M/S PERIYAR & PAREEKANNI RUBBERS LTD. Vs. STATE OF KERALA

Tags Land Acquisition

Supreme Court of India (Division Bench (DB)- Two Judge)

SPECIAL APPEAL DEFECTIVE, 7034-7037 of 2015, Judgment Date: Sep 14, 2015

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

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

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

VERSUS

STATE OF KERALA …… RESPONDENT

J U D G M E N T

V. GOPALA GOWDA, J.

Leave granted.
These appeals by special leave are directed against the impugned common
judgment and order dated 07.04.2010 passed by the High Court of Kerala at
Ernakulam in Civil Revision Petition Nos. 196, 199, 205 and 208 of 2009
(filed against the order dated 15.10.2008 of the learned Sub-Judge,
Ernakulam-the Execution Court), wherein the dispute between the parties
related to the claim of solatium for the enhanced amount of compensation
and interest thereon in respect of the acquired land. The High Court has
confirmed that solatium is payable on that portion of land value based on
capitalization method of yielding rubber trees and directed to compute
balance amount payable under the decree, but awarded the interest on
solatium from 19.09.2001, the date when judgment by the Constitution Bench
in the case of Sunder v. Union of India[1] was delivered by this Court and
not for the prior period. The legality and validity of the impugned
judgment and order is seriously challenged urging various legal contentions
as the appellant is aggrieved by the denial of the interest payable on the
component of solatium under Sections 23(1A), 23(2) read with Sections 28
and 34 of the Land Acquisition Act, 1894 (for short “the Act”). The
solatium being the component of compensation payable to the claimant/decree
holder, the restriction upon its payment by the High Court placing reliance
upon another subsequent Constitution Bench judgment of this Court in the
case of Gurpreet Singh v. Union of India[2] is hereby challenged.

3. The brief facts of the case are stated hereunder:-

Various portions of rubber estate of the appellant situated in village
Kuttamangalam was acquired by the State Government in exercise of its
eminent domain power pursuant to the notification dated 10.10.1978 issued
under Section 4(1) of the Act for the purpose of Periyar Valley Irrigation
Project.

In 1980 and 1981 Awards were passed by the Land Acquisition Officer
awarding compensation, on the market value of land which were partly based
on capitalization method of the yielding rubber trees for the planted area
and partly based on the value of bare land on which there were no yielding
rubber plantation. Awards included solatium and interest on compensation
including solatium.

Being dissatisfied with the compensation, the appellant filed Land
Acquisition Reference (LAR) Nos. 425, 427, 428, 429, 432, 434, 435, 456,
458 and 463 of 1988 before the Court of III Additional Sub-Judge, Ernakulam
(the Reference Court) under Section 18 of the Act.

The Reference Court after perusal of the record, by its common judgment,
passed an Award on 19.11.1992 by enhancing the compensation partly based on
capitalization method of the yielding rubber trees for the planted area and
partly based on the value of bare land on which there were no rubber trees.
The Reference Court held that the claimant is entitled to get 30% solatium,
12% additional market value from the date of the notification i.e.,
10.10.1978 till the date of Award passed against it and they are also
entitled to get 9% interest for the first one year from the date of
dispossession and thereafter at 15% till realization of the compensation
awarded in favour of the claimant/decree holder.

In some of the abovesaid LARs, payments were made by respondent-State in
full and final settlement of the enhanced compensation, solatium and
interest on compensation including solatium. With respect to the remaining
cases, the appellant filed Execution Petition Nos. 152, 147, 146, 149 and
145 of 1996 before the Execution Court for execution of the Award/decree
passed by the Reference Court.
The Execution Court on 15.10.2008 passed an order fixing balance amount
payable by the State government after excluding solatium on that portion of
the market value of the acquired land based on capitalization method of the
yielding rubber trees for the planted area.

Being aggrieved by the said order of the Execution Court, the appellant
filed Civil Revision Petition (CRP) Nos. 196, 199, 201, 205 and 208 of 2009
before the High Court of Kerala.

