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  IN THE SUPREME COURT OF INDIA    CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 7034-7037 OF 2015   (Arising out of S.L.P. (C) NOS. 29463-29466 of 2012)

M/S PERIYAR & PAREEKANNI RUBBERS LTD.  …… APPELLANT

VERSUS

STATE OF KERALA                        …… RESPONDENT

J U D G M E N T

V. GOPALA GOWDA, J.

     Leave granted.

2. These appeals by special leave are directed

against  the  impugned  common  judgment  and  order

dated 07.04.2010 passed by the High Court of Kerala

at Ernakulam in Civil Revision Petition Nos. 196,

199, 205 and 208 of 2009 (filed against the order

dated  15.10.2008  of  the  learned  Sub-Judge,

Ernakulam-the Execution Court), wherein the dispute

between  the  parties  related  to  the  claim  of

REPORTABLE

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solatium for the enhanced amount of compensation

and  interest  thereon  in  respect  of  the  acquired

land. The High Court has confirmed that solatium is

payable  on  that  portion  of  land  value  based  on

capitalization method of yielding rubber trees and directed to compute balance amount payable under

the decree, but awarded the interest on solatium

from  19.09.2001,  the  date  when  judgment  by  the

Constitution Bench in the case of Sunder v. Union

of India1 was delivered by this Court and not for

the prior period. The legality and validity of the

impugned judgment and order is seriously challenged

urging various legal contentions as the appellant

is aggrieved by the denial of the interest payable

on the component of solatium under Sections 23(1A),

23(2) read with Sections 28 and 34 of the Land

Acquisition Act, 1894 (for short “the Act”). The

solatium  being  the  component  of  compensation

payable  to  the  claimant/decree  holder,  the

restriction  upon  its  payment  by  the  High  Court

1

(2001) 7 SCC 211

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placing  reliance  upon  another  subsequent

Constitution Bench judgment of this Court in the

case  of  Gurpreet  Singh  v.  Union  of  India2  is

hereby challenged.  3.  The  brief  facts  of  the  case  are  stated

hereunder:-      Various  portions  of  rubber  estate  of  the

appellant  situated  in  village  Kuttamangalam  was

acquired by the State Government in exercise of its

eminent domain power pursuant to the notification

dated 10.10.1978 issued under Section 4(1) of the

Act for the purpose of Periyar Valley Irrigation

Project.

4. In 1980 and 1981 Awards were passed by the

Land Acquisition Officer awarding compensation, on

the market value of land which were partly based on

capitalization method of the yielding rubber trees

for the planted area and partly based on the value

of bare land on which there were no yielding rubber

plantation. Awards included solatium and interest

on compensation including solatium.  

5. Being dissatisfied with the compensation, the 2   (2006) 8 SCC 457

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appellant  filed  Land  Acquisition  Reference  (LAR)

Nos. 425, 427, 428, 429, 432, 434, 435, 456, 458

and 463 of 1988 before the Court of III Additional

Sub-Judge,  Ernakulam  (the  Reference  Court)  under

Section 18 of the Act.

6. The  Reference  Court  after  perusal  of  the

record, by its common judgment, passed an Award on

19.11.1992  by  enhancing  the  compensation  partly

based  on  capitalization  method  of  the  yielding

rubber trees for the planted area and partly based

on the value of bare land on which there were no

rubber  trees.  The  Reference  Court  held  that  the

claimant  is  entitled  to  get  30%  solatium,  12%

additional  market  value  from  the  date  of  the

notification  i.e.,  10.10.1978  till  the  date  of

Award passed against it and they are also entitled

to get 9% interest for the first one year from the

date of dispossession and thereafter at 15% till

realization of the compensation awarded in favour

of the claimant/decree holder.  

7. In some of the abovesaid LARs, payments were

made  by  respondent-State  in  full  and  final

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settlement of the enhanced compensation, solatium

and  interest  on  compensation  including  solatium.

With respect to the remaining cases, the appellant

filed Execution Petition Nos. 152, 147, 146, 149

and  145  of  1996  before  the  Execution  Court  for

execution  of  the  Award/decree  passed  by  the

Reference Court.  8. The Execution Court on 15.10.2008 passed an

order fixing balance amount payable by the State

government after excluding solatium on that portion

of the market value of the acquired land based on

capitalization method of the yielding rubber trees

for the planted area.

9. Being  aggrieved  by  the  said  order  of  the

Execution Court, the appellant filed Civil Revision

Petition (CRP) Nos. 196, 199, 201, 205 and 208 of

2009 before the High Court of Kerala.

10. The  High  Court  on  07.04.2010  passed  the

common impugned judgment and order in the said CRPs

confirming  that  the  solatium  is  payable  by  the

state  government  for  the  enhanced  compensation

awarded for the market value of the entire land.

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Thus, it provided solatium for that portion of land

the value of which was based on the capitalization

method of yielding rubber trees and directed the

respondents to compute balance amount payable under

the  decree.  However,  the  High  Court  awarded  the

interest on solatium w.e.f. 19.09.2001, the date of

judgment  delivered  by  Constitution  Bench  in

Sunder’s case (supra) instead of from the date of

acquisition of the land of the appellant. Hence,

these  appeals  are  filed  by  the  appellant  urging

various grounds.

