Supreme Court - Daily Orders
Mahadevi vs The National Highways Authority Of ... on 30 August, 2022
Bench: Aniruddha Bose, Vikram Nath
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IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2022
(Arising out of SLP(C) No.30560/2017)
SMT. MAHADEVI & ORS. APPELLANT(S)
VERSUS
THE NATIONAL HIGHWAYS AUTHORITY OF INDIA
& ANR. RESPONDENT(S)
WITH
CIVIL APPEAL NOs. OF 2022
(Arising out of SLP(C) Nos.1851418520/2018)
SRI SHANKARAPPA AND ORS. APPELLANT(S)
VERSUS
THE NATIONAL HIGHWAYS AUTHORITY OF INDIA
AND ANR. RESPONDENT(S)
ORDER
Leave granted in all the matters.
2. These appeals arise out of acquisition proceedings Signature Not Verifiedundertaken under the provisions of the National Highway Digitally signed by DEEPAK SINGH Date: 2022.09.21 17:18:00 IST Reason: Authority of India Act, 1956 for the purpose of formation or expansion of National Highway No.4. The notice declaring the 2 intention of the Central Government to acquire the land, was issued on 12th February, 2001. In the appeal of Smt. Mahadevi & Ors., subject land was in Varur Village whereas in the appeals of Sri Shankarappa & Ors., the subjectlands were in Varur and Chabbi Villages, in the district of Dharwar, Karnataka. Since points of law involved in these sets of appeals are similar and key facts are nearidentical, we shall narrate the facts wherever necessary, pertaining to the appeal of Smt. Mahadevi & Ors. arising out of SLP(C)No. 30560 of 2017. Awards made in the said proceedings were taken to Arbitration by the land owners in terms of Section 3G (5) of the 1956 Act. The Arbitrator (in these cases the Deputy Commissioner, Dharwad) ordered: “The claim of the claimants is allowed. It is ordered to award additional 50% compensation i.e. additional Rs.269.10/ per sq. mtr. Deducting i.e. 50% as development charges for the lands acquired i.e. Rs.134.55. Interest on additional amount has to be calculated as per Section 3H of the National Highways Act, and paid accordingly.” (quoted verbatim from the paperbook)
3. The land owners brought actions under Section 34 of the Arbitration and Conciliation Act, 1996 before the District and Sessions Judge (Section 34 Court). The Section 34 Court, inter alia, found that deduction of 50% of the value towards development charges was illegal and held that the concerned land owners were entitled to compensation with additional 50% 3 weightage at the rate of Rs.75/ per sq.ft. In the appeals arising out of SLP(C) Nos.1851418520/2018 also, compensation was enhanced in broadly the same terms. Appeals were filed against the decision of the District Judge in both sets of cases by the National Highways Authority of India (NHAI) before the High Court. The High Court found that the basis on which the Section 34 Court had enhanced compensation did not come within the ambit of the provisions of Section 34(2) of the 1996 Act. The High Court also found error in form in which the Section 34 Court had examined the applications of the landowners. The Section 34 Court had treated the applications as a suit. The High Court rightly opined that such proceedings ought to be treated as petitions. But so far the points on which we shall deal the present appeals, opinion of the High Court on that point is not of much significance.
4. In a proceeding under Section 34 of the 1996 Act, it is not open to the Court to modify an award and its jurisdiction is confined to either dismissal of the application or setting aside the award. Only on limited grounds Courts can remit the matter to the Arbitrator. This is the general position of law in interpreting scope of jurisdiction of the Court under Section 34 of the 1996 Act. This position of law has been laid down in a judgment of a Coordinate Bench of this Court delivered on 11th July 2022 in the case of National Highways Authority of India vs. Sri P. 4 Nagaraju @ Cheluvaiah & Anr. [(2022) SCC OnLine SC 864] while dealing with arbitration proceedings originating from the 1956 Act.
