Allahabad High Court
Sabhajeet Singh And Another vs National Highway Authority Of India ... on 19 September, 2025
Author: Jaspreet Singh
Bench: Jaspreet Singh
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
HIGH COURT OF JUDICATURE AT ALLAHABAD
LUCKNOW
APPEAL UNDER SECTION 37 OF ARBITRATION AND CONCILIATION ACT 1996 No. - 34 of 2023
Sabhajeet Singh And Another
..Appellant(s)
Versus
National Highway Authority Of India Thru. Project Director And Others
..Respondents(s)
Counsel for Appellant(s)
:
Shyam Mohan Pradhan
Counsel for Respondent(s)
:
Gantavya
With
APPEAL UNDER SECTION 37 OF ARBITRATION AND CONCILIATION ACT 1996 No. - 38 of 2023
..Appellant(s)
Versus
National Highway Authority Of India Thru. Project Director And Others
..Respondents(s)
Counsel for Petitioners(s)
:
Shyam Mohan Pradhan
Counsel for Respondent(s)
:
Sarvesh Kumar Dubey
RESERVED
Court No. - 7
HON'BLE JASPREET SINGH, J.
1. The instant two appeals under Section 37 of the Arbitration and Conciliation Act, 1996 (in short 'the Act of 1996') have been filed by the claimant-appellants whose land was acquired under the National Highways Act, 1956.
2. They had challenged the award passed by the Competent Authority seeking enhancement before the Arbitrator in terms of Section 3(G) of the Act 1956 and the statutory Arbitrator dismissed the claim for enhancement. This award dated 11.07.2018 was assailed before the District Judge under Section 34 of the Act of 1996 and the District Judge, Pratapgarh by means of order dated 04.02.2023 dismissed the petitions and the said order of the District Judge under Section 34 of the Act of 1996 has been made the subject matter of challenge in the two appeals under Section 37 of the Act of 1996 before this Court.
3. Since the issue involved in the two appeals are common, coupled with the fact that the land acquired of the appellants in the two appeals is located in the same village and the appellants are aggrieved by the same award made by the Competent Authority and the petition for enhancement has been dismissed by the Statutory Arbitrator and the further petitions under Section 34 of the Act of 1996 were also dismissed on the same grounds, hence, both the appeals have been heard together and are decided by this common judgment.
4. Bereft of unnecessary facts, the National Highway Authority issued a notification under Section 3-A of National Highway Act, 1956 (in short 'The Act of 1956") on 19.09.2012. The notification under Section 3(D) was issued on 19.07.2023. Several plots including the plots of the present appellants in both appeals, situate in Village Sonpara, Teshil Patti, District Pratapgarh was acquired for widening of National Highway-56 on the Sultanpur-Varanasi Prakhand on the Sultanpur-Jaunpur Highway-56.
5. The Competent Authority made an award on 18.09.2015 by determining the compensation at the agricultural rate of 69,20,416/- per hectare. The land owners being aggrieved assailed the said award for enhancement by approaching the statutory arbitrator under Section 3(G) (5) of the Act of 1956 primarily on the ground that the Competent Authority had failed to take note of the fact that the rate for the land in question should have been calculated at Rs. 8,000/- per square meter which was the rate prescribed in the Collector's rate list.
6. It was also stated that even for the land which was non-agricultural and was situate on the link road of Village Sonapur, but falling in the category of Vikassheel Kshetra, its prescribed rate was Rs. 3,700/- per square meter.
7. The statutory arbitrator by means of its award dated 11.07.2018 held that there are three separate circle rates prescribed and in order to bring in uniformity, it took note of the three separate circle rates and by averaging the same, held that the average rate as applicable would be of Rs.18,20,781/- per acre upon which rate the compensation be computed.
8. This was challenged by the land owners by filing petitions under Section 34 of the Act of 1996 before the District Judge, Pratapgarh and by the impugned orders, the petition under Section 34 was dismissed by the District Judge holding that the view taken by the statutory arbitrator was not erroneous and moreover considering the scope of Section 34 of the Act of 1996, it found that there was hardly any scope for interference and it dismissed the petitions which has given rise to these aforesaid appeals.
