# Bhartiya Rashtriya Rajmarg Pradhikaran v. Smt. Manju Dixit & Anr

- **Citation:** (2021) 7 ILRA 1
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-04-19
- **Bench:** Saral Srivastava
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/bhartiya-rashtriya-rajmarg-pradhikaran-v-smt-manju-dixit-anr-47140
- **Pages:** 14

## Headnote

Arbitration & Conciliation Act, 1996:
Section
34
-The
District
Judge
while
considering the application under Section 34
of the Act has noticed that inspite of
providing with the an ample evidence to
demonstrate that the land in question was a
commercial land, the arbitrator did not
consider any of the evidences and rejected
the claim of the respondent no. 1. Thus, the
District Judge has not committed any error or
illegality in concluding that the award is
against the public policy and non-speaking
and therefore falls within the ambit of Section
34 of the Act, 1996. ( Paras 26-30)

Assessment of compensation of land
acquired - National Highway Act, 1956:
Section
3-A,
3-G(5),
3G(7)
-
U.P.
Roadside Land Control Act, 1942 - The
competent authority or the arbitrator in
determining the compensation is only to
consider the market value of the land on
the date of notification under Section 3A
of the Act, 1956 and the nature of land
recorded in the revenue record is not
relevant
for
determining
the
compensation. (Para 36)
The District Judge was right in considering the
unrebutted pieces of evidence which establishes
that land in question is commercial. It further
held that the simply because the land is
recorded as agricultural land in the revenue
record, that does not mean that the claimant
would be entitled to compensation on the rates
applicable to agricultural land. The best way to
determine the market value of the land is the
amount which a willing purchaser would pay to
the owner of the land. (Para 35)

The provision of arbitration in the Act,1956 has
been inserted with an intention to provide a
quick remedy to the landowners, therefore in
such circumstances, it cannot be said that the
court is denuded of the power to modify the
awards for the ends of justice to provide relief
to the landowner so that he may not suffer
indefinitely. (Para 40)

Appeal Rejected. (E-8)

List of Cases cited:

## Text

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7 All. Bhartiya Rashtriya Rajmarg Pradhikaran Vs. Smt. Manju Dixit & Anr.
1
(2021)07ILR A1
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 19.04.2021

BEFORE

THE HON'BLE SARAL SRIVASTAVA, J.

Appeal U/S 37 of Arbitration and Conciliation Act
1996 No. 8 of 2021

Bhartiya Rashtriya Rajmarg Pradhikaran
 ...Petitioner
Versus
Smt. Manju Dixit & Anr. ...Respondents

Counsel for the Petitioner:
Pranjal Mehrotra

Counsel for the Respondents:
-----

Arbitration & Conciliation Act, 1996:
Section
34
-The
District
Judge
while
considering the application under Section 34
of the Act has noticed that inspite of
providing with the an ample evidence to
demonstrate that the land in question was a
commercial land, the arbitrator did not
consider any of the evidences and rejected
the claim of the respondent no. 1. Thus, the
District Judge has not committed any error or
illegality in concluding that the award is
against the public policy and non-speaking
and therefore falls within the ambit of Section
34 of the Act, 1996. ( Paras 26-30)

Assessment of compensation of land
acquired - National Highway Act, 1956:
Section
3-A,
3-G(5),
3G(7)
-
U.P.
Roadside Land Control Act, 1942 - The
competent authority or the arbitrator in
determining the compensation is only to
consider the market value of the land on
the date of notification under Section 3A
of the Act, 1956 and the nature of land
recorded in the revenue record is not
relevant
for
determining
the
compensation. (Para 36)
The District Judge was right in considering the
unrebutted pieces of evidence which establishes
that land in question is commercial. It further
held that the simply because the land is
recorded as agricultural land in the revenue
record, that does not mean that the claimant
would be entitled to compensation on the rates
applicable to agricultural land. The best way to
determine the market value of the land is the
amount which a willing purchaser would pay to
the owner of the land. (Para 35)

The provision of arbitration in the Act,1956 has
been inserted with an intention to provide a
quick remedy to the landowners, therefore in
such circumstances, it cannot be said that the
court is denuded of the power to modify the
awards for the ends of justice to provide relief
to the landowner so that he may not suffer
indefinitely. (Para 40)

Appeal Rejected. (E-8)

List of Cases cited:

1. Dyna Technologies Pvt. Ltd. Vs Crompton
Greaves Ltd. (2019) 20 SCC 1

2. Swan Gold Mining Ltd. Vs Hindustan Copper
Ltd. (2015) 5 SCC 739

3. M/s Navodaya Mass Entertainment Ltd. Vs
M/s J.M. Combines (2015) 5 SCC 698

4. MMTC Limited Vs Vedanta Ltd. (2019) 4 SCC
163

5. Oil & Natural Gas Corporation Ltd. Vs Saw
Pipes Ltd. (2003) 5 SCC 705

6. Digamber & ors. Vs St. of Mah. & ors. (2013)
14 SCC 406

7. Attar Singh & anr.Vs U.O.I. & anr. (2009) 9
SCC 289

(Delivered by Hon'ble Saral Srivastava, J.)

