[Cites 11, Cited by 0]
Bombay High Court
Darsing Sakharam Bhil And Others vs The Project Director Project ... on 6 May, 2026
2026:BHC-AUG:20364
IN THE JUDICATURE OF HIGH COURT AT BOMBAY
BENCH AT AURANGABAD
WRIT PETITION NO. 914 OF 2026
Tukaram Kana Pawara (Deceased)
Thr Legal heirs :
1. Sumanbai Tukaram Pawara,
2. Parwatibai Tukaram Pawara,
3. Deepak Tukaram Pawara, ...Petitioners
(Ori.DHs)
VERSUS
1. The Project Director Project Implementation Unit,
2. The Competent Authority and Deputy Collector. ...Respondents
(Ori.JDs.)
...
Advocate for the Petitioner : Mr. Chandrakant P Patil
Advocate for Respondent No.1: Mr. S. J. Rahate
Advocate for Respondent No.2: Mr. Rahul Bagul
...
AND
WRIT PETITION NO. 2231 OF 2026
Laxmibai Babulal Pawara, (Deceased)
Thr Legal Heirs :
1. Bahadur Babulal Pawara,
2. Amarsing Babulal Pawara ...Petitioners
(Ori.DHs)
VERSUS
1. The Project Director Project Implementation Unit,
2. The Competent Authority and Deputy Collector. ...Respondents
(Ori.JDs.)
...
Advocate for the Petitioner : Mr. Chandrakant P. Patil
Advocate for Respondent/ NHAI: Mr. D. P. Madkar h/f Mr. D. S. Manorkar
Advocate for Respondent No.2 : Mr. R. B. Bagul
...
AND
WRIT PETITION NO. 2232 OF 2026
1. Tukaram Raysing Pawara,
2. Kalabai Tukaram Pawara,
3. Dilip Tukaram Pawara,
4. Paising Tukaram Pawara,
5. Ramdilal Tukaram Pawara. ...Petitioners
Page 1 of 15
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(Ori.DHs)
VERSUS
1. The Project Director Project Implementation Unit,
2. The Competent Authority and Deputy Collector. ...Respondents
(Ori.JDs.)
...
Advocate for the Petitioner : Mr. Chandrakant P. Patil
Advocate for Respondent No.2 : Mr. Suresh Walmikrao Munde
Advocate for Respondent/ NHAI: Mr. D. P. Madkar h/f Mr. D. S. Manorkar
...
AND
WRIT PETITION NO. 2240 OF 2026
1. Mistar Chotu Pawara,
2. Dhudkibai Mistar Pawara,
3. Jaga Mistar Pawara,
4. Sunil Mistar Pawara,
5. Sanjay Mistar Pawara. ...Petitioners
(Ori.DHs)
VERSUS
1. The Project Director Project Implementation Unit,
2. The Competent Authority and Deputy Collector. ...Respondents
(Ori.JDs.)
...
Advocate for the Petitioner : Mr. Chandrakant P. Patil
Advocate for Respondent No.2 : Mr. R. B. Bagul
Advocate for Respondent/ NHAI: Mr. D. P. Madkar h/f Mr. D. S. Manorkar
...
AND
WRIT PETITION NO. 2241 OF 2026
1. Vechan Surbhan Pawara,
2. Nanibai Vechan Pawara,
3. Lalchand Vechan Pawara,
4. Suman Lalchand Pawara,
5. Bhavsa Vechan Pawara. ...Petitioners
(Ori.DHs)
VERSUS
1. The Project Director Project Implementation Unit,
2. The Competent Authority and Deputy Collector. ...Respondents
Page 2 of 15
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(Ori.JDs.)
...
Advocate for the Petitioner : Mr. Chandrakant P. Patil
Advocate for Respondent No.2 : Mr. N. T. Bhagat
Advocate for Respondent No.1: Mr. Akshay Kulkarni
...
AND
WRIT PETITION NO. 2242 OF 2026
1. Darsing Sakharam Bhil,
2. Shevantabai Darsing Bhil,
3. Anju,
4. Santosh,
5. Geetabai. ...Petitioners
(Ori.DHs)
VERSUS
1. The Project Director Project Implementation Unit,
2. The Competent Authority and Deputy Collector. ...Respondents
(Ori.JDs.)
