# NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. NAGARAJU @ CHELUVAIAH & ANR

- **Citation:** [2022] 8 S.C.R. 1070
- **Court:** Supreme Court of India
- **Decided:** 2022-07-11
- **Case number:** Civil Appeal No. 4671 of 2022
- **Bench:** Indira Banerjee, A. S. Bopanna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/national-highways-authority-of-india-v-sri-p-nagaraju-cheluvaiah-anr-36378
- **Pages:** 51

## Headnote

National Highways Act - ss.3J, 3G (7) - Arbitration and
Conciliation Act, 1996 - ss.28(2), 31(3), 34, 37 - Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation
and Resettlement Act, 2013 - ss.26, 28 - Lands of claimants/
respondents were notified for acquisition under the preliminary
notification dtd.01.02.16 and 02.02.16 issued under NH Act -
Special Land Acquisition Officer (SLAO) determined the
compensation at Rs.2026/- and Rs.17200/- per sq. mtr respectively
- Challenged by respondents, Arbitrator having taken into
consideration the method adopted by the SLAO while determining
the compensation, though adopted the same mode of determination
by reckoning the guideline value provided by the Department of
Stamps and Registration for the purpose of registration of sale
transactions, however took into consideration the subsequent
notifications dtd. 28.03.16 and 05.12.18 to reckon the guideline
value - Market value was determined at Rs.15,400/- per sq. mtr
and Rs.25,800/- per sq. mtr respectively and compensation was
awarded - Appellant aggrieved by the method adopted by the
Arbitrator in determining the market value and compensation filed
arbitration suit u/s. 34 of the Act, 1996, dismissed by District Judge
- Appeals also dismissed by High Court- Held: On facts, the reliance
placed on the guideline value notification dtd. 28.03.16 for
reckoning the market value of the property acquired under the
preliminary notification dtd. 01.02.16, by itself cannot be accepted
to be a patent illegality committed by the Arbitrator - However, the
manner in which the notification dtd. 28.03.16 was relied upon and
the value fixed under the said notification in respect of two distinct
layouts was automatically made applicable to the lands in question
despite noting the guideline value notified for the same survey
number would indicate that the said exercise was undertaken without
sufficient opportunity to NHAI - Further, appropriate reasons were
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also not indicated by the Arbitrator to arrive at the conclusion to
uniformly adopt the value of Rs.15,400/- per sq.mtr fixed in respect
of lands in a layout which was separately indicated in the notification
- If there is evidence brought on record in the manner known to law
with opportunity to the opposite side, it certainly would be open for
the Arbitrator to adopt the said value - However, the pleadings in
the claim petition and the award indicate that the appellant did not
have sufficient opportunity before the Arbitrator to controvert the
material sought to be relied upon by the Arbitrator nor has the
Arbitrator indicated sufficient reasons which to that extent would
indicate patent illegality in the award passed by the Arbitrator being
contrary to ss.28(2) and 31(3) of Act, 1996 - That being the fact
situation and also the position of law being clear that it would not
be open for the court in the proceedings u/s.34 or in the appeal u/
s.37 to modify the award, the appropriate course to be adopted in
such event is to set aside the award and remit the matter to the
Arbitrator in terms of s.34(4) to keep in view these aspects of the
matter and even if the notification dtd. 28.03.16 relied upon is
justified as the same could be relied upon, the further aspects with
regard to the appropriate market value fixed under the said
notification for the lands which is the subject matter of the
acquisition or comparable lands is to be made based on appropriate
evidence available before it and on assigning reasons for the
conclusion to be reached by the Arbitrator - In C.A. No. 4681/
2022,arbitrator committed patent illegality in applying two different
notifications in determining the market value - Only course open is
to set aside the award and allow the Arbitrator to reconsider the
matter on that aspect - Impugned order set aside - Consequently,
the awards, connected awards which are the subject matter in these
appeals are also set aside

## Text

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SUPREME COURT REPORTS
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NATIONAL HIGHWAYS AUTHORITY OF INDIA
v.
SRI P. NAGARAJU @ CHELUVAIAH & ANR.
(Civil Appeal No. 4671 of 2022)
JULY 11, 2022
[INDIRA BANERJEE AND A. S. BOPANNA, JJ.]
