NH Act: Land Acquisition Act 2013 Applicable Where Compensation Deposited Before Dec 31, 2014, But Not Paid To Majority: Punjab & Haryana HC

The Punjab and Haryana High Court has ruled that the provisions of the Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act 2013, would apply to cases of land acquisition, under National Highways Act 1956, where agencies deposited the compensation amount prior to December 31, 2014 with the Competent Authority for Land Acquisition (CALA) but the same was not paid to the majority of the acquired land holders.

Justice Avneesh Jhingan also observed that in a situation where the compensation amount is challenged and an arbitration is preferred on behalf of the landowners who are farmers, It would be desirable if the arbitrators record reasons, making evident as to how the material available was dealt with. 

“Majority of the persons affected are the farmers and rustic villagers who would be able to make out as to whether just compensation has been awarded for land acquired or not In the case in hand, the acquisition was of 2012, the arbitral award was passed in March 2019, an earnest effort should be made by the arbitrator to conclude the matter expeditiously. The delay deprives the land owners (most of them being farmers) of the just compensation,” said the court.

The Case

The NHAI and land owners had filed appeals before the court under Section 37 of Arbitration and Conciliation Act, 1996 in the case wherein the acquisition of the land was done in 2012, the arbitral award was passed in 2019 and a modification order to the arbitral award was passed in 2021. 

A notification under Section 3-A of the National Highways Act, 1956 was issued on 25.5.2012, proposing to acquire lands of twenty five villages on National Highway No.64 (Patiala-Sangrur-Bathinda stretch). The notification under Section 3-D of the 1956 Act was issued on 3.5.2013.

Thereafter, CALA on 15.1.2014 relying upon the prices fixed by the Price Fixation Committee determined the compensation amount. Aggrieved by the decision of CALA, the arbitration was initiated at the instance of land owners. The proceedings culminated in an award dated 27.3.2019.

The NHAI as well as landowners thereafter raised objections under Section 34 of the 1996 Act which was dismissed on 29.10.2021. However, the award was modified to the extent that the amount of severance will be paid on market value of acquired land and not on value of the unacquired land.

Arguments

The counsel appearing on behalf of NHAI submitted that the provisions of 2013 Act would not apply to the acquisition in question because conditions in clause 4.6 (iii)(a) and (b) of the guidelines dated 28.12.2017 issued by the Ministry of Road Transport and Highways were complied with by NHAI. It was also argued that prior to 31.12.2014, full amount of the award was deposited. The guidelines in question were issued in respect of cases where land acquisition proceedings had been initiated under the NH Act, 1956.

It was further contended that market value was to be determined as per the provisions of 3G(7) of the 1956 Act and that other provisions of the 2013 Act could not be made applicable.The NHAI also said the modification of the award was without jurisdiction.

The counsel appearing on behalf of the landowners countered by stating that the Supreme Court in Union of India and Another vs. Tarsem Singh and others, 2019(9) SCC 304 has already decided that the 2013 Act would be applicable to the land acquired under the 1956 Act.

He submitted that as on 31.12.2014, the compensation was not paid to the majority of land holdings under acquisition. While refuting the claim that clause 4.6(iii)(a) and (b) of the guidelines were followed, he further contended that the acquisition in question is covered under sub-clause (a) of clause 4.6 (iii) as the amount awarded was not paid to the majority of the land holdings, even though it was deposited with the CALA.

The landowners also defended the award stating that the arbitrator has taken into consideration the relevant factors as per First Schedule of the 2013 Act. On instructions, the counsel representing landowners also submitted that they are not against the modified relief granted under Section 34 of the 1996 Act and the arbitral award be sustained.

Verdict

While briefly outlining the facts of the case, the bench pointed out the purpose of the 2013 Act. It said, “The 2013 Act was enacted with the object to address the issue of rehabilitation and resettlement of the persons and families affected by land acquisition…. A balance was sought to be achieved between the land acquisition, rehabilitation and resettlement as these were two sides of the same coin…Scientific method for calculation of market value was proposed for ensuring comprehensive package. The benefit of the new law was extended to all cases under the 1894 Act where the award was not passed or possession of land not taken.”

“There is no dispute that from 1.1.2015 the beneficial provisions of the 2013 Act were made applicable to the land acquired under the 1956 Act and the other enactments specified in Fourth Schedule,” the bench added.

