Karnataka High Court
National Highways Authority Of India vs Sri K Sundar Rajan on 25 January, 2025
Author: H.P.Sandesh
Bench: H.P.Sandesh
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 25TH DAY OF JANUARY, 2025
BEFORE
THE HON'BLE MR. JUSTICE H.P. SANDESH
MISCELLANEOUS FIRST APPEAL NO.3581/2024 (AA)
C/W
MISCELLANEOUS FIRST APPEAL NO.3301/2024 (AA)
IN MISCELLANEOUS FIRST APPEAL NO.3581/2024:
BETWEEN:
NATIONAL HIGHWAYS AUTHORITY OF INDIA
PROJECT IMPLEMENTATION UNIT-BANGALORE
SY NO.13, 14TH KM, NAGADANDRA VILLAGE
BANGALOR - TUMKUR ROAD (NH-4)
BANGALORE - 560 073
REPRESENTED BY ITS PROJECT DIRECTOR
NHAL, PIU, BANGALORE. ... APPELLANT
(BY SMT. SHILPA GHANSHYAMBHAI SHAH, ADVOCATE)
AND:
1. SRI DAVURU VIJAY KUMAR REDDY
SON OF GOPAL KRISHNA REDDY
AGED MAJOR
RESIDING AT KAMMARAMITTI VILLAGE
MATUKUMAR MANDAL, NELLORE POST
NELLORE DISTRICT - 524 001, A.P.
2. THE ARBITRATOR AND
SPECIAL DEPUTY COMMISSIONER-1
BANGALORE URBAN DISTRICT
(NH-75) (OLD NH-4), K.G.ROAD,
2
NEAR DISTRICT REGISTRAR OFFICE
BANGALORE - 560 009.
3. THE ASSISTANT COMMISSIONER AND
COMPETENT AUTHORITY
NHAI, MULBAGILU - KOLAR
BANGALORE SECTION OF NH- 4 (75)
NO.678/3, NEERUBHAVI
KEMPANNA LAYOUT, HEBBAL
BANGALORE - 560 024
REPRESENTED BY THE SPECIAL
LAND ACQUISITION OFFICER. ... RESPONDENTS
(BY SRI VISHWANATHA M.S., ADVOCATE FOR R1;
SRI GOPALAKRISHNA SOODI, AGA FOR R2;
VIDE ORDER DATED 20.11.2024,
NOTICE TO R3 - DISPENSED WITH)
THIS M.F.A. IS FILED UNDER SECTION 37(1)(c) OF THE
ARBITRATION AND CONCILIATION ACT, AGAINST THE ORDER
DATED 21.12.2023 PASSED IN A.P.NO.22/2020 ON THE FILE OF
THE XXIV ADDITIONAL CITY CIVIL AND SESSIONS JUDGE
(CCH-6), BENGALURU, DISMISSING THE PETITION FILED
UNDER SECTION 34(2) OF ARBITRATION AND CONCILIATION
ACT, 1996 AND ETC.
IN MISCELLANEOUS FIRST APPEAL NO.3301/2024:
BETWEEN:
NATIONAL HIGHWAYS AUTHORITY OF INDIA
PROJECT IMPLEMENTATION UNIT-BANGALORE
SY.NO.13, 14TH KM., NAGASANDRA,
BANGALORE-TUMKUR ROAD (NH-4)
BANGALORE - 560 073
REPRESENTED BY ITS PROJECT DIRECTOR
NHAL, PIU, BANGALORE. ... APPELLANT
(BY SMT. SHILPA GHANSHYAMBHAI SHAH, ADVOCATE)
3
AND:
1. SRI. K. SUNDAR RAJAN
SON OF LATE N. KRISHNAN
AGED MAJOR
RESIDING AT K. PHARMA
AVALAHALLI, VIROGNAGAR POST
BANGALORE-560049.
2. THE ARBITRATOR AND
SPECIAL DEPUTY COMMISSIONER-1
BANGALORE URBAN DISTRICT,
(NH-75), (OLD NH-4) K.G.ROAD,
NEAR DISTRICT REGISTRAR OFFICE
BANGALORE - 560 009.
3. THE ASSISTANT COMMISSIONER
AND COMPETENT AUTHORITY
NHAI, MULBAGILU-KOLAR
BANGALORE SECTION OF NH-4 (75)
NO.678-3, NEERUBHAVI
KEMPANNA LAYOUT, HEBBAL,
BANGALORE - 560 024.