11. Mr. V. Giri, learned senior counsel on behalf

of the appellant contended that the Awards in the

instant case were passed in 1980 and 1981 and the

Reference Court judgment and Award was passed in

1992, the time when there was no dispute regarding

the payment of interest on solatium. It is only in

1995 when this Court passed a judgment in the case

of  Prem  Nath  Kapur  v.  National  Fertilizers

Corporation.  Of  India  Ltd.3 which  barred  the

payment of interest on solatium. But the decision

3  (1996) 2 SCC 71

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in Prem Nath Kapur’s case was subsequently reversed

in  Sunder’s (supra) case. Therefore, there was no

justification  and  reason  for  the  High  Court  to

restrict the payment of interest on solatium prior

to 19.09.2001 by applying the observations made at

paragraph 54 in the case of Gurpreet Singh (supra).   12. The  learned  senior  counsel  has  further

contended  that  the  respondent-State  has  already

settled few cases covered by the Reference Court

judgment by paying the full compensation, solatium

and  interest  on  compensation  including  solatium

without any dispute. It shows that there was no

dispute between the parties as to the payment of

interest on solatium by the respondents. Before the

Execution  Court,  the  dispute  raised  by  the

respondent-State was as to the amount of land value

on which solatium was to be computed.   13. On the other hand, Ms. Bina Madhavan, learned

counsel  on  behalf  of  the  respondent-State

government sought to justify the impugned common

judgment and order by placing strong reliance upon

paragraph  54  of  Gurpreet  Singh’s case  (supra),

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which is extracted in the reasoning portion of this

judgment.

14. She further contended that the interest on

solatium can be claimed only in pending execution

cases and not in the closed cases and the execution

courts are entitled to permit its recovery by the

claimant/decree holder from 19.09.2001 i.e., from

the date of judgment in Sunder’s case and not for

any prior period.  

15. With reference to the aforesaid rival legal

submissions urged by the learned counsel on behalf

of the parties, this Court is required to examine

the  correctness  of  the  impugned  common  judgment

order  passed  in  the  aforesaid  CRPs  by  the  High

Court  in  restricting  the  payment  of  statutory

interest  payable  on  the  solatium  component  by

placing  reliance  upon  the  cases  of  Sunder and

Gurpreet Singh  (supra). In this connection, this

Court is required to find out as to whether the

payment of interest on solatium is the legislative

statutory  right  conferred  upon  the  land

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loser/claimant recognised by the Constitution Bench

in Sunder’s case.  The High Court in the light of

observations made in Gurpreet Singh’s case (supra)

at paragraph 54 has fixed the date of payment of

interest  payable  on  the  solatium  to  the

claimant/decree holder with effect from 19.09.2001.

The correctness of the same is also required to be

examined by this Court.   16. For  the  aforesaid  purpose,  it  would  be

necessary  to  refer  to  the  question  of  law  as

referred to in  Sunder’s  case (supra) wherein this

Court deals with the conflicting decisions rendered

on one hand in Union of India v. Ram Mehar4  (three

Judge Bench) and on the other, in later decisions

of  co-equal  Benches  of  this  Court  viz.,  Mir

Fazeelath Hussain v. Special Deputy Collector, Land

Acquisition5, Prem Nath Kapur (supra) and Yadavrao

P. Pathade v. State of Maharashtra6.

17. In the case of  Union of India  v. Ram Mehar

(supra) this Court after examining the scope of the

expression “market value” in Section 4(3) of the 4   (1973) 1 SCC 109 5    (1995) 3 SCC 208 6   (1996) 2 SCC 570

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Land  Acquisition  (Amendment  and  Validation)  Act,

1967, held that solatium cannot form part of the

market value of the land, rather the “market value”

is only one of the components to be reckoned with

in the determination of the amount of compensation.

The relevant para 7 of the decision reads thus :

“7…..If  market  value  and  compensation were intended by the legislature to have the  same  meaning  it  is  difficult  to comprehend why the word “compensation” in Section 28 and 34 and not “market value” was used. The key to the meaning of the word  “compensation”  is  to  be  found  in Section 23(1) and that consists (a) of the market value of the land and (b) the sum of 15% on such market value which is stated to be the consideration for the compulsory  nature  of  the  acquisition. Market value is therefore only one of the components  in  the  determination  of  the amount  of  compensation. If  the Legislature  has  used  the  word  “market value” in Section 4(3) of the Amending Act of 1967 it must be held that it was done deliberately and what was intended was that interest should be payable on the market value of the land and not on the  amount  of  compensation  otherwise there was no reason why the Parliament should  not  have  employed  the  word “compensation” in the aforesaid provision of the Amending Act.”                           (emphasis supplied)

Thus, it provides for the payment of interest on

the market value of the land. The said judgment is

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later followed by two Judge Bench of this Court in

Periyar  &  Pareekanni  Rubbers  Ltd.  v.  State  of

Kerala7. The relevant para 24 of which reads thus:-

“24. ….Therefore, we have no hesitation to hold that Section 25(3) contemplates payment  of  interests  on  solatium  to recompensate the owner of the land for loss of user of the land from the date of taking  possession  till  date  of  payment into  court.  The  word  compensation  has been advisedly used by the legislature. Accordingly we hold that the appellant is entitled to interest on solatium.”

