HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO
AND
HONOURABLE SRI JUSTICE T.VINOD KUMAR
Civil Miscellaneous Appeal No.737 of 2014
Civil Miscellaneous Appeal No.761 of 2014
and
Civil Miscellaneous Appeal No.1055 of 2014
COMMON JUDGMENT: (Per Hon'ble Sri Justice M.S. Ramachandra Rao)
These three appeals have been filed by the land owners, the
District Collector, Hyderabad District and the Union of India and two
others respectively under Section 11 of the Requisitioning and
Acquisition of Immoveable Property Act, 1952 (for short, 'the Act')
challenging the award passed by learned Sole Arbitrator on
02.07.2014 in respect of Acs.17.12 gts. (83,732 Sq.Yds.) in
Sy.Nos.20, 57 and 58 of Kanchanbagh Village, Bandlaguda Mandal,
Hyderabad District acquired under the Act for establishment of the
Defence Research and Development Laboratory (DRDL) under the
Ministry of Defence, Union of India.
2. The said Award dt.2.7.2014 was rendered by the Sole Arbitrator
appointed by the Union of India under Clause (b) of Sub-Section (1)
of Section 8 of the said Act.
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1978-2000
3. On 14.9.1978, notice in Form-A was issued by the District
Collector, Hyderabad to the land owners/ appellants in CMA No.727
of 2014 to show cause why the above land should not be requisitioned
under Sec.3 of the Act. They filed a responder in October, 1978 to
withdraw the said notice in Form-A. On 27.10.1978, the District
Collector, Hyderabad issued order in Form-E directing the landowners
to surrender the possession of land in 30 days. On 19.2.1979, the
possession of the subject land was taken from the land owners by the
State and handed over to the Defence Department of the Union of
India.
4. Though initially a Form-J Notice was issued on 02.03.1985
acquiring the above land under the said Act under Section 7(1) of the
Act, the said acquisition was set aside on 29.06.1994 in Writ Petition
No.5400 of 1993 filed by the land owners on the ground that no
compensation had been paid by that date, and no arbitrator was also
appointed under the Act for fixing compensation; that acquisition of
property by issuing notification without paying compensation cannot
be considered to be valid'; and the Union of India, Director General of
Defence Estates (Acquisition) and the Defence Estate Officer were
permitted to initiate fresh proceedings under the Act and determine
compensation payable.
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5. This order was challenged by the Union of India in Writ Appeal
No.1330 of 1994 before a Division Bench of the Andhra Pradesh High
Court. On 21.04.1995, in WAMP.No.2403 of 1994 in Writ Appeal
No.1330 of 1994, the Division Bench, while staying the order of the
learned Single Judge, directed :
"(i) the Union of India shall deposit of Rs.20,57,347/- before
the Land Acquisition Officer. The appellants herein shall be
entitled to interest at 15 per cent per annum from the date of the
judgment of the learned single Judge. The appellants shall be
entitled to withdraw the amount.
(ii) If the appellants herein are not satisfied with the
compensation, they may request the collector to refer the matter
for arbitration.
(iii) The Land Acquisition officer shall issue fresh Form-J
notification for acquisition of the subject land as per the Order of
the learned single Judge."
6. On 29.04.1995, the land owners issued letter to the District
Collector and Defence Estates Officer requesting the Collector to note
their objection and protest to the amount of compensation determined
and requested for reference to arbitration under Section 8(1)(b) of the
Act.
7. On 20.05.1995, fresh Form-J Notice was issued for acquisition
of property by the District Collector, Hyderabad under Section 7(1) of
the Act for acquiring the above property.
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8. On 07.06.1995, the land owners received Rs.20,57,347/- and
again on 08.03.1996, they received Rs.2,22,274/- towards interest
from the acquisition authorities.
9. On 26.06.1996, Writ Appeal No.1330 of 1994 was dismissed
taking note of the issuance of the above notification and the
considerable delay which occurred in taking steps under the Act to
pay compensation. The Division Bench directed the authorities to
carry out further proceedings pursuant to the said notification and
complete the process within six months from the date of receipt of
copy of its order. It made clear that any payment made to the land
owners shall be subject to the final fixation of compensation by the
competent authority under the Act.
10. SLP (Civil) No.1196-1198 of 1997 was filed by the Union of
India against the order dt.25.06.1996 in Writ Appeal No.1130 of
1994, but the same was dismissed extending the time for completion
of the acquisition proceedings till 30.06.1997. Review Petition was
filed by the Union of India to review the above order, but the same
was also dismissed on 21.08.1997, and time for completion of the land
acquisition was extended on 20.10.1997 by one month.
11. In the mean time, the Land Acquisition Officer claimed that the
subject land was declared as 'surplus land' under the Urban Land
(Ceiling and Regulation) Act, 1976 and so the balance compensation
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was not payable to the land owners and issued a Notice dt.08.12.1997
to them.
12. The land owners replied on 15.12.1997 stating that the said land
was exempted by the Government from the provisions of the said Act
under G.O.Ms.No.153 dt.05.02.1991 at the request of the Defence
Estate Officer, and therefore there is no question of there being any
claim by the Special Officer and Competent Authority, Urban Land
Ceiling Department on the subject property; and non-payment of
compensation would amount to contravention of the orders passed by
the High Court in Writ Appeal No.1130 of 1994 as confirmed by the
Supreme Court.
13. A Writ Petition No.1077 of 1988 had been filed by the land
owners challenging the order dt.23.07.1987 of the Special Officer,
Urban Land Ceiling declaring a part of the subject land as 'surplus'
land. The same was disposed of on 03.07.1999 by the High Court of
Andhra Pradesh directing the Commissioner (Appeals), Urban Land
Ceiling to dispose of the appeal filed by the land owners within three
months, and a direction was also given to the Dy. Collector, Land
Acquisition to pass award basing on order of the Commissioner within
two months.
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2000-2014
14. On 29.12.2000, the Commissioner (Appeals) dismissed the
appeal filed under the Urban Land (Ceiling and Regulation) Act, 1976
declaring a part of the subject land as 'surplus' land.
15. The land owners filed Writ Petition No.27023 of 2001
challenging the order dt.29.12.2000 passed by the Commissioner
(Appeals).
