SMT GANGAMMA vs NATIONAL HIGHWAYS AUTHORITY OF INDIA
- Court
- Karnataka High Court
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MFA No. 7579 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 17 DAY OF OCTOBER, 2026
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE T.P.VIVEKANANDA
MISCELLANEOUS FIRST APPEAL NO.7579 OF 2024 (AA)
BETWEEN:
1. SMT. GANGAMMA
W/O LATE RAJASHEKARAIAH
AGED ABOUT 73 YEARS
RESIDING AT EDENAHALLI
KASABA HOBLI, TIPTUR TALUK
TUMKUR DISTRICT-572 102
2.
SHRI. KUMARAIAH
S/O LATE MARIYAPPA
SINCE DECEASED ON 09.11.2024
REPRESENTED BY HIS LEGAL HEIRS
SMT. SHARADHAMMA
MAJOR
RESIDING AT EDENAHALLI
KASABA HOBLI, TIPTUR TALUK
TUMKUR DISTRICT-572 102
2(B). SHRI. MANJUNATH
MAJOR
RESIDING AT EDENAHALLI
KASABA HOBLI, TIPTUR TALUK
TUMKUR DISTRICT-572 102
2(C).
SHRI MOHAN K
MAJOR
RESIDING AT EDENAHALLI
2(A).
Digitally signed
by PAVITHRA B
Location: HIGH
COURT OF
KARNATAKA
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MFA No. 7579 of 2024
KASABA HOBLI, TIPTUR TALUK
TUMKUR DISTRICT-572 102
[APPELLANT NOS.2(A TO C) ARE IMPLEADE
AS PER ORDER DATED 28.04.2025]
…APPELLANTS
(BY SMT. MAITHREYI KRISHNAN, ADVOCATE)
AND:
1.
NATIONAL HIGHWAYS AUTHORITY OF INDIA
PROJECT IMPLEMENTATION UNIT
TUMAKURU, HAVING OFFICE AT
SRI RAKSHE, 80FT ROAD
MAHALAKSHMI NAGAR
NEAR KRISHNA COLLEGE
BATAWADI, TUMKUR-572 103
REPRESENTED BY ITS PROJECT DIRECTOR
2.
THE SPECIAL LAND ACQUISITON
AND COMPETENT AUTHORITY,
(TUMKUR-SHIVAMOGA SEC OF NH-206)
HAVING OFFICE AT
BETTASHREE COMPLEX
ABOVE RENUKA SUPER BAZAAR
ST
1 FLOOR, 60 FEET ROAD
SAPTHAGIRI EXTENSION
TUMKUR-572 102
REPRESENTED BY THE
SPECIAL LAND ACQUISITION OFFICER
3.
THE ARBITRATOR AND DEPUTY COMMISSIONER
TUMKUR DISTRICT
(TUMKUR-SHIVAMOGA SEC OF NH -206)
OFFICE OF THE DEPUTY COMMISSIONER
MINI VIDHANA SOUDHA
TUMKUR-572 101
…RESPONDENTS
(BY SMT. SHILPA GHANSHYAMBHAI SHAH, ADVOCATE FOR R1
& R2;
SRI. BYREGOWDA N AGA FOR R3)
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MFA No. 7579 of 2024
THIS MFA IS FILED U/S.37(1)(c) OF THE ARBITRATION
AND CONCILIATION ACT, 1996, AGAINST THE JUDGMENT
DT.23.08.2024 PASSED IN A.S.NO.10004/2024 ON THE FILE
OF THE V ADDITIONAL DISTRICT AND SESSIONS JUDGE,
TUMKUR, (SITTING IN TIPTUR), ALLOWING THE ARBITRATION
SUIT FILED U/S.34(2) OF THE ARBITRATION AND
CONCILIATION ACT, 1996.