1. Heard Sri Pranjal Mehrotra, learned
counsel for the appellant.
2 INDIAN LAW REPORTS ALLAHABAD SERIES

2. The appellant, Bhartiya Rashtriya
Rajmarg Pradhikaran has preferred the
present appeal under Section 37 of the
Arbitration and Conciliation Act, 1996
(hereinafter referred to as 'Act, 1996')
praying for setting aside the order dated
06.08.2020 passed by the District Judge,
Shahjahanpur in Arbitration Case No.16 of
2016 under Section 34 of the 'Act, 1996'.

3. The brief facts of the case are that the
appellant in the exercise of power under
Section 3-A (1) of the National Highway Act,
1956 (hereinafter referred to as) issued
notification dated 16.11.2009 with respect to
the lands situated in the number of villages
for the widening of NH-24 to four-lanes. By
the said notification, Gata No.193 area
0.1260 hectare (hereinafter referred to as
'land in question') situated in village
Maujampur,
Tehsil
Sadar,
district
Shahjahanpur owned by respondent no.1 was
also acquired.

4. The declaration under Section 3-D of
the 'Act, 1956' in respect of the land in
question was issued on 08.10.2010. The
competent authority while disposing of the
objection of respondent held that since land
in question is recorded as agriculture land,
therefore, compensation be calculated and
paid as per circle rates applicable to
agriculture land. Accordingly, it calculated
compensation based on circle rates applicable
to agriculture land and declared the award on
05.10.2012 under Section 3-G of the Act,
1956.

5. Feeling aggrieved by the award,
respondent no.1 preferred application under
Section 3-G (5) of the Act, 1956 for referring
the matter to the Arbitrator. Accordingly, the
application of respondent no.1 was referred to
the Sole Arbitrator/Collector, Shahjahanpur
for deciding the claim of respondent no.1.

6. The Sole Arbitrator/Collector,
Shahjahanpur by order dated 30.06.2016
dismissed the application of respondent
no.1 holding that he could not prove that
the land in question was outside the
purview of U.P. Road Side Land Control
Act,
1942,
therefore,
the
competent
authority
rightly
computed
the
compensation treating the land to be
agriculture land. Accordingly, it held that
there is no illegality or infirmity in the
award passed by the competent authority.

7. Feeling aggrieved by the order of
the Sole Arbitrator/Collector, Shahjahanpur
in Arbitration Case No.27 of 2012, the
respondent no.1 preferred application under
Section 34 of the Act, 1996 before the
District Judge, Shahjahanpur which was
numbered as 16 of 2016. The District
Judge,
Shahjahanpur
by
order
dated
06.08.2020 rejected the objection of the
appellant against the application of the
respondent under Section 34 of the Act,
1996. It set aside the award dated
30.06.2016 passed in Arbitration Case
No.16 of 2016 and directed for payment of
compensation treating the land to be
commercial land.

8. The District Judge, Shahjahanpur
in allowing the application of respondent
no.1 after noticing in detail the scope of
Section 34 of the Act, 1996 concluded that
the award of the Arbitrator is against the
public policy and principles of natural
justice. Accordingly, it found no merit in
the objection of the appellant and rejected
the same. Thereafter, the District Judge
proceeded to consider the issue as to
whether respondent no.1 is entitled to
compensation on the basis of agriculture
land or commercial land. After examining
the evidence led by respondent no.1, the
District Judge found that the land in
7 All. Bhartiya Rashtriya Rajmarg Pradhikaran Vs. Smt. Manju Dixit & Anr.
3
question
was
commercial
land,
and
accordingly, it directed for payment of
compensation of the land in question on the
basis of the commercial rate applicable on
the date of notification under Section 3-A
of the Act, 1956.

9. Challenging the order dated
06.08.2020 passed by the District Judge,
Shahjahanpur, learned counsel for the
appellant has contended that the District
Judge in passing the order on the
application under Section 34 of the Act,
1996 has acted as an appellate authority
and has reappraised the evidence on record
which is beyond the scope of Section 34 of
the Act, 1996. He submits that Section 34
of
the
Act,
1996
stipulates
certain
preconditions which if present would
entitle the court to interfere under Section
34 of the Act, 1996. He submits that in the
case on hand, the District Judge has
travelled beyond jurisdiction in interfering
with the award under Section 34 of the
Act,1996 as no condition envisaged under
said Section empowering the courts to
invoke its jurisdiction is present in the
present case. Thus, he submits that the
order of the District Judge, Shahjahanpur is
without jurisdiction and deserves to be set
aside.

