Supreme Court of India
NATIONAL HIGHWAYS AUTHORITY OF INDIAversusSRI P. NAGARAJU @ CHELUVAIAH & ANR
- Citation
- 2022 INSC 689
- Decided
- 11 July 2022
- Disposal
- Case Partly allowed
- Bench
- INDIRA BANERJEE
Holding
The arbitral awards were set aside for patent illegality because the arbitrator failed to give sufficient reasons and denied NHAI a proper opportunity to contest the material, and the matter was remanded for rehearing in accordance with the RFCTLARR Act, 2013.
Summary
The National Highways Authority of India (NHAI) challenged arbitral awards that enhanced compensation for land acquired under the National Highways Act, arguing that the arbitrator improperly relied on post‑acquisition guideline values and failed to give sufficient reasons, violating Sections 28(2) and 31(3) of the Arbitration and Conciliation Act. The Court examined whether the arbitrator could use later‑dated guideline notifications to determine market value and whether the award complied with the requirement to give intelligible reasons and afford a fair opportunity to NHAI. It held that while the reliance on the 28‑03‑2016 notification was not per se a patent illegality, the arbitrator’s failure to provide adequate reasons and to give NHAI a chance to contest the material amounted to patent illegality. Consequently, the awards were set aside and the matters remanded to the arbitrator to rehear with proper reasoning. The Court also clarified that the RFCTLARR Act, 2013 applies to compensation determinations under the NH Act and that courts may not modify awards but can only set them aside under Section 34(4).
Issues considered
- Whether the arbitrator’s reliance on a guideline value notification dated after the acquisition notification constitutes a patent illegality under Section 34 of the Arbitration Act.
- Whether the arbitrator complied with the duty to give reasons under Section 31(3) of the Arbitration Act and the principles of natural justice.
- Whether the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act) apply to compensation determinations under the National Highways Act.
- Whether the court can modify an arbitral award or must only set it aside and remit the matter.
Legislation cited
- Arbitration and Conciliation Act, 1996s. 28(2), s. 31(3), s. 34, s. 37
- Indian Stamp Act, 1899
- Land Acquisition Act (pre‑2013)
- National Highways Acts. 3G(7), s. 3J
- Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013s. 26, s. 28
Subjects
ArbitrationLand acquisitionCompensationNational Highways ActRFCTLARR ActPatent illegalitySection 34 Arbitration ActSection 31(3) reasonsNatural justiceMarket value determination
Judgment
1070 [2022]REPORTS
SUPREME COURT 8 S.C.R. 1070 [2022] 8 S.C.R.
A NATIONAL HIGHWAYS AUTHORITY OF INDIA
v.
SRI P. NAGARAJU @ CHELUVAIAH & ANR.
(Civil Appeal No. 4671 of 2022)
B 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
C 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
D – 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
E 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
F 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
G 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
H sufficient opportunity to NHAI – Further, appropriate reasons were
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also not indicated by the Arbitrator to arrive at the conclusion to A
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
B
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 C
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
D
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 E
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,
F
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 G
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.
H
1072 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 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.
B 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
C 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
D 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
E 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
F 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
G 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 A
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
B
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. C
[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 D
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 E
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 F
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
G
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
H
1074 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 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
B
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
C 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
D
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
E 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
F 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
G 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
H
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compensation. In such cases while examining the award in the A
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
B
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 C
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
D
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 E
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]
F
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] G
NHAI vs. M. Hakeem & Anr., (2021) 9 SCC 1 : 2021
(8) SCALE 391 – referred to.
H
1076 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 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
B
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.
C 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
D
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
E 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
F
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
G General is that the award passed by the learned Arbitrator is ex-
facie 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
H
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1077
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the notification under Section3A of NH Act was issued on A
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,
B
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 C
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
D
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 E
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
F
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] G
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
H
1078 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 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,
B
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
C 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
D
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,
E 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
F
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
G 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 A
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
B
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 C
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 D
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 E
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 F
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 G
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
H
1080 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 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-A-
B
B]
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
C 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
D compensation for the acquired land has been issued on 03.07.2017.
In that light, it was contended that the market value of the non-
agricultural 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
E 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.
F 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
G 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
H 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 A
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
B
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] C
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 D
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 E
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 F
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 G
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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1082 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 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
B
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
C 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
D
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; 1116-
A-E]
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
F 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
G 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]
H
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1083
NAGARAJU @ CHELUVAIAH & ANR.
1.12 C.A. No.4681/2022 @ SLP(C)No.2503/2022 A
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 B
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]
C
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 D
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 E
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 F
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 G
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
H
1084 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 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]
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
C 06.01.2020 which are the subject matter in these appeals are set
aside. The arbitration proceedings are remanded. [Para 50][1120-
C]
State of Chhattisgarh vs. Sale Udyog Private Ltd. (2022)
2 SCC 275; Ssangyong Engineering & Construction
D 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
E 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.
F
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
G
[2019] 3 SCR 1023 referred to Para 21
[2014] 13 SCR 895 referred to Para 21
H
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1085
NAGARAJU @ CHELUVAIAH & ANR.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4671 A
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 B
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. C
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. D
The Judgment of the Court was delivered by
A. S. BOPANNA, J.
1. Leave granted.
E
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,
F
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 G
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
H
1086 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 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
B
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
C 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
D 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
E 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
F 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. The SLAO keeping in view the provisions
contained under the Right to Fair Compensation and Transparency in
G Land Acquisition, Rehabilitation and Resettlement Act, 2013
(‘RFCTLARR Act, 2013’ for short), took note of the sale exemplars
which were available before him but ultimately took note of the value
provided under the notification dated 07.11.2014 issued by the Department
of Stamps and Registration for the purpose of registration of the sale
transactions, to award compensation.
H
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1087
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
5. The claimants being dissatisfied with the determination of the A
compensation awarded by SLAO, filed their respective petitions before
the learned Arbitrator in terms of the provisions contained under Section
3G(7) of NH Act. The learned Arbitrator having taken into consideration
the method adopted by the SLAO while determining the compensation,
though has adopted the same mode of determination by reckoning the
B
guideline value provided by the Department of Stamps and Registration
for the purpose of registration of sale transactions, has however taken
into consideration the subsequent notifications dated 28.03.2016 and
05.12.2018 to reckon the guideline value. In addition, the learned Arbitrator
while applying the guideline dated 28.03.2016 and 05.12.2018 has taken
note that the lands which were the subject matter of acquisition were C
converted for residential use and industrial purpose, from agricultural
purpose. While adopting the guideline value of residential and industrial
property, the learned Arbitrator has instead of applying the same value
which was provided under the guideline to the specific survey number in
the village wherein the property under acquisition is situate, has adopted
D
the guideline value which was separately indicated in the said notification
in respect of a specified residential layout which is situated in the vicinity.
