Landowners are entitled to 15% additional interest as damages from dispossession until Section 4 notification.

The appellant’s land, comprising Khasra Nos. 589, 591, 593, 595, 604 and 605, measuring approximately 00-52-93 hectares, was used for construction of the Kargoli-Nallah-Mundu Road.

The State’s evidence and pleadings established that the road construction commenced between 1986–1988, was completed around 1990, and that possession of the land was taken by the Public Works Department in 1990.

However, the notification under Section 4 of the Land Acquisition Act, 1894 was issued only on 17.05.2007, followed by the declaration under Sections 6 and 7 on 28.05.2008.

On reference under Section 18, the District Judge enhanced the market value to Rs.15,000 per biswa for all categories and awarded statutory benefits, but granted interest at 9% per annum for one year and 15% per annum thereafter from the date of the Collector’s award, i.e., 27.08.2009.

Whether the appellant was entitled to additional interest by way of damages or use and occupation charges for the period between dispossession in 1990 and issuance of the Section 4 notification on 17.05.2007?

Whether statutory interest on the enhanced compensation was payable from the date of the Section 4 notification rather than from the date of the Collector’s award?

The Court applied the provisions of the Land Acquisition Act, 1894 relating to compensation and statutory benefits, including Section 23(1-A) concerning additional compensation, Section 23(2) concerning solatium, and the interest provisions governing payment of enhanced compensation.

It relied on Madishetti Bala Ramul (D) by LRs v. Land Acquisition Officer, (2007) 9 SCC 650, Tahera Khotoon v. Revenue Divisional Officer/Land Acquisition Officer, (2014) 13 SCC 613, and Balwan Singh v. Land Acquisition Collector, (2016) 13 SCC 412, which recognize that where the State takes possession before formal acquisition, the landowner may be compensated by additional interest at 15% per annum from dispossession until the Section 4 notification.

The Court also followed the coordinate Bench decisions in State of Himachal Pradesh v. Lekh Ram, Principal Secretary (PWD) v. Jai Gopal, and Tribhuwan v. State of Himachal Pradesh, applying the same principle to road-construction acquisitions.

It further held that statutory interest at 9% per annum for the first year and 15% per annum thereafter runs from the date of the Section 4 notification, not from the date of the Collector’s award.

The Court found that the appellant had proved dispossession in 1990 through the writ proceedings, the reference pleadings, his own deposition, and the testimony of the State’s witness.

The State had admitted that the road was constructed during 1986–1988 and that possession was taken by the Public Works Department; moreover, it had not specifically denied the appellant’s assertion that possession was taken in 1990.

Applying the Supreme Court’s precedents, the Court held that the State could not use the land for nearly seventeen years without compensating the owner.

Accordingly, additional interest at 15% per annum was treated as damages for the period from dispossession in 1990 until the Section 4 notification dated 17.05.2007.

Separately, because statutory interest is linked to the date of notification and not the date of the award, the Court corrected the Reference Court’s direction and calculated interest at 9% per annum for one year from 17.05.2007, followed by 15% per annum until payment or deposit.

The appellant was held entitled to additional interest by way of damages at 15% per annum from 1990, the date of actual dispossession, until 17.05.2007, the date of the Section 4 notification.

He was further held entitled to statutory interest at 9% per annum for one year from 17.05.2007 and thereafter at 15% per annum until actual payment or deposit of the compensation.

The remaining findings and components of the Reference Court’s award were left undisturbed, and the respondents were directed to calculate and deposit the amount before the Reference Court within three months.