IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

Special Civil Application Nos. 5728, 5790 to 5805 of 2017

Decided On: 25.09.2017

Appellants: Land Acquiring Body Chief Executive Authority and Ors.

Vs.

Respondent: Rameshbhai Shankarbhai Patel and Ors.

Hon'ble Judges/Coram:

C.L. Soni, J.

Counsels:

For Appellant/Petitioner/Plaintiff: R.R. Marshall, Senior Advocate and Aum M. Kotwal, Advocate

For Respondents/Defendant: Sanjay M. Amin, Caveator

Subject: Land Acquisition

Catch Words

Mentioned IN

Acts/Rules/Orders:

Code of Civil Procedure, 1908 (CPC) - Order XXI Rule 1; Code of Civil Procedure, 1908 (CPC) - Order
XXI Rule 30; Code of Civil Procedure, 1908 (CPC) - Section 2 (2); Code of Civil Procedure, 1908 (CPC) -
Section 2(2); Constitution Of India - Article 226, Constitution Of India - Article 227; Indian Contract
Act, 1872 - Section 60; Land Acquisition Act, 1894 - Section 11, Land Acquisition Act, 1894 - Section
18, Land Acquisition Act, 1894 - Section 23, Land Acquisition Act, 1894 - Section 23 (1), Land
Acquisition Act, 1894 - Section 23 (1-A), Land Acquisition Act, 1894 - Section 23 (2), Land Acquisition
Act, 1894 - Section 23(1), Land Acquisition Act, 1894 - Section 23(1-A), Land Acquisition Act, 1894 -
Section 23(1A), Land Acquisition Act, 1894 - Section 23(2), Land Acquisition Act, 1894 - Section 26,
Land Acquisition Act, 1894 - Section 28, Land Acquisition Act, 1894 - Section 31, Land Acquisition Act,
1894 - Section 34, Land Acquisition Act, 1894 - Section 4, Land Acquisition Act, 1894 - Section 4 (1),
Land Acquisition Act, 1894 - Section 4(1), Land Acquisition Act, 1894 - Section 54

Cases Referred:

Gurpreet Singh vs. Union of India (UOI) MANU/SC/4736/2006; Mathunni Mathai vs. Hindustan
Organic Chemicals Limited and another MANU/SC/0298/1995; Meka Venkatadri Appa Row Bahadur
Zemindar Garu and Ors. vs. Raja Parthasarathy Appa Row Bahadur Zemindar Garu
MANU/PR/0102/1921; Rai Bahadur Seth Nemichand, since deceased (now represented by Seth
Teekam Chand) vs. Seth Radha Kishen (since deceased) and others MANU/PR/0133/1921; Meghraj
and Ors. vs. Mst. Bayabai and Ors. MANU/SC/0368/1969; Prem Nath Kapur and Anr. vs. National
Fertilizers Corpn. of India Ltd. and Ors. MANU/SC/1097/1996

Citing Reference:

Mentioned 

 3

Relied On 

 3

Case Note:

Land Acquisition - Enhancement of compensation - Present petitions filed against order whereby
Petitioners were liable to pay enhanced amount of compensation to Respondents - Whether
Respondents were entitled to appropriate enhanced amount as compensation - Held, Respondents
could not be permitted to appropriate entire amount only towards interest accrued on
compensation - When Court finds that Respondents could not be permitted to appropriate
enhanced compensation deposited by Petitioners only towards interest on compensation but could
be permitted towards different heads, fresh calculation as to amount to be recovered including
interest by Respondents from Petitioners as per award made by Reference Court should be required
to be made - Impugned order was set aside - Matter was remitted to Executing Court - Petitions
partly allowed. [15],[17] and[18]

Disposition:
Petition Partly Allowed

JUDGMENT

C.L. Soni, J.

1. The petitioners who are the Land Acquiring Body and Land Acquisition Officer respectively have
preferred the present petitions under Articles 226 and 227 of the Constitution of India against the
orders dated 17.02.2017 passed by the learned Auxiliary Chamber Judge, Court No. 25, City Civil
Court, Ahmedabad in different execution petitions being Execution Petitions No. 496 of 2012, 514 of
2015, 554 of 2015, 530 of 2015, 515 of 2015, 516 of 2015, 531 of 2015, 1255 of 2016, 519 of 2015,
521 of 2015, 1118 of 2016, 1120 of 2016, 1119 of 2015, 520 of 2015, 1121 of 2016, 518 of 2015, 517
of 2015 filed by the respondents of each petition respectively.

2. Since, common question as to the manner of appropriation of the amount of compensation

awarded under the Land Acquisition Act, 1894 (the Act) is involved in these petitions, they are heard
and decided together.

3. Some relevant facts need to be first stated. The lands of the respondents were acquired for
petitioner No. 1 which is Urban Development Authority. The Land Acquisition Officer passed award
on 12.05.1988 in Land Acquisition Case No. 3 of 1986 awarding compensation by fixing market price
of the land at the rate of Rs. 9/- per square meter. Being dissatisfied with the award of the Land
Acquisition Officer, the respondents sought references under Section 18 of the Act. The Reference
Court partly allowed the references and held that the respondents (to be referred as "the
claimants") were entitled to get Rs. 69/- per square meter as an additional compensation for their
acquired lands together with 30% solatium, 9% interest per annum for a period of one year from the
date of taking over the possession of the acquired lands and, thereafter 15% interest per annum till
entire amount was fully paid or deposited by the petitioners. The claimants were also held entitled
to get 12% increase on the market value of the acquired lands for the period from the date of
notification under Section 4 of the Act i.e. from 12.02.1986 to the date of the award passed by the
Land Acquisition Officer under Section 23(1-A) of the Act. Against the common award made by the
Reference Court, First Appeals No. 459 of 1999 to 478 of 1999 were preferred before this Court
which came to be dismissed by this Court vide order dated 24.03.1999 against which, the petitioners
preferred different Civil Appeals before the Hon'ble Supreme Court wherein interim applications
were filed by the petitioners. The Hon'ble Supreme Court passed the following orders on 31.07.2000
on interim applications.