Accordingly, the market value was determined at Rs.15,400/- per sq.
mtr. On the said basis, learned Arbitrator had taken note that the land
bearing Survey No.40/8 in Kumbalagodu was converted for industrial
purpose and since the guideline dated 05.12.2018 provided that an E
additional amount of 50% is to be added as against what had been
indicated for residential property under the guideline, an amount of
Rs.25,800/- per sq. mtr was determined. Having arrived at such
determination of the market value, the total extent of the land acquired
was considered and the compensation was awarded.
F
6. The NHAI claiming to be aggrieved by the method adopted by
the learned Arbitrator in determining the market value and compensation,
filed the arbitration suit under Section 34 of the Act, 1996 raising various
contentions. It was contended that the award passed is against the
provisions of law and public policy, apart from being in violation of
Principles of Natural Justice. It was contended that the notification for G
acquisition was issued on 01.02.2016, which is the relevant date for
determining the market value. The grievance put forth was that the
learned Arbitrator in the first set of cases had taken into consideration
the guideline value which was fixed under a subsequent notification dated
28.03.2016. The further grievance is that even under the said notification H
1088 SUPREME COURT REPORTS [2022] 8 S.C.R.
A dated 28.03.2016 the guideline value in respect of the lands which are
situated in the village which was the subject matter of acquisition is
fixed at about Rs.8000/- per sq. mtr but the learned Arbitrator has without
basis adopted the guideline value of Rs.15,400/- per sq. mtr. which was
the guideline value for a different specified land. In that view, it was
contended that the SLAO on the other hand had taken into consideration
B
the sale value for which the transactions had taken place. In the said
process, since the guideline value fixed under the notification dated
07.11.2014, prior to the date of preliminary notification for acquisition
dated 01.02.2016 was fixed and considering the fact that Section 26 of
RFCTLARR Act, 2013 provides for awarding the higher of the value,
C the SLAO had adopted the guideline value of Rs.2026/- per sq. mtr in
respect of lands in survey nos.92/1, 90/2A of Mayaganahalli and survey
no.35/3 and 37/1 of Madapura while the properties in survey no.42/1 of
Mayaganahalli was awarded Rs.7833/- and the property in survey no.24
of Kallugopahalli was awarded Rs.8102/- and the property in survey
D no.40/8 of Kumbalagodu was awarded Rs.17,200/-.
7. The learned Principal District and Sessions Judge while taking
note of the contentions as put forth has kept in view the narrow scope
available in a suit/petition under Section 34 of Act, 1996 and also keeping
in view the provisions contained in Section 26 and 28of RFCTLARR
Act, 2013 has arrived at the conclusion that as against the consideration
E
made by the SLAO by reckoning the land under acquisition as agricultural
land, the learned Arbitrator has taken note that the lands were converted
for residential purpose and in that light had taken into consideration the
guideline value fixed in respect of the residential extension known as
‘city green’ and ‘Zunadu’ for which the guideline value for registration
F purpose was fixed at Rs.15,400/- per sq. mtr. In that view, the learned
District Judge on taking note of the decisions laying down that limited
scope is available for interference under Section 34 of Act, 1996, has
dismissed the suit.
8. The High Court, in an appeal under Section 37 of Act, 1996
G while adverting to the very contentions put forth by NHAI in attacking
the award passed by the learned Arbitrator has taken into consideration
that NHAI had sufficient opportunity to put forth their contentions in the
proceedings before the learned Arbitrator. The reliance placed on the
guideline value notification dated 28.03.2016 was adverted to by the
High Court and it was noted that the said guideline value had been notified
H
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1089
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
in the official gazette which was to the knowledge of all concerned. In A
that light, keeping in view the fact that the SLAO though had taken note
of the guideline value for the earlier period, the market value was fixed
unscientifically since the lands which were converted to commercial,
industrial and residential purposes had not been taken into consideration.
The contention of the claimants that the acquired land was situated near
B
to the lands in ‘Zunadu’ Extension and ‘city greens’ was held justified.
In this regard, the High Court had taken into consideration that in
Kallugopahalli, even under the earlier notification dated 07.11.2014 under
Stamp Act, the guideline value fixed for registration was Rs.8,073/- per
sq. mtr for converted land and for sites in ‘Zunadu’, it was Rs.13,993/-
per sq. mtr. In comparison, under the guideline value notification dated C
28.03.2016 the market value for ‘Zunadu’ is Rs.15,400/- per sq. mtr. In
that light, taking note of the fact that the notification dated 28.03.2016
contained reference to a notification dated 14.09.2015 proposing the
registration value which was earlier to the acquisition notification was of
the opinion that reckoning of the value specified in the notification dated D
28.03.2016 by the learned Arbitrator, which was upheld in the suit under
Section 34 of the Act, 1996 is justified. Similar consideration is made in
respect of the extent of land situate in the remaining survey numbers
which have reference to the acquisition process. The issue relating to
industrial land is referred separately here below. The market value
determined at Rs.15,400/- per sq. mtr in respect of all the lands has E
accordingly been upheld by the High Court. In that view, the High Court
was of the opinion that in the limited scope available in an appeal under
Section 37 of Act, 1996 an examination beyond the scope provided under
Section 34 of Act, 1996 is not to be undertaken and has indicated that if
a plausible view is taken by the learned Arbitrator, it should not be F
substituted by another view of the Court under Sections 34 and 37 of
Act, 1996. Accordingly, the appeals filed by NHAI have been dismissed.
9. It is in that view the NHAI claiming to be aggrieved is before
this Court in these appeals.
G
10. We have heard Ms. Madhavi Divan, learned Additional Solicitor
General for NHAI, Mr. S. Nagamuthu learned senior counsel, Mr.
Naresh Kaushik and Mr. K. Parameshwar being assisted by the
advocates on record for the respective claimants. We have also perused
the appeal papers in great detail.
H
1090 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 11. From the narration of the sequence made above it would be
clear that the factual aspects involved in the instant case are to be
considered in the background of the legal contentions urged. While doing
so, what is also to be borne in mind is that these appeals arise out of the
proceedings whereunder an award had been passed by the learned
Arbitrator in arbitration proceedings. In that light, the limited scope
B
available under Act, 1996 to assail an award as provided under Section
34 of the said Act is also to be kept in view even in these appeals. While
doing so, what cannot also be lost sight of is the fact that the arbitration
was not initiated based on an agreement entered into between the
contracting parties under a contract but is under a statutory provision
C which provides for such arbitration in lieu of ‘reference’ under the regime
for acquisition of land for public purpose. One of the parties to such
arbitration proceedings would also be a land loser and the adjudication in
the arbitration proceedings is not based on any definite terms of the
contract providing for mutual obligations determinable under the contract
but for determination of ‘just compensation’ in respect of land which is
D
compulsorily acquired for a public purpose. Notwithstanding the same,
the broad perspective relating to the limited grounds to challenge an
award under Section 34 of Act, 1996 also is to be kept in perspective
since the arbitration is governed by Act, 1996.