The High Court on 07.04.2010 passed the common impugned judgment and order
in the said CRPs confirming that the solatium is payable by the state
government for the enhanced compensation awarded for the market value of
the entire land. Thus, it provided solatium for that portion of land the
value of which was based on the capitalization method of yielding rubber
trees and directed the respondents to compute balance amount payable under
the decree. However, the High Court awarded the interest on solatium w.e.f.
19.09.2001, the date of judgment delivered by Constitution Bench in
Sunder’s case (supra) instead of from the date of acquisition of the land
of the appellant. Hence, these appeals are filed by the appellant urging
various grounds.

Mr. V. Giri, learned senior counsel on behalf of the appellant contended
that the Awards in the instant case were passed in 1980 and 1981 and the
Reference Court judgment and Award was passed in 1992, the time when there
was no dispute regarding the payment of interest on solatium. It is only in
1995 when this Court passed a judgment in the case of Prem Nath Kapur v.
National Fertilizers Corporation. Of India Ltd.[3] which barred the payment
of interest on solatium. But the decision in Prem Nath Kapur’s case was
subsequently reversed in Sunder’s (supra) case. Therefore, there was no
justification and reason for the High Court to restrict the payment of
interest on solatium prior to 19.09.2001 by applying the observations made
at paragraph 54 in the case of Gurpreet Singh (supra).

The learned senior counsel has further contended that the respondent-State
has already settled few cases covered by the Reference Court judgment by
paying the full compensation, solatium and interest on compensation
including solatium without any dispute. It shows that there was no dispute
between the parties as to the payment of interest on solatium by the
respondents. Before the Execution Court, the dispute raised by the
respondent-State was as to the amount of land value on which solatium was
to be computed.

On the other hand, Ms. Bina Madhavan, learned counsel on behalf of the
respondent-State government sought to justify the impugned common judgment
and order by placing strong reliance upon paragraph 54 of Gurpreet Singh’s
case (supra), which is extracted in the reasoning portion of this judgment.

She further contended that the interest on solatium can be claimed only in
pending execution cases and not in the closed cases and the execution
courts are entitled to permit its recovery by the claimant/decree holder
from 19.09.2001 i.e., from the date of judgment in Sunder’s case and not
for any prior period.

With reference to the aforesaid rival legal submissions urged by the
learned counsel on behalf of the parties, this Court is required to examine
the correctness of the impugned common judgment order passed in the
aforesaid CRPs by the High Court in restricting the payment of statutory
interest payable on the solatium component by placing reliance upon the
cases of Sunder and Gurpreet Singh (supra). In this connection, this Court
is required to find out as to whether the payment of interest on solatium
is the legislative statutory right conferred upon the land loser/claimant
recognised by the Constitution Bench in Sunder’s case. The High Court in
the light of observations made in Gurpreet Singh’s case (supra) at
paragraph 54 has fixed the date of payment of interest payable on the
solatium to the claimant/decree holder with effect from 19.09.2001. The
correctness of the same is also required to be examined by this Court.

For the aforesaid purpose, it would be necessary to refer to the question
of law as referred to in Sunder’s case (supra) wherein this Court deals
with the conflicting decisions rendered on one hand in Union of India v.
Ram Mehar[4] (three Judge Bench) and on the other, in later decisions of
co-equal Benches of this Court viz., Mir Fazeelath Hussain v. Special
Deputy Collector, Land Acquisition[5], Prem Nath Kapur (supra) and Yadavrao
P. Pathade v. State of Maharashtra[6].