...
Advocate for the Petitioner : Mr. Chandrakant P. Patil
Advocate for Respondent No.2 : Mr. U. B. Bondar
Advocate for Respondent/ NHAI: Mr. D. P. Madkar h/f Mr. D. S. Manorkar
...
AND
WRIT PETITION NO. 2243 OF 2026
1. Champalal Najlya Pawara,
2. Islam Najlya Pawara,
3. Sayari Najlya Pawara,
4. Najlya Narasing Pawara,
5. Tulshiram Najlya Pawara (Deceased)
Thr : Legal Heirs
A. Reena Tulshiram Pawara,
B. Vijay Tulshiram Pawara,
C. Ajay Tulshiram Pawara,
D. Shevanta Tulshiram Pawara,
E. Kavita Mahendra Pawara,
F. Kutvani Najalya Pawara. ...Petitioners
(Ori.DHs)
Page 3 of 15
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VERSUS
1. The Project Director Project Implementation Unit,
2. The Competent Authority and Deputy Collector. ...Respondents
(Ori.JDs.)
...
Advocate for the Petitioner : Mr. Chandrakant P. Patil
Advocate for Respondent No.2 : Mr. R. D. Sanap
Advocate for Respondent No.1 : Mr. D. P. Madkar h/f Mr. D. S. Manorkar
...
Learned Counsel Mr. Chandak, Appointed to Assist the Court.
...
CORAM : ARUN R. PEDNEKER, J.
Dated : May 06, 2026
JUDGMENT :
1. Rule. Rule made returnable forthwith. By consent of the parties, the
Writ Petitions are taken up for final hearing.
2. Heard the learned Counsel Mr. Chandrakant P. Patil for the petitioner;
learned Counsel Mr. S. J. Rahate for respondent No. 1 in Writ Petition No.
914 of 2026; learned Counsel Mr. Rahul Bagul for respondent No. 2 in Writ
Petition No. 914 of 2026, Writ Petition No. 2231 of 2026, Writ Petition No.
2240 of 2026, and Writ Petition No. 2242 of 2026; learned Counsel Mr. D. P.
Madkar holding for Mr. D. S. Manorkar for the respondent - NHAI; learned
Counsel Mr. S. W. Munde for respondent No. 2 in Writ Petition No. 2232 of
2026; learned Counsel Mr. N. T. Bhagat for respondent No. 2 in Writ Petition
No. 2241 of 2026; learned Counsel Mr. Akshay Kulkarni for respondent No.1
in Writ Petition No. 2241 of 2026; and learned Counsel Mr. R. D. Sanap for
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respondent No. 2 in Writ Petition No. 2243 of 2026.
Also heard learned Counsel Mr. Chandak, appointed to assist the
Court.
3. By these petitions, the petitioners challenge the orders passed by
the District Court in Arbitration Regular Darkhast No.109 of 2021, whereby
the executing Court, while permitting withdrawal of the deposited amount,
directed deduction of 10% amount towards Tax to be Deducted at Source
(TDS) and further directed that the said amount be credited to the account
of the Competent Authority for Land Acquisition (CALA).
4. Since all the petitions raise an identical issue regarding deduction of
TDS from compensation awarded under the provisions of the National
Highways Act, 1956, they are being disposed of by this common order.
For the sake of convenience, the facts in Writ Petition No.914 of 2026 are
referred to.
5. The land of the petitioners bearing Gut No.953, situated at village
Hadakhed, Taluka Shirpur, came to be acquired for the purpose of widening
of a National Highway under the provisions of the National Highways Act,
1956. The Competent Authority for Land Acquisition passed an award
under Section 3G(1) of the said Act. Being dissatisfied, the petitioners
invoked Section 3G(5) and sought arbitration. The Arbitrator, by award
dated 22/04/2014, enhanced the compensation to Rs.1,719/- per square
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meter and also granted compensation towards easementary rights.