12. In order to consider whether an award is in accordance with
E law, at the outset the scope of jurisdiction of an arbitrator while
determining the compensation under NH Act vis-à-vis RFCTLARR Act,
2013 to which detailed reference is made by the learned Additional
Solicitor General is to be noted. It is contended that the factors to
determine the compensation payable to the land loser as provided in
F Section 3G(7)(a) of the NH Act can only be the basis. In that view, it is
contended that the parameters contained in Section 28 of RFCTLARR
Act, 2013 cannot be taken into consideration. The contention in that
regard is that while determining the market value, the definite parameters
as contained in Section 3G(7)(a) of NH Act alone would be applicable
and in view of the provisions contained in Section 3J of NH Act the
G provisions of the Land Acquisition Act shall not be made applicable. It is
therefore contended that by invoking Section 28 of RFCTLARR Act,
2013the seventh factor stated therein, namely, the ground relating to the
fixation of the market value based on equity, justice and benefit to the
affected families cannot be a criteria to determine the market value. To
H press home the point, the learned Additional Solicitor General has referred
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1091
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
to a comparative statement between the two provisions under the said A
two enactments which is taken note as hereunder:
B
C
D
E
F
G
H
1092 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 13. It is contended that the applicability of the provisions of the
RFCTLARR Act, 2013 is limited to the provision contained in Section
26 thereof for determination of the market value by the Collector which
provides the basic factors to be taken into consideration in view of
notification dated 28.08.2015 and the Act cannot be made applicable
beyond the same.
B
14. The contention on behalf of the claimants is that the
determination of the compensation requires all factors to be taken into
consideration for fixing the ‘fair and just compensation’ and as such the
parameters contained in Section 28 RFCTLARR Act, 2013are also
applicable since the NH Act finds a place in the Fourth Schedule to
C RFCTLARR Act, 2013.
15. On this aspect, it would be appropriate to take note of the
decision rendered by this Court in Union of India vs. Tarsem Singh,
(2019) 9 SCC 304 relied on by both sides, wherein it has been held as
hereunder:
D
“51. We were also referred to an order in Sunita Mehra v. Union
of India, in which this Court held:
“5. The only point agitated before us by the learned Solicitor
General is that in para 23 of the impugned judgment of the
E High Court, it has been held that landowners would “henceforth”
be entitled to solatium and interest as envisaged by the
provisions of Sections 23 and 28 of the Land Acquisition Act,
1894. In the ultimate paragraph of the impugned judgment it
has, however, been mentioned that in respect of all acquisitions
made under the National Highways Act, 1956, solatium and
F interest in terms similar to those contained in Sections 23(2)
and 28 of the Land Acquisition Act, 1894 will have to be paid.
6. The learned Solicitor General has pointed out that there is an
apparent inconsistency in the judgment, which needs to be clarified.
It has also been submitted by the learned Solicitor General that
G the order of the High Court should be clarified to mean that the
issue of grant of interest and solatium should not be allowed to be
reopened without any restriction or reference to time. The learned
Solicitor General has particularly submitted that to understand the
order of the High Court in any other manner would not only seriously
burden the public exchequer but would also amount to overlooking
H
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1093
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
the delay that may have occurred on the part of the landowner(s) A
in approaching the Court and may open floodgates for en masse
litigation on the issue.
7. We have considered the submissions advanced. In Gurpreet
Singh v. Union of India , this Court, though in a different context,
had restricted the operation of the judgment of this B
Courtin Sunder v. Union of India and had granted the benefit
of interest on solatium only in respect of pending proceedings.
We are of the view that a similar course should be adopted in the
present case also. Accordingly, it is directed that the award of
solatium and interest on solatium should be made effective only to
proceedings pending on the date of the High Court order in Golden C
Iron and Steel Forging v. Union of India i.e. 28-3-2008.
Concluded cases should not be opened. As for future
proceedings, the position would be covered by the
provisions of the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and D
Resettlement Act, 2013 (came into force on 1-1-2014),
which Act has been made applicable to acquisitions under
the National Highways Act, 1956 by virtue of notification/
order issued under the provisions of the 2013 Act.”
52. There is no doubt that the learned Solicitor General, in the E
aforesaid two orders, has conceded the issue raised in these cases.
This assumes importance in view of the plea of Shri Divan that
the impugned judgments should be set aside on the ground that
when the arbitral awards did not provide for solatium or interest,
no Section 34 petition having been filed by the landowners on this
score, the Division Bench judgments that are impugned before us F
ought not to have allowed solatium and/or interest. Ordinarily, we
would have acceded to this plea, but given the fact that the
Government itself is of the view that solatium and interest should
be granted even in cases that arise between 1997 and 2015, in the
interest of justice we decline to interfere with such orders, given G
our discretionary jurisdiction under Article 136 of the Constitution
of India. We therefore declare that the provisions of the
Land Acquisition Act relating to solatium and interest
contained in Sections 23(1-A) and (2) and interest payable
in terms of Section 28 proviso will apply to acquisitions
H
1094 SUPREME COURT REPORTS [2022] 8 S.C.R.
A made under the National Highways Act. Consequently, the
provision of Section 3-J is, to this extent, violative of Article
14 of the Constitution of India and, therefore, declared to
be unconstitutional. Accordingly, appeal arising out of SLP (C)
No. 9599 of 2019 is dismissed.”
B (emphasis supplied)
16. 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 relevant portion of the
C notification dated 28.08.2015 reads as hereunder:
“And whereas, the Central Government considers it necessary to
extend the benefits available to the land owners under the
RFCTLARR Act to similarly placed land owners whose lands
are acquired under the 13 enactments specified in the Fourth
D Schedule; and accordingly the Central Government keeping in
view the aforesaid difficulties has decided to extend the beneficial
advantage to the land owners and uniformly apply the beneficial
provisions of the RFCTLARR Act, relating to the determination
of compensation and rehabilitation and resettlement as were made
applicable to cases of land acquisition under the said enactments
E in the interest of the land owners;
Now, therefore, in exercise of the powers conferred by sub-
section (1) of Section 113 of the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and Resettlement
Act, 2013 (30 of 2013), the Central Government hereby makes
F the following Order to remove the aforesaid difficulties, namely;-
1. (1) This Order may be called the Right to Fair Compensation
and Transparency in Land Acquisition, Rehabilitation and
Resettlement (Removal of Difficulties) Order, 2015.
(2) It shall come into force with effect from the 1st day of
G
September, 2015.
2. The provisions of the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and Resettlement
Act, 2013, relating to the determination of compensation in
accordance with the First Schedule, rehabilitation and resettlement
H
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1095
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
in accordance with the Second Schedule and infrastructure A
amenities in accordance with the Third Schedule shall apply to all
cases of land acquisition under the enactments specified in the
Fourth Schedule to the said Act.