"Heard learned counsel for the parties. Appellant is directed to deposit 25% of the enhanced
compensation within two months from today with the liberty to the claimants to withdraw the same
on furnishing security to the satisfaction of the trial Court."
4. At the final hearing of above Civil Appeals, the Hon'ble Supreme Court set aside the award made
by the Reference Court, as also the judgment and order rendered by this Court and remitted the
matters to the Reference Court to restore to file in their original numbers and to be dealt with afresh
in accordance with law after affording opportunity to the parties. While remitting the matters to the
Reference Court, vide order dated 09.10.2002, the Hon'ble Supreme Court issued the following
directions in concluding paragraph of its order.

"Pending re-determination of the question of compensation by the Reference Court, no recovery

proceedings shall be taken against the claimants - respondents and the rights of both parties in this
respect shall thereafter abide by the determination made by the Reference Court."

5. It was, thereafter, the Reference Court decided the references afresh and rendered its common
award on 12.07.2005 whereunder the claimants are again held entitled to additional compensation
@ Rs. 69/- per square meters of land with 30% solatium, 9% interest per annum for a period of one
year from the date of taking over of the possession of the acquired lands and, thereafter, 15%
interest for further period with 12% increase under Section 23(1-A) of the Act. The petitioners
challenged such award in First Appeal Nos. 1304 to 1323 of 2007 before this Court but failed as this
Court vide its common order dated 19.03.2007 dismissed all the appeals. There is no further
challenge made by the petitioners.

6. To recover the different amounts under the common award made by the Reference Court and
confirmed by the High Court, the respondents filed Execution Petitions as referred above. As per the
calculation in their Execution Petitions, the respondents have shown appropriation of amount of
25% deposited by the petitioners towards interest to arrive at the total amount now due and
payable by the petitioners as per the award. By impugned orders learned Judge has directed the
petitioners to pay the amounts respectively mentioned in the impugned orders with interest at the
rate of 15% from the date of filing of the Execution Petitions and to issue warrant of attachment of
movable property under Order XXI Rule 30 of the Civil Procedure Code if the petitioners fail to pay
the amounts under the impugned orders.

7. Learned advocate Mr. Marshall appearing with learned advocate Mr. Kotwal for the petitioners
submitted that the petitioners are not required to pay any amount towards interest as calculated by
the respondents. Mr. Marshall submitted that under the interim direction issued by the Hon'ble
Supreme Court in appeals preferred by the petitioners, the petitioners deposited 25% of the
enhanced compensation, and, therefore, it was not open to the respondents to decide to first
appropriate the same towards the interest liability. Mr. Marshall submitted that in their appeals
before the Hon'ble Supreme Court, the petitioners succeeded and award made by the Reference
Court, as also the judgment and order made by the High Court in appeals were set aside, however,
the petitioners were asked not to recover the amount deposited by them pursuant to the interim
order made by the Hon'ble Supreme Court and, therefore, in no circumstances, 25% amount
deposited by the petitioners could be received as interest by the respondents. Mr. Marshall
submitted that in fact, what the petitioners deposited was more than 25% of the enhanced
compensation which would show it was towards principal amount of compensation awarded by the
Reference Court and not towards the interest awarded on compensation. Mr. Marshall submitted
that such amount deposited under the interim order of the Hon'ble Supreme Court when withdrawn
by the respondents without any objection or protest or without stating that they were receiving the
amount towards interest, now, after long time of more than five years, the respondents cannot
claim interest on the full amount of compensation and the petitioners cannot be saddled with the
liability to pay double interest. Mr. Marshall submitted that the petitioners had obeyed the order of
the Hon'ble Supreme Court and deposited the amount towards compensation and if there was any
doubt on the part of the respondents for appropriation of such amount, the respondents were
required to get clarification from Hon'ble Supreme Court. Mr. Marshall submitted that in absence of
any clarification, 25% amount deposited by the petitioners pursuant to the interim order of the
Hon'ble Supreme Court is to be taken as deposit towards the compensation and the respondents
cannot appropriate such amount towards the interest.

