Supreme Court: “Delay in compensation would entitle the owner to interest from the date of deprivation of possession”

Despite the approval of Corporate Insolvency Resolution Plan, the Apex Court permits the continuation of arbitration

Recently, Hon’ble Supreme Court held that when a person’s land is acquired, he/she should be compensated immediately after he/she is deprived of possession of the land. The Court also inferred that if such compensation is not paid immediately, then the person is entitled to interest from the date on which he/she was deprived of the possession.

The judgment was pronounced by a division bench of Justices AM Khanwilkar & CT Ravikumar while hearing an appeal against an order of the Bombay High Court which had overturned the directions given by the reference court. Before the top court, the limited issue involved was about the liability to pay interest & whether it commences from the date of taking possession or only from the date of the award.

In this case, the reference court had ordered that the interest was to be paid from April 1997 when the possession was taken until March 1998 for the first year at the rate of 9% per annum & thereafter at the rate of 15% per annum from April 1998 till the date of payment, i.e., September 2004. Later the Bombay High Court overturned these directions. 

The Supreme Court, citing its previous judgment in RL Jain vs DDA where it was ruled that the person whose land is acquired will be entitled to interest from the day on which land was acquired, held that the issue is settled, i.e., the appellant in the present case would be entitled to interest from the date on which he was deprived of the land’s possession-April 4, 1997. Hence, the directions in this regard by the reference court were restored consequently.  

Arryan Mohanty
I am Arryan Mohanty, a second-year student, pursuing BA-LLB from Symbiosis Law School, Nagpur. Although my interests are constitutional law, administrative law, contracts, torts, and criminal law, I am also keeping a keen interest in other aspects of law as well. I am an analyst who analyses the geo-political situation and political situation during these times. I am a quizzer and actor....sometimes I play volleyball, kabaddi and tennis( not in touch since 2019). I am a big Cricket Enthusiast.