6. The petitioners thereafter initiated execution proceedings by filing
Arbitration Regular Darkhast No.109 of 2021 before the Principal District
Judge, Dhule. The acquiring body deposited an amount of Rs.3,65,523/-
before the Executing Court on 06/08/2025. The petitioners filed an
application (Exhibit 48) seeking withdrawal of the said amount. The
Executing Court permitted withdrawal but directed deduction of 10% TDS.
The said direction, to the extent of deduction of TDS, is under challenge.
7. The learned Counsel for the petitioners Mr. Chandrakant P. Patil
submits that TDS could not have been deducted by the Executing Court, as
Section 96 of the Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act, 2013 provides that no
income tax shall be levied on any award or agreement made under the said
Act. It is further submitted that the Executing Court has exceeded its
jurisdiction in directing deduction of 10% TDS, as it is neither an authority
nor a person responsible for deduction of tax at source under the Income-
tax Act, 1961. He further submits that the decretal amount is required to
be paid in its entirety and no deduction towards TDS can be made
therefrom.
8. Learned Counsel Mr. Chandak, who is appointed to assist the Court,
submits that the issue involved in the present writ petitions pertains to the
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applicability of Section 96 of the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and Resettlement Act,
2013 to the compensation awarded for acquisition of agricultural land
under the National Highways Act, 1956, and whether such compensation,
including the interest thereon, is exempt from deduction of tax at source
under the Income-tax Act, 1961.
9. He submits that under the 2013 Act, the cost of acquisition includes
the entire amount payable to the land loser, including enhanced
compensation and interest, and that the entire amount is not liable to
payment of income tax in view of Section 96 of the said Act.
10. He further submits that CBDT Circular No.36/2016 dated 25/10/2016
clarifies that compensation received under an award made in terms of the
2013 Act is exempt from income tax. He also submits that a proviso has
been introduced in Section 194 LA of the Income-tax Act, 1961, with effect
from 01/04/2017, which reinforces that no deduction of tax at source is to
be made where the compensation is exempted under the provisions of the
2013 Act. He, therefore, submits that the compensation paid for
acquisition of land under the National Highways Act, 1956 is not amenable
to deduction of TDS.
11. Having heard the learned Counsel for the parties, the issue that
arises for determination is whether TDS is deductible from the
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compensation awarded under 3G(5) of the National Highways Act, 1956.
12. Before adverting to the said issue, it is necessary to refer to the
observations made by the Executing Court in paragraph No.7 of the
impugned order while directing deduction of TDS, which read thus :
"(7) In this matter, the Award is of dated 26/11/2014. Central
government's Circular bearing No.36/2016 for exclusion of deduction
of TDS regulated with effect from 25/10/2016. In this circulation,
there is no proviso made for the retrospective effect. Therefore, 10%
TDS, in this matter, is required to be deducted. As well, Hon'ble High
Court in the case of Seema Jagdish Patil Vs. The National Hi-
Speed Rail Corporation Ltd. and others, Writ Petition
No.1049 of 2021, decided by Hon'ble Bombay high Court, bench At
Aurangabad, on 09/06/2022 has made exclusion of TDS amount, in
view of circular. My Ld. Predecessor has not directed about
deduction of 10% TDS while passing the order below Exh.19.
However, in view of above circular as well as cited case, it is
necessary to deduct 10% TDS amount in respect of remaining
compensation amount while releasing it."
13. In the present case, the arbitral award under Section 3G(5) of the
National Highways Act, 1956 was passed on 22/04/2014, i.e., after the
coming into force of the Right to Fair Compensation and Transparency in
Land Acquisition, Rehabilitation and Resettlement Act, 2013 and the
amounts are deposited in the executing Court in 2025. The beneficial
provision of Section 96 of the said 2013 Act is applicable to the
compensation awarded, the acquisitions made under the National
Highways Act in view of Notification under Section 105 (3) of 2013 Act.
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Section 96 of the 2013 Act reads as under :
"Section 96 : No income-tax or stamp duty shall be levied on
any award or agreement made under this Act, except under Section
46 and no person claiming under any such award or agreement shall
be liable to pay any fee for a copy of the same."
