- 1 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 IN THE HIGH COURT OF KARNATAKA, AT DHARWAD DATED THIS THE 20TH DAY OF AUGUST, 2025 BEFORE THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ WRIT PETITION NO. 102891 OF 2025 (GM-CPC) BETWEEN: THE DEFENSE ESTATE OFFICER KARNATAKA AND GOA CIRCLE T-56, ASSYE LINES KAMARAJ ROAD BANGALORE 42 …PETITIONER (BY SRI. MRUTYUNJAYA S.HALLIKERI,ADVOCATE) AND: 1. 2. 3. MITA RIPA NAIK SINCE DECEASED BY HER LRS SMT RADHA MITA NAIK AGE MAJOR, OCC PVT WORK R/O AMADALLI VILLAGE KARWAR TALUKA DISTRICT UTTARA KANNADA. SMT. MEERA GANAPATI NAIK AGE: MAJOR OCC: PVT WORK R/O. AMADALLI VILLAGE, KARWAR TALUKA DIST: UTTARA KANNADA SMT. SUMA VISHNU NAIK AGE: MAJOR OCC: PVT WORK R/O. AMADALLI VILLAGE, KARWAR TALUKA ® Digitally signed by GIRIJA A. BYAHATTI Location: High Court of Karnataka, Dharwad Bench, Dharwad - 2 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 4. 5. 6. 7. 8. 9. 10. DIST: UTTARA KANNADA SMT. GRIPA GANGADHAR NAIK AGE: MAJOR OCC: PVT WORK R/O. AMADALLI VILLAGE, KARWAR TALUKA DIST: UTTARA KANNADA SMT. DEEPA DATTA NAIK AGE: MAJOR OCC: PVT WORK R/O. AMADALLI VILLAGE, KARWAR TALUKA DIST: UTTARA KANNADA SMT. DIVYA THOKU NAIK AGE: MAJOR OCC: PVT WORK R/O. AMADALLI VILLAGE, KARWAR TALUKA DIST: UTTARA KANNADA SMT. TARA SIDDU NAIK AGE: MAJOR OCC: PVT WORK R/O. AMADALLI VILLAGE, KARWAR TALUKA DIST: UTTARA KANNADA SRI. ARUN SIDDU NAIK AGE: MAJOR OCC: PVT WORK R/O. AMADALLI VILLAGE, KARWAR TALUKA DIST: UTTARA KANNADA SRI. DAYANAND SIDDU NAIK AGE: MAJOR OCC: PVT WORK R/O. AMADALLI VILLAGE, KARWAR TALUKA DIST: UTTARA KANNADA SMT. SAKU @ SAROJA - 3 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 11. 12 13. 14. 15 16. D/O SIDDU NAIK AGE: MAJOR OCC: PVT WORK R/O. AMADALLI VILLAGE, KARWAR TALUKA DIST: UTTARA KANNADA SMT. PUSHPA D/O SIDDU NAIK AGE: MAJOR OCC: PVT WORK R/O. AMADALLI VILLAGE, KARWAR TALUKA DIST: UTTARA KANNADA SRI CHATRAPATI DEVU NAIK AGE: MAJOR, OCC: PVT. WORK R/O. SHEJWADA VILLAGE, KARWAR TALUKA DIST: UTTARA KANNADA SRI MARUTHI DEVU NAIK, AGE: MAJOR, OCC: PVT. WORK, R/O. AVERSA VILLAGE, ANKOLA TALUKA DIST: UTTARA KANNADA SMT. JANAKI @ SETA DATTARAM NAIK, AGE: MAJOR, OCC: PVT. WORK, R/O. AVERSA VILLAGE, ANKOLA TALUKA DIST: UTTARA KANNADA SMT. SUMITRA @ RANJANA RAMACHANDRA NAIK AGE: MAJOR, OCC: PVT. WORK, R/O. AVERSA VILLAGE, ANKOLA TALUKA DIST: UTTARA KANNADA SMT. JAYASHREE DHANANJAY NAIK AGE: MAJOR, - 4 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 17. 18. 19. 20. OCC: PVT. WORK, R/O. AVERSA VILLAGE, ANKOLA TALUKA DIST: UTTARA KANNADA KUMAR SRINIVAS DHANANJAY NAIK AGE: MINOR, OCC: NIL. R/O. AVERSA VILLAGE, ANKOLA TALUKA DIST: UTTARA KANNADA KUMAR SUBHAS DHANANJAY NAIK AGE: MINOR, OCC: NIL. R/O. AVERSA VILLAGE, ANKOLA TALUKA DIST: UTTARA KANNADA KUMAR SRINIVAS DHANANJAY NAIK AGE: MINOR, OCC: NIL. R/O. AVERSA VILLAGE, ANKOLA TALUKA DIST: UTTARA KANNADA SPECIAL LAND ACQUISITION OFFICER, PROJECT SEA BIRD NAVAL BASE, MINI VIDHANA SOUDHA KARWAR. …RESPONDENTS (BY SRI. RAMESH B. CHIGARI., AGA FOR R20; NOTICE TO R1 TO R19 IS D/W) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT, ORDER OR DIRECTION IN THE NATURE OF CERTIORARI BY QUASHING THE ORDER DATED 29/08/2022 PASSED IN EXECUTION CASE NO. 79/2018 BY THE HON BLE COURT OF ADDITIONAL SENIOR CIVIL JUDGE AND JMFC, KARWAR VIDE ANNEXURE-D, IN THE INTEREST OF JUSTICE AND EQUITY AND ETC. THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: - 5 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 ORAL ORDER (PER: THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ) 1. Learned AGA accepts notice for respondent No.20. Notice to respondents No.1 to 19 is dispensed with, in view of the proposed order to be passed. 2. The petitioner-The Defense Estate Officer, Karnataka and Goa Circle in W.P.No.102891/2025 is before this Court seeking for the following reliefs: a. Issue a writ, order or Direction in the nature of certiorari by quashing the order dated 29.08.2022 passed in Execution Case No.79/2018 by the Hon’ble Court of Additional Senior Civil Judge and JMFC, Karwar vide Annexure-D, in the interest of justice and equity. b. Pass such other order or orders that are deemed fit under the facts and circumstances of the case. 3. The petitioner-The Defense Estate Officer, Karnataka and Goa Circle in W.P.No.102884/2025 is before this Court seeking for the following reliefs: a. Issue a writ, order or Direction in the nature of certiorari by quashing the order dated 02.09.2022 passed in Execution Case