THIS MFA, HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 17.09.2026 AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY,
T.P.VIVEKANANDA J., PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE T.P.VIVEKANANDA
CAV JUDGMENT
(PER: HON'BLE MR. JUSTICE T.P.VIVEKANANDA)
The appellants are before this Court raising a
challenge to the judgment and order dated 23.08.2024
passed in A.S.No.10004/2024 by V Addl. District and
Sessions Judge, Tumkur (Sitting in Tiptur), whereby the
District Court allowed the petition filed under Section
34(2) of the Arbitration and Conciliation Act, 1996
(hereinafter referred to as ‘the Act’ for short) and set aside
the award dated 25.01.2023 in
No.LAQ:ARB:206:CR/230/2020 passed by the Deputy
Commissioner and Arbitrator, Tumkur District.
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MFA No. 7579 of 2024
2. The brief background of the dispute which
reached this Court through the present appeal is that the
lands measuring to an extent of 304 square meters in
Survey No.88/1 and an extent of 10,117 square meters in
Survey No.88/2 of Ramashettihalli Village, Tiptur Taluk,
Tumkur District, were notified for acquisition through the
Preliminary Notification dated 19.01.2018 for the purpose
of widening/construction of four lane road between
Tumkur-Shivamogga Section from 66.540 Kms to 119.790
Kms of National Highway No.206. The Special Land
Acquisition Officer and the Competent Authority-
Respondent No.2 herein passed the award under Section
3(G)(5) of the National Highways Act, 1956, on
13.11.2018 determining the market value of the land
acquired at Ramashettihalli Village in a sum of
Rs.1,58,220/- per acre. The award discloses that the sale
instances from 2015-16 to 2017-18 have been taken into
consideration and highest of the value shown in two of the
sale deeds registered on 07.06.2017 and 01.08.2017 were
considered by averaging the value shown in both the sale
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MFA No. 7579 of 2024
deeds. Accordingly, the market value of Rs.1,58,220/-
was arrived at. The award further discloses that as per the
Guidance Value Notification of the year 2017 issued by the
Senior Sub-Registrar, Tiptur Taluk, the guidance value of
the lands at Ramashettihalli Village was Rs.1,29,000/- per
acre.
3. Being dissatisfied with the market value
determined by respondent No.2- SLAO, the
appellants/land owners approached the Deputy
Commissioner/Arbitrator-respondent No.3 herein under
Section 3(G)(5) of the National Highways Act, 1956,
seeking re-determination of the compensation. The main
ground on which the appellants/land owners had sought
for re-determination of compensation was on the basis of
the award passed by the SLAO in respect of Edenahalli
Village, Tiptur Taluk, Kasaba Hobli, in a sum of
Rs.43,000/- per gunta which is the adjacent village. In
support of the same, the appellants/land owners have
produced the copy of the award dated 18.12.2019 in
respect of the lands acquired at Edenahalli Village,
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MFA No. 7579 of 2024
whereby the market value of the lands acquired at
Edenahalli Village was determined at Rs.17,33,166 /-.
4. The claim petition of the appellants was
opposed by the NHAI contending that in order to establish
that the land belongs to the appellants has more value
than the market value determined by the SLAO, no
supporting documents are produced and the award passed
by the SLAO is strictly in accordance with the provisions of
the RFCTLARR Act, 2013 (hereinafter referred to as “2013,
Act” for short). Therefore, the claimants are not entitled
for enhancement of compensation.
5. The learned Arbitrator upon conducting the spot
inspection of the subject land along with the SLAO,
Tahsildar and Surveyor was of the opinion that there is a
need to re-determine the market value. The Deputy
Commissioner/Arbitrator came to the conclusion that the
villages i.e., Ramashettihalli and Edenahalli are on the left
and right hand side of NH-206 and both the villages are
abutting the National Highway. It is also the opinion of
the Arbitrator that since there is substantial difference in
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MFA No. 7579 of 2024
the value of the lands situated in the two villages, uniform
rate shall be fixed as provided under the provisions of
2013, Act. The Deputy Commissioner also noticed that the
main carriageway is passing through lands of Edenahalli
Village and the service road of the same National Highway
is passing through lands of Ramashettihalli Village and
therefore, determination of market value of the lands at
Ramashettihalli village is lesser and unscientific, therefore,
passed an order dated 25.01.2023 fixing the market value
at Rs.43,329/- per gunta.
