ms.No.683 and Letter No.558 issued based on Prem Nath Kapoor, which was overruled by Gurpreet Singh, cannot be enforced and must be treated as invalid. (Paras 3, 8) D) Constitutional Law - Administrative Law - Compliance with Supreme Court Declarations - Constitution of India, Article 141 - The State and its instrumentalities are bound by the law declared by the Supreme Court, and any administrative communication contrary to such declaration has no force. Held that it is sufficient to direct the State to issue fresh administrative communication consistent with Gurpreet Singh, as the law declared by the Supreme Court prevails over any executive instruction. (Para 8)
Issue of Consideration
Whether the impugned government orders/directions regarding calculation of interest on land acquisition compensation are valid in light of the Supreme Court's decision in Gurpreet Singh v. Union of India.
Final Decision
Writ petition disposed of. G.O.Ms.No.683, Letter No.558, and paragraph 6 of G.O.Ms.No.401 held not valid. Respondents directed to issue fresh administrative communication consistent with Gurpreet Singh, and the authorities shall follow the principles in Gurpreet Singh while dealing with compensation under the Land Acquisition Act, 1894. No costs.
Law Points
- Legal points not extracted
- Where part payment of compensation is received
- it must be adjusted first towards interest
- then costs
- then principal (Gurpreet Singh)
- Subsequent re-appropriation is not permissible
- Interest on solatium can be granted by execution court only from the date of Sundar judgment (19.09.2001) if not covered by decree and cannot be for any prior period
- If decree includes interest on solatium it must be as per decree and cannot be restricted to from 19.09.2001
- The ratio in Prem Nath Kapoor stands overruled by Gurpreet Singh
