REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7245 OF 2003

Ivo Agnelo Santimano Fernandes & Ors.  ..Appellant(s)

- Versus -

Government of Goa & Anr. ..Respondent(s)

J U D G M E N T

GANGULY, J.

1. Heard counsel for the parties.

2. A notification dated 6.09.1984 under Section 4 of  

the Land Acquisition Act, 1894 (hereinafter, ‘the  

Act’),  was  issued  for  acquisition  of  land  at  

Sanguem, Goa, for the construction of a sports  

complex. The concerned dispute relates to land in  

Survey Nos. 111/1 and 111/2. The Land Acquisition  

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Collector  (hereinafter,  ‘LAC’)  awarded  

compensation at Rs.45/- per sq. meter.

3. Aggrieved, landowners-appellants 1 to 3 and one  

Ana Conceicao Antonieta Santimano filed reference  

petitions  against  the  order  of  the  LAC  under  

Section 18 of the Act.  The District Judge, South  

Goa, passed an award dated 19.08.1992, wherein  

the rate of Rs.45/- per sq. meter given by the  

LAC  was upheld.   Additionally,  they were  held  

entitled  to  severance  charges  @  20%  p.a.  of  

Rs.45/-  per  sq.  meter  in  respect  of  the  non-

acquired portion of 37,731 sq. meters. They were  

also  granted  compensation  in  respect  of  a  

boundary wall amounting to Rs.31,720/-, and other  

statutory benefits. The total sum thus awarded to  

them was Rs.8,80,372/-.

4.On 7.3.1996, an order was issued by the Director  

of Sports and Youth Affairs, releasing funds to  

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the extent of Rs.8,80,372/-, placing the same at  

the disposal of Addl. Dy. Collector, L.A., South,  

Margoa,  Goa,  towards  payment  of  the  decretal  

order of the District Judge, South Goa, Margoa in  

the said land acquisition matter.

5. On 11.3.1996, Ana Conceicao Antonieta Santimano  

expired  leaving  behind  a  Will  dated  19.4.1995  

bequeathing the additional compensation payable  

by the government, to her son Herbert Santimano  

Fernandes (appellant No. 2). The appellants 4, 5  

and 6 are the other legal representatives of the  

deceased Ana Conceicao Antonieta Santimano.  

6. The death of Ana Conceicao Antonieta Santimano  

was not intimated to the government. Accordingly,  

pursuant to the award, the respondents prepared  

two  cheques  each  in  the  sum  of  Rs.2,06,436/-  

(after  deduction  of  taxes)  in  favour  of  the  

deceased  Ana  Conceicao  Antonieta  Santimano  and  

appellant 1, and two cheques each in the sum of  

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Rs.2,06,437/- (after deduction of taxes) in the  

names  of  appellants  2  and  3.  The  Government  

addressed a letter dated 1.4.1996 to the deceased  

Ana Conceicao Antonieta Santimano and appellants  

1 to 3, requesting them to collect their cheques  

on  8.4.1996. The  appellants 2  and 4  collected  

their cheques on 9.4.1996. However, the other two  

cheques  were  not  collected  by  the  respective  

claimants.  On  13.9.1996,  the  respondents  thus  

deposited  the  uncollected  cheques  in  their  

Revenue Deposit by way of challan and utilized  

the same.

7. The  appellants  filed  an  execution  application  

(No. 3/98) for the recovery of the balance amount  

along with interest accrued thereon. In the said  

execution  application,  the  appellants  raised  a  

dispute  as  to  apportionment  of  compensation  

within the meaning of Section 31(2) of the Act,  

contending that Ana Conceicao Antonieta Santimano  

was entitled to Rs.2,83,159.67/- and Ivo Agnelo  

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Santimano  Fernandes  was  entitled  to  

Rs.2,83,159.67/- as per Survey No.111/1; and Ana  

Conceicao  Antonieta  Santimano  was  entitled  to  

Rs.1,57,026.20/- and Herbert Santimano Fernandes  

was entitled to Rs.1,57,026.20/- as per Survey  

No.  111/2.  It  was  contended  that  appellant  3  

(Nancy  Fernnades  Viviera  Menezes)  was  not  

entitled to receive any sums as no enhancement  

was awarded with respect to the area belonging to  

her. The interested party, Ivo Agnelo Santimano  

Fernandes,  was  thus  entitled  to  receive  a  

difference of Rs.58,952/-.  

