Challenge Of Compensation Under National Highways Act, 1956 Fall Under Arbitration And Conciliation Act, 1996: Rajasthan High Court

Brief Facts:

The Appellant approached the Rajasthan High Court (“High Court”) and challenged the orders issued by the District Judge wherein the applications/objections under Section 34 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) filed by the claimants-objectors were rejected for being non-maintainable. The matter revolved around a notification, pursuant to Section 3A of the National Highways Act, 1956 (“Act of 1956”), for land acquisition for constructing National Highway No.754K under the Bharat Mala Project in Jalore District. Despite objections filed by the claimants, the acquisition was finalized with a declaration made on 05.08.2019 and gazetted on 06.08.2019. Subsequently, the Competent Authority determined the compensation on 21.11.2019 based on prevailing DLC rates.

Following the determination, the claimants filed an application before the Collector, initially under Section 18 of the Land Acquisition Act, 1894 ('the Act of 1894'), later amended to be under Section 64 of the Right to Fair Compensation and Transparency in Land Acquisition Act, 2013 ('the Act of 2013'). The Collector dismissed this application, affirming the earlier determination. Subsequently, the claimants filed application/objections under Section 34 of the Arbitration Act before the District Judge, Jalore, who rejected them, stating they were not maintainable since the earlier application rejected by the Collector was under the Act of 2013, not an 'Award' under the Arbitration Act.

The Appellants admitted the misnaming of the application before the Collector but argued it was essentially under Section 3G(5) of the Act of 1956. It contended that since the Collector treated it as such and dismissed it, objections under Section 34 of the Arbitration Act were appropriate per Section 3G(6) of the Act of 1956. Additionally, it stressed that the Act of 1956 governed the acquisition and compensation process, rendering any reference to the Act of 1894 irrelevant. Furthermore, it highlighted that Section 3G(5) of the Act of 1956 allowed for arbitration.

Observations by the High Court:

The High Court noted that the land acquisition in question was intended for National Highways purposes under the Act of 1956. Therefore, the procedures outlined in Section 3G of the Act of 1956 governed the determination of compensation. Under this provision, the Competent Authority's determination of compensation could be challenged before an arbitrator appointed by the Central Government. The High Court noted that challenges to such awards fell under Section 34 of the Arbitration Act, and thus, the application before the District Judge challenging the award by the Collector/Arbitrator was properly framed under Section 34 of the Arbitration Act.

Regarding the nature of the application filed before the Collector, the High Court observed that it was explicitly under Section 3G(5) of the Act of 1956, evident from the absence of a prayer for reference under Section 64 of the Act of 2013. The High Court noted that even in subsequent applications for correction of nomenclature, the focus was on determining compensation under the Act of 2013, not invoking Section 64. It reiterated that incorrect labeling or mention of the wrong provision does not affect jurisdiction as long as the relief sought falls within the court's jurisdiction.

The High Court then addressed the District Judge's reliance on Section 64 of the Act of 2013, emphasizing that the Act of 2013's provisions regarding compensation determination were made applicable to the Act of 1956 by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Removal of Difficulties) Order, 2015. However, only Sections 26 to 28 of the Act of 2013 were applicable, not Section 64. The High Court clarified that the Act of 1956's provisions governed the entire compensation determination process, rendering Section 64 of the Act of 2013 inapplicable to the present matter.

Addressing the issue of arbitration, the High Court pointed out that the Arbitration Act only allows for a reference to a Civil Court in specific circumstances outlined in Section 3H(4). It highlighted that the Arbitration Act does not provide for other contingencies for referring disputes to a Civil Court.

Regarding the appointment of an arbitrator, the High Court acknowledged that no notification appointing an arbitrator under Section 3G(5) of the Arbitration Act was presented before the District Judge. However, such notification was provided with the appeal, indicating that the Collector had indeed been appointed as an arbitrator for the acquisition in question. Therefore, the application before the District Judge should be treated under Section 34 of Arbitration Act.

Consequently, the High Court quashed and set aside the impugned orders and remanded the matter back to the District Judge, Jalore, for a fresh decision on the application/objections under Section 34 of the Arbitration Act.

Case Title: Akha Ram and Others vs National Highway Authority Of India and Others.

Case Number: S.B. Civil Misc. Appeal No. 1805/2023.

Advocate for the Applicant: Mr. Jitendra Mohan Choudhary Mr. Samyak Dalal.

Advocate for the Respondent: Mr. Ankur Mathur Mr. Mudit Vaishnav.

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