Reportable   

 IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1494 OF 2011 [Arising out of SLP(C) No.30709 of 2008]

STATE OF PUNJAB .......APPELLANT  

Versus

AMARJIT SINGH & ANR. .....RESPONDENTS

O R D E R

R.V.RAVEENDRAN, J.

Leave granted. The question raised in this appeal is  

whether additional amount under Section 23(1A) of the Land  

Acquisition Act, 1894 (‘Act’ for short) is payable on the  

solatium under Section 23(2) of the Act.

2. In  regard  to  acquisition  of  land  belonging  to  the  

respondents, the reference Court by judgment dated 5.3.2001  

awarded compensation at the rate of Rs.6,96,000/- per acre  

alongwith  statutory  benefits  under  Section  23(1A),  23(2)  

and  28  of  the  Act.  The  respondents  filed  an  execution  

application wherein they claimed additional amount of 12%

per annum for the period 11.11.1993 to 16.6.1994 (that is  

from the date of notification under Section 4(1) of the Act  

till the date of the award) under Section 23(1A) of the  

Act, not only on the market value of the land, but also on  

the solatium amount.  The said claim was accepted by the  

Executing Court by order dated 8.5.2008. The revision filed  

by  the  appellant  was  rejected  by  the  High  Court  on  

4.9.2008. The said revisional order of the High Court is  

challenged in this appeal by special leave.

3. To  find  an  answer  to  the  question  arising  for  

consideration, it is necessary to refer to Section 23 of  

the  Act  dealing  with  matters  to  be  considered  in  

determining compensation. The said provision is extracted  

below:

“23. Matters to be considered in determining compensation: (1) In determining the amount of compensation to be awarded  for land acquired under this Act, the Court shall take into  consideration-

first, the  market-value  of the land at the date of the  publication  of  the  notification  under  section  4,  sub- section (1);

secondly, the damage sustained by the person interested, by  reason of the taking of any standing crops or trees which  may be on the land at the time of the Collector's taking  possession thereof;

thirdly,  the  damage  (if  any)  sustained  by  the  person  interested,  at  the  time  of  the  Collector's  taking  possession of the land, by reason of severing such land  from his other land;

fourthly,  the  damage  (if  any)  sustained  by  the  person  interested,  at  the  time  of  the  Collector's  taking  possession  of  the  land,  by  reason  of  the  acquisition  

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injuriously  affecting  his  other  property,  movable  or  immovable, in any other manner, or his earnings;

fifthly, in consequence of the acquisition of the land by  the Collector, the person interested is compelled to change  his residence or place of business, the reasonable expenses  (if any) incidental to such change; and

sixthly,  the  damage  (if  any)  bona  fide  resulting  from  diminution of the profits of the land between the time of  the publication of the declaration under section 6 and the  time of the Collector's taking possession of the land.

(1A) In addition to the market value of the land, as above  provided, the Court shall in every case award  an amount  calculated at the rate of twelve per centum per annum on  such market value for the period commencing on and from the  date of the publication of the notification under section  4, sub-section (1), in respect of such land to the date of  the award of the Collector or the date of taking possession  of the land, whichever is earlier.

Explanation. - In computing the period referred to in this  sub-section,  any  period  or  periods  during  which  the  proceedings for the acquisition of the land were held up on  account of any stay or injunction by the order of any Court  shall be excluded.

(2)  In addition to the market value of the land as above  provided, the Court shall in every case award  a sum of  thirty per centum on such market value, in consideration of  the compulsory nature of the acquisition.”

(emphasis supplied)

4. Section 23 of the Act refers to four distinct amounts:

(i) Market value of the land on the date of publication of  

the notification under Section 4(1) of the Act is first and  

foremost  of  the  six  factors  to  be  taken  note  of  for  

determining  the  amount  of  compensation  for  the  land  

acquired. It is the major component (and in most cases, the  

only component) of the compensation determined by the court  

under Section 23(1) of the Act.

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(ii) Compensation to  be  awarded  to  a  person  for  the  

acquired land,  is to be determined under Section 23(1) of  

the Act by taking into consideration six factors – (i) the  

market value of the land, on the date of publication of the  

notification  under  section  4(1)  of  the  Act;  (ii  to  iv)  

damage sustained by the person interested by reason of the  

taking  of  any  standing  crops  or  trees  in  the  lands,  or  

severing  such  land  from  his  other  land/s,  or  the  

acquisition  injuriously  affecting  his  other  property  or  

earnings;  (v)  the  reasonable  expenses  incidental  to  the  

person interested being compelled to change the residence  

or place of business as a consequence of acquisition; and  

(iv) the damage bonafide resulting from diminution of the  

profits  of  the  land  between  the  time  of  publication  of  

declaration under section 6 and the time of the Collector’s  

taking possession of the land.  

