1
IN THE COURT OF THE PRINCIPAL DISTRICT JUDGE: AT NALGONDA
(Dated this the 16th day of October, 2019)
Present: Sri S.Sasidhar Reddy
Principal District Judge
Arb. O.P.No. 267 of 2014
Between:
Project Director, National Highways Authority of India, Project Implementation Unit, D.No.331/2RT, 2nd floor, R.S.Nagar, Masab Tank, Hyderabad-500 057.
…Petitioner
AND
1.Chikoti Balesh S/o Bixapathi
2.Smt. Paladugu Kamala Kumari W/o Mahender
3.Pati Malla Reddy S/o Buchi Reddy,
4.Smt. Kadagatla Andamma W/o Yadagiri Reddy all are residents of Khairthapur village of Choutuppal Mandal, Nalgonda District.
...Respondents
5.The Competent Authority & Revenue Divisional Officer, Bhongir, Nalgonda District.
6.The Arbitrator, Additional Joint Collector, Nalgonda. …Respondents
and
Arb. O.P.No. 163 of 2018
Between:
1.Chikoti Balesh S/o Bixapathi
2.Smt. Paladugu Kamala Kumari W/o Mahender
3.Pati Malla Reddy S/o Buchi Reddy,
4.Smt. Kadagatla Andamma W/o Yadagiri Reddy all are residents of Khairthapur village of Choutuppal Mandal, Nalgonda District. …Petitioners
AND
1.The Competent Authority cum Revenue Divisional Officer, Bhongir Division, Nalgonda District.
2.The Project Director, National High Way Authority, Door No.331/2 RT, 2nd floor, R.S.Nagar, Masab Tank, Hyderabad-500 057.
3.G.P.Neelakantam, Sole Arbitrator cum Addl.Joint Collector, Nalgonda District. …Respondents These petitions coming on today before me for hearing in the presence of Sri M/s Laxminarayana & Associates, Counsel for the Petitioner and of Sri Gunde Venkateshwarlu, Government Pleader for the Respondent Nos.5 & 6, and of the respondents 1 to 4 are set exparte in Arb.O.P.No.267 of 2014 and in the presence of Sri Nukala Narasimha Reddy, Counsel for the Petitioners and of Sri Gunde Venkateshwarlu, Government Pleader for the Respondent Nos.1 & 3, and of Sri M/s Laxminarayana & Associates, Counsel for the Respondent No.2 in Arb.O.P.No.163 of 2018 and after hearing and having stood over for consideration till this day, this Court passed the following: -
C O M M O N O R D E R
1.These are applications under Section 34 of the Arbitration and Conciliation
Act, 1996.
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FACTS :
2.The facts of the case are that the Government of India, the Ministry of
Shipping Road Transport and Highways, New Delhi in exercise of powers conferred under Section 3A (1) of the National Highways Act, 1956 (hereinafter referred to as NH
Act, 1956) issued a notification declaring it’s intention to acquire lands in Khairthapur village of Choutuppal Mandal, Nalgonda District (presently Yadadr-Bhongir District) for the purpose of widening the existing National High Way No.9 (presently National
Highway No.65) from two lanes to four lanes with divided carriage way from KM 40/0 to KM 62/290 of Hyderabad-Vijayawada Section. The Revenue Divisional Officer,
Bhongir, Nalgonda District was appointed as Competent Authority (Land Acquisition) (hereinafter referred to as “CALA”) under Sections 3A, 3D and 3G of NH Act, 1956.