8. Learned senior advocate Mr. Marshall has relied on the following judgments.

"1. Gurpreet Singh v. Union of India, reported in MANU/SC/4736/2006 : 2006 (8) SCC 457

2. Mathunni Mathai v. Hindustan Organic Chemicals Limited and another, reported in

MANU/SC/0298/1995 : AIR 1995 SC 1572"

9. As against the above arguments, learned advocate Mr. Amin appearing for the respondents in all
the matters submitted that as per the interim order made by the Hon'ble Supreme Court dated
31.07.2000, the petitioners were required to deposit 25% of enhanced compensation within two
months, however, they did not such make deposit two months, but deposited the same at their own
convenience and, therefore, deposit of 25% amount could not be said to be made as per the interim
order of the Hon'ble Supreme Court. Mr. Amin submitted that as per the principles of law settled by
the Hon'ble Supreme Court as regards appropriation of the amount deposited by the Acquired Body
or the Land Acquisition Officer, if full amount as awarded is not deposited, it is always open to the
claimants to first appropriate the amount deposited towards the interest accrued on compensation.
Mr. Amin submitted that since full amount of compensation as per the award was not deposited, the
respondents were entitled to appropriate 25% amount deposited by the petitioners first towards
their interest liability and accordingly the respondents calculated final amount now due and payable
by petitioners and sought recovery by execution proceedings. Mr. Amin submitted that the
Execution Petitions are filed within a period of limitation, and the petitioners who are responsible for
not paying full amount cannot take the plea of delay. Mr. Amin submitted that the Hon'ble Supreme
Court when made interim order did not direct the respondents to receive the amount towards
principal compensation nor even the petitioners before depositing 25% amount of compensation
gave any intimation to the respondents that they were depositing towards the principal component
of the compensation and, therefore, the respondents were entitled to receive the 25% amount
deposited by the petitioners towards accrued interest. Mr. Amin submitted that while finally
disposing of the Civil Appeals also, the Hon'ble Supreme Court has not given any direction as to how
the amount of 25% deposited by the petitioners was to be appropriated and, therefore, the right of
the respondents to appropriate amount of 25% deposited by the petitioners towards interest cannot
be taken up. Mr. Amin submitted that if this Court finds that there is a mistake in calculation, it could
be corrected by remanding the matters to the Executing Court, however, on principle of law settled
by the Hon'ble Supreme Court, the respondents will remain entitled to appropriate the amount
deposited by the petitioners towards interest in absence of any specific direction issued by the
Hon'ble Supreme Court or in absence of any intimation by the petitioners to the respondents to
receive the amount only towards principal compensation.

10. Mr. Amin has also relied on the following the judgment in the case of Gurpreet Sing (supra).

11. The Court having heard learned advocates for both the sides finds that as per the interim order
dated 31.07.2000 made by the Hon'ble Supreme Court, the petitioners were to deposit 25% of the
enhanced compensation within a period of two months. However, it could not be disputed that such
amount was deposited by the petitioners after the period of two months i.e. after some delay, on
13.10.2000. Though the Hon'ble Supreme Court by interim order dated 31.07.2000 directed the
petitioners to deposit 25% of the enhanced compensation and also permitted the claimants to
withdraw such amount on furnishing security, however, when the Civil Appeals were finally disposed
of, it was directed that till redetermination of the question of compensation, no recovery
proceedings shall be taken against the claimants and the rights of both the parties in respect thereof
were left to be abided by determination made by the Reference Court.

12. Thus, no final direction was given as to the manner in which the amount deposited was to be
appropriated, when the Civil Appeals were finally disposed of by the Hon'ble Supreme Court. But
rights of both the parties to the said amount were to abide by determination of the Reference Court.
As per the award made by the Reference Court, on fresh consideration, there is no change in the
enhanced compensation awarded and, therefore, the respondents became entitled to the amount
deposited by the petitioners. But the question is whether the respondents are entitled to
appropriate 25% amount deposited towards the interest liability of the petitioners. The method of
calculation of amounts to be recovered is similar in all Execution Petitions and is taken from first
matter which is as under:-

13. From the above calculation, it appears that the amount of 25% of the enhanced compensation
deposited in each case by the petitioners has been appropriated by the respondents towards
interest accrued on the compensation.

14. On the question as to the appropriation of the amount of the compensation awarded under the
Act, the following judgments need to be first referred.
"(a) In the case of Mathunni Mathai v. Hindustan Organiz Chemicals Ltd. and others, reported in
MANU/SC/0298/1995 : (1995) 4 SCC 26, the Hon'ble Supreme Court has held and observed in paras-
3, 4 and 5 as under.

3. The right of the decree-holder to appropriate the amount deposited by the judgment-debtor,
either in Court or paid outside, towards interest and other expenses is founded both on fairness and
necessity. The Courts and the law have not looked upon favourably were the judgment-debtor does
not pay or deposit the decretal amount within the time granted as one cannot be permitted to take
advantage of is own default. Therefore, the normal rule that is followed is to allow the deposit or
payment if it is in part to be adjusted towards the interest due etc. In Meka Venkatadri Appa Rao
Bahadur Zamindar Garu v. Raja Parthasarathy Appa Rao Bahadur Zamindar Garu,
MANU/PR/0102/1921 : AIR 1922 PC 233 the rationale was explained thus (at p.234):-

"There are moneys that are received without a definite appropriation on the one side or on the
other, and the rule which is well-established in ordinary cases is that in those circumstances the
money is first applied in payment of interest and then when that is satisfied in payment of the
capital."

But the law or even the agreement entered between the parties may provide for adjustment of
payment in a particular manner. Section 60 of the Contract Act provides that,

"60. Where the debtor has omitted to intimate and there are no other circumstances indicating to
which debt the payment is to be applied, the creditor may apply it, at his discretion to any lawful
debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the
law in force for the time being as to the limitation of suits."