5. The Section 34 Court gave reasoning for enhancing compensation, which the High Court found inadequate to fit in with the restrictive mandate of Section 34(2) of the 1996 Act. But on the aspect of scope of interference in relation to an award in a contractual arbitration and an award made under the 1956 Act, a distinction has been carved out and explained by the Coordinate Bench in the case of Sri P. Nagaraju (supra). It has been held and observed in this judgment: “ …Unlike the arbitration in a contractual matter where the parties from the very inception at the stage of entering into a contract would mutually agree to refer any future dispute to an arbitrator, at that very stage are aware that in the event of any dispute arising between the parties the contours of the right, remedy, and scope from the commencement of the arbitration up to the conclusion through the judicial process. The terms of arbitration and the rights and obligations will also be a part of the agreement and a reference to the same in the award will constitute sufficient reasons for sustaining the award in terms of Section 31(3) of Act, 1996. Whereas, in the arbitration proceedings relating to NH Act, the parties are not governed by an agreement to regulate the process of arbitration. However, in the process of determination of just and fair compensation, the provisions in Section 26 to 28 of RFCTLARR Act, 2013 will be the guiding factor.
6. In our opinion, the High Court applied the stricter test contemplated in contractual arbitration in setting aside the decisions of the Section 34 Court on the aspect of methodology 5 and factual basis for computing compensation. The approach of the Section 34 Court in the two decisions was more in tune with the principle enunciated in the case of Sri P. Nagaraju (supra) in the passage which we have quoted above. We are conscious of the fact that in the case of Sri P. Nagaraju (supra), the Coordinate Bench examined, interalia, the applicability of the principles contained in certain provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. In the appeals before us, the acquisition process started in the year 2001. Applicability of any of the principles incorporated in 2013 Act is not in question before us. But we are referring to this judgment only to highlight that the strict restrictions on interference with an award contemplated in 1996 Act in relation to contractual arbitrations would have to be eased a bit in an arbitration proceeding originating from compulsory acquisition of land.
7. It has further been held in the case of Sri P. Nagaraju (supra): “Leaving aside the facts in the instant case for a while, if in a matter as against the determination of the market value by the SLAO, the land loser had referred to the exemplar sale deeds and seeks higher compensation than prescribed in the guidance value, and in that circumstance, if no reasons are assigned by the learned Arbitrator for such determination and either approves the SLAO award or awards a lesser amount than the actual entitlement, in such circumstance the arbitration process which is thrust on the land loser should 6 not be an impediment and limited interference should not be a reason to deny the just and fair compensation. In such cases while examining the award in the limited scope under Section 34 of Act, 1996, the Court is required to take note as to whether the evidence available on record has been adverted to and has been taken note by the Arbitrator in determining the just compensation failing which it will fall foul of Section 31(3) and amount to patent illegality. Therefore, while examining the award within the parameters permissible under Section 34 of Act, 1996 and while examining the determination of compensation as provided under Sections 26 and 28 of the RFCTLARR Act, 2013, the concept of just compensation for the acquired land should be kept in view while taking note of the award considering the sufficiency of the reasons given in the award for the ultimate conclusion. In such event an error if found, though it would not be possible for the Court entertaining the petition under Section 34 or for the appellate court under Section 37 of Act 1996 to modify the award and alter the compensation as it was open to the court in the reference proceedings under Section 18 of the old Land Acquisition Act or an appeal under Section 54 of that act, it should certainly be open to the court exercising power under Section 34 of Act, 1996 to set aside the award by indicating reasons and remitting the matter to the Arbitrator to reconsider the same in accordance with law. The said exercise can be undertaken to the limited extent without entering into merits where it is seen that the Arbitrator has on the face of the award not appropriately considered the material on record or has not recorded reasons for placing reliance on materials available on record in the background of requirement under RFCTLARR Act, 2013.”