The Project Director, National High Way Authority of India, PIU Hyderabad (herein after referred to as NHAI) furnished requisition for acquiring Acres 5-35 Guntas of land along with structures and trees within the limits of Khairthapur village of Choutuppal
Mandal, Nalgonda District (presently Yadadri-Bhongir District). Land was surveyed and identified and notification was published under Section 3A of the NH Act declaring intention to acquire the said land on 01.04.2008 in the gazette and published in the newspapers on 09.07.2008. Objections were received under Section 3C of the NH
Act, 1956. After considering the objections of all the interested persons, declaration under Section 3D of the NH Act was issued and published in the gazette on 17.12.2008. A newspaper publication was issued calling for the interested persons to participate in the for enquiry about compensation under Section 3G of the NH Act, 1956 on 02.07.2009. The claimants filed their objections before CALA and CALA passed award No. B/1536/2009 dt:05.01.2010 determining compensation. CALA collected the sale statistics for three years prior to notification under Section 3A and further treated the entire land in Sy.Nos.52,56,57,72,73,80,81,82 of Khairthapur Village as category as the land was situated within 100 feet of the National Highway on either side and fixed market value on yardage basis at the rate of Rs.240/- per Square yard and deducted 40 percent towards development charges. CALA also awarded solatium 3 at 30% and additional market value of 12% in lumpsum. After deducting income-tax at source under Section 194-LA of Income-tax Act, 1961 awarded compensation.
Aggrieved by the award the persons whose land was acquired sought reference to arbitration. The Additional Joint Collector, Nalgonda was appointed as Arbitrator. The
Arbitrator after examining the claims and the material on record passed award in Case
No.G2/4499/2010-1 to 4 dt: 06.02.2014 enhancing the compensation to Rs.300/- per
Sq.yard along with all statutory benefits awarded by CALA and interest at 9% per annum from the date of taking possession till date of deposit and also disallowed the deduction of development charges and directed payment of the amount that fell short due to deduction on that count. Aggrieved by this award both NHAI and the claimants whose land was acquired filed the present applications. Since common issues are involved in all the cases a common order is passed in the above applications.
CONTENTIONS OF NHAI :
3.The learned counsel for the NHAI contended that the Arbitrator erred in enhancing the compensation without considering the detailed analysis done by the
CALA, who had considered comparable sale statistics as well as the nature of the lands and potential for development. The learned counsel would contend that the deduction of development charges by CALA is justified and there is no basis for modification of the said deduction by the Arbitrator. The learned counsel for the NHAI placed reliance upon the judgments of the Hon’ble Supreme Court in Viluben Jhalejar
Contractors Vs. State of Gujarat [(2005) 4 Supreme Court Cases 789] and the judgment of the Hon’ble High Court of Madras in NHAI vs. G.Marimuthu Gounder & another [(2010) 5 Mad LJ 1], and the judgment of the Hon’ble Supreme Courtin
Lucknow Development Authority Vs. Krishna Gopal Lahoti and another [(2008)
1 Supreme Court Cases 554].
4.The learned counsel further contended that the value of sale of small plots can be considered for fixing the rate of large plots subject to necessary reductions and adjustments and also placed reliance upon the judgment of Chandrashekar (D) by 4
LRs. and Others Vs. Land Acquisition Officer and Others [AIR 2012 SC 446].
The learnedcounsel further placed reliance upon the judgment of the Hon’ble High
Court of Kerala in Ramdas M.R. Vs. NHAI and Others [(2019) 1 KLJ 803] to contend that the Court under Section 34 of the Arbitration and Conciliation Act, can only quash the award and leave the parties to their remedies and cannot modify the award by enhancing the claim. The learned counsel further placed reliance upon the judgments of the Hon’ble Supreme Court of India in Mc.Dermott International Incorporate
Vs.Burn Standard Co. Ltd., and Others. [(2006) 11 Supreme Court Cases 181] and
Hindustan Zinc Ltd., Vs. Friends Coal Carbonisation [(2006 (4) SCC 445] and the
Hon’ble High Court of Delhi in GEA EGI Contracting/Engineering Co., Ltd., Vs.
Bharat Heavy Electricals Limited [(233) (2016) DLT 661] and in Oil & Natural Gas
Corporation Ltd., Vs. SAW Pipes Ltd., [AIR 2003 SC 2629].