National Highways Act - ss.3J, 3G (7) - Arbitration and
Conciliation Act, 1996 - ss.28(2), 31(3), 34, 37 - Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation
and Resettlement Act, 2013 - ss.26, 28 - Lands of claimants/
respondents were notified for acquisition under the preliminary
notification dtd.01.02.16 and 02.02.16 issued under NH Act -
Special Land Acquisition Officer (SLAO) determined the
compensation at Rs.2026/- and Rs.17200/- per sq. mtr respectively
- Challenged by respondents, Arbitrator having taken into
consideration the method adopted by the SLAO while determining
the compensation, though adopted the same mode of determination
by reckoning the guideline value provided by the Department of
Stamps and Registration for the purpose of registration of sale
transactions, however took into consideration the subsequent
notifications dtd. 28.03.16 and 05.12.18 to reckon the guideline
value - Market value was determined at Rs.15,400/- per sq. mtr
and Rs.25,800/- per sq. mtr respectively and compensation was
awarded - Appellant aggrieved by the method adopted by the
Arbitrator in determining the market value and compensation filed
arbitration suit u/s. 34 of the Act, 1996, dismissed by District Judge
- Appeals also dismissed by High Court- Held: On facts, the reliance
placed on the guideline value notification dtd. 28.03.16 for
reckoning the market value of the property acquired under the
preliminary notification dtd. 01.02.16, by itself cannot be accepted
to be a patent illegality committed by the Arbitrator - However, the
manner in which the notification dtd. 28.03.16 was relied upon and
the value fixed under the said notification in respect of two distinct
layouts was automatically made applicable to the lands in question
despite noting the guideline value notified for the same survey
number would indicate that the said exercise was undertaken without
sufficient opportunity to NHAI - Further, appropriate reasons were
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also not indicated by the Arbitrator to arrive at the conclusion to
uniformly adopt the value of Rs.15,400/- per sq.mtr fixed in respect
of lands in a layout which was separately indicated in the notification
- If there is evidence brought on record in the manner known to law
with opportunity to the opposite side, it certainly would be open for
the Arbitrator to adopt the said value - However, the pleadings in
the claim petition and the award indicate that the appellant did not
have sufficient opportunity before the Arbitrator to controvert the
material sought to be relied upon by the Arbitrator nor has the
Arbitrator indicated sufficient reasons which to that extent would
indicate patent illegality in the award passed by the Arbitrator being
contrary to ss.28(2) and 31(3) of Act, 1996 - That being the fact
situation and also the position of law being clear that it would not
be open for the court in the proceedings u/s.34 or in the appeal u/
s.37 to modify the award, the appropriate course to be adopted in
such event is to set aside the award and remit the matter to the
Arbitrator in terms of s.34(4) to keep in view these aspects of the
matter and even if the notification dtd. 28.03.16 relied upon is
justified as the same could be relied upon, the further aspects with
regard to the appropriate market value fixed under the said
notification for the lands which is the subject matter of the
acquisition or comparable lands is to be made based on appropriate
evidence available before it and on assigning reasons for the
conclusion to be reached by the Arbitrator - In C.A. No. 4681/
2022,arbitrator committed patent illegality in applying two different
notifications in determining the market value - Only course open is
to set aside the award and allow the Arbitrator to reconsider the
matter on that aspect - Impugned order set aside - Consequently,
the awards, connected awards which are the subject matter in these
appeals are also set aside - Arbitration proceedings remanded -
Stamp Act, 1899.
National Highways Act - ss.3J, 3G(7) - Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation
and Resettlement Act, 2013 - ss.26, 28 - Jurisdiction of arbitrator
determining the compensation under NH Act vis-à-vis RFCTLARR
Act, 2013 - Scope of - Discussed.
Arbitration and Conciliation Act, 1996 -s.34 - Interference
with an award, limited scope available u/s.34 - Discussed.
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National Highways Act - Arbitration proceedings relating to
NH Act - Just and fair compensation - Process for determination
of - Discussed - Right to Fair Compensation and Transparency in
Land Acquisition, Rehabilitation and Resettlement Act, 2013 - ss.26,
28 - Arbitration and Conciliation Act, 1996 - ss.28(2), 31(3), 34.
