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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.    5084              OF 2013 (arising out of SLP(C)No.31318  of 2011)

KAZI AKILODDIN SUJAODDIN           … APPELLANT

Versus

STATE OF MAHARASHTRA & ORS.          … RESPONDENTS

J U D G M E N T

SUDHANSU JYOTI MUKHOPADHAYA, J.

Leave granted.  The appellant is aggrieved by impugned  

order dated 15th  September, 2011 passed by the Division  

Bench of the High Court of Bombay, Nagpur Bench, Nagpur in  

a Review Application, MCA No.774/2011. By the impugned  

order the Division Bench reviewed and recalled the judgment  

and order dated 5th  October, 2010 passed in Writ Petition  

No.3883/2010(D) filed by the appellant. The High Court  

further directed the State of Maharashtra to deposit rental  

compensation at the rate of 8% of the amount of  

Rs.1,07,82,270/­ as enhanced and awarded by the Reference  

Court, in First Appeal   No.06/2010,   as the same is

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pending against the award passed by the Reference Court.  

The High Court by the impugned order also allowed the  

appellant to withdraw only half of the amount deposited by  

the State upon furnishing security to the satisfaction of  

the Registrar and to  keep remaining amount  in FDR of  a  

Nationalised Bank pending the litigation.

2. The only question involved in this appeal is whether  

the High Court of Bombay, Nagpur Bench was justified in  

directing the State to deposit the rental compensation with  

the Appellate Court at the rate of 8%   per annum on the  

award value passed by the Reference Court for the period of  

occupation before formal acquisition, allowing the  

appellant to withdraw only 50% of such rental compensation  

during the pendency of the appeal.   

3. The factual matrix giving rise to this appeal are as  

follows:­   

The matter relates to payment of rental compensation  

with regard to land occupied by State before the formal  

acquisition.   The Land Acquisition Act, 1894 does not  

contemplate the payment of any rental compensation. The  

entitlement of rental compensation is on the basis of

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resolutions and instructions issued by the State of  

Maharashtra from time to time since 7th  February, 1949  

including Resolutions dated 2nd  May, 1961, 1st  December,  

1972,  2nd April, 1979 and 24th March, 1988.

4. By the aforesaid Resolutions, the State of Maharashtra  

has empowered the Irrigation and Power Department/Buildings  

and Communication Department Officers to take possession of  

lands required for its development works by private  

negotiations, wherever possible, as it was apprehended that  

the speed of acquisition of lands under the Land  

Acquisition Act, 1894(hereinafter referred to as the  

'Act'), would not be, in view of its procedural  

requirements, commensurate with  the speed of work planned  

by the Department, thus resulting in delay in execution of  

works.  It was also indicated that prompt payment of such  

compensation should be done.  

5. By Resolution dated 2nd May, 1961 it was decided by the  

State Government that in cases where awards have been  

declared by the Revenue authorities, rental compensation  

should be paid at the rate of 4% per annum on the award  

value for the period of occupation before the formal

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acquisition plus the adjustment which has been paid by the  

owner of the land for that period in respect of that land.  

Subsequently, by Resolution dated 1st   December, 1972 while  

procedure for taking possession of the land by private  

negotiations were notified, the determination of rental  

compensation was enhanced to     6­1/2% per cent of the  

final award value, as apparent from the paragraph 6 of the  

said Resolution quoted hereunder:   

“6 .Payment of rental compensation: The  responsibility of payment of rental  compensation of to the title holder of the  lands taken over by I.& P.D./B & C.D.  officers through private negotiations rests  with I.&P.D. /B.&C.D. Officers for the  period from the date on which possession of  the land is taken over till the date on  which the full amount of final Award is  paid.   Government has now decided that the  rental compensation payable shall be     6­ 1/2% of the final award value in respect of  both Non­Agricultural land and Agricultural  land. With a view to avoiding any  inconvenience to the owners of the land who  have willingly parted   with their land and  to ensure timely and regular payments of  rental compensation, the following procedure  should be adopted.”

6. By the subsequent Resolution dated 2nd April, 1979 the  

State Government decided to increase the percentage from 6­

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1/2%   to 8% for working out the amount for payment of  

rental compensation, which reads as follows:

“GOVERNMENT OF MAHARASHTRA Irrigation Department,  

Resolution No.IND.1078/1014/IMG­(3) Sachivalaya, Bombay 400032,

Dated 2nd April, 1979.

Read: Government Resolution, Irrigation  and Power Department, No.IPM.  1069/20083/I(5), dated Ist December, 1972

Resolution: The question of raising the  percentage of rental compensation admissible  to the title holders of the lands during the  period from the date of taking over the  possession of their lands by private  negotiations till the payment of final award  was under the consideration of Government  for some time past. Government is now  pleased to increase the percentage from 6­ 1/2% to 8% laid down for working out the  amount for payment of rental compensation in  paras 6 and 7 of Government Resolution,  Irrigation and Power Department,  No.IPM.1069/20083­I(5), dated Ist December,  1972 with effect from Ist January, 1979.”

