Sheikh MUHAMMAD ILYAS AHMED, etc. vs PAKISTAN through Secretary
This matter involves appeals filed by landowners seeking enhancement of compensation and the award of interest regarding acquired land. At the hearing, the appellants withdrew their request for further enhancement of compensation, limiting their claim to the non-award of interest on the compensation amount, as mandated by the Land Acquisition Act, 1894. The core legal question was whether the interest on compensation under the Act is a statutory entitlement that cannot be withheld. The Supreme Court held that the provision for interest under Section 34 of the Land Acquisition Act, 1894, is mandatory and statutory in nature. Consequently, the Court ruled that the appellants were entitled to compound interest at the rate of eight percent per annum from the date of taking possession of the acquired land until the date of payment of compensation. The appeals were partly allowed to reflect this entitlement, correcting the oversight of the lower courts in failing to award the statutory interest.
- Is the payment of interest under Section 34 of the Land Acquisition Act, 1894, mandatory or discretionary?
- Are landowners entitled to compound interest on compensation from the date of possession of acquired land?
- Can statutory interest on land compensation be withheld by the courts?
- Section 34, Land Acquisition Act 1894
Anwar Zaheer Jamali, C.J.--For the reasons set out in the applications for condonation of delay, the delay in filing of these appeals is condoned and the appeals are taken up for hearing on merit.
2. At the outset, learned ASC for the appellants has made a statement at the bar that in view of announcement of judgment by this Court today in connected Civil Appeals No. 1120 to 1124 of 2014, the appellants are not pressing these appeals for seeking further enhancement in the amount of compensation, but only to the extent of non awarding of interest on the amount of compensation, as mandated under Section 34 of the Land Acquisition Act, 1894 (in short "the Act of 1894"), which has been withheld for no valid reasons.
3. A bare reading of above referred provision of the Act of 1894 reveals that awarding of such interest is statutory in nature, which cannot be withheld. Thus, the appellants are fully entitled for grant of compound interest at the rate of eight percent per annum from the date of taking possession of acquired land till the date of payment of its compensation, but for no valid reasons, such relief has escaped the sight of the two Courts below.
4. This being the position, these appeals are partly allowed to the extent that the appellants will also be entitled for compound interest at the rate of eight percent per annum from the date when possession of the acquired land was taken over from them till the time, compensation in terms of the impugned judgment dated 10.4.2014, is paid to them.