4. The words of the Section are clear. It has been construed broadly by the Courts. The right of the
creditor was further explained judicially in Rai Bahadur Seth Nemichand v. Seth Radha Kishen,
MANU/PR/0133/1921 : AIR 1922 PC 26 and it was held that the creditor was not bound to accept a
payment on condition of the judgment-debtor. For the decrees passed by Courts, the provisions was
made in unamended Order XXI Rule 1 prior to 1976 and it was provided that the amount be
deposited in the Court whose duty it was to execute the decree. It was further provided by sub-rule
(2) that where any payment was made under clause (a) of sub-rule (1) notice of such payment was
to be given to the decree-holder. It was this rule which was construed in Meghraj's case,
MANU/SC/0368/1969 : AIR 1970 SC 161, (supra). The Court held that even though the judgment-
debtor while depositing decretal amount from time to time stated that payments were being made
towards the principal due but in absence of any evidence that the decree-holder was informed
about the nature of deposit or the decree-holder appropriated it towards the principal, the ordinary
rule applied and the payments by the judgment-debtor would be appropriated towards interest and
cost as held in Meka Venkatadri case, (MANU/PR/0102/1921 : AIR 1922 PC 233)(supra). It may now
be seen if the principle laid down in this decision stands diluted by amendment of Rule 1. The
relevant portion of the amended Rule reads as under:-
"O, XXI, R.1.- Modes of paying money under decree:- (1) All money, payable under a decree shall be
paid as follows, namely:-

(a) by deposit into the Court whose duty it is to execute the decree, are sent to that Court by postal
money order or through a bank; or

(b) out of Court, to the decree-holder by postal money order or through a bank of by any other
mode wherein payment is evidenced in writing; or

(c) otherwise, as the Court which made the decree, directs.

(2) Where any payment is made under Clause (a) or clause (c) of sub-rule (1), the judgment-debtor
shall give notice thereof to the decree-holder either through the Court or directly to him by
registered post, acknowledgment due.

(3)* * * * *

(4) On any amount paid under clause (a) or clause (c) of sub-rule (1), interest, if any, shall cease to
run from the date of service of the notice referred to in sub-rule (2)."

The amended sub-rule (2) removes the doubt if there was any that the judgment-debtor is not
absolved of the obligation of informing the decree-holder by written notice even in respect of
deposit in Court either directly or by registered post. The purpose of addition of the expression,
'either through Court directly or by registered post acknowledgment due' is that the judgment-
debtor should not only give notice of payment but he must ensure that the decree holder has been
served with the notice. The ratio laid down in Meghraj case, (MANU/SC/0368/1969 : AIR 1970 SC
161) (supra) applies now with greater rigour. The reason for the rule both in the unamended and
amended provision appears to be that if the judgment debtor intends that the running of interest
should cease then he must intimate in writing and ensure that it is served on the decree-holder. Sub
rules (4) and (5) added in 1976 to protect the judgment-debtor provide for ceasure of interest from
the date of deposit or payment. But the cessation of interest under sub-rule (4) takes place not by
payment alone but from the date of service of the notice referred to in sub-rule (2). It is not
necessary for purposes of this case to decide whether the creditor was bound to appropriate the
amount towards principal once it was deposited in Court and intimation of the deposit was served
on the decree-holder as it does not appear that the respondent ever served any notice on the
appellant about the deposit. It is true that the amount was deposited in January, 1988. But in
absence of any intimation as required by sub-rule (2) of R.1. of O.21 and indication of manner of
appropriation, the payment could not be deemed to have been appropriated towards principal
unless the decree-holder admits it to be so. The reasoning of the High Court that since the deposit
was made in pursuance of order of this Court it would be deemed that the deposit was towards
principal does not appear to be correct. Factually, there was no direction to deposit. The Court only
granted an interim order in respect of escalation. Therefore, the judgment-debtor was bound to
deposit the decretal amount in accordance with law. And that is provided for by Order XXI, Rule I of
the Civil Procedure Code. But mere deposit in absence of any notice and intimation that it was being
deposited towards principal it was for the decree-holder to appropriate it towards the dues. That is
what has laid down in Meghraj case.

5. There is yet another reason for setting aside the order of the High Court. Once the appeal was
decided and it was held that the amount awarded under the Amended Act, 1984 did not suffer from
any error of law except the amount under section 23(1A), the parties were relegated to the same
position as they were on the date when the interim order was granted. In other words, the amount
due was to be paid on the principal amount and it cannot be urged that since the respondent had
deposited the amount the principal stood paid and, therefore, no interest or solatium could be
calculated on the principal amount.

(b) In the case of Prem Nath Kapur and another v. National Fertilizers Corpn. of India Limited and
others, reported in MANU/SC/1097/1996 : (1996) 2 SCC 71, while taking slightly different view on
applicability of the Order XXI Rule 1 of the Civil Procedure Code to land acquisition cases under the
Act, the Hon'ble Supreme Court has held and observed in paras-8, 12 and 13 as under.

8. A reading of the above provisions would establish that the award consists of (a) the compensation
determined under Section 23 (1), (b) solatium on the market-value determined under Section 23 (2),
as additional sum for compulsory nature of acquisition, and (c) payment of interest on the amount of
compensation under Section 11, on excess or part thereof under Section 26 awarded by court from
the date of taking possession till date of payment or deposit into the court at the rates specified
under the respective provisions of Section 34 and 28. Under Section 23 (1-A), additional amount at
12 per centum per annum shall be paid or deposited from the date of notification under Section 4
(1) till date of award or taking possession of land, whichever is earlier. The additional amount under
Section 23 (1-A) and solatium under Section 23 (2) are in addition to the compensation under
Section 11 and excess amount determined under Section 23 (1) read with Section 26 or Section 54.
Equally, under Section 26 of the Act award is deemed to be a decree under Section 2 (2) of the CPC
for the excess amount determined by the Court; this would be so proprio vigore, when the appellate
court under Section 54 has further enhanced the compensation.