16. On 29.10.2008, the said Writ Petition was disposed of holding
that possession was not taken under Section 10(6) of the Urban Land
(Ceiling and Regulation) Act, 1976 and so the proceedings under the
said Act stood abated in view of the Repeal of the said Act by the
Urban Land (Ceiling and Regulation) Repeal Act, 1999 which was
adopted in the then State of Andhra Pradesh w.e.f. 27.03.2008.
17. In spite of letters dt.28.11.2008 and 30.12.2008 addressed by
the land owners to the District Collector requesting compensation for
the land acquired, no action was taken.
18. So the land owners filed Writ Petition No.6333 of 2009 in the
Andhra Pradesh High Court questioning the said inaction. In
WPMP.No.8259 of 2009 in the said Writ Petition on 26.03.2009, an
interim order was granted to the District Collector, Hyderabad and
others to forthwith pay compensation amount as determined in the
notice of offer dt.29.03.2001 together with interest from the said date
at 18% per annum.
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19. On 01.12.2009, the District Collector fixed compensation
payable to the land owners at Rs.350/- per Sq.Yd. with interest at 15%
per annum on the principal amount and deducted 40% of the area
towards development. He awarded Rs.5,59,54,769/-.
20. On 09.12.2009, the land owners received Rs.2,29,99,248/-
towards part payment of compensation as per the award dt.01.12.2009
passed by the District Collector and a sum of Rs.25,55,472/- was
deducted towards income tax.
21. On 14.12.2009, the land owners addressed letter to District
Collector, Hyderabad stating that they received only part payment of
compensation under protest and requested for appointment of
arbitrator to decide and finalize fair and reasonable compensation.
22. They also wrote another letter on 20.09.2010 to the District
Collector stating that only part payment was received under protest
and they are still entitled to get Rs.2,81,20,429/- pursuant to the
Award of the Collector.
23. Writ Petition No.3707 of 2011 was filed by the land owners for
appointment of arbitrator under the Act and for payment of balance
compensation.
24. On 28.02.2011, the said Writ Petition No.3707 of 2011 was
disposed of directing the Union of India and other respondents to
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appoint an arbitrator for determining the compensation under the Act,
and to pay the balance compensation.
25. On 02.08.2011, the land owners received Rs.2,12,93,825/- after
deduction of Rs.23,65,981/- towards income tax pursuant to the award
of the Collector dt.01.12.2009.
26. On 06.08.2012 and 15.09.2012, the land owners gave consent
for appointment of a retired High Court Judge, Justice Vaman Rao
(Retd.) as the Arbitrator to determine compensation payable under the
Act.
27. On 30.10.2012, the Defence Estate Officer wrote to the District
Collector that there was no objection for giving consent for
appointment of a retired High Court Judge as arbitrator to determine
compensation, and on 08.01.2013, the Defence Estate Officer wrote to
the Spl. Dy. Collector, Land Acquisition (General), Hyderabad
Collectorate Complex, Hyderabad stating that he has no objection for
the appointment of Justice Vaman Rao (Retd.) as arbitrator.
28. On 16.01.2013, the District Collector, Hyderabad informed the
Principal Secretary to Government, Revenue (Land Acquisition)
Hyderabad that the Government had already issued a Memo on
22.12.2012 to obtain the consent of the Defence Department for
appointment of Justice Vaman Rao (Retd.) as Arbitrator, and that on
08.01.2013, the Defence Estate Officer had also given consent for the
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appointment of Justice Vaman Rao (Retd.) and further action may be
taken.
The arbitral proceedings and the award dt.2.7.2014 of the arbitrator
29. So Justice Vaman Rao (Retd.) was appointed as arbitrator by
the parties and he commenced arbitral proceedings.
30. Before the Hon'ble Arbitrator, the land owners marked Exs.C.1
to C.74, and the respondents i.e., Union of India and others marked
Exs.R.1 to R.25.
31. On 02.07.2014, the learned Arbitrator passed Award
determining the compensation payable to the land owners at
Rs.1,000/- per sq.yd. for the extent of Acs.17.12 gts. amounting to
83,732 Sq.yds. after excluding 1/3rd of this area for community and
public amenities and other deductions. He awarded Rs.5,58,21,000/-
with interest at 15% per annum from 20.05.1995 to the date of the
award and awarded interest @ 12% per annum from the date of the
award till the date of realization after adjusting the payment already
received. He further directed that amounts already paid be deducted
appropriately. He also directed that the individual shares of the land
owners / claimants should be ascertained and payment should be made
though there is no inter se dispute among them.
32. In the Award, the arbitrator referred to Ex.R.25 - Map which
indicated that a 150' wide High Way which goes towards
Mahabubnagar abuts the acquired land, that the acquired land would
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have comparatively higher value than the one recorded in the sale
deeds of open plots filed before him by the parties; that the sale price
mentioned in the sale deeds ranges between Rs.350 to Rs.700 per
sq.yd.; and taking into consideration the circumstances of the case and
the location of the land, he was inclined to take into account the
higher value of Rs.700/- per sq.yd. He also recorded that under
Section 8 of the Act, the arbitrator is required to award compensation
"which appears to him to be just", and keeping in mind the additional
advantage attached to the acquired lands and also other special
circumstances, he is fixing the rate of Rs.1000/- per sq.yd. as the
compensation payable.
33. He also noted that as per the decisions of the Supreme Court
cited before him, grant of interest and solatium as stipulated in the
Land Acquisition Act, 1984 is not mandatory while awarding
compensation for acquisition of land under the Act; that while arriving
at the market value and the rate of compensation per sq.yd. payable to
the land owners / claimants, he had already taken into account the
special features of the land and also the special circumstances of the
case such as the enormous delay in determining compensation and
payment of the same; and so, the claimants will only be entitled to
interest at 15% per annum from the date of acquisition, i.e.,
20.05.1995 till date of award and there is no need for awarding
solatium separately. He also awarded interest @ 12% per annum
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from the date of the award till the date of realization after adjusting
the payment already received.
CMA No.737 of 2014
34. Challenging the same, Civil Miscellaneous Appeal No.737 of
2014 was filed by the claimants contending that the learned arbitrator
should have :
(a) awarded Rs.2600/- per sq.yd. instead of Rs.1,000/- per sq.yd.;
(b) not deducted 1/3rd of the land area towards development, and
compensation should have been awarded for the entire land acquired;
(c) awarded solatium at 30% of the enhanced compensation amount to
the land owners / claimants for the delay caused in the appointment of
arbitrator and payment of compensation keeping in mind the fact that
possession of the land was taken in 1979;
(d) awarded interest @ 15% per annum from the date of award till
realization instead of 12% per annum for the said period.
