Section 3H(4) National Highways Act references must be adjudicated on merits and cannot be withdrawