T Younis S/O Haji T Ameersab vs Special Land Acquisition Officer
2023 Latest Caselaw 395 Kant

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                                               WP No.104106/2022




          IN THE HIGH COURT OF KARNATAKA,                       R
                   DHARWAD BENCH

     DATED THIS THE 6TH DAY OF JANUARY, 2023
                            BEFORE
     THE HON'BLE MR JUSTICE N.S.SANJAY GOWDA

      WRIT PETITION NO.104106/2022 (LA-RES)

BETWEEN:

T. Younis @ Unees
S/o. Haji T. Ameer Sab,
Age 56 years Occ: Business,
R/o.: Ward No.13, Amarawati,
Taluka Hosapete.
                                                      ... Petitioner
(By Shir Mallikarjunswamy B.Hiremath, Advocate)

AND:

1.     Special Land Acquisition Officer
       & The Competent Authority,
       National Highway Authority of India,
       Vidya Nagar, 4th Main Road, 5th Cross,
       Opp: Gangaparameshwari Kalyan Mantapa,
       Vidyanagar, Ballari-583 104.

2.     National Highway Authority of India,
       By its Project Director,
       Hosapete-583 101.
                                                    ... Respondents
(By Sri. Vinayak S. Kulkarni, AGA for R1
    Smt. Shilppa Shah, Advocate for
    Sri. Shivaraj Ballolli, Advocate for R2)

     This Writ Petition is filed under Articles 226 & 227 of the
Constitution of India, praying to issue a writ of certiorari
quashing the impugned endorsement dated 20.05.2022,
produced at Annexure-F, issued by the 1st respondent bearing
No. SLAO/ NHAI/ BLR/ NH-13(50) 2022-23/55 & etc.
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                                            WP No.104106/2022




     This writ petition, having been heard and reserved for
Orders, coming on for pronouncement, this day, the Court
made the following:

                          ORDER

1. Two endorsements issued by the Special Land

Acquisition Officer (for short, "the Competent Authority"),

National Highway Authority dated 20.05.2022 and

20.09.2022 vide Annexures-F and F1 respectively are

challenged in this writ petition by the landowner.

2. The Competent Authority, by the above-

mentioned endorsements, has informed the petitioner that

the payment of the compensation in respect of the

acquired lands belonging to the petitioner in

Sy.Nos.503/A2 & 503/B2 of Amaravati Village, Hospet

Taluk cannot be made because the National Highway

Authority of India (for short, "NHAI") had received a legal

opinion that it should not release the payment due to the

pendency of the applications filed under Section 33 of the

Arbitration and Conciliation Act, 1996 (for short, "the A &

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C Act") and the payment would be released by NHAI only

after the award attains finality.

3. The admitted facts of the case are that a

notification under Section 3A of the National Highways Act,

1956 (for short "the Act"), declaring the intention of the

Government to acquire the lands was published on

15.12.2009. This was followed by a declaration under

Section 3D of the Act, which was published on 14.12.2010.

4. The Competent Authority determined that a

sum of Rs.12,916/- per sq. mtrs. was the compensation

payable to the landowner. This order determining the

compensation was passed under Section 3G (1) of the Act

on 05.12.2011.

5. This amount determined by the Competent

Authority was not acceptable to the NHAI and hence it

invoked its right to seek for determination of the amount

payable as compensation by the Arbitrator i.e., by the

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Deputy Commissioner, by making an application under

Section 3G (5) of the Act.

6. In these proceedings, the landowner also

challenged the amount determined by the Competent

Authority as being inadequate and sought for re-

determination of the amount

7. The Arbitrator, on 16.02.2013, modified the

award of the Competent Authority and proceeded to award

a sum of Rs.14,64,545/- per acre in respect of dry lands

and a sum of Rs.30,00,000/- per acre for the converted

lands.

8. Being aggrieved by the said modification of the

award by the Arbitrator, the petitioner-landowner filed two

applications seeking for setting aside the award under

Section 34 of the A & C Act read with Section 3G (6) of the

Act. One application was filed challenging the reduction of

the market value and another application was filed

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challenging the dismissal of their counter-claim made for

enhancement before the Arbitrator.

9. The District Court, by its order dated

10.04.2014, and in the exercise of its power under Section

34(4) of the A & C Act directed the Arbitrator to hold an

enquiry and give findings on the points mentioned in the

order, while keeping the application filed under Section 34

of A & C Act pending.

10. Pursuant to the said order of the District Court,

the Arbitrator proceeded to conduct an enquiry and passed

an order dated 14.10.2015.