No.35/2020 by the Hon’ble Court of Additional Senior Civil Judge and JMFC, - 6 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 Karwar vide Annexure-E, in the interest of justice and equity. b. Pass such other order or orders that are deemed fit under the facts and circumstances of the case. 4. Proceedings having been initiated by the land loser under Section 28 of Land Acquisition Act, 1894 (for short hereinafter referred to as “LA Act, 1894”) for enhancement of compensation, the same came to be allowed and the compensation which had been awarded had been enhanced. Execution Proceedings having been filed, the petitioner made payment of the due amount on 21.01.2020 after deducting a sum of Rs.50,10,825/- as tax deduction at source and the balance of Rs.4,47,54,965/- was paid. 5. The Execution Court vide order dated 29.08.2022 held that question of deduction of TDS would not arise, since the land is agriculture in nature and the calculation being made under Section 28 and not under Section 34 of the LA Act, 1894, there is no requirement for making deduction of taxes at source. - 7 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 The office was directed to calculate the amount which was required to be made payment by respondents- therein i.e., petitioner-herein. 6. The petitioner claiming that an amount had been deducted as TDS contended that the amount having already been deducted the entire amount cannot be paid and in that background an attachment order of the Additional Senior Civil Judge & JMFC, Karwar dated 29.08.2022 was passed which is under challenge. 7. Though the petitioner is the Defense Estate Officer representing the defense establishment, this Court is constrained to make certain observations against the petitioner, in view of the manner in which the matter has proceeded. 8. The land of the respondents in Sy.No.502 totally measuring 19 Acres 32 Guntas of Amadalli Village, Karwar Taluk came to be acquired for establishment of the Naval Base Seabird Project, the preliminary notification is dated 19.09.1986, the final notification - 8 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 came to be issued on 09.03.1987 the compensation which had been awarded under an award dated 31.10.1988 was accepted by respondents under protest and a reference sought for, as such a reference was made and came to be registered in LAC No.62 of 1991, by then 5 years had lapsed from the date of preliminary notification. 9. LAC No.62 of 1991 came to be disposed after a gap of 17 years on 13.03.2008 enhancing the compensation, the petitioner-The Defense Estate Officer had preferred an appeal in MFA No.25520 of 2010 which came to be disposed on 04.10.2011. It is to execute the said final order that Execution Proceedings in Ex. Case No.79 of 2018 had been filed by landowner. Prior to that Execution proceedings in Ex.No.158 of 2008 the same has been filed, the same has been withdrawn on account of the appeal preferred. 10. The total amount which was payable as on the date of filing of Execution petition was stated to be - 9 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 Rs.1,37,28,130/- and the interest payable on the said amount until 18.04.2008 was calculated to be Rs.4,44,92,257/-. The petitioner made payment for sum of Rs.1,33,71,445/- on 28.02.2011 leaving a balance payable of Rs.3,11,20,812/- with furthermore interest at the rate of 15% which as on 18.07.2017 amounted to Rs.1,90,47,600/-. The total interest payable coming up to Rs.5,01,68,412/- an amount of Rs.4,47,54,965/- was paid in the year 2017-18 leaving a further balance amount of Rs.54,13,447/- which accrued further interest of Rs.20,59,200/- totaling up to Rs.74,72,647/- and along with the award amount of Rs.1,37,28,130/-, the balance amount as on the date of filing of the execution petition was stated to be Rs.2,12,00,777/-. 11. Though the Execution Petition is filed in the year 2018 the payments were not made and the matter continued to languish. Memos were also filed by the decree holders in the Execution Petition clearly stating - 10 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 the amount which are due from time to time. The last memo which had been filed was on 10.08.2022 which took into account, the further amount which have been paid leaving a balance of Rs.1,11,49,799/-. 