Partly allowing the appeals, the Court
HELD: 1.1 While arriving at the conclusion that notification
bearing SO No.2368(E)dated 28.8.2015 whereunder the
provisions of RFCTLARR Act, 2013 are made applicable, it is
noted that NH Act is also one of the enactments specified in the
Fourth Schedule. The observations contained also in para 29, 30
and 31 in Tarsem Singh will make it more than evident that this
Court was concerned about discrimination in determination of
compensation under different enactments though in that case the
issue was limited to solatium and interest.In that view of the
matter, though Section 3G(7)(a) of the NH Act provides the
parameters to be taken into consideration, it only provides the
basic parameters to be taken note of, for determining the amount
payable as compensation. While applying the said parameters for
determination of compensation, since RFCTLARR Act, 2013 is
also applicable as NH Act is contained in Fourth Schedule, the
factors as provided under Section 26 and 28 RFCTLARR Act,
2013 including the seventh factor will also be applicable in
appropriate cases for the determination of the market value as
fair compensation for the acquired land. When land is acquired
from a citizen, Articles 300A and 31A of the Constitution will
have to be borne in mind since the deprivation of property should
be with authority of law, after being duly compensated. Such law
should provide for adequately compensating the land loser
keeping in view the market value. Though each enactment may
have a different procedure prescribed for the process of
acquisition depending on the urgency, the method of determining
the compensation cannot be different as the market value of the
land and the hardship faced due to deprivation of the property
would be the same irrespective of the Act under which it is
acquired or the purpose for which it is acquired. In that light, if
Section 28 of RFCTLARR Act, 2013 is held not applicable in
view of Section 3J of NH Act, the same will be violative of Article
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14 of the Constitution. In that circumstance, the observation in
Tarsem Singh (supra) that Section 3J of NH Act is unconstitutional
to that extent though declared so while on the aspect of solatium
and interest, it is held so on all aspects relating to determination
of compensation. In any event, the extracted portion of the
notification dated 28.08.2015 is explicit that the benefits available
to the land owners under RFCTLARR Act is to be also available
to similarly placed land owners whose lands are acquired under
the 13 enactments specified in the Fourth Schedule, among which
NH Act is one. Hence all aspects contained in Section 26 to 28 of
RFCTLARR Act for determination of compensation will be
applicable notwithstanding Section 3J and 3G(7)(a) of NH Act.
[Paras 16-18][1094-C; 1095-C; 1096-E-H; 1097-A-C]
Union of India vs. Tarsem Singh, (2019) 9 SCC 304 :
[2019] 13 SCR 49 - referred to.
1.2 In NHAI vs. Sayedabad Tea Company Ltd. (2020) 15
SCC 16, this Court while examining the question as to whether
the land loser can seek the appointment of an Arbitrator in terms
of Section 11 of Act, 1996, it was noted that such power would not
be available in view of the provisions contained in Section 3G(5)
of NH Act since Arbitrator is to be appointed by the Central
Government to discharge its functions as per the provisions of
the Arbitration and Conciliation Act. Having taken note of the
said decision, though it is seen that it was held so while
considering the maintainability of petition under Section 11 of
the Act, 1996 to exclude the right of the land loser to seek the
appointment of an Arbitrator keeping in view the statutory
provision in the NH Act, the larger perspective of such limited
right to the land loser in the process of arbitration is also to be
kept in view. Unlike the arbitration in a contractual matter where
the parties from the very inception at the stage of entering into a
contract would mutually agree to refer any future dispute to an
arbitrator, at that very stage are aware that in the event of any
dispute arising between the parties the contours of the right,
remedy, and scope from the commencement of the arbitration up
to the conclusion through the judicial process. The terms of
arbitration and the rights and obligations will also be a part of the
agreement and a reference to the same in the award will constitute
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sufficient reasons for sustaining the award in terms of Section
31(3) of Act, 1996. Whereas, in the arbitration proceedings relating
to NH Act, the parties are not governed by an agreement to
regulate the process of arbitration. However, in the process of
determination of just and fair compensation, the provisions in
Section 26 to 28 of RFCTLARR Act, 2013 will be the guiding
factor. The requirement therein being adverted to, should be
demonstrated in the award to satisfy that Section 28(2) and 31(3)
of Act, 1996 is complied. Therefore, what is also to be kept in
perspective while noticing the validity or otherwise of an award
regarding which the non-furnishing of reasons is contended as
patent illegality is the reason assigned for determining just
compensation in terms thereof. The situation which may arise in
cases when a lesser compensation is determined in the arbitration
proceedings and the land loser is complaining of the award is
also to be kept in perspective since the requirement of reasons
to be given by the learned Arbitrator in cases for determination
of market value and compensation should indicate reasons since
the same will have to be arrived at on a comparative analysis for
which the reasons should be recorded and Section 26 to 28 of
RFCTLARR Act will be relevant. Neither the land loser nor the
exchequer should suffer in the matter of just and fair
compensation. Hence the reasons under Section 31(3) is to be
expected in that manner, the absence of which will call for
interference under Section 34 of Act, 1996. [Para 23][1104-B-H;
1105-A-B]
NHAI vs. Sayedabad Tea Company Ltd. (2020) 15 SCC
16 - referred to.