CLAIMANTS :
5.The learned counsel for the claimants contended that the CALA erred in classifying the lands in the same stretch into different categories and support of the same placed reliance upon the judgment of the Hon’ble Supreme Court in Union of
India Vs. Harinderpal Sing and others [AIR 2006 SC 447], and the Hon’ble High
Court of Andhra Pradesh in K.V.Ramana Reddy and others Vs. Special Deputy
Collector (Land Acquisition) [(2013) (6) ALT 649]. The learned counsel contended that the right to fair compensation and transparency in land acquisition, rehabilitation and resettlement Act 2013, (hereinafter referred to as the 2013 Act) applies to the present proceedings and in support of the same relied upon the judgment of the
Hon’ble Supreme Court of India in Sunita Mehra and another Vs. Union of India
[(2016) (8) Scale 582]. The learned counsel further contended that the judgment of the Hon’ble High Court of Punjab in M/s Golden Iron & Steel Forging Vs. Union of
India & Others [2008 Law Suit (P&H) 70] awarded solatium and additional market value and interest to the compensation for acquisition of land under the NH Act, 1956 and had struck down Section 3J of the NH Act, 1956. The learned counsel also relied upon the judgment of the Hon’ble High Court of Karnataka in Lalitha Vs. Union of 5
India [AIR 2003 Karnataka 165]. The learned counsel further contended that the comparable sale deeds and valuation reports filed by the claimants have been ignored by the Arbitrator and compensation was not granted at a higher rate. That Land
Acquisition Act, 1894 or the 2013 Act are applicable and therefore, higher compensation has to be granted at Rs.5,000/- per sq.yard or Rs.1,50,00,000/- per acre. The learned counsel contended that this Court under Section 34 of the
Arbitration and Conciliation Act, 1996 has the power to modify the award and grant enhancement of compensation. Learned counsel contended that statutory benefits were not granted to the structures and houses by CALA and the Arbitrator and the same ought to have been granted by the Arbitrator. The calculation of depreciation on the structures is also invalid as the acquisition is compulsory in nature. Learned counsel further placed reliance upon the judgment of the Hon’ble High Court of Andhra
Pradesh in C.Ramachandra Reddy and others Vs. Government of India and another [2008 (4) ALD 105] to contend that relevant date to fix market value under
Section 3-D notification and the said date 08.04.2009.
6.Upon examining the material on record and upon considering the contentions of the counsel the following point emerges for consideration :
1. Whether the impugned award suffers from any infirmity in terms of Section 34 of the Arbitration & Conciliation Act 1996 and is liable to be set aside ?
POINT :
7.Section 34 of Arbitration & Conciliation Act reads as follows:
34. Application for setting aside arbitral award.— (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).(2) An arbitral award may be set aside by the Court only if—
(a) the party making the application furnishes proof that—
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so 6 submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may beset aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that—
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii)the arbitral award is in conflict with the public policy of India.
1[Explanation 1—For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,—
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2—For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
2[(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award, or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.
(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.1 Explanation Subs. by Act 3 of 2016, sec. 18 ( w.e.f. 23.10.2015)2 Ins. by Act 3 of 2016, sec. 18 (w.e.f. 23.10.2015)1 (5)An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party.]
8.From the above, the grounds on which arbitration award can be interfered with are very limited. The present case is peculiar in the sense that there is no agreement between the parties to refer the matter to arbitration. This is a statutory arbitration under Section 3G of the NH Act, 1956. Consequently, the grounds of review namely that the arbitrator passed award considering matters beyond the arbitration agreement or that the award was passed considering matters extraneous to the contract are inapplicable in the present case. The only ground on which the award 7 can be assailed is that the award is in violation of public policy of India. A further question then arises as to the scope of interference in this adjudication. Learned counsel for the NHAI would contend that even if this Court finds that the award was passed in violation of any grounds under Section 34 of the Act, all that can be done is to set aside the award and leave the parties to work out their remedies as per law. Per contra, the learned counsel for the claimants would contend that this Court can modify the award to address the grievances of the claimants. Learned counsel placed reliance upon the judgment of Hon’ble High Court of Madras in Gayathri Balaswamy
Vs. ISG Nova Soft Technologies Ltd., [O.P.No.463 of 2012 dt: 2.9.2014].