Terms ‘Paid’ and ‘Deposited’ in the guidelines have different meanings

While pointing out that in sub-clauses (a) and (b) of 4.6 (iii) of the guidelines, two different expressions 'paid' and 'deposited' have been used, the bench observed, “From the combined reading of clauses (a) to (c), it becomes crystal clear that only in completed and settled cases, the proceedings were not to be re-opened and in cases covered under sub- clauses (a) and (b), provisions of the 2013 Act shall apply to acquisition under the 1956 Act.”

“For the cases to be considered as settled and completed under 4.6(iii)(c) of the guidelines, three things were to be done before 31.12.2014 i.e. the award to be announced by CALA under Section 3-G of the 1956 Act; amount to be deposited by the acquiring agency with CALA and lastly compensation to be paid to the majority of land holdings under acquisition,” it added.

While noting that in clause (a), the expression 'paid' is used whereas in clause (b), it is 'deposited', the bench said, “The argument raised by learned counsel for NHAI is based upon the reading of the word 'deposited' in clause (a) instead of 'paid'. The contention is against the rules of interpretation and would result in doing violence to the plain language of the guidelines and to the intent for issuing the guidelines.”

In this case since the payments to a majority of the land holdings under acquisition were not made as on 31.12.2014, the bench held that 4.6(iii)(a) and (b) were not complied with.

“If the argument of learned counsel for NHAI is accepted, the result would be that if the case of the land owners falls in sub-clause (b), they would be ousted from the benefit of 2013 Act in spite of the fact that they are fully covered under sub-clause (a). In such circumstances, the condition under sub-clause (a) would be rendered redundant. The clauses cannot be read in a manner which render the other clause otiose…Consequently, the provisions of the 2013 Act or determination of compensation shall apply to acquisition in question,” the bench added.

While dealing with the argument that compensation is to be determined only as per factors mentioned in Section 3-G(7) of the 1956 Act, the court held that the issue “is no longer res integra. The Supreme Court in National Highways Authority of India v. Sri P. Nagaraju @ Chelluvaish and another, 2022(3) RCR (Civil) 604 held that Section 3-G (7) of the 1956 Act provides basic parameters of determination of compensation and after 2013 Act was made applicable to acquisition under the 1956 Act, the factors provided under Sections 26 and 28 of the 2013 Act will also apply.”

Arbitral Award passed has to state reasons

The court rejected the contention that the arbitral award be sustained having been passed after considering the evidence. The court said the law is settled that the arbitral award has to contain reasons to support the conclusion arrived at, unless otherwise agreed between the parties.

"Non-recording of reasons in consonance with Section 31(3) of the 1996 Act results in violation of Section 28(1)(a) of the 1996 Act, rendering the award patently illegal for not deciding the proceedings in accordance with the substantive law,” said the court.

While setting out the parameters of the power under Section 34 and 37 of the Arbitration and Conciliation Act, the bench said, “Further that in exercise of powers under Sections 34 and 37 of the 1996 Act, neither the award can be modified nor the matter can be remanded back to the same arbitrator. The court can set aside the award, relegating the parties for fresh arbitration or consider the appeal on merits on the basis of material on record but within the restricted jurisdiction of Section 37 of the 1996 Act”

Justice Jhingan said that from the perusal of the award passed by CALA and the arbitral award, it is evident that no reasons were recorded, the court said:

"In award of CALA, there is only a passing reference that reports of Tehsildar and Naib Tehsildar were called with regard to potential of the land. Reliance was placed upon the prices fixed by District Price Fixation committee for determination of compensation. From the reading of the arbitral award, it cannot be even made out as to whether the compensation was determined as per the provisions of the 1956 Act, 1894 Act or 2013 Act."

Observing that the non-speaking award is patently illegal being violative of Sections 28(1)(a) and 31(3) of the 1996 Act, the court said the issue raised by the counsel for the land owners for sustaining the award as the modified relief granted under Section 34 of the 1996 Act was not being pressed has been rendered academic and needs no further expounding. 

"Resultantly, the impugned orders and the award are set aside. The parties would be at liberty to avail remedies in accordance with law for initiation of fresh arbitration," said the court, adding earnest effort should be made by the arbitrator to conclude the matter expeditiously.

Case Title: National Highways Authority of India vs. Modan Singh and others FAO-756-2022 (O&M)

Citation: 2023 LiveLaw (PH) 65

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