10. He further submits that it is
established from the evidence on record
that land in question is recorded as
agriculture land on the date of notification
under Section 3-A of the Act, 1956,
therefore, merely because land in question
was being used for commercial purposes, it
would not become commercial land.
Accordingly, he submits that the District
Judge has committed a manifest error of
law apparent on the face of the record in
treating the land to be commercial land
and directing for payment of compensation
on the basis of commercial land. Thus, the
submission is that the impugned order is
per se illegal and not sustainable in law.

11. I have heard learned counsel for
the appellant and perused the record.

12. Before adverting to the first
argument of learned counsel for the
appellant in respect of the scope of Section
34 of the Act, 1996, it would be appropriate
to reproduce Section 34 of the Act, 1996:-

"34. Application for setting aside
arbitral award. --(1) Recourse to a Court
against an arbitral award may be made
only by an application for setting aside
such award in accordance with sub-section
(2) and sub-section (3).

(2) An arbitral award may be set
aside by the Court only if--

(a)
the
party
making
the
application furnishes proof that--

(i) a party was under some
incapacity, or

(ii) the arbitration agreement is
not valid under the law to which the parties
have subjected it or, failing any indication
thereon, under the law for the time being in
force; or

(iii)
the
party
making
the
application was not given proper notice of
the appointment of an arbitrator or of the
arbitral proceedings or was otherwise
unable to present his case; or

(iv) the arbitral award deals with
a dispute not contemplated by or not falling
within the terms of the submission to
arbitration, or it contains decisions on
matters beyond the scope of the submission
to arbitration:
4 INDIAN LAW REPORTS ALLAHABAD SERIES

Provided that, if the decisions on
matters submitted to arbitration can be
separated from those not so submitted, only
that part of the arbitral award which
contains decisions on matters not submitted
to arbitration may be set aside; or

(v) the composition of the arbitral
tribunal or the arbitral procedure was not
in accordance with the agreement of the
parties, unless such agreement was in
conflict with a provision of this Part from
which the parties cannot derogate, or,
failing such agreement, was not in
accordance with this Part; or

(b) the Court finds that--

(i) the subject-matter of the
dispute is not capable of settlement by
arbitration under the law for the time being
in force, or

(ii) the arbitral award is in
conflict with the public policy of India.

[Explanation
1.--For
the
avoidance of any doubt, it is clarified that
an award is in conflict with the public
policy of India, only if,--

(i) the making of the award was
induced or affected by fraud or corruption
or was in violation of section 75 or section
81; or

(ii) it is in contravention with the
fundamental policy of Indian law; or

(iii) it is in conflict with the most
basic notions of morality or justice.]

Explanation
2.--For
the
avoidance of doubt, the test as to whether
there
is
a
contravention
with
the
fundamental policy of Indian law shall not
entail a review on the merits of the
dispute.]

[(2A) An arbitral award arising
out of arbitrations other than international
commercial arbitrations, may also be set
aside by the Court, if the Court finds that
the award is vitiated by patent illegality
appearing on the face of the award:

Provided that an award shall not
be set aside merely on the ground of an
erroneous application of the law or by
reappreciation of evidence.]

(3) An application for setting
aside may not be made after three months
have elapsed from the date on which the
party making that application had received
the arbitral award or, if a request had been
made under section 33, from the date on
which that request had been disposed of by
the arbitral tribunal:

Provided that if the Court is
satisfied that the applicant was prevented
by sufficient cause from making the
application within the said period of three
months it may entertain the application
within a further period of thirty days, but
not thereafter.

(4) On receipt of an application
under sub-section (1), the Court may,
where it is appropriate and it is so
requested
by
a
party,
adjourn
the
proceedings
for
a
period
of
time
determined by it in order to give the
arbitral tribunal an opportunity to resume
the arbitral proceedings or to take such
other action as in the opinion of arbitral
tribunal will eliminate the grounds for
setting aside the arbitral award.

[(5) An application under this
section shall be filed by a party only after
issuing a prior notice to the other party and
such application shall be accompanied by
an affidavit by the applicant endorsing
compliance with the said requirement.

(6) An application under this
section shall be disposed of expeditiously,
and in any event, within a period of one
year from the date on which the notice
referred to in sub-section (5) is served upon
the other party.]"