(iii)Additional amount at the rate of 12% per annum on such  

market value (for the period commencing on and from the  

date of publication of notification under Section 4(1) of  

the Act to date of award of the Collector or the date of  

taking possession of the land, whichever is earlier).

(iv) Solatium at 30% on such market value, in consideration  

of the compulsory nature of acquisition.  

While  market  value  and  compensation are  factors  to  be  

assessed  and  determined  by  the  court,  no  such  judicial  

exercise is involved in regard to additional amount payable  

under  Section  23(1A)  and  solatium payable  under  Section  

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23(2) as they are statutory benefits payable automatically  

at  the  rates  specified  in  those  sub-sections,  qua  the  

market  price.  No  reasons  need  be  assigned  for  grant  of  

additional amount or solatium.

5. This court explained the object of granting additional  

amount  under  Section  23(1A)  of  the  Act  in  Assistant  

Commissioner,  Gadag  Sub-Division,  Gadag  v. Mathapathi  

Basavannewwa (1995) 6 SCC 355 and in State of Tamil Nadu v.  

L. Krishnan (1996) 1 SCC 250. In  Mathapathi Basavannewwa  

(supra) this court observed:  

“The object of introducing Section 23(1-A) is to mitigate  the hardship caused to the owner of the land, who has been  deprived of the enjoyment of the land by taking possession  from him and using it for the public purpose, because of  considerable delay in making the award and offering payment  thereof.  To  obviate  such  hardship,  Section  23(1-A)  was  introduced and the Legislature envisaged that the owner of  the land is entitled to 12 per cent per annum additional  amount on the market value………….”

In L.Krishnan (supra) this court observed:  

“The  provisions  in  this  Sub-section  are  designed  to  compensate the owners of the land for the rise in prices  during the pendency of the land acquisition proceedings. It  is a measure to off-set the effects of inflation and the  continuous rise in the values of properties over the last  few decades……….”

In P.Ram Reddy v. Land Acquisition Officer (1995) 2 SCC 305  

this court held that additional amount under Section 23(1A)  

of the Act was payable only on the market value determined  

under Section 23(1) of the Act, thereby clearly implying  

that it was not reckonable on any other amount:   

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“The amount awardable under Sub-section (1-A) of Section 23  of the LA Act, therefore, would be an amount of 12 per  centum per annum on the market value of the land determined  under first Clause of Sub-section (1) of Section 23 for the  period  between  the  date  of  publication  of  Notification  under Section 4(1) and to the dale of the award of the  Collector or the date of taking possession of the land,  whichever  is  earlier…………….In  this  context  is  has  to  be  noted that the amount payable is 12 per centum per annum on  the market value in the first Clause of Sub-section (1) of  Section 23 of the LA Act. It has also to be noted that  solatium under Sub-section (2) is not payable in respect of  the amount awardable under Sub-section (1-A), in that, Sub- section (2) says that in addition to the market value of  the land, as above provided, the Court shall in every case  award a sum of thirty per centum on such market value, in  consideration of the compulsory nature of the acquisition.”

(emphasis supplied)

In  Sunder  v.  Union  of  India (2001)  7  SCC  211,  a  

Constitution Bench of this court held that the terms ‘sum  

awarded’ or ‘amount awarded’ occurring in sections 34 and  

28  of  the  Act  would  include  not  only  the  compensation  

determined by taking note of the six factors mentioned in  

Section 23(1) of the Act, but also amounts awarded under  

the remaining sub-sections of section 23 as well, for the  

purpose of calculating interest. The words ‘compensation to  

be awarded’ used in Section 23(1) of the Act refers to the  

total of the sums awarded with reference to the six factors  

enumerated in Section 23(1). On the other hand, the words  

‘amount awarded’ or ‘sum awarded’ in Sections 28 and 34 of  

the  Act  refers  to  the  aggregate  of  the  compensation  

determined by the court under Section 23(1), the additional  

amount  payable  under  Section  23(1A)  and  the  solatium  

payable under Section 23(2) of the Act.

