Under the Land Acquisition Act, Interest awarded under Section 34 is to be calculated from the date of award and not from the date of notification.

The Supreme Court in the case of Chanabasappa vs Karnataka Neeravari Nigam Ltd. & Anr (Civil Appeal no. 475 of 2020, Arising out of S.L.P. (Civil) No. 29148 of 2016) decided on 21.01.2020 held that interest awarded under Section 34 is to be calculated from the date of award and not from the date of notification however if the possession has been taken earlier to the issuance of notification under section 4(1) of the Act, the Court can direct the Collector to examine the extent of rent or damage that the owners of the land would be entitled to.

Facts :
The area pertaining to the appeal came under submergence in the year 1991. Thereafter, notification under section 4 was issued on 07.06.2007 for acquiring the land and the award was passed on 23.07.2009 for a sum of Rs. 56,672/- per acre.
Reference was made before Senior Civil Judge, who enhanced the compensation amount to Rs. 2,70,000/- per acre. Aggrieved by the decision, an appeal was preferred before the District Court who reduced the compensation to Rs. 2,25,000/- per acre.
The appellant filed second Appeal before the High Court of Karnataka, the Court awarded compensation at the rate of Rs. 3,00,000/- per acre and ordered payment of interest from the date of award i.e. 23.07.2009. The appellant filed the present appeal before the apex court for determination of the date from which the interest is to be calculated.

Issue
Whether the interest to be calculated from the date of award or notification or from the date when the area came under submergence?

Observation:
The court relied on several judgments of the same Court, “Lila Ghosh v. State of West Bengal” (2004) 9 SCC 337, wherein the court held that interest under section 34 or section 28 can start only from the date the possession is taken and further in case of “Special Land Acquisition Officer v. Karigowda & Ors.” (2010) 5 SCC 708 the court held that no interest can be claimed for the period prior to the section 4 notification.

The court observed that once the notification under section 4(1) has been issued and the award has been passed, then only the land will vest in the State. If in case the possession has been taken earlier to the issuance of notification under section 4(1) of the Act, the Court can direct the Collector to examine the extent of rent or damage that the owners of the land would be entitled to.

Ratio:
The Apex Court held that while determining the compensation under section 23(1) of the Act, the court shall take into consideration firstly, the market value of the land on the date of publication, secondly, the damage sustained by reason of taking of any standing crops or trees and other damages at the time of taking possession. Under section 23(1)(A) of the Act, the additional compensation is awarded at the rate of 12% p.a. on the market value from the date of notification. Further, under section 23(2) of the Act, in addition to the market value, 30% solatium is awarded on such market value.
The court also directed 9% interest payable for the first year from the date of taking possession (and in case it is not paid in first year from the date of possession the interest rate of 15% p.a. would be payable). In the present case interest is awarded from the date of award and not from the date of notification.