11. The District Court thereafter proceeded to

consider the application filed under Section 34 of A & C Act

and by an order dated 16.03.2019, set aside the order

passed by the Arbitrator, by which he had reduced the

compensation payable and thereby confirmed the order of

the Competent Authority which had determined

compensation payable at Rs.12,916/- per sq. mtr.

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12. Being aggrieved, NHAI preferred appeals to this

Court. In these appeals, the landowner also filed Cross

Objections. This Court, by an order dated 01.10.2020,

allowed the appeals of the NHAI and remanded the matter

to the Arbitrator for determination of the amount payable

as compensation. The Cross Objections of the landowners

were dismissed as withdrawn.

13. Pursuant to the said order of remand, the

Arbitrator, by his order dated 03.02.2022, dismissed the

application filed by the NHAI and thereby confirmed the

award of the Competent Authority. The Arbitrator also

directed the Competent Authority to extend the statutory

benefits of solatium, additional market value and interest

as provided under the provisions of the Land Acquisition

Act.

14. Thus, the order of the Competent Authority

determining compensation payable at Rs.12,916/- per sq.

mtrs. was affirmed by the Arbitrator on 03.02.2022.

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15. The landowner thereafter filed an application for

correction of certain errors in the award on 10.02.2022

and the said application was allowed, and the errors were

corrected by the District Court on 11.02.2022.

16. Thereafter on 08.03.2022, NHAI filed an

application under Section 33(1)(a) of the A & C Act to

modify the award.

17. The landowner also filed an application under

Section 33(4) of the A & C Act seeking for modification of

the award and sought for a grant of 50% additional

amount over & above the market value.

18. The petitioner, during the pendency of these

applications, also made an application on 06.05.2022

seeking for release of the compensation deposited to the

Competent Authority. The Competent Authority, however,

refused to make the payment by issuing an endorsement

dated 20.05.2022 at Annexure-F.

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19. It is also pertinent to state here that the

application that had been filed by the NHAI and the

application filed by the petitioner seeking for modification

of the award were both dismissed by the Arbitrator on

04.07.2022.

20. The landowner thereafter made one more

application seeking for release of the compensation

amount. However, the Competent Authority issued an

endorsement dated 20.09.2022 at Annexure-F1, once

again refusing to make the payment.

21. This endorsement dated 20.09.2022 at

Annexure-F1 and the earlier endorsement dated

20.05.2022 at Annexure-F are the subject matter of

challenge in this writ petition.

22. It is also stated by the landowner (in his

synopsis) that a review petition that had been filed in

August-2022 seeking for review of the order passed by the

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Arbitrator on 04.07.2022, by which, the application filed

by the landowner and NHAI, was dismissed.

23. It is also stated that NHAI has filed an

application under Section 34 of the A & C Act challenging

the award of the Deputy Commissioner dated 03.02.2022,

by which, the award of the Competent Authority was

confirmed. It is stated that in these applications filed

under Section 34 of the A & C Act, a prayer has been

made for a stay of the award of the Arbitrator and the

same is yet to be considered.

24. It is also stated that the landowner has also

filed an application under Section 34 of the A & C Act and

the same is also pending adjudication.

25. The case urged by the petitioner-landowner is

that the Competent Authority has no jurisdiction to refuse

payment of compensation after passing the award. It is

contended that the statutory Rules require the

compensation determined by the Competent

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Authority should not only be deposited immediately but

should also be immediately disbursed. It is contended that

the Competent Authority does not have the power to

withhold the compensation for any reason whatsoever,

and at any rate, it does not have the power to seek for the

consent of the NHAI to disburse the compensation

amount.

26. The NHAI, on the other hand, contends that

when it still had time to file an application seeking for

setting aside the award under Section 34 of the A & C Act,

it had a right to demand the Competent Authority not to

disburse the compensation amount, since the application

filed by NHAI to set aside the award would be frustrated.

It is contended that under the statutory Rules, NHAI is

obliged to deposit the compensation amount only if a

decision is taken not to challenge the award.

27. It is contended that once a decision is taken to

challenge the award, there would be no liability to deposit

the compensation amount and since admittedly an

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application had been filed seeking for setting aside the

award, the Competent Authority was perfectly justified in

refusing the payment of compensation.

28. The questions that are, therefore, required to

be considered in this writ petition are as follows:

(i) Whether the Competent Authority possess the jurisdiction to refuse payment of compensation awarded to the land-loser?

(ii) Whether the Competent Authority can seek for the opinion of the Executing Agency for disbursal of the compensation and refuse payment based on the opinion of the Executing Agency?

29. An overview of the provisions of the Act would

be necessary for the determination of the aforementioned.

30. The Act has been enacted to provide for the

declaration of certain Highways to be National Highways

and for matters connected therewith.

