Land Acquisition Compensation: Supreme Court Rules on Interest Calculation and Submergence Damages

The case of Chanabasappa vs. Karnataka Neeravari Nigam Ltd. & Another revolved around compensation for land acquisition and interest calculations under the Land Acquisition Act, 1894. The Supreme Court had to decide whether the claimant was entitled to compensation from 1991, when the land was allegedly submerged, or from the date of notification under Section 4 of the Act.

Background of the Case

The appellant’s land was affected due to the Malprabha Reservoir Project in Karnataka. Originally, the dam’s height was 2074.5 feet, which was later raised to 2079.5 feet. However, the government failed to conduct a proper survey of lands that would come under submergence due to the height increase. When the reservoir was filled in 1991, lands that were not initially acquired got submerged.

The issue was raised in the Karnataka Legislative Assembly on 6.9.1991, but the government initiated the land acquisition process only in 2007. The acquisition notification under Section 4 of the Land Acquisition Act, 1894, was issued on 7.6.2007, and the award was passed on 23.7.2009.

The Special Land Acquisition Officer awarded Rs.56,672 per acre. The claimant sought a reference, claiming compensation at Rs.5,00,000 per acre. The Senior Civil Judge awarded Rs.2,70,000 per acre. The District Court reduced it to Rs.2,25,000 per acre using the capitalization method. The High Court, in a Miscellaneous Second Appeal, enhanced the compensation to Rs.3,00,000 per acre but awarded interest only from the date of the award, not from the earlier period when submergence allegedly occurred.

Aggrieved by this, the claimant approached the Supreme Court.

Arguments by the Petitioner

The petitioner, Chanabasappa, made the following arguments:

The land had come under submergence in 1991 due to the government’s negligence in surveying affected areas.
Interest under Section 34 of the Land Acquisition Act should be granted from the date of notification under Section 4, if not from 1991.
The petitioner was entitled to damages or rent for use and occupation of the land by the government from 1991 until acquisition proceedings formally began.
The government deprived the landowner of lawful possession for 16 years before issuing the acquisition notification.

Arguments by the Respondent

The respondents, Karnataka Neeravari Nigam Ltd., countered with these arguments:

There was no proof that the land came under submergence in 1991.
Documents from 1993 to 2005 showed cultivation, contradicting claims that the land was underwater.
Inspection reports from 2008 showed standing crops, an open well, and a borewell, suggesting continued agricultural use.
Interest could only be granted from the date of the award (23.7.2009), as the possession was still with the landowner before that.

Supreme Court Judgment

The Supreme Court carefully examined the facts and made the following key observations:

“In the instant case, the date of taking of the possession/submergence is disputed, and there is no categorical finding recorded that the area in question came under submergence with effect from the year 1991 and was not as a matter of fact in possession of the appellant.”

The Court ruled that:

The claim for compensation from 1991 required further factual examination.
The Collector must determine whether the land had come under submergence before the notification under Section 4.
If the land was submerged before acquisition, the appellant was entitled to damages or rent for that period.
If submergence was proved, interest under Section 34 must be awarded from the date of notification under Section 4.
Interest could not be claimed for any period before the notification unless possession was officially taken under Section 17.

Legal Precedents Considered

The Court referred to several landmark rulings:

Lila Ghosh vs. State of West Bengal – Interest under Sections 28 and 34 can start only from the date of possession.
R.L. Jain vs. DDA – If possession is taken before notification, the landowner can only claim rent or damages, not interest.
Siddhappa Vasappa Kuri vs. Special Land Acquisition Officer – Compensation under Section 23(1A) is payable from the date of notification.
Special Land Acquisition Officer vs. Karigowda – No interest can be claimed for a period before the Section 4 notification.

Final Outcome

The Supreme Court issued the following directives:

The Collector must examine whether the land was under submergence from 1991.
If proven, the appellant should receive damages for loss of use from 1991 to 2007.
If submergence is confirmed, interest under Section 34 should be paid from the date of the Section 4 notification.
The Collector must complete this determination within six months.

This ruling clarified the distinction between compensation, interest, and damages when land is taken without formal acquisition, ensuring fair treatment for landowners in similar cases.

Petitioner Name: Chanabasappa.
Respondent Name: Karnataka Neeravari Nigam Ltd. & Another.
Judgment By: Justice Arun Mishra, Justice Indira Banerjee.
Place Of Incident: Karnataka.
Judgment Date: 21-01-2020.

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