13. At this point, it would be
appropriate to refer to few judgments of the
7 All. Bhartiya Rashtriya Rajmarg Pradhikaran Vs. Smt. Manju Dixit & Anr.
5
Apex Court to appreciate the scope of
Section 34 of the Act, 1996.

14. In Dyna Technologies Private
Limited Vs. Crompton Greaves Limited
(2019) 20 SCC 1, the Apex Court has held
that Section 34 of the Act, 1996 limits
challenge to the award only on the grounds
stipulated therein. Paragraphs 24 & 25 of
the said judgment are being extracted
herein below:-

"24. There is no dispute that
Section 34 of the Arbitration Act limits a
challenge to an award only on the grounds
provided therein or as interpreted by
various courts. We need to be cognizant of
the fact that arbitral awards should not be
interfered with in a casual and cavalier
manner, unless the court comes to a
conclusion that the perversity of the award
goes to the root of the matter without there
being
a
possibility
of
alternative
interpretation which may sustain the
arbitral award. Section 34 is different in its
approach and cannot be equated with a
normal appellate jurisdiction. The mandate
under Section 34 is to respect the finality of
the arbitral award and the party autonomy
to get their dispute adjudicated by an
alternative forum as provided under the
law. If the courts were to interfere with the
arbitral award in the usual course on
factual aspects, then the commercial
wisdom behind opting for alternate dispute
resolution would stand frustrated.

25. Moreover, umpteen number of
judgments of this Court have categorically
held that the courts should not interfere
with
an
award
merely
because
an
alternative view on facts and interpretation
of contract exists. The courts need to be
cautious and should defer to the view taken
by the Arbitral Tribunal even if the
reasoning provided in the award is implied
unless such award portrays perversity
unpardonable under Section 34 of the
Arbitration Act."

15. The Apex Court in the case of
Swan Gold Mining Limited Vs. Hindustan
Copper Limited (2015) 5 SCC 739 held
that the Court shall not ordinarily substitute
its interpretation for that of the Arbitrator.
Paragraph 12 of the said judgment is being
reproduced hereinbelow:-

"12. It is equally well settled that
the arbitrator appointed by the parties is
the final judge of the facts. The finding of
facts recorded by him cannot be interfered
with on the ground that the terms of the
contract were not correctly interpreted by
him.

16. The Apex Court in the case of M/s
Navodaya Mass Entertainment Limited
Vs. M/s. J.M. Combines (2015) 5 SCC 698
while considering the scope of Section 34
of the Act, 1996 reiterated that the scope of
interference of the court is very limited.
Court is not vested with the power to
reappraise the material on record and
substitute the view of Arbitrator by its
view. Paragraph 8 of the said judgment is
being reproduced hereinbelow:-

"8. In our opinion, the scope of
interference of the court is very limited.
The court would not be justified in
reappraising the material on record and
substituting its own view in place of the
arbitrator's view. Where there is an error
apparent on the face of the record or the
arbitrator has not followed the statutory
legal position, then and then only it would
6 INDIAN LAW REPORTS ALLAHABAD SERIES
be justified in interfering with the award
published by the arbitrator. Once the
arbitrator has applied his mind to the
matter before him, the court cannot
reappraise the matter as if it were an
appeal and even if two views are possible,
the view taken by the arbitrator would
prevail."

17. In the case of MMTC Limited Vs.
Vedanta Limited (2019) 4 SCC 163, the
Apex Court held that court does not sit in
appeal
over
arbitral
award
while
considering the application 34 of the Act,
1996. Paragraph 11 of the said judgment is
being reproduced hereinbelow:-

"11. As far as Section 34 is
concerned, the position is well-settled by now
that the Court does not sit in appeal over the
arbitral award and may interfere on merits
on the limited ground provided under Section
34(2)(b)(ii), i.e. if the award is against the
public policy of India. As per the legal
position clarified through decisions of this
Court prior to the amendments to the 1996
Act in 2015, a violation of Indian public
policy, in turn, includes a violation of the
fundamental policy of Indian law, a violation
of the interest of India, conflict with justice or
morality, and the existence of patent illegality
in the arbitral award. Additionally, the
concept of the "fundamental policy of Indian
law" would cover compliance with statutes
and judicial precedents, adopting a judicial
approach, compliance with the principles of
natural
justice,
and
Wednesbury
reasonableness.
Furthermore,
"patent
illegality" itself has been held to mean
contravention of the substantive law of India,
contravention
of
the
1996
Act,
and
contravention of the terms of the contract."