18. On  the  other  hand,  in  the  cases  of  Mir

Fazeelath Hussain (supra), Prem Nath Kapur (supra)

and  Yadavrao  P.  Pathade  (supra)  this  Court  held

that   interest is not claimable upon solatium.

19. Due to the said conflicting decisions of this

Court, a reference to the Constitution/larger Bench

was made by this Court in the case of  Sunder  v.

Union  of  India8 (two  Judge  Bench).  The  relevant

paragraph of reference order reads thus :  

“Leave  granted  on  the  short  question whether interest can be paid on solatium under Section 28 read with Section 34 of the  Land  Acquisition  Act,  1894  on  the

7   (1991) 4 SCC 195 8   (2000) 10 SCC 470

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ground  that  solatium  is  a  part  of compensation.  This  question  squarely arises for consideration as there is an apparent conflict between a three-Judge Bench decision of this Court in the case of Union of India v. Ram Mehar on the one hand  and  the  later  three-Judge  Bench decisions of this Court in the cases of Mir  Fazeelath  Hussain v.  Special  Dy. Collector,  Land  Acquisition,  Prem  Nath Kapur v.  National Fertilizers Corpn. of India  Ltd. and  Yadavrao  P.  Pathade v. State of Maharashtra on the other. The later  three-Judge  Bench  judgments  have taken the view that solatium is not a part of compensation. However, in none of the later three-Judge Bench judgments the earlier  view  of  the  three-Judge  Bench judgment in the case of Union of India v. Ram  Mehar that  solatium  is  a  part  of compensation,  has  been  noticed  or considered.  Consequently,  in  our  view, this matter requires to be decided by a Constitution/larger Bench of this Court. We, therefore, direct that the papers may be  placed  before  Hon’ble  the  Chief Justice of India for placing the appeals arising  out  of  these  proceedings  for final  disposal  before  an  appropriate Constitution/larger Bench of this Court.

Prior to  Sunder’s Case  (two Judge Bench), similar

reference was made in  Kapur Chand Jain & Ors.  v.

State  Government  of  H.P.  &  Ors9 ,  the  relevant

paras of which read thus :-

“3. Learned counsel for the petitioners invited  our  attention  to  a  three-Judge

9   (1999) 2 SCC 89

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Bench judgment of this Court in Union of India v.  Ram  Mehar and  also  later  two decisions  of  two-Judge  Benches  of  this Court in  Periyar and Pareekanni Rubbers Ltd. v.  State of Kerala and  Narain Das Jain v. Agra Nagar Mahapalika. Relying on these  judgments,  he  submitted  that  for applicability of Section 28 of the Land Acquisition Act, 1894 solatium has to be considered as a component of compensation and interest could be paid thereon; and that  the  High  Court  has  wrongly  not granted  interest  on  solatium.  However, there  is  another  three-Judge  Bench judgment of this Court in Prem Nath Kapur v.  National Fertilizers Corpn. of India Ltd. wherein a contrary view is taken and it  has  been  held,  that  no  interest  is payable on solatium under Section 23(2) or  on  additional  amount  payable  under Section  23(1-A).  For  coming  to  that conclusion,  the  Bench  of  three  learned Judges  relied  upon  another  decision  of this  Court  in  P.  Ram  Reddy v.  Land Acquisition Officer.

4. In view of this conflict of decisions and also in view of the further fact that the three-Judge Bench of this Court in Prem  Nath  Kapur had  no  opportunity  to refer  to  the  earlier  decision  of  a three-Judge Bench in Ram Mehar we direct that  these  special  leave  petitions  be placed for decision before a three-Judge Bench  of  this  Court.  The  office  may obtain suitable orders from the Hon’ble Chief Justice.”

 20. The  question  of  reference  to  Constitution

Bench in Sunder’s case (supra) reads thus :- “Is the State liable to pay interest on the amount envisaged under Section 23(2)

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of the Land Acquisition Act, 1894?”    

In other words, the question was whether for the

purpose of Section 28 read with Section 34 of the

Act, solatium is a part of compensation. The answer

was in affirmation to the reference question by the

Constitution Bench. By answering the said question

it laid down the law with regard to the question of

payment of interest.

21. From  the  interpretation  of  provisions  of

Sections 11, 15, 23, 24 and 31 of the Act and after

placing reliance upon the decision of this Court in

State  of  Gujarat  v.  Vakhatsinghji  Vajesinghji

Vaghela10,  it  is  clear  that  the  amount  of

compensation in the Collector’s Award includes not

only the amount determined under Section 23(1) of

the Act but also the additional amount of solatium

as stipulated under Section 23(2) of the Act. The

relevant paragraph 9 of the said case reads thus: “9. ……The collector has to make an award of  compensation  under  Section  11  and having regard to Sec. 15 in determining the amount of compensation, he is guided by the provisions of Section 23 and 24. Section 23 (1) requires an award of the market value of the land. Section 23 (2)

10   AIR 1968 SC 1481

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requires an additional award of a sum of fifteen percentum on such market value, in  consideration  of  the  compulsory nature of acquisition…..”