In the case of Union of India v. Ram Mehar (supra) this Court after
examining the scope of the expression “market value” in Section 4(3) of the
Land Acquisition (Amendment and Validation) Act, 1967, held that solatium
cannot form part of the market value of the land, rather the “market value”
is only one of the components to be reckoned with in the determination of
the amount of compensation. The relevant para 7 of the decision reads thus
:
“7…..If market value and compensation were intended by the legislature to
have the same meaning it is difficult to comprehend why the word
“compensation” in Section 28 and 34 and not “market value” was used. The
key to the meaning of the word “compensation” is to be found in Section
23(1) and that consists (a) of the market value of the land and (b) the sum
of 15% on such market value which is stated to be the consideration for the
compulsory nature of the acquisition. Market value is therefore only one of
the components in the determination of the amount of compensation. If the
Legislature has used the word “market value” in Section 4(3) of the
Amending Act of 1967 it must be held that it was done deliberately and what
was intended was that interest should be payable on the market value of the
land and not on the amount of compensation otherwise there was no reason
why the Parliament should not have employed the word “compensation” in the
aforesaid provision of the Amending Act.”
(emphasis supplied)
Thus, it provides for the payment of interest on the market value of the
land. The said judgment is later followed by two Judge Bench of this Court
in Periyar & Pareekanni Rubbers Ltd. v. State of Kerala[7]. The relevant
para 24 of which reads thus:-
“24. ….Therefore, we have no hesitation to hold that Section 25(3)
contemplates payment of interests on solatium to recompensate the owner of
the land for loss of user of the land from the date of taking possession
till date of payment into court. The word compensation has been advisedly
used by the legislature. Accordingly we hold that the appellant is entitled
to interest on solatium.”

On the other hand, in the cases of Mir Fazeelath Hussain (supra), Prem Nath
Kapur (supra) and Yadavrao P. Pathade (supra) this Court held that
interest is not claimable upon solatium.

Due to the said conflicting decisions of this Court, a reference to the
Constitution/larger Bench was made by this Court in the case of Sunder v.
Union of India[8] (two Judge Bench). The relevant paragraph of reference
order reads thus :

“Leave granted on the short question whether interest can be paid on
solatium under Section 28 read with Section 34 of the Land Acquisition Act,
1894 on the ground that solatium is a part of compensation. This question
squarely arises for consideration as there is an apparent conflict between
a three-Judge Bench decision of this Court in the case of Union of India v.
Ram Mehar on the one hand and the later three-Judge Bench decisions of this
Court in the cases of Mir Fazeelath Hussain v. Special Dy. Collector, Land
Acquisition, Prem Nath Kapur v. National Fertilizers Corpn. of India Ltd.
and Yadavrao P. Pathade v. State of Maharashtra on the other. The later
three-Judge Bench judgments have taken the view that solatium is not a part
of compensation. However, in none of the later three-Judge Bench judgments
the earlier view of the three-Judge Bench judgment in the case of Union of
India v. Ram Mehar that solatium is a part of compensation, has been
noticed or considered. Consequently, in our view, this matter requires to
be decided by a Constitution/larger Bench of this Court. We, therefore,
direct that the papers may be placed before Hon’ble the Chief Justice of
India for placing the appeals arising out of these proceedings for final
disposal before an appropriate Constitution/larger Bench of this Court.

Prior to Sunder’s Case (two Judge Bench), similar reference was made in
Kapur Chand Jain & Ors. v. State Government of H.P. & Ors[9] , the relevant
paras of which read thus :-

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

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

The question of reference to Constitution Bench in Sunder’s case (supra)
reads thus :-
“Is the State liable to pay interest on the amount envisaged under Section
23(2) of the Land Acquisition Act, 1894?”

In other words, the question was whether for the purpose of Section 28 read
with Section 34 of the Act, solatium is a part of compensation. The answer
was in affirmation to the reference question by the Constitution Bench. By
answering the said question it laid down the law with regard to the
question of payment of interest.

21. From the interpretation of provisions of Sections 11, 15, 23, 24 and
31 of the Act and after placing reliance upon the decision of this Court in
State of Gujarat v. Vakhatsinghji Vajesinghji Vaghela[10], it is clear that
the amount of compensation in the Collector’s Award includes not only the
amount determined under Section 23(1) of the Act but also the additional
amount of solatium as stipulated under Section 23(2) of the Act. The
relevant paragraph 9 of the said case reads thus:
“9. ……The collector has to make an award of compensation under Section 11
and having regard to Sec. 15 in determining the amount of compensation, he
is guided by the provisions of Section 23 and 24. Section 23 (1) requires
an award of the market value of the land. Section 23 (2) requires an
additional award of a sum of fifteen percentum on such market value, in
consideration of the compulsory nature of acquisition…..”