12. It is clear from the scheme of the Act and the express language used in Section 23 (1) & (2), 34
and 28 and now Section 23 (1-A) of the Act that each component is a distinct and separate one.
When compensation is determined under Section 23 (1), its qualification, though made at different
levels, the liability to pay interest thereon arises from the date on which the qualification was so
made but, as stated earlier, it relates back to the date of taking possession of the land till the date of
deposit of interest on such excess compensation into the court. Equally, when the appellate court
under Section 54 further enhances the compensation, interest is payable on such excess amount
determined under Section 23 (1). In other words, the liability to pay interest arises as and when the
compensation is further enhanced and liability to pay interest would be co-terminus with the
payment of the amount under Section 34 from the date of taking possession till date of payment or
deposit or under Section 28 or Section 54 from the date of taking possession till the date of deposit
of such excess amount into the court. The liability to pay interest is only on the excess amount of
compensation determined under Section 23(1) and not on the amount already determined by the
Land Acquisition Officer under Section 11 and paid to the party or deposited into the court or
determined under Section 26 or Section 54 and deposited into the court or on solatium under
Section 23(2) and additional amount under Section 23(1-A).

13. Thus we hold that the liability to pay interest on the amount of compensation determined under
Section 23 (1) continues to subsist until it is paid to the owner or interested person or deposited into
court under Section 34 read with Section 31. Equally, the liability to pay interest on the excess
amount of compensation determined by the Civil Court under Section 26 over and above the
compensation determined by the Collector/Land Acquisition Officer under Section 11 subsists until it
is deposited into court. Proprio vigore in case of further enhancement of the compensation on
appeal under Section 54 to the extent of the said enhanced excess amount or part thereof, the
liability subsists until it is deposited into court. The liability to pay interest ceases on the date on
which the deposit into court is made with the amount of compensation so deposited. As held earlier,
the computation of the interest should be calculated from the date of taking possession till date of
payment or deposit in terms of Section 34 or deposit into court in terms of Section 28, as the case
may be.

(c) However, in the case of Gurpreet Singh (supra), while approving the ratio in the decision
rendered in Prem Nath Kapur (supra), the Hon'ble Supreme Court with slight modification has held
and observed in paras-39 to 53 as under:

39. Mathunni Mathai v. Hindustan Organic Chemicals Ltd. and Ors. [MANU/SC/0298/1995 : (1995) 3
SCR 765] was a case of execution of an award decree under the Land Acquisition Act. The question
that was involved in that case was whether interest ceased to run on the amount under the award
decree being deposited even without notice of deposit being issued to the decree-holder. The High
Court had held in that case that where deposit was made in pursuance of the order passed by the
Court, it was not necessary for the judgment-debtor to specify the manner in which the amount
should be appropriated. Notice of deposit was also not mandatory. This Court while considering
Order XXI Rule 1 of the Code, as it existed prior to the amendment by Act 104 of 1976, after referring
to the decisions of the Privy Council, held that interest will cease to run only on notice of the deposit
being given and not from the date of the deposit. This Court further held that after the amendment
of Order XXI, Rule 1 of the Code by Act 104 of 1976, this position that only upon service of notice
interest would cease to run, got reinforced and that the High Court was in error in rejecting the
argument that in the absence of notice of deposit being given, there was no cessation of the running
of interest. This Court specifically did not decide any other question. For, this Court stated,

"It is not necessary for purposes of this case to decide whether the creditor was bound to
appropriate the amount towards principal once it was deposited in court and intimation of the
deposit was served on the decree-holder as it does not appear that respondent ever served any
notice on the appellant about the deposit."

40. There was no contention in that case based on the scheme of the Land Acquisition Act and the
Court also did not consider the question whether there was any deviation from the normal rules of
appropriation by virtue of the provisions of the Land Acquisition Act. In fact, that case was
concerned more with the question whether notice of deposit was necessary before interest ceased
to run, rather than the mode or manner in which the amount deposited was to be appropriated
even though this Court did observe that in the absence of any intimation as required by sub-rule (2)
of Order XXI, Rule 1 of the Code and indication of the manner of appropriation, the payment could
not be deemed to have been appropriated towards principal unless the decree-holder admits it to
be so.

41. The question of appropriation in the context of the Land Acquisition Act and the relevant
provisions therein specifically came up before a Bench of three-Judges of this Court in Prem Nath
Kapur and Anr. v. National Fertilizers Corporation of India Ltd. and Ors. (supra). In that case, on the
award being made, the Collector had paid the compensation including solatium and interest
determined under the award. When the High Court enhanced the compensation, the enhanced
compensation also was deposited. When some further amounts were awarded by the High Court on
the basis of damages for severance and subsequently, it enhanced the solatium and interest and the
additional amount payable under Sections 23(2), 28 and 23(1-A) as amended, the decree-holder laid
execution, firstly, after appropriating the amount received towards costs, then towards interest on
the total compensation and solatium and then towards the land value. Though the executing court
allowed the claim, the High Court set aside that order and remanded the execution case for fresh
disposal according to the directions contained in that order. The directions issued by the High Court
were challenged in the appeal before this Court.