22. Further, from the reading of Sections 28 and

34 of the Act, it is clear that the ‘purpose of

interest’ is to compensate an unpaid landowner who,

on the one hand has been deprived of the possession

of his land in pursuance of compulsory acquisition

by the State Government in exercise of its eminent

domain power and on the other hand, has also been

kept out of the use of the money due to him for the

acquisition by not being paid the money, in full or

in part, in lieu of taking possession. Reliance is

placed on the decision of this Court in the case of

Satinder Singh  v.  Umrao Singh11 at paragraph 19,

which reads thus:

“19.……When  a  claim  for  payment  of interest  is  made  by  a  person  whose immovable property has been acquired compulsorily  he  is  not  making  claim for damages properly or technically so called; he is basing his claim on the general rule that if he is deprived of his  land  he  should  be  put  in possession  of  compensation immediately;  if  not,  in  lieu  of

11   AIR 1961 SC 908

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possession  taken  by  compulsory acquisition interest should be paid to him  on  the  said  amount  of compensation…."

23. Section  34  of  the  Act  provides  for  the

payment  of  interest  on  “amount  of  such

compensation”. The word “such” makes the reading of

Section 34 read along with Section 31 necessary.

Section 31 of the Act provides for the payment of

compensation  or  deposit  of  the  same  in  Court.

Section  31  (1)  says  “On  making  an  Award  under

Section 11, the Collector shall tender payment of

the  compensation  awarded  by  him  to  the  persons

interested  entitled  thereto  according  to  the

Award…..” Further, Section 28 of the Act provides

for  the  direction  which  may  be  made  to  the

Collector  to  pay  the  interest  on  excess

compensation. It says “If the sum which, in the

opinion of the court, the Collector ought to have

awarded as compensation is in excess of the sum

which the Collector did award as compensation…..”

Thus, it is clear from Section 34 read with Section

31 and the term “sum” under Section 28 of the Act

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that the Award includes not only the sum as is

determined under Section 23(1) of the Act but also

the  amounts  payable  under  Section  23(1A)  and

Section  23(2).  The  same  has  been  held  by  the

Constitution Bench of this Court in Sunder’s case, the relevant paragraph 23 of which reads thus:

“23.…We  make  it  clear  that  the compensation awarded would include not only the total sum arrived at as per sub-section (1) of Section 23 but the remaining  sub-sections  thereof  as well. It is thus clear from Section 34 that the expression “awarded amount” would mean the amount of compensation worked  out  in  accordance  with  the provisions  contained  in  Section  23, including  all  the  sub-sections thereof.”    

24. After adverting to Sections 34, 28, 23(1),

23(1A),  23(2),  24,  26  and  31  of  the  Act,  the

Constitution  Bench  in  Sunder’s case  (supra)

answered the question regarding payment of interest

on solatium in affirmation holding that Section 26

of  the  Act  does  not  say  that  the  Award  would

contain only the amounts granted under Section 23

(1) of the Act. It was further held that there can

be no doubt that all the three heads specified in

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the three sub-sections of Section 23 of the Act are

the sums to be awarded by the court. The words

“every award under this Part” in Section 26(1) of

the  Act  cannot  be  treated  as  the  Award  after

delinking  the  amounts  awarded  under  sub-Section

(1A) or sub-Section (2) of Section 23 of the Act.

Further in paragraphs 20, 21 and 23 in  Sunder’s

case (supra), the Constitution Bench has held as

under-  

“20… whether exclusion of the factor “ any  disinclination  of  the  person interested  to  part  with  the  land acquired” from being considered as part of the compensation indicated in Section 24 of the Act would be of any aid for excluding  solatium  from  the  purview  of interest accrual process….”            “21. It is apposite in this context to point  out  that  during  the  enquiry contemplated under Section 11 of the Act the  Collector  has  to  consider  the objections  which  any  person  interested has stated pursuant to the notice given to him. It may be possible that a person so  interested  would  advance  objections for  highlighting  his  disinclination  to part with the land acquired on account of a variety of grounds, such as sentimental or  religious  or  psychological  or traditional  etc.  Section  24  emphasises that  no  amount  on  account  of  any disinclination of the person interested to part with the land shall be granted as

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compensation.  That  aspect  is qualitatively different from the solatium which the legislature wanted to provide “in  consideration  of  the  compulsory nature of the acquisition.”