[F.No. 13011/01/2014-LRD]
K. P. KRISHNAN, Addl. Secy.” B
17. The observations contained also in para 29, 30 and 31 in Tarsem
Singh (supra) 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. The said paras read as hereunder:- C
“29. Both, P. Vajravelu Mudaliar and Nagpur Improvement Trust
clinch the issue in favour of the Respondents, as has been correctly
held by the Punjab and Haryana High Court in Golden Iron and
Steel Forging. First and foremost, it is important to note that, as
has been seen hereinabove, the object of the 1997 Amendment D
was to speed up the process of acquiring lands for National
Highways. This object has been achieved in the manner set out
hereinabove. It will be noticed that the awarding of solatium and
interest has nothing to do with achieving this object, as it is nobody’s
case that land acquisition for the purpose of national highways E
slows down as a result of award of solatium and interest. Thus, a
classification made between different sets of landowners whose
lands happen to be acquired for the purpose of National Highways
and landowners whose lands are acquired for other public purposes
has no rational relation to the object sought to be achieved by
the Amendment Act, i.e. speedy acquisition of lands for the purpose F
of National Highways. On this ground alone, the Amendment
Act falls foul of Article 14.
30. Even otherwise, in P. Vajravelu Mudaliar, despite the fact that
the object of the Amendment Act was to acquire lands for housing
schemes at a low price, yet the Amendment Act was struck down G
when it provided for solatium at the rate of 5% instead of 15%,
that was provided in the Land Acquisition Act, the Court holding
that whether adjacent lands of the same quality and value are
acquired for a housing scheme or some other public purpose such
as a hospital is a differentiation between two sets of landowners
H
1096 SUPREME COURT REPORTS [2022] 8 S.C.R.
A having no reasonable relation to the object sought to be achieved.
More pertinently, another example is given – out of two adjacent
plots belonging to the same individual one may be acquired under
the principal Act for a particular public purpose and one acquired
under the Amending Act for a housing scheme, which, when
looked at from the point of view of the landowner, would be
B
discriminatory, having no rational relation to the object sought to
be achieved, which is compulsory acquisition of property for public
purposes.
31. Nagpur Improvement Trust has clearly held that ordinarily a
classification based on public purpose is not permissible
C under Article 14 for the purpose of determining compensation.
Also, in para 30, the Seven-Judge Bench unequivocally states
that it is immaterial whether it is one Acquisition Act or
another Acquisition Act under which the land is acquired, as, if
the existence of these two Acts would enable the State to give
D one owner different treatment from another who is similarly
situated, Article 14 would be infracted. In the facts of these cases,
it is clear that from the point of view of the landowner it is
immaterial that his land is acquired under the National Highways
Act and not the Land Acquisition Act, as solatium cannot be denied
on account of this fact alone.”
E
18. 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
F 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
G 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
H
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1097
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
as the market value of the land and the hardship faced due to deprivation A
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
B
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 C
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.
19. In that background, the award passed by the Arbitrator is to D
be examined keeping in view the limited scope available under Section
34 of Act, 1996 to interfere with an award. The learned Additional Solicitor
General while attacking the award has sought to contend that the award
suffers from patent illegality which is a ground to interfere with an award
as provided under Section 34(2A) of Act, 1996, yet the District Judge
and High Court has failed to interfere. To contend with regard to the E
facets which could be considered as patent illegality, reliance is placed
on the decision in the State of Chhattisgarh vs. Sale Udyog Private
Ltd. (2022) 2 SCC 275 with specific reference to paragraphs 14,15, 16
and 24 therein. The same is as hereunder:
“14. The law on interference in matters of awards under the 1996 F
Act has been circumscribed with the object of minimising
interference by courts in arbitration matters. One of the grounds
on which an award may be set aside is “patent illegality”. What
would constitute “patent illegality” has been elaborated in Associate
Builders v. DDA [Associate Builders v. DDA, (2015) 3 SCC 49: G
(2015) 2 SCC (Civ) 204], where “patent illegality” that broadly
falls under the head of “Public Policy”, has been divided into three
sub-heads in the following words:
“42. In the 1996 Act, this principle is substituted by the “patent
illegality” principle which, in turn, contains three sub-heads: H
1098 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 42.1 (a) A contravention of the substantive law of India would
result in the death knell of an arbitral award. This must be
understood in the sense that such illegality must go to the root of
the matter and cannot be of a trivial nature. This again is really a
contravention of Section 28(1)(a) of the Act, which reads as under:
B 28. Rules applicable to substance of dispute – (1) Where the
place of arbitration is situated in India,-
(a) In an arbitration other than an international commercial
arbitration, the Arbitral Tribunal shall decide the dispute submitted
to arbitration in accordance with the substantive law for the time
being in force in India;’
C
42.2. (b) A contravention of the Arbitration Act itself would be
regarded as a patent illegality – for example if an arbitrator gives
no reasons for an award in contravention of Section 31(3) of the
Act, such award will be liable to be set aside.
D 42.3 (c) Equally, the third sub-head of patent illegality is really a
contravention of Section 28(3) of the Arbitration Act, which reads
as under:
‘28. Rules applicable to substance of dispute- (1)-(2) * * *
(3) In all cases, the Arbitral Tribunal shall decide in accordance
E with the terms of the contract and shall take into account the
usages of the trade applicable to the transaction.’
This last contravention must be understood with a caveat. An
Arbitral Tribunal must decide in accordance with the terms of the
contract, but if an arbitrator construes a term of the contract in a
reasonable manner, it will not mean that the award can be set
F
aside on this ground. Construction of the terms of a contract is
primarily for an arbitrator to decide unless the arbitrator construes
the contract in such a way that it could be said to be something
that no fair-minded or reasonable person could do.”
15. In Ssangyong Engg. & Construction Co. Ltd. v. NHAI
G (Ssanguyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15
SCC 131 : (2020) 2 SCC (Civ) 213], speaking for the Bench, R.F.
Nariman, J. has spelt out the contours of the limited scope of
judicial interference in reviewing the arbitral awards under the
1996 Act and observed thus :
H xxx
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1099
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
37. Insofar as domestic awards made in India are concerned, an A
additional ground is now available under sub-section (2-A), added
by the Amendment Act, 2015, to Section 34. Here, there must be
patent illegality appearing on the face of the award, which refers
to such illegality as goes to the root of the matter but which does
not amount to mere erroneous application of the law. In short,
B
what is not subsumed within “the fundamental policy of Indian
law”, namely, the contravention of a statute not linked to public
policy or public interest, cannot be brought in by the backdoor
when it comes to setting aside an award on the ground of patent
illegality.
38. Secondly, it is also made clear that reappreciation of evidence, C
which is what an appellate court is permitted to do, cannot be
permitted under the ground of patent illegality appearing on the
face of the award.