8. The  District Judge,  South Goa,  by order  dated  

29.10.1999,  directed  that  the  amount  of  

Rs.2,06,436/- each for which the cheques had been  

drawn, be paid to the appellants 1 and 3, leaving  

the  question  of  interest  to  be  determined  

subsequently.  Thus, on 23.3.2000, fresh cheques  

for an amount of Rs.60,000/- in the name of Ivo  

Agnelo Santimano Fernandes and for Rs.3,52,873/-  

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in the name of Herbert Santimano Fernandes were  

issued by the respondents and deposited in court.

9. The District Judge, South Goa, by way of order  

dated 18.8.2000, held that there was a dispute as  

to apportionment of compensation, and in light of  

the judgment in the case of  Prem Nath Kapur &  

Anr. v. National Fertilizers Corporation of India  

Ltd. & Ors., reported in (1996) 2 SCC 71, held  

that  the  liability  of  the  respondents  to  pay  

interest subsisted till the respondents had not  

deposited  the amount  in the  court. Since,  the  

respondents  had  deposited  the  amount  of  

compensation  in  their  Revenue  account  and  had  

utilized  the same  instead of  depositing it  in  

Court,  the  respondents  were  liable  to  pay  

interest @ 15% p.a. on compensation. The relevant  

portion of that determination reads as follows:

“The decree holders have not contested the  figures  mentioned  in  the  reply  Exh.  20  dated  15.7.2000  filed  by  the  judgment  debtors,  which  show  that  an  amount  of  Rs.8,80,372/- was due and payable to them  

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upto 31.3.1996. Decree holders nos. 1 and  2 would be therefore, entitled to receive  further interest at the rate of 15% from  1.4.1996 to 8.4.1996 on the said sums of  Rs.2,06,436/-  and  Rs.2,06,437/-  respectively. Likewise, decree holder no.  1  would  also  be  entitled  to  receive  further  interest  at  the  rate  of  15%  on  Rs.60,000/- from 1.4.1996 to 7.1.2000 and  decree holder no. 2 would also be entitled  to receive further interest at the rate of  15%  on  Rs.3,52,872/-  from  1.4.1996  to  7.1.2000.  Judgment  debtors  are  hereby  directed  to  pay  the  same  to  the  said  decree holders nos. 1 and 2 respectively.”

10. Aggrieved by that order of the District Judge,  

South Goa passed in the execution proceeding, the  

respondents preferred a revision before the High  

Court of Bombay at Goa.  

11. Before the High Court it was contended by counsel  

for  the  respondents  that  a  bare  perusal  of  

Sections 28 and 34 of the Act read with Order XXI  

Rule I of the CPC would clearly indicate that the  

State  was  not  liable  to  pay  any  additional  

interest except for the period from 1.4.1996 to  

8.4.1996. The respondents further contended that  

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as  far  as  the  State  was  concerned,  they  had  

actually  tendered  and  paid  the  money  to  the  

original claimants by drawing four cheques for  

the amount mentioned therein with regard to the  

four  original  claimants  by  cheques  dated  

29.3.1996  and  also  by  communicating  a  letter  

dated 1.4.1996 that the claimants ought to come  

and  collect  their  respective  amounts  payable  

under the cheques on 8.4.1996; and once the State  

prepared the cheques and kept them ready to be  

collected, there was no duty cast on the State to  

deposit the same in court unless and until the  

State was informed that Ana Conceicao Antonieta  

Santimano could not claim the amount and she had  

bequeathed her amount to Herbert. The respondents  

contended that an ex facie reading of Sections 28  

and 34 of the Act and Order XXI Rule 1 of CPC  

make it clear that the claimants could not insist  

on the State depositing the amount only in court  

and it cannot be contended that State was not  

entitled to pay the said amount directly to the  

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claimants.

12. On the other hand, the counsel for the appellants  

urged that Sections 28 and 34 of the Act make it  

abundantly clear that the interest could be paid  

only in Court, otherwise liability on the State  

to pay interest would continue. As per Section 53  

of the Act, the provisions of Order XXI Rule 1 of  

CPC could not come in the way of the contention  

of  the  appellants  in  as  much  as  the  said  

provision was inconsistent with the provisions of  

the Act and thus, the bar with regard to grant of  

interest as provided under Order XXI Rule 1 of  

CPC would not apply in the instant case. Learned  

counsel for the appellants relied on, inter alia,  

on the decision of this Court in the case of Prem  

Nath Kapur (supra).