8. The Section 34 Court in the case of Smt. Mahadevi & Ors. gave its finding on patent illegality in the award to the extent the Arbitrator directed deduction of development charges. It has been held in the judgment of the Section 34 Court: “21. On perusal of the award passed by the Deputy Commissioner, though he has enhanced the compensation in respect of the land of other claimants out of Sy.no.340/A+B by relying on the judgment of the Hon’ble 7 Supreme Court reported in AIR 1976 SC 651 on the principle that compensation awarded to the nearby land is relevant to determine the compensation. The Arbitrator has also placed reliance on another ruling of the Hon’ble Delhi High Court reported in AIR 1996 Delhi 101 to the effect that lands from same village categorized in the same block and acquired under the same notification cannot be awarded different rates. By considering the above rulings the defendant No.II has enhanced the compensation at 50% to the acquired lands of the claimants in other case under Ex.P4 but the same yardstick was not applied by the defendant No.II while awarding the compensation to the plaintiffs. Merely on the ground that in other cases there were structures and buildings but in the lands of the plaintiffs there were no structures and buildings and hence he deducted 50% towards the developmental charges, is not a good ground’ As held by the Hon’ble Apex court in a ruling reported in 2009 (3) KCCR 2133 referred to above and relied on by the counsel for the plaintiffs when the land was acquired for the purpose of widening the road, the question of deduction does not arise. The award passed by the defendant No.I itself goes to show that he ahs considered the land of the plaintiffs as non agricultural commercial land. Once the land is considered as non agricultural and commercial land, the defendants cannot go back to deduct 50% of the value towards the developmental charges and there shall not be any discrimination in respect of the compensation awarded to the lands of the plaintiffs and to the lands of other claimants. Merely the lands of the plaintiffs were situated far away from the village limits that itself is not a ground to reject the claim of the plaintiffs. Therefore, I hold that defendant Nos.I and II have committed serious error and illegality while deducting 50% value towards the developmental charges. Therefore, the deduction made by the defendant Nos. I and II towards developmental charges is illegal and liable to be set aside. Hence I hold that the plaintiffs are entitled to the compensation equal to that the compensation awarded to the other claimants under Ex.P4 with additional 50% weightage ie., at the rate of Rs.75/ per sq.feet or Rs.807 30 per sq.meter. Hence I answer Point Nos.1 and 2 in the affirmative.
22. Point No.2: For the foregoing reasons, I proceed to pass the following: ORDER The suit filed under Section 34 of Arbitration and Conciliation Act 1996 is decreed with costs. 8
The awards passed by the defendant Nos.I and II in No.NH4/CALAQII26/200405 dtd.23.6.2004 and in LAQ/ARBN/AP/Cr No.166+215/200506 dtd. 3.6.2011 in respect of deduction of 50% market value towards developmental charges for, Block No.5 of Varur Village are set aside.
The plaintiffs are entitled for the compensation at the rate of.Rs.75/ per sq. feet or Rs.80730 per Sq. meter in respect of acquired extent of their lands out of Block No.5 of Varur village, with interest and other statutory benefits.
Send the copy of the judgment along with the LCR to the concerned forthwith.” (quoted verbatim from the paperbook)
9. So far the form in which the Section 34 Court examined the application of the landowners, we affirm the High Court’s view that an application under the aforesaid provision could not be tried as a suit. But this defect, per se, does not invalidate the decision rendered by the said Court. The procedure for trying and determining a suit is more elaborate and having regard to the scope of jurisdiction in a proceeding under Section 34 of the 1996 Act, such an elaborate exercise is neither contemplated nor warranted. But on going through the said decision, we find that the part of the award that has been set aside is backed by sufficient reasoning. Under the 1956 Act, the necessity to compute compensation “just and fair” is inlaid in the four factors specified in Section 3G(7) of the 1956 Act. The said provision stipulates: “7. The competent authority or the arbitrator while 9 determining the amount under subsection (1) or sub section (5), as the case may be, shall take into consideration
(a) the market value of the land on the date of publication of the notification under section 3A;
(b) the damage, if any, sustained by the person interested at the time of taking possession of the land, by reason of the severing of such land from other land;
(c) the damage, if any, sustained by the person interested at the time of taking possession of the land, by reason of the acquisition injuriously affecting his other immovable property in any manner, or his earnings;
(d) if, in consequences of the acquisition of the land, the person interested is compelled to change his residence or place of business, the reasonable expenses, if any, incidental to such change.”
