National Highways Act | Reference Court Can Incidentally Determine Title For Compensation Entitlement : Supreme Court

The Supreme Court recently ruled that a Reference Court under the National Highways Act can incidentally determine questions of title for determining entitlement to compensation.

“The jurisdiction exercised by the Reference Court under Section 3H (4) is, therefore, wide enough to incidentally determine questions of title insofar as such determination is necessary for deciding the person entitled to the compensation arising out of the acquisition. Any contrary interpretation would frustrate the legislative scheme and compel parties to simultaneously pursue independent civil suits for declaration of title, thereby defeating the very object of referring the dispute to the principal civil court.”, observed a bench of Justice Vikram Nath and Justice Sandeep Mehta.

The bench set aside the Karnataka High Court's judgment which had interfered with the Reference court's decision to declare Appellant Nos. 1 to 3 as the absolute owners of the acquired land to receive the entire compensation amount arising out of the acquisition proceedings

The case arose from the acquisition of land in Karnataka during 2002–03 under the National Highways Act. The Special Land Acquisition Officer determined compensation amounting to ₹20.32 lakh. Before the amount could be disbursed, rival claims emerged regarding entitlement to receive the compensation.

Owing to the dispute over entitlement to compensation, the matter was referred to the civil court under Section 3H (4) of the Act.

The Reference (Civil) Court initially held in favour of the appellants. On appeal, the High Court remanded the matter with directions to examine the competing claims.

Following remand, the Reference Court again concluded that the appellants were entitled to the compensation. However, in a subsequent appeal, the High Court held that the Reference (civil) Court lacked jurisdiction to adjudicate title disputes and could only apportion compensation among admitted claimants.

Aggrieved, the appellants moved to the Supreme Court.

Setting aside the impugned order, the Court interpreted Section 3H (4) of the Act, stating that the High Court erred in narrowly interpreting the provision. According to the Court, the provision is wide enough to empower the reference court i.e., the civil court to dwell upon the issue of title for the purpose of determining the entitlement of the compensation amount.

“We are, therefore, unable to concur with the view taken by the High Court that the Reference Court lacks jurisdiction to examine disputes relating to title. To accept such an interpretation would render the expression “person to whom the amount is payable” otiose and substantially defeat the object of the reference contemplated under Section 3H (4). A reference to the principal civil court is not intended to be a mere ministerial exercise of dividing the compensation amongst claimants. Its purpose is to secure a judicial determination of the person lawfully entitled to receive the compensation where such entitlement itself is disputed.”, the Court observed.

"…where rival claimants assert competing rights to the acquired land, the determination of the person entitled to receive compensation inevitably requires an adjudication of the underlying claim of title. Such an inquiry is incidental and integral to the jurisdiction conferred under Section 3H(4).”, the Court added.

In terms of the aforesaid, the appeal was allowed, thereby restoring the Regular First Appeal to the file of the High Court for disposal afresh on its own merits and in accordance with law.

Further, the Court clarified that:

“1. It is made clear that the issues concluded by the earlier judgment and remand order dated 9th March, 2012 shall not be reopened. The High Court shall confine its consideration to examining whether the findings recorded by the Reference Court pursuant to the remand are sustainable on the evidence available on record and in accordance with the directions contained in the remand order.

2. It is further clarified that the correctness of the Reference Court's assumption of jurisdiction to adjudicate the rival claims of title shall not be reopened, the issue having attained finality by virtue of the remand order dated 9th March, 2012 and, in any event, in view of the interpretation of Section 3H of the National Highways Act, 1956, as rendered by us hereinabove.”

Cause Title: K. VENKATASWAMY & ORS. VS. GOWRAMMA & ANR.

Citation : 2026 LiveLaw (SC) 770

Click here to download order

Appearance:

For Petitioner(s) : Mr. Rohan Thawani, Adv. Ms. Pooja Dhar, AOR Mr. Pratul Pratap Singh, Adv. Ms. Maryam Junaid, Adv.

For Respondent(s) :Mr. N. Sai Vinod, AOR Ms. Kanu Garg, Adv.