7. The State Government by its Resolution dated 24th March,  

1988 directed the authorities to pay rental compensation on  

time else the amount is payable towards interest. The  

relevant portion of the said Resolution is quoted  

hereunder:

“3. It has come to the notice of the  Government that the directions given in the  aforesaid Government Resolutions are not

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being followed properly. As a result, the  land owners are facing harassment and  inconvenience. Due to the delay in sending  proposal for acquisition of lands where  possession has been taken through private  negotiations, the amounts payable towards  interest and rental compensation have  increased.

4. In view  of the  amendment  of  the  Land  Acquisition Act, 1894 and the time limits  specified for the acquisition of land as also  in view of Section 4(1) of the Act and the  increase in the amount of solatium from 15%  to 30%, special attention is required to be  given to the completion of process of  acquisition quickly.”  

8. The respondent­State required the land of the appellant  

for construction of flood protection wall for the city of  

Akola and after negotiations the appellant handed over the  

possession of his land on 15th November, 1998 to the State.  

Subsequently, Notification under Section 4 of the Land  

Acquisition Act, 1894, was published on 3rd  June, 1999 in  

respect of said land, followed by Notification under  

Section 6 of the Act published on 18th November, 1999. The  

Special Land Acquisition Officer by his award dated 4th  

August,  2000 determined  the  compensation at  the  rate of  

Rs.5,61,000/­ per hectare and awarded total compensation of  

Rs.9,45,173/­ in favour of  appellant.

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9. Aggrieved by the award, the appellant filed an  

application under Section 18 of the Act which on reference  

registered as LAC No.140/2000 in the Court of District  

Judge, Akola. During the pendency of the said reference  

case, the appellant received a sum of Rs.59,998/­ on 7th  

August, 2001 towards rental compensation. The amount was  

calculated at the rate of 8% of the compensation awarded by  

the Land Acquisition Officer.   The Reference Court by its  

award dated 2nd  August,  2008 allowed the application and  

enhanced the rental compensation @ 8% per annum on  

Rs.1,07,82,270/­ with interest at the rate of 9% from 12th  

October, 2000 to 11th October, 2001 that is for one year and  

interest at the rate of   15% per annum, thereafter, till  

the date of actual payment.  

10. Aggrieved by the enhancement, the State Government  

preferred First Appeal No.06/2009 before the High Court of  

Bombay. In the said appeal, the High Court passed interim  

order on 28th  January, 2009 staying operation,  

implementation and execution of  the  order passed by  the  

Reference Court on the condition of depositing 50% of the  

amount granted by the Reference Court.   The First Appeal

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No.06/2009 is still pending before the High Court for its  

decision.

11. The appellant was also not happy with the award passed  

by the Reference Court, therefore, he preferred First  

Appeal No.1210/2008, which is also pending before the High  

Court.

12. During the pendency of the appeals, the appellant  

applied to the 3rd  respondent for grant of rental  

compensation on the basis of enhanced compensation awarded  

by the Reference Court by its order dated 2nd August, 2008.  

As no reply was received by the appellant he filed a Writ  

Petition No.2763/2009 before the High Court of Bombay,  

Bench at Nagpur.  The said writ petition was disposed of on  

6th  July, 2009 recording the statement of the Assistant  

Government Pleader that the application of the appellant  

would be decided on merits at the earliest.   Thereafter,  

the 3rd respondent on consideration of the said application,  

by his letter dated 5th October, 2009 rejected the prayer on  

the ground that the order of Reference Court was under  

challenge before the High Court. Against the order of  

rejection the appellant preferred Writ Petition

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No.3883/2010, before the High Court  of Bombay, Bench at  

Nagpur. In the said case, the Special Land Acquisition  

Officer, 4th  respondent filed an affidavit assailing the  

order passed by Reference Court. According to the  

appellant, there is no statement made in the said reply  

that the appellant was not entitled  for  enhanced rental  

compensation on the basis of compensation awarded by the  

Reference Court.   The High Court allowed the said writ  

petition by order dated 5th  October, 2010 referring to the  

decision of this Court in  State of Maharashtra and others  

vs. Maimuma Banu and others, (2003) 7 SCC 448.  As the  

Division Bench ordered to pay enhanced rental compensation  

to the appellant as per award passed by the Reference  

Court, the respondents filed a review petition for  

recalling the order dated 5th  October, 2010.   It was  

submitted that the order was passed by the High Court on  

wrong interpretation of decision in  Maimuma Banu (supra)  

and that there is an error apparent on the face of the  

record.  

13. On notice and hearing the parties, the High Court  

passed the impugned order dated 15th  September, 2011,

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recalling its earlier order dated 5th  October, 2010. The  

following direction  has  been issued  in place of  earlier  

order:

“In the result, the judgment and order dated  5/10/2010 is reviewed and set aside. Instead  we direct the State of Maharashtra to  deposit as rental compensation 8% of the  amount of Rs.1,07,82,270/­, in First Appeal  No.6/2010, which is the compensation as  enhanced by the Reference Court in this  Court  for  the  period  from  15/11/1998  i.e.  the date of taking possession till the date  of the award i.e. 4/8/2000. The original  petitioner Kazi Akiloddin Sujaoddin may  withdraw  the  half  amount  deposited  by  the  State upon furnishing security to the  satisfaction of the Registrar. The remaining  amount shall be kept in F.D.R. of a  nationalized bank pending the litigation.