  XXX         XXX           XXX     23. In deciding the question as to what amount would bear interest under Section 34 of the Act, a peep into Section 31(1) of the Act would be advantageous. That sub-section says:-

31.  (1)  On  making  an  award under  Section  11,  the Collector shall tender payment of the compensation awarded by him to the persons interested entitled  thereto according to the award, and shall pay it to them unless prevented by some one  or  more  of  the contingencies mentioned in the next sub-section……”

Further,  in  the  said  case,  after  adverting  to

Section 34 of the Act, this Court held thus:-

               “24. The proviso to Section 34 of the Act makes  the  position  further  clear.  The proviso says that “if such compensation” is not paid within one year from the date of  taking  possession  of  the  land, interest shall stand escalated to 15% per annum from the date of expiry of the said period  of  one  year  “on  the  amount  of compensation  or  part  thereof  which  has not  been  paid  or  deposited  before  the date of such expiry”. It is inconceivable that  the  solatium  amount  would  attract only the escalated rate of interest from

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the  expiry  of  one  year  and  that  there would be no interest on solatium during the  preceding  period.  What  the legislature  intended  was  to  make  the aggregate amount under Section 23 of the Act to reach the hands of the person as and when the award is passed, at any rate as  soon  as  he  is  deprived  of  the possession  of  his  land.  Any  delay  in making  payment  of  the  said  sum  should enable the party to have interest on the said sum until he receives the payment. Splitting  up  the  compensation  into different components for the purpose of payment of interest under Section 34 was not  in  the  contemplation  of  the legislature when that section was framed or enacted.”

  25. The  judgment  rendered  by  the  Constitution

Bench of this Court in Sunder’s case (supra) is the

binding  precedent  on  the  question  of  payment  of

legislative statutory interest payable on solatium

under Sections 23(1A), 28 and 34 of the Act which

cannot be deprived to the claimant/decree holder by

the court. As the said judgment is binding upon the

State Government it cannot contend that it is not

liable  from  the  date  as  provided  under  the

provisions of the Act.

26. The Constitution Bench judgment in  Sunder’s

case  (supra)  is  aptly  applicable  to  the  fact

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situation of the present case for the reason that

the enhanced compensation includes the solatium @

30% as provided under Section 23(2) of the Act.

Therefore, the claimant/decree holder is entitled

for the interest on the solatium component which is

part  of  the  compensation  payable  by  the  State

government  to  the  claimant.  The  Execution  Court

held  that  the  claimant/decree  holder  company  is

entitled to claim solatium only in respect of the

enhanced compensation provided for the land alone

which  has  been  separately  fixed,  but,  not  in

respect of that portion of market value of the land

based  on  capitalization  method  of  the  yielding

rubber  trees  for  the  planted  area  which  was

separately  fixed  by  the  Reference  Court  in  its

Award. The High Court was right in holding that the

claimant is entitled for the interest not only in

respect of the land but also with respect to the

trees  standing  on  the  land  of  which  the  market

value  is  determined  by  the  Reference  Court.

However, it awarded the interest on solatium from

19.09.2001 and not for the prior period by placing

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reliance  on  Gurpreet  Singh  case  (supra),  the

relevant  paragraph  54  of  which  is  extracted

hereunder:-  

“54. One other question also was sought to be raised and answered by this Bench though not referred to it. Considering that  the  question  arises  in  various cases  pending  in  courts  all  over  the country,  we  permitted  the  counsel  to address  us  on  that  question.  That question is whether in the light of the decision  in  Sunder,  the awardee/decree-holder would be entitled to  claim  interest  on  solatium  in execution though it is not specifically granted  by  the  decree.  It  is  well settled that an execution court cannot go behind the decree. If, therefore, the claim for interest on solatium had been made  and  the  same  has  been  negatived either  expressly  or  by  necessary implication by the judgment or decree of the Reference Court or of the appellate court,  the  execution  court  will  have necessarily  to  reject  the  claim  for interest on solatium based on Sunder on the  ground  that  the  execution  court cannot go behind the decree. But if the award of the Reference Court or that of the  appellate  court  does  not specifically  refer  to  the  question  of interest on solatium or in cases where claim  had  not  been  made  and  rejected either  expressly  or  impliedly  by  the Reference Court or the appellate court, and merely interest on compensation is awarded, then it would be open to the execution court to apply the ratio of Sunder and  say  that  the  compensation awarded includes solatium and in such an

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event interest on the amount could be directed to be deposited in execution. Otherwise,  not.  We  also  clarify  that such interest on solatium can be claimed only in pending executions and not in closed  executions  and  the  execution court  will  be  entitled  to  permit  its recovery from the date of the judgment in  Sunder (19-9-2001) and not for any prior period. We also clarify that this will not entail any reappropriation or fresh  appropriation  by  the decree-holder. This we have indicated by way of clarification also in exercise of our power under Articles 141 and 142 of the Constitution of India with a view to avoid multiplicity of litigation on this question.”

27. The  decision  of  this  Court  in  Gurpreet

Singh’s Case  (supra),  upon  which  the  strong

reliance is placed by learned counsel on behalf of

respondent,  is  totally  inapplicable  to  the  fact

situation of the instant case for the reason that

the  question  that  arose  in  the  said  case  was

distinct, which reads thus:-

“What is the rule of appropriation in  execution  of  money  decrees?  Is the rule the same in the case of an award-decree  under  the  Land Acquisition  Act  or,  is  there anything  in  the  Land  Acquisition Act,  1894  as  amended  by  the  Land Acquisition (Amendment) Act (68 of 1984) making that rule inapplicable

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or not wholly applicable?”  The issue in the said question was examined and

answered by the Constitution Bench with reference

to  Prem  Nath  Kapur’s  case  (supra)  regarding  the

rule  of  appropriation  in  execution  of  money

decrees. The examination of Sections 23(1), 23(1A),

23(2), 28, 31, 34 and 11 of the Act was made in

this regard.