12. Finally, an issue was raised that TDS amount is required to be deducted on the interest amount of the compensation which required the Execution Court to consider the matter and pass a detailed order on 29.08.2022 which is under challenge in these Proceedings. The Execution Court by the said order come to a categorical conclusion that the land which has been acquired being agricultural in nature, the compensation which has been enhanced and interest directed to be paid was in terms of Section 28 of the LA Act, 1894 and therefore there is no requirement of deduction of tax at source and called upon the petitioner to make payment of the entire amount, the said order is under challenge before this Court. - 11 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 13. Sri.Mrutynjaya. S.Hallikeri., learned counsel appearing for the petitioner submits that; 13.1. The deduction of tax at source is exempted insofar as the compensation amount is concerned, that being the capital receipt at the hands of the land loser. Insofar as interest is concerned, the same being a revenue receipt in the hands of the land loser would be income from other sources requiring deduction of tax at source in terms of Section 194-LA of the Income Tax Act, 1961. 13.2. He relies upon Clause (viii) of Sub-section (2) of Section 56 to contend that income by way of interest received on compensation or on enhanced compensation, under Sub-section (1) of Section 145-B would amount to income from other sources. 13.3. He refers to Clause (viii) of Sub-section (2) of Section 56 to contend that income by way of - 12 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 interest received on compensation or enhanced compensation referred to in Sub-section (1) of Section 145-B would be income from other sources which shall be chargeable to income tax under such head. 13.4. By referring to Section 145-B, he submits that the interest received by any assessee on any compensation or on enhanced compensation as the case may be shall be deemed to be income of the previous year in which it is received and by referring to Section 194-LA, he submits that it is only the compensation which is exempt from deduction of tax at source and not the interest. 13.5. In this regard, he relies upon the decision of the Punjab and Haryana High Court in Mahender Pal Narang v. CBDT1 more particularly para Nos.2 and 13 thereof, which are reproduced hereunder for easy reference; 1 (2020) 423 ITR 13 - 13 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 2. The issue involved in narrow circumference is "whether after the insertion of sections 56(2)(viii) and 57(iv) of the Act, with effect from April 1, 2010, can the assessee claim that interest received under section 28 of the Land Acquisition Act, 1894 (for short, "the 1894 Act") will partake the character of compensation and would fall under the head 'Capital gains' and not 'Income from other sources' ?" 13. In view of the above, it is held that the interest received on compensation or enhanced compensation is to be treated as "income from other sources" and not under the head "capital gains". 13.6. By relying on the same, he again submits that interest received in compensation or enhanced compensation is to be treated as income from other sources. 13.7. He relies upon the decision of this Court in Guru Rao v. State of Karnataka2 more particularly para 10 and 14 thereof, which are reproduced hereunder for easy reference; 10. The ‘interest’ in the context means, a consideration paid either for use of money or for forbearance in demanding it, after it has fallen due. It is a compensation allowed by law or fixed by parties or permitted by custom or usage for use 2 ILR 2012 Karn. 6485 - 14 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 of money, belonging to another or for the delay in paying the money after it has become payable. 14. As has been noticed above, interest is not an item of compensation nor is it a consideration for acquisition of land. Interest under Section 28 is statutorily paid for the delayed payment of compensation amount. It is a revenue receipt. The amount received as interest on the amount of compensation assessed under the Land Acquisition Act is taxable under the Income Tax Act. The bar contained in Section 194 LA for deducing the tax at source is only in respect of the compensation determined for acquiring the agricultural lands. The said bar is not applicable in so far as interest is concerned. Therefore, I do not find any error in the circular at Annexure ‘B’ dated 4.9.2010. In my opinion, the second respondent has rightly deducted 10% of the interest amount towards deduction of tax at source. There is no merit in the writ petitions. They are accordingly dismissed. No costs. 