18. The Apex Court in the aforesaid
judgments while explaining the scope of
Section 34 of the Act, 1996 consistently
held that the court does not act as the court
of appeal in dealing with the arbitral award
and should be slow in interfering with the
arbitration award. It is also held in the
aforesaid judgments that if two views are
possible on an issue and one adopted by the
arbitrator is possible then, the court should
not substitute its view by the view of the
Arbitrator. Thus, it can be elucidated from
aforesaid that the existence of any one of
the conditions specified under Section 34
of the Act, 1996 is a precondition for
interference with the award by the court. In
other words, the courts are devoid of the
power to interfere with the award if
conditions stipulated under Section 34 of
the Act,1996 are lacking and not present.

19. The Apex Court, by and large, has
approved the interference in the award by
the court under Section 34 of the Act, 1996
if the award is perverse or so irrational that
no reasonable man would have arrived at
the same or it is bereft of reasons or against
the public policy or in violation of the
principles
of
natural
justice
or
the
Arbitrator has not followed the statutory
legal provision of law or if there is
something so shocking in the award which
pricks the conscience of the Court.

20. The term "public policy"
contained in Section 34 (2) (b) (ii) of the
Act, 1996 has been defined by the Apex
Court in paragraph 31 of the judgment in
the case of Oil & Natural Gas Corporation
Ltd. Vs. Saw Pipes Ltd. (2003) 5 SCC 705.
Paragraph 31 of the judgment reads as
under:-

"31. Therefore, in our view, the
phrase "public policy of India" used in
Section 34 in context is required to be
given a wider meaning. It can be stated that
7 All. Bhartiya Rashtriya Rajmarg Pradhikaran Vs. Smt. Manju Dixit & Anr.
7
the concept of public policy connotes some
matter which concerns public good and the
public interest. What is for public good or
in public interest or what would be
injurious or harmful to the public good or
public interest has varied from time to time.
However, the award which is, on the face
of it, patently in violation of statutory
provisions cannot be said to be in public
interest. Such award/judgment/decision is
likely to adversely affect the administration
of justice. Hence, in our view in addition to
narrower meaning given to the term
"public policy" in Renusagar case (supra),
it is required to be held that the award
could be set aside if it is patently illegal.
The result would be - award could be set
aside if it is contrary to: -

(a) fundamental policy of Indian
law; or

(b) the interest of India; or

(c) justice or morality, or

(d) in addition, if it is patently
illegal.

Illegality must go to the root of
the matter and if the illegality is of trivial
nature it cannot be held that award is
against the public policy. Award could also
be set aside if it is so unfair and
unreasonable that it shocks the conscience
of the court. Such award is opposed to
public policy and is required to be adjudged
void."

21. At this stage, it would also be
appropriate to refer to the judgment of
Dyna
Technologies
Private
Limited
(supra) wherein the Apex Court in
paragraphs 34 & 35 of the judgment has
explained
the
necessity
for
passing
reasoned award as mandated under Section
31 (3) of the Act, 1996. Paragraphs 34 &
35 of the judgment are being reproduced
hereinbelow:

"34. The mandate under Section
31(3) of the Arbitration Act is to have
reasoning
which
is
intelligible
and
adequate and, which can in appropriate
cases be even implied by the courts from a
fair reading of the award and documents
referred to thereunder, if the need be. The
aforesaid provision does not require an
elaborate judgment to be passed by the
arbitrators having regard to the speedy
resolution of dispute.

35.
When
we
consider
the
requirement of a reasoned order, three
characteristics of a reasoned order can be
fathomed. They are: proper, intelligible
and adequate. If the reasonings in the
order are improper, they reveal a flaw in
the
decision-making
process.
If
the
challenge to an award is based on
impropriety or perversity in the reasoning,
then it can be challenged strictly on the
grounds provided under Section 34 of the
Arbitration Act. If the challenge to an
award is based on the ground that the same
is unintelligible, the same would be
equivalent of providing no reasons at all.
Coming to the last aspect concerning the
challenge on adequacy of reasons, the
Court while exercising jurisdiction under
Section 34 has to adjudicate the validity of
such an award based on the degree of
particularity of reasoning required having
regard to the nature of issues falling for
consideration. The degree of particularity
cannot be stated in a precise manner as the
same would depend on the complexity of
the issue. Even if the Court comes to a
conclusion that there were gaps in the
reasoning for the conclusions reached by
the Tribunal, the Court needs to have
regard to the documents submitted by the
parties and the contentions raised before
the
Tribunal
so
that
awards
with
inadequate reasons are not set aside in
8 INDIAN LAW REPORTS ALLAHABAD SERIES
casual and cavalier manner. On the other
hand, ordinarily unintelligible awards are
to be set aside, subject to party autonomy
to do away with the reasoned award.
Therefore, the courts are required to be
careful
while
distinguishing
between
inadequacy of reasons in an award and
unintelligible awards."

