Civil Court possesses no power to award interest beyond the statutory rate and manner prescribed under the Land Acquisition Act.

The respondent-claimants’ lands in Village Detroj, Ahmedabad, were acquired for the Narmada Canal project under the Land Acquisition Act, 1894 ("the Act")

An award under Section 11 was passed on March 19, 1996, and subsequently, the Reference Court enhanced compensation by Rs. 18/- on November 3, 1999

The State’s appeals against this enhancement were disposed of, and the State deposited Rs. 93,183/- on July 30, 2003

However, there was a shortfall of Rs. 33,751/- against the actual entitlement of Rs. 1,26,934/-

The claimants filed recovery applications for the remaining amount plus interest. The Reference Court allowed the applications, directing the State to pay the principal shortfall with 15% interest for 6,728 days (from 2003 to 2021)

The State challenged this order via the present writ petitions.

1. Whether the Reference Court erred in awarding 15% interest on the delayed payment of the remaining compensation amount under Section 28 of the Act

2. Whether the interest calculation provided by the Reference Court amounted to "interest upon interest" in violation of settled law

Section 28 of the Land Acquisition Act, 1894, which mandates interest on excess compensation at 9% p.a. for the first year from the date of possession, and 15% p.a. thereafter on the unpaid amount

Section 34 of the Act regarding interest on unpaid compensation

The Court relied on Union of India v. Budh Singh (1995) 6 SCC 233, which clarifies that the State’s liability for interest is strictly governed by the statute

Gurpreet Singh v. Union of India (2006) 8 SCC 458 regarding the calculation of interest in appropriation

The Court noted that even though the State deposited a portion of the compensation in 2003, there was an undisputed shortfall of Rs. 33,751/-

Under the proviso to Section 28, once a period of one year expires from the date of possession, any unpaid "excess" amount must carry interest at 15% p.a.

The Court rejected the State's argument that the calculation was "interest upon interest," finding instead that the Reference Court correctly applied the statutory rate to the principal amount that had remained unpaid for 6,728 days

Since the Act is a self-contained code, the statutory rates of 9% and 15% are mandatory and not subject to equitable variations

The delay by the claimants in filing for recovery did not extinguish their statutory right to interest on the unpaid principal

It held that the direction to pay the principal shortfall of Rs. 31,964/- along with 15% interest (Rs. 88,378/-) for the delayed period was just, proper, and in strict accordance with Section 28 of the Land Acquisition Act

The State is required to satisfy the recovery applications as ordered