6. Four weeks time is granted to deposit  the above said amount.

7. Order accordingly.”

14. Learned counsel for the appellant contended that the  

appellant is entitled for the enhanced rental compensation  

proportionate to the increase in compensation awarded by  

the Reference Court. As per the policy of the respondent­

State, the claimant is entitled to rental compensation at  

the rate of 8% of the amount of compensation awarded to the  

claimant for acquisition of his land.  Circulars issued by  

the State do not limit the rental compensation to 8% of the

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amount awarded by the Land Acquisition Officer. The  

resolutions do not stipulate that the rental compensation  

should not be enhanced proportionate to the enhancement of  

compensation awarded by the Reference Court or higher  

courts.  

15. Learned counsel for the appellant further contended  

that the High Court committed a grave error in deciding  

against the appellant by   reviewing its own order on the  

basis of judgment of this Court in State of Maharashtra and  

others vs. Maimuma Banu and others, (2003) (7) SCC 448.  

16. Per contra, according to the respondents, the  

Reference Court enhanced the compensation exorbitantly.  

Therefore, the State Government was left with no other  

option but to challenge the award by filing the first  

appeal, registered as First Appeal No.06/2009.  

17. In  Maimuma Banu (supra)  this Court noticed that the  

State of Maharashtra by  its resolutions and instructions,  

contained   in the circulars dated 1st  December, 1972, 17th  

September, 1977, 2nd  April, 1979 and 24th  March, 1988  

provided for rental compensation, payable to the title­

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holders of the lands.   Apart from those resolutions, the  

provisions of the Land Acquisition Act, 1894   do not  

contemplate  payment  of any rental compensation.   In  the  

said case of  Maimuma Banu (supra)  the Court decided the  

question relating to the ‘payment of interest on rental  

compensation’awarded to the persons whose lands were  

acquired under the Land Acquisition Act, 1894; this Court  

in the said case also held as follows:

“9.............It is not in dispute that  in most of the cases the rental compensation  has not been paid. If that factual position  continues, it clearly is a case where the  amount to which a person is entitled is  withheld without any legitimate excuse. The  learned counsel for the appellants  strenuously urged that in most of the cases  the proceedings have not yet attained  finality and are pending either before the  Reference Court or in appeal. That does not  provide a legitimate excuse to the  appellants to withhold payment of the rental  compensation. The amount calculated on the  basis of award by the Land Acquisition  Officer cannot be below than the amount to  be ultimately fixed. If in appeal or the  reference proceeding, there is any  variation, the same can be duly taken note  of as provided in law. There is no  difficulty and we find none as to why the  compensation on the basis of value  determined by the Land Acquisition Officer  cannot be paid. If there is upward revision  of the amount, the consequences will follow  and if necessary, redetermination of the  rental  compensation can be  made and after  adjustment of the amount paid, if any,

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balance can be paid. If, however, the Land  Acquisition Officer's award is maintained  then nothing further may be required to be  done. In either event, payment of the rental  compensation expeditiously would be an  appropriate step.  Looking at the problem  from another perspective, one thing is clear  that authorities have clearly ignored the  sense of urgency highlighted in the various  resolutions.”

18. From the aforesaid decision of this Court, it is clear  

that during the pendency of a reference proceeding or  

appeal before a Higher Court the rental compensation is to  

be   determined on the basis of award passed by the Land  

Acquisition Officer. Subsequently, if there is upward  

revision of amount, consequences will follow and if  

necessary,           re­determination of the rental  

compensation can be made and after adjustment of the amount  

paid, if any, balance can be paid.  

19. In the present case, we find that the State Government  

along with the appellant is not satisfied with the award  

passed by the Reference Court and hence, two appeals  

against the said award by both parties are pending before  

the High Court of Bombay, Nagpur Bench for determination.  

Giving reference to the decision in Maimuma Banu (supra) it  

was not open to the High Court to direct the authorities to

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pay rental compensation as per award passed by the  

Reference Court. For the reason aforesaid, if the High  

Court recalled the order dated 5th  October, 2010 and  

directed the State Government to deposit rental  

compensation at the rate of 8% of the amount awarded by the  

Reference Court with the appellate Court, allowing the  

appellant to withdraw the half of the amount, no  

interference is called for.   However, this order will not  

stand in the way of appellant to claim proportionate higher  

rental compensation, if the order of the Reference Court is  

upheld or further enhancement of compensation is made by  

the Appellate Court.

20.  We find no merit in this appeal. It is, accordingly,  

dismissed with observations as made above. No costs.

………..……………………………………………..J. ( T.S. THAKUR )

...……………………………………………………….J. NEW DELHI,            ( SUDHANSU JYOTI MUKHOPADHAYA)  JULY 3,  2013.