14. A reference may be made to the Division Bench Judgment of the
High Court of Andhra Pradesh in C. Nanda Kumar vs. Union of India
(Writ Petition No.7874 of 2016 and connected matters, decided on
13/03/2017), wherein it has been observed that the Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013 (Central Act 30 of 2013) is a welfare legislation
which marks a significant departure from the provisions of the Land
Acquisition Act, 1894. The object of the 2013 Act is not merely to provide
just and fair compensation, but also to ensure rehabilitation and
resettlement of affected families. The Preamble indicates that land losers
are to be treated as stakeholders in the development process.
15. It has further been held that Section 96 of the 2013 Act is intended
to secure these objectives and, therefore, it cannot be contended that
Section 194 LA of the Income-tax Act, 1961 would override or dilute the
said welfare provision. Any interpretation which requires deduction of tax
at source and thereafter compels land losers to seek refund from the
Income Tax Department would defeat the very purpose of the legislation.
Such an approach, which forces farmers and land losers to move from one
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authority to another, is clearly contrary to the objects and reasons of the
2013 Act.
16. The Division Bench of this Court in Seema Jagdish Patil vs.
National Hi-Speed Rail Corporation Ltd. and others (supra)
considered the issue relating to deduction of TDS from compensation paid
for acquisition of land under the 2013 Act. This Court held that no
deduction of tax at source can be made where the compensation is
determined and paid under the provisions of the Act of 2013, whether such
compensation is awarded pursuant to acquisition proceedings or by
agreement.
17. This Court in Seema Jagdish Patil (Supra) also took into
consideration CBDT Circular No.36/2016 dated 25/10/2016, which clarifies
that the amount received under an award made under the 2013 Act is not
liable to income tax.
18. In my view, TDS cannot be deducted from the compensation
awarded under the arbitral award for the following reasons :
(i) Section 194LA of the Income-tax Act, 1961 does not mandate
deduction of tax at source in respect of compensation paid for acquisition
of agricultural land, which stands specifically excluded from its ambit. In
the instant cases the acquisition is of agricultural lands with N.A. potential.
Section 194LA of the Income tax act (inserted w.e.f.
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01/10/2004) reads as under :
"Section 194LA. Any person responsible for paying to a resident
any sum, being in the nature of compensation or the enhanced
compensation or the consideration or the enhanced consideration on
account of compulsory acquisition, under any law for the time being
in force, of any immovable property (other than agricultural
land), shall, at the time of payment of such sum in cash or by issue
of a cheque or draft or by any other mode, whichever is earlier,
deduct an amount equal to ten per cent of such sum as income-tax
thereon :
Provided that no deduction shall be made under this section where
the amount of such payment or, as the case maybe, the aggregate
amount of such payments to a resident during the financial year
does not exceed two lakh and fifty thousand rupees :
Provided further that no deduction shall be made under this
section where such payment is made in respect of any award or
agreement which has been exempted from levy of income-tax under
section 96 of the Right to Fair Compensation and Transparency in
Land Acquisition, Rehabilitation and Resettlement Act, 2013 (30 of
2013)."
(ii) In the present case, the arbitral award is dated 22/04/2014, i.e., after
the coming into force of the Act of 2013. Section 96 of the said Act
expressly provides that no income tax shall be levied on any award or
agreement made under the Act. Thus, the statutory exemption operates in
full force. A proviso introduced on 01/04/2017 to Section 194LA of the
Income-tax Act, 1961 further clarifies that no deduction of tax at source
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shall be made where the compensation is exempt from levy of income tax
under any law for the time being in force. Even prior to the said
clarification, CBDT Circular No.36/2016 dated 25/10/2016, it is clarified that
compensation received under an award made under the 2013 Act is
exempt from income tax. Though taxability and deduction at source are
distinct concepts, once the income itself is exempt in view of the judgment
in C. Nanda Kumar (supra), there remains no occasion to deduct tax at
source under the beneficial legislation of the 2013 Act.