1.3 Leaving aside the facts in the instant case for a while, if
in a matter as against the determination of the market value by
the SLAO, the land loser had referred to the exemplar sale deeds
and seeks higher compensation than prescribed in the guidance
value, and in that circumstance, if no reasons are assigned by the
learned Arbitrator for such determination and either approves
the SLAO award or awards a lesser amount than the actual
entitlement, in such circumstance the arbitration process which
is thrust on the land loser should not be an impediment and limited
interference should not be a reason to deny the just and fair
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compensation. In such cases while examining the award in the
limited scope under Section 34 of Act, 1996, the Court is required
to take note as to whether the evidence available on record has
been adverted to and has been taken note by the Arbitrator in
determining the just compensation failing which it will fall foul of
Section 31(3) and amount to patent illegality. Therefore, while
examining the award within the parameters permissible under
Section 34 of Act, 1996 and while examining the determination of
compensation as provided under Sections 26 and 28 of the
RFCTLARR Act, 2013, the concept of just compensation for the
acquired land should be kept in view while taking note of the
award considering the sufficiency of the reasons given in the award
for the ultimate conclusion. In such event an error if found, though
it would not be possible for the Court entertaining the petition
under Section 34 or for the appellate court under Section 37 of
Act 1996 to modify the award and alter the compensation as it
was open to the court in the reference proceedings under Section
18 of the old Land Acquisition Act or an appeal under Section 54
of that act, it should certainly be open to the court exercising
power under Section 34 of Act, 1996 to set aside the award by
indicating reasons and remitting the matter to the Arbitrator to
reconsider the same in accordance with law. The said exercise
can be undertaken to the limited extent without entering into
merits where it is seen that the Arbitrator has on the face of the
award not appropriately considered the material on record or has
not recorded reasons for placing reliance on materials available
on record in the background of requirement under RFCTLARR
Act, 2013. [Para 24][1105-B-H]
1.4 Under the scheme of the Act 1996 it would not be
permissible to modify the award passed by the learned Arbitrator
to enhance or reduce the compensation based on the material
available on record in proceeding emanating from Section 34 of
Act, 1996. The option would be to set aside the award and remand
the matter. [Para 26][1107-F-G]
NHAI vs. M. Hakeem & Anr., (2021) 9 SCC 1 : 2021
(8) SCALE 391 - referred to.
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1.5 The mere provision as contemplated under Section
3G(5) of NH Act providing for either of the parties to assail the
determination made by the SLAO by itself does not provide a
better status to the award passed by the SLAO. Even the award
passed by the SLAO under the provisions of NH Act would still
continue to remain as an offer of compensation by the Acquiring
Authority to the land loser and the materials relied on by the
SLAO even if discussed in detail does not provide the status of a
judicially considered order so as to interfere with the same only
if error is pointed out. It is not necessary to critically examine
the award made by SLAO before considering enhancement.
Notwithstanding the documents relied upon by the SLAO it would
still be open for the learned Arbitrator to rely upon any additional
material that may be brought before the learned Arbitrator not
necessarily to point out an error in the consideration made by
SLAO but such material could be considered despite the
consideration made by the SLAO if such material aids in deciding
just and fair compensation. Though, as contended by the learned
Additional Solicitor General it is seen that in Tarsem Singh it is
held that there is a regime change and the stage to offer an amount
by way of compensation is removed, it only means that the process
of award notice etc. from Section 9 to 15A, before possession
under Section 16 of L.A. Act is removed, which only alters the
procedure and enables immediate vesting of the land with the
acquiring authority but does not take away the character of the
SLAO award from being an offer of compensation. Hence, in the
present case, though the SLAO has taken note of the guideline
dated 07.11.2014 it would be open for the learned Arbitrator to
take note of any other evidence that would be more relevant
than the said guideline to re-determine the compensation in terms
of the parameters under Sections 26 and 28 of RFCTLARR Act,
2013. [Para 30][1109-E-H; 1110-A-C]
1.6 The further contention of the learned Additional Solicitor
General is that the award passed by the learned Arbitrator is exfacie erroneous amounting to patent illegality since the learned
Arbitrator while redetermining the compensation has taken into
consideration the guideline value as provided under the
notification dated 28.03.2016. In that regard, it is contended that
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the notification under Section3A of NH Act was issued on
01.02.2016. The provision in Section 3G (7) of NH Act provides
that the competent authority or the Arbitrator while determining
the amount under sub-section (1) or sub-section (5) shall take
into consideration the market value of the land as on the date of
publication of the notification under Section 3A. It is contended,
despite the said provision to consider the market value as on the
date of the acquisition notification, the entire basis on which the
learned Arbitrator has re-determined the compensation is based
on a notification dated 28.03.2016 issued by the Department of
Stamps and Registration which is notably the market value fixed
on a date subsequent to the acquisition notification dated
01.02.2016. It is therefore, contended that the award passed by
the learned Arbitrator would not be sustainable. That apart, a
reference is made to para 49 and 50 in the case of M. Hakeem
(supra) to contend that in fact this Court has indicated that the
reliance placed on the guideline determining the market value
for registration would not be justified. On that aspect it is
necessary for us to clarify at this stage itself that such observation
as contained in M. Hakeem (supra) is not made with reference
to any provision of the Act. In contrast, a reference to Section
26(1)(a) of the RFCTLARR Act, 2013 indicates that the statutory
provision itself provides for the market value specified in the
Indian Stamp Act, 1899 for the registration of sale deeds or
agreement to sell, in the area where the land is situated to be
adopted by the Collector for assessing and determining the
market value of the acquired land. In view of the said provision,
it is open for the SLAO as well as the learned Arbitrator to rely
upon the guideline and if the value provided therein is higher
than the value of the property indicated from the other documents,
it would be open to place reliance on the guideline issued for the
purpose of the registration under the Stamp Act to determine
the market value to be tendered as compensation for acquisition.
