A later arbitrator appointment operates prospectively and does not displace the arbitrator in pending proceedings.

The respondents owned land acquired for widening/four-laning NH-82 under a Section 3A notification dated 4 March 2014. Dissatisfied with the compensation assessed by the competent authority, they sought arbitration.

An October 2017 notification had appointed the Additional Collector, Gaya, as arbitrator for the relevant acquisition disputes. While their arbitration was pending, a Central Government notification dated 21 June 2018 appointed the Divisional Commissioner, Gaya, as arbitrator.

On 4 August 2018, the Additional Collector treated Khesra No. 3243 as developing land and made an award. The Corporation subsequently directed that the award be recalled and the matter transferred to the Divisional Commissioner.

The Single Judge quashed that letter and directed implementation of the award, with 12% annual interest. The Corporation appealed.

1. Whether the 21 June 2018 notification displaced the Additional Collector’s authority to conclude an arbitration already pending before him.

2. Whether the award could be enforced as made, given the arbitrator’s alleged failure to consider the statutory compensation factors and applicable entitlements to solatium and interest.

3. Whether the Single Judge’s direction to pay 12% interest should stand, or compensation and interest required reassessment under the applicable land-acquisition law.

Section 3G(5) of the National Highways Act, 1956 permits either party dissatisfied with the competent authority’s compensation determination to seek determination by a Central Government-appointed arbitrator; Section 3G(6) makes the Arbitration and Conciliation Act, 1996 applicable, and Section 3G(7) requires the competent authority or arbitrator to consider the specified compensation factors, including market value and relevant damage.

An administrative notification ordinarily operates prospectively; absent language superseding the earlier appointment, the later notification does not displace the arbitrator in a proceeding already pending.

Relying on Union of India v. Tarsem Singh and Manav Bhanot v. National Highway Authority of India, the Court held that for this pre-1 January 2015 acquisition, solatium, interest and interest on solatium were to be computed under the Land Acquisition Act, 1894.

A challenge to the merits of an arbitral award may be pursued under Section 34 of the 1996 Act.

The 21 June 2018 notification did not state that it superseded the 2017 notification, and the arbitration was already pending before the Additional Collector. The Court therefore held that the later notification did not invalidate the Additional Collector’s authority in that proceeding; the Corporation’s letter seeking recall and transfer of the award was properly quashed.

However, the award did not address the factors required by Section 3G(7), and its reasoning on Khesra No. 3243 rested principally on the presence of pillars and nearby construction. The Court consequently declined to uphold the Single Judge’s direction to implement that award with 12% interest. Because the acquisition notification pre-dated 1 January 2015, the Court directed reassessment applying the solatium and interest entitlements under the 1894 Act.

The competent authority was directed to reassess compensation for Khesra No. 3243, including solatium, interest and interest on solatium under the Land Acquisition Act, 1894, within three months of receiving the order.