28. At  paragraph  54  of  Gurpreet  Singh’s case,

certain observations are made regarding the payment

of interest on solatium. The interest on solatium

can be awarded at execution stage if the Reference

Court or the Appellate Court does not specifically

refer to the question of interest on solatium or

cases wherein claim had not been made and rejected

either  expressly  or  impliedly  by  the  Reference

Court or the Appellate Court and merely interest on

compensation is awarded. But where the Reference

Court  or  appellate  court  has  negatived  the  same

either  expressly  or  by  implication  then  such

interest on solatium cannot be awarded as it is a

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well settled rule of law that the execution court

cannot go behind the decree. Another point which is

clearly  made  in  the  said  judgment  is  that  the

interest on solatium can be claimed only in pending

execution cases and not in closed execution cases,

recoverable  from  the  date  of  the  judgment  in

Sunder’s case  i.e.,  19.09.2001  and  not  for  any

prior period.  It is also held in this case that

this  will  not  entail  any  appropriation  or

reappropriation by the claimant/decree holder. But,

it is noteworthy that this was not the question

which was referred to the Court for consideration

in  the  said  case.  Therefore,  it  is  merely  an

observation of the court which cannot be applied as

binding precedent in the instant case with regard

to the entitlement of statutory interest payable

under Sections 23(1A), 28 and 34 of the Act on the

solatium. If applied, it would be contrary to the

doctrine of  stare decisis. In this regard, it is

necessary to advert to the Constitution Bench (11

Judge  Bench)  judgment  of  this  Court  in  H.H.

Maharajadhiraja  Madhav  Rao  Jivaji  Rao  Scindia

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Bahadur  &  Ors.  v.  Union  of  India12,  wherein at

paragraph 138, it is held that it is not proper to

regard a word, a clause or a sentence occurring in

a judgment of the Supreme Court, divorced from its

context, as containing a full exposition of the law

on a question when the question did not even fall

to  be  answered  in  that  judgment.  The  relevant

portion of the paragraph reads as under:-

“138  …The  question  as  to  the jurisdiction of the Courts to entertain a claim for payment of Privy Purse did not  fall  to  be  determined  in  Nawab Usman Ali Khan case. The only question raised was whether the Privy Purse was not capable of attachment in execution of the decree of a Civil Court, because of the specific exemption of political pensions under Section 60(1)(g) of the Code of Civil Procedure. In Kunvar Shri Vir Rajendra Singh’s case, the Court did not  express  any  opinion  that  Article 366(22) was a provision relating to a covenant within the meaning of Article 363. In that case the petitioner who was not  recognised  as  a  Ruler  by  the President abandoned at the hearing of his  petition  his  claim  to  the  Privy Purse payable to the Ruler of Dholpur, and  pressed  his  claim  by  succession under  the  Hindu  Law  to  the  Private property of the former Ruler. The Court was not called upon to decide and did not decide that Article 366(22) was a provision relating to a covenant within

12   AIR 1971 SC 530

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the  meaning  of  Article  363.  It  is difficult to regard a word, a clause or a sentence occurring in a judgment of this Court, divorced from its context, as containing a full exposition of the law on a question when the question did not  fall  to  be  answered  in  that judgment.”

         [Emphasis supplied]

The  said  view  has  been  followed  and  reiterated

subsequently by this Court in a catena of cases

regarding the distinction between  ratio of a case

and obiter dicta.

29. In the case of Director of Settlement v. M.R.

Apparao13,  this  Court  extensively  elaborated  upon

the principle of binding precedent. The relevant

para 7 is reproduced hereunder:

“7…Article  141  of  the  Constitution unequivocally indicates that the law declared by the Supreme Court shall be binding on all courts  within  the  territory  of  India.  The aforesaid Article empowers the Supreme Court to  declare  the  law.  It  is,  therefore,  an essential function of the Court to interpret a legislation. The statements of the Court on matters other than law like facts may have no binding force as the facts of two cases may not be similar. But what is binding is the ratio of the decision and not any finding of facts. It is the principle found out upon a reading  of  a  judgment  as  a  whole,  in  the light of the questions before the Court that forms the ratio and not any particular word

13   (2002) 4 SCC 638

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28

or sentence. To determine whether a decision has “declared law” it cannot be said to be a law when a point is disposed of on concession and  what  is  binding  is  the  principle underlying  a  decision.  A  judgment  of  the Court  has  to  be  read  in  the  context  of questions  which  arose  for  consideration  in the case in which the judgment was delivered. An  “obiter  dictum”  as  distinguished  from  a ratio  decidendi  is  an  observation  by  the Court on a legal question suggested in a case before it but not arising in such manner as to require a decision. Such an obiter may not have a binding precedent as the observation was unnecessary for the decision pronounced, but  even  though  an  obiter  may  not  have  a binding effect as a precedent, but it cannot be  denied  that  it  is  of  considerable weight….”  