[Para 31][1110-C-H; 1111-A-B]
1.7 In that view, the question that would arise for
consideration in the case on hand is as to whether the award
passed by the learned Arbitrator would stand vitiated merely
because the guideline dated 28.03.2016 which is marginally
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subsequent in point of time is reckoned, when the acquisition
notification under Section 3A of NH Act was prior to the same
i.e. on 01.02.2016. As already noted, Section 3G(7)(a) of NH Act
provides for determination of the market value on the date of
publication of the acquisition notification under Section 3A. In a
normal circumstance, for the determination of the market value,
the rate prevailing prior to the date of the notification shall be
the basis more particularly when the determination is made based
on sale exemplars, as otherwise there is a likelihood of
manipulation with escalated price being dishonestly indicated in
the subsequent transactions. While taking note of the documents
relied on for the purpose of determination of the market value,
the existence of appropriate documents in the facts of each case
would also become relevant. In circumstances where a document
which is proximal to the date of acquisition is not available, it
would be open to rely on a document which is much prior in point
of time and if the time gap is more, determination could be made
by providing for reasonable escalation depending on the area
wherein the acquired property is situate and nature of property.
Similarly, in a circumstance where no document which is prior to
the date of the acquisition notification is available and the
exemplars are subsequent to the date of acquisition notification,
the value therein could be noted and reasonable de-escalation
be considered to determine the appropriate value. Needless to
mention that no strait-jacket formula can be applicable to all cases
with arithmetical precision in the matter of determination of
compensation. In that backdrop, in the instant case it is no doubt
true that the notification issued by the Department of Stamps and
Registration on 07.11.2014 is prior to the acquisition notification
dated 01.02.2016. It is also to be noted that there was a time gap
of more than one year between the two. In a normal circumstance,
even if the notification dated 07.11.2014 was taken into
consideration it would be open for the learned Arbitrator to
consider certain amount of escalation to determine the market
value. The said process could have been adopted if there was no
other document. At this juncture, it is necessary to note that the
SLAO in fact had relied on the said notification dated 07.11.2014
and determined the market value but had ignored the fact that
the lands regarding which the market value was to be determined
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had been converted for purposes other than agriculture. The
SLAO had therefore taken into consideration the registration
value which had been fixed in respect of the agricultural property.
In that light, firstly it would have been open for the learned
Arbitrator to take note of the value fixed for the commercial/
industrial lands under that notification itself and provide certain
amount of escalation. [Paras 32, 33][1111-C-H; 1112-A-C]
1.8 Notwithstanding such option of providing escalation to
the already existing guideline value being available to the learned
Arbitrator, what cannot be lost sight in the instant case is that, as
evident from the notification dated 28.03.2016 the process for
redetermining the guideline value had commenced through the
notification bearing No.CBC-25/2014-15 dated 14.09.2015 and
proceedings of the committee were also held during 2015-2016
which ultimately led to the notification dated 28.03.2016. Further,
though the preliminary notification for acquisition was issued on
01.02.2016, the final notification under Section 3D of NH Act was
issued on 23.09.2016. During the intervening period the guideline
value notification dated 28.03.2016, the process for which had
commenced through the notification dated 14.09.2015, was
already published. Furthermore, when all these proceedings were
in close proximity to the date of the preliminary notification for
acquisition and the revision of the market value by the Department
of Stamps and Registration itself was within a period of one year
and 4 months from the earlier guideline value published on
07.11.2014, it would indicate that the escalation which was
otherwise open for being worked out and applied by the learned
Arbitrator on taking note of the notification dated 07.11.2014 was
undertaken by the Department of Stamps and Registration and
the benefit of considering such escalation was available to the
learned Arbitrator by taking note of the guideline dated
28.03.2016, though technically published on a date subsequent
to the preliminary notification dated 01.02.2016. In that view of
the matter, in the present facts and circumstances, the reliance
placed on the guideline value notification dated 28.03.2016 for
reckoning the market value of the property acquired under the
preliminary notification dated 01.02.2016, by itself cannot be
accepted to be a patent illegality committed by the learned
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Arbitrator. It is also to be noted that though the notification is
dated 01.02.2016 the award notice is dated 03.07.2017 by which
time the guideline value notification dated 28.03.2016 was already
in vogue. The learned Arbitrator had not committed any illegality
much less patent illegality in reckoning the guideline value
notification dated 28.03.2016 [Paras 34-36][1112-C-H; 1113-AB]
1.9 To consider this aspect of the matter what is necessary
to be taken note is that the SLAO had determined the
compensation by taking note of the market value assigned to
agricultural property under the notification dated 07.11.2014. The
claimants were before the learned Arbitrator in terms of Section
3G(5) of the NH Act, a copy of which is available at Annexure-P6
to the appeal papers. The grievance essentially put forth in the
claim petition is that the preliminary notification is dated
01.02.2016 and the notice of award for fixing the amount of
compensation for the acquired land has been issued on 03.07.2017.