CMA No.761 of 2014 and CMA No.1055 of 2014
35. Challenging the Award, the District Collector, Hyderabad filed
Civil Miscellaneous Appeal No.761 of 2014, and the Union of India,
rep. by its Secretary, Ministry of Defence, South Block, New Delhi
and two others filed Civil Miscellaneous Appeal No.1055 of 2014.
They contended that the arbitrator should have :
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(a) fixed the compensation at Rs.350/- per sq.yd. as determined by
the District Collector, Hyderabad in his Award proceeding
dt.01.12.2009 and not at Rs.1,000/- per sq.yd. as determined by the
arbitrator;
(b) deducted 40% of area for roads and common amenities as was
done by the District Collector in his award, dt.01.12.2009, and not
1/3rd towards development and common amenities as was done by the
arbitrator; and
(c) awarded no interest at all since there is no such provision in the
Act. They also contended that the arbitrator was right in denying
solatium to the land owners / claimants.
36. Heard Sri D.Prakash Reddy, learned senior Counsel for Sri
D.Avinash Reddy, counsel for the land owners/appellants in CMA
No.737 of 2014, the learned Govt.Pleader for Arbitration for the
appellant in CMA No.761 of 2014 and the learned Asst.Solicitor
General for the appellants in CMA No.1055 of 2014.
The consideration by the Court:
37. The following are the admitted facts.
38. Though the possession of the subject land was taken on 19.2.
1979 by the Defence Department authorities to set up the Defence
Research and Development Laboratories in the subject land, the Form
J notification was issued under Sec.7(1) of the Act only on 20.5.1995.
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The arbitrator was appointed in 2013 and he passed the award on
2.7.2014.
Points for consideration :
39. From the contentions of the parties, the following points arise
for consideration:
(a) Is the award of the Collector passed on 1.12.2009 valid in law and
binding on the arbitrator?
(b) Was the arbitrator justified in awarding compensation at Rs.1000/-
per sq.yd to the acquired land?
(c) Whether the arbitrator was justified in making 1/3rd deduction from
the acquired land towards community and public amenities and
others?
(d) Whether the arbitrator erred in granting interest @ 15% p.a from
20.5.1995 (the date of form J notification) till 7.2.2014 (date of
award) and also interest @ 12% p.a from 7.2.2014 (date of award)
till date of realization?
(e) Whether the arbitrator ought to have also awarded solatium to the
land owners?
40. Before we deal with the above points we shall briefly discuss
the provisions of the Act and it's differences with the Land
Acquisition Act, 1894.
41. Section 3 empowers a competent authority to requisition a
property for a public purpose, being a purpose of the Union. However,
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before the exercise of the power, the competent authority must form
an opinion that the property is needed or likely to be needed for a
public purpose; that under Section 7, the requisitioned property could
be acquired, if the Central Government is of the opinion that it be so
acquired for a public purpose; Sub-section (3) of Section 7 lays down
certain embargoes on the exercise of the power; that this sub-section
contains two clauses; clause (a) deals with a situation where works
have been constructed during the period of requisition, which works
require to be secured or preserved for the purpose of Government;
while under clause (b) it is provided that the cost of restoration of the
property would be excessive. Thus, it is not in every case the
acquisition is or can be resorted to.
42. As regards compensation during the period of requisitioning,
sub-section (2) of Section 8 takes care, subject to the provisions of
Sections 2(a) and 2(b).
43. The principles and the methods of determining compensation
are set out in clauses (a) to (g) of sub-section (1) of Section 8.
"8. Principles and method of determining compensation.--
(1) Where any property is requisitioned or acquired under this Act,
there shall be paid compensation the amount of which shall be
determined in the manner and in accordance with the principles
hereinafter set out, that is to say,--
(a) where the amount of compensation can be fixed by agreement, it
shall be paid in accordance with such agreement;
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(b) where no such agreement can be reached, the Central Government
shall appoint as arbitrator a person who is, or has been, or is qualified
for appointment as, a Judge of a High Court;
(c) the Central Government may, in any particular case, nominate a
person having expert knowledge as to the nature of the property
requisitioned or acquired to assist the arbitrator and where such
nomination is made, the person to be compensated may also nominate
an assessor for the same purpose;
(d) at the commencement of the proceedings before the arbitrator, the
Central Government and the person to be compensated shall state
what in their respective opinion is a fair amount of compensation;
(e) the arbitrator shall, after hearing the dispute, make an award
determining the amount of compensation which appears to him to be
just and specifying the person or persons to whom such compensation
shall be paid; and in making the award, he shall have regard to the
circumstances of each case and the provisions of sub-sections (2)
and (3), so far as they are applicable;.."( emphasis supplied)
44. Section 8(3) states:
"8. (3) The compensation payable for the acquisition of any
property under Section 7 shall be--
(a) The price which the requisitioned property would have fetched
in the open market, if it had remained in the same condition as it
was at the time of requisitioning and been sold on the date of
acquisition, or
(b) twice the price which the requisitioned property would have
fetched in the open market, if it had been sold on the date of
requisition, whichever is less."
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45. The clause (b) of Sub-section (3) of Section 8 was struck down
by the Supreme Court in Union of India v. Kamlabhai Harjiwandas
Parekh1 on the ground that it does not give the person to be
compensated a just equivalent of the property he was losing at the date
of acquisition. So it was made clear by the Court that there must be
payment of just equivalent as compensation to the land owner, on the
date of acquisition, in regard to the land acquired.
46. In Union of India v. Hari Krishan Khosla2, the Supreme
Court explained the differences between this Act and the Land
Acquisition Act,1894 in the following terms:
"41. The points of similarities and dissimilarities between the Act
and the Land Acquisition Act are as under.
42. In both the cases unless and until there is a public purpose,
acquisition cannot be resorted to.
43. Coming to dissimilarities, in the case of requisition, one of
the important rights in the bundle of rights emanating from
ownership, namely, the right to possession and enjoyment has been
deprived of, when the property was requisitioned. It is minus that
right for which, as stated above, the compensation is provided under
Section 8(2), the remaining rights come to be acquired.