42. When the appeal came up, it was argued on behalf of the decree-holder that the question
involved had been decided in Mathunni Mathai v. Hindustan Organic Chemicals Ltd. and Ors. (supra)
and that nothing remained to be decided. It was contended that the decree-holder was entitled to
appropriate the costs from the principal amount of compensation, as also the interest on the total
amount of compensation from the date of taking possession till date of payment as determined by
the Collector as well as, as determined by the High Court. The judgment creditor was entitled to
appropriate the principal amount deposited by the Collector in the first instance towards the costs,
then towards interest on the total amount and the balance amount and interest accrued thereon,
and recover the balance in execution. The High Court was, therefore, not right in interfering with the
order of the executing court. This Court did not accede to the submission that the question was
concluded by the decision in Mathunni Mathai v. Hindustan Organic Chemicals Ltd. and Ors. (supra).
This Court posed two questions. When does the liability of the State to pay interest cease? Whether
the owner of the land is entitled to appropriate from the amount deposited, the amounts towards
costs first and then towards interest and then towards the principal amount and again claim interest
on the total amount?

43. This Court made a detailed survey of the relevant provisions of the Land Acquisition Act and after
summing up the position held: (Prem Nath Kapur case, SCC p.76, para 8)
"8. A reading of the above provisions would establish that the award consists of (a) the
compensation determined under Section 23(1), (b) solatium on the market value determined under
Section 23(2), as additional sum for compulsory nature of acquisition, and (c) payment of interest on
the amount of compensation under Section 11, on excess or part thereof under Section 26 awarded
by court from the date of taking possession till date of payment or deposit into the court at the rates
specified under the respective provisions of Sections 34 and 28. Under Section 23(1-A), additional
amount at 12 per centum per annum shall be paid or deposited from the date of notification under
Section 4(1) till date of award or taking possession of land, whichever is earlier. The additional
amount under Section 23 (1-A) and solatium under Section 23(2) are in addition to the
compensation under Section 11 and excess amount determined under Section 23(1) read with
Section 26 or Section 54. Equally, under Section 26 of the Act award is deemed to be a decree under
Section 2(2) of the CPC for the excess amount determined by the Court; this would be so proprio
vigore, when the appellate court under Section 54 has further enhanced the compensation."

44. Section 34 of the Act fastens liability on the Collector to pay interest on the amount of
compensation determined under Section 23(1) with interest from the date of taking possession till
date of payment or deposit into the court to which reference under Section 18 would be made. On
determination of the excess amount of compensation, Section 28 empowers the court, if it was
enhancing the compensation awarded by the Collector, to award interest on the sum in excess of
what the Collector had awarded as compensation. The award of the court may also direct the
Collector to pay interest on such excess or part thereof from the date on which he took possession
of the land to the date of payment of such excess into court at the rates specified thereunder. The
Court Stated: (Prem Nath Kapur case, SCC p. 77, para-10)

"In other words, Sections 34 and 28 fasten the liability on the State to pay interest on the amount of
compensation or on excess compensation under Section 28 from the date of the award and decree
but the liability to pay interest on the excess amount of compensation determined by the Court
relates back to the date of taking possession of the land to the date of the payment of such excess
into the court."

45. The Court concluded: (Prem Nath Kapur case, SCC p. 78, para-12)

"12. It is clear from the scheme of the Act and the express language used in Sections 23(1) and (2),
34 and 28 and now Section 23(1-A) of the Act that each component is a distinct and separate one.
When compensation is determined under Section 23(1), its quantification, though made at different
levels, the liability to pay interest thereon arises from the date on which the quantification was so
made but, as stated earlier, it relates back to the date of taking possession of the land till the date of
deposit of interest on such excess compensation into the court....The liability to pay interest is only
on the excess amount of compensation determined under Section 23(1) and not on the amount
already determined by the Land Acquisition Officer under Section 11 and paid to the party or
deposited into the Court or determined under Section 26 or Section 54 and deposited into the court
or on solatium under Section 23(2) and additional amount under Section 23(1-A)."

46. This Court ultimately held that the right to make appropriation is indicated by necessary
implication, by the award itself as the award or decree clearly mentions each of the items. When the
deposit is made towards the specified amounts, the decree-holder is not entitled to deduct from the
amount of compensation towards costs, interest, additional amount under Section 23(1-A) with
interest and then to claim the total balance amount with further interest. Referring to Meghraj
(supra), this Court held that the ratio of that decision was inapplicable to a case of execution under
the Land Acquisition Act since the provisions of the Act were inconsistent with Order XXI, Rule 1.
Referring to Mathunni Mathai (supra), this Court noticed that the provisions of the Act were not
brought to the attention of the Court and a decision invited thereon and hence the observations
made therein could not govern a case of execution of an award decree under the Land Acquisition
Act.

47. On the scheme of the Act, the above conclusions, with respect, are justified. But, it is argued that
when a reference court or the appellate court awards enhanced compensation, the operative award
is that of the court and going by the doctrine of merger also, the operative decree is that of the
appellate court. Thus, the award of the ultimate Court, in the given case, would be the amount
payable for acquisition and it is open to the decree-holder to proceed to calculate the amount due
to him on that basis and seek a re-appropriation based on such a calculation and reckoning the
payment or payments already made. In other words, it is contended that a recalculation and
adjustment would be called for every time there is an enhancement. In answer, it is contended that
the Act provides for determination of compensation at different stages, the stage of the award, the
stage of reference and the stage of appeal and provides for payment of interest and solatium based
on the award and thereafter, only on the excess compensation awarded and in such a situation, a
reopening of the satisfaction recorded at the earlier stage is not contemplated or warranted. It is
submitted that the ratio of Prem Nath Kapur and Anr. v. National Fertilizers Corporation of India Ltd.
and Ors. (supra) also supports this position and that in the context of the relevant provisions, the
position adopted in that decision on this aspect deserves acceptance.

