Arbitral Award Not Providing Statutory Compensation On Land Acquired Under NHA Is Perverse: Madras High Court

The Madras High Court has held that an arbitral award that does not provide for payment of mandatory statutory compensation with respect to the land acquired under the National Highways Act, 1956 is perverse. The Single Bench of Justice P.T. Asha held that an Arbitrator exercising jurisdiction under the National Highways Act has to be more vigilant in ensuring that the arbitral award is fair and that the land owner is compensated adequately as per his legal entitlement. The Court upheld the order of the District Judge that had set aside the arbitral award and had directed the competent authority to pay compensation to the land owner as provided under the statute. A specified land was acquired under the National Highways Act, 1956 and compensation was awarded to the 1st respondent/land owner T. Palanisamy. Subsequently, certain disputes arose which were referred to arbitration. The 1st respondent raised claims seeking enhancement in compensation and against the non-payment of compensation in respect of certain buildings acquired. Thereafter, the compensation awarded by the Special District Revenue Officer was revised and the Arbitrator cum District Collector confirmed the revised compensation. The 1st respondent/land owner filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) to set aside the award passed by the Arbitrator cum District Collector and to direct the competent authority to sanction the statutory benefits available to the 1st respondent/ land owner. The petition under Section 34 of the A&C Act was allowed and the Principal District Judge set aside the arbitral award. The District Judge passed an order directing the competent authorities to pay additional market value to the first respondent along with solatium and interest. The appellant Project Director, National Highways Authority of India (NHAI) filed an appeal against the order of the District Judge under Section 37 of the A&C Act before the Madras High Court. The appellant NHAI submitted before the Madras High Court that under the provisions of Section 34 of the A&C Act, the power of the Court is restricted and the Court does not have the power to modify or vary the award passed by the Arbitrator. The appellant contended that the Court can only set aside the award on the grounds set out in Section 34(2) of the A&C Act. The 1st respondent/land owner submitted that award of solatium is a statutory right and its denial by the Arbitrator can be challenged before the Court. The 1st respondent contended that the Principal District Judge did not set aside the award passed by the Arbitrator, but only modified it to include the relief which the 1st respondent was statutorily entitled to. Thus, the 1st respondent averred that no appeal could lie under Section 37 of the A&C Act before the High Court. Section 23(1-A) of the Land Acquisition Act, 1894 provides that the Court shall award an additional market value of 12% on the land acquired under the Land Acquisition Act. Additionally, Section 23 (2) provides that the Court shall award a sum of 30% on such market value, in consideration of the compulsory nature of the acquisition. Proviso to Section 28 provides for interest at the rate of 15% on the excess compensation as specified under the Land Acquisition Act. Section 3 J of the National Highways Act, 1956 provides that nothing in the Land Acquisition Act, 1894 shall apply to an acquisition under the National Highways Act. The High Court noted that the Supreme Court in the case of Union of India and Another versus Tarsem Singh and Others (2019) has declared that the provisions of Section 3 J of the National Highways Act are unconstitutional insofar as it relates to Section 23(1-A), Section 23 (2) and the proviso to Section 28 of the Land Acquisition Act. The High Court observed that the first respondent/land owner was not aggrieved by the amount of compensation but with the omission to grant the statutory compensation payable under the Land Acquisition Act, which included the additional market value at 12%, solatium at 30% and interest. The Court noted that the Supreme Court in the case of Narain Das Jain versus Agra Nagar Mahapalika (1991) had ruled that there is no discretion with the Court to not award solatium and that it automatically follows the market value of the land acquired, as a shadow would to a man. The High Court thus held that the additional market value at 12%, solatium at 30% and interest are an integral part of the award which are not required to be pleaded by the land owner to be paid to him. The Court added that the said amounts have been omitted to be given to the land owner by the Arbitrator and the omission had been corrected by the Principal District Judge in a petition under Section 34 of the A&C Act. The Court ruled that arbitral proceedings under the National Highways Act are not conducted by...

Arbitral Award Not Providing Statutory Compensation On Land Acquired Under NHA Is Perverse: Madras High Court

Parina Katyal

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