22. It would also be apposite to
reproduce Section 3-G (7) of the Act, 1956
which provides criteria for assessment of
compensation of the land acquired. Section
3-G(7) of the Act, 1956 is being
reproduced hereinbelow:-

"3-G. Determination of amount
payable as compensation.--

(1)...

(2)...

(3)...

(4)...

(5)...

(6)...

(7). The competent authority or
the arbitrator while determining the
amount under sub-section (1) or subsection (5), as the case may be, shall take
into consideration--

(a) the market value of the land
on
the
date
of
publication
of
the
notification under section 3A;

(b) the damage, if any, sustained
by the person interested at the time of
taking possession of the land, by reason of
the severing of such land from other land;

(c) the damage, if any, sustained
by the person interested at the time of
taking possession of the land, by reason of
the acquisition injuriously affecting his
other immovable property in any manner,
or his earnings;

(d) if, in consequences of the
acquisition of the land, the person
interested is compelled to change his
residence or place of business, the
reasonable expenses, if any, incidental to
such change."

23. On the touchstone of the
parameters laid down by the Apex Court
explicating when the court can interfere
with the award under Section 34 of the Act,
1996 and the criteria provided in Section 3G(7) of the Act, 1956 which the competent
authority or the Arbitrator shall take into
consideration
in
assessing
the
compensation, the legality of the arbitral
award passed by the Collector is being
tested, and whether in the facts of the
present case, the District Judge was
justified in setting aside the award and
directing for payment of compensation
treating the land to be commercial land.

24. The fact as emanates from the
record suggest that respondent no.1 being
dissatisfied with the compensation awarded
by the competent authority, raised an
arbitration dispute under Section 3-G(5) of
the Act, 1956. The case of respondent no.1
was that the land in question was
commercial land, and therefore, he is
entitled to compensation on the basis of
rates applicable to commercial land on the
date of notification under Section 3-A of
the Act, 1956. In respect of the said
contention, respondent no.1 has produced
shreds of evidence; namely sale deed dated
01.11.1999 in respect of 168 square meter
which was the part and parcel of Gata
No.193, the evidence showing that M/s
Manoj Kumar Dixit was running a
transport office in the shop constructed
over the land in question, copy of
registration certificate of the commercial
establishment (वाणिज्यिक अणिष्ठान), copy of
khasra in which land in question is
recorded as 'Dukan/Abadi'. The other
pieces of evidence adduced by respondent
7 All. Bhartiya Rashtriya Rajmarg Pradhikaran Vs. Smt. Manju Dixit & Anr.
9
no.1, which establishes that the land was
Abadi land, was Rashion Card and Voter
I.D. Card. Besides above, respondent no.1
also adduced evidence to establish that
there
was
a
petrol
pump,
Hyundai
showroom, tractor agency, Nainital Dhaba,
Fauji Dhaba, Shahjahanpur Dhaba, Urea
and Pesticides shop in the surrounding area
of the land in question on the date of
notification which proves that commercial
activity is also being carried on in the
vicinity of land in question.

25. The aforesaid pieces of evidence
were filed by respondent no.1 before the
Arbitrator, but the Arbitrator did not
consider any of the evidence adduced by
respondent no.1 and rejected the claim of
respondent no.1 on the ground that
respondent no.1 could not produce any
evidence that land in question was
outside the limits of the U.P. Roadside
Land Control Act, 1942. The Arbitrator
further recorded a finding that respondent
no.1 has not adduced any evidence to
prove that construction over land was
made after taking necessary approval
from the authority.

26. The District Judge while
considering the application under Section
34 of the Act, 1996 of respondent no.1
has noticed that there was ample evidence
adduced by respondent no.1 which proves
that land in question was commercial
land and the Arbitrator did not consider
any of the evidence led by the respondent
no.1
while
rejecting
his
claim.
Accordingly,
the
District
Judge
concluded that the award is against the
public policy and non-speaking, hence,
the application under Section 34(2) of the
Act, 1996 is maintainable.

27. From the facts detailed above, it
is clear that the arbitral award is perverse
for want of consideration of any of the
evidence adduced by respondent no.1
proving
that
land
in
question
was
commercial on the date of notification
under Section 3A.

28. At this point, it is worth pointing
that Section 3-G(7) of the Act, 1956 cast a
duty upon the Arbitrator to follow the
criteria provided in the said Section for
determining
the
compensation.
Accordingly, the Arbitrator shall determine
the compensation as per the market value
of the land on the date of publication of the
notification under Section 3-A of the Act,
1956 whereas in the present case, the
Arbitrator
has
failed
to
assess
the
compensation as per the market value of
the land in question on the date of the
notification under Section 3-A of the Act,
1956. Thus, the Arbitrator has failed to
follow the criteria provided in Section 3-G
(7) of the Act, 1956 for determining the
compensation and the arbitral award is in
violation of Section 3-G (7) of the Act,
1956.

