The Supreme Court has referred a significant question regarding the entitlement of landowners to interest on solatium to a three-judge bench. This decision aims to determine whether interest on solatium should be calculated from the date of land acquisition or from the date of the Sunder v. Union of India judgement on September 19, 2001.
A bench comprising Justice Surya Kant and Justice Ujjal Bhuyan directed the matter to be placed before a larger bench, with necessary orders to be obtained from the Chief Justice of India. The bench noted that the issue needs further examination in light of conflicting interpretations in previous judgments.
Solatium refers to the additional payment made to landowners over the market value due to the compulsory nature of land acquisition. Section 23(2) of the Land Acquisition Act, 1894 mandates a 30 percent solatium over the market value. Additionally, Section 23(1A) provides for a 12 percent annual payment on the market value from the date of the preliminary notification to the date of the Collector’s award or the date of taking possession, whichever is earlier.
Sunder v. Union of India (2001):
In the landmark Sunder case, a five-judge bench ruled that landowners are entitled to interest on solatium. The court held that “compensation” under Section 28 includes solatium, thus entitling landowners to interest on the solatium amount. This decision overturned previous rulings that excluded solatium from interest calculations.
Gurpreet Singh v. Union of India (2006):
The Gurpreet Singh case addressed whether interest on solatium could be claimed during the execution of a decree if it was not specifically granted. The court ruled that an execution court cannot exceed the decree’s terms. If a reference or appellate court did not grant or expressly reject interest on solatium, the execution court could apply the Sunder decision to award interest on solatium from the date of the Sunder judgement, but not earlier.
The current referral arose from the need to clarify whether the interest on solatium should be calculated from the date of land acquisition or only from the Sunder judgement. The division bench’s decision to refer this issue to a three-judge bench aims to resolve this legal ambiguity.
This referral will address a critical aspect of land acquisition compensation, impacting numerous pending and future cases involving landowners and their entitlements. The three-judge bench’s forthcoming deliberations will provide clarity on this matter.