REPRESENTED BY THE SPECIAL LAND
ACQUISITION OFFICER. ... RESPONDENTS
(BY SRI VISHWANATHA M.S., ADVOCATE FOR R1;
SRI GOPALAKRISHNA SOODI, AGA FOR R2)
THIS M.F.A. IS FILED UNDER SECTION 37(1)(c) OF THE
ARBITRATION AND CONCILIATION ACT, AGAINST THE ORDER
DATED 21.12.2023 PASSED IN AP.NO.16/2020 THE FILE OF THE
XXIV ADDITIONAL CITY CIVIL AND SESSIONS JUDGE,
BENGALURU CCH-6, DISMISSING THE ARBITRATION PETITION
FILED UNDER SECTION 34(2) OF THE ARBITRATION AND
CONCILIATION ACT, 1996 AND ETC.
4
THESE APPEALS HAVING BEEN HEARD AND RESERVED
FOR JUDGMENT ON 17.01.2025 THIS DAY, THE COURT
PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MR. JUSTICE H.P.SANDESH
CAV JUDGMENT
These two Miscellaneous First Appeals are filed under
Section 37(1)(c) of the Arbitration and Conciliation Act, 1996
challenging the judgment dated 21.12.2023 passed in Arbitration
Petition Nos.22/2020 and 16/2020 respectively by the XXIV
Additional City Civil and Sessions Judge, Bengaluru as well as
challenging the Arbitral award dated 06.01.2020 in Case
No.LAQ/ARB/NH-4(BET)/104/2010-11 and case No. LAQ/ARB/
NH-4(BET)/74/2010-11 respectively passed by respondent No.2.
2. Heard the learned counsel appearing for the
respective parties.
3. The factual matrix of the case in MFA No.3301/2024
is that the preliminary notification under Section 3A of the
National Highways Act 1956 (for short 'NH Act') was published
by the Central Government declaring its intention to acquire
various lands in Bandapura village, K.R.Puram Taluk, Bengaluru
Urban District among other villages for the purpose of widening /
6 lane of National Highway No.4(NH4) and the final notification
was issued under Section 3D(1) and (2) of the NH Act declaring
that amongst others, the agricultural lands in Sy.No.28/2 to an
extent of 154 square meters situated at Bandapura village,
K.R.Puram Taluk, Bangalore Urban District belonging to
respondent No.1 shall vest absolutely with the Central
Government and respondent No.3 passed an award fixing the
market value of agricultural land at Rs.420.07/- per square
meter.
4. In MFA No.3581/2024 also proceedings were
initiated under Section 3A of the NH Act in respect of the very
same village and also final notification was issued in respect of
Sy.No.40 to an extent of 550 square meters situated in the same
village belonging to respondent No.1 shall vest absolutely with
the Central Government. Being aggrieved by the market value
determined by respondent No.3, respective respondent No.1
preferred an application before respondent No.2 under Section
3G(5) of the NH Act seeking for enhancement of compensation
in respect of Sy.Nos.28/2 and 40.
5. Respondent No.2 vide its order dated 06.01.2020
passed the award enhancing the compensation in both the
claims from Rs.420.07 per square meter to Rs.1,483/- per
square meter. Being aggrieved by the said order, the appellant
herein preferred A.P.Nos.16/2020 and 22/2020 under Section
34(2) of the Arbitration and Conciliation Act, 1996 (for short 'the
Act of 1996') before the XXIV Additional City Civil and Sessions
Judge, Bengaluru seeking to set aside the Arbitral award dated
06.01.2020 passed by respondent No.2 and both the petitions
were dismissed and being aggrieved by the said order, the
present miscellaneous first appeals are filed before this Court.
6. The issues involved between the parties are one and
the same and hence, these appeals are taken up together for
common consideration.
7. The learned counsel for the appellant in both the
appeals would vehemently contend that there is no dispute with
regard to issuance of preliminary notification and final
notification and also contend that SLO fixed the rate at
Rs.420.07 per square meter. It is contended that the land is an
agricultural land situated in Bandapura village and SLO passed
the award based on the sale statistics but the Arbitrator passed
the order enhancing the same determining the compensation at
Rs.1,483/- per square meter. The counsel in his arguments
would vehemently contend that the impugned orders of the
Arbitrator as well as the Civil Court are erroneous. The appellant
had specifically contend that arbitral award was not in
accordance with the substantive law i.e., Section 3G(7)(a) of the
NH Act which provides that the market value of the acquired
land has to be determined as on the date of publication of
preliminary notification. The appellant had urged that the
Arbitrator had relied upon a guidance value notification which
had come into effect subsequent to the issuance of the
preliminary notification and the same is patently illegal, perverse
as it is violative of Section 3G(7) of the NH Act. The Civil Court
has made an inherent finding that the appellant herein has not
established that the Arbitrator was under an obligation to
conduct enquiry. The petitioner had contended before the Civil
Court that Section 24 of the Act of 1996 specifically speaks
about hearing and the manner in which the Arbitral Tribunal is
required to conduct hearing.