39. To elucidate, para 42.1 of Associate Builders [Associate
Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) D
204],namely, a mere contravention of the substantive law of India,
by itself, is no longer a ground available to set aside an arbitral
award. Para 42.2 of Associate Builders [Associate Builders v.
DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], however,
would remain, for if an arbitrator gives no reasons for an award
E
and contravenes Section 31 (3) of the 1996 Act, that would certainly
amount to a patent illegality on the face of the award.
40. The change made in Section 28 (3) by the Amendment Act
really follows what is stated in paras 42.3 to 45 in Associate
Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2
SCC (Civ) 204], namely, that the construction of the terms of a F
contract is primarily for an arbitrator to decide, unless the arbitrator
construes the contract in a manner that no fair-minded or
reasonable person would; in short, that the arbitrator’s view is not
even a possible view to take. Also, if the arbitrator wanders outside
the contract and deals with matters not allotted to him, he commits G
an error of jurisdiction. This ground of challenge will now fall
within the new ground added under Section 34 (2-A).
41. What is important to note is that a decision which is perverse,
as understood in paras 31 and 32 of Associate Builders {Associate
Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204],
H
1100 SUPREME COURT REPORTS [2022] 8 S.C.R.
A while no longer being a ground for challenge under “public policy
of India”, would certainly amount to a patent illegality appearing
on the face of the award. Thus, a finding based on no evidence at
all or an award which ignores vital evidence in arriving at its
decision would be perverse and liable to be set aside on the ground
of patent illegality. Additionally, a finding based on documents taken
B
behind the back of the parties by the arbitrator would also qualify
as a decision based on no evidence inasmuch as such decision is
not based on evidence led by the parties, and therefore, would
also have to be characterised as perverse.”
16.In Delhi airport Metro Express (P) Ltd. [Delhi Airport Metro
C Express (P) Ltd. v. DMRC, (2022) 1 SCC 131] referring to the
facets of patent illegality, this Court has held as under :
29. Patent Illegality should be illegality which goes to the root of
the matter. In other words, every error of law committed by the
Arbitral Tribunal would not fall within the expression “patent
D illegality”. Likewise, erroneous application of law cannot be
categorised as patent illegality. In addition, contravention of law
not linked to public policy or public interest is beyond the scope
of the expression “patent illegality”. What is prohibited is for
courts to reappreciate evidence to conclude that the award
suffers from patent illegality appearing on the face of the award,
E
as Courts do not sit in appeal against the arbitral award. The
permissible grounds for interference with a domestic award under
Section 34 (2-A) on the ground of patent illegality is when the
arbitrator takes a view which is not even a possible one, or
interprets a clause in the contract in such a manner which no
F fair-minded or reasonable person would, or if the arbitrator
commits an error of jurisdiction by wandering outside the contract
and dealing with matters not allotted to them. An arbitral award
stating no reasons for its findings would make itself susceptible
to challenge on this account. The conclusions of the arbitrator
which are based on no evidence or have been arrived at by
G ignoring vital evidence are perverse and can be set aside on the
ground of patent illegality. Also, consideration of documents which
are not supplied to the other party is a facet of perversity falling
within the expression “patent illegality”.
24. The patent illegality committed by the arbitrator was to apply
H the 2016 Guidelines which came into force after the issuance of
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1101
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
the Section 3A notification, contrary to the mandate of Section A
3G(7)(a) of the NH Act read with the proviso to Section 26(1)
and Section 11 of the LA Act, 2013. In the seventh SLP bearing
SLP(C) No.2503/2022, the 2018 Guidelines have been applied
showing complete arbitrariness and whimsicality on the part of
the arbitrators, resulting in wide inconsistency and uncertainty in
B
the process relating to a common acquisition.”
20. The learned Additional Solicitor General in order to contend
with regard to the patent illegality has also relied on the decision in the
case of NHAI vs. M. Hakeem & Anr. (2021) 9 SCC 1and in Ssangyong
Engineering & Construction Co. Ltd., V/s. NHAI (2019) 15 SCC 131
holding that the patent illegality appearing on the face of the award goes C
to the root of the matter. It is contended that if an Arbitrator gives no
reasons for an award and contravenes Section 31(3) of Act 1996, the
same would amount to patent illegality on the face of the award. In that
light, it is contended that in the instant case there is no reason whatsoever
given by the Arbitrator to rely upon the guideline value fixed in respect D
of another property for which value is indicated in a different serial
number, instead of relying on the value for the same survey number.
Without indicating reasons to draw a comparison with the land under
acquisition, the same is applied though value of the very same lands
containing same survey number was provided for in the same notification.
Further, no opportunity was given to rebut the same. E
21. On the aspect relating to the scope of examination of an award
within the limited power to interfere provided under Section 34 of Act
1996, the learned senior counsel and other counsel for the claimants in
order to contend that the award passed by the Arbitrator is sustainable
in the instant case where the Arbitrator is none other than the Deputy F
Commissioner who has taken note of the market value in the vicinity,
has relied on the decision of this Court in NHAI vs. M. Hakeem &
Anr., (2021) 9 SCC 1. The decision in Emkay Global Financial
Services Ltd. vs. Girdhar Sondhi (2018) 9 SCC 49 is relied to contend
that the proceedings under Section 34 of Act, 1996 is summary in nature. G
Proceedings does not require framing of issues and leading evidence.
The expression ‘furnishes proof’ in Section 34 is only to examine the
record. However, what is to be noted by us is the manner in which the
proceedings was conducted by the learned Arbitrator and whether that
aspect has been properly appreciated in the proceedings under Section
34 and 37 of Act, 1996. H
1102 SUPREME COURT REPORTS [2022] 8 S.C.R.
A Reliance is placed on MMTC Ltd. vs. Vedanta Ltd. (2019) 4
SCC 163, wherein it is held that the jurisdiction under Section 34 is not
as an appeal. Supreme Court should be slow to interfere with concurrent
finding and the interference on merits is on limited grounds under
Section34(2)(b)(ii). Patent illegality would mean contravention of 1996
Act and of terms of contract and illegality appearing on the face of the
B
award but not by re-appreciation of evidence. In Associate Builders
vs. Delhi Development Authority (2015) 3 SCC 49 it is held that none
of the grounds under Section 34 (2)(a) deal with merits of the decision
rendered by an arbitral award. Interference is permissible only when
findings of an arbitrator is arbitrary, capricious or perverse or when
C conscience of Court is shocked or when illegality is not trivial but goes to
the root of the matter.
22. The case in Ssangyong Engineering and Construction
Company Ltd. (supra) relied on by the learned Additional Solicitor
General is also relied by the learned counsel for claimants to contend
D regarding limited scope. This Court, in that context has referred to the
requirement to be complied in the proceedings before the arbitrator, which
if not complied will be ground of challenge under Section 34(2)(a)(iii).