44. In contradistinction under the Land Acquisition Act, as stated
above, the sum total of the rights, namely, the ownership itself comes
to be acquired.
......
1
AIR 1968 SC 377 2 1993 Supp (2) SCC 149, at page 158 MSR,J & TVK,J ::17:: cma_737_2014&batch First, the owner will have a right to possess the thing which he owns....
Secondly, the owner normally has the right to use and enjoy the thing owned: the right to manage it, i.e., the right to decide how it shall be used; and the right to the income from it ....
* ** Fifthly, ownership has a residuary character. If, for example, a landowner gives a lease of his property to A, an easement to B and some other right such as a profit to C, his ownership now consists of the residual rights, i.e., the rights remaining when all these lesser rights have been given away ...."
45. Then again, under the Act, the acquisition even though it is for a public purpose is restricted to the two clauses of Section 7(3) of the Act to which we have already made a reference. Thus two clauses of Section 7(3) constitute statutory embargo.
46. Under the Land Acquisition Act, the power of eminent domain could be exercised without any embargo so long as there is an underlying public purpose."
47. The Court also explained that absence of a provision for payment of solatium to the land owner does not make the Act as discriminatory.
48. In Hari Krishan Khosla (2 Supra), the Supreme Court also laid down the principles for determination of compensation by the arbitrator under the Act. It declared that he must determine the compensation (i) which appears to him to be just, (b) having regard to circumstances of each case and also (c) the provisions of subsections (2) and (3) of Sec.8. It held:
"61. We are of the opinion that the amount of compensation can be fixed by agreement under Section 8(1)(b).
In the absence of such an agreement it is left to the discretion MSR,J & TVK,J ::18:: cma_737_2014&batch of the arbitrator. The arbitrator under Section 8(1)(e) is to hear the dispute. Thereafter he is to determine the compensation which appears to him to be just. He must have regard to the circumstances of each case while applying the provisions of sub-section (3)(a) of Section 8 which reads as under:
"8. (3) The compensation payable for the acquisition of any property under Section 7 shall be--
(a) the price which the requisitioned property would have fetched in the open market, if it had remained in the same condition as it was at the time of requisitioning and been sold on the date of acquisition, or
(b) * * *"
(emphasis supplied)
62. In our view, the significant omission of solatium is indicative of the legislative intent necessitating stress on the expressions "just" and "circumstances of each case" occurring in sub-section (1)(e) thereof.
63. Yet another distinguishing feature is the expression "open market". The reason why solatium has not been provided is that "open market" contemplates a bargain between a free buyer and a free seller unfettered by the consideration of requisition and consequent acquisition.
64. Now we will deal with the reasons which prompted the High Court to hold that this provision is discriminatory. To say that the owner of requisitioned property was getting compensation does not make any difference, is not correct. Equally, to hold, as the High Court does, that the property requisitioned under the Act can be acquired under the Land Acquisition Act, does not seem to be correct. We have already pointed out how the power of Eminent Domain comes to be exercised under the Land Acquisition Act and how an acquisition under this Act is subject to the statutory embargo unless there is a derequisitioning of the immovable property and separate proceedings are taken under the Land Acquisition Act, there is no possibility of acquiring the property under the Land Acquisition Act.
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65. Reference should also be made to Section 8(1)(e) of the Act. That refers to three things:
(i) The amount of compensation which appears to be just;
(ii) the circumstances of each case; and
(iii) the provisions of sub-sections (2) and (3).
66. The effect of this classification, in our opinion, is that the Arbitrator must determine the amount of compensation which appears to him to be just but he must have regard to sub-sections (2) and (3) of Section 8. Therefore, where, a property which was subject to prior requisition comes to be acquired the compensation should be awarded on the basis of the principles adumberated in this Act.
67. The comparison of acquisition under this Act to an acquisition under the Land Acquisition Act seems to be odious in view of the dissimilarities between the two Acts which we have clearly indicated above."(emphasis supplied)
49. On the aspect of payment of solatium, there was further elaboration in Prabhu Dayal v. Union of India3, where the Court followed it's earlier precedent and held that even solatium can be granted. It held:
"4. It is next contended that the appellants are entitled to the solatium though in law they are not entitled but in equity they are entitled to the solatium for the reason that for 22 years arbitrator was not appointed to determine the market value. In support they relied upon the judgment of this Court in Union of India v. Hari Krishan Khosla (2 Supra). Therein this Court relied upon another judgment in Harbans Singh v. Union of India4. In that judgment this Court said that having regard to the peculiar facts and circumstances of the present case and in view of the fact that the appointment of the arbitrator was not made by the Union of India for period of 16 years, this Court considered in equity to give solatium 3 1995 Supp (4) SCC 221, at page 223 4 Civil Appeal No.470 and 471 of 1985 dt.11.2.1985 MSR,J & TVK,J ::20:: cma_737_2014&batch at the rate of 30 per cent of the amount of compensation and interest at the rate of 9 per cent per annum should be awarded to the appellants therein. In this case, the question of appointing the arbitrator would arise only when the market value offered was rejected by the claimants. The offer was made and rejected on 13- 10-1961 and the arbitrator came to appoint on 22-9-1966 after five years. Under these circumstances, the claimants are entitled to solatium at the rate of 15 per cent on the market value. The appellants did not challenge the rate of interest granted at 6 per cent. Accordingly they are also entitled to the interest at the rate of 6 per cent per annum.
50. The aspect of right of a land owner to payment of interest on the compensation was considered in Kalimpong Land & Building Ltd. v. State of W.B5. and it was laid down as under:
"Although there is no provision in the Act for award of the interest, but the power to determine compensation under the Act is unlike Land Acquisition Act or Arbitration Act. Sub-clause (d) uses the expression "fair amount of compensation" whereas sub-clause (e) widens it further by empowering the arbitrator to award an amount which appears to him to be just having regard to the circumstances of each case. What is just and fair in the circumstances of each case cannot be laid down with any precision. Compensation is paid to indemnify a person and it should normally be an equivalent or substitute of equal values. The payment of compensation of Rs 30,00,000 for a three-storeyed building in Calcutta with 4.9 acres open space in 1994 without interest when possession was taken in 1964 would amount to being unjust and unfair to the appellant. The recommendation in the report for payment of interest would be included in the expression, "which appears to him to be just" used in clause (e) of the sub-section."( emphasis supplied) 5 (1994) 6 SCC 720, at page 727 MSR,J & TVK,J ::21:: cma_737_2014&batch
51. In Defence Estate Officer v. Syed Abdul Saleem6, the Supreme Court upheld award of solatium and interest granted by the High Court in relation of land acquired for defence purposes under the Act stating :
"The appellant presents as exceptionable the High Court's enhancement of compensation. But the chiefly objectionable aspect to the impugned judgment and order is, in the submission of the appellant, the High Court's extra-legal award of solatium and interest on the principal statutory compensation awardable under the Requisitioning and Acquisition of Immovable Property Act, 1952.