                     [Emphasis supplied]

The decision of this Court in the case of Deena v.

Union of India14 is also pertaining to the extension

of ratio of a decision to cases involving identical

situations, be it factual or legal, but the same

should not be mechanically applied to the facts of

a case, the relevant para 15 reads thus:

“15. …It is permissible to extend the ratio of a decision to cases involving identical situations, factual and legal, but care must be  taken  to  see  that  this  is  not  done mechanically,  that  is,  without  a  close examination of the rationale of the decision which is cited as a precedent. Human mind, trained  even  in  the  strict  discipline  of law, is not averse to taking the easy course

14   (1983) 4 SCC  645

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29

of  relying  on  decisions  which  have  become famous  and  applying  their  ratio  to supposedly identical situations….”

                              (emphasis supplied)

The  binding  effect  of  judgment  of  this  Court

vis-à-vis State and Central Government circulars is

considered in the case of  CCE  v.  Ratan Melting &

Wire Industries15, wherein it is held that the law

laid down by this Court is the law of the land. The

law so laid down is binding on all Courts/Tribunals

and bodies and that the circulars issued by the

State or the Central Government cannot prevail over

the law laid down by this Court.

30. From the facts of the present case and in the

light of law laid down on the question of payment

of interest on solatium by the Constitution Bench

in  Sunder’s  case, it is amply clear that the said

case is the binding precedent. As far as  Gurpreet

Singh’s case is concerned, the question which arose

for its consideration was only with regard to the

rule  of  appropriation  in  execution  of  the  Award

passed  under  the  provisions  of  the  Act.  While

15   (2008) 13 SCC 1

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30

answering the said question of law after referring

to the relevant provisions of the Act, at paragraph

54, it has incidentally made some observation with

regard to the payment of interest on solatium which

is only an obiter but not the binding precedent as

that question did not fall for consideration before

the Constitution Bench.  Therefore, in view of the

foregoing reasons, I hold that there is no need to

advert to the other judgments upon which reliance

was  placed  by  the  learned  counsel  for  both  the

parties.  For the reason that the binding precedent

laid down by the Constitution Bench of this Court

in  Sunder’s  case  on  the  question  of  payment  of interest  on  the  solatium  to  the  claimant/decree

holder from the date of  entitlement as provided

under  the  provisions  of  the  Act.  Accordingly,  I

pass the following order:-

a)     In  view  of  the  aforesaid  reasons assigned by me with reference to  Sunder  and Gurpreet  Singh cases  (supra),  I  am  of  the view  that  the  impugned  common  judgment  and order  with  regard  to  awarding  interest payable  on  solatium  w.e.f.  19.09.2001  is

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31

vitiated in law.  Accordingly, that portion of the impugned judgment and order is hereby set aside.     

b)     The  civil  appeals  are  allowed.  The respondent-State  Government  is  directed  to pay interest as provided under Section 23(1A) of the Act on the solatium component of the Award under Section 23(2) of the Act in the reference Award in the earlier decisions and the interest payable under Sections 28 and 34 of the Act. The respondent-State Government is further directed to compute the same with reference to the compensation awarded by the Reference  Court  from  the  date  when  the claimant decree holder is entitled strictly in accordance with the abovesaid provisions of the Act including the solatium and pay to the appellant within 8 weeks from the date of receipt of copy of this judgment. No order as to costs.

     ……………………………………………………………………J.                          [V.GOPALA GOWDA] New Delhi, September 14, 2015

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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.  7034-7037   OF 2015 (ARISING OUT OF SLP (CIVIL) NOS.29463-29466 OF 2012)

M/S. PERIYAR & PAREEKANNI RUBBERS LTD.                 …APPELLANT

VERSUS

 STATE OF KERALA                           ...RESPONDENT

J U D G M E N T

ADARSH KUMAR GOEL, J.

1. I  have  perused  the  proposed  judgment  prepared  by  my  learned

brother V. Gopala Gowda, J.  I am in respectful disagreement with the

same.   The  facts  have  been  broadly  mentioned  in  the  judgment  of

Gopala Gowda, J. and need not be repeated.

2. The award of  the Reference Court is  dated 19th November,  1992

which did not expressly award interest on solatium.  In the impugned

order, the High Court restricted the interest on solatium to the period

post 19th September, 2001, following the Constitution Bench judgment of

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2

this Court in Gurpreet Singh vs. Union of India16 directing as follows :