6. Being aggrieved by the re-determination of
compensation by the Deputy Commissioner/Arbitrator, the
NHAI had approached the District Court by filing a petition
under Section 34(2) of the Act for setting aside the award
dated 25.01.2023. Though, several grounds were urged in
support of the petition, the substance of the attack on the
arbitral award are as follows:-
(i) The market value is determined by the learned
Arbitrator without considering the value of the land as on
the date of publication of Preliminary Notification. The only
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MFA No. 7579 of 2024
circumstances which the learned Arbitrator has taken note
of is the proximity of the land situated at Ramashettihalli
Village and Edenahalli Village, which has no relevance for
the purpose of determination of market value.
(ii) There was no reason for the learned Arbitrator
to come to a different conclusion than that of the award of
the SLAO, since, the SLAO has taken note of the guidance
value, so also the sale instances of preceding 3 years in
respect of both the villages, therefore determination of the
market value at Rs.43,329/- in respect of Ramashettihalli
Village is contrary to the provisions of National Highways
Act and RFCTLARR Act.
(iii) The award in respect of Ramashettihalli Village
was passed on 13.11.2018. However, the award in respect
of Edenahalli Village was passed on 18.12.2019.
Therefore, there was no occasion for the SLAO to take
note of the market value determined in respect of
Edenahalli which is dated 18.12.2019.
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MFA No. 7579 of 2024
(iv) There cannot be any challenge to the Guidance
Value Notification. If at all, the appellants/land owners
were aggrieved by the Guidance Value Notification, it was
open for them to challenge the same by approaching CVC.
(v) The reliance placed by the learned Arbitrator on
the so called spot inspection conducted by him along with
the SLAO, Tahsildar and Surveyor is outside the
jurisdiction of the learned Arbitrator in as much as no
notice of such spot inspection was ever issued to the NHAI
and no formal report was placed on record. On account of
which, the NHAI had no opportunity to respond to the
alleged spot inspection. Thus, it is a clear violation of
principles of natural justice.
(vi) The Edenahalli Village is situated just 1
kilometer away from the limits of Tiptur Town, but
Ramashettihalli Village is situated 3.2 kilometers away
from the municipal limits of Tiptur Town and therefore,
there is possibility of considerable difference of the
guidance value and the sale exemplars between two
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MFA No. 7579 of 2024
villages and therefore, there cannot be an uniform
guidance value between the two villages.
7. Before the District Court, the appellants/land
owners have filed cross-objections contending that the
actual value of their land should have been at Rs.428.27
per square meters and therefore, the award of the learned
Arbitrator requires interference. It was further contended
that by virtue of the acquisition, their land has been
divided into two parts which cannot be enjoyed
conveniently and the said aspect ought to have been
considered by fixing the market value in terms of Section
26 of the RFCTLARR Act.
8. The NHAI has opposed the cross-objection on the
ground that the same is not maintainable. If at all, the
appellants/land owners were aggrieved by the award of
the learned Arbitrator, it was open for them to prefer a
separate and independent petition under Section 34(2) of
the Act. It is also the contention that the District Court
while considering the petition filed under Section 34(2) of
the Act cannot modify the award nor remand the matter to
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MFA No. 7579 of 2024
respondent No.3 for fresh consideration. In support of the
said contention, the NHAI has relied upon several
judgments. However, the latest judgment on the point was
the decision in the case of National Highways Authority
1
of India v. M. Hakeem and Another .
9. Upon consideration of the rival contentions of
the NHAI and the appellants/land owners, the District
Court has passed an order on 23.08.2024 allowing the
petition and set aside the arbitral award dated 25.01.2023
passed by the Deputy Commissioner/Arbitrator. The said
order is under challenge in the present appeal.
10. We have heard the learned counsel for the
appellants and the learned counsel for the respondents.
11. It is the submission of the learned counsel for
the appellants that:
(i) The grounds under Section 34(2)(b)(ii) did not
exist to set aside the arbitral award. The learned Arbitrator
has taken note of the proximity of the villages in
1
(2021) 9 SCC 1
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MFA No. 7579 of 2024
Edenahalli and Ramashettihalli and came to a just
conclusion that in respect of the lands situated on either
side of the highway in two different villages cannot have
different market value with the difference of 10 times.
