National Highways Authority of India vs Sri P. Nagaraju @ Cheluvaiah & Anr.

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. 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

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 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 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.

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 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 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 otherw ise 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 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 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 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 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]

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 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.