29. Therefore, in the light of the
above discussion, this Court finds that the
District
Judge,
Shahjahapur
has
not
committed any error or illegality in
concluding that the present case falls within
the ambit of Section 34 of the Act, 1996
and has rightly interfered with the award.

30. Now coming to the next
submission of learned counsel for the
appellant that since the land in question is
recorded as agricultural land in the revenue
record, therefore, merely because the land
in question is in use for commercial
10 INDIAN LAW REPORTS ALLAHABAD SERIES
purpose, it would not become commercial
land, and, the compensation awarded the
competent authority treating the land to be
agriculture land is just and proper and does
not warrant interference by the Court.

31. It is worth pointing out that it is
evident from the record that overwhelming
evidence as detailed above was adduced by
respondent no.1 to demonstrate that the
land in question was commercial land on
the date of notification under Section 3A of
the Act, 1956. Those pieces of evidence
were not rebutted by the appellant. Section
3-G(7)(a) provides that compensation shall
be determined on the basis of the market
value of the land on the date of notification
under Section 3-A of the Act, 1956. So, the
criteria for determination of compensation
in respect of land acquired is the market
value of the land which it could fetch on
the date of notification under Section 3-A
of the Act, 1956.

32. At this stage, it would be worth
noticing few judgments of the Apex Court
where Apex Court has explained with
reference to the Land Acquisition Act,
1894 as to what criteria should be adopted
by the courts in fixing the 'market value' of
land. Paragraphs 16.3 and 16.4 of the
judgment of the Apex Court in the case of
Digamber and Others Vs. State of
Maharashtra and Others (2013) 14 SCC
406 are being reproduced hereinbelow:-

"16.3 Also paras 16 and 17 from
Sabhia Mohammed Yusuf Abdul Hamid
Mulla v. Land Acquisition Officer, (2012) 7
SCC 595 are quoted hereunder:

"16. We have considered the
respective arguments and carefully perused
the record. It is settled law that while fixing
the market value of the acquired land, the
Land Acquisition Collector is required to
keep in mind the following factors:

(i)
Existing
geographical
situation of the land.

(ii) Existing use of the land.

(iii)
Already
available
advantages, like proximity to National or
State Highway or road and/or developed
area.

(iv) Market value of other land
situated in the same locality/village/area or
adjacent or very near the acquired land.

17.
In
Viluben
Jhalejar
Contractor v. State of Gujarat (2005) 4
SCC 789 this Court laid down the following
principles for the determination of market
value of the acquired land: (paras 17-19)

"17. Section 23 of the Act
specifies the matters required to be
considered
in
determining
the
compensation; the principal among which
is the determination of the market value of
the land on the date of the publication of
the notification under sub-section (1) of
Section 4.

18. One of the principles for
determination
of
the
amount
of
compensation for acquisition of land would
be the willingness of an informed buyer to
offer the price therefor. It is beyond any
cavil that the price of the land which a
willing and informed buyer would offer
would be different in the cases where the
owner is in possession and enjoyment of the
property and in the cases where he is not.

19. Market value is ordinarily the
price the property may fetch in the open
market if sold by a willing seller unaffected
by the special needs of a particular
purchase. Where definite material is not
forthcoming either in the shape of sales of
similar lands in the neighbourhood at or
about the date of notification under Section
4(1) or otherwise, other sale instances as
7 All. Bhartiya Rashtriya Rajmarg Pradhikaran Vs. Smt. Manju Dixit & Anr.
11
well as other evidences have to be
considered.

16.4.
Further,
it
would
be
worthwhile to refer to the portion which is
extracted from Atma Singh Vs. State of
Haryana (2008) 2 SCC 568 which paragraph
is referred to at para 18 in Sabhia
Mohammed Yusuf Abdul Hamid Mulla v.
Land Acquisition Officer, (2012) 7 SCC 595
which reads thus:

"5. For ascertaining the market
value of the land, the potentiality of the
acquired land should also be taken into
consideration.
Potentiality
means
capacity or possibility for changing or
developing into state of actuality. It is
well settled that market value of a
property has to be determined having due
regard to its existing condition with all
its existing advantages and its potential
possibility when led out in its most
advantageous
manner.
The
question
whether a land has potential value or not,
is primarily one of fact depending upon
its condition, situation, uses to which it is
put or is reasonably capable of being put
and proximity to residential, commercial
or industrial areas or institutions. The
existing amenities like water, electricity,
possibility of their further extension,
whether nearabout town is developing or
has prospect of development have to be
taken into consideration."