This Court has previously, in Hari Krishan Khosla ( 2 supra), conducted a thorough analysis of the features of the aforementioned Act apropos the Land Acquisition Act, 1894, and providing cogent rationales therefor, in our humble opinion rightly labelled as "odious" any attempt to make a black letter comparison of the two enactments. Whilst upholding the constitutionality of the Requisitioning Act absent the provisions therein of the award of solatium and interest, the court nevertheless, relying upon a previous pronouncement in Harbans Singh v. Union of India (3 supra), found it just and proper to uphold award of both solatium (at 30 %) and 9% interest along with the principal statutory compensation, where appointment of the Statutory arbitrator had been delayed by 16 years. "Equity is a mitigant to the harshness of common law" is a well-known common law maxim. Several Benches of this Court, from Hari Krishan Khosla (2 supra) in 1993; the Constitution Bench in Union of India v. Chajju Ram7, in the context of the Defence of India Act, 1971; Union of India v. Parmal Singh8 and thereafter in Dilawar Singh v. Union of India9, have consistently applied mutatis mutandis the equity resting in this maxim to mitigate the harshness of this requisition statute, thereby providing for payment of interest and solatium to affected/dispossessed parties in cases of extensive 6 (2015) 12 SCC 294 7 (2003) 5 SCC 568 8 (2009) 1 SCC 618 9 (2010) 14 SCC 357 MSR,J & TVK,J ::22:: cma_737_2014&batch protraction, where the statute ex facie provides for neither of these ameliorators.
7. The precedential position being unquestionably clear, we find that the facts before us, displaying dilation by the appellant of 19 years in reappointment of the Statutory arbitrator, command and not merely commend the application of the precedent. We, therefore, sustain the judgment of the High Court1, and confirm the award of solatium and interest therein, along with the principal compensation amount."
52. Keeping in mind these principles we shall now deal with the points framed by us.
Point (a)
53. We shall first deal with point (a) which states: "Is the award of the Collector passed on 1.12.2009 valid in law and binding on the arbitrator?"
54. Both the Government Pleader for Arbitration and the Assistant Solicitor General contended that the arbitrator could not have granted anything more than what was granted by the Collector, Hyderabad District in his award dt.01.12.2009.
55. Per contra, Sri D. Prakash Reddy, Senior Counsel appearing for land owners, pointed out that under the Act, the Collector had no jurisdiction or authority to pass any award; only the arbitrator appointed under Clause (b) of Sub-Section (1) of Section 8 of the Act can pass an award under Clause (e) of Sub-Section (1) of Section 8.
56. We agree with the contention of the Senior Counsel for the claimants because the Government Pleader for Arbitration and the MSR,J & TVK,J ::23:: cma_737_2014&batch Assistant Solicitor General were unable to point out any provision in the Act, unlike the Land Acquisition Act, 1894, which entitles the Collector to pass an award determining the compensation.
57. Point (a) is answered accordingly in favour of the claimants and it is held that the District Collector has no jurisdiction under the Act to pass any award, and any such award passed by him is not binding on the arbitrator appointed under Clause (b) of Sub-Section (1) of Section 8. At best the said award can be construed as an attempt by the State to determine the compensation for the acquired land pending the decision of the arbitrator on the said aspect. Point (b) :
58. We shall now consider the following point :
(b) Was the arbitrator justified in awarding compensation at Rs.1000/- per sq.yd to the acquired land?
59. While the land owners contend that the arbitrator should have granted compensation for the acquired land at Rs.2,600/- per sq.yd., the Union of India and the District Collector contended that even Rs.1,000/- per sq.yd. granted by the arbitrator for the acquired land is very high.
60. The compensation for the acquired land has to be determined by the arbitrator as mentioned above, as per Sub-Section (3) of Section 8 and it shall be the price which the requisitioned property would have MSR,J & TVK,J ::24:: cma_737_2014&batch fetched in the open market, if it had remained in the same condition as it was at the time of requisitioning and had been sold on the date of acquisition.
61. The date of acquisition according to all the parties is 20.05.1995 when Form-J notice was issued to acquire the property. Therefore, the arbitrator ought to award compensation for the acquired land as on 20.05.1995.
62. Before the arbitrator, the land owners marked Exs.C.1 to C.28 registered sale deeds of sale transactions in the vicinity of the acquired land. They also relied on Ex.C.73 - copy of Certificate of Market Value of the property issued by the Sub-Registrar, Azampura on 24.04.2014 issued for the year 1995. In that certificate, in the column 'Market Value', it is mentioned 'Market Value Basic Register' leading road from Santoshnagar 'X' Roads to MCH and DRDL Roads
- Rs.2,000/- as on 01.04.1995.
63. The Union of India / Defence Estates Officer marked Ex.R.17 to R.23 - registered Sale Deeds.
64. The arbitrator did not rely on Ex.C.73 - Market Value Certificate on the ground that Sub-Registrar or anyone from the Office of the Sub-Registrar was not examined to prove the basis for this document. He observed that the Defence Estate Officer and the Department of Defence, Government of India were determined to acquire the land from much prior to 01.04.1995 (at least from 1979 MSR,J & TVK,J ::25:: cma_737_2014&batch when the possession was taken). So he observed that everyone was aware that the land in question was under acquisition and so it is not known when the Basic Value Register was changed to incorporate Rs.2,000/- per sq.yd. as market value.
The arbitrator also observed that in anticipation of formal acquisition order by way of Form-J issued on 20.05.1995, Ex.C.73 might have been issued and the basic value might have been enhanced for the purpose of the revenue of the Government and so Ex.C.73 cannot be a guide for determining the correct market value.