Further, from the reading of Sections 28 and 34 of the Act, it is clear
that the ‘purpose of interest’ is to compensate an unpaid landowner who, on
the one hand has been deprived of the possession of his land in pursuance
of compulsory acquisition by the State Government in exercise of its
eminent domain power and on the other hand, has also been kept out of the
use of the money due to him for the acquisition by not being paid the
money, in full or in part, in lieu of taking possession. Reliance is placed
on the decision of this Court in the case of Satinder Singh v. Umrao
Singh[11] at paragraph 19, which reads thus:
“19.……When a claim for payment of interest is made by a person whose
immovable property has been acquired compulsorily he is not making claim
for damages properly or technically so called; he is basing his claim on
the general rule that if he is deprived of his land he should be put in
possession of compensation immediately; if not, in lieu of possession taken
by compulsory acquisition interest should be paid to him on the said amount
of compensation…."

Section 34 of the Act provides for the payment of interest on “amount of
such compensation”. The word “such” makes the reading of Section 34 read
along with Section 31 necessary. Section 31 of the Act provides for the
payment of compensation or deposit of the same in Court. Section 31 (1)
says “On making an Award under Section 11, the Collector shall tender
payment of the compensation awarded by him to the persons interested
entitled thereto according to the Award…..” Further, Section 28 of the Act
provides for the direction which may be made to the Collector to pay the
interest on excess compensation. It says “If the sum which, in the opinion
of the court, the Collector ought to have awarded as compensation is in
excess of the sum which the Collector did award as compensation…..” Thus,
it is clear from Section 34 read with Section 31 and the term “sum” under
Section 28 of the Act that the Award includes not only the sum as is
determined under Section 23(1) of the Act but also the amounts payable
under Section 23(1A) and Section 23(2). The same has been held by the
Constitution Bench of this Court in Sunder’s case, the relevant paragraph
23 of which reads thus:
“23.…We make it clear that the compensation awarded would include not only
the total sum arrived at as per sub-section (1) of Section 23 but the
remaining sub-sections thereof as well. It is thus clear from Section 34
that the expression “awarded amount” would mean the amount of compensation
worked out in accordance with the provisions contained in Section 23,
including all the sub-sections thereof.”

After adverting to Sections 34, 28, 23(1), 23(1A), 23(2), 24, 26 and 31 of
the Act, the Constitution Bench in Sunder’s case (supra) answered the
question regarding payment of interest on solatium in affirmation holding
that Section 26 of the Act does not say that the Award would contain only
the amounts granted under Section 23 (1) of the Act. It was further held
that there can be no doubt that all the three heads specified in the three
sub-sections of Section 23 of the Act are the sums to be awarded by the
court. The words “every award under this Part” in Section 26(1) of the Act
cannot be treated as the Award after delinking the amounts awarded under
sub-Section (1A) or sub-Section (2) of Section 23 of the Act. Further in
paragraphs 20, 21 and 23 in Sunder’s case (supra), the Constitution Bench
has held as under-

“20… whether exclusion of the factor “ any disinclination of the person
interested to part with the land acquired” from being considered as part of
the compensation indicated in Section 24 of the Act would be of any aid for
excluding solatium from the purview of interest accrual process….”

“21. It is apposite in this context to point out that during the enquiry
contemplated under Section 11 of the Act the Collector has to consider the
objections which any person interested has stated pursuant to the notice
given to him. It may be possible that a person so interested would advance
objections for highlighting his disinclination to part with the land
acquired on account of a variety of grounds, such as sentimental or
religious or psychological or traditional etc. Section 24 emphasises that
no amount on account of any disinclination of the person interested to part
with the land shall be granted as compensation. That aspect is
qualitatively different from the solatium which the legislature wanted to
provide “in consideration of the compulsory nature of the acquisition.”

