18 Dec 2020

The amount of compensation for acquisition of land should be based on the balance of interests of both the parties - Supreme Court of India

Case : Nayara Energy Limited v. The State of Gujarat and others Civil Appeal Nos. 4102¬-4103 of 2020

Court : Supreme Court of India

Bench : Justice Ashok Bhushan, Justice R. Subhash Reddy and Justice M.R. Shah

Decided on : 18 Dec 2020

Relevant Statutes

Sections 113, 96, 101, 102 and 103 of the Code of Civil Procedure, 1908

Brief Facts and Procedural History:

1. The Reference Court passed a judgement and award enhancing the amount of compensation for the land acquired by the appellant in 1996.

2. Feeling aggrieved the appellant preferred the first appeal before the High Court of Gujarat. In the said appeal, the appellant filed Civil Application to stay the judgement and order passed by the Reference Court.

3. By the order dated 18.08.2020, the High Court passed an order to the following effect:

a. The execution, implementation and operation of the judgment and award passed by the learned Reference Court are stayed, on condition that the appellant shall deposit 80% of the awarded amount along with proportionate cost and interest before the Reference Court.

b. Upon deposit of the aforesaid amount, the learned Reference Court to deposit 50% out of the said deposited amount (80% of the amount awarded by the Reference Court), together with proportionate cost and interest, in the cumulative fixed deposit, in any nationalised bank, initially for five years in the names of the original claimants, which shall be continued to be renewed from time to time, till the final disposal of the main first appeal.

c. Balance 50% of the 80% of the awarded amount together with proportionate cost and interest is permitted to be withdrawn by the original claimants.

d. Original claimants shall be entitled to withdraw 50% of the accrued principal interest on the fixed deposit.

4. Thereafter the appellant pointed out that in case of a judgement relied upon by the Reference Court, an appeal has been preferred and the High Court- Coordinate Bench granted an unconditional stay. The appellant applied to modify the said interim order accordingly.

5. The Single Judge of the High Court dismissed the said application.

6. The original applicant/ acquiring body/ appellant preferred the present appeal before the Supreme Court.

Issues of the Case

Whether the order passed by the Reference Court is liable to be modified?

The Observations of the Court

1. The Reference Court enhanced the amount of compensation after approximately 17 years, and the original claimants are not in a position to furnish any security. The original claimants were permitted to withdraw the amount of enhanced compensation awarded by the Reference Court, to strike the balance and to consider the interest of both the parties.

2. The appellant was ready and willing to deposit the entire enhanced amount of compensation awarded by the learned Reference Court, together with interest and cost.

3. The Honourable Supreme Court opined that if the original claimants are permitted to withdraw 25% of the enhanced amount of compensation, together with proportionate interest and cost, without furnishing any security and the balance 75% of the enhanced amount of compensation, together with proportionate cost and interest, as awarded by the learned Reference Court is permitted to be invested in a fixed deposit in any nationalised bank with cumulative interest in accordance with the award of the Reference Court will meet the ends of justice.

The Decision Held by the Court:

The Honourable Supreme Court partly allowed the appeals and modified the challenged order to the following extent:

1. The execution, operation and implementation of the judgment and award passed by the learned Reference Court, is stayed on condition that the appellant shall deposit entire 100% of the awarded amount along with interest and cost before the Reference Court, within four weeks from the date of the judgement.

2. Upon deposit of the aforesaid amount, the learned Reference Court is directed to deposit 75% of the said deposited amount together with proportionate cost and interest, in the cumulative fixed deposit, in any nationalised bank, initially for five years, in the name of the Court, which shall be continued to be renewed from time to time, till the final disposal of the main first appeal. The fixed deposit receipt may be kept in the custody of the learned Reference Court.

3. The balance 25% of the deposited amount, together with proportionate cost and interest is permitted to be withdrawn by the original claimants without furnishing any security, which shall be paid by the learned Reference Court, by way of account payee cheque, on proper identification and verification and the original claimants shall be informed by the learned Reference Court itself the amount which they are to be paid. The withdrawal of the aforesaid amount shall be subject to the outcome of the main first appeal.

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