The arbitrator also observed that the market value shown in the Basic Value Register in the office of the Sub-Registrar, as per settled law, cannot form the basis for fixing market value, particularly when sale deeds in respect of open lands of the relevant period in the vicinity of the acquired lands are available on record for consideration of the arbitrator.
He also stated that Ex.C.73 is a Certificate in respect of a specific property having M.C.H.No.18-8-192, which is obviously the constructed building; therefore, it is not issued in respect of market value of open land; and so, cannot be relied upon as a guide for determining the market value of open land.
65. We are satisfied that cogent reasons have been given by the learned arbitrator for discarding Ex.C.73 and we agree with the said reasons, and in particular, that it relates to a constructed building, and MSR,J & TVK,J ::26:: cma_737_2014&batch so cannot be taken into account while determining market value of open land.
66. We do not agree with the contention of Sri D. Prakash Reddy, Senior Counsel that as per III proviso to Sub-Section (3) of Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, prevalent market rate is now allowed to be taken into account for determination of compensation under the said Act for the acquired land, and for that purpose the District Collector has to revise and update the market value of the land before initiating any Land Acquisition proceedings, and so, Ex.C.73 ought to be taken into account by applying the said principle.
67. This is because Ex.C.73 does not relate to open land and relates to a constructed building, and cannot be taken as a guide while determining market value of open land. Also, when registered sale deeds are available for consideration, it is not permissible to go by the market value certificate issued by the Sub-Registrar when nobody connected with the said office of Sub-Registrar has been examined to show on what basis it was issued in respect of land, which from 1979 was in the occupation of the Defence Department of Government of India.
68. The arbitrator had excluded certain sale deeds filed by the land owners which relate to plots with constructed houses in para no.37 of MSR,J & TVK,J ::27:: cma_737_2014&batch the Award and discussed sale deeds with regard to open land in para no.41 of the Award.
69. These sale deeds, no doubt, deal with small extents of land ranging from 106 sq.yds. to 378 sq.yds. and the consideration mentioned in those sale deeds varies from Rs.350/- per sq.yd. to Rs.700/- per sq.yd.
70. The arbitrator then considered Ex.R.25-Sketch showing the location of the acquired land vis-à-vis the lands covered by the sale deeds marked by the parties. He noted that the acquired land, as seen from the Map Ex.R.25 (wrongly mentioned as C.25 in para no.52 of the Award) abuts 150' wide highway towards Mahabubnagar and it can reasonably be presumed that it would have comparatively higher value than the one recorded in the sale deeds in respect of open plots; after layout is prepared, all plots formed may not fall on the road-side; and taking into consideration the circumstances of the case and location of the land, he is inclined to take into account the higher value of Rs.700/- per sq.yd. According to him, he was required under Section 8 of the Act to award compensation which appears just to him and so he is awarding compensation at the rate of Rs.1,000/- per sq.yd.
71. All the counsel informed us that the sale deeds filed by the parties before the Arbitrator were of open plots / plots with MSR,J & TVK,J ::28:: cma_737_2014&batch construction where consideration was on the basis of square yards and not on acre basis, and that the plots were small plots.
72. Though normally sale deeds of smaller extents of land will not be taken into account while determining compensation of acquired land, but if there is no other evidence available, they can still be considered after making appropriate adjustments. This principle has been laid down in several decisions of the Supreme Court including A. Natesam Pillai v. Tahsildar (LA)10 in the following manner :
"16. In Rishi Pal Singh v. Meerut Development Authority11 this Court while dealing with the issue relating to a large tract of land held as follows: (SCC p. 207, para 5) "5. ... With respect to the first reason, that is, exemplars of small plots have been taken into consideration by the Reference Court, in the first instance our attention was invited to some judgments of this Court to urge that there is no absolute bar to exemplars of small plots being considered provided adequate discount is given in this behalf. Thus there is no bar in law to exemplars of small plots being considered. In an appropriate case, specially when other relevant or material evidence is not available, such exemplars can be considered after making adequate discount. This is a case in which appropriate exemplars are not available. The Reference Court has made adequate discount for taking the exemplars of small plots into consideration."
17. Furthermore, in Administrator General of W.B. v. Collector, Varanasi12 this Court has held: (SCC p. 157, para 12) "12. It is trite proposition that prices fetched for small plots cannot form safe bases for valuation of large tracts of land as the two are not comparable properties. The principle that evidence of market value of sales of small, developed plots is not a safe guide in valuing 10 (2010) 9 S.C.C. 118 11 (2006) 3 S.C.C. 205 12 (1988) 2 S.C.C. 150 MSR,J & TVK,J ::29:: cma_737_2014&batch large extents of land has to be understood in its proper perspective. The principle requires that prices fetched for small developed plots cannot directly be adopted in valuing large extents. However, if it is shown that the large extent to be valued does not admit of and is ripe for use for building purposes; that building lots that could be laid out on the land would be good selling propositions and that valuation on the basis of the method of hypothetical layout could with justification be adopted, then in valuing such small, laid out sites the valuation indicated by sale of comparable small sites in the area at or about the time of the notification would be relevant. In such a case, necessary deductions for the extent of land required for the formation of roads and other civic amenities; expenses of development of the sites by laying out roads, drains, sewers, water and electricity lines, and the interest on the outlays for the period of deferment of the realisation of the price; the profits on the venture, etc. are to be made."
18. The small area of land measuring 1710 sq ft was sold for Rs. 20,000 as per Ext. A-3 dated 15-7-1992 which works out to a value of Rs. 11 per square foot. A comparison of the two plots, namely, land in Ext. A-3 and the acquired land shows that they are not identical. While the land in Ext. A-3 may not be an excellent guide it is still a better guide than any other document exhibited on record. The same could be used as a relevant yardstick to assess the just and reasonable compensation in the present case." (emphasis supplied)
73. Also, if the acquired land abuts a highway, it will have a higher market value than land which is away from the highway. This principle is also accepted in Bijender v. State of Haryana13 as under:
"34. The acquired land having a frontage abutting the highway/main road always has a better value as compared to the land, which is away from the highway/main road. Indeed, farther the land from the highway/main road, lesser the value of such land."
13
(2018) 11 SCC 180, at page 188
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74. The acquired land, in the instant case, has frontage abutting the 150' highway towards Mahabubnagar while most of the area where the land subject matter of the sale deeds is located, is far away from the highway.
