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R. F. A. No. 110 of 1974, decided on 3rd March 1975.

-- [As amended by Act III of 1969], Ss. 18 & 34-Property acquired in 1963-Award made in 1970-Collector to make aware in light of amended S. 34-Reference under S. 18 with respect to rate of "interest"-Competent-Whatever is admissible to person as "interest" under the Act is to be treated as "compensation".

It is admitted that possession had been taken earlier than the determination of the compensation by the Collector in 1970. In the circumstances, there was hardly a question of retrospectivity. The Collector was to make an award in the light of the amended section 34. The interest was admissible to the respondent over the amount of compensation from the date on which the possession was taken and until that amount of compensation was paid or deposited. The intention of the Legislature that the interest was payable at the enhanced rate and that it should be paid in every case will become all the more manifest if one refers to the proviso that was added by the Amending Act, which says that a party entitled to the interest cannot waive his claim and that it shall be payable notwithstanding any agreement to the contrary. Furthermore, the proviso which was added to section 28 by the Amending Act will also show that even where the compensation was determined but had not been paid before the amendment the enhanced rate of 8 % would be admissible, the orders of the Court allowing 6 % interest notwithstanding. It comes to this that the respondent had a very strong case on merits to claim 8 % compound interest.

For the purposes of the Act payment of interest shall have to be treated as part of the compensation admissible to a person entitled to compensa tion. The underlying philosophy behind section 34 is to compensate the person from whom possession has been taken and to whom amount has not been paid simultaneously. There is reason for it. The rate of compensation admissible is the market value at the time of the acquisition and interest is added to that inasmuch as more often than not it is not possible for the Government to pay the compensation simultaneously with the taking over of possession.

The words amount of compensation' as these occur in section 18 of the Act shall have to be given a wider meaning and will, t1herefore, include the amount payable in consideration for compulsory acquisition or by way of interest. The Court has got to see as to whether the petitioner has been compensated as provided by the law. Whatever is admissible to a person as interest under the Act is the amount of compensation and on this reference under section 18, Land Acquisition Act, 1894 would be competent.

A I R 1963 Pb. 411 ref.

Mian Burhanuddin. A: G. for Appellant.

Abdul Bari Khan for Respondent.

Date of hearing : 17th February 1975.

The Government of N.-W. F. P. felt aggrieved by the order of-the Senior Civil Judge, Peshawar, on a reference under section 18 of the Land Acquisi tion Act made by the respondent and preferred the present appeal to question, the award of Rs. 15,408 by way of interest for the periods and the amount: which are not in dispute at the rate of 8 per cent per annum. The grievance of the appellant is that the respondent could not be awarded interest; at the rate of 8 per cent for Land Acquisition (West Pakistan Amend ment) Act III of 196-) (hereinafter called the Amending Act) whereby the rate of interest was increased came into force on the 15th of March 1969 and the Notification under section 4 of the Land Acquisition Act (hereinafter called the Act) in the case had been made much earlier, that is to say on 9th May 1963. It is contended that the rate admissible to the respondent was 6 per cent and that has been already awarded by the Collector.

2. As already indicated the amount of compensation or the period for which interest was being claimed is not in dispute. It is also, not dispute that the property was acquired in 1963, and that the award in the case was announced on 23-10-1970, that is to say, after they Amending Act came into force. The only question that in the circum stances arises for determination is whether the amendment will benefit the respondent 7 The question as to whether Amending Act is retrospec tive becomes purely academic when I see that it is a case in which the award was given after the amendment and it was, therefore, the duty of the" Collector to take into consideration section 34 of the Land Acquisition Act as amended. It is admitted that possession had been taken earlier than the determination of the compensation by the Collector in 1970. In the circumstances, there was hardly a question of retrospectivity. The Collector was to make an award in the light of the amended section 34. The interest was admissible to the respondent over the amount of compensation from the date on which the possession was taken and until that amount of compensation was paid or deposited. The intention of the Legislature that the interest was payable at the enhanced rate and that i should be paid in every case will b-.come all the more manifest if one, refers to the proviso that was added by the Amending Act, which says that a party entitled to the interest cannot waive his claim and that it shall be payable notwithstanding any agreement to the contrary. Furthermore, the proviso which was added to section 28 of the Amending Act will also show that even where the compensation was determined but had not been paid before the amendment the enhanced rate of 8 % would be admissible, the orders of the Court allowing 6 % interest notwithstanding. It comes to this that the respondent had a very strong case on merits to claim 8 per cent compound interest.