In that light, it was contended that the market value of the nonagricultural lands adjoining the Bengaluru Mysuru National
Highway such as the one owned by the claimant has increased
considerably after the acquisition of the schedule land and
accordingly the Registration Department has revised the guideline
value. However, there is no reference to any specific notification
relating to the guideline value much less the notification dated
28.03.2016. Further, there is no other indication to the manner
in which the notification dated 28.03.2016 was brought on record
though the said notification is published in the gazette.
Comparison with lands in 'Zunadu' and 'City Greens' is also not
pleaded. Further, as pointed out by the learned Additional Solicitor
General the land situate in Madhapura and Mayaganahalli have
been notified at serial Nos. 519, 524 and 525 respectively with
reference the same survey number as that of the acquired land.
The land value for 'Zunadu' and 'City Greens' are notified
separately at Serial Nos.250 and 529. In that circumstance not
just to place reliance on the notification dated 28.03.2016 but
also to apply the value notified for 'Zunadu' and 'City Greens' to
the acquired lands, necessary pleading in claim petition and
evidence with opportunity to NHAI to rebut the same should
have been placed before the learned Arbitrator. Based on the
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same a consideration in that regard was required to be made by
the learned Arbitrator to arrive at a conclusion with regard to the
applicability of the guideline value fixed under notification dated
28.03.2016 for the lands that had been converted to purposes
other than agriculture. Further while applying the guideline value
fixed for 'Zunadu' and 'City Greens' to the acquired lands by
discarding guideline value for the same survey number, necessary
evidence to derive comparison between the lands so as to apply
the value fixed in respect of another item of land in the same
notification was necessary to be brought on record and was to be
considered by the learned Arbitrator by assigning reasons. [Para
37][1113-E-H; 1114-A-D]
1.10 The extracted portion of the award would demonstrate,
prior to said finding being recorded, the learned Arbitrator has
not referred to the manner in which the notification dated
28.03.2016 was brought on record and relied upon in the
proceedings. The award, except for recording that the notification
indicates the value fixed at Rs.8,000/- per sq.mtr in respect of
converted land situate in the survey numbers of Mayaganahalli
village and stating that the price of the converted lands of the
Green City in the same village has been fixed at Rs.15,400/- per
sq.mtr has not referred to any evidence relating to the
comparability with that land despite noting the guideline value of
Rs.8000/- fixed for claimant's land. The very fact that the layout
is named as 'City Greens' and 'Zunadu' appears to be that the
lands therein are situate in a self-contained and developed lay
out with all civic amenities due to which it is separately indicated
in the notification for specifically fixing the guideline value. Even
if the lands belonging to the claimants is converted for residential
purposes, value for the same was fixed in the notification by
specifying the survey number. If the value as fixed under the
guideline for 'City Greens' and 'Zunadu' was to be adopted as
comparable land to the acquired land, necessary reasons ought
to have been indicated in the award with reference to the
evidence brought on record, with opportunity to NHAI to have
their say on that aspect and reasons justifying such comparison
should have been recorded. Further the manner in which the
notification dated 28.03.2016 has been relied upon and the value
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fixed under the said notification in respect of two distinct layouts
has been automatically made applicable to the lands in question
despite noting the guideline value notified for the same survey
number would indicate that the said exercise has been undertaken
without sufficient opportunity to NHAI. Further, appropriate
reasons have not been indicated by the learned Arbitrator to
arrive at the conclusion to uniformly adopt the value of Rs.15,400/
- per sq.mtr fixed in respect of lands in a layout which was
separately indicated in the notification. As stated above, if there
is evidence brought on record in the manner known to law with
opportunity to the opposite side, it certainly would be open for
the learned Arbitrator to adopt the said value. However, from
the pleading in the claim petition and from the portion extracted
from the award which is the only basis for the ultimate order made
by the learned Arbitrator, it would indicate that the NHAI did not
have sufficient opportunity before the learned Arbitrator to
controvert the material sought to be relied upon by the learned
Arbitrator nor has the learned Arbitrator indicated sufficient