13.8. He relies upon the decision of the full bench of the Hon’ble Apex Court in Sham Lal Narula (Dr.) v. CIT3 more particularly para 8 thereof, which is reproduced hereunder for easy reference; 8. The legislature expressly used the word “interest” with its well known connotation under Section 34 of the Act. It is, therefore, reasonable to give that expression the natural meaning it 3 (1964) 53 ITR 151 - 15 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 bears. There is an illuminating exposition of the expression “interest” by the House of Lords in Westminster Bank Ltd. v. Riches [(1947) 28 TC 159, 189] . The question there was whether, where in an action for recovery of any debt or damages the court exercises its discretionary power under a statute and orders that there shall be included in the sum for which the judgment is given interest on the debt or damages, the sum of interest so included is taxable under the Income Tax Acts. If the said amount was “interest of money” within Schedule D and the General Rule 21 of the All Schedules Rules of the Income Tax Act, 1918, income tax was payable thereon. In that context it was contended that money awarded as damages for the detention of money was not interest and had not the quality of interest. Lord Wright observed: “The general idea is that he is entitled to compensation for the deprivation. From that point of view it would seem immaterial whether the money was due to him under a contract express or implied, or a statute, or whether the money was due for any other reason in law. In either case the money was due to him and was not paid or, in other words, was withheld from him by the debtor after the time when payment should have been made, in breach of his legal rights, and interest was a compensation, whether the compensation was liquidated under an agreement or statute, as for instance under Section 57 of the Bills of Exchange Act, 1882, or was unliquidated and claimable under the Act as in the present case. The essential quality of the claim for compensation is the same, and the compensation is properly described as interest.” This passage indicates that interest, whether it is statutory or contractual, represents the profit the creditor might have made if he had the use of the money or the loss he suffered because he had - 16 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 not that use. It is something in addition to the capital amount, though it arises out of it. Under Section 34 of the Act when the legislature designedly used the word “interest” in contradistinction to the amount awarded, we do not see any reason why the expression should not be given the natural meaning it bears. 1.1. By relying on Guru Rao’s case and Sham Lal Narula’s case, he again submits that interest is for the very same purpose. 1.2. Insofar in the decision in CIT v. Ghanshyam (HUF) reported in (2009) 8 SCC 412 which has been relied upon by trial Court, he submits that that decision will no longer be applicable since the said decision was rendered on 16.07.2009, the amendment to Clause (viii) of Sub-section (2) of Section 56 having occurred on 01.04.2010, it is the said amended provision which would be required to be looked into and not the judgement of the Hon’ble Apex Court in Ghanshyam’s case. - 17 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 1.3. That apart he submits, that the decision of the two Judge Bench of the Hon’ble Apex Court in Ghanshyam’s case is per incuriam inasmuch as the full Bench judgment in Sham Lal Narula's case had not been referred to in that matter and the earlier judgment being of a full bench would have supremacy over the two Judge Bench judgement in Ghanshyam’s case. 1.4. On all the above basis, he submits that the Defense Estate Officers have rightly deducted tax at source and the same cannot be faulted with and the same would have to be taken into consideration. 14. Heard Sri.Mrutyunjaya S.Hallikeri., learned counsel appearing for the petitioner and perused papers. 