9.The scope of interference by a Court under Section 34 of the Arbitration and Conciliation Act, 1996 is well established by a catena of judgments of the Hon’ble
Supreme Court. Hon’ble Supreme Court in Associate Builders Vs. Delhi
Development Authority [AIR 2015 SC 620] referring to the various judgments of the
Hon’ble Supreme Court on the scope of interference with the arbitration award
categorically held that the award can only be interfered with if the grounds under
Section 34 are made out and the Court while exercising jurisdiction under Section 34 is not sitting in appeal over the arbitration award. Hon’ble Supreme Court held that the findings of the fact made by the arbitrator cannot be substituted by fresh findings of the fact by the Court. The arbitrator is the master of facts and the Court under Section 34 can only review the facts when the challenge is made to the award on the ground of violation of public policy. Hon’ble Supreme Court further held that even in case of such analysis the factual findings cannot be interfered with unless they are perverse.
10.Hon’ble High Court of Madras in Gayathri Balaswamy’s case found that the committee required to be established under the guidelines of Visakha Vs. State of
Rajasthan was not established and consequently the women employee who was terminated was prejudiced and quantum of compensation that could be awarded could not be quantified and therefore, the compensation that could have been awarded was only an adhoc amount without any mathematical precision which the arbitrator ought 8 to have awarded and therefore, the Court interfered with the award and granted compensation.
11.In the present case, this Court is faced is with a peculiar situation where there is no contract between the parties to refer the matter to arbitration. Further there are two fact finding authorities namely the CALA and the arbitrator, unlike an arbitration involving contractual disputes when the parties establish the facts only
before the arbitrator. The consequence is that the grounds under Section 34
concerning the contractual terms are not available to the petitioners herein and this
Court cannot review any fact that was not established before the Arbitrator. If any fact was established before the CALA and the same is not assailed before the Arbitrator, such factual finding cannot be challenged before this court on any ground. The only ground on which the award can be interfered with is public policy. This view was taken by the Hon’ble High Court of Rajasthan in Perfect Thread Mills Limited Vs.
Competent Authority (Land Acquisition) Cum SDO Girwa and Others [2015 Law
Suit (Rajasthan) 2471] wherein the Hon’ble High Court held as follows:
[21] After analysing the law on the subject i.e. judicial review with the arbitral award, I am not impressed by the argument of learned counsel for the respondent that in such matters, the courts are required to adopt an idealistic and pedantic approach in view of sea through change with wider connotation to the phrase "Fundamental policy of Indian Law" and even applying the Wednesbury's principle of reasonableness horizons of the judicial review has been given a new dimension. This sort of situation has persuaded this court to examine the arbitral award with a pragmatic approach to test its sustainability on the anvil of "Fundamental policy of Indian Law", Wednesbury's principle of reasonableness and with justice oriented approach.
[22] The point in issue in the instant appeal is not related with an arbitral award wherein rights flowing from a contract between rival parties is adjudicated to compensate the aggrieved party. In fact, in the instant case, the appellant is 9 sought to be deprived of its property land by enforcing law of compulsory acquisition and the grievance of the appellant is against awarding inadequate compensation which is a mere pittance. The appellant has also laid emphasis on the fact that the determination of compensation is without scientifically applying the principle of offering compensation commensurating with the market value of the land. The appellant in its endeavour has seriously doubted the DLC rates which are pressed into service for determining compensation vis-a-vis industrial land allotted by RIICO at development charges rates / concessional rates. Even adopting development charges rates / concessional rates of RIICO as DLC rates is also questioned by the appellant to assert that DLC rates are irrational and not at par with the prevailing rates of the area where land is situated. The contemporaneous sale deeds in the proximate area are also highlighted by the appellant with the grievance that those were not considered by the learned court below as well as by the Arbitral Tribunal and the Competent Authority. Against such a challenge to the determination of amount of compensation, the respondent has taken shelter of DLC rates which are dependent on development charges rates / concessional rates of RIICO with full emphasis as if these rates are unfellable having Midas touch and beyond the arms of judicial review of this
Court. Therefore, in totality, the issue is seriously contentious and requires judicial scrutiny by this Court and it would be unsafe to nonsuit the appellant by adopting a narrower approach vis-a-vis the scope of judicial review with the arbitral award.
Consequently, I am not impressed by argument of learned counsel for the respondent and feel persuaded to examine the afflictions of the appellant on merits.