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

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

Further, in the said case, after adverting to Section 34 of the Act, this
Court held thus:-

“24. The proviso to Section 34 of the Act makes the position further clear.
The proviso says that “if such compensation” is not paid within one year
from the date of taking possession of the land, interest shall stand
escalated to 15% per annum from the date of expiry of the said period of
one year “on the amount of compensation or part thereof which has not been
paid or deposited before the date of such expiry”. It is inconceivable that
the solatium amount would attract only the escalated rate of interest from
the expiry of one year and that there would be no interest on solatium
during the preceding period. What the legislature intended was to make the
aggregate amount under Section 23 of the Act to reach the hands of the
person as and when the award is passed, at any rate as soon as he is
deprived of the possession of his land. Any delay in making payment of the
said sum should enable the party to have interest on the said sum until he
receives the payment. Splitting up the compensation into different
components for the purpose of payment of interest under Section 34 was not
in the contemplation of the legislature when that section was framed or
enacted.”

The judgment rendered by the Constitution Bench of this Court in Sunder’s
case (supra) is the binding precedent on the question of payment of
legislative statutory interest payable on solatium under Sections 23(1A),
28 and 34 of the Act which cannot be deprived to the claimant/decree holder
by the court. As the said judgment is binding upon the State Government it
cannot contend that it is not liable from the date as provided under the
provisions of the Act.

The Constitution Bench judgment in Sunder’s case (supra) is aptly
applicable to the fact situation of the present case for the reason that
the enhanced compensation includes the solatium @ 30% as provided under
Section 23(2) of the Act. Therefore, the claimant/decree holder is entitled
for the interest on the solatium component which is part of the
compensation payable by the State government to the claimant. The Execution
Court held that the claimant/decree holder company is entitled to claim
solatium only in respect of the enhanced compensation provided for the land
alone which has been separately fixed, but, not in respect of that portion
of market value of the land based on capitalization method of the yielding
rubber trees for the planted area which was separately fixed by the
Reference Court in its Award. The High Court was right in holding that the
claimant is entitled for the interest not only in respect of the land but
also with respect to the trees standing on the land of which the market
value is determined by the Reference Court. However, it awarded the
interest on solatium from 19.09.2001 and not for the prior period by
placing reliance on Gurpreet Singh case (supra), the relevant paragraph 54
of which is extracted hereunder:-
“54. One other question also was sought to be raised and answered by this
Bench though not referred to it. Considering that the question arises in
various cases pending in courts all over the country, we permitted the
counsel to address us on that question. That question is whether in the
light of the decision in Sunder, the awardee/decree-holder would be
entitled to claim interest on solatium in execution though it is not
specifically granted by the decree. It is well settled that an execution
court cannot go behind the decree. If, therefore, the claim for interest on
solatium had been made and the same has been negatived either expressly or
by necessary implication by the judgment or decree of the Reference Court
or of the appellate court, the execution court will have necessarily to
reject the claim for interest on solatium based on Sunder on the ground
that the execution court cannot go behind the decree. But if the award of
the Reference Court or that of the appellate court does not specifically
refer to the question of interest on solatium or in cases where claim had
not been made and rejected either expressly or impliedly by the Reference
Court or the appellate court, and merely interest on compensation is
awarded, then it would be open to the execution court to apply the ratio of
Sunder and say that the compensation awarded includes solatium and in such
an event interest on the amount could be directed to be deposited in
execution. Otherwise, not. We also clarify that such interest on solatium
can be claimed only in pending executions and not in closed executions and
the execution court will be entitled to permit its recovery from the date
of the judgment in Sunder (19-9-2001) and not for any prior period. We also
clarify that this will not entail any reappropriation or fresh
appropriation by the decree-holder. This we have indicated by way of
clarification also in exercise of our power under Articles 141 and 142 of
the Constitution of India with a view to avoid multiplicity of litigation
on this question.”

The decision of this Court in Gurpreet Singh’s Case (supra), upon which the
strong reliance is placed by learned counsel on behalf of respondent, is
totally inapplicable to the fact situation of the instant case for the
reason that the question that arose in the said case was distinct, which
reads thus:-

“What is the rule of appropriation in execution of money decrees? Is the
rule the same in the case of an award-decree under the Land Acquisition Act
or, is there anything in the Land Acquisition Act, 1894 as amended by the
Land Acquisition (Amendment) Act (68 of 1984) making that rule inapplicable
or not wholly applicable?”