48. We may say with respect that the decision in Mathunni Mathai (supra) does not answer the
question. That case was concerned with the question of the point of time of cessation of interest,
whether it would be the date of deposit or whether the date of notice of the deposit. It did not
specifically refer to the relevant sections of the Act and did not consider their possible impact on the
question, Prem Nath Kapur (supra) dealt with this aspect to the extent of holding that the Act
provides for a mode of appropriation not consistent with that in Order XXI, Rule 1 of the Code or the
general law and to that extent, the scheme of the Act would prevail.

49. Though, a decree-holder may have the right to appropriate the payments made by the
judgment-debtor, it could only be as provided in the decree - if there is provision in that behalf in the
decree - or, as contemplated by Order XXI, Rule 1 of the Code as explained by us above. The Code or
the general rules do not contemplate payment of further interest by a judgment-debtor on the
portion of the principal he has already paid. His obligation is only to pay interest on he balance
principal remaining unpaid as adjudged either by the court of first instance or in the court of appeal.
On the pretext that the amount adjudged by the appellate court is the real amount due, the decree-
holder cannot claim interest on that part of the principal already paid to him. Of course, as indicated,
out of what is paid he can adjust the interest and costs first and the balance towards the principal, if
there is a shortfall in deposit. But, beyond that, the decree-holder cannot seek to re-open the entire
transaction and proceed to re-calculate the interest on the whole amount and seek a re-
appropriation as a whole in the light of the appellate decree.

50. It is true that the understanding of the expression "compensation awarded" for the purpose of
Section 28 of the Act in Prem Nath Kapur (supra) was modified. To that extent one strand of
reasoning in Prem Nath Kapur (supra) also stands discredited. But as we see it, on the question of
appropriation, the decision in Sunder (supra) does not have such an impact as to compel us to
jettison the reasoning adopted in Prem Nath Kapur (supra). Slightly deviating from the reasoning in
Prem Nath Kapur (supra) we have indicated earlier that even going by Order XXI, Rule 1 of the Code,
the position would be as envisaged in Prem Nath Kapur (supra). That apart, we are inclined to
respectfully agree with the reasoning in Prem Nath Kapur (supra) that on the wording of Section 34
and Section 28 of the Act read with and understood in the light of the stages of the award of
compensation, the question of appropriation would be at different stages and a decree-holder
would not be entitled to reopen the entire transaction to claim a re-appropriation of the amounts
already received by him and appropriated at that particular stage. The reliance on the doctrine of
merger does not enable the decree-holder to get over the scheme adopted by the Act.

51. Prem Nath Kapur (supra) also indicates that when an award-decree is passed specifying the
amounts under different heads like the amount under Section 23(1), the amount under Section
23(2), the amount under Section 23(1A) and the interest under Section 28 and the judgment-debtor
makes a deposit of specified sums under these different heads, it will amount to the judgment-
debtor intimating the decree- holder as to how the sum deposited is to be applied in discharge of
the obligation of the judgment-debtor. Once a decree-holder receives the payment of the sums thus
deposited, he would be accepting the appropriation made by the judgment-debtor under the award
decree on the scheme of the Land Acquisition Act. This part of the reasoning in Prem Nath Kapur
(supra) is, of course, also based on the reasoning that there is some inconsistency in Order XXI, Rule
1 of the Code and the scheme of the Act. Prem Nath Kapur (supra) also indicates that when the
decree itself specifies the amount payable under different heads (the decree has to do so under
Section 26 of the Act) and amounts are deposited towards those different heads, the appropriation
would be on the basis of the direction under the decree which must be taken to be one for crediting
the various sums paid under particular heads. On the scheme of the Act, especially the wording of
Section 34 and Section 28 of the Act it is not possible to say that the said approach made in Prem
Nath Kapur (supra) is erroneous or is unreasonable or is not a line of approach that is not warranted.
Therefore, when the judgment-debtor State makes a deposit along with the calculation
appropriating distinct sums towards various heads of compensation as awarded by the reference
court or by the appellate court in the appellate decree, and the amount is received by the decree-
holder, the decree-holder must be taken to be not entitled to seek an appropriation as if the
judgment-debtor has not made any intimation and that he is entitled to appropriate at his volition.
Considering the scheme of compensation under the Act in the context of the specific nature of the
items specifically referred to in Section 23 of the Act, we are of the view that the approach adopted
in Prem Nath Kapur (supra) is justified. A re-appropriation by seeking to reopen the satisfaction
already rendered might result in interest being made payable even on that part of the principal
amount that had already been deposited and received by the decree-holder and that would be in
the realm of unjust enrichment.
52. What is to happen when a part of the amount awarded by the reference court or by the
appellate court is deposited pursuant to an interim order of the appellate court or of the further
appellate court and the awardee is given the liberty to withdraw that amount? In such a case, the
amount would be received by the decree-holder on the strength of the interim order and the
appropriation will be subject to the decision in the appeal or the further appeal and the direction, if
any, contained therein. In such a case, if the appeal is disposed of in his favour, the decree-holder
would be entitled to appropriate the amount already received by him pursuant to the interim order
first towards interest then towards costs and the balance towards principal as on date of the
withdrawal of the amount and claim interest on the balance amount of enhanced compensation by
levying execution. But on that part appropriated towards the principal, the interest would cease
from the date on which the amount is received by the awardee. Of course, if while passing the
interim order, the court had indicated as to how the deposited amount is to be appropriated, that
direction will prevail and the appropriation could only be done on the basis of that direction.