12.The judgment of the Hon’ble High Court of Rajasthan was carried in appeal to the Hon’ble Supreme Court by the NHAI vide Civil Appeal No.2978/2016 and the same is pending consideration before the Hon’ble Supreme Court.
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13.Be that as may, the adjudication in Perfect Spinning Mills involved determination of market value with reference to the value of the land fixed by the
District Level Committees in the State of Rajasthan. The Hon’ble High Court finding that the said rates cannot be the sole consideration for fixing market value of the land held that such method violates the law laid down by the High Court and the Supreme
Court in various judgments and therefore was in violation of public policy. The scope of enquiry in the present case also will have to be restricted to whether the arbitrator had followed the applicable statutes and precedents in determining the market value. If the arbitrator had failed to consider the law and failed to award some compensation that he ought to have awarded then only this court can interfere into the award. The factual findings made by the arbitrator and the CALA cannot be interfered with by this Court.
The further contentions of the learned counsel for NHAI and the other claimants have to be tested only on this standard. Basing upon the contentions of the learned counsel for NHAI and the learned counsel for the claimants the main points of dispute are (1)
Deduction of Development Charges, (2) Determination of market value, (3)
Applicability of Land Acquisition Act, 1894 and 2013 Act.
(1). Deduction of Development Charges :
14.The learned counsel for NHAI would contend that the claim made by the claimants that Development Charges could not be deducted was allowed by the
Arbitrator. Learned counsel placing reliance upon judgments of the Hon'ble Supreme
Court in Viluben Jhalejar Contractor (dead) by Lrs v State of Gujarat [(2005) 4
SCC 789] and the Hon'ble High Court of Madras in National Highways Authority of
India v G.Marimuthu Gounder [(2010) 5 MLJ 1] would contend that development charges have to be deducted.
15.Per contra the learned counsels for the claimants would contend that development charges need not be collected and place reliance upon the judgment of the Hon'ble Supreme Court in C R NAGARAJA SHETTY V/S SPECIAL LAND 11
ACQUISITION OFFICER AND ESTATE OFFICER AND ANR [2009 (11) SCC
80;2009 (5) SCJ 707] to contend that development charges need not be deducted.
Hon'ble Supreme Court in C R Nagaraja Shetty held as follows:
[8] The High Court has directed the deduction of Rs. 25/- per square feet.
Unfortunately, the High Court has not discussed the reason for this deduction of
Rs.25/- per square feet nor has the High Court relied on any piece of evidence for that purpose. It is true that where the lands are acquired for public purpose like setting up of industries or setting up of housing colonies or other such allied purposes, the acquiring body would be entitled to deduct some amount from the payable compensation on account of development charges, however, it has to be established by positive evidence that such development charges are justified.
The evidence must come for the need of development contemplated and the possible expenditure for such development. We do not find any such discussion in the order of the High Court. As if this is not sufficient, when we see the judgment of the Principal Civil Judge (Sr. Division), Bangalore, Rural District,
Bangalore in Reference proceedings, we find that there is no deduction ordered for the so-called development charges. We are, therefore, not in a position to understand as to from where such development charges sprang up. The Learned
Counsel appearing on behalf of the respondents was also unable to point out any such evidence regarding the proposed development. We cannot ignore the fact that the land is acquired only for widening of the National Highway. There would, therefore, be no question of any such development or any costs therefor. In the reported judgment in Nelson Fernandes and Ors. v. Special Land Acquisition
Officer, South Goa and Ors. in this Court has discussed the question of development charges. That was a case, where, the acquisition was for laying a
Railway line. This Court found that the land under acquisition was situated in an area, which was adjacent to the land already acquired for the same purpose, i.e., for laying Railway line.
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In paragraph 29, the Court observed that the Land Acquisition Officer, the
District Judge and the High Court had failed to notice that the purpose of
acquisition was for Railways and that the purpose is a relevant factor to be taken into consideration for fixing the compensation. The Court relied on judgment in
Viluben Jhalejar Contractor v. State of Gujarat reported in, where it was held that the purpose for which the land is acquired, must also be taken into consideration in fixing the market value and the deduction of development charges.