15. The sequence of events leading up to the Execution Proceedings have been detailed hereinabove. - 18 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 16. The acquisition having occurred in the 80’s Execution Proceedings are still pending in the year 2024 and the Defense Estate Officer has not made payment of compensation in its entirety, though at various points of time certain amounts have been paid. 17. Section 28 of the LA Act, 1894 is reproduced hereunder for easy reference; 28. Collector may be directed to pay interest on excess compensation If the sum which, in the opinion of the Court, the Collector ought to have awarded as compensation is in excess of the sum which the Collector did award as compensation, the award of the Court may direct that the Collector shall pay interest on such excess at the rate of [nine per centum] [Substituted by Act 68 of 1984, Section 18, for " six per centum" (w.e.f. 24.9.1984).] per annum from the date on which he took possession of the land to the date of payment of such excess into Court: [Provided that the award of the Court may also direct that where such excess or any part thereof is paid into Court after the date of expiry of a period of one year from the date on which possession is taken, interest at the rate of fifteen per centum per annum shall be payable from the date of expiry of the said period of one year on the amount of such excess or part thereof which has not been paid into Court before the date of such expiry.] [Inserted by Act 68 of 1984, Section 18 (w.e.f. 24.9.1984).] [28-A. Re-determination of the amount of compensation on the basis of the award of the - 19 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 Court [Inserted by Act 68 of 1984, Section 19 (w.e.f. 24.9.1984).] (1) Where in an award under this Part, the Court allows to the applicant any amount of compensation in excess of the amount awarded by the Collector under section 11, the persons interested in all the other land covered by the same notification under section 4, sub-section (1) and who are also aggrieved by the award of the Collector may, notwithstanding that they had not made an application to the Collector under section 18, by written application to the Collector within three months from the date of the award of the Court require that the amount of compensation payable to them may be re-determined on the basis of the amount of compensation awarded by the Court: Provided that in computing the period of three months within which an application to the Collector shall be made under this sub-section, the day on which the award was pronounced and the time requisite for obtaining a copy of the award shall be excluded. (2)The Collector shall, on receipt of an application under sub-section (1), conduct an inquiry after giving notice to all the persons interested and giving them a reasonable opportunity of being heard, and make an award determining the amount of compensation payable to the applicants. (3) Any person who has not accepted the award under sub-section (2) may, by written application to the Collector, require that the matter be referred by the Collector for the determination of the Court and the provisions of sections 18 to 28 shall, so far as may be, apply to such reference as they apply to a reference under section 18.] - 20 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 18. A perusal of Section 28 would indicate that the Court may direct that the collector shall pay interest on such excess amount awarded at 9% per annum from the date on which he took possession of the land to the date of payment of the excess into Court. Provided that the Court may also direct that were such excess any part thereof is paid after date of expiry of period of one year from the date on which the possession is taken interest at the rate of 15% per annum shall be payable from the date of expiry of said period of one year on the amount of such excess or part thereof which has not been paid into Court before the date of such expiry. 19. This interest under Section 28 of the LA Act of 1894 is distinct from that under Section 34 of the LA Act of 1894. Section 34 is reproduced hereunder for easy reference; 34. Payment of interest; When the amount of such compensation is not paid or deposited on or before taking possession of the land, the Collector shall pay the amount awarded with interest thereon at the rate of [nine per centum] [Substituted by Act 68 of 1984, Section 20, for " six per centum" (w.e.f. - 21 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 24.9.1984).] per annum from the time of so taking possession until it shall have been so paid or deposited: [Provided that if such compensation or any part thereof is not paid or deposited within a period of one year from the date on which possession is taken, interest at the rate of fifteen per centum per annum shall be payable from the date of expiry of the said period of one year on the amount of compensation or part thereof which has not been paid or deposited before the date of such expiry.] [Inserted by Act 68 of 1984, Section 20 (w.e.f. 24.9.1984).] 