National Highways Authority of India Vs Sri P. Nagaraju @ Cheluvaiah & Anr. (Supreme Court)
Courts do not have the power to modify any award decided by the Arbitrator under Sections 34 and 37 of Arbitration and Reconciliation Act, 1996
BRIEF FACTS:
1. The claimants – (private respondents in these appeals) are the owners of the different extent of land in the various survey numbers which were all part of the same acquisition which was initiated under the preliminary notifications dated 01.02.2016 and 02.02.2016 issued under the National Highways Act (‘NH Act’ for short). The facts arising in the appeal relating to SLP(C) No.19775/2021 is referred as the lead case. The facts in the other cases are more or less similar, while the legal issues raised are the same.
2. The lands situated in Survey Nos. 92/1, 90/2A, 42/1 of Mayaganahalli, survey no.35/3 and 37/1 of Madapura, survey no.24 of Kallugopahalli and survey no.40/8 of Kumbalagodu, among others were notified for acquisition under the preliminary notification dated 01.02.2016 and 02.02.2016. The said acquisition was a part of the process for formation of the Bengaluru Mysore (NH-275) Highway. The final notification was issued on 23.09.2016 and 04.10.2016. The SLAO on initiating the process for passing the award, on consideration of the material available before him, had passed the award dated 10.03.2017 and 04.01.2017 determining the compensation at Rs.2026/-and Rs.17200/- per sq. mtr respectively. The SLAO keeping in view the provisions contained under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (‘RFCTLARR Act, 2013’ for short), took note of the sale exemplars which were available before him but ultimately took note of the value provided under the notification dated 07.11.2014 issued by the Department of Stamps and Registration for the purpose of registration of the sale transactions, to award compensation.
3. The claimants being dissatisfied with the determination of the compensation awarded by SLAO, filed their respective petitions before the learned Arbitrator in terms of the provisions contained under Section 3G(7) of NH Act.
4. The learned Arbitrator having taken into consideration the method adopted by the SLAO while determining the compensation, though has adopted the same mode of determination by reckoning the guideline value provided by the Department of Stamps and Registration for the purpose of registration of sale transactions, has however taken into consideration the subsequent notifications dated 28.03.2016 and 05.12.2018 to reckon the guideline value. In addition, the learned Arbitrator while applying the guideline dated 28.03.2016 and 05.12.2018 has taken note that the lands which were the subject matter of acquisition were converted for residential use and industrial purpose, from agricultural purpose.
5. While adopting the guideline value of residential and industrial property, the learned Arbitrator has instead of applying the same value which was provided under the guideline to the specific survey number in the village wherein the property under acquisition is situate, has adopted the guideline value which was separately indicated in the said notification in respect of a specified residential layout which is situated in the vicinity. Accordingly, the market value was determined at Rs.15,400/- per sq. mtr. On the said basis, learned Arbitrator had taken note that the land bearing Survey No.40/8 in Kumbalagodu was converted for industrial purpose and since the guideline dated 05.12.2018 provided that an additional amount of 50% is to be added as against what had been indicated for residential property under the guideline, an amount of Rs.25,800/- per sq. mtr was determined. Having arrived at such determination of the market value, the total extent of the land acquired was considered and the compensation was awarded.
6. The NHAI claiming to be aggrieved by the method adopted by the learned Arbitrator in determining the market value and compensation, filed the arbitration suit under Section 34 of the Act, 1996 raising various contentions.
It was contended that the award passed is against the provisions of law and public policy, apart from being in violation of Principles of Natural Justice. It was contended that the notification for acquisition was issued on 01.02.2016, which is the relevant date for determining the market value. The grievance put forth was that the learned Arbitrator in the first set of cases had taken into consideration the guideline value which was fixed under a subsequent notification dated 28.03.2016. The further grievance is that even under the said notification dated 28.03.2016 the guideline value in respect of the lands which are situated in the village which was the subject matter of acquisition is fixed at about Rs.8000/- per sq. mtr but the learned Arbitrator has without basis adopted the guideline value of Rs.15,400/- per sq. mtr. which was the guideline value for a different specified land. In that view, it was contended that the SLAO on the other hand had taken into consideration the sale value for which the transactions had taken place. In the said process, since the guideline value fixed under the notification dated 07.11.2014, prior to the date of preliminary notification for acquisition dated 01.02.2016 was fixed and considering the fact that Section 26 of RFCTLARR Act, 2013 provides for awarding the higher of the value, the SLAO had adopted the guideline value of Rs.2026/- per sq. mtr in respect of lands in survey nos.92/1, 90/2A of Mayaganahalli and survey no.35/3 and 37/1 of Madapura while the properties in survey no.42/1 of Mayaganahalli was awarded Rs.7833/- and the property in survey no.24 of Kallugopahalli was awarded Rs.8102/- and the property in survey no.40/8 of Kumbalagodu was awarded Rs.17,200/-.
7. THE LEARNED PRINCIPAL DISTRICT AND SESSIONS Judge while taking note of the contentions as put forth has kept in view the narrow scope available in a suit/petition under Section 34 of Act, 1996 and also keeping in view the provisions contained in 4 Section 26 and 28 of RFCTLARR Act, 2013 has arrived at the conclusion that as against the consideration made by the SLAO by reckoning the land under acquisition as agricultural land, the learned Arbitrator has taken note that the lands were converted for residential purpose and in that light had taken into consideration the guideline value fixed in respect of the residential extension known as ‘city green’ and ‘Zunadu’ for which the guideline value for registration purpose was fixed at Rs.15,400/- per sq. mtr. In that view, the learned District Judge on taking note of the decisions laying down that limited scope is available for interference under Section 34 of Act, 1996, has dismissed the suit.