9. Sri Shyam Mohan Pradhan, learned counsel appearing for the appellants in two appeals have urged that the statutory arbitrator as well as the District Judge has failed to consider that the provisions of the Act of 1956 read with Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act, 2013(in short ' the Act of 2013') specifically provides that the Collector's rate list should be followed while determining the market value of the land. It is further urged that there is no procedure prescribed nor any mode provided in the Collector's rate list to permit averaging of the different rates as done by the Collector while determining the market value.
10. It is further stated that the mode of averaging as provided in Section 26 of the Act of 2013 relates to determining the rate or extracting the average but that is confined to a situation when exemplar sale deeds or agreement to sell of the land of the vicinity which is under acquisition is taken, but that is not the case in hand. Moreover, the statutory arbitrator clearly noticed that from the exemplars which were noticed the market rate upon averaging fell much below the circle rates, hence, that was discarded. Once the exemplars were discarded and the only methodology adopted was taking note of the Collector's rate list then the said list ought to have been noticed the way it is and in such cases, it was not open for the statutory arbitrator to have averaged three separate rates to arrive at a different rate altogether which was not prescribed in the Collector's rate list.
11. It is further submitted that this aspect was raised before the Court under Section 34 of the Act of 1996 but the court also shirked from its responsibility of looking into this aspect and dismissed the petitions under Section 34 of the Act of 1996 in a cursory manner.
12. It is further urged that the order passed by the District Judge dismissing the petition under Section 34 is bad in the eyes of law and is also contrary to the decision of this Court in (i) Chandra Kishori v. Union of India; 2023 SCC Online All 3950, (ii) Nitin Maheshwari v. Union of India; MANU/UP4080/2023 (iii) Harish Tripathi v. National Highway Authority of India; MANU/UP/4213/2023.
13. Per contra, Ms. Suniti Chandra, learned counsel who appeared through video conferencing along with Sri Gantavya, learned counsel for the respondent in FAFO No. 34 of 2023 and Sri Sarvesh Dubey, learned counsel for the respondents appearing in connected appeal No. FAFO no.38 of 2023 have vehemently urged that the statutory arbitrator has adopted the method of averaging which is provided in the Collector's rate list and it cannot be said that the rate as provided is against the provisions of law or in violation of the Collector's rate list.
14. It is further urged that admittedly the property in question is agricultural in nature and therefore for the agricultural properties, three separate circle rates were provided. This has been done by the Collector himself so that a uniform method could be adopted, inasmuch as, the land area which is smaller in size has been given the maximum rate and as the land holding increases, the rates have been trimmed. This is based on the premise that large areas are not sold easily and to ensure that each type of land holder i.e. big land holder or small land holder gets almost uniform rates, hence, this method has been prescribed and the same has been adopted by the statutory arbitrator and it cannot be said that the same is bad in the eyes of law. Consequently, the award passed by the statutory arbitrator is a plausible view and does not suffer either from any violation of the public policy or any patent illegality, hence, the District Judge rightly dismissed the petition under Section 34 of the Act of 1996.
15. It was urged that since the scope of interference in Section 34 of the Act of 1996 is narrow and that too only on the grounds mentioned in the said section, consequently, the scope under Section 37 of the Act of 1996 is even narrower and confined to examine the controversy through the prism of grounds which are available in terms of Section 34 of the Act of 1996. Thus, it is urged that the order impugned does not suffer from any error and as such the appeals deserve to be dismissed.
16. The learned counsel for the respondents have relied upon the decision of the Apex Court in Zahir Ahmad (D) through LR etc. v. Power Grid Corporation of India Ltd. & Others etc. in Civil Appeal No. 1339-1403 of 2020 decided on 10th February 2020.
17. The Court has considered the rival submissions and also perused the material available on record.
18. At the outset, it will be relevant to notice the relevant statutory provisions as provided under Section 3-G (7) of the Act of 1956 as well as Section 26 of the Act of 2013 which are reproduced hereinafter for ready reference:-
"Section 3 G (7) Determination of amount payable as compensation:-
(1)xxx
(2)xxx
(3)xxx
(4)xxx
(5)xxx
(6)xxx
(7) The competent authority or the arbitrator while determining the amount under sub-section (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.]
26. Determination of market value of land by Collector.
(1) The Collector shall adopt the following criteria in assessing and determining the market value of the land, namely:
(a) the market value, if any, specified in the Indian Stamp Act, 1899 (2 of 1899) for the registration of sale deeds or agreements to sell, as the case may be, in the area, where the land is situated; or
(b) the average sale price for similar type of land situated in the nearest village or nearest vicinity area; or
(c) consented amount of compensation as agreed upon under sub-section (2) of section 2 in case of acquisition of lands for private companies or for public private partnership projects, whichever is higher:
Provided that the date for determination of market value shall be the date on which the notification has been issued under section 11.
