Karnataka HC Sets Aside Enhanced Compensation Award For NHAI’s 2009 Acquisition Over 2013 Act Calculation, Leaving Other Issues Open

The National Highways Authority of India (NHAI) appealed under Section 13(1)(a) of the Commercial Courts Act against the District Court’s dismissal of its challenge to an arbitral award enhancing compensation for land acquired for a national highway project.

The acquisition followed a preliminary notification dated 18 December 2009 and a final notification dated 14 December 2010; the Arbitrator and Deputy Commissioner made the award on 24 August 2021, and the District Court upheld it on 8 August 2022.

NHAI contended that the award had wrongly applied the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, relying on a coordinate Bench decision and Union of India v. Tarsem Singh.

The Court considered the National Highways Act, 1956, the Land Acquisition Act, 1894, and the 2013 Act in determining the applicable compensation framework for the acquisition.

It relied on Union of India v. Tarsem Singh, (2019) 9 SCC 304, particularly paragraph 48, and on the coordinate Bench’s decision in MFA No. 5128/2024. As presented in this judgment, those authorities precluded calculating compensation under the 2013 Act in the manner adopted by the Arbitrator; the Court noted the distinction that land value and solatium could be calculated under the 2013 Act, but not all benefits under that Act.

The Court held that the coordinate Bench’s reasoning applied to the present acquisition, which was initiated by notifications in 2009 and 2010.

It accepted NHAI’s submission that the arbitral award had calculated compensation under the 2013 Act without adhering to the principles identified in Tarsem Singh. On that basis, it concluded that the District Court’s decision affirming the award could not stand.

It set aside both the District Court’s order dated 8 August 2022 and the arbitral award dated 24 August 2021, leaving all other issues open.