13. The High Court opined that acceptance of such an  

argument may lead to absurdity in the sense that  

the claimant could very well collect the excess  

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amount directly from the State and after a few  

years may turn around and say that the amount was  

not deposited in the Reference Court and claim  

interest thereon. Further, with respect to the  

contention  of  the  appellants  regarding  

prohibition in Section 53 of the Act in invoking  

Order XXI Rule 1 of CPC, it was rejected on the  

ground that there was no inconsistency between  

the  proviso  to  Order  XXI  Rule  1  of  CPC  and  

Sections 28 and 34 of the Act. Accordingly, the  

High Court held that the amount was duly paid to  

the appellants but they did not come to collect  

the same. Therefore, in the aforesaid facts and  

circumstances, the judgment of the District Court  

dated 18.8.2000 could not be sustained and was  

set aside by way of impugned judgment of the High  

Court dated 16.8.2002.

14. Aggrieved by the said order of the High Court,  

the appellants filed the present appeal.

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15. During the pendency of the appeal, the wife of  

Ivo  Agnelo Santimano  Fernandes by  the name  of  

Celina  de  Conceicao  Socorro  Josefina  Barbosa  

Fernandes  alias  Celina  Barbosa  Fernandes  

(appellant  5)  passed  away  on  6.11.2003.  An  

application  was  filed  for  substitution  for  

bringing on record the legal representatives of  

appellant 5 and the same was allowed by an order  

dated 12.7.2004. Accordingly, the legal heirs of  

appellant 5 were brought on record.

16.We  have  heard  the  parties  and  perused  the  

materials  on  record  as  well  as  the  relevant  

provisions of the Act.

17. In the case of Prem Nath Kapur (supra), a three-

Judge Bench of this Court considered the question  

as to when the liability of the State to pay  

interest  ceases.  The  relevant  portion  of  the  

judgment reads as follows:

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“13. Thus we hold that the liability to  pay interest on the amount of compensation  determined  under  section  23(1)  continues  to subsist until it is paid to the owner  or  interested  person  or  deposited  into  court under section 34 read with section  31. Equally, the liability to pay interest  on  the  excess  amount  of  compensation  determined  by  the  Civil  Court  under  section 26 over and above the compensation  determined  by  the  Collector/Land  Acquisition  Officer  under  section  11  subsists until it is deposited into court.  Proprio  vigore  in  case  of  further  enhancement of the compensation on appeal  under section 54 to the extent of the said  enhanced  excess  amount  or  part  thereof,  the  liability  subsists  until  it  is  deposited into court. The liability to pay  interest ceases on the date on which the  deposit into court is made with the amount  of compensation so deposited.”  

(Emphasis added)

18. This Court also held that by operation of Section  

53 of the Act, Order XXI Rule 1 of CPC, being  

inconsistent  with  the  express  provisions  

contained in Sections 34 and 28 of the Act, stood  

excluded.

19. In the light of the abovesaid principle, we are  

of  the  view  that  the  contentions  of  the  12

respondents cannot be accepted. The Act requires  

that the interest be deposited in court, and the  

same has been upheld in the case of  Prem Nath  

Kapur (supra).  In  the  present  case,  the  

respondents did not deposit the amount in court,  

but  in their  Revenue account  and utilized  the  

same. Even if the respondent State does pay the  

compensation to the claimants directly, and the  

same  is  not  collected,  the  respondent  State  

cannot then keep the said money with itself and  

utilize  it. In  such cases,  after a  reasonable  

period, if the claimants do not come forward to  

collect compensation, then it should be deposited  

in court by the State. Allowing the State to keep  

the  compensation  with  itself  and  utilizing  it  

cannot possibly be permitted being contrary to  

the provisions of the Act and the law laid down  

in  Prem Nath Kapur (supra). Hence, the judgment  

of  the  High  Court  is  clearly  erroneous  and  

deserves to be set side.

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20. Accordingly, the appeal is allowed and interest  

will be payable to the parties as per the order  

of  the  District  Judge  dated  18.8.2000.   Such  

payment be released within a period of six weeks  

from date.  

21.No order as to costs.

.......................J. (G.S. SINGHVI)

.......................J. (ASOK KUMAR GANGULY)

New Delhi February 23, 2011

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