GODAVARI SUGAR MILLS LTD. versus THE STATE OF MAHARASHTRA & ORS.

Leave granted.

p. 186, margin C

The arpellant was the owner of a large extent of sugarcane land. The Special Deputy Collector, Ahmednagar issued a notification dated 15.6.1961 under section 21 of the Maharashtra Agricultural Lands (Ceiling on Holdings)'"'"'• 1961 ('Act' for short) declaring that the appellant held 12127.4 acres as surplus agricultural land. In pursuance of it, possession of 7407 acres and 33 Y2 guntas of land at Sakarwadi and 2910 acres and 4 guntas in Lakshmiwadi was taken over on 25.5.1968. Possession of another 608 acres and 38 Y2 guntas in Sakarwadi and 525 acres 1% gunta in Lakshmiwadi was takem on 23.1.1976. Ultimately possession of the remaining 99 acres 13 guntas at Lakshmiwadi was taken on 6.4.1990.

p. 186, margin C

On 13.11.1978 the appellant submitted its claim in regard to the entire lands (except the 99 acres 13 guntas which was taken subsequently) under Section 24(1) of the Act. Several reminders were sent by the appellant wherein the delay was highlighted and demand was made for payment of interest at 9% per annum. Ultimately on 13.12.2001 proceedings for determination ot compensation were commenced by issue of notices for enquiry under Section 24(1) and (2) of the Act. The second respondent made an award dated 30.3.2005 determining the amount due as Rs.88,77,538.49 comprising Rs.43,22,656.65 as compensation and Rs.45,i.14,881.84 as interest thereon at 3% per annum from the date of possession to 31.3.2004. The said payment was·· accepted under protest · . by the appellant on 31.3.2005.

pp. 186–187, margin E

Aggrieved by the interest awarded only a.Uhe rate of · · 3% per annum, the appellant filed ·a writ petition (WP Nq.6375/. 2005). The appellant sought quashing the .award insofar as it awarded interest at 3% Per anrium and prayed for award of interest at 9% from the date of delivery of possession till date of actual payment According to th~ appellant, a sum of Rs.97,66, 189.16' was due as on the date of writ petition (WP No,6375/2005) being. the difference iri interest on calculating interest at 9% per annum on .the principal amount ins~ead .of 3% awarded. The High Court dismissed the said pe~ition at admission stage by the impugned order dated 4.10.~005 on the ground that the prayer bei.ng only for payment of money (by way of interest), .the writ petition was not entertainable and it was open to the appellant to pursue any other remedy that may be available. The said order is challenged in this appeal by special leave.

p. 187, margin A

The foilowing two questions arise for our ~onsideration in this appeal: · · (i) Whether the writ petition was for "recovery of money" and therefore not maintainable? (ii) Whether the seco'nd respondent was justified in awarding interest only at the rate of 3% per annum on the compensation payable under Section 25 of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961? Re: Question No.(i)

p. 187, margin D

The writ petition was fora declaration that the Notice dated 30.3.2005 informing the appellant that total compensation including interest for acquisition of 12127.4 acres of land as Rs.88,77,538/- was unjust discriminatory insofar as.·it offered interest 3% per annum on the compensation amount mandamus to pay the compensation with annum from the date of surrende.r of possession actual payment. The appellant contended in having r~gard to decisions of the Bombay Krishnakumar Vithalrao Jamdar vs. State (WP No.83 of 1986 decided on 29.6.1991) changdeo Sugar Mills vs. State of Maharashtra 2000 decided on 7.7.2000) wherein interest the rate of 9% per annum in regard to compensation under the said Act, the second respondent awarding interest at a lesser rate of 3% per the writ petition filed by appellant did not money claim. It required adjudication allegations of arbitrariness and discrimination state government and its officers in the exercise functions, before the issue of rate of interest· or determined. Primarily, therefore the writ public law character as it related to the public the part of the state government and its officers, maintainable,

