Landowner’s Compensation Award For 2011 NHAI Acquisition Set Aside Over 2013 Act Calculation: Karnataka HC

The National Highways Authority of India (NHAI) challenged the Commercial Court’s dismissal of its petition against an arbitral award enhancing compensation for land acquired for a national highway project.

The acquisition followed a preliminary notification dated 8 February 2010 and a final notification dated 4 February 2011; the Arbitrator and Deputy Commissioner made the challenged award on 26 October 2021.

NHAI contended that the Arbitrator had wrongly calculated compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (the 2013 Act), relying on a coordinate-bench decision concerning the same notifications.

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

It relied on Union of India v. Tarsem Singh, (2019) 9 SCC 304, particularly paragraph 48, and on the coordinate-bench decision in MFA No. 5128/2024.

Following that decision, the Court held that calculating compensation under the 2013 Act without regard to the principles identified in Tarsem Singh was incorrect; the judgment also recorded that the parties’ entitlement was limited to the relevant land-value and solatium calculation, rather than all benefits under the 2013 Act.

The acquisition had been initiated by notifications issued in 2010 and 2011, and the Court considered the case covered by the coordinate-bench ruling concerning the same notifications.

Applying that ruling and its treatment of Tarsem Singh, the Court concluded that the Arbitrator’s calculation of compensation under the 2013 Act was untenable.

It therefore found that the arbitral award and the Commercial Court’s decision affirming it could not stand.

All other issues were left open.