The issue in the said question was examined and answered by the
Constitution Bench with reference to Prem Nath Kapur’s case (supra)
regarding the rule of appropriation in execution of money decrees. The
examination of Sections 23(1), 23(1A), 23(2), 28, 31, 34 and 11 of the Act
was made in this regard.

At paragraph 54 of Gurpreet Singh’s case, certain observations are made
regarding the payment of interest on solatium. The interest on solatium can
be awarded at execution stage if the Reference Court or the Appellate Court
does not specifically refer to the question of interest on solatium or
cases wherein claim had not been made and rejected either expressly or
impliedly by the Reference Court or the Appellate Court and merely interest
on compensation is awarded. But where the Reference Court or appellate
court has negatived the same either expressly or by implication then such
interest on solatium cannot be awarded as it is a well settled rule of law
that the execution court cannot go behind the decree. Another point which
is clearly made in the said judgment is that the interest on solatium can
be claimed only in pending execution cases and not in closed execution
cases, recoverable from the date of the judgment in Sunder’s case i.e.,
19.09.2001 and not for any prior period. It is also held in this case that
this will not entail any appropriation or reappropriation by the
claimant/decree holder. But, it is noteworthy that this was not the
question which was referred to the Court for consideration in the said
case. Therefore, it is merely an observation of the court which cannot be
applied as binding precedent in the instant case with regard to the
entitlement of statutory interest payable under Sections 23(1A), 28 and 34
of the Act on the solatium. If applied, it would be contrary to the
doctrine of stare decisis. In this regard, it is necessary to advert to the
Constitution Bench (11 Judge Bench) judgment of this Court in H.H.
Maharajadhiraja Madhav Rao Jivaji Rao Scindia Bahadur & Ors. v. Union of
India[12], wherein at paragraph 138, it is held that it is not proper to
regard a word, a clause or a sentence occurring in a judgment of the
Supreme Court, divorced from its context, as containing a full exposition
of the law on a question when the question did not even fall to be answered
in that judgment. The relevant portion of the paragraph reads as under:-
“138 …The question as to the jurisdiction of the Courts to entertain a
claim for payment of Privy Purse did not fall to be determined in Nawab
Usman Ali Khan case. The only question raised was whether the Privy Purse
was not capable of attachment in execution of the decree of a Civil Court,
because of the specific exemption of political pensions under Section
60(1)(g) of the Code of Civil Procedure. In Kunvar Shri Vir Rajendra
Singh’s case, the Court did not express any opinion that Article 366(22)
was a provision relating to a covenant within the meaning of Article 363.
In that case the petitioner who was not recognised as a Ruler by the
President abandoned at the hearing of his petition his claim to the Privy
Purse payable to the Ruler of Dholpur, and pressed his claim by succession
under the Hindu Law to the Private property of the former Ruler. The Court
was not called upon to decide and did not decide that Article 366(22) was a
provision relating to a covenant within the meaning of Article 363. It is
difficult to regard a word, a clause or a sentence occurring in a judgment
of this Court, divorced from its context, as containing a full exposition
of the law on a question when the question did not fall to be answered in
that judgment.”
[Emphasis supplied]

The said view has been followed and reiterated subsequently by this Court
in a catena of cases regarding the distinction between ratio of a case and
obiter dicta.

In the case of Director of Settlement v. M.R. Apparao[13], this Court
extensively elaborated upon the principle of binding precedent. The
relevant para 7 is reproduced hereunder:
“7…Article 141 of the Constitution unequivocally indicates that the law
declared by the Supreme Court shall be binding on all courts within the
territory of India. The aforesaid Article empowers the Supreme Court to
declare the law. It is, therefore, an essential function of the Court to
interpret a legislation. The statements of the Court on matters other than
law like facts may have no binding force as the facts of two cases may not
be similar. But what is binding is the ratio of the decision and not any
finding of facts. It is the principle found out upon a reading of a
judgment as a whole, in the light of the questions before the Court that
forms the ratio and not any particular word or sentence. To determine
whether a decision has “declared law” it cannot be said to be a law when a
point is disposed of on concession and what is binding is the principle
underlying a decision. A judgment of the Court has to be read in the
context of questions which arose for consideration in the case in which the
judgment was delivered. An “obiter dictum” as distinguished from a ratio
decidendi is an observation by the Court on a legal question suggested in a
case before it but not arising in such manner as to require a decision.
Such an obiter may not have a binding precedent as the observation was
unnecessary for the decision pronounced, but even though an obiter may not
have a binding effect as a precedent, but it cannot be denied that it is of
considerable weight….”
[Emphasis supplied]