(ii) It is the contention that the lands situated at
both the aforesaid villages was acquired under the very
same Preliminary Notification, however, the finding of the
District Court that the lands were acquired under different
Notifications is a patent error.
(iii) When there is a huge difference in the market
value between two adjacent villages, the fixing of uniform
rate is the law. Failing to do so result in gross
discrimination in granting compensation to the same set of
land owners, of course, in different villages. The reliance
placed on the sale deeds of the year 2015-16 to 2017-18
by the SLAO is untenable in as much as the guidance
value as on the date of the Preliminary Notification ought
to be the guiding factor in terms of Section 26 of the
RFCTLARR Act. The finding of the District Court that the
reliance placed on the spot inspection of the land is
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MFA No. 7579 of 2024
untenable is concerned, it is submitted that the spot
inspection was conducted in the presence of SLAO and
Surveyor and the SLAO is the representative of NHAI and
therefore, no fault can be found in the decision of the
learned Arbitrator to rely upon the spot inspection
conducted before passing the award.
(iv) The reason assigned by the District Court is
that the Edenahalli Village is at the distance of 1 Km away
from the municipal limits and Ramashettihalli Village is at
the distance of 3.2 Kms away from the municipal limits is
totally unacceptable, because the lands at Edenahalli and
Ramashettihalli were acquired by the NHAI are on either
side of the National Highway and therefore, the distance of
the villages has no relevance to ascertain the proximity of
the lands acquired in both the villages. It is not the
gramatana of both the villages are relevant for the present
consideration, it is the location of the lands notified and
acquired which are relevant.
12. Learned counsel for respondent No.1-NHAI
contended that there is no illegality in the order passed by
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MFA No. 7579 of 2024
the District Court in setting aside the award of the learned
Arbitrator in as much as while passing the award in
respect of the land situated in both the villages, the SLAO
has considered the Guidance Value Notification, so also the
sale exemplars of preceding 3 years of the Preliminary
Notification. Therefore, there was no occasion for the
learned Arbitrator to come to a different conclusion and
rely upon the award passed in respect of Edenahalli
Village. In as much as the award passed in respect of
Edenahalli Village is subsequent to the award passed in
respect of Ramashettihalli Village. Therefore, there was no
occasion for the SLAO to take note of the market value
determined in respect of Ramashettihalli Village. Learned
counsel has reiterated the grounds urged by NHAI before
the District Court in the petition filed under Section 34 and
seeks to justify the order passed by the District Court.
13. On hearing the learned counsel for the
respective parties and on perusal of the award passed by
the SLAO, the award passed by the learned Arbitrator, so
also the order passed by the District Court while
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MFA No. 7579 of 2024
considering the petition filed under Section 34(2) of the
Act, the points that arise for our consideration are:
(i) Whether the learned Arbitrator/Deputy
Commissioner was justified in re-determining
the compensation only relying upon the award
passed in respect of Edenahalli village?
(ii) Whether the District Court was justified in
setting aside the arbitral award?
14. At this stage it is necessary to examine whether
the arbitral award could have been set aside under any of
the grounds enumerated under any of the grounds
enumerated in section 34 of the Arbitration and
Conciliation Act without giving any finding as to under
which of the provisions of Section 34 the award passed by
the learned Arbitrator required to be set aside.
15. As noticed above, the date of Preliminary
Notification of both the villages referred to supra is one
and the same. However, the award passed in respect of
the lands situated at both the villages is different. The
award of the SLAO discloses the guidance value of both
the villages as on the date of Preliminary Notification is
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MFA No. 7579 of 2024
Rs.1,29,000/- for Ramashettihalli village and
Rs.5,82,000/- in respect of Edenahalli Village.