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6. Section 23(1) refers to market value of the land on  

the date of publication of the notification under Section  

4(1) of the Act as a relevant factor for determining the  

amount  of  compensation  to  be  awarded  for  land  acquired  

under the Act. Sub-section (2) provides that in addition to  

the  market  value  of  the  land  determined  under  Section  

23(1), the Court shall, in every case, award a sum of 30%  

on  such  market  value  in  consideration  of  the  compulsory  

nature  of  acquisition.  Sub-section  (1A)  of  Section  23,  

inserted by Act 68 of 1984 provides that in addition to the  

market value of the land, as provided under Section 23(1),  

the Court shall, in every case, award an amount calculated  

at the rate of 12% per annum on such market value for the  

period commencing on or from the date of publication of the  

notification under Section 4(1) in respect of such land to  

the date of award of the collector or the date of taking  

possession  of  the  land,  whichever  is  earlier.  The  

additional amount under Section 23(1A) and solatium under  

Section 23(2) are both payable only on the market value  

determined under Section 23(1) of the Act and not on any  

other amount. Solatium under Section 23(2) is not payable  

on  the  additional  amount  nor  additional  amount  under  

Section 23(1A) payable on solatium. Solatium and additional  

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amount are also not payable on the damages/expenses that  

may be awarded under second to sixth factors under Section  

23(1) of the Act.

7. Thus a person whose land is acquired is entitled to  

the following amounts under the Act.

(a) Compensation determined under Section 23(1) of the  

Act  (comprising  the  market  value  of  the  land  

referred  to  as  the  first  factor  and  any  

damages/expenses referred to as the second to sixth  

factors under the said sub-section).

(b) Solatium at 30% on the market value determined as  

the first factor under section 23(1) of the Act.

(c) Additional amount at 12% per annum of the market  

value of the land referred to as the first factor  

under  Section  23(1)  of  the  Act,  for  the  period  

specified in Section 23(2).

(d) Interest on the aggregate of (a), (b) and (c) above  

for the period between the date of taking possession  

to date of payment/deposit at the rate of 9% per  

annum for the first year and 15% per annum for the  

remaining period.

Payments  made  are  to  be  adjusted  and  accounted  in  the  

manner set out in Gurpreet Singh v. Union of India (2006) 8  

SCC 457.  

8. Learned counsel for the respondents placed reliance on  

the following observations of this Court in Commissioner of  

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Income Tax, Faridabad Vs.  Ghanshyam (HUF) - (2009) 8 SCC  

412:  

“The additional amount payable under Section 23(1A) of the  1894  Act  is  neither  interest  nor  solatium.  It  is  an  additional compensation designed to compensate the owner of  the land, for the rise in price during the pendency of the  land acquisition proceedings. It is a measure to offset the  effect of inflation and the continuous rise in the value of  properties.  Therefore,  the  amount  payable  under  Section  23(1A) of the 1894 Act is an additional compensation in  respect to the acquisition and has to be reckoned as part  of the market value of the land.”

The learned counsel for respondents submitted that as this  

court has treated additional amount under Section 23(1A) as  

part of the market value, additional amount is payable on  

the solatium. There is no logic in the contention as the  

decision  nowhere  holds  that  solatium  is  part  of  market  

value nor holds that additional amount under Section 23(1A)  

is payable on the solatium amount. Be that as it may. More  

importantly, what requires to be noticed is that the entire  

consideration  and  analysis  in  that  decision  was  with  

reference  to  the  question  whether  solatium,  additional  

amount and interest are part of ‘enhanced compensation’ for  

the  purposes  of  Section  45(5)(b)  of  the  Income  Tax  

Act,1961. The observations therein should be understood in  

the context of the provisions of the Income Tax Act. For  

example the decision also holds that interest payable under  

Section 28 of the Act is ‘enhanced compensation’ for the  

purposes of Section 45(5)(b) of Income Tax Act, which if  

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taken  as  the  interpretation  with  reference  to  the  Land  

Acquisition Act, 1894, will be contrary to the constitution  

bench decision in Sunder (supra). We may also note that the  

decision clearly holds that additional amount is awardable  

only against the market value and not solatium:  

“It is clear from reading of Sections 23(1A), 23(2) as also  Section 28 of the 1894 Act that additional benefits are  available on the market value of the acquired lands under  Section 23(1A) and 23(2) whereas Section 28 is available in  respect of the entire compensation.”

9. In  view  of  the  above,  the  appeal  is  allowed,  the  

orders of the High Court and the Executing Court, in so far  

as they hold that additional amount under Section 23(1A) is  

payable on solatium, are set aside. It is declared that  

additional amount under Section 23(1A) is awardable only on  

the  market  value  determined  under  the  first  factor  of  

Section 23(1) of the Act and cannot be calculated on the  

solatium payable under Section 23(2) of the Act.

  ......................J.                 ( R.V. RAVEENDRAN )

  ......................J. New Delhi;  ( A.K. PATNAIK ) February 08, 2011.                  

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