10. Section 34 Court made proper analysis of the relevant materials in holding as to why deduction towards development charges should not have been made. The Arbitral award fails the test of giving proper reasoning, as required under Section 31(3) of the 1996 Act. The limited enquiry embarked upon by the Section 34 Court in this regard is permissible in an arbitration proceeding relating to compulsory acquisition of land. Thus, the Section 34 Court had rightly set aside a part of the award, but the decision of the said Court cannot be sustained for another reason.
11. In the cases of the land owners in Civil Appeals arising out of SLP (Civil) Nos.1851418520 of 2018, the awards were not identical and the manner in which the Section 34 Court passed orders is also not identical. But in these proceedings also, in 10 substance the awards were modified in that the said Court enhanced the market value of the acquired lands while setting aside the respective awards. In this judgment, the question we are primarily addressing is as to whether the Section 34 Court has the jurisdiction to pass such an order or not. The reasoning of the Section 34 Court for enhancing the compensation amount appears to us to be just, but in our opinion the said Court could not have fixed the enhanced compensation as that would constitute modifying the award.
12. The Section 34 Court went wrong in modifying the award on its own. The 1996 Act does not vest the Section 34 Court with such jurisdiction. The course that the Section 34 Court should have adopted has been outlined in the decision of the Coordinate Bench in the case of Sri P. Nagaraju (supra) and we have quoted the view of the Coordinate Bench earlier in this judgment.
13. We, under the circumstances, affirm the view of the High Court that jurisdiction of the Court under Section 34 of 1996 Act cannot be exercised to modify an award.
14. We, however, modify the judgments and orders under appeal in the following terms:
(i) The High Court, to the extent it has held that the decisions 11 of the District Judge are set aside, shall stand confirmed on the ground that the District Judge exercising jurisdiction under Section 34 of the 1996 Act cannot modify an award.
(ii) We also set aside the awards and the matters shall be remitted to the Arbitrator for consideration afresh, in the light of our observations made in this judgment.
15. With the above directions, the appeals stand disposed of. There shall be no order as to costs.
16. All pending applications, if any, shall stand disposed of.
............................J. (ANIRUDDHA BOSE) ............................J. (VIKRAM NATH) New Delhi;
August 30, 2022.
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ITEM NO.10 COURT NO.15 SECTION IV-A
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Special Leave to Appeal (C) No(s). 30560/2017
(Arising out of impugned final judgment and order dated 06-06-2017 in MFA No. 25323/2012 passed by the High Court Of Karnataka Circuit Bench At Dharwad) MAHADEVI & ORS. Petitioner(s) VERSUS THE NATIONAL HIGHWAYS AUTHORITY OF INDIA & ANR. Respondent(s) WITH SLP(C) No. 18514-18520/2018 (IV-A) (FOR ADMISSION and I.R. and IA No.87599/2018-CONDONATION OF DELAY IN FILING and IA No.87602/2018-EXEMPTION FROM FILING O.T.) Date : 30-08-2022 This petition was called on for hearing today. CORAM :
HON'BLE MR. JUSTICE ANIRUDDHA BOSE HON'BLE MR. JUSTICE VIKRAM NATH For Petitioner(s) Mr. Awanish Kumar, AOR Mr. Chandrashekhar A. Chakalabbi, Adv. Mr. S.K. Pandey, adv.
Mr. Awanish Kumar, Adv.
Mr. Anshul Rai, Adv.
Mr. Abhinav Garg, Adv.
Mr. D. Girish Kumar, Adv.
Mr. Kumar Vinayakam Gupta, Adv. Mr. Aditya Singh, Adv.
M/S. Dharmaprabhas Law Associates, AOR For Respondent(s) Ms. Neetica Sharma, Adv.
M/S. M. V. Kini & Associates, AOR UPON hearing the counsel the Court made the following O R D E R Leave granted.13
The appeals stand disposed of in terms of the signed Order.
There shall be no order as to costs.
Pending application, if any, also stands disposed of.
(JATINDER KAUR) (RAM SUBHAG SINGH)
SENIOR PERSONAL ASSISTANT BRANCH OFFICER
[Signed order is placed on the file]