16. The award passed by the SLAO in respect of
Edenahalli Village discloses that the guidance value of the
lands abutting NH-206 was Rs.8,80,000/- per acre and
that, having regard to the average sales statistics for the
relevant period, the market value was determined at
Rs.17,33,166/- per acre. In respect of Ramashettihalli
Village, the SLAO recorded the guidance value as
Rs.1,29,000/- per acre. However, while determining the
market value of the acquired lands in Ramashettihalli
Village, the SLAO relied upon the sale exemplars dated
07.06.2017 and 01.08.2017 and arrived at a market value
of Rs.1,58,220/- per acre by taking the average of the
values reflected in the said transactions. Thus, although
the guidance value of Ramashettihalli Village was recorded
in the award, the extent to which it was considered in
arriving at the final market value is not evident from the
reasoning contained therein. The substantial disparity
between the market values determined for the two
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MFA No. 7579 of 2024
villages, therefore, assumes significance, particularly in
the light of the location of the acquired lands and their
proximity to NH-206.
17. When it is demonstrated that the lands of
Edenahalli and Ramashettihalli Villages are abutting the
existing national highway and one is utilized for main
carriageway and another is utilized for service road, the
difference of market value at 10 times is only
unacceptable.
18. We have also noticed that the District Court has
given a finding that Edenahalli village is at the distance of
1 km from the municipal limits of Tiptur Taluk. However,
Ramashettihalli Village is at the distance of 3.2 kms away
from the municipal limits and therefore, there is huge
difference of the value of the land between two villages.
We are unable to accept the said finding because the
relevant consideration is not the distance of the
Gramathana/villages in the present case, it is the location
of the lands of both the villages which is relevant. The
lands of both the villages are on either side of the existing
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MFA No. 7579 of 2024
National Highway, which is sought to be widened by
acquiring the lands of both the villages, in all probability,
the distance between both the lands may not be more
than 100 meters.
19. The learned Arbitrator, before passing the
award, has conducted the spot inspection in the presence
of the SLAO, Tahsildar and the Surveyor and found that
the lands of Ramashettihalli and Edenahalli are on either
side of the existing national highway. For ready reference
and better understanding, the learned Arbitrator has
furnished a diagram of the existing national highway and
the location of the lands of Ramashettihalli and Edenahalli
in his award itself. The said diagram was neither disputed
before the District Court nor before this Court by the
NHAI. Neither the SLAO nor the District Court have
noticed nor considered the said aspect. It was the
Arbitrator who has visited the lands in question and came
to the conclusion that the lands of Edenahalli and
Ramashettihalli are adjacent to each other therefore, same
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MFA No. 7579 of 2024
compensation is to be awarded in respect of lands of
Ramashettihalli.
20. We find considerable force in the submission of
the learned counsel for the appellants/land owners that
the adjacent lands or villages possessing similar potential,
advantages must be compensated equitably unless
distinctions are clearly and substantially justified. In
support of the said contention, she has relied upon the
judgment of the Hon’ble Supreme Court in the case of
2
Krishna Kumar Vs. State of Haryana and Others . The
following paragraph of the aforesaid judgment is very
much relevant for consideration of the present case, which
reads as follows:
"14. It is trite law that adjacent lands or
villages possessing similar potential and
advantages must be compensated equitably,
unless distinctions are clearly and substantially
justified. In this context, this Court in Land
Acquisition Officer v. Karigowda, aptly
encapsulated the legal position regarding
compensation for adjacent villages:
“ 75. It is a settled principle of law that
lands of adjacent villages can be made the
basis for determining the fair market value of
the acquired land. This principle of law is
qualified by clear dictum of this Court itself
2
2025 SCC Online SC 1043
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MFA No. 7579 of 2024
that whenever direct evidence i.e. instances of
the same villages are available, then it is most
desirable that the court should consider that
evidence. But where such evidence is not
available court can safely rely upon the sales
statistics of adjoining lands provided the
instances are comparable and the potentiality
and location of the land is somewhat similar.
The evidence tendered in relation to the land
of the adjacent villages would be a relevant
piece of evidence for such determination. Once
it is shown that situation and potential of the
land in two different villages are the same
then they could be awarded similar
compensation or such other compensation as
would be just and fair.
