'Interest To Solatium A Must': Madras High Court Modifies Award Of Additional Compensation For Land Acquired By ONGC

While upholding the additional compensation per Are granted by a Reference Court under the Land Acquisition Act, 1894 (hereinafter 'Act') , Madras High Court has held that interest for Solatium is a mandatory component as per Section 28 of the Act.

The single Bench of Dr Justice G. Jayachandran was hearing a batch of appeal suits preferred by Oil and Natural Gas Corporation Limited (ONGC) under Section 54 of the Act.

The appeal was against the awards passed by an Additional District Judge in Puducherry pertaining to the ONGC's acquisition of over 5.46 hectares of land as separate slots in Akkaraivattam Village. It is pertinent to note that the said area was already under the lease of ONGC for 10 years preceding the land acquisition.

The court observed that the Act mandates to provide market value for the land acquired, whereas in the current case, the value was fixed only based on the government guidelines value and not the market value. Therefore, the Reference Court was right in fixing the land value at Rs 11, 272/- per Ares according to the High Court since it was the market value at the time when the Section 4(1) notification (initiation of acquisition proceedings) under the Act was issued in 1997.

With respect to the interest that must be paid on Solatium, the court observed that there was an omission from the Reference Court since Section 28 of the Act [Collector may be directed to pay interest on excess compensation] and Supreme Court Judgments mandate such interest even if the landowners have not preferred any cross objection or appeal for the interest portion on the solatium.

"...their right to seek interest to solatium in the appeal filed by the third party/Requisition Authority has to be entertained. The cardinal principle in land acquisition is, when a person is deprived of his Constitutional Right to hold property, he must be paid a just and fair compensation. Therefore, when the statute prescribes interest to compensation at a particular rate (i.e) 9% p.a., from the date of award, till the date of possession plus one year and at the rate of 15% thereafter, the same has to be applied on the solatium also, as mandated under Section 28 of the Land Acquisition Act, 1894", the court underscored.

Background

The said land was acquired by ONGC for the purpose of store-yard for drilling and other operational groups. According to ONGC, the Land Acquisition Officer awarded Rs 2,000/- to Rs 2.500/- per Are as compensation to the landowners based on the date value and the government guideline value as the market value. The Respondents in the current appeal suit demanded Rs 10,000/- per kuzhi and approached the Reference Court under the Act.

Before the Reference Court, the Land Acquisition Officer Contended that the plots acquired were wetlands not ideal for cultivation or housing for fixing the value. The nearby areas were also not a proper location for residential purposes and the potential for appreciation is NIL, the officer added before the Reference Bench.

The respondents in the current petition and the claimants before the reference court contended that since the land was under ONGC's lease for 10 years, it was being used without any further modification after acquisition. According to them, the land acquisition officers awarded a paltry sum as compensation by disregarding the factum that the land very adjacent to the acquired land fetched a price of Rs 1800/- per square feet (sq. ft.) as evident from its sale deed.

The reference court awarded the enhanced sum of compensation of Rs 11,272 along with interest from 07.01.1998 to 31.12.1999 along with 30% of solatium for the market value after deduction of 25% for development charges. As a result, ONGC filed the current appeal.

Interestingly, the Reference Court had not awarded interest on Solatium which is an essential part of compensation.  

Arguments Raised

Apart from the arguments raised before the Reference Court, the respondents in the current appeal/ original claimants also contended that the appeal suit was filed by the Requisition Authority which is a third party to the proceedings at the Reference Court and not the Acquisition Authority. Out of the 57 sale deeds examined by the Acquisition Officer, all were rejected except one which was used for fixing the market value at Rs 2000/- to Rs 2500 per Are.

The counsel acknowledged that there was no sale in the acquired land since it was under the lease of ONGC for 10 years. However, according to them, the Reference Court was justified in relying on sale deeds of adjacent lands just across the road and appreciating their value for fixation of the market value of the land acquired by ONGC. They also clarified that these sale deeds are documents referred in Sl.Nos.46 and 47 in the sale statistics considered by the Land Acquisition Authority and no separate proof is required for their veracity.

The respondents/ claimants relied on Cement Corporation of India Ltd. v. Purya, [2004(8) SCC 270] to establish that they have discharged the burden of proof regarding the market value of the acquired land and it was upon the requiring authority to part away with the land at guideline value lesser than the market value.

Moreover, according to the claimants, under Pondicherry Land Acquisition Rules, the Acquisition Authority alone is the necessary party before the Reference Court.

On the other hand, ONGC contended that the Requisition Authority was not made a party in the Reference Court and therefore, the award passed behind them has to be set aside.

ONGC also went on to question the sale deeds of adjacent land cited by the original claimants and argued that those sale deeds were not proved in the manner known to law. Hence, they cannot be relied upon for determining the market value. They also submitted that the industries mentioned in the claim petition are at quite a distance from the land acquired. They tried to establish that the awards passed/ market value fixed by the Land Acquisition Officer after examining 57 sale deeds were just.

Court's Observations

The court concluded that the award fixed by the Reference Court at Rs 11, 272/-  per Are based on the sale deeds of adjacent land was not arbitrary.

"...Obviously, the Acquisition Authority had rejected the sale deeds found in Sl.Nos.46 and 47 on the ground that they are the dry lands, whereas the land, which has now been acquired, has been classified as wet land. For industrial purpose, it is immaterial whether the land is wet or dry. Even otherwise it is a common knowledge that wet land is more valuable than the dry land, if it is used for agricultural purpose. In any event, the rejection of date sale shown in Sl.Nos.46 and 47 by the Acquisition Authority is unreasonable", the court noted.

The court also concluded that interest for solatium is a mandatory component under Section 28 of the Act and as declared by the Supreme Court. With the above modification, the court disposed of the appeal suits by ONGC.

Case Title: M/s Oil and Natural Gas Corporation Ltd., rep.by its Deputy General Manager v. Rajeswari & Ors and Connected Cases

Case No: Appeal Suit Nos.417 to 421 of 2010 and M.P.Nos.1/2010 (5 petitions)

Citation: 2022 LiveLaw Mad 90

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