8. The High Court, in an appeal under Section 37 of Act, 1996 while adverting to the very contentions put forth by NHAI in attacking the award passed by the learned Arbitrator has taken into consideration that NHAI had sufficient opportunity to put forth their contentions in the proceedings before the learned Arbitrator. The reliance placed on the guideline value notification dated 28.03.2016 was adverted to by the High Court and it was noted that the said guideline value had been notified in the official gazette which was to the knowledge of all concerned. In that light, keeping in view the fact that the SLAO though had taken note of the guideline value for the earlier period, the market value was fixed unscientifically since the lands which were converted to commercial, industrial and residential purposes had not been taken into consideration.
The contention of the claimants that the acquired land was situated near to the lands in ‘Zunadu’ Extension and ‘city greens’ was held justified. In this regard, the High Court had taken into consideration that in Kallugopahalli, even under the earlier notification dated 07.11.2014 under Stamp Act, the guideline value fixed for registration was Rs.8,073/- per sq. mtr for converted land and for sites in ‘Zunadu’, it was Rs.13,993/- per sq. mtr. In comparison, under the guideline value notification dated 28.03.2016 the market value for ‘Zunadu’ is Rs.15,400/- per sq. mtr. In that light, taking note of the fact that the notification dated 28.03.2016 contained reference to a notification dated 14.09.2015 proposing the registration value which was earlier to the acquisition notification was of the opinion that reckoning of the value specified in the notification dated 28.03.2016 by the learned Arbitrator, which was upheld in the suit under Section 34 of the Act, 1996 is justified.
Similar consideration is made in respect of the extent of land situate in the remaining survey numbers which have reference to the acquisition process. The issue relating to industrial land is referred separately here below. The market value determined at Rs.15,400/- per sq. mtr in respect of all the lands has accordingly been upheld by the High Court.
In that view, the High Court was of the opinion that in the limited scope available in an appeal under Section 37 of Act, 1996 an examination beyond the scope provided under Section 34 of Act, 1996 is not to be undertaken and has indicated that if a plausible view is taken by the learned Arbitrator, it should not be substituted by another view of the Court under Sections 34 and 37 of Act, 1996. Accordingly, the appeals filed by NHAI have been dismissed.
OBSERVATION AND DECISION OF APEX COURT:
9. Firstly, when we are of the opinion that the learned Arbitrator has committed patent illegality in applying two different notifications in determining the market value, keeping in view the scope available under Section 34 of Act, 1996 it would not be open for this Court to substitute our view to that of the learned Arbitrator and modify the award.
10. Further, the learned Additional Solicitor General sought to refer to Special Instruction No.6 in the notification of 2014 to arrive at the market value even if it is accepted that the value of industrial land is not indicated in the notification. These are aspects to which the learned Arbitrator is required to advert so as to arrive at the conclusion.
11. In the circumstance where we have opined that the award passed by the learned Arbitrator suffers from patent illegality and appropriate consideration is necessary, the only course open is to set aside the award and allow the learned Arbitrator to reconsider the matter on that aspect.
12. From the conclusion reached above, in both the set of cases it is evident that awards passed by the learned Arbitrator is to be set aside and the matters be remanded in terms of Section 34(4) of Act, 1996 so as to enable the learned Arbitrators to assign reasons to arrive at their conclusion.
13. In this regard, it is made clear that we have approved the guideline value notification dated 28.03.2016 being reckoned for determining the market value.
14. Hence, the claimants in any event would be entitled to determination of market value at the guideline value indicated vide notification dated 28.03.2016 for the respective properties in Madhapura, Mayaganahalli etc. as against what is awarded by SLAO if there is no other evidence indicating higher market value.
15. The consideration to be made by the learned Arbitrator however is as to the material and evidence if any available to treat the acquired land as comparable to the lands situate in ‘City Greens’ and ‘Zunadu’ layout and award the compensation based on the guidance value indicated for the lands in the said layout if found comparable.
16. The reason for not applying the guideline value indicated for the lands in the very survey number of the acquired lands is to be disclosed on such consideration. Needless to mention that any other sale transaction if higher than the guideline value can also be considered to arrive at just and fair compensation. Since in any event the claimants would be entitled to higher amount than what was awarded by SLAO, the part of the amount awarded by the learned Arbitrator which was deposited before this Court and disbursed to the claimants will be subject to adjustment based on the quantum of compensation that would ultimately be decided by the learned Arbitrator. In the matter arising out of SLP No.2503/2022 the applicability of the appropriate special instruction, if any, is to be considered.
17. The appeals accordingly are allowed in part with no order as to costs.
18. The pending applications, if any, stand disposed of.
CONCLUSION: the Apex Court in above case held that Arbitrator had not clearly violated any laws by relying on the guideline value notice dated 28.03.2016 to determine the market price of the property obtained under the initial notification dated 01.02.2016. in case of other arguments the court has decided that the Arbitrator has not provided justification while deciding value of land Rs. 15,400/- sq. mts. , and hence the award passed by arbitrator under provisions of Sections 34 and 37 cannot be overruled , it can be set aside and asked the arbitrator to consider the matter gain based on rules as may be specified.
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