77. In this regard we may also make a
reference to the judgment of this Court in
Kanwar Singh v. Union of India [(1998) 8 SCC
136 : AIR 1999 SC 317 : JT (1998) 7 SC 397]
where sale instances of the adjacent villages
were taken into consideration for the purpose
of determining the fair market value of the
land in question and their comparability,
potential and acquisition for the same purpose
was hardly in dispute. It was not only
permissible but even more practical for the
courts to take into consideration the sale
statistics of the adjacent villages for
determining the fair market value of the
acquired land. ”
18. The sole apparent justification for this
differentiation appears to be the existence of
distinct sale deeds for Kukrola and Fazalwas.
In Karigowda (supra), this Court recognized
that sale exemplars from adjacent villages
may only be relied upon in the absence of
direct evidence. However, in our considered
view, a rigid adherence to this principle is
unwarranted in the present case. We say so
for the following reasons:
a) A fundamental principle in land acquisition
jurisprudence is that lands with similar
locational and developmental potential must
be compensated equitably unless clear,
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MFA No. 7579 of 2024
objective distinctions justify otherwise. Neither
the LAC nor the Reference Court in this case
have returned any specific finding that the
potential or advantages of the acquired lands
in the two villages differ significantly. No
cogent evidence or expert report has been
placed on record to justify the lower
compensation awarded to Kukrola or the
higher rate granted to Fazalwas. The ‘leading
judgments’ instead provide no factual basis to
support this artificial classification between the
two sets of landowners. In such an evidentiary
vacuum, the High Court ought not to have
relied solely on differing sale deeds to assign
vastly disparate compensation rates. Arbitrary
differentiation in compensation, based on
superficial considerations, necessarily violates
settled constitutional principles of fairness and
equality.
b) The High Court should have refrained from
proceeding on the basis of a singular sale deed
to award widely divergent compensation
between the two villages. In the absence of
corroborative evidence—such as multiple
comparable sale transactions, expert valuation
reports, or any factual finding indicating a
genuine difference in market potential—the
use of an isolated transaction to justify such a
disparity is per se erroneous. Without further
evidence to establish that the lands in Kukrola
differ in their developmental potential from
those in Fazalwas, the differential
compensation lacks a sound logical foundation
and cannot be sustained.
c) Moreover, a glaring inconsistency arises in
the present case : while lands abutting NH-8
within a depth of 5 acres have been awarded
markedly different rates of compensation,
lands situated beyond this depth have been
treated uniformly. What is particularly
problematic is that the most homogeneous and
comparable category—namely, the lands
adjacent to NH-8—have been assessed
disparately, whereas the more heterogeneous
lands farther from the highway, which
ostensibly vary significantly in terms of
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MFA No. 7579 of 2024
location and developmental potential, have
been treated alike. Such an approach not only
appears incongruous but also contrary to the
principles of equality and fairness that must
govern the exercise of determining
compensation under the 1894 Act.
Consistency, therefore, demands the
application of a uniform standard across both
villages Kukrola and Fazalwas. This is
especially true when we consider their relative
distances from the National Capital Region,
with Kukrola being closer thereto.
d) In any case, we must caution against an
excessively positivist approach in matters of
land acquisition. It is well understood that the
very exercise of assessing compensation is
antithetical to rigid formalism. Compensation
cannot be assessed in a mechanical or
formulaic manner but must be guided by
considerations of equality, equity, and justice.
20. Consequently, we find no justification for
the disparity in compensation for lands from
both villages situated in the inner belt. The
High Court itself has offered no factual finding
to support the conclusion that lands abutting
NH-8 in Kukrola must be valued differently
from those in Fazalwas. Accordingly, we hold
that the differential compensation is
unsustainable and must be set aside. The
quantum of compensation across both villages
should remain at par.
D.2. Issue No. 2 : Ascertaining the quantum of
compensation for the acquired lands”
21. Learned counsel for the appellants/land owners
has also placed reliance on the judgment in the case of
National Highways Authority of India Vs. P.Nagaraju
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MFA No. 7579 of 2024
3
Alias Cheluvaiah and Another . The relevant
paragraphs of the said judgment are as follows:
"52. Be that as it may, in our opinion the
mere provision as contemplated under Section
3-G(5) of the NH Act providing for either of the
parties to assail the determination made by
SLAO by itself does not provide a better status
to the award passed by SLAO. Even the award
passed by SLAO under the provisions of the NH
Act would still continue to remain as an offer of
compensation by the acquiring authority to the
landloser and the materials relied on by SLAO
even if discussed in detail does not provide the
status of a judicially considered order so as to
interfere with the same only if error is pointed
out. It is not necessary to critically examine the
award made by SLAO before considering
enhancement. Notwithstanding the documents
relied upon by SLAO it would still be open for
the learned arbitrator to rely upon any
additional material that may be brought before
the learned arbitrator not necessarily to point
out an error in the consideration made by SLAO
but such material could be considered despite
the consideration made by SLAO if such material
aids in deciding just and fair compensation.