33. In the case of Attar Singh and
Another Vs. Union of India and Another
(2009) 9 SCC 289, the Apex Court
explained in paragraphs 7 to 9 of the
judgment the norms to be applied for the
determination of the market value of the
land. Paragraphs 7 to 9 of the said
judgment
are
being
reproduced
hereinbelow:-

"7. It is now a well-settled
principle of law that determination of the
market value of the land acquired
indisputably would depend upon a large
number of factors including the nature
and quality thereof. The norms which are
required to be applied for determination
of the market value of the agricultural
land and homestead land are different. In
given cases location of land and in
particular, closeness thereof from any
road or highway would play an important
role for determination of the market value
wherefor
belting
system
may
in
appropriate cases may be resorted to.
The position of the land, particularly in
rainy season, existence of any building,
etc. also plays an important role. A host
of other factors including development in
and around the acquired land and/or the
potentiality of development will also have
a bearing on determination of the fair
market value of the land.

8. Determination of the market
value of the land may also depend upon
the facts and circumstances of each case,
amongst them would be the amount of
consideration mentioned in a deed of sale
executed in respect of similarly situated
land nearabout the date of issuance of
notification in terms of Section 4(1) of the
Act; in the absence of any such
exemplars, the market value can be
determined on yield basis or in case of an
orchard on the basis of number of fruitbearing trees.

9. It is also well settled that for
the purpose of determination of price of
acquired land, the courts would be well
advised to consider the positive and
negative factors, as has been laid down by
this Court in Viluben Jhalejar Contractor
v. State of Gujarat 2005 (4) SCC 789:
12 INDIAN LAW REPORTS ALLAHABAD SERIES

"Positive factors

Negative factors

(i) smallness of size

(i) largeness of area

(ii) proximity to a road

(ii) situation in the interior at a

distance from the road

(iii) frontage on a road

(iii) narrow strip of land with

verysmall frontage compared to
depth

(iv) nearness to developed area

(iv) lower level requiring the

depressed portion to be filled up

(v) regular shape (v) remoteness
from developed

locality

(vi) level vis-a-vis land under

(vi)
some
special
disadvantageous acquisition factors which
would deter a purchaser

(vii) special value for an owner

of an adjoining property to

whom it may have some very

special advantage."

34. The Apex Court has consistently
held in the above judgments that the best
method to assess the market value of land
would be the amount that a willing
purchaser would pay to the owner of the
land. In the absence of any direct evidence,
the other method as elucidated by the Apex
Court in the judgements referred above
may be taken recourse to.

35. The District Judge in concluding
that the land in question was commercial
land has considered unrebutted pieces of
evidence adduced by respondent no.1
which established that the land in question
is commercial. It further held that simply
because the land is recorded as agricultural
land in the revenue record, that does not
mean that the claimant would be entitled to
compensation on the rates applicable to
agricultural land. Applying the principle
laid down by the Apex Court that the best
method to determine the market value of
the land is the amount which a willing
purchaser would pay to the owner of the
land, this court finds that the view taken by
the District Judge that the respondent no. 1
is
entitled
to
compensation
as
per
commercial rate of the land is correct and
in conformity with the criteria provided for
determination
of
compensation
under
Section 3G(7) of the Act, 1956 for the
reason that in the present case, the land in
question is commercial land, therefore, it is
obvious that the willing purchaser would
offer the price of commercial land to
purchase the land in question which means
that the market value of the land in
question is the price of commercial land in
the area where land is situated.

36. Thus, it can be concluded that the
competent authority or the arbitrator in
determining the compensation is only to
consider the market value of the land on the
date of notification under Section 3A of
Act, 1956 and the nature of land recorded
in the revenue record is not relevant for
determining the compensation. Therefore,
the court finds that the District Judge has
rightly
issued
direction
to
pay
compensation of the land treating it be
commercial
land.
Consequently,
the
contention of the counsel for the appellant
that the District Judge has acted illegally
and beyond its jurisdiction in directing the
appellant to pay compensation on the
commercial rate is devoid of substance and
rejected.

37. Now another question that arises
for consideration is whether the District
Judge was justified in directing payment of
compensation treating the land to be
7 All. Bhartiya Rashtriya Rajmarg Pradhikaran Vs. Smt. Manju Dixit & Anr.
13
commercial land instead of remanding the
matter back to the Arbitrator or leave it
open to the parties to approach the
Arbitrator again.

38. In this respect, it is useful to notice
that Section 3-A to 3-F of the Act, 1956
provides a mechanism for acquisition of land
where the Central Government is satisfied
that for public purposes any land is required
for building, maintenance, management or
operation of a national highway or part
thereof, it can acquire the land by following
the procedure provided under Section 3-A to
3-F of the Act, 1956 and take possession of
the land.