The interpretation placed by the Executing Court on the decision of
this Court in Seema Jagdish Patil vs. National Hi-Speed Rail
Corporation Ltd. and others (supra) is not correct. The said judgment
recognizes the exemption flowing from the 2013 Act and the CBDT Circular.
The award in the said case was after the issuance of CBDT Circular.
However, the exemption from tax liability is statutory and existed from the
inception of the 2013 Act. The Andhra Pradesh High Court in C. Nanda
Kumar vs. Union of India (Supra), has held that deduction of TDS in such
cases would defeat the very object of the beneficial legislation. In view of
the aforesaid, and having regard to the object and purpose of the 2013 Act
as a welfare legislation, there can be no direction to deduct TDS from the
compensation awarded under the arbitral award passed under Section
3G(5) of the NH Act.
(iii) Another important reason why TDS cannot be deducted is that
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the arbitral award is executable as a decree of a Court of law. In the
present case, the amount has been deposited before the Executing Court in
satisfaction of the arbitral award and, therefore, assumes the character of a
decretal debt.
I draw support from the Judgment of the Hon'ble Supreme Court in
All India Reporter Ltd. vs. Ramchandra D. Datar (AIR 1961 SC 943),
the respondent, an employee of the appellant company, had filed a civil
suit claiming compensation for wrongful termination of employment,
arrears of salary, and interest. The trial Court passed a decree for
Rs.42,359/-, which included Rs.36,000/- towards compensation for wrongful
termination, Rs.6,000/- towards salary in lieu of notice, along with interest
and costs. In execution, the respondent claimed a higher amount after
adjustments. The Income Tax Officer issued a notice seeking deduction of
Rs.15,956-13 towards income tax, surcharge, and super-tax from the
decretal amount, and the employer sought permission to deduct the said
amount before satisfying the decree.
The Executing Court permitted such deduction; however, the High
Court reversed the said order. The Hon'ble Supreme Court in Ramchandra
D. Datar (Supra) upheld the decision of the High Court and held that once
the claim merges into a decree, it assumes the character of a "judgment-
debt". Even if a part of the original claim represented salary or
compensation in lieu of salary, after the decree, the amount loses its
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original character. It was further held that there is no provision under the
Income-tax Act enabling a judgment debtor to deduct income tax at source
from a decretal amount, in the absence of any specific direction in the
decree.
In All India Reporter Ltd. vs. Ramchandra D. Datar (supra), it
has been clearly held that the decretal amount must be paid in its entirety
and no deduction towards income tax can be made therefrom by the
judgment debtor. A similar view qua deduction of TDS on arbitral award
considering the same as 'Judgment Debt' has been taken by the Calcutta
High Court in M/s Neo Built Corporation vs. Union of India (EC 272 of
2022).
19. Applying the aforesaid principle, once the compensation is
crystallized in the form of an arbitral award, it partakes the character of a
'Judgment Debt' and must be paid in its entirety, without any deduction
towards TDS.
20. In view of the aforesaid legal position, the impugned order, to the
extent it directs deduction of TDS, cannot be sustained. The Competent
Authority for Land Acquisition (CALA) is directed to redeposit the amount
deducted towards TDS before the Executing Court. The Executing Court
shall ensure that the entire decretal amount, along with accrued interest, is
paid to the claimants.
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21. In view of the foregoing discussion, the petitions succeed. The
impugned orders passed by the Executing Court in Arbitration Regular
Darkhast to the extent directing deduction of 10% amount towards Tax
Deducted at Source (TDS), are quashed and set aside.
22. It is held that no deduction of TDS is permissible from the
compensation awarded under the arbitral award passed under Section
3G(5) of the National Highways Act, 1956, having regard to the provisions
of Section 96 of the Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act, 2013.
23. The Competent Authority for Land Acquisition (CALA) shall redeposit
the amount, if any, already deducted towards TDS, before the Executing
Court within a period of four weeks from today.
24. Upon such redeposit, the Executing Court shall disburse the entire
decretal amount, along with accrued interest, to the petitioners, without
any deduction, in accordance with law.
25. Rule is made absolute in the aforesaid terms.
( ARUN R. PEDNEKER, J. )
vj gawade/-.