75. Therefore, the arbitrator, in our opinion, has rightly taken the market value of the acquired land, which is adjacent to the 150' highway, at Rs.1,000/- per sq.yd. also keeping in mind the delay in appointment of the arbitrator and the fact that land was taken possession in 1979 and the award was being passed in 2014, long afterwards. We are satisfied that the learned arbitrator has determined the amount of compensation which appeared to him to be just and having regard to the circumstances of the case.
76. We also agree with the arbitrator that the land owners cannot rely upon Ex.C.46 - Arbitral Award dt.24.06.2013 in respect of lands in Survey No.41/2/1 of Kanchanbagh Village where Rs.5,000/- per sq.yd. was awarded by the Arbitrator as compensation, because the acquisition in that case was almost 15 years after the date of acquisition in the instant case, i.e, on 02.04.2010 under the Act; and in these 15 years, there would be many developments in the vicinity of the acquired land and many commercial establishments and other structures would have come up.
77. Therefore, Point (b) is answered against the landowners and in favour of Union of India and its Defence Department.
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Point (c) :
78. We shall now deal with Point (c) which is as under :
(c) Whether the arbitrator was justified in making 1/3rd deduction from the acquired land towards community and public amenities?
79. No doubt, the acquired land is of extent Acs.17.12 gts. (83,732 Sq.yds.) in Sy.Nos.20, 57 and 58 of Kanchanbagh Village. The arbitrator had held that 1/3rd must be excluded out of this area for community and public amenities and other deductions and compensation should be awarded only for the balance 2/3rd area amounting to 55,821 Sq.yds.
80. In the Award, he has not indicated why he is adopting a deduction of 1/3rd for development, etc.
81. The land owners contend that there is no necessity for deduction as the land was already developed, but the Union of India and the District Collector maintain that such a deduction was validly done, and in fact the deduction should be at least 40% and not 1/3rd.
82. In the Claim Statement filed by land owners before the Arbitrator, they have pleaded specifically that the land acquired is agricultural land abutting 100' road from Hyderabad to Mahabubnagar, and that the area was developed with residential colonies around the same by the date of notification. According to the land owners, the acquired land is situated between Santoshnagar and MSR,J & TVK,J ::32:: cma_737_2014&batch Chandrayanagutta, which are well-developed residential areas even during 1970's, and had been reserved for residential purpose as per the Zonal Development Plan notified by the Hyderabad Urban Development Authority. According to them, the land around the acquired land was already developed into a colony called 'Rakshapuram' by the date of issuance of the Form-J notification on 20.05.1995.
83. This was disputed in the counter-affidavits filed before the arbitrator by the Union of India to the claim statement filed by the respondents. They contended that the land owners have not produced any evidence in support of their claim and the deduction should be 40% towards development, and the market value cannot be more than Rs.350/- per sq.yd.
84. In his evidence, P.W.1, one of the land owners stated that the acquired land is located in the prime area of Kanchanbagh abutting 150' wide inner ring road leading from Santoshnagar to Chandrayanagutta which forms part of NH-7, that the locality is part of Urban agglomeration and was currently witnessing widespread development of residential communities and commercial establishments. According to him, Kendriya Vidyalaya, Deccan Medical College, etc., were established in the vicinity of the acquired land and there are six fuel filling stations, ten function halls and a theatre in the surrounding area. He also stated that the acquired land is 14 kms. away from the Rajiv Gandhi International Airport, MSR,J & TVK,J ::33:: cma_737_2014&batch Shamshabad, Hyderabad and it takes about 20 minutes to reach the airport from the said land. He also stated that there were major Defence establishments such as DRDL, DMRL, Midhani, BDL, RCI, major hospitals such as 1000 bed Owaisi Hospital and Research Center and Apollo Hospital nearby. He stated that the acquired land is opposite to the main entrance to DRDL which also enhances its commercial value and that it is within three kilometres of the newly development Hyderabad Outer Ring Road.
85. In cross-examination, PW.1 denied that as on the date of acquisition in 1985, the acquired land was not a commercial land and there were no commercial establishments around it and it was purely an agricultural land. He also denied that only after the acquisition, commercial development in the area took place. He added that the National Highway was already there and various function halls, hotels, Kendriya Vidyala, Deccan Medical College and Hospital and other establishments were already there at the time of acquisition. He stated that the acquired land is an already developed urban land.
86. R.W.1 deposed in cross examination for the Union of India stating that he has no personal knowledge, and he did not know if the land in question was requisitioned on account of its proximity to the city. He stated that he did not know if the area in which the requisitioned land is located was commercially developed at the time of requisition or that it was part of Municipal Corporation of Hyderabad. He however admitted that Defence establishments in that MSR,J & TVK,J ::34:: cma_737_2014&batch area had come into existence in 1978 and the surrounding area to the Defence establishments developed into residential area.
87. R.W.2, the Special Dy. Collector (Land Acquisition), stated in cross-examination that beyond defence establishments, i.e., about 0.75 kms. from the requisitioned land, there is development of residential and commercial buildings, that there are educational institutions like Kendriya Vidyalaya and the Deccan Medical College is 1 ½ km. away from the acquired land. She admitted that the acquired land was part of the Hyderabad Municipal Corporation at the time of acquisition, and that by 1995 there were constructions in the areas surrounding the acquired land.
88. In Ex.R.16-Preliminary Valuation Report, dt.20.05.1997, prepared by the Special Dy. Collector, Land Acquisition (INDS), Hyderabad, he stated that from the records of the Mandal Revenue Officer, Charminar, it is clear that the lands in Kanchanbagh were included in the Municipal Area, and Town Survey was also completed in 1981, and the question of treating the acquired land as agricultural land does not arise.
89. After considering the above evidence adduced by the parties, we are of the opinion that by the date of the Form-J Notice dt.20.05.1995, the subject land had ceased to be agricultural land, that there was considerable development in its vicinity and residential and MSR,J & TVK,J ::35:: cma_737_2014&batch commercial establishments apart from other defence establishments, hospitals, Kendriya Vidyalaya, etc. had come into existence.
90. If the land is already well developed, as in the instant case, by the date of Form-J notification dt.20.05.1995, then 1/3rd deduction as was done by the arbitrator, is not warranted.