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31. Section 2 of the Act provides for the declaration

of certain Highways to be National Highways and Sections

3A to 3J relate to the acquisition of lands for the purpose

of the Act.

32. The scheme of the Act is that a notification is

issued declaring the intention of the Government to

acquire the lands for the purpose of a National Highway

(Section-3A) and thereupon power has been conferred on

a person authorized to enter the land for making a survey

(Section-3B).

33. The Act contemplates that any person

interested in the lands can file objections and thereby

object to the acquisition. On such objections being filed,

the Competent Authority is required to give an opportunity

of hearing to the objector or his counsel and thereafter

make an order to either allow the objections or disallow

the objections (Section-3C).

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34. On an order being passed disallowing the

objections, a report is required to be submitted to the

Central Government and on receipt of the report, the

Central Government is required by way of a notification in

the Official Gazette to declare that the lands should be

acquired. On the publication of the declaration, the lands

stand vested absolutely in the Central Government free

from all encumbrances (Section-3D).

35. On the land vesting in the Central Government

and the amount determined by the Competent Authority

with respect to the land has been deposited, the

Competent Authority is required, by issuing a notice in

writing, to direct the owner or any other person, who is in

possession, to surrender or deliver the possession and on

the failure of the said person, the Competent Authority, is

empowered to inform the Commissioner of Police or

Collector of the District, who shall thereafter be required

to enforce the surrender (Section-3E).

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36. The Act requires that in respect of the lands

which are acquired, the determination of amounts payable

as compensation is required to be made by an order of the

Competent Authority. The Competent Authority before

determining the amount is required to issue a public notice

and after hearing the interested persons, determine the

amount payable as compensation for the acquired lands

[Section-3G(3)].

37. If the amount determined by the Competent

Authority is unacceptable to either of the parties, the

amount shall on an application by either of the parties be

determined by the Arbitrator [Section-3G(5)].

38. Both the Competent Authority and the

Arbitrator are required to take into consideration the

factors mentioned in Section 3-G (7) of the Act while

determining compensation.

39. The Act stipulates that, before taking

possession of the land, the amount determined under

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Section 3-G of the Act, that is either by the Arbitrator or

by the Competent Authority should be deposited by the

Central Government in such a manner as may be

prescribed by the Rules with the Competent Authority.

40. For the purposes of this case, Section 3H of the

Act11 would be relevant.

41. The Act also requires that as soon as the

amount has been deposited, the Competent Authority shall

on behalf of the Central Government pay the amount to

the person or persons entitled thereto.

42. If, however, there are several persons claiming

to have an interest in the amount deposited, the

Competent Authority is required to determine, in his

opinion, as to the persons, who are entitled to receive an

amount. If there is a dispute regarding the apportionment,

the Competent Authority is required to refer the dispute to

Section 3H of the Act is extracted at the end of the judgment at page Nos.41 & 42

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the Civil Court within whose jurisdiction the land acquired

is situate [Section-3H (3) & (4)].

43. The Act specifically provides that in cases where

the amount determined by the Arbitrator is in excess of

the amount determined by the Competent Authority, the

Arbitrator is entitled to award interest at the rate of 9%

p.a. on such excess amount from the date of taking

possession till the date of actual deposit. [Section-3H(5)]

44. It also stipulates that where the amount

determined by the Arbitrator is more than the amount

determined by the Competent Authority, that excess

amount along with interest, should be deposited by the

Central Government in the manner laid down by the Rules

made in this behalf.

45. It also stipulated that the provisions relating to

the payment of the amount to the person entitled to or the

determination as to who was entitled to receive the

compensation or reference to the Civil Court if there was a

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dispute, shall be as is provided for in cases where the

determination is made by the Competent Authority under

Section 3G [Section-3H (6)].

46. The intent of the statutory rule is that

irrespective of whether the amount was determined by the

Competent Authority as compensation payable to the land

loser or the amount was determined by the Arbitrator, that

amount is required to be deposited by the Central

Government before the Competent Authority in the

manner laid down by Rules specified in that behalf. Once a

statutory rule has been prescribed for the deposit of the

amount determined, the beneficiary i.e., the NHAI is

bound to comply with it and it has no right to withhold the

deposit.

47. In fact, in both cases, the statutory provision

also stipulates the amount deposited before the competent

authority is required to be paid immediately on deposit to

the person or persons entitled to it and the Competent

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authority is given no discretion in the matter of payment

of compensation

48. It should be borne in mind that possession of

the land is permitted to be taken under Section 3E (1),

only after the amount determined as compensation has

been deposited as provided under Section 3H(1).