reasons which to that extent would indicate patent illegality in
the award passed by the learned Arbitrator being contrary to
Section28(2) and 31(3) of Act, 1996. [Para 39][1115-E-H; 1116A-E]
1.11 That being the fact situation and also the position of
law being clear that it would not be open for the court in the
proceedings under Section 34 or in the appeal under Section 37
to modify the award, the appropriate course to be adopted in such
event is to set aside the award and remit the matter to the learned
Arbitrator in terms of Section 34(4) to keep in view these aspects
of the matter and even if the notification dated 28.03.2016 relied
upon is justified since we have indicated that the same could be
relied upon, the further aspects with regard to the appropriate
market value fixed under the said notification for the lands which
is the subject matter of the acquisition or comparable lands is to
be made based on appropriate evidence available before it and
on assigning reasons for the conclusion to be reached by the
learned Arbitrator. In that regard, all contentions of the parties
are left open to be put forth before the learned Arbitrator. [Para
40][1116-F-H]
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1.12 C.A. No.4681/2022 @ SLP(C)No.2503/2022
The learned Arbitrator has committed patent illegality in
applying two different notifications in determining the market
value, keeping in view the scope available under Section 34 of
Act, 1996 it would not be open for this Court to substitute its
view to that of the learned Arbitrator and modify the award. In
the circumstance where we have opined that the award passed
by the learned Arbitrator suffers from patent illegality and
appropriate consideration is necessary, the only course open is
to set aside the award and allow the learned Arbitrator to
reconsider the matter on that aspect. [Para 48][1119-B-D]
1.13 From the conclusion reached, in both the set of cases
it is evident that awards passed by the learned Arbitrator is to be
set aside and the matters be remanded in terms of Section 34(4)
of Act, 1996 so as to enable the learned Arbitrators to assign
reasons to arrive at their conclusion. In this regard, it is made
clear that we have approved the guideline value notification dated
28.03.2016 being reckoned for determining the market value.
Hence, the claimants in any event would be entitled to
determination of market value at the guideline value indicated
vide notification dated 28.03.2016 for the respective properties
in Madhapura, Mayaganahalli etc. as against what is awarded by
SLAO if there is no other evidence indicating higher market
value. The consideration to be made by the learned Arbitrator
however is as to the material and evidence if any available to
treat the acquired land as comparable to the lands situate in 'City
Greens' and 'Zunadu' layout and award the compensation based
on the guidance value indicated for the lands in the said layout if
found comparable. The reason for not applying the guideline value
indicated for the lands in the very survey number of the acquired
lands is to be disclosed on such consideration. Needless to
mention that any other sale transaction if higher than the guideline
value can also be considered to arrive at just and fair
compensation. Since in any event the claimants would be entitled
to higher amount than what was awarded by SLAO, the part of
the amount awarded by the learned Arbitrator which was deposited
before this Court and disbursed to the claimants will be subject
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to adjustment based on the quantum of compensation that would
ultimately be decided by the learned Arbitrator. In the matter
arising out of SLP No.2503/2022 the applicability of the
appropriate special instruction, if any, is to be considered. [Para
49][1119-E-H; 1120-A-B]
1.14 For all the aforesaid reasons, (i) the judgment dated
26.07.2021 in MFA. No.2040/2021(AA) and connected matters
approving the Order dated 26.02.2021 in suits under Section 34
of Act, 1996 and in MFA No.2041/2021 (AA) approving order
dated 27.01.2021 are set aside. Consequently, the awards dated
13.08.2019 and connected awards, and the award dated
06.01.2020 which are the subject matter in these appeals are set
aside. The arbitration proceedings are remanded. [Para 50][1120C]
State of Chhattisgarh vs. Sale Udyog Private Ltd. (2022)
2 SCC 275; Ssangyong Engineering & Construction
Co. Ltd., vs. NHAI (2019) 15 SCC 131 : [2019] 7 SCR
522; Emkay Global Financial Services Ltd. vs. Girdhar
Sondhi (2018) 9 SCC 49: [2018] 10 SCR 937; MMTC
Ltd. vs. Vedanta Ltd. (2019) 4 SCC 163 : [2019] 3 SCR
1023; Associate Builders vs. Delhi Development
Authority (2015) 3 SCC 49 : [2014] 13 SCR 895; Delhi
Airport Metro Express Pvt. Ltd. vs. Delhi Metro Rail
Corporation Ltd. (2022) 1 SCC 131 : 2021 (10) SCALE
428; Dyna Technologies (P) Ltd. vs. Crompton Greaves
Ltd. (2019) 20 SCC 1; Abdul Karim Alarakha vs. State
(1982) 3 SCC 227 - referred to.