We deem it appropriate to note the relevant observation which read as
hereunder:-
E “51. Sections 18, 24(3) and 26 are important pointers to what is
contained in the ground of challenge mentioned in Section
34(2)(a)(iii). Under Section 18, each party is to be given
a full opportunity to present its case. Under Section 24(3), all
statements, documents, or other information supplied by one party
to the Arbitral Tribunal shall be communicated to the other party,
F and any expert report or document on which the Arbitral Tribunal
relies in making its decision shall be communicated to the parties.
Section 26 is an important pointer to the fact that when an expert’s
report is relied upon by an Arbitral Tribunal, the said report, and
all documents, goods, or other property in the possession of the
G expert, with which he was provided in order to prepare his report,
must first be made available to any party who requests for these
things. Secondly, once the report is arrived at, if requested, parties
have to be given an opportunity to put questions to him and to
present their own expert witnesses in order to testify on the points
at issue.
H
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1103
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
52. Under the rubric of a party being otherwise unable to present A
its case, the standard textbooks on the subject have stated that
where materials are taken behind the back of the parties by the
Tribunal, on which the parties have had no opportunity to comment,
the ground under Section 34(2)(a)(iii) would be made out.”
Permissibility of interference is on specific grounds of (i) arbitrator B
not adopting judicial approach (ii) breach of principles of natural justice
(iii) contravention of statute not linked to public policy or public interest,
as being patent illegality under Section 34(2A) and (iv) most basic notions
of justice.
The decision in Delhi Airport Metro Express Pvt. Ltd. vs. Delhi C
Metro Rail Corporation Ltd. (2022) 1 SCC 131 is relied upon to indicate
that there should be minimal interference in arbitral awards, save, it
suffers from patent illegality. What is patent illegality is delineated in
para 29 which is as hereunder: -
“29. Patent illegality should be illegality which goes to the root of
D
the matter. In other words, every error of law committed by the
Arbitral Tribunal would not fall within the expression “patent
illegality”. Likewise, erroneous application of law cannot be
categorized as patent illegality. In addition, contravention of law
not linked to public policy or public interest is beyond the scope of
the expression “patent illegality”. What is prohibited is for Courts E
to reappreciate evidence to conclude that the award suffers from
patent illegality appearing on the face of the award, as Courts do
not sit in appeal against the arbitral award. The permissible grounds
for interference with a domestic award under Section34(2-A) on
the ground of patent illegality is when the arbitrator takes a view F
which is not even a possible one, or interprets a clause in the
contract in such a manner which no fair-minded or reasonable
person would, or if the arbitrator commits an error of jurisdiction
by wandering outside the contract and dealing with matters not
allotted to them. An arbitral award stating no reasons for its findings
would make itself susceptible to challenge on this account. The G
conclusions of the arbitrator which are based on no evidence or
have been arrived at by ignoring vital evidence are perverse and
can be set aside on the ground of patent illegality. Also, consideration
of documents which are not supplied to the other party is a facet
of perversity falling within the expression “patent illegality”.
H
1104 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 23. Having taken note of the rival contentions and while examining
the scope available under Section 34 of Act 1996 in the backdrop of the
precedents, what is also to be kept in perspective is the decision referred
to in the case of NHAI vs. Sayedabad Tea Company Ltd. (2020) 15
SCC 16. In the said case, this Court while examining the question as to
whether the land loser can seek the appointment of an Arbitrator in
B 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
C 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
D 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
E 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
F 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
G 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
H of market value and compensation should indicate reasons since the
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1105
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
same will have to be arrived at on a comparative analysis for which the A
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.
B
24. 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 C
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
D
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 Section31(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 E
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 F
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 G
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. H
1106 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 25. In that context it will be apposite to note the decision relied on
by the learned Additional Solicitor General in Dyna Technologies (P)
Ltd. vs. Crompton Greaves Ltd. (2019) 20 SCC 1 wherein inter alia it
is held as under:
“34. The mandate under Section 31(3) of the Arbitration Act is
B 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.
C
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
D 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
E
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
F 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 casual and cavalier manner. On the other hand, ordinarily
unintelligible awards are to be set aside, subject to party autonomy
G 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.
36. At this juncture it must be noted that the legislative intention
of providing Section 34(4) in the Arbitration Act was to make the
H award enforceable, after giving an opportunity to the Tribunal to
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1107
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
undo the curable defects. This provision cannot be brushed aside A
and the High Court could not have proceeded further to determine
the issue on merits.
37. In case of absence of reasoning the utility has been provided
under Section 34(4) of the Arbitration Act to cure such defects.
When there is complete perversity in the reasoning then only it B
can be challenged under the provisions of Section 34 of the
Arbitration Act. The power vested under Section 34(4) of the
Arbitration Act to cure defects can be utilised in cases where the
arbitral award does not provide any reasoning or if the award has
some gap in the reasoning or otherwise and that can be cured so
as to avoid a challenge based on the aforesaid curable defects C
under Section 34 of the Arbitration Act. However, in this case
such remand to the Tribunal would not be beneficial as this case
has taken more than 25 years for its adjudication. It is in this state
of affairs that we lament that the purpose of arbitration as an
effective and expeditious forum itself stands effaced. D
42. From the facts, we can only state that from a perusal of the
award, in the facts and circumstances of the case, it has been
rendered without reasons. However, the muddled and confused
form of the award has invited the High Court to state that the
arbitrator has merely restated the contentions of both parties. From E
a perusal of the award, the inadequate reasoning and basing the
award on the approval of the respondent herein cannot be stated
to be appropriate considering the complexity of the issue involved
herein, and accordingly the award is unintelligible and cannot be
sustained.”
F
26. 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. In this regard it would
be apposite to take note of the observation in M. Hakeem (supra), as G
hereunder:-
“42. It can therefore be said that this question has now been
settled finally by at least 3 decisions of this Court. Even otherwise,
to state that the judicial trend appears to favour an interpretation
that would read into Section 34 a power to modify, revise or vary H
1108 SUPREME COURT REPORTS [2022] 8 S.C.R.
A the award would be to ignore the previous law contained in the
1940 Act; as also to ignore the fact that the 1996 Act was enacted
based on the UNCITRAL Model Law on International Commercial
Arbitration, 1985 which, as has been pointed out in Redfern and
Hunter on International Arbitration, makes it clear that, given
the limited judicial interference on extremely limited grounds not
B
dealing with the merits of an award, the “limited remedy” under
Section 34 is coterminous with the “limited right”, namely, either
to set aside an award or remand the matter under the
circumstances mentioned in Section 34 of the Arbitration Act,
1996.”
C 27. In the above backdrop, the contention relating to ‘patent
illegality’ in an award in terms of Section 34(2A) of Act 1996 as put
forth by the learned Additional Solicitor General needs consideration.