8. The counsel also would vehemently contend that the
Arbitrator had considered the rates for the period 2007-08 and
found that there was no amount fixed during that period. The
Civil Court has comes to the conclusion that based on this
observation of the Arbitrator, sufficient enquiry had been
conducted. The said finding is an erroneous finding. The
counsel also would vehemently contend that there was no rates
fixed for the year 2007-08 and the same is still an incorrect
finding. It is contend that the preliminary notification was issued
on 18.12.2006 and therefore, the Arbitrator ought not to have
relied upon the notification of the year 2007. The Arbitrator
relied on the guidance notification dated 17.04.2007 and
therefore, it cannot be said that there is a violation of Section
28(1)(a). The same is an erroneous finding and the Court has
once again overlooked that the market value is required to be
determined as on the date of preliminary notification i.e.,
18.12.2006. The Civil Court also committed an error in
erroneously discussing in page Nos.16 to 18 and failed to
consider the judgments which have been quoted before the Trial
Court and the similar judgments are quoted before this Court.
The appellant herein was never given an opportunity to rebut the
document which has been relied upon by the Arbitrator and the
said document was not produced by either of the parties and the
Arbitrator relied upon that document while passing the arbitral
award suo moto and hence, the impugned Arbitral award is
contrary to the provision of Section 24(3) of the Act of 1996.
9. The counsel also relied upon the case of Ssangyong
and contend that non-disclosure of a document relied upon by
the Arbitral Tribunal would affect the case of the parties since
they would be unable to present their case and would amount to
denial of an opportunity to comment upon the documents relied
upon by the Tribunal and shockingly relied upon the guidance
notification and committed an error. The counsel also would
vehemently contend that inspite of citations referred, the same
have not been considered.
10. The counsel in support of his arguments relied upon
the judgment reported in AIR 2003 SC 2629 in the case of OIL
& NATURAL GAS CORPORATION LTD., vs SAW PIPES LTD.,
and brought to notice of this Court the discussions made in
paragraph 12 wherein question was raised whether the award
could be set aside, if the arbitral tribunal has not followed the
mandatory procedure prescribed under Sections 24, 28 or 31(3),
which affects the rights of the parties. The counsel also brought
to notice of this Court paragraph 21 wherein it is held that if the
award is patently against the statutory provisions of substantive
law which is force in India or is passed without giving an
opportunity of hearing to the parties as provided under Section
24 or without giving any reason in a case where parties have not
agreed that no reasons are to be recorded, it would be against
the statutory provisions. In all such cases, the award is required
to be set aside on the ground of patent illegality. The counsel
referring this judgment would vehemently contend that the
arbitral award obtained is patent illegality and without giving an
opportunity, relied upon the notification.
11. The counsel also relied upon the judgment reported
in (2009) 10 SCC 259 in the case of SOM DATT BUILDERS
LTD., vs STATE OF KERALA and brought to notice of this Court
the discussions made in paragraph 21 that Section 31(3)
mandates that the arbitral award shall state the reasons upon
which it is based, unless the parties have agreed that no reasons
are to be given or the award is an arbitral award under Section
30. It was obligatory for the arbitral tribunal to state reasons in
support of its award in respect of claim and now it is essential for
the arbitral tribunal to give reasons in support of the award. The
counsel also brought to notice of this Court the paragraph 25 of
the said judgment wherein it is held that requirement of reasons
in support of the award under Section 31(3) is not an empty
formality. It guarantees fair and legitimate consideration of the
controversy by the arbitral tribunal. The reasons must be stated
by the arbitral tribunal upon which the award is based.
12. The counsel also relied upon the judgment reported
in MANU/SC/0705/2019 in the case of SSANGYONG
ENGINEERING & CONSTRUCTION CO. LTD., vs NATIONAL
HIGHWAYS AUTHORITY OF INDIA (NHAI) and brought to
notice of this Court paragraph 45 of the said judgment wherein it
is held that there can be no doubt that the government
guidelines that were referred to and strongly relied upon by the
majority award to arrive at the linking factor were never in
evidence before the Tribunal. In fact, the Tribunal relies upon
the said guidelines by itself and states that they are to be found
on a certain website. If either of the parties not relied upon
such guidelines, the Tribunal had no jurisdiction to rely upon the
same while deciding the issue before it. The counsel also would
vehemently contend that in paragraph 46 of the said judgment it
is held that majority award needs to be set aside under Section
34(2)(a)(iii). The counsel also would vehemently contend that
the Arbitrator as well as the Trial Court committed an error in
relying upon the notification and erroneously comes to the
conclusion that no error has been committed.