The decision of this Court in the case of Deena v. Union of India[14] is
also pertaining to the extension of ratio of a decision to cases involving
identical situations, be it factual or legal, but the same should not be
mechanically applied to the facts of a case, the relevant para 15 reads
thus:
“15. …It is permissible to extend the ratio of a decision to cases
involving identical situations, factual and legal, but care must be taken
to see that this is not done mechanically, that is, without a close
examination of the rationale of the decision which is cited as a precedent.
Human mind, trained even in the strict discipline of law, is not averse to
taking the easy course of relying on decisions which have become famous and
applying their ratio to supposedly identical situations….”
(emphasis supplied)

The binding effect of judgment of this Court vis-à-vis State and Central
Government circulars is considered in the case of CCE v. Ratan Melting &
Wire Industries[15], wherein it is held that the law laid down by this
Court is the law of the land. The law so laid down is binding on all
Courts/Tribunals and bodies and that the circulars issued by the State or
the Central Government cannot prevail over the law laid down by this Court.

From the facts of the present case and in the light of law laid down on the
question of payment of interest on solatium by the Constitution Bench in
Sunder’s case, it is amply clear that the said case is the binding
precedent. As far as Gurpreet Singh’s case is concerned, the question which
arose for its consideration was only with regard to the rule of
appropriation in execution of the Award passed under the provisions of the
Act. While answering the said question of law after referring to the
relevant provisions of the Act, at paragraph 54, it has incidentally made
some observation with regard to the payment of interest on solatium which
is only an obiter but not the binding precedent as that question did not
fall for consideration before the Constitution Bench. Therefore, in view
of the foregoing reasons, I hold that there is no need to advert to the
other judgments upon which reliance was placed by the learned counsel for
both the parties. For the reason that the binding precedent laid down by
the Constitution Bench of this Court in Sunder’s case on the question of
payment of interest on the solatium to the claimant/decree holder from the
date of entitlement as provided under the provisions of the Act.
Accordingly, I pass the following order:-

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

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

……………………………………………………………………J.
[V.GOPALA GOWDA]

New Delhi,
September 14, 2015

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

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

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

VERSUS

STATE OF KERALA
...RESPONDENT

J U D G M E N T

ADARSH KUMAR GOEL, J.

1. I have perused the proposed judgment prepared by my learned brother
V. Gopala Gowda, J. I am in respectful disagreement with the same. The
facts have been broadly mentioned in the judgment of Gopala Gowda, J. and
need not be repeated.

2. The award of the Reference Court is dated 19th November, 1992 which
did not expressly award interest on solatium. In the impugned order, the
High Court restricted the interest on solatium to the period post 19th
September, 2001, following the Constitution Bench judgment of this Court in
Gurpreet Singh vs. Union of India[16] directing as follows :

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

2. Learned counsel for the appellants relied upon Land Acquisition
Officer and Asstt. Commnr. Vs. Shivappa Mallappa Jigalur[17] laying down
as follows :

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

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

3. On the other hand, learned counsel for the State submitted that the
judgment in Shivappa (supra) does not apply to the present case
as the award dated 19th November, 1992 has attained finality. She also
relied upon Chimanlal Kuberdas Modi vs. Gujarat Industrial Development
Corpn.[18] laying down as follows :

“15. It is no doubt true that the execution court cannot examine the
reasons so as to go behind the decree but if in the award passed, the
Reference Court makes a specific reference to payment of interest but
without any such reference to the payment of interest on solatium and
merely payment of interest on compensation is granted, then it would be
open to the executing court to apply the ratio of Sunder and declare that
the compensation awarded includes solatium, and consequently, interest on
the amount could be directed to be deposited in execution. That being the
legal position as prevailing today, we cannot ignore the observations made
in para 54 of the aforesaid judgment in Gurpreet Singh and we order
accordingly that compensation awarded includes solatium and therefore
interest on the said amount shall be paid by the respondent in the pending
execution.”