53. Though, as contended by the learned
Additional Solicitor General it is seen that in
Tarsem Singh [Union of India v. Tarsem Singh,
(2019) 9 SCC 304 : (2019) 4 SCC (Civ) 364] it
is held that there is a regime change and the
stage to offer an amount by way of
compensation is removed, it only means that
the process of award notice, etc. from Sections
9 to 15-A, before possession under Section 16
of the LA Act is removed, which only alters the
procedure and enables immediate vesting of the
land with the acquiring authority but does not
take away the character of SLAO award from
being an offer of compensation. Hence, in the
present case, though SLAO has taken note of
3
(2022) 15 SCC 1
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MFA No. 7579 of 2024
the guideline dated 7-11-2014 it would be open
for the learned arbitrator to take note of any
other evidence that would be more relevant
than the said guideline to redetermine the
compensation in terms of the parameters under
Sections 26 and 28 of the RFCTLARR Act, 2013.
71. As stated above, if there is evidence
brought on record in the manner known to law
with opportunity to the opposite side, it certainly
would be open for the learned arbitrator to
adopt the said value. However, from the
pleading in the claim petition and from the
portion extracted from the award which is the
only basis for the ultimate order made by the
learned arbitrator, it would indicate that the
NHAI did not have sufficient opportunity before
the learned arbitrator to controvert the material
sought to be relied upon by the learned
arbitrator nor has the learned arbitrator
indicated sufficient reasons which to that extent
would indicate patent illegality in the award
passed by the learned arbitrator being contrary
to Sections 28(2) and 31(3) of the 1996 Act.
72. That being the fact situation and also the
position of law being clear that it would not be
open for the Court in the proceedings under
Section 34 or in the appeal under Section 37 to
modify the award, the appropriate course to be
adopted in such event is to set aside the award
and remit the matter to the learned arbitrator in
terms of Section 34(4) to keep in view these
aspects of the matter and even if the
Notification dated 28-3-2016 relied upon is
justified since we have indicated that the same
could be relied upon, the further aspects with
regard to the appropriate market value fixed
under the said notification for the lands which is
the subject-matter of the acquisition or
comparable lands is to be made based on
appropriate evidence available before it and on
assigning reasons for the conclusion to be
reached by the learned arbitrator. In that
regard, all contentions of the parties are left
open to be put forth before the learned
arbitrator."
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MFA No. 7579 of 2024
22. Learned counsel for the appellants has
vehemently contended that the Court while considering
the validity of the award passed by the Land Acquisition
Officer, cannot place reliance on the documents/material
relied upon by the SLAO for passing of the award unless
the said material was placed before the Court for
consideration. In support of the said contention, learned
counsel has placed reliance on the judgment in the case of
Chimanlal Hargovinddas Vs. Special Land Acquisition
4
Officer, Poona and Another. The relevant paragraphs
read as under:
“4. The following factors must be etched on the
mental screen:
(1) A reference under Section 18 of the
Land Acquisition Act is not an appeal against the
award and the court cannot take into account the
material relied upon by the Land Acquisition Officer
in his award unless the same material is produced
and proved before the court.
(2) So also the award of the Land Acquisition
Officer is not to be treated as a judgment of the trial
court open or exposed to challenge before the court
hearing the reference. It is merely an offer made by
the Land Acquisition Officer and the material utilised
by him for making his valuation cannot be utilised
4
(1988) 3 SCC 751
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MFA No. 7579 of 2024
by the court unless produced and proved before it.