53. Thus, on the whole, we are satisfied that the essential ratio in the Prem Nath Kapur (supra) on
appropriation being at different stages is justified though if at a particular stage there is a shortfall,
the awardee decree-holder would be entitled to appropriate the same on the general principle of
appropriation, first towards interest, then towards costs and then towards the principal, unless, of
course, the deposit is indicated to be towards specified heads by the judgment debtor while making
the deposit intimating the decree-holder of his intention. We, thus, approve the ratio of Prem Nath
Kapur (supra) on the aspect of appropriation."

15. In light of the above principles settled by the Hon'ble Supreme Court, the claim of the
respondents to appropriate the amount of 25% of the enhanced amount deposited by the
petitioners towards the interest accrued is to be examined in the facts of the case. Though the
deposit of 25% of the enhanced compensation was not made by the petitioners within the time limit
of two months as directed in the interim order made by the Hon'ble Supreme Court, but even if such
deposit of 25% of the enhanced compensation is taken to be pursuant to the interim order of the
Hon'ble Supreme Court as the respondents received deposited amount, however, there was no
intimation from the petitioners to the respondents that they should receive or appropriate such
amount only towards principal compensation. Undisputedly, the amount of 25% of the enhanced
compensation in each case was deposited with calculation sheet showing the calculation of 25% on
amounts under the different heads i.e. under the head of Section 23, 23(2), 23(1-A) and 28 of the
Act. Such bifurcation of amounts by the petitioners under different heads appear to be as per the
award of the Reference Court as confirmed by this Court as required under the Act. Thus, it could be
said that the entire amount of 25% of the enhanced compensation deposited by the petitioners
would not be towards the principal component of the compensation. At the same time, when the
respondents received the amount from the Court deposited by the petitioners based on calculation
on different heads with the calculation sheet, and not raising any grievance against deposit made on
bifurcated heads, it could be said that they appropriated 25% amount deposited in the same manner
as indicated in the calculation sheet. Mr. Marshall, however, submitted that the deposit of 25% of
enhanced compensation was since pursuant to interim order of the Hon'ble Supreme Court, the
respondents having received such amount without any objections and did not raise any grievance
for long period of five years would clearly go to show that the deposit was received towards the
principal amount. However, the Court finds that unless there was clear indication in the interim
order of the Hon'ble Supreme Court for the respondents to receive the amount only towards the
principal compensation, the deposit of 25% of enhanced compensation by the petitioners could not
be considered entirely towards the principal amount, especially, when the award required the
petitioners to deposit the amount of compensation under the different heads as per the provisions
of the Act and especially when at the time of final disposal of the Civil Appeals, the Hon'ble Supreme
Court has left rights of both the parties in respect of such amount to abide by the determination
made by the Reference Court. Though the petitioners succeeded before the Supreme Court, there
was no final direction as to how the amount deposited by the petitioners was to be appropriated
and when the rights of the parties in respect of the amount deposited were to abide by the final
determination by the Reference Court and as per the final determination of the Reference Court as
confirmed by this High Court, the amount of 25% deposited by the petitioners, would become part
of the enhanced compensation awarded, the contention that the amount of 25% of the enhanced
compensation deposited by the petitioners was only towards the principal amount of compensation
cannot be accepted. However, at the same time, the respondents cannot be permitted to
appropriate the entire amount only towards interest accrued on the compensation.

16. As regards the contentions that since, there was delay of five years on the part of the
respondents in filing Execution Petitions, the respondents are not entitled to get any amount as
claimed in Execution Petitions, it is required to note that it is not the contention that the Execution
Petitions are not filed within the period of limitation and, therefore, when the respondents sought
recovery of unpaid amount of compensation as per the award, the respondents could not be denied
execution of the award on the ground of delay as it is for them to establish that the award has not
been fully satisfied.

17. In above view of the matter and when the Court finds that the respondents cannot be permitted
to appropriate the entire amount of 25% of the enhanced compensation deposited by the
petitioners only towards interest on compensation but could be permitted towards different heads
under Section 23, 23(2) and 23(1-A), the fresh calculation as to the amount to be recovered including
the interest by the respondents from the petitioners as per the award made by the Reference Court,
as confirmed by this Court shall be required to be made. For such purpose, the matters are required
to be remitted to the Executing Court. The petitions are, therefore, required to be partly allowed.

18. In the result, the petitions are partly allowed. The impugned orders are quashed and set aside.
The matters are remitted to the Executing Court i.e. the Court of learned Auxiliary Chamber Judge,
Court No. 25, City Civil Court, Ahmedabad or the concerned Court for fresh calculation of the
amounts to be recovered from the petitioners by the respondents, in light of the conclusion reached
in the present order. The Executing Court shall complete such exercise within a period of three
months from the date of receipt of this order after giving opportunity to the parties to present their
calculations. Rule is made absolute to the aforesaid extent.

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Land Acquiring Body Chief Executive Authority and Ors. vs. Rameshbhai Shankarbhai Patel and Ors.
(25.09.2017 - GUJHC) : MANU/GJ/1699/2017