13. Per contra, the learned counsel appearing for
respondent No.2 in his arguments would vehemently contend
that the property was acquired for road widening of Mulabagil -
Kolar road which is adjacent to the Highway. The Arbitrator has
taken note of the said fact into consideration and potentiality of
the property was also considered. The Civil Court in paragraph
12, in detail discussed and taken note of 30% of guidance value
and reasons were given while dismissing the petitions and
hence, it does not requires any interference. The counsel also
would vehemently contend that the SLO fixed the rate at
Rs.420.07 per square meter is only a peanut and when the
property comes within the purview of K.R.Puram Taluk which is
adjacent to the Bengaluru city and the same is a developed area,
the Arbitrator rightly taken the guidance notification and passed
an award and hence, it does not requires any interference.
14. The learned counsel for respondent No.1 would
vehemently contend that award passed by the Arbitrator is
based on the material available on record as well as the
guidance notification and the amount awarded by the SLO is
very meager and guideline was taken while enhancing the same
and even the enhancement made by the Arbitrator is very less
having taken note of the potentiality of the property and hence,
it does not requires any interference.
15. Having heard the learned counsel appearing for the
respective parties and also on perusal of the material available
on record as well as considering the principles laid down in the
judgments referred supra, the points that would arise for the
consideration of this Court are:
1. Whether the award passed by the Arbitrator and also the
judgment passed by the Civil Court invoking Section 34 of
the Act of 1996 requires interference?
2. What order?
Point No.1:
16. Having heard the learned counsel appearing for the
respective parties and also on perusal of the material available
on record, it discloses that it is not in dispute that lands to the
tune of 550 square meters and 154 square meters were acquired
by the National Highway Authority. It is also not in dispute that
the land is acquired for the purpose of widening of the road of
Mulabagil - Kolar road. It is also not in dispute that the
properties are situated in K.R.Puram taluk and the same is
abutting to the Bengaluru City. It is also important to note that
the main contention of the appellant that substantive law has not
been considered by both the Arbitrator as well as Civil Court. The
Arbitrator relied upon the document of guideline notification on
his own and the same has not been produced by either of the
parties and hence, it is against Sections 24 and 28 of substantive
law and the document which has been relied upon is not part of
record and even not notified to the parties and communicated
and hence, the counsel would vehemently contend that in view
of the principles laid down, it requires to be set aside and needs
to be set aside based on the relevant discussions made by the
Apex Court in the judgments referred supra.
17. It has to be noted that the SLO has fixed the rate at
Rs.420.07 per square meter. It is also not in dispute that the
properties are an agricultural land situated at Bandapura village
and the Arbitrator while passing an award taken note of extent
of land which was acquired for the purpose of widening the road.
It is also important to note that the Arbitrator also taken note of
the fact that the land was acquired in the year 2006 by way of
preliminary notification and final notification was issued in the
year 2007. The arbitrator also taken note of Section 3G(5) of
the NH Act and also taken note of Section 28 of the Act of 1996
wherein it discloses that Arbitral Tribunal shall decide the dispute
in accordance with substantive law for time being in force in
India and also discussed the same in the award itself that
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 the market value of the
land on the date of publication of the notification under Section
3A. The Arbitrator also had taken note of the fact that the land
which was acquired is an agricultural and non-agricultural land
wherein rate is fixed at Rs.420.07 per square meter and in
respect of NAK/Site, an amount of Rs.1.506.90 per square
meter. It is also important to note that the arbitrator also taken
note of the notification dated 17.04.2007 and the same is of the
year 2007-08, the amount of Rs.60,00,000/- has been fixed per
acre in terms of the said notification. But in respect of 2007-08,
rate was not fixed and in terms of the notification, if the property
comes within the purview of CMC and the converted land and
also if it is within the gramatana, 30% has to be added. The
Arbitrator relied upon the notification dated 17.04.2007
guidelines value for 2007-08 and an amount of Rs.60,00,000/- is
fixed and if it is converted into gunta it comes to Rs.1,50,000/-
hence, taken Rs.1,483/- per square meter and hence after
deducting the SLO amount fixed, taken Rs.1,063/- per square
meter and passed an order. The appellant not disputes the fact
that issuance of said notification but only contend that same was
not part of the record and admittedly the said guidelines
notification was issued by the Government.