49. Thus, the requirement of depositing the amount

determined as compensation and its disbursal to the

person concerned is statutorily provided and would thus

have to be followed scrupulously and no deviation from

the Rules would be permissible.

50. The Central Government, in the exercise of

powers conferred under the Act has framed Rules in 1998,

which were repealed and replaced by a new set of Rules in

2019. For having a comprehensive understanding of the

issue, both the Rules would have to be examined and

considered.

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51. In 1998, the National Highways (Manner of

Depositing the Amount by the Central Government with

the Competent Authority for Acquisition of Land) Rules,

199822 was framed.

52. Under the 1998 Rules i.e., till the 2019 Rules

came into force, the statutory Rules required that the

Executing Agency (i.e., the National Highways Authority of

India in the case of National Highways) should deposit the

amount determined by the Competent Authority or by the

Arbitrator under Section 3G of the Act, with the competent

authority, by way of a Demand Draft within a period of 7

days from the date of such determination.

53. Thus, the NHAI is required, by law, to deposit

within a period of 7 days with the competent authority, by

way of a demand draft, the amount determined as

compensation by the Competent Authority or by the

Arbitrator.

The National Highways (Manner of Depositing the Amount by the Central Government with the Competent Authority for Acquisition of Land) 1998 is extracted at the end of the judgment at page no.42.

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54. The statutory mandate of Section 3H of the Act,

read with the Rules framed regarding deposit

fundamentally demand that the amount determined as

compensation is deposited within a week. The lawmakers

were aware that the NHAI did have an option to approach

the Arbitrator, if the amount determined by the competent

authority was unacceptable to it and yet it chose to

prescribe a time limit of 7 days to deposit. This statutory

intent, therefore, excludes any option being given to the

NHAI to withhold or delay the deposit of compensation.

55. It may be pertinent to notice here that the

NHAI has not been given the option to withhold the

deposit, if it is contemplating a challenge to the amount

determined either by the Competent Authority or by the

Arbitrator and the NHAI is simply required to deposit the

compensation determined within 7 days by way of a

Demand Draft.

56. Furthermore, on the deposit being made within

7 days of the determination as aforesaid, as required by

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the statutory mandate of Section 3H(2) of the Act, the

Competent Authority is also obliged to pay the amount to

the person or persons entitled on behalf of the Central

Government. The legislature by using the expression "As

soon as may be after the amount has been deposited" has

made it crystal clear that the disbursal of the

compensation cannot and should not be delayed.

57. It is thus clear from the statutory scheme, the

amount determined as compensation by the competent

authority is not only to be deposited within 7 days before

the competent authority but is also required to be

disbursed immediately thereafter to the landowner.

58. The intent behind this prescription of deposit

within 7 days and payment immediately thereafter in

explicit terms is rather clear. The Legislature was

conscious of the fact that the acquisition of land was

always a tedious and time-consuming process and to

speed up this process, the Act provided for vesting of the

land immediately after the declaration was made.

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59. It was also aware that obstacles would be laid

by the land loser if payment of compensation was delayed

and it hence imposed arbitration statutorily as the mode of

determining the compensation and significantly, it

stipulated a statutory mandate, that the compensation

should be deposited within 7 days of the determination by

the Competent Authority and should also be disbursed to

the land loser immediately thereafter.

60. It should also be kept in mind that, by virtue of

Section 3E (1) of the Act, the NHAI cannot take possession

until the amount determined as compensation under

Section 3G of the Act is deposited as provided under

Section 3H(1) of the Act.

61. Thus, it is imperative, as per the statutory rules

framed, that the NHAI should deposit the compensation

within 7 days of the determination by way of a demand

draft with the Competent Authority and the said authority

is also statutorily obliged to disburse the compensation

immediately thereafter.

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62. This statutory fiat cannot be defeated by the

NHAI on the ground that it has a right to challenge the

determination of compensation and unless that right is

exhausted, they have an option to withhold payment. It is

settled law, that when a statutory procedure is prescribed

there can be no deviation from that procedure. This would

be true, more so, when it relates to payment of

compensation to a person who has lost his land.

63. The consequence of this statutory mandate is

that the NHAI cannot delay or withhold the deposit of the

amount determined as compensation and on deposit being

made, the Competent Authority cannot also delay or

withhold the disbursal of the compensation for any reason.

64. The argument, therefore, that NHAI possesses

the right not to deposit the compensation, if it has decided

to challenge the determination of the amount payable as

compensation, is wholly untenable.