Further, in paragraph 30, the Court specifically referred to the deduction for the development charges and observed:
30. We are not, however, oblivious of the fact that normally 1/3rd deduction of further amount of compensation has been directed in some cases. However, the purpose for which the land is acquired must also be taken into consideration. In the instant case, the land was acquired for the construction of new BG line for the
Konkan Railways.... In the instant case, acquisition is for laying a railway line.
Therefore, the question of development thereof would not arise.
The Court made a reference to two other cases, viz., Hasanali Khanbhai &
Sons v. State of Gujarat and Land Acquisition Officer v. Nookala Rajamallu
reported in and respectively, where, the deduction by way development charges, was held permissible. The situation is no different in the present case. All that the acquiring body has to achieve is to widen the National Highway. There is no further question of any development. We again, even at the cost of repetition, reiterate that no evidence was shown before us in support of the plea of the proposed development. We, therefore, hold that the High Court has erred in directing the deduction on account of the developmental charges at the rate of
Rs. 25/- per square feet out of the ordered compensation at the rate of Rs. 75/- per square feet. We set aside the judgment to that extent. The claimant would, therefore, be entitled to the compensation at the rate of Rs. 75/- per square feet 13 with all the statutory benefits like solatium under Section 23(2) , 12% interest under Section 23(1A) on the enhanced market value and interest at 9% and 15% as provided under Section 34 of the Act for one year and the rest of the period from the date of taking possession till the date of payment of the compensation awarded in favour of the claimant. With this, we partly allow the appeal and modify the order of the High Court.
16.From the above it is seen that Hon'ble Supreme Court referred to the
Judgment in Viluben Jhalejar Contractor as well as Nelson Fernandes Vs. Special
Land Acquisition Officer [2007 (9) SCC 447] and held that in order to claim deduction of development charges some material should be produced before the court that the land acquired requires to be developed before the purpose for which the acquisition is being made can be achieved. Further the Hon'ble Supreme court categorically held that since land is being acquired for widening the National Highway there is no question of any development being done over the said land.
17.In the present case the NHAI has not produced any material before the
CALA or the Arbitrator showing that some development has to be done over the land acquired before the purpose of widening the High way is achieved. Development charges will not be deducted without justification and no justification was put forth by the NHAI except making a bald claim for deduction of development charges.
Therefore, in view of ruling of the Hon'ble Supreme Court in C R Nagaraja Shetty case which was rendered specifically in a case where NHAI was party development charges need not be deducted.
18.Therefore, the Arbitrator did not commit any error in holding that the deduction of development charges is unjustified.
(2). Determination of Market Value :
19.The learned counsel for NHAI would contend that the arbitrator enhanced the compensation without any rational basis in the face of the well considered and reasoned order passed by CALA. Per contra, the learned counsel for claimants would 14 contend that the arbitrator failed to consider the certified copies of sale deeds of some contemporaneous sales that the claimants relied upon to show that the land was sold at a higher rate than estimated by the CALA or awarded by the arbitrator and further the arbitrator did not consider the existence of various structures and potentiality of the land and the compensation granted by the arbitrator is not correct and compensation that has to be awarded is Rs.5000/- per sq.yard.
20.A perusal of the award of CALA would show that CALA considered the comparative sales within three years preceding the Section 3-A Notification. For A-
Category land CALA discarded the sale deeds on the ground that there was no increase in prices of land in the three years and took into consideration the basic value in order to fix the price at Rs.240/- per square yard.
21.The arbitrator considering the same set of sale transactions and also the certified copy of registered sale deed Document No.2103/2007 Dt.23.03.2007 wherein an extent of 1307 Square yards was purchased for Rs.4,19,000/- (Rs.320/- per square yard), filed by the counsel for the claimants. The Arbitrator found that the said sale occurred in Sy.No.80 in which land was acquired. The Arbitrator found that though
CALA observed that there was no increase in prices the sale statistics showed that there were sales in the range of Rs.160 to Rs.259/- in the same period. Therefore the
Arbitrator enhanced the compensation to Rs.300/- per Square yard. The deeds relied upon by the claimants were considered by the arbitrator before arriving at the market value as stated above. This is a finding of fact by the arbitrator and an estimation of the market value considering the various aspects of the potentiality, land use and also comparable sales. In the face of such findings this court exercising jurisdiction under
Section 34 of the Arbitration and Conciliation Act cannot second guess the arbitrator.