To the same effect, she also relied upon Nadirsha Shapurji
Patel vs. Collector & LAO[19] and Chhanga Singh vs. Union of India[20].

4. So long as judgments relied upon by learned counsel for the State
stand, the appellant cannot succeed. Any contrary view can be taken only
by a larger Bench. It will thus be appropriate that the matter is placed
before a Bench of 3-Judges.

.…..….………………………………..J. [ ADARSH KUMAR GOEL ]
NEW DELHI
SEPTEMBER 14, 2015

REPORTABLE
IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

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

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

VERSUS

STATE OF KERALA ...RESPONDENT(S)

COMMON ORDER

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

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

..........................J.
(ADARSH KUMAR GOEL)
NEW DELHI,
SEPTEMBER 14, 2015
-----------------------
[1]

(2001) 7 SCC 211
[2] (2006) 8 SCC 457
[3] (1996) 2 SCC 71
[4] (1973) 1 SCC 109
[5] (1995) 3 SCC 208
[6] (1996) 2 SCC 570
[7] (1991) 4 SCC 195
[8] (2000) 10 SCC 470
[9] (1999) 2 SCC 89
[10] AIR 1968 SC 1481
[11] AIR 1961 SC 908
[12] AIR 1971 SC 530
[13] (2002) 4 SCC 638
[14] (1983) 4 SCC 645
[15] (2008) 13 SCC 1
[16]

(2006) 8 SCC 457
[17] (2010) 12 SCC 387
[18] (2010) 10 SCC 635
[19] (2010) 13 SCC 234
[20] (2012) 5 SCC 763

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

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

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

VERSUS

STATE OF KERALA …… RESPONDENT

J U D G M E N T

V. GOPALA GOWDA, J.

3. The brief facts of the case are stated hereunder:-

Being aggrieved by the said order of the Execution Court, the appellant
filed Civil Revision Petition (CRP) Nos. 196, 199, 201, 205 and 208 of 2009
before the High Court of Kerala.

On the other hand, in the cases of Mir Fazeelath Hussain (supra), Prem Nath
Kapur (supra) and Yadavrao P. Pathade (supra) this Court held that
interest is not claimable upon solatium.

Prior to Sunder’s Case (two Judge Bench), similar reference was made in
Kapur Chand Jain & Ors. v. State Government of H.P. & Ors[9] , the relevant
paras of which read thus :-

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

Further, in the said case, after adverting to Section 34 of the Act, this
Court held thus:-

The said view has been followed and reiterated subsequently by this Court
in a catena of cases regarding the distinction between ratio of a case and
obiter dicta.

……………………………………………………………………J.
[V.GOPALA GOWDA]

New Delhi,
September 14, 2015

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

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

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

VERSUS

STATE OF KERALA
...RESPONDENT

J U D G M E N T

ADARSH KUMAR GOEL, J.

2. Learned counsel for the appellants relied upon Land Acquisition
Officer and Asstt. Commnr. Vs. Shivappa Mallappa Jigalur[17] laying down
as follows :

To the same effect, she also relied upon Nadirsha Shapurji
Patel vs. Collector & LAO[19] and Chhanga Singh vs. Union of India[20].

.…..….………………………………..J. [ ADARSH KUMAR GOEL ]
NEW DELHI
SEPTEMBER 14, 2015

REPORTABLE
IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

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

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

VERSUS

STATE OF KERALA ...RESPONDENT(S)

COMMON ORDER

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

..........................J.
(ADARSH KUMAR GOEL)
NEW DELHI,
SEPTEMBER 14, 2015
-----------------------
[1]

(2006) 8 SCC 457
[17] (2010) 12 SCC 387
[18] (2010) 10 SCC 635
[19] (2010) 13 SCC 234
[20] (2012) 5 SCC 763

-----------------------
|REPORTABLE |

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