pp. 187–188, margin F

The High Court relying upon the decision in Suganmal v. State of MP-AIR 1965 SC the prayer in the writ petition being one for payment it should be considered to be a writ petition money claim and therefore, not maintainable. in Suganmal related to a claim for refund be understood with reference to the nature therein. The decision in Suganmal has been distinguished in several subsequent cases, Pollution Control Board vs. Kanoria Industrial SCC 5'49 and ABL International Ltd vs. Guarantee Corporation of India Ltd. - 2004 legal position becomes clear when the decision read with the other decisions of this .Court on the issue, referred to below: (i) Normally a petition· under Article 226 of the· Constitution of India will not be entertained to enforce a civil liability arising out of a breach of a contract or a tort to pay an amount of money due to the claimants. The aggrieved party wiil have to agitate the question in a civil suit. But an order for payment of money may be made in a writ proceeding, in enforcement of statutory functions of the State or its officers. [vide Burmah Construction Co. v. State of Orissa - (1962) Supp 1 SCR 242]. (ii) If a right has been infringed - whether a fundamental right or a statutory right - and the aggrieved party comes to the court for enforcement of the right, it will not be giving complete relief if the court merely declares the existence of such right or the fact that existing right has been infringed. The High Court, while enforcing fundamental or statutory rights, has the power to give consequential relief by ordering payment of money reaUzed by the government without the authority of law (vide State of Madhya Pradesh v. Bhaila/Bhai -AIR 1964 SC 1006). . (iii) A petition for issue of writ of mandamus will not normally be entertained for the purpose of merely ordering a refund of money, to the return of which the petitioner claims a right. The aggrieved party seeking refund has to approach the civil court for claiming the amount, though the High Courts have the power to pass appropriate orders in the exercise of the power conferred under Article 226 for payment of money. (vide Suganmal v. State of Madhya Pradesh - AIR 1965 SC 1740). (iv) There is a distinction between cases where a. claimant approaches the High Court seeking the relief of obtaining only refund and those where refund is sought as a consequential relief after striking down the order of assessment etc. While a petition praying for mere issue of a A writ of mandamus to the state to refund the money alleged to · have been illegally collected is no.t ordinarily: maintainable, if the allegation is that the assessment was without a jurisdiction and · the taxes collected was without authority of law and therefore the respondents had no authority to retain the money collected without any authority of law, the High Court has the power to direct refund in a writ petition [vide Salonah Tea Co.Ltd. v. Superintendent of Taxes, Nangaon (1988) 1 SCC 401]. (v) It is one thing to say that the High Court has no power under Article 226 of the Constitution to issue a writ of mandamus for making refund of the money illegally collected. It is yet another thing to say that such power can be exercised sparingly depending on facts and circumstances of each case. For instance, where the facts are not in dispute, where. the collection of money was without the authority of law and there was no case of undue enrichment, there is no good reason to deny a relief of refund to the citizens. But even in cases where collection of cess, levy or tax is held to be unconstitutional or invalid, refund is not an automatic consequence but may be refused on several grounds depending on facts and E ·Circumstances of a given case. (Vide U.P. Pollution Control Board vs. Kanoria Industrial Ltd - 2001 (2) SCC 549). (vi) Where the lis has a public law character, or involves a question arising out of public law functions on the part of the F State or its authorities, access to justice by way of a public law remedy under Article 226 of the Constitution will not be denied. [Vide Sanjana M. Wig v. Hindustan Petroleum Corporation Ltd. c2oos) 8 sec 242.J We are therefore of the view that reliance upon Suganmal was misplaced, to hold that the writ petition filed by the appellant was not maintainable. Re : Question (ii)

pp. 188–190, margin E

The appellant contended that the compensation amount became due when possession of the lands was taken and as it was unjustly wittiheld, the appellant was entitled to interest on the compensation amount at a reasonable rate of 9% per annum; upto the date of payment. In support of their claim, they relied upon two decisions of the Bombay High Court in Krishna Kumar and Shree Changdeo Sugar Mills where interest was awarded at 9% per annum in similar matters. The respondents on the other hand submitted that there was sufficient indication in section 26 of the Act to indicate that the rate of interest should be only 3% per annum, and therefore interest can be awarded only at 3% per annum. The respondents submitted that the two decisions of the Bombay High Court were distinguishable as they related to cases where compensation had not been paid at all whereas in this case compensation with interest at 3% per annum had already been paid on 31.3.2005 and therefore the said decisions would not apply. It was pointed out that in Krishnakumar possession of surplus land were taken in the year 1973 but till the date of disposal of the writ petition, no compensation had been paid; in Shree Changdeo Sugar Mills possession of surplus land had been taken by the State Government and though compensation payable was determined on 29.12.1966, 23.2.1967 and 13.12.1968, it was not paid; and that in those circumstances, the High Court had directed payment of compensation with interest at the rate of 9% per annum from the date of taking possession of lands till date of actual payment. Alternatively it was submitted that the said decisions not having considered section 26 of the Act, they . were not rightly decided.