This Court can only interfere if the finding of the arbitrator is perverse or contrary to law. Neither the claimants’ counsel nor the counsel for NHAI were able to show any judgment of the Hon’ble Supreme Court or the Hon’ble High Court or any provision of law which were violated by the method adopted by the CALA or the arbitrator. Nor 15 were they able to point out any instance which makes the method of determination adopted by CALA or the Arbitrator perverse or illegal. The CALA and the arbitrator formed their opinion basing upon their analysis of the sales statistics and the information before them about the lapse of time between the sales and the acquisition proceedings and the potentiality for development. The same cannot be interfered with under Section 34 of the Arbitration and Conciliation Act.
22.The learned counsel for the claimants relied upon the judgment of the
Hon’ble Supreme Court in Mehrawal Khewaji Trust (Registered) Faridkot and
others Vs. Punjab State and others [AIR 2012 SC 2721] to contend that the highest value in the sales statistics has to be awarded as compensation. In the present case, the CALA considered the sales statistics and awarded the highest price possible as determined from the sales statistics. The arbitrator also awarded the highest price possible from the sales statistics. With great respect and humility Hon’ble Supreme
Court in Mehrawal Case did not hold that the highest consideration paid among the sales statistics should be automatically awarded irrespective of other considerations.
Therefore, there is no perversity or illegality in the order of the CALA and the arbitrator with regard to fixing the market value through comparative sales method.
(3). Applicability Of Land Acquisition Act or the 2013 Act :
23.The counsel for the claimants placing reliance upon the judgment of the
Hon’ble High Court of Punjab and Haryana in M/s Golden Iron & Steel Forging,
Dynamac (India) Ltd., Sudhir Bansal Vs. Union of India & others [2008 Law Suit
(P&H) 70] and the judgment of the Hon’ble Supreme Court in Sunitha Mehra and another Vs. Union of India [2016 (8) Scale 582] would contend that the provisions of the Land Acquisition Act, 1894 will apply the present proceedings. Hon’ble Supreme
Court in Sunitha Mehra held as follows:
[8] We have considered the submissions advanced. In Gurpreet Singh v.
Union of India, 2006 8 SCC 457, this Court, though in a different context, had restricted the operation of the judgment of this Court in Sunder v.
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Union of India, 2001 7 SCC 211 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 Iron & Steel Forgings v. Union of
India & Ors. i.e. 28.03.2008. 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 Resettlement Act, 2013 (came into force on 01.01.2014), 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 Act of 2013.
24.Hon’ble High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh in Nerajala Nageshwar Rao Vs. Union of India [2017 (5) ALD 575] held that Section 24 of the 2013 Act is not applicable to the acquisitions under the National Highways Act. Hon’ble High Court of Telangana in
Pasula Ravinder Vs. Union of India [2019 (4) ALD 512 (TS)] also considered the application of the 2013 Act concerning limitation for passing award.
25.Hon'ble High Court in both these cases decided the question of lapse of the acquisition notification in terms of Section 24 of the 2013 Act. Hon'ble High Court did not consider questions of determination of market value in terms of the First
Schedule of the 2013 Act.
26.In so far as the present case is concerned the notification applying the 2013 Act was issued by the Union of India on 28.01.2015. In this case when the
Section 3A notification was issued the 2013 Act was not in existence. By the time the
CALA passed the award also the 2013 Act was not in existence. By the time the
Arbitrator passed the award the 2013 Act was enacted but was inapplicable to the acquisition of land under the NH Act by virtue of Section 105 r/w 4th schedule of 2013 17
Act. Therefore, no fault can be found either with the arbitrator or the CALA for not applying the provisions of the 2013 Act for determining the market value of the acquired land.
27.The question then arises whether this court can direct the CALA or the
Arbitrator to apply the provisions of the 2013 Act.