20. A perusal of Section 34 indicates that it relates to amount of compensation which is not paid or deposited on or before taking possession of the land, the collector shall pay the amount awarded with interest thereon at the rate of 9% per annum from the date of so taking possession until it shall have been so paid or deposited. 21. The distinction between Section 28 and Section 34 is the ex-facie evident. Section 34 would arise in a situation where there is no reference which has been made and on account of non-payment of compensation interest would be liable to be made payment of by the acquiring authority. Whereas Section 28 deals with a situation - 22 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 where enhancement of compensation has been sought for and when the compensation is enhanced the acquiring authority is required to make payment of the enhanced amount with interest at the rate as specified therein. 22. Even insofar as enhancement of compensation under Section 28 is concerned, the acquiring authority could have always paid the compensation amount as originally awarded without the land loser taking any recourse to Execution Proceedings. When an award has been passed on acquisition of land it is the bounden duty on part of the acquiring authority to make payment of the compensation amount at the earliest. It is only if that compensation amount awarded is not paid within time that interest under Section 34 would have to be taken into consideration by the Execution Court when execution proceedings are initiated. 23. Insofar Section 28 is concerned as indicated (supra) the same arises on account of the Court directing - 23 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 enhancement of compensation and in furtherance thereof directing payment of interest for the period during which the enhancement proceedings were pending and therefore in my considered opinion the interest which is awarded under Section 28 partakes the nature of compensation and not interest per se. This being so for the simple reason that it is during the pendency of a proceeding under Section 28 that interest under Section 28 is awarded. Firstly, at the rate of 9% till the date of taking possession and subsequently at the rate of 15% after taking possession. 24. Thus, the calculation which has been made in a proceeding under Section 28 is both as regards the enhanced value of the land and the interest liable to be paid thereon for the delay in making payment of the compensation which becomes part of compensation and is not interest in terms of Section 34 of the LA Act, 1894. 25. The decision which has been referred to by the learned counsel for the petitioner starting with a decision of the - 24 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 Hon’ble Apex Court in Shamlal Narula’s case was one where interest was levied under Section 34 as could be seen from para No.8 which has been extracted hereinabove and the said interest at the end of para No.9, the Hon’ble Apex Court has observed “we therefore, hold that the statutory interest paid under Section 34 of the LA Act is the interest paid for the delayed payment of the compensation amount and therefore is a revenue receipt liable to tax under the Income Tax Act”. 26. 26. Thus, the finding rendered by the full Bench of the Hon’ble Apex Court was only with reference to interest under Section 34 Act of 1984 and not under Section 28 of the Act 1984. 27. This aspect which has been considered by the Hon’ble Punjab and Haryana High Court in Mahender Pal Narang’s case and a co-ordinate Bench of this Court in Guru Rao’s case relied upon by the counsel for the petitioner. - 25 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 28. Wherein reliance has been placed by both the Courts on Shamlal Narula’s case. Shamlal Narula's case dealing with only interest levied in terms Section 34 will not in my considered opinion apply to interest levied in terms of Section 28 of the Act of 1894. 29. Furthermore, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 in Section 96 of the said Act, exempts income tax, stamp duty and fees on any award or agreement made under the Act except under Section 46. 