pp. 190–191, margin H

There is considerable force in the submissions Of Mrs. Madhavi Divan, the learned counsel for the respondents that the decisions of Bombay High Court In Krishna kumar and Changdeo are not sound, as they completely ignore section 26 · of the Act, while awarding interest at 9% per annum on the · · belated payment of compensation.

p. 191, margin F

The question as to when and what circumstances, interest could be awarded on belated payment of compensation, was considered by this Court in Union of India vs. Parma/ Singh - (2009) 1 SCC 618. This Court first referred to the general principle and then the exceptions thereto, as under: "When a property is acquired, and law provides for payment of compensation to be determined in the manner specified, ordinarily compensation shall have to be paid at the time of taking possession in pursuance of acquisition. By applying equitable principles, the courts have always awarded interest on the delayed payment of compensation in regard to acquisition of any property ...... . The said general principle will not apply in two circumstances. One is where a statute specifies or regulates the interest. In that event, interest will be payable only in terms of the provisions of the statute. The second is where a statute or contract dealing with the acquisition specifically bars or prohibits payment of interest on the compensation amount. In that event, interest will not be awarded. Where the statute is silent about interest, and there is no express bar about payment of interest, any delay in paying compensation or enhanced compensation for acquisition would require award of interest at reasonable rates on equitable grounds.• This Court, dealing with an acquisition under the Defence of India Act, 1962 (which did not contain any provision either requiring or prohibiting payment of interest), upheld the award of interest at 6% per annum.

pp. 191–192, margin G

Section 24 of the Act requires the Collector, after possession of surplus land was taken over under Section 21 (4) of the Act, to cause public notice requiring persons interested to lodge their claims. Section 25 of the Act provides for determination of compensation and apportionment thereof. Section 26 deals with mode of payment of amount of compensation and the same is extracted below : "26. (1) The amount of compensati9n may, provisions of sub-section (3), be payable bonds carrying interest at three per cent (2) The bonds shall be - (a) ofthefollowing denominations, namely:- Rs.1 OO;Rs.200; Rs.500; Rs. 1,000; Rs. 10,000; and (b) of two classes - one being repayable period of twenty yearsfrom the date of issue equat~d annual instalment of principle and the other being redeemable at of twenty years from the date of issue. the option of the person receiving compensation choose payment in one qr other class partly in one class and partly in another . (3) Where the amount of compensation thereof, cannotbe paid in the denomination, it may be paid in cash." (emphasis The said section contemplates the payment of with interest at 3% per annum in annual intalments a period of 20 years or at the end of 20 contemplates payment being made either by bonds or in cash. Sub-section (3) of Section payment of compensation by cash, in cases where be paid by such bonds, does not disturb the which is 3% per an.num for 20 years, provided (1) thereof. We are therefore of the view that whether payment is made by transferable bonds or by cash, interest can be only at 3% per annum for a period from the date of taking possession.

pp. 192–193, margin F

The next question that requires consideration is about the rate of interest if the payment is not made even after·20 years, and whether it should be only at the rate of 3% per annum, even after 20 years. Section 26 is silent about the rate of interest payable, if the compensation is not paid within 20 years. We are therefore of the view that section 26 contemplates payment of the compensation within 20 years from the date of taking possession with interest at 3% per annum; and for the period beyond 20 years, .the said provision regarding interest will cease to apply and the general equitable principles relating to interest will apply; and interest can be awarded at any reasonable rate, in the discretion of the. court. Interest at the rate of 6% per annum, beyond 20 years would be appropriate and payable, on equitable principles.

p. 194

We therefore allow this appeal in part and direct the respondents to pay interest on the compensation amount from the date of taking possession to date of payment, at the rate of 3% per annum for the first twenty years and thereafter (that is from the date of expiry of the period of 20 years) to 31.3.2005 (date of payment) at the rate of 6% per annum. Date of Principal Period Rate of taking Amount Interest possession 20.5.1968 Rs.41,31,821.59 20.5.1968 to 3% per annum 19.5.1988 20.5.1988to 31.3.2005 6% per annum 23.1.1996 Rs. 1,77,478.61 23.1.1976 to 3% per annum 22.1.1996 23.1.1996 to ~1.3.2005 6% per annum 6.4.1990 . Rs. 13,365.45 6.4.1990 to 31.3:2005 3%per annum Out of the interest so calculated, the sum ofRs.45,54,881/84 already paid towards interest on 31.3.2005 shall be deducted and the balance shall be paid by the respondents to the appellants within three months from today. D.G. Appeal partly allowed.

pp. 194–195, margin C