On such consideration, only if the award passed in the instant case falls
foul of any such requirement so as to bring it within the power of review
D under Section 34 of Act 1996, the interference would be warranted. As
noted, strong reliance is placed by the learned Additional Solicitor General
to the decision in the case of State of Chhattisgarh (supra) to contend
with regard to the different facets of patent illegality in an award including
violation of requirement under Section 28(2) and 31(3) of Act 1996.
E 28. In order to demonstrate that the award passed in the instant
case suffers from such patent illegality, the learned Additional Solicitor
General has contended that the compensation determined by the SLAO
is not just an offer as was the case under the Land Acquisition Act in
view of the provision contained in Section 3G(5) of NH Act. In that
regard, it is contended that Section 3G(5) is explicit that either of the
F parties if dissatisfied with the amount determined by the competent
authority under sub-section (1) or sub-section (2) of Section 3G of NH
Act are entitled to file an application to the Arbitrator appointed by the
Central Government for determination. Hence, it is contended that unlike
Section 18 of the Land Acquisition Act wherein the land loser alone
G could seek reference for enhancement of the compensation, under NH
Act the acquiring authority is also granted the liberty of filing an application
before the learned Arbitrator if the compensation determined by the
SLAO is excessive. In that view, it is contended that when there is
determination made by the SLAO based on the material available before
him with opportunity to both the parties, such determination cannot be
H disturbed by the learned Arbitrator in a mechanical manner unless the
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1109
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award passed by SLAO is pointed out to be erroneous in law. In that A
regard, it is contended that in the instant case, the SLAO has taken into
consideration the various sale deeds as exemplars to note the sale value
of the property in different transactions relating to certain other properties
situate in the area. Having thus assessed the average value, the SLAO
has taken into consideration the guideline value of 2014 which was prior
B
to the date of the acquisition notification and on finding that the guideline
value of the property fixed for registration is more than the value for
which sale transactions have been made, has adopted the guideline value
as provided under Section 26(1)(a) of the RFCTLARR Act, 2013.
29. The learned senior counsel for the claimants however, sought
to contend that even under the provisions of the Land Acquisition Act C
the determination of market value if was excessive, it was open for the
Acquiring Authority to seek reference to determine the just compensation,
wherein it was open to the reference court to determine the just
compensation. In this regard, reliance is placed on the judgment of this
Court in Abdul Karim Alarakha vs. State (1982) 3 SCC 227. In that D
light, a perusal of the said judgment would indicate that this Court while
taking note of the facts therein under Section 18 of Rajasthan Land
Acquisition Act held that the government also can seek reference as the
scope was wider.
30. Be that as it may, in our opinion the mere provision as E
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 F
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 G
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 (supra) it is held that there is a regime change H
1110 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 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,
B
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.
C 31. The further contention of the learned Additional Solicitor
General is that the award passed by the learned Arbitrator is ex-facie
erroneous amounting to patent illegality since the learned Arbitrator while
re-determining the compensation has taken into consideration the guideline
value as provided under the notification dated 28.03.2016. In that regard,
D it is contended that the notification under Section3A of NH Act was
issued on 01.02.2016. The provision in Section3G(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
E 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
F 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
G 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
H land is situated to be adopted by the Collector for assessing and
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1111
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
determining the market value of the acquired land. In view of the said A
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
B
tendered as compensation for acquisition.
32. 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
28.03.2016which is marginally subsequent in point of time is reckoned,
when the acquisition notification under Section 3A of NH Act was prior C
to the same i.e. on 01.02.2016. As already noted, Section3G(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 D
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 E
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 F
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. G
33. 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 H
1112 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 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
B 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
C lands under that notification itself and provide certain amount of escalation.
34. 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-
D 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
E 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
F 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
G 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
H committed by the learned Arbitrator.
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1113
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35. It is also to be noted that though the notification is dated A
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.
36. Having arrived at the conclusion that the learned Arbitrator
had not committed any illegality much less patent illegality in reckoning
the guideline value notification dated 28.03.2016, the issue that would B
still remain for further consideration is as to whether an appropriate
consideration has been made by the learned Arbitrator in the matter of
applying the market value notified as a guideline value under the
notification dated 28.03.2016 and as to whether the manner in which the
said guideline was taken into consideration amounts to denial of opportunity
to NHAI amounting to violation of principles of natural justice violating C
Section 28(2). The further aspect which requires consideration is also
as to whether the guideline value fixed in respect of ‘City Greens’ and
‘Zunadu’ being applied automatically to the land in question was justified
and as to whether the learned Arbitrator has indicated sufficient reasons
to place such reliance since the non-assignment of reasons or discussion D
would also amount to patent illegality being contrary to Section 31(3) of
Act, 1996.
37. 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 E
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 F
contended that the market value of the non-agricultural 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 G
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 H
1114 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 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,
B
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
C 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
D record and was to be considered by the learned Arbitrator by assigning
reasons.
38. In that background a perusal of the award passed by the
learned Arbitrator would indicate that the only discussion worth noting,
after narration of the facts is contained in para 8 of the award which
E reads as hereunder:
“8. On perusal of the written statement and documents produced
by the applicant as well as the written statement and documents
produced by the respondents, it is seen that the land in dispute has
been acquired for the purpose of expansion of National Highway-
F 275 and while rendering the Award, the price of the land in question
has been arrived at, by considering it as dry land. However, since
the land in question, even prior to the issue of 3(A) Land Acquisition
Notification, has been converted for residential purpose as per
Official Memorandum No.BDS/ALN/SR/89/91-92 dated
20.06.1992 of the Sub-Divisional Officer, Ramanagara Sub-
G Division, proper price has to be fixed by considering the lands in
question as residential lands. This procedure has not been adopted.
Further, by revising the market price, the Stamps and Registration
Department has issued a Notification dated 28.03.2016 in respect
of the lands belonging to City Greens situated in the Sy.Nos.
H coming under the said Mayaganahalli village wherein, the price of
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1115
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
converted sites/sites of layouts approved by competent authority, A
has been fixed at Rs.15,400/- per Sq.Mtr. That their lands are
more developed than the lands of Green City and has hence prayed
for grant of compensation at a higher rate than the same. On
perusal of the said Notification of the Stamps and Registration
Department, it is seen that the price of the applicant’s converted
B
lands situated in the survey numbers of Mayaganahalli village is
fixed at Rs.8,000/- per Sq. Mtr. and the price of the converted
lands of Green City in the same village has been fixed at Rs.15,400/
- per Sq. Mtr. Section 26 of the said Act clearly defines the
procedure for fixing the market price. Even then, it could be seen
that the applicant has not been given the fair price. Therefore, it is C
opined that instead of the present price fixed for the lands in
question, its price has to be fixed on par with the rates fixed by
the Stamps and Registration Department on the basis of land
conversion value in respect of the similarly situated lands of the
same village and that compensation be awarded accordingly.
D
Further, since the Award has been passed by fixing the value of
the assets and structures existing on the lands in question as per
the assessment of the concerned officers, the prayer of the
applicant to enhance compensation for the same has been rejected
and the following order is passed.”