“54. One other question also was sought to be raised and answered  by  this  Bench  though  not  referred  to  it. Considering  that  the  question  arises  in  various  cases pending  in  courts  all  over  the  country,  we  permitted  the counsel  to  address  us  on  that  question.  That  question  is whether in the light of the decision in Sunder [(2001) 7 SCC 211], the awardee/decree-holder would be entitled to claim interest on solatium in execution though it is not specifically granted by the decree. It is well settled that an execution court cannot go behind the decree. If, therefore, the claim for interest on solatium had been made and the same has been negatived either expressly or by necessary implication by the judgment or decree of the Reference Court or of the appellate court, the execution court will have necessarily to reject the claim for interest on solatium based on  Sunder on the ground that the execution court cannot go behind the decree. But if the award of the Reference Court or that of the  appellate  court  does  not  specifically  refer  to  the question of interest on solatium or in cases where claim had not been made and rejected either expressly or impliedly by the  Reference  Court  or  the  appellate  court,  and  merely interest on compensation is awarded, then it would be open to the execution court to apply the ratio of Sunder and say that  the  compensation  awarded  includes  solatium and  in such an event interest on the amount could be directed to be deposited in execution. Otherwise, not.  We also clarify that  such  interest  on  solatium  can  be  claimed  only  in pending executions  and not  in  closed executions  and the execution court will be entitled to permit its recovery from the date of the judgment in Sunder (19-9-2001) and not for any prior period. We also clarify that this will not entail any reappropriation or fresh appropriation by the decree-holder. This  we  have  indicated  by  way  of  clarification  also  in exercise of  our  power under  Articles  141 and 142 of  the Constitution  of  India  with  a  view  to  avoid  multiplicity  of litigation on this question.”

2. Learned counsel for the appellants relied upon  Land Acquisition

Officer and Asstt. Commnr. Vs. Shivappa Mallappa Jigalur17  laying 16

(2006) 8 SCC 457 17  (2010) 12 SCC 387

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3

down as follows :

“13. Coming  now to  the  stipulation  that  any  interest  on solatium can only be granted for the period subsequent to 19-9-2001, the date of the decision in  Sunder, it is evident that this again, is a limitation on the power of the execution court. The direction is actually referable to those cases in which  the  award  of  the  Reference  Court  or  the  appellate court being  silent, it is left open to the execution court to give direction for the deposit of interest on solatium. In such cases, the Reference Court can ask for interest only for the period  subsequent  to  19-9-2001.  The  direction  in  no  way circumscribes the power of the court dealing with the main proceeding relating to enhancement of the compensation.

14. The matter can be looked at from another angle. The appeal being the continuation of the original proceeding, in the facts of  the cases in this  sub-group, there can be no question  of  accrual  of  interest  only  after  the  date  of  the decision in Sunder. At this stage, it may be recalled that the civil court had awarded solatium @ 30% and interest @ 9% for the first year and @ 15% from second year onwards till the  date  of  realisation.  The  State’s  appeal  against  the judgment  of  the  civil  court  was  dismissed.  Thus,  the direction for payment of solatium with interest at the rates indicated had become final.  The High Court enhanced the rate  of  compensation.  This  would  inevitably  lead  to  an increase in the amount of solatium and consequently in the amount of interest on the unpaid amount of solatium. Thus, looked at from any point of view, the question of payment of interest subsequent to 19-9-2001 does not arise.”

3. On the other hand, learned counsel for the State submitted that the

judgment  in  Shivappa  (supra)  does  not  apply  to  the  present  case   

as the award dated 19th November, 1992 has attained finality.  She also

relied  upon  Chimanlal  Kuberdas  Modi  vs.  Gujarat  Industrial

Development Corpn.18 laying down as follows :

“15. It  is  no doubt  true that  the execution court  cannot examine the reasons so as to go behind the decree but if in

18  (2010) 10 SCC 635

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4

the award passed,  the Reference Court  makes a  specific reference  to  payment  of  interest  but  without  any  such reference  to  the  payment  of  interest  on  solatium  and merely  payment  of  interest  on  compensation  is  granted, then it would be open to the executing court to apply the ratio of Sunder and declare that the compensation awarded includes  solatium,  and  consequently,  interest  on  the amount  could  be  directed  to  be  deposited  in  execution. That being the legal position as prevailing today, we cannot ignore the observations made in para 54 of the aforesaid judgment in  Gurpreet Singh and we order accordingly that compensation  awarded  includes  solatium  and  therefore interest on the said amount shall be paid by the respondent in the pending execution.”

  To the same effect,  she also relied upon  Nadirsha Shapurji

Patel  vs.  Collector  &  LAO19 and  Chhanga  Singh  vs.  Union  of

India20.

4. So long as judgments relied upon by learned counsel for the State

stand, the appellant cannot succeed.  Any contrary view can be taken

only by a larger Bench.  It will  thus be appropriate that the matter is

placed before a Bench of 3-Judges.

                                                         .…..….………………………………..J. [ ADARSH KUMAR GOEL ]

NEW DELHI SEPTEMBER 14, 2015

19  (2010) 13 SCC 234 20  (2012) 5 SCC 763

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1

REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos. 7034-7037  OF 2015 (Arising out of S.L.P. (C) Nos. 29463-29466/2012)  

M/S PERIYAR & PAREEKANNI RUBBERS LTD.  ... APPELLANT(S)

    VERSUS

STATE OF KERALA                        ...RESPONDENT(S)

COMMON    ORDER

In  view  of  divergence  of  opinion  in  terms  of separate judgments pronounced by us in these appeals today,  the  Registry  is  directed  to  place  the  papers before Hon'ble the Chief Justice of India for appeals being assigned to an appropriate Bench.

...........................J.                       (V. GOPALA GOWDA)

..........................J.                         (ADARSH KUMAR GOEL)

 NEW DELHI,   SEPTEMBER 14, 2015