Explanation 1.The average sale price referred to in clause (b) shall be determined taking into account the sale deeds or the agreements to sell registered for similar type of area in the near village or near vicinity area during immediately preceding three years of the year in which such acquisition of land is proposed to be made.
Explanation 2.For determining the average sale price referred to in Explanation 1, one-half of the total number of sale deeds or the agreements to sell in which the highest sale price has been mentioned shall be taken into account.
Explanation 3.While determining the market value under this section and the average sale price referred to in Explanation 1 or Explanation 2, any price paid as compensation for land acquired under the provisions of this Act on an earlier occasion in the district shall not be taken into consideration.
Explanation 4.While determining the market value under this section and the average sale price referred to in Explanation 1 or Explanation 2, any price paid, which in the opinion of the Collector is not indicative of actual prevailing market value may be discounted for the purposes of calculating market value.
(2) The market value calculated as per sub-section (1) shall be multiplied by a factor to be specified in the First Schedule.
(3) Where the market value under sub-section (1) or sub-section (2) cannot be determined for the reason that
(a) the land is situated in such area where the transactions in land are restricted by or under any other law for the time being in force in that area; or
(b) the registered sale deeds or agreements to sell as mentioned in clause (a) of sub-section (1) for similar land are not available for the immediately preceding three years; or
(c) the market value has not been specified under the Indian Stamp Act, 1899 (2 of 1899) by the appropriate authority, the State Government concerned shall specify the floor price or minimum price per unit area of the said land based on the price calculated in the manner specified in sub-section (1) in respect of similar types of land situated in the immediate adjoining areas:
Provided that in a case where the Requiring Body offers its shares to the owners of the lands (whose lands have been acquired) as a part compensation, for acquisition of land, such shares in no case shall exceed twenty-five per cent, of the value so calculated under sub-section (1) or sub-section (2) or sub-section (3) as the case may be:
Provided further that the Requiring Body shall in no case compel any owner of the land (whose land has been acquired) to take its shares, the value of which is deductible in the value of the land calculated under sub-section (1):
Provided also that the Collector shall, before initiation of any land acquisition proceedings in any area, take all necessary steps to revise and update the market value of the land on the basis of the prevalent market rate in that area:
Provided also that the appropriate Government shall ensure that the market value determined for acquisition of any land or property of an educational institution established and administered by a religious or linguistic minority shall be such as would not restrict or abrogate the right to establish and administer educational institutions of their choice."
19. From the conjoint reading of the aforesaid two provisions, it would be clear that the Competent Authority is required to take into consideration and determine the market value of the land under acquisition as on the date of publication of the notification under Section 3-A of the Act of 1956.
20. Admittedly, in the case at hand, the notification under Section 3-A was made on 19.09.2012 and it is also not disputed that the rates as prescribed by the Collector were notified on 18.07.2012 i.e. prior to the date of notification under Section 3-A of the Act of 1956. It is also not disputed that the land in question was recorded in the revenue records as agricultural.
21. In the aforesaid background, the issue before the statutory arbitrator was as to whether the market value as determined by the Competent Authority applicable to the land sought to be acquired was correct or not.
22. In the given fact scenario, once the land had been acquired by exercising powers of eminent domain, the issue as to whether the appropriate compensation has been awarded is a germane question, to be determined.
23. The provisions of Section 3-G (7) of the Act of 1956 read with Section 26 of the Act of 2013 prescribed the mode to be adopted for determining the market value for computing the compensation.
24. Several factors have to be taken into consideration while determining the compensation. The provisions for grant of compensation, which have been noticed here-in-above also indicates that once the land is acquired at the given rate noticing the status and nature of the land as recorded on the date of notification any improvement made on the said land is then assessed and calculated to determine the final compensation and while doing so it will include various factors such as (a) the average sale price for same type of land situate in the nearest village or vicinity; (b) the damages sustained by the person interested by reason of taking of any standing crop or trees, which may be on the land at the time of taking possession; (c) the damages, if any, sustained by a person interested at the time of Collector's taking possession which affects his other immovable property; (d) damages in case, if suffered relating to the acquisition by virtue of which the person interested is compelled to change his residence or place of business and reasonable expenses incidental to such change and any other ground which in the interest of equity justice and is beneficial to the affected families.