3. The learned Advocate-General submitted that reference by the Collector was not at all competent for section 18 contemplated a reference with respect to the amount of compensation and not with respect to the rate of interest admissible. The learned Advocate-General added that interest was not compensation. This objection is not available to the Government. In the first place, no such objection was taken when they filed their written statement before the learned Senior Civil Judge. In the second place, no objection on this point was taken in the grounds of appeal. In the third and last place, the learned Advocate-General conveniently over looks that the expression 'compensation' has not been defined in the Act and that reference under section 18 can be with respect to the amount of compensation. It is true that in section 23 matters to be considered for determining compensation have been indicated and section 24 lays down the matters which are not to be included for determining compensation but all these enumerations in the aforesaid sections cannot be exhaustive. For the purposes of the Act payment of interest shall have to be treated as part of the compensation admissible to a person entitled to compensation. The underlying philosophy behind section 34 is to compensate the person from whom possession has been taken and to whom amount has not been paid simultaneously. There is reason for it. The rate of compensation admissible is the market value at the time of the acquisition and interest is added to that inasmuch as more often than it is not possible for the Government to pay the compensation simultaneously with the taking over of possession. Be that as it may, any other view of the payment under section 34 of the Act will hamper the remedy and the Courts while inter-preting a statute have to place an interpretation which will advance the remedy. It appears to me that a Collector who may wish to ignore the prescribed rate of 15 per cent in consideration of compulsory nature of acquisition or to reduce the rate of interest admissible on compensation is in substance reducing the compensation. The words amount of compen sation' as those occur in section 18 of the Act shall have to be given at 1 wider meaning and will therefore, include the amount payable in consideration for compulsory acquisition or by way of interest. The Court has got to see as to whether the petitioner has been compensated as provided by the law. It seems to me whatever is admissible to a person as interest under the Act is the amount of compensation and on this reference would be competent. That the definition of interest and compensation overlap finds support from A I R 1963 Pb. 411. Their Lordships have observed :-

(7) The words "compensation" and "interest" which occur in section 34 may now be considered. In the absence of any statutory definitions, their un-circumscribed application is prone to cause confusion. As the connotation of these two terms does not admit of precision, and admits of considerable flexibility and varying shades of meaning, which are both narrow and broad their true import needs to be examined with close scrutiny in the background of chargeability of income-tax.

(8) The words "interest" and "compensation" are sometimes used inter changeably and on other occasions they have distinct connotation

(9) The term "compensation" is used to indicate what constitutes or is regarded as equivalent or recompense for loss or privation. Ordinarily, the word "compensation" connotes equivalency, which adequately remunerates for a loss or deprivations, or for a service rendered, though under a statutory definition, it may indicate not what constitutes, but what by the Legislature is treated as equivalent. Thus it will be noticed that in whatever range the connotation of the term "interest" or "compensation" may oscillate, or, whether the sense in which it may be understood is strict or liberal, the meaning of the two terms largely overlap. In these circumstances, it will not be free front confusion if the answer to the question posed is to be furnished by styling the amount either as "interest" and, therefore, taxable or as "compensation" and consequently immune from tax liability . . . . ."

It is true that their Lordships excluded interest under section 34 from com pensation but in that case the precise question was as to whether or not interest would be income under the Income-tax Act.

On the above view of the matter, I find no force in this appeal filed by the Government and dismiss it with costs.

K, B. A. Appeal dismissed.

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