Under Section 34 of the Land Acquisition Act, 1894, at what rate is interest payable on enhanced compensation, and may a court award a different rate?

Interest is payable at the rate of 9% per annum from the date of taking of possession till deposit or payment of the amount, and at 15% per annum for any period extending beyond one year. A court cannot deviate from the explicit mandate under Section 34, and interest has to be awarded strictly in accordance with the statutory provision. All statutory benefits, including the additional amount under Section 23(1A) and solatium under Section 23(2), would be due on the enhanced amount of compensation.

Land Acquisition Act, 1894 — s.4 — s.23(1) — s.24 — s.34 — Market value — Sale exemplars — Auction sale — Escalation — Solatium and interest — Land Acquisition Act, 1894 — s.23(1) — Auction sale exemplar — unreliable indicator of true market value — Held: An auction sale reduces the exemplar's reliability, because an auction motivates buyers to purchase at higher prices than the prevailing market rate and imports competition, ego and speculation. Such exemplars can only be used when no other comparable sale instances are available. (¶22, 23) Land Acquisition Act, 1894 — s.4 — s.24 — Post-notification sale instances — price rise to be disregarded — Held further: Sale instances after the initiation of the acquisition are unreliable, as land value tends to appreciate expecting benefits from the public purpose. The 'fifthly' clause of Section 24 mandates that the price increase due to that purpose be disregarded. (¶25) Land Acquisition Act, 1894 — s.23(1) — Highest sale exemplar — higher escalation in metropolitan areas — Held further: The exemplar depicting the highest market value ought to be used among multiple reliable sale instances, an average only where rates are within a narrow margin. Escalation for the time gap, ordinarily 10-12% per year, must be higher in metropolitan areas. (¶38, 43) Land Acquisition Act, 1894 — s.34 — s.23(1A) — s.23(2) — Interest and solatium on enhanced compensation — Held further: Interest under Section 34 runs at 9% per annum for the first year after taking of possession and 15% thereafter, and a court cannot deviate from that explicit mandate. All statutory benefits are due on the enhanced amount; appeals allowed in part, market value reduced. (¶48, 50, 52)

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