25. The Collector's rate list which has been noticed by the statutory arbitrator as well as the court while dealing with the petitions under Section 34 of the Act of 1996 would reveal that the statutory arbitrator has recorded that the Collector has created 3 separate rates for agricultural properties. It has taken into consideration the separate rates as prescribed and then has averaged the same and holding that the compensation should be paid at the rate of Rs. 18,20,781.60/- per acre. It negatived the contention of the land-owners that they should be paid compensation at the rate of Rs. 8,000/- per square meter for that the property of the land-owners, acquired, which was purely agricultural on the date of notification.
26. While coming to the aforesaid conclusion, the statutory arbitrator failed to notice that all plots which were situate on the segmented roads which inter-alia included the Sultanpur-Jaunpur State Highway, for which the prescribed rate was Rs. 8,000/- per square meter was mentioned in the Collectors rate list.
27. In the said Collector's rate list, the plots of land of village Sonpura which was adjacent to the road i.e. Sultanpur-Jaunpur State road have been clearly indicated and the land of the present appellants in both the appeals find mention in the said list of plots which are at running page No. 94 of the appeal no. 34 of 2020. This fact is not disputed by the respondents and is a matter of record.
28. In such circumstances, where the Collector's rate list clearly makes a mention that where the land which falls on the Sultanpur-Jaunpur Highway and with specific details of the plots which as noticed above and mentioned at running page 94 of the paper-book then for such plots, a specific rate has been prescribed as Rs. 8,000/- per square meter. Apparently, the said rate was applicable to the land owners.
29. Apparently, the attempt made by the statutory arbitrator to average the rates, is not a prescribed mode in the Collector's rate list. A feeble attempt was made by learned counsel for the respondent to suggest that Section 26 prescribes the mode of averaging while determining the market value to justify the method adopted by the statutory arbitrator. This submission does not impress this Court for the reason that the said averaging as provided under Section 26 of the Act of 2013 is altogether different and it refers to a situation where the exemplar sale deeds/agreements relating to the area in question where the land is sought to be acquired is being noticed. However, it does not prescribe that where clear rates have been indicated in the Collector's rate list, then three separate rates may be combined to take the average, hence, the said submission is apparently misconceived and is turned down.
30. Accordingly, the view taken by the statutory arbitrator is apparently erroneous and is in complete disregard to the Collector's rate list. It would be relevant to mention that once the particular mode is taken to determine the market value then the same is to be followed in the manner as provided therein and it is not open for the statutory arbitrator to adopt a different methodology which does not find mention in the Collector's rate list especially when it had banked upon the Collector's rate list to determine the market value. If a certain method is prescribed and it is used to computed the compensation then the said method is to be adopted the way it is prescribed and no modification is permitted as what cannot be done directly cannot be done indirectly either and thus, the prescribed method was to be adopted the way it is provided or not at all.
31. The issue of grant of compensation is the core issue involved in matters relating to acquisition of land under the NHAI Act, 1956. This being the core issue was raised before the District Court in Petition under Section 34 of the Act of 1996. Having considered the judgment passed by the District Judge under Section 34 of the Act of 1996, this Court finds that the court has moved in a very mechanical manner. It has noticed the submissions and recorded the findings of the Arbitrator and then it has mechanically held that the Court under Section 34 has a narrow scope to interfere and declined to entertain the petitions.
32. This is not the manner in which a petition under Section 34 of the Act of 1996 is to be decided. This Court had the occasion to consider the aforesaid aspect in Nitin Maheshwari (supra) and in paragraph 33, 34 and 35, it held as under:-
"33. From the perusal of the aforesaid provisions, even if at all, the land may not be non-agricultural yet Clause 12 clearly provides that in cases of all such agricultural land which are adjacent and close to the main road, the minimum value as provided in the chart is applicable.
34. Thus, despite the fact that that the land of the appellants was agricultural on the date of the notification under Section 3-A of the Act of 1956 yet in terms of the Section 26 of the LARA Act of 2013, the market value ought to have been considered in terms of the market value as determined in accordance with the Indian Stamp Act. This aspect has not been noticed either by the Arbitrator and in any case the District Judge has refused to look into the aforesaid aspect.