18. It is also important to note that the Civil Court also
taken note of the fact that preliminary notification is dated
14.12.2006 i.e., it is in the verge of end of December 2006 and
final notification is dated 14.11.2007 and taking note of gap of
11 months, considered the loss for the said period, the
compensation is enhanced and the fact that applicant has filed
objections and the said fact also not disputed. The fact that the
land is adjacent to the National Highway and the said fact is also
not in dispute. It is worth about 1.80 crore and as on the date of
award it was worth of 6.50 crore and also taken note of the
enhancement sought at the rate of Rs.1,800/- per square meter
with 9% interest. Even in paragraph 12 discussed that there is
no rate fixed for the period of 2007-08 as the notification is
dated 17.04.2007, the guidance value is considered and an
increase of 30% of the value also taken note of.
19. The main contention of the appellant's counsel that
substantive law has not been considered and at the same time,
the Court has to take note of the fact that potentiality of the
property. The appellant's counsel also not disputed the fact that
the land which was acquired is abutting to the National Highway
for the purpose widening of the road and the Arbitrator also
given the reason that land which is abutting to the National
Highway is useful for non-agricultural purpose and the lands are
also capable of being further developed and detail discussion was
made by the Civil Court while confirming the judgment of the
Trial Court. No doubt, it is the contention of the appellant's
counsel that Section 3G(7)(a) of the NH Act is not complied and
ought to have been fixed based on the market value on the date
of publication of the notification and relies on decision in the
case of Oil and Natural Gas referred supra and also relied upon
the judgment of Kerala High Court as well as Apex Court and
brought to notice of this Court Section 24, 28, 31(3) of the Act
of 1996. No doubt, in the above judgment it is discussed that it
is not an empty formality and discussed the same in paragraphs
15 and 16 of the order. The Civil Court also taken note of the
fact that on perusal of the entire award passed by the Arbitrator
it discloses the reasons for coming to such a conclusion for
enhancement and also taken note of the fact that the Arbitrator
has taken into consideration of the fact that the property
acquired is adjacent to the National Highway and consideration
of the actual market value would be always high and rightly
awarded three times compensation. In paragraph 17 also
discussed in detail that the Arbitrator has considered the fact
that the plaintiff is a farmer and lost the agricultural land though
it was an agricultural land but it is adjacent to the National
Highway and abutting to the National Highway and hence, there
is increase of 30% in the areas within the purview of CMC and
converted sites and gramatana and all these factors taken note
of by the Trial Court and also taken note of the Government
notification and considered the case of the claimants who lost
the property.
20. The Trial Court also taken note of the fact that the
provisions of Section 23 and 28 of the Land Acquisition Act
wherein the land looser is entitled to solatium and interest and
also taken note of the fact that in the similar matter, the
enhanced compensation is deposited based on the same
guidance value but has proceeded to challenge the same with
respect to these properties are concerned. The Trial Court also
taken note of the judgment reported in AIR 2019 SC 4689
wherein the Apex Court has held that the provisions of Land
Acquisition Act relating to solatium and interest are applicable to
the National Highways Act also and while confirming the order
also reasoned order has been passed. When such reason has
been assigned by the Trial Court and Arbitrator also taken note
of the factual aspects that the land is abutting to the National
Highway and also having taken its potentiality and also located
in K.R.Puram taluk which is abutting to Bengaluru, I do not find
any error committed by the Arbitrator as well as the Civil Court
and in both the matters, considered the material available on
record and also though the notification was not the part of the
record as contended by the appellant's counsel, the guidance
value is fixed by the Government itself by issuing the
notification. I have already pointed out that preliminary
notification was in the verge of end of the year 2006 and final
notification was passed on 14.11.2007 and guidance notification
was issued within a span of three months of preliminary
notification that is in the month of April 2007 i.e., in between
preliminary notification and final notification in the case on hand
and when the Arbitrator relied upon the said notification and
taken note of the potentiality of the property and land is abutting
to the National Highway, it cannot be termed as arbitrarily and
not followed the substantive law and the same is contrary to
Sections 24, 28, 31(3) of the Act of 1996 cannot be accepted
since the acquisition of land is for purpose of widening the road
to a small extent i.e., to the extent of 550 square meter and 154
square meter. Hence, I do not find any merit in the appeals to
accept the contention of the appellant's counsel and it does not
requires any interference when reason was given while
enhancing and confirming the order of the Arbitrator by the Civil
Court. Accordingly, I answer the above point as negative.
Point No.2:
21. In view of the discussions made above, I pass the
following:
ORDER
The Miscellaneous First Appeals are dismissed.
Sd/-
(H.P. SANDESH)
JUDGE
SN