91. In Special Tehsildar Land Acquisition v. A. Mangala Gowri (Smt)14, the Supreme Court held that :
"4. ... ... ... Where acquired land is in the midst of already developed land with amenities of roads, drainage, electricity etc. then deduction of 1/3 would not be justified. ... ... ..."
92. Similar view was expressed in the following terms by the Supreme Court in Charan Dass v. H.P. Housing & Urban Development Authority15, as under :
"32. It is well settled that it is not in every case that deduction towards development charges has to be made when a big chunk of land is acquired for housing colonies, etc. Where the acquired land falls in the midst of an already developed land with amenities of roads, electricity, etc. deduction on this account may not be warranted."
93. In Indraj Singh v. State of Haryana16, the Supreme Court held that 1/3rd deduction is harsh in respect of developed land and that 10% deduction is proper. It held :
"10. ... .... .... Deduction to the extent of 1/3rd of the value of the land is definitely harsh even as per the observations made by the High Court as the land in question is very much in 14 (1991) 4 SCC 218, at page 223 15 (2010) 13 SCC 398 16 (2013) 14 SCC 491 MSR,J & TVK,J ::36:: cma_737_2014&batch the developed area. The area has been developed by HUDA and therefore, the deduction of 1/3rd of the value of the land is not justified.
11. Upon considering all relevant facts, in our opinion, it would be absolutely just if 10% value of the land is deducted instead of 1/3rd because the land is forming part of a well- developed area."
94. Having regard to the above decisions and the evidence adduced before the arbitrator, we are satisfied that the acquired land is in a developed area, that 1/3rd deduction made by the arbitrator is not warranted, and the appropriate percentage of deduction, in the facts and circumstances of the case, is 10%.
95. Point (c) is answered accordingly in favour of the land owners and against the Union of India / it's Defence estates Officer and the District Collector.
Points (d) and (e):
96. We shall now consider points (d) and (e) framed by us:
(d) Whether the arbitrator erred in granting interest @ 15% p.a from 20.5.1995 (the date of form J notification) till 7.2.2014 (date of award) and also interest @ 12% p.a from 7.2.2014 (date of award) till date of realization?
(e) Whether the arbitrator ought to have also awarded solatium to the land owners?
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97. We have already noticed that the learned arbitrator had awarded interest at 15% per annum from 20.05.1995 to the date of the award and awarded interest @ 12% per annum from the date of the award till the date of realization after adjusting the payment already received.
He did not award any solatium.
98. We have already noticed the decisions of the Supreme Court in Hari Krishan Khosla (2 Supra) wherein the Supreme court had held that the significant omission of solatium is indicative of the legislative intent necessitating stress on the expressions "just" and "circumstances of each case" occurring in sub-section (1)(e) thereof. Yet in some cases, the Supreme Court has not interfere with the award of interest and solatium for land acquired under the Act - Prabhu Dayal (3 Supra), Kalimpong Land & Building Ltd. (5 Supra) and Syed Abdul Saleem (6 supra).
99. The question is, whether in the facts and circumstances, the arbitrator, ought to have granted 'solatium' (which he denied) and whether he should have granted interest @ 15% from 20.5.1995 till payment /realisation (he had granted at 15% per annum from 20.05.1995 to the date of the award and awarded interest @ 12% per annum from the date of the award till the date of realization).
100. Normally, when smaller plots exemplars only exist to determine compensation, and there is no other material available which can be relied upon by the arbitrator, some deduction from the rate mentioned MSR,J & TVK,J ::38:: cma_737_2014&batch in the exemplars is done to arrive at the compensation payable for a larger parcel of land which is acquired.
101. We may note that the arbitrator had fixed the market value at Rs.1,000/- per sq.yd., though only sale deeds of small open plots were available with the highest consideration of Rs.700/- per sq.yd. on the ground that the highway towards Mahabubnagar is adjacent to the acquired land and in our opinion, he has also taken into account the delay between 1979 (when the possession of the acquired land was taken) and 20.05.1995 (when Form-J notification was issued for acquisition).
102. In our opinion, the above logic given by the arbitrator shows that he had fixed just compensation keeping in mind the special circumstances of the case and has thus built into his assessment of compensation even the aspect of 'solatium', and therefore he did not deem it necessary to separately grant solatium in addition to the compensation. We are in complete agreement with the arbitrator in this regard and hold that the landowners have not made out any case for award of solatium in addition to the compensation per square yard arrived at by the arbitrator.
103. Even with regard to grant of interest, in the decisions cited by us 9% interest in addition to 30% solatium was granted / approved by the Supreme Court in cases of lands acquired under the Act. The Supreme Court has not granted interest separately for : (a) the period MSR,J & TVK,J ::39:: cma_737_2014&batch between the issuance of Form-J notification and the date of the award of the arbitrator, and (b) the period from the date of the award till the realization.
104. However, the arbitrator, in the instant case, has done so. He had granted interest at 15% per annum from 20.05.1995 to the date of the award, viz., 07.02.2014, and awarded interest @ 12% per annum from the date of the award till the date of realization.
105. We are of the opinion that no exception can be taken to the award of interest by the arbitrator in addition to the compensation of Rs.1,000/- per sq.yd. for the acquired land, and there is no need also to alter the rate of interest for the period from the date of the award till realization, since the assessment of the arbitrator regarding the rate of interest appears to us to be just, as mandated under Clause (e) of Sub- Section (1) of Section 8 of the Act.
106. Accordingly, Points (d) & (e) are answered against the land owners and in favour of Union of India / District Collector.
107. In the result :
(a) Civil Miscellaneous Appeal No.737 of 2014 is partly allowed; and the award of the Arbitrator dt.02.07.2014 is altered to the limited extent of the percentage of land to be deducted towards development i.e from 1/3rd fixed by the learned arbitrator to 10% deduction of the total land acquired;
and that the land owners/appellants in CMA No.727 of 2014 MSR,J & TVK,J ::40:: cma_737_2014&batch shall be paid compensation for 75,359 sq.yds [83732 (total acquired area in sq.yds) -8373 (10% deduction)].
(b) Civil Miscellaneous Appeal Nos.761 of 2014 and 1055 of 2014 are dismissed. No costs.
108. As a sequel, miscellaneous applications pending if any in these Appeals, shall stand closed.
____________________________ M.S.RAMACHANDRA RAO, J ____________________ T.VINOD KUMAR, J Date: 02-06-2021 Ndr