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65. It is to be kept in mind that when the Rules

were framed, the Legislature was obviously aware that

NHAI had a right to challenge the determination of the

amount payable by the Competent Authority by making an

application to the Arbitrator and yet it made a statutory

rule that the amount was to be deposited within 7 days of

the determination. The NHAI, therefore, cannot escape the

obligation of depositing the amount determined by the

Competent Authority and the Competent Authority is also

obliged to pay the compensation immediately thereafter.

66. The only option available to NHAI to prevent

the disbursal of compensation on the determination of the

amount payable by the Competent Authority is to obtain

an interim order from the Arbitrator restraining the

Competent Authority to disburse the amount. The NHAI

cannot, therefore, avoid the deposit of the amount and the

consequential disbursal on any reason whatsoever.

67. It is also to be noticed that the lawmakers were

aware of the fact that the Arbitrator could also award an

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amount in excess of the sum determined by the

Competent Authority, in which event, the liability to pay

interest was also prescribed. It also to be noticed that as

against such a higher determination of the amount

payable as compensation by the Arbitrator, the Legislature

was obviously aware that NHAI had a remedy of making

an application under Section 34 of the A & C Act and yet it

did not provide for an exception to the rule relating to the

deposit of the amount determined as compensation within

7 days. Thus, even in cases where the Arbitrator has

determined the amount in excess of the amount

determined by the competent authority, the NHAI cannot

delay or postpone the deposit and the consequential

disbursal of the compensation.

68. The only option even in such cases would be for

the NHAI to make an application to the District Judge in its

application under Section 34 of the A & C Act and seek for

a stay of the disbursal of the compensation.

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69. It is quite probable that it was not even in the

contemplation of the Legislature that the NHAI could be

challenging the determination made of the amount

payable and therefore, did not provide for a delay in the

deposit. But then, this can only be in the realm of

speculation.

70. The inescapable conclusion, therefore, is that

NHAI is bound to deposit the amount determined as

compensation within 7 days of the determination before

the Competent Authority and the Competent Authority is

immediately thereafter required to disburse the

compensation to the land loser as provided under Section

3H(2) to (4).

71. In the instant case, the Competent Authority

determined the amount payable as Rs.12,916/- per square

meter on 05.12.2011 and consequently, as per the

statutory rule prevailing as on 2011 i.e., the 1998 rules,

the amount payable ought to have been deposited before

the competent authority by way of a demand draft on or

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before 12.02.2011 and immediately thereafter the said

amount was required to be paid by the Competent

Authority to the land loser.

72. However, the said amount has not been

deposited by the NHAI and the amount has also not been

paid to the land loser and there is thus a clear infraction of

the statutory rule.

73. In the instant case, the order determining the

compensation payable by the Competent Authority, was

challenged by the NHAI by approaching the Arbitrator and

the Arbitrator by his order dated 16.02.2013 reduced the

compensation determined.

74. Thereafter, the decision of the Arbitrator was

challenged by making an application under Section 34 of

the A & C Act to the District Court and the District Court

by an order dated 10.03.2014, after concluding that

decision of the Arbitrator suffered from illegalities, while

keeping the application under Section 34 of the A & C Act

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pending, directed the Arbitrator to hold an enquiry and

give separate and independent findings regarding the

nature of the properties that had been acquired, in the

exercise of its powers under Section 34 (4) of the A & C

Act.

75. The Arbitrator, pursuant to the said direction,

proceeded to record a finding on 14.10.2015 and the

District Court thereafter proceeded to set aside the award

itself by its order dated 16.03.2019. Thus, the order of the

Competent Authority dated 05.02.2011 was confirmed by

the District Court on 16.03.2019.

76. This order of the District Court was set aside by

this Court on 01.10.2020 and the matter was once again

remanded to the Arbitrator and the Arbitrator by his order

dated 03.02.2022, has affirmed the order of the

Competent Authority and rejected the application filed by

NHAI under Section 3G (5) of the Act.

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77. An argument is, therefore, advanced that the

award became final only on 03.03.2022 and therefore, the

2019 Rules would be applicable.

78. As stated above, the Competent Authority

determined the amount payable by his order dated

05.02.2011 and NHAI was basically required to deposit the

amount on or before 12.02.2011.

79. However, since there has been continuous

litigation relating to the determination of the amount

during the pendency of which 2019 Rules have been

framed, it would also be necessary to examine whether

under the 2019 Rules, there was any exemption provided

in the matter of deposit of the compensation.

80. On 18th of January 2019, the 1998 Rules were

replaced by the National Highways (Manner of Depositing

the Amount by the Central Government; making requisite

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funds available to the Competent Authority for Acquisition

of Land) Rules, 201933.

81. The Rule basically requires the NHAI to ensure

a Bank account is maintained with requisite funds, to

which the Competent Authority has access and has

authorization to withdraw, subject to limits set by NHAI.

