Section 28 interest runs from the acquisition award or permanent possession, not temporary possession.

The appeals were filed by ONGC under Section 54 of the Land Acquisition Act, 1894 read with Section 96 of the Code of Civil Procedure, challenging the common judgment dated 10 May 2013 of the Additional Senior Civil Judge, Kalol, in Land Acquisition Reference Cases Nos. 282–287 of 2012.

Lands situated at Village Pansar, District Gandhinagar, were acquired for ONGC’s “Sarkam No. K-439 (KLEH) Works.” Although temporary possession had been taken on 27 February 1986, the Section 4 notification was published on 12 June 1997, the Section 6 declaration on 20 March 1998, and the Special Land Acquisition Officer passed the award on 2 May 2000, fixing compensation at Rs. 13 per square metre.

The claimants sought references under Section 18 and later claimed Rs. 350 per square metre. Relying on a valuation determination concerning adjoining Village Dhamasana and applying 10% annual appreciation, the Reference Court fixed the market value at Rs. 343.80 per square metre and awarded additional compensation of Rs. 330.80 per square metre, together with solatium, additional amount under Section 23(1-A), and interest under Section 28 from the date of temporary possession.

ONGC challenged, principally contending that the Dhamasana award should not have been preferred over a sale deed from Pansar and that Section 28 interest could not commence from the date of temporary possession.

1. Whether the Reference Court was justified in determining the market value of the Pansar lands at Rs. 343.80 per square metre by relying on the award concerning adjoining Village Dhamasana and applying 10% annual appreciation, rather than relying on the Pansar sale deed at Exh. 22?

2. Whether interest under Section 28 of the Land Acquisition Act could be awarded from the date of temporary possession, i.e., 27 February 1986, or only from the date of the award/permanent possession?

3. Whether the claimants were entitled to solatium under Section 23(2) and the additional amount under Section 23(1-A) on the enhanced compensation?

The Court applied Section 54 of the Land Acquisition Act, 1894 and Section 96 CPC governing appeals from awards and decrees, and Sections 23(1), 23(1-A), 23(2) and 28 of the Land Acquisition Act concerning market value, the 12% additional amount, solatium, and interest on excess compensation.

In determining market value, a judicial determination relating to comparable land may be relied upon, and parity may be adopted where no cogent evidence establishes a material difference in location, quality or potentiality.

The Court also relied on the Supreme Court’s order dated 7 November 2017 in SLP (C) Nos. 8133–8136 of 2017, which restored the valuation of comparable Pansar lands at Rs. 343.80 per square metre.

Under Section 28, interest on excess compensation runs from the date of possession for permanent acquisition, or, where appropriate, from the award date; temporary occupation under the provisions relating to temporary acquisition is distinct and does not ordinarily trigger Section 28 interest.

The Court held that the Reference Court’s reliance on the Dhamasana award was not perverse. The appellant produced no cogent evidence showing a substantial difference in the quality, potentiality or location of Pansar and Dhamasana lands, making the principle of parity applicable.

The Pansar sale deed at Exh. 22 had already been considered by the Special Land Acquisition Officer and therefore did not displace the later comparable judicial valuation. Consistency was further supported by the Supreme Court’s decision concerning other Pansar lands, which confirmed a market value of Rs. 343.80 per square metre.

However, the Court distinguished temporary possession from possession for permanent acquisition and found that interest under Section 28 could not run from 27 February 1986. It accordingly shifted the commencement of interest to 2 May 2000, the date of the Special Land Acquisition Officer’s award, while maintaining the statutory benefits because the enhanced market value was upheld.

The enhanced compensation of Rs. 330.80 per square metre over and above the original Rs. 13 per square metre was confirmed.

The awards of 30% solatium under Section 23(2) and the 12% additional amount under Section 23(1-A) were also confirmed.

The direction granting Section 28 interest from 27 February 1986 was set aside; interest was instead ordered at 9% per annum for the first year from 2 May 2000 and thereafter at 15% per annum until realisation or deposit of the excess amount.

Any rent paid under the temporary acquisition arrangement was to be adjusted, and ONGC was directed to deposit the balance amount within eight weeks, subject to refund of any excess deposit.