Statutory interest under Section 34 is payable for compensation delayed by erroneous payment to another claimant.

The petitioners, Sh. Shardha Nand and his son Sh. Subhash Chand, claimed compensation for land acquired under an award of 1984–85.

Although possession of the acquired land was taken on 29 May 2006, the compensation relating to the petitioners’ share was mistakenly paid to another person, Sh. Sheoraj/Deepak, due to erroneous land-record entries.

The Land Acquisition Collector initially directed the petitioners to recover the amount from the wrongful recipient.

Following intervention by the Public Grievances Cell, the authorities recovered the amount and paid Rs. 2,48,141 and Rs. 2,48,142 to the two petitioners on 14 December 2017.

The petitioners thereafter sought statutory interest for the period during which the compensation remained unpaid.

The only surviving issue before the High Court was their entitlement to such interest.

Whether the petitioners were entitled to statutory interest under Section 34 of the Land Acquisition Act, 1894, when compensation was paid to them only on 14 December 2017 despite possession having been taken on 29 May 2006.

Whether the fact that the initial non-payment resulted from an inadvertent administrative error and that the amount was later recovered from the wrongful recipient disentitled the petitioners from claiming statutory interest.

The Court applied Section 34 of the Land Acquisition Act, 1894, which mandates payment of interest on compensation where it is not paid or deposited before taking possession of the acquired land.

The statutory interest is payable for the period of delay; the Court directed that interest be calculated at 9% per annum if released within three months, with the rate increasing to 15% per annum after expiry of that period.

The Court treated the delayed payment to the petitioners as a failure to pay compensation within the meaning of Section 34, notwithstanding that the amount had initially been paid to an unauthorized recipient.

Possession had been taken in 2006, but the petitioners received the compensation only in December 2017, resulting in a substantial period of non-payment.

The respondents’ explanation that the delay arose from an inadvertent error and that recovery proceedings had been initiated did not extinguish the petitioners’ statutory entitlement to interest.

The Court therefore distinguished the administrative recovery action against the wrongful recipient from the petitioners’ independent right to interest for delayed payment.

The Land Acquisition Collector was directed to release the interest within three months.

If released within that period, interest was to be calculated at 9% per annum; upon expiry of three months, the applicable rate would be 15% per annum.

The LAC was left free to proceed against the unlawful recipient in accordance with law.

The writ petition and pending applications were disposed of accordingly.