30. Section 46 deals with provisions relating to rehabilitation and resettlement to apply in cases of certain persons other than the specified persons. Thus, upto the year 2013 the parliament in its wisdom thought it was fit to exempt from income tax any amount awarded under an agreement, which in my considered opinion would also have to be read into compensation awarded by a Court, even though it may not be by way of an agreement. - 26 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 31. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 as the name itself indicates came about to make the compensation fair, bring about transparency in land acquisition, provide for rehabilitation and resettlement this being for the reason that the acquiring authorities under the earlier LA Act of 1894, where not fair or transparent not did they provide for rehabilitation and resettlement. 32. The aspect of fairness and transparency, if taken into consideration the manner in which the litigation has proceeded in the present matter, would also indicate that the petitioner has neither been fair nor transparent. The acquisition being of the year 1986, the entire compensation has not been paid for nearly 40 years requiring the land loser to be knocking on the doors of the Courts to get just compensation. The award of compensation under Section 28 was on account of lower compensation being awarded at the time when the initial - 27 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 award had been passed, requiring the enhancement of the compensation, which came to be further challenged in an MFA, and the earlier Execution Petition filed by the land loser was required to be withdrawn on that account. 33. Thus, the entire delay on part of the petitioner is the one which has resulted in interest being levied on the petitioner initially at the rate of 9% and subsequently at the rate of 15% till the payment of compensation. A further aspect which would be required to be addressed here is that though compensation was awarded under Section 28 and Execution Proceedings were filed in the year 2018, payments not having been made until then and even thereafter the award under Section 28 having been passed on 13.03.2008 the interest even from 13.03.2008 would form part of the compensation under Section 28, since in terms of the order in LAC No.62 of 1991 the interest will continue to be applicable until the payment of the amounts. This interest post 13.03.2008 would also not come within the purview of Section 34 but - 28 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 would still continue to be part of Section 28 until the discharge thereof. 34. In view of the above matter, it is clear that the interest payable in terms of an award under Section 28 of the LA Act of 1894 would also form part of the compensation amount and therefore forming part of the capital receipt at the hands of the land loser this interest being paid on account of the delay in the acquiring authority in paying the amount of compensation and not an income from other sources as sought to be contended by learned counsel for the petitioner. 35. In that view of the matter there being no infirmity in the order passed by the Execution Court, the writ petitions stand dismissed by imposing cost of Rs.10,000/- per respondent to be payable to the land losers as part of the remaining acquisition amount for the unnecessary delay which has been caused by the Defense Estate Officer in disbursing the amount to the land losers by taking one or the other frivolous condition after that. - 29 - HC-KAR NC: 2025:KHC-D:12319 WP No. 102891 of 2025 36. The manner in which the matter has been prolonged for the last nearly 40 years in making payment of the compensation amount as necessitated the payment of interest by the acquiring authority. This interest needless to say would be paid out of the taxpayer’s money which has unnecessarily been required to be paid on account of the delay on part of the acquiring authority. It is these kinds of matters which not only put unnecessary burden on the public exchequer but also escalate the cost of a public project. 37. It would be for the concerned authorities to look into this matter, the Commanding officer of the Karwar Naval Base is directed look into the matter and take necessary action against all the concerned who have delayed in the disbursal of compensation. Sd/- (SURAJ GOVINDARAJ) JUDGE SR List No.: 1 Sl No.: 21