39. The above extracted portion of the award would demonstrate, E
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 F
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- G
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 H
1116 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 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
B
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
C 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
D
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
E 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.
40. 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
F 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
G 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
H be put forth before the learned Arbitrator.
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1117
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
C.A. No.4681/2022 @ SLP(C)No.2503/2022 A
Leave granted.
41. In the instant case the land acquired is in Survey No.40/8,
Kumbalagodu Village, Bengaluru, South Taluk, Bengaluru District,
measuring 121 sq. mtr. The purpose of acquisition is the same as in the
earlier cases and the consideration relating to determination of market B
value and award of compensation is also similar to those cases. However,
in the instant case the acquisition is under a different preliminary
notification dated 02.02.2016 and the final notification is dated 04.10.2016.
42. Insofar as determination of the market value, both by the SLAO
and the learned Arbitrator, it is based on the guideline value notification C
dated 27.10.2014 published by the Department of Stamps and Registration
as per which it is fixed at Rs.17,200/- sq. mtr. The guideline value
notification relied upon in this case is prior to the acquisition notification
and as such there is no grievance in that regard. Irrespective of the
contentions put forth on behalf of the NHAI at this juncture, the award
D
passed by the learned Arbitrator would disclose that the NHAI while
opposing further enhancement by the learned Arbitrator had contended
to sustain the determination of market value at Rs.17,200/- per sq. ft.
made by the SLAO by contending that the market value determined is in
accordance with law.
43. Hence, the issue that arises for consideration herein is only as E
to whether the course adopted by the learned Arbitrator to apply the
subsequent notification dated 05.12.2018 issued by the Department of
Stamps and Registration to reckon the special instructions contained in
that notification so as to enhance the market value by 50% of the guidance
value which is provided in the notification dated 27.10.2014 and thus F
arrive at the market value of Rs.25,800/- per sq. mtr. With the aid of two
different guideline value notifications is justified.
44. The learned Additional Solicitor General has highlighted this
aspect of the matter as patent illegality in passing the award in this case.
It is contended that the learned Arbitrator has chosen to apply the
G
Notification dated 05.12.2018 to consider enhancement by 50% for
industrial land since it was not specifically provided for in the guideline,
by relying on the special instruction in guideline of 2018. In such event,
the guideline value which was much lesser in the notification of 2018
itself should have been taken into consideration. It is pointed out that the
guideline value for residential land in the 2018 Notification works out to H
1118 SUPREME COURT REPORTS [2022] 8 S.C.R.
A Rs.11,900/- per sq. mtr. If 50% of the same is added to derive the value
for industrial land, it will be Rs.16,680/- per sq. mtr. But the learned
Arbitrator has chosen to sustain Rs.17,200/- awarded by SLAO based
on the guideline value of 2014 notification but relied on the 2018
notification to apply the 50% value addition of the same to determine
market value for industrial land, which is not sustainable. It is contended
B
that if Clause 6 of special instruction was applied the market value will
work out to Rs.12,900/- i.e. 75% of Rs.17,200/-.
45. The learned counsel for the claimant contended, the fact
remains that the industrial land belonging to the claimant has been
acquired. It is contended, in the notification dated 27.10.2014 although
C Kumbalagodu Industrial Area is mentioned, the categories of land for
which value has been indicated does not include industrial plot. As such
the value for industrial plot is to be determined by applying the provision
made in special instructions. It is contended, though the learned Arbitrator
has noted the special instruction under 2018 Notification, even under the
D 2014 Notification, the special instruction provides for addition of 50% to
arrive at the value of industrial plot. Hence the enhancement to the tune
of Rs.8600/- per sq. mtr. is justified.
46. Insofar as the learned Arbitrator having adopted the guideline
issued in 2014, the same is prior to the date of the notification for
E acquisition and the aspects considered relating to date of notification in
the earlier set of cases does not arise. Hence, it is justified. The value
indicated at serial no.51 in the notification is for Kumbalagodu Industrial
Area, but the value stated therein is for residential sites, the approval for
which was obtained from the different authorities. Though reference is
to Kumbalagodu Industrial Area, the value of the industrial plot has not
F been specified. It cannot also be assumed that the value indicated therein
itself is for industrial site, since in the same entry in Serial No.51, the
value of residential buildings is also indicated. Hence, in the absence of
the SLAO undertaking the exercise for determining the market value of
the industrial land which was acquired, the learned Arbitrator was required
G to do so.
47. The learned Arbitrator, however, while undertaking the said
exercise, as evident from the award has relied on the market value at
Rs.17,200/- sq. mtr. based on the guideline value Notification dated
27.10.2014. But for determining the market value, the special instructions
in the notification dated 05.12.2018 is relied upon. Such procedure
H
NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. 1119
NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]
adopted is not justified and amounts to material irregularity on the face A
of the award. The learned counsel for the claimant contended that the
learned Arbitrator though relied on 2018 notification, the Special
Instruction No.3 in the 2014 notification also provides for adding 50% of
the rates applicable if the acquired land is adjoining the National Highway.
48. Firstly, when we are of the opinion that the learned Arbitrator B
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
our view to that of the learned Arbitrator and modify the award. Further,
the learned Additional Solicitor General sought to refer to Special
Instruction No.6 in the notification of 2014 to arrive at the market value C
even if it is accepted that the value of industrial land is not indicated in
the notification. These are aspects to which the learned Arbitrator is
required to advert so as to arrive at the conclusion. In the circumstance
where we have opined that the award passed by the learned Arbitrator
suffers from patent illegality and appropriate consideration is necessary, D
the only course open is to set aside the award and allow the learned
Arbitrator to reconsider the matter on that aspect.
49. From the conclusion reached above, 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 E
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 F
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 G
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 H
1120 SUPREME COURT REPORTS [2022] 8 S.C.R.
A 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
B
of the appropriate special instruction, if any, is to be considered.
50. 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.
C 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. (ii) The arbitration proceedings bearing Case Nos.:
LAQ(A)/NH-275/CR/137/2017-18,
LAQ(A)/NH-275/CR/134/2017-18,
D
LAQ(A)/NH-275/CR/135/2017-18,
LAQ(A)/NH-275/CR/132/2017-18,
LAQ(A)/NH-275/CR/139/2017-18,
LAQ(A)/NH-275/CR/41/2019-20 are remanded to the Deputy
E Commissioner and Arbitrator, NH-275, Ramanagar District, Ramanagar
and Case No.LAQ/ARB/BNG/NH-275/CR-02/2/2018-19 is remanded
to Deputy Commissioner and Arbitrator, Bangalore Rural District.
51. The appeals accordingly are allowed in part with no order as
to costs.
F 52. The pending applications, if any, stand disposed of.
Divya Pandey Appeals partly allowed.
(Assisted by : Shubhanshu Das, LCRA)
G
H
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