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

The appellant’s land comprised in Khasra Nos. 520, 532 and 533, measuring approximately 0-38-42 hectares, was utilised by the State for construction of the Kargoli-Nallah-Mundu Road.

Although the road construction commenced between 1986 and 1988 and was completed in 1990, the Section 4 notification under the Land Acquisition Act, 1894 was issued only on 17 May 2007, followed by the declaration under Sections 6 and 7 on 28 May 2008.

The Land Acquisition Collector’s Award No. 20/2009 dated 27 August 2009 assessed compensation according to the classification of the land.

On reference under Section 18, the Additional District Judge enhanced the market value uniformly to Rs.15,000 per biswa and awarded statutory benefits, but granted interest at 9% per annum for one year and thereafter at 15% per annum from the date of the Collector’s award rather than from the date of the Section 4 notification.

The appellant challenged the award to the limited extent of non-award of damages/use and occupation charges for the period between dispossession and notification, and the commencement date of statutory interest.

Whether the appellant was entitled to additional interest by way of damages or use and occupation charges for the period from his dispossession in 1990 until publication of the Section 4 notification on 17 May 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 Land Acquisition Act, 1894, particularly Sections 23(1-A), 23(2) and the provisions governing interest on 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 establish that where the State takes possession before formal acquisition, the landowner may receive additional interest by way of damages, generally at 15% per annum, from the date of dispossession until the Section 4 notification.

The Court also followed State of Himachal Pradesh v. Lekh Ram, Principal Secretary (PWD) v. Jai Gopal, and Tribhuwan v. State of Himachal Pradesh, recognising the same entitlement where possession is taken for construction of a public road before acquisition proceedings.

It further applied the principle that statutory interest on compensation under the Act runs at 9% per annum for the first year from the date of the Section 4 notification and at 15% per annum thereafter until payment or deposit.

The Court found that the appellant’s assertion that possession had been taken in 1990 was supported by his pleadings, oral evidence, the State’s response in the earlier writ proceedings, and the testimony of the State’s own witness, who admitted that possession was taken by the Public Works Department when the road was constructed.

The State had not specifically denied the relevant averments in the reference petition; accordingly, the Court treated the material facts regarding dispossession and deprivation of use as established.

Applying the Supreme Court’s rule that a landowner must be compensated for the period during which the State enjoys possession without completing acquisition, the Court awarded additional interest at 15% per annum from 1990 until 17 May 2007.

Separately, because statutory interest is linked to the date of the preliminary notification and not the Collector’s award, the Court corrected the commencement date of interest on the enhanced compensation to 17 May 2007.

The appellant was held entitled to additional interest by way of damages at 15% per annum from 1990, when possession was taken, until 17 May 2007, the date of the Section 4 notification.

He was also held entitled to interest at 9% per annum for one year from 17 May 2007, followed by 15% per annum until actual payment or deposit of the compensation.

The remaining portions of the award were affirmed, and the respondents were directed to calculate and deposit the amount before the Reference Court within three months.