The Competent Authority is empowered to withdraw from

the said account and disburse the compensation to the

landowners.

82. Two significant factors are to be noticed in this

Rule.

83. The first factor is that the Rule stipulates that

when a demand is made by the Competent Authority

before the announcement of the award, the NHAI is

required to issue authorization limits to the Bank in favour

of the Competent Authority for withdrawal and

disbursements to the landowners through electronic

The 2019 Rules is extracted at the end of the judgment at page no.42 & 43.

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banking mechanism. Thus, NHAI is put on notice even

before the award is announced to issue instructions to the

Bank regarding the limits to which the Competent

Authority is authorised to withdraw.

84. The second factor is that the Rule also

specifically stipulates that the Competent Authority was

entitled to without any reference to the land acquiring

agency, for disbursement to the landowners or persons

interested. Thus, the Competent Authority is specifically

discharged from the obligation to inform NHAI about the

disbursal of the compensation, thereby, meaning that

NHAI had no role at all to play in the disbursal of

compensation.

85. The further inference of the Rule is that the only

role of the NHAI is to ensure that the Competent Authority

is enabled to withdraw funds from the Bank account to be

maintained by NHAI and nothing more.

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86. The Rule also goes on to stipulate two timelines

to ensure the withdrawal of the amount by the Competent

Authority:

87. In case of a determination by the Competent

Authority under Section 3G of the Act, the period

prescribed is 15 days. In cases, where the NHAI is not

aggrieved of the determination, there would no

impediment for the deposit.

88. If, however, the order of the Competent

Authority was unacceptable to the NHAI and it wanted to

make an application to the Arbitrator for determination,

NHAI would still, nevertheless, must ensure that the

Competent Authority is enabled to withdraw the amount

determined by it for disbursal to the landowner, by issuing

necessary instructions to the Bank.

89. It should be noticed that in such cases the Rule

does not entitle the NHAI to withhold the withdrawal if it

decides to approach the Arbitrator. Thus, in cases of

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determination of the amount payable as compensation is

made by the Competent Authority, there is no escape from

the need to ensure arrangements are made for the

withdrawal by the Competent Authority and it is a must.

90. In case of a determination of the amount by the

Arbitrator under Section 3G (7) of the Act, the excess

amount together with interest is also required to be

deposited within 30 days of the Arbitrator's award.

91. However, an exception is sought to be made in

such a case. The Rule states that "unless such award has

been challenged by either of the aggrieved parties"

meaning thereby, that the NHAI need not ensure the

withdrawal, if within 30 days of the award, the award has

been challenged by either of the parties.

92. Thus, if an Arbitrator's award is not challenged

within 30 days from the date of the award, NHAI would be

bound to ensure that instructions are in place for

withdrawal by the Competent Authority.

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93. The consequence of this stipulated timeline is

that the NHAI, if it wants to be discharged of the

obligation to ensure the facilitation of withdrawal of the

amount by the Competent Authority will have to

necessarily file an application under Section 34 of the A &

C act, challenging the award of the Arbitrator within 30

days.

94. This, no doubt, may lead to an anomalous

situation where the time limit provided for making an

application under Section 34 of the A & C Act to challenge

the award is sought to be curtailed or reduced. However,

on closer scrutiny, this would not be true. This is because

the time limit stipulated to the NHAI under this Rule is to

only ensure the Competent Authority is facilitated to

withdraw and disburse the compensation and not for

challenging the award.

95. If the NHAI wants to be discharged of the

obligation to facilitate the withdrawal, then, it would have

to make an application under Section 34 of the A & C Act

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within 30 days of the award made by the Arbitrator. If

NHAI does not make an application under Section 34 of

the A & C Act within 30 days, it will invite the statutory

obligation to facilitate the withdrawal of the compensation

amount by the Competent Authority. This, therefore, does

not in any way alter the time limit for challenging the

award under Section 34 of the A & C Act.

96. Having regard to the fact that the Act is a

special statute, whereby arbitration is statutorily imposed,

the prescription of a distinct timeline would also be

permissible.

97. However, in the present case, this provision

relating to deposit pursuant to the award of the Arbitrator

will not arise at all. This is because, under the Rules, the

requirement to deposit within 30 days would arise only if

the amount awarded by the Arbitrator is in excess of the

amount determined by the Competent Authority. In this

case, the Arbitrator has only confirmed the order of the

Competent Authority awarding Rs.12,916 per sq. mtr. and

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it has not awarded any amount in excess of the amount

awarded by the Competent Authority. Thus, the question

of applying this exception to withhold payment of

compensation would not at all arise.

