367-day delay in Compensation: HP High Court orders 7.5% Interest on Land Compensation

367-day delay in Compensation: HP High Court orders 7.5% Interest on Land Compensation

Shimla, Oct 8,

The Himachal Pradesh High Court has directed the authorities to pay interest at the rate of 7.5% per annum on compensation payable to two landowners whose compensation for land acquired for a National Highway project was deposited more than a year after the award.

Justice Sandeep Sharma, while allowing a petition filed by Deepak Bareja and another in CWP No. 2816 of 2024, held that the petitioners were entitled to interest for the 367-day period between the award dated February 14, 2022 and the deposit of the compensation amount on February 16, 2023.

The case relates to acquisition of land at Bhuppur-II, Paonta Sahib in Sirmaur district for construction, widening and four-laning of National Highway-72 Bye Pass Paonta Sahib-Ballupur. The competent authority had passed Award No. 3/2022 on February 14, 2022, determining compensation payable to the petitioners.

According to the judgment, the compensation amount was ultimately deposited with the competent authority on February 16, 2023—367 days after the award. The petitioners were subsequently paid their compensation during the pendency of the writ proceedings. The dispute before the High Court thereafter remained confined to interest on the delayed payment.

The authorities argued that the award had been challenged in arbitration proceedings and that instructions had been issued not to release the compensation until those proceedings were concluded. It was also contended that the petitioners had delayed handing over possession of the land, affecting the construction of the highway.

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The High Court, however, rejected the justification for denying interest for the period before the arbitration proceedings were stayed. The Court noted that the arbitration proceedings were initiated only after the compensation amount had been deposited and that there was no stay operating during the relevant 367-day period.

The Court further held that once the acquisition process was completed, the land stood vested absolutely in the Central Government under Section 3D of the National Highways Act. Therefore, the respondents’ contention regarding delay in handing over possession could not be used to deny the petitioners interest for the delayed deposit of compensation.

Referring to Sections 3G and 3H of the National Highways Act, the Court observed that the compensation determined under the award was required to be deposited with the competent authority, which was then required to pay the amount to the persons entitled to it. The Court found no dispute regarding apportionment of the compensation or any competing claim that could have justified the delay.

The Court consequently directed respondents No. 1 and 2 to calculate and pay interest at 7.5% per annum from February 14, 2022 to February 16, 2023 on the amount falling to the petitioners’ share under the award.

The amount is to be deposited with respondent No. 3 within two weeks from the date of the order for release to the petitioners. The Court further directed that if the amount is not deposited within the stipulated period, the petitioners will be entitled to an enhanced interest rate of 18% per annum from the date of the order until actual payment, in addition to the interest already awarded for the delayed period.

The petition was accordingly allowed, while all pending applications were disposed of and there was no order as to costs.

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