It is not the function of the court to sit in appeal
against the award, approve or disapprove its
reasoning, or correct its error or affirm, modify or
reverse the conclusion reached by the Land
Acquisition Officer, as if it were an appellate court.
(3) The court has to treat the reference as an
original proceeding before it and determine the
market value afresh on the basis of the material
produced before it.
(4) XXXX
(5) XXXX
(6) XXXX
(7) XXXX
(8) XXXX
(9) XXXX
(10) XXXX
(11) XXXX
(12) XXXX
(13) XXXX
(14) XXXX
23. Though the aforesaid judgment is rendered
under the provisions of Land Acquisition Act 1894 and the
powers of the reference Court is different as that of the
powers of District Court under section 34 of the Arbitration
and Conciliation Act 1996 R/W the provisions of Arbitration
and Conciliation Act 1996, the proposition that the court
cannot take into account the material relied upon by the
Land Acquisition Officer in his award unless the same
material is produced and proved before the court is a
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MFA No. 7579 of 2024
guiding principle which can be applied to the proceedings
before the Arbitrator/Deputy Commissioner under the
provisions of NHAI Act, but not before the Court in a
proceedings under Section 34 of the Arbitration and
Conciliation Act, 1996.
24. In the light of the rival submissions, the
material available on record and the principles laid down in
the judgments referred to supra, we find that the arbitral
award and the judgment of the District Court cannot be
sustained for the reasons recorded herein below. The
learned Arbitrator noticed the substantial disparity
between the compensation determined for the lands in
Edenahalli and Ramashettihalli villages and relied upon the
location and proximity of the acquired lands while
determining compensation. The District Court, however,
set aside the arbitral award, inter alia, having regard to
the difference in the distance of the two villages from the
municipal limits of Tiptur. In our considered opinion, the
relevant consideration is not merely the distance of the
respective village settlements from the municipal limits,
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MFA No. 7579 of 2024
but the location, potentiality and advantages of the
acquired lands themselves. At the same time, the
determination of compensation must rest on relevant
material and cogent reasons, with due opportunity to the
parties to address such material. The substantial disparity
in compensation, coupled with the circumstances noticed
by the learned Arbitrator, warrants reconsideration of the
determination of market value in accordance with law.
However, having regard to the limitations governing the
exercise of jurisdiction under Sections 34 and 37 of the
Arbitration and Conciliation Act, 1996, this Court cannot
substitute its own assessment of compensation for that of
the competent adjudicatory forum merely because a
different valuation appears equitable.
25. Hence, we are of the considered opinion that
the award of the learned Arbitrator and the order of the
District Court under Section 34 are liable to be set at
naught and the ground of patent illegality as noticed supra
and the parties to be left for initiation of fresh proceedings
under Section 3(G)(5) of the National Highways Act, 1956.
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MFA No. 7579 of 2024
In view of the limitations on the powers of the Courts
under section 34 and 37 of the Act as explained by the
Hon'ble Supreme Court in the case of National Highways
Authority of India Vs. M.Hakeem and Another
reported in (2021) 9 SCC 1 , so also the judgment of the
Hon'ble Supreme Court in the case of Gayatri Balasamy
v. ISG Novasoft Technologies Ltd., reported in (2025)
7 SCC 1 , this Court cannot consider another valuation to
be more appropriate which would result in modification of
the impugned Award and orders.
26. In the result:
(i) The Miscellaneous First Appeal is allowed .
(ii) The award dated 25.01.2023 passed in
No.LAQ:ARB:206:CR/230/2020 by the Deputy
Commissioner and Arbitrator, Tumkur District
and the judgment and order dated 23.08.2024
passed in A.S.No.10004/2024 by V Addl.
District and Sessions Judge, Tumkur (Sitting at
Tiptur) are set aside.
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MFA No. 7579 of 2024
(iii) The appellants/land owners may pursue such
remedy as may be available to them in
accordance with Section 3G(5) of the National
Highways Act 1956 R/w Section 43(4) of the
Arbitration and Conciliation Act, 1996.
Sd/-
(ANU SIVARAMAN)
JUDGE
Sd/-
(T.P.VIVEKANANDA)
JUDGE
PB