Case Law Reference
[2019] 13 SCR 49
referred to
Para 15
[2019] 7 SCR 522
referred to
Para 20
[2018] 10 SCR 937
referred to
Para 21
[2019] 3 SCR 1023
referred to
Para 21
[2014] 13 SCR 895
referred to
Para 21
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4671
of 2022.
From the Judgment and Order dated 26.07.2021 of the High Court
of Karnataka at Bengaluru in M.F.A. No. 2040 of 2021.
With
Civil Appeal Nos. 4676, 4677, 4678, 4679, 4680 and 4681 of 2022.
Ms. Madhavi Divan, ASG, Abhishek Thakur, Sahil Monga, Pradeep
Kumar Mathur, Ms. Vidushi Jain, Chiranjeev Johri, Kuldeep Singh,
Kartikeya Jha, Daksh Arora, Santosh Kumar-I, Shashwat Singh, Advs.
for the Appellant.
S. Nagamuthu, Sr. Adv., K. Parameshwar, Nishanth Patil, Naresh
Kaushik, Anand Singh, Manoj Joshi, Yogesh Yadav, B. Purushottama
Reddy, Prafulla Saini, Nishant Gautam, Ms. Lalitha Kaushik, Ms. Alaisha
Ashar, Dhruv Joshi, B. P. Ravi, Akshata Singh, Vardhman Kaushik, Advs.
for the Respondents.
The Judgment of the Court was delivered by
A. S. BOPANNA, J.
1. Leave granted.
2. The appellant - National Highways Authority of India ('NHAI'
for short) is before this Court in these appeals assailing the judgment
dated 26.07.2021 by the Division Bench, High Court of Karnataka,
Bengaluru in MFA No.2037/2021 (AA) and connected matters. The
appeals filed by the appellant herein before the High Court were dismissed,
whereby the judgment dated 26.02.2021 passed by the Principal District
Sessions Judge, Ramanagara in Arbitration Suit No.22/2019 and
analogous suits as also the judgment dated 27.01.2021 by the Principal
and District and Sessions Judge, Bengaluru Rural District, Bengaluru
filed under Section 34 of the Arbitration and Conciliation Act, 1996 ('Act
1996' for short) were upheld. The said arbitration suits under Section 34
of Act, 1996 were filed by NHAI assailing the award dated 13.08.2019
and 06.01.2020 passed by the Deputy Commissioner and Arbitrator,
National Highway - 275 (land acquisition), Ramanagara District,
Ramanagara in Case No.LAQ(A)/NH-275/CR/137/2017-18 and Deputy
Commissioner-1 and Arbitrator Bengaluru Urban District, Bengaluru in
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Case No.LAQ/ARB/BNG/NH-275/CR/02/2018-19. By the said awards
the respective learned Arbitrators had enhanced the compensation from
Rs.2026/- per sq. mtr and Rs.17,200/- determined by the Special Land
Acquisition Officer ('SLAO' for short) to Rs.15,400/- per sq. mtrand
Rs.25,800/- respectively. Since the learned District Judge and the High
Court have upheld the determination of the compensation based on the
market value determined at Rs.15,400/- and Rs.25,800 per sq. mtr, the
appellant - NHAI, claiming to be aggrieved is before this Court.
3. Considering that the description of the parties was different in
the hierarchy of the proceedings, for the sake of convenience and clarity
the appellant herein would be described as 'NHAI' and the private
respondents herein (land losers) would be referred to as the 'claimants'
hereinafter, wherever the context so requires. The claimants -(private
respondents in these appeals) are the owners of the different extent of
land in the various survey numbers which were all part of the same
acquisition which was initiated under the preliminary notifications dated
01.02.2016 and 02.02.2016 issued under the National Highways Act
('NH Act' for short).The facts arising in the appeal relating to SLP(C)
No.19775/2021 is referred as the lead case. The facts in the other cases
are more or less similar, while the legal issues raised are the same.
4. The lands situated in Survey Nos. 92/1, 90/2A, 42/1 of
Mayaganahalli, survey no.35/3 and 37/1 of Madapura, survey no.24 of
Kallugopahalli and survey no.40/8 of Kumbalagodu, among others were
notified for acquisition under the preliminary notification dated 01.02.2016
and 02.02.2016. The said acquisition was a part of the process for
formation of the Bengaluru-Mysore (NH-275) Highway. The final
notification was issued on 23.09.2016 and 04.10.2016. The SLAO on
initiating the process for passing the award, on consideration of the
material available before him, had passed the award dated 10.03.2017
and 04.01.2017 determining the compensation at Rs.2026/-and Rs.17200/
- per sq. mtr respectively.