35. At this state, it will be relevant to state that in furtherance of the powers conferred upon the State, the acquisition is made under the powers of eminent domain. On one hand, the land which is acquired by exercising the power of eminent domain is a sense is a proceed sale for the land owner and is entitled to get the compensation strictly as per the provisions contained in law. Thus, to state that once the Competent Officer has determined the compensation and if it is assailed before the Arbitrator for enhancement and if the person does not succeed then he has a right to assail the award in court provided he is able to establish that the grounds for challenge is within the spectrum of Section 34 of the Act of 1996 and it enables the Court to interfere."
33. This aspect was also considered by this Court in Chandra Kishori (Supra) wherein this Court held as under:-
"19. From the perusal of the aforesaid dictum and applying the principles to the instant case, this Court finds that where the land is acquired by the State, which is in the nature of compulsory acquisition, in exercise of its powers of eminent domain and the compensation which is payable as per the guiding factors enumerated in Section 3-G (7) of the NHAI Act, 1956 read with Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, apparently is an issue, which is absolutely core of the controversy, which requires consideration. Since the award passed by the Arbitrator in violation of the said provisions would definitely be a ground to invoke the jurisdiction of the Court under Section 34 of the Act 1996 on the ground of the Public Policy of India More so, where the land of a person, over which he has a constitutional right in terms of Article 300-A of the Constitution of India, is taken away by the State by compulsory acquisition and the requisite provisions for grant of compensation is not adhered then it would definitely incur the scrutiny of the Court in terms of Section 34 of the Arbitration & Conciliation Act, 1996."
34. It is in the aforesaid backdrop that if the award passed by the Arbitrator and the order of the Court under Section 34 of the Act of 1996 is seen, it would be found that both the Authorities have not exercised the jurisdiction vested in them in law. Both the Authorities failed to consider and ignored the provisions relating to computation of compensation. In light thereof, this Court is of the clear view that the District Judge while considering the petition under Section 34 of the Act of 1996 erred in not examining the core issue of application of relevant provisions and procedure for computing the compensation. The court below ignored the grounds upon which the petition was filed as it was required to determine and ascertain whether correct provisions were adopted by the Competent Authority (Land Acquisition) to determine the compensation. It was the duty of the Court to ascertain whether the settled legal principles have been applied or not especially when the sole issue was raised relating to the compensation to be determined in accordance with the applicable rules and provisions. In this regard, the Competent Authority and the Arbitrator was bound to consider and deal with the provisions including the Collector's rate list and its clause as made applicable for treating the land at a higher rate even if it was agricultural, if it was falling within the list of villages in semi-urban area as mentioned in the said list and its appendix. Thus, if the same would have been considered, then it would have given a different complexion to the compensation which was in the domain of the Arbitrator, but unfortunately not considered.
35. This Court in exercise of powers under Section 37 of the Act of 1996 is not empowered to enter its factual methodology for computing the compensation nor can it correct the award. However, this Court is not satisfied with the orders impugned then the award can be set aside and the matter can be remitted for re-consideration.
36. In view of the aforesaid, the instant appeals are allowed. The judgment dated 04.02.2023 passed by the Additional District Judge, Room No. 1-Pratapgarh in M.N.R. Case No. 583 of 2018 (Sabhajeet Singh and another v. National Highway Authority of India & Others) and M.N.R. Case no. 580 of 2018 (Uma Shankar & others v. National Highway Authority of India & Others) and the award made by the Arbitrator dated 11.07.2018 in both the aforesaid cases are set aside. The Arbitrator shall re-determine the compensation afresh in light of the observations made by this Court including taking note of the relevant clauses of the Collector's rate list dated 18.07.2012 and its applicability including considering the evidence already produced and placed on record by the parties in light of the provisions contained under Section 3-G (7) of the National Highways Act, 1956 read with Section 26 and 28 of the LARA Act of 2013 including the Collector's rate list and decide the matter afresh expeditiously as possible preferably within a period of six months from the date, a certified copy of this order is placed before the Authority concerned. It is clarified that the appellant shall not be permitted to lead any fresh evidence. Subject to the aforesaid, the appeals are allowed. In the aforesaid facts and circumstances, there shall be no order as to costs. The records of the Court below shall be returned forthwith.
(Jaspreet Singh, J.)
September 19, 2025
Asheesh