98. As a consequence, the argument of NHAI that it

had the option of withholding the compensation since it

had decided to challenge the award passed by the

Arbitrator is without any merit and deserves to be

rejected.

99. It is no doubt true, that the provisions of the

Act may amount to frustrating the right of NHAI to

challenge the award of the Arbitrator, if the land loser is

permitted to withdraw the amount. However, if the

statute, by clear and express terms, contemplates a

withdrawal of the compensation even before the time

limits to challenge the award expires, the said statutory

mandate cannot be nullified.

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100. The only option available to NHAI in such cases

is to ensure that it challenges the order of the Competent

Authority within 15 days or within 30 days from the date

of the award of the Arbitrator and obtain an interim order

restraining the Competent Authority from disbursing the

compensation. If this is not done by NHAI, the inevitable

consequence would be that the Competent Authority

should be facilitated to withdraw the amount and disburse

the same to the land loser.

101. In this case, the Competent Authority passed its

order determining the compensation on 05.02.2011 and

the amount was required to be deposited on or before

12.02.2011 as per the 1998 Rules. This, has however, not

been done.

102. The Arbitrator, after the order of remand,

passed his award on 16.03.2019 rejecting the claim of

NHAI and upholding the order of the Competent Authority.

Thus, NHAI was required to facilitate the withdrawal by

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the Competent Authority within 30 days i.e., on or before

15.04.2019.

103. As stated above, this date of passing of the

Arbitrator's award on 16.03.2019 would not be relevant

for the deposit, since the Arbitrator did not award any

amount in excess of the amount determined by the

Competent Authority.

104. Lastly, the District Court dismissed the

application filed by NHAI on 03.02.2022 and the

applications for correction, etc., were also dismissed on

04.07.2022 and assuming for the sake of argument, that

04.07.2022 is the starting point, even then, NHAI was

required to ensure the withdrawal of the compensation

amount by the Competent Authority on or before

03.08.2022.

105. Admittedly, NHAI has failed to ensure the

deposit was made within 7 days of the original decision of

the Competent Authority i.e., before 12.02.2011.

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106. The NHAI has also not ensured that the

Competent Authority was enabled to withdraw the amount

within 30 days from 04.07.2022, the date of the

Arbitrator's award and admittedly no interim order has

been granted by the District Court restraining the

Competent Authority to disburse the compensation.

107. The NHAI has, on the other hand, contended

that it had a right not to release the payment since the

applications filed under the A & C act were still pending

adjudication. This is clearly impermissible for the reasons

enumerated above.

108. In this view of the matter, it is hereby held that

the Competent Authority does not possess the jurisdiction

to refuse payment of compensation awarded to the land-

loser and the Competent Authority cannot also seek for

the opinion of the Executing Agency for disbursal of the

compensation and refuse payment based on the opinion of

the Executing Agency.

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109. Consequently, the impugned endorsements

dated 20.05.2022 and 20.09.2022 at Annexures-F and F1

respectively issued by the Competent Authority to refuse

payment cannot be sustained and the same are quashed.

110. The NHAI shall, therefore, discharge its

statutory obligation to facilitate the Competent Authority

to withdraw the compensation amount determined by the

Competent Authority and disburse the compensation to

the land loser.

111. Since the NHAI has withheld the compensation

payable to the landowner, it would have to necessarily be

liable to pay interest on the compensation which became

payable from 12.02.2011 till the date of payment. Since

Section 3H(5) of the Act prescribes interest at 9% per

annum on the excess amount awarded by the Arbitrator,

in my view, it would be just and proper to direct NHAI to

pay interest at 9% per annum on the compensation

amount determined by the Competent Authority from

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12.02.2011 i.e., the date which it became payable till the

date of payment.

112. The NHAI is directed to ensure that this entire

process of payment of compensation to the petitioner-

landowner is completed within 30 days from the date of

receipt of this order.

Writ Petition is accordingly allowed.

SD JUDGE

3H.Deposit and payment of amount- (1) The amount determined under section 3G shall be deposited by the Central Government in such manner as may be laid down by rules made in this behalf by that Government, with the competent authority before taking possession of the land.

(2) As soon as may be after the amount has been deposited under sub-section (1), the competent authority shall on behalf of the Central Government pay the amount to the person or persons entitled thereto.

(3) Where several persons claim to be interested in the amount deposited under sub-section (1), the competent authority shall determine the persons who in its opinion are entitled to receive the amount payable to each of them.

(4) If any dispute arises as to the apportionment of the amount or any part thereof or to any person to whom the same or any part thereof is payable, the competent authority shall refer the dispute to the decision of the principal civil court of original jurisdiction within the limits of whose jurisdiction the land is situated.