28.As discussed above, the jurisdiction of this Court under Section 34 is very limited. This Court can only interfere when some gross error of law or fact is committed which merits intervention in terms of the Section 34 of the Arbitration and Conciliation
Act is found. In the present case, non-application of the provisions of 2013 Act is neither perverse nor against public policy since the 2013 Act was not in existence when the original notification for acquisition was issued and by the time Act was made applicable the arbitration proceedings had concluded. In such event the non- application cannot be termed as violation of public policy on the part of the Arbitrator.
No doubt the legal position is that where an Act is repealed by another Act the proceedings that were pending will be governed by the repealed enactment. Keeping this in mind, the parliament had enacted Section 24 in the 2013 Act.
Section 24 of 2013 Act reads as follows:
24. Land acquisition process under Act No 1 of 1894 shall be deemed to have lapsed in certain cases :- (1) Notwithstanding anything contained in this Act, in any case of land acquisition proceedings initiated under the Land Acquisition Act, 1894,-- (a) where no award under section 11 of the said Land
Acquisition Act has been made, then, all provisions of this Act relating to the determination of compensation shall apply; or (b) where an award under said section 11 has been made, then such proceedings shall continue under the provisions of the said Land
Acquisition Act, as if the said Act has not been repealed.
(2) Notwithstanding anything contained in sub-section (1), in case of land acquisition proceedings initiated under the Land Acquisition 18
Act. 1894, where an award under the said section 11 has been made five years or more prior to the commencement of this Act but the physical possession of the land has not been taken or the compensation has not been paid the said proceedings shall be deemed to have lapsed and the appropriate Government, if it so chooses, shall initiate the proceedings of such land acquisition afresh in accordance with the provisions of this Act: Provided that where an award has been made and compensation in respect of a majority of land holdings has not been deposited in the account of the beneficiaries, then, all beneficiaries specified in the notification for acquisition under section 4 of the said Land Acquisition Act, shall be entitled to compensation in accordance with the provisions of this Act.
29.From the above, the notification will lapse if award is not passed within five years of notification and compensation is not deposited. In the present case, award was passed within one year of the notification and compensation was also deposited. Therefore, there is no infirmity in the awards passed by the CALA or the arbitrator on this count.
30.Much controversy was raised before the Court about the applicability of the Land Acquisition Act, 1894. The learned counsel for the claimants placing reliance upon the judgment of the Hon’ble High Court of Karnataka in Lalitha case, contended that the Land Acquisition Act is applicable as Section 3-J of NH Act has been struck down. However, the learned counsel for NHAI would contend that the decision in
Lalitha was stayed by the Division Bench of the Hon’ble High Court of Karnataka and therefore, the same cannot be considered as a precedent. The learned counsel for
NHAI further contended that even if the Land Acquisition Act, 1894 is applied the only benefit that the parties will get is the award of solatium and Additional Market Value and CALA had granted such relief already. A perusal of the award shows that solatium was granted and Additional Market Value was also granted. Further, as discussed 19 above, the applicability of the Land Acquisition Act, 1894 or the 2013 Act are of no consequence to the claims at present as the same will not constitute an error requiring interference by this Court and further the judgment of the Hon’ble High Court of
Karnataka in Lalitha Case was stayed by the Division Bench of the Hon’ble High
Court of Karnataka. Therefore, no interference is called for on this issue.
CONCLUSION :
31.From the above, as discussed the scope of interference with an arbitration award is very narrow. Further there is no perversity in the findings of the fact nor any violation of public policy requiring interference of this court in the award passed by the arbitrator. This Court though in the process of adjudicating this case had considered the findings made by CALA this Court cannot interfere with the said factual findings made by CALA since the purview of adjudication in this case is confined only to the findings of the arbitrator. In any event as held above, no interference is called for with the award of the arbitrator on any count.
32.In the result, these petitions are dismissed and in the peculiar facts of the case parties to bear their own costs.
Typed to my Dictation by the Stenographer Grade-I, corrected and pronounced by me in the open Court on this the 16 th day of October, 2019.
PRINICIPAL DISTRICT JUDGE,
NALGONDA.
APPENDIX OF EVIDENCE
-NIL-
PRINICIPAL DISTRICT JUDGE,
NALGONDA.