(5) Where the amount determined under section 3G by the arbitrator is in excess of the amount determined by the competent authority, the arbitrator may award interest at nine per cent. per annum on such excess amount from the date of taking possessions under section 3D till the date of the actual deposit thereof.

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(6) Where the amount determined by the arbitrator is in excess of the amount determined by the competent authority, the excess amount together with interest, if any, awarded under sub-section (5) shall be deposited by the Central Government in such manner as may be laid down by rules made in this behalf by that Government, with the competent authority and the provisions of sub-sections (2) to (4) shall apply to such deposit.

G.S.R. 12(E)- In exercise of the powers conferred by clause (aa) of sub-section (2) of section 9 of the National Highways Act, 1956 (48 of 1956), the Central Government hereby makes the following rules, namely:-

1. Short, title and commencement:- (1) These rules may be called the National Highways (manner of depositing the amount by the Central Government with the competent authority for acquisition of land) Rules, 1998.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. The manner of depositing money with the competent authority,-

(1) Subject to the provisions of the Act, the executing agency authorised by the Central Government in this behalf shall deposit,-

(a) the amount determined under section 3G of the Act, and

(b) where the amount determined by the arbitrator under Section 3G of the Acts is in excess of the amount determined by the competent authority, the excess amount together with interest, if any, awarded by the arbitrator, within seven days of such determination or award by the competent authority or by the arbitrator, as the case may be, with the competent authority through demand draft.

(2) The competent authority shall deposit the amount received under sub-rule (I) in a separate Public Deposit Account in the Public Account of India and the provisions of sub-sections (2) to (4) of section 3H of the Act shall apply to such deposit.

Explanation- For the purpose of this rule,-

(a) 'Act' means the National Highways Act, 1956 (48 of 1956)

(b) the expression 'executing agency' shall have the same meaning as assigned to it under clause (d) of rule 2 of the National Highways Rules, 1957.

2019 Rules- (3) The manner of making requisite funds available to the competent authority shall be as follows:-

(i) Subject to provisions of the Act, the executing agency authorised by the Central Central Government in this behalf, shall open and maintain an account with one or more Scheduled Commercial Banks for remittance of the amount for land acquisition across the country, with arrangements for access to such account by the competent authority for specific jurisdiction as per authorisation of limits by the executing agency. The executing Agency shall, on the demand raised by the competent authority before announcement of the Award, issue requisite authorisation limits in favour of the competent authority for withdrawal of amount from such account as per requirement from time to time for disbursement to the landowners or persons interested therein through an electronic banking machanism as per extant Reserve Bank of India regulations and the said authorisation limits, revolving in nature, shall entitle the competent authority to withdraw money from such account as per requirements, without any further reference to the land acquiring agency, for disbursement to the landowners or persons interested therein, as follows:-

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(a) The amount determined under section 3(G) of the Act within fifteen days of the raising of demand by the competent authority, and

(b) Where the amount determined by the Arbitrator under sub- section (7) of Section 3G of the Act is in excess of the amount determined by the competent authority, the excess amount, together with interest, if any, awarded by the Arbitrator, within 30 days of the communication of Arbitrator's award, unless such Award has been further challenged by either of the aggrieved parties.

Explanation: The authorisation limits, revolving in nature, are explained with the help of an illustration as under:-

Say, the amount of award is Rs.200 crore for which the CALA places demand on the acquiring/executing agency. The executing agency shall issue an authorisation in favour of CALA to draw an amount up to Rs.200 crore from the Central account, in limits of Rs.50.00 crore at any point in time. As the CALA keeps disbursing the amount, the limit of Rs.50.00 crore shall keep getting automatically recouped and so on till the utilisation of total amount of authorisation of Rs.200 Crore.

(ii) The executing agency, authorised by the Central Government in this behalf, shall ensure that the requisite account is maintained with a Scheduled Commercial Bank, against which an authorisation limit is issued in favour of the competent authority for disbursement of the compensation amount, duly determined under Section 3(G) of the Act, to the landowners or persons interested therein. Further, the said authorisation limit shall be utilised by the competent authority for the intended purpose of disbursement and shall be duly reflected in the books of accounts of the executing agency for the purpose of proper monitoring the reconciliation thereof and any interest earned therein shall be credited into the said account and shall belong to the executing agency.

(iii) In cases where the executing agency of a project is any State Government of Union territory, the amount shall preferably be disbursed through the Public Financial Management System of the Ministry of Finance.

(iv) The competent authority shall, in turn, disburse the compensation amount to the landowners of the persons interested therein preferably by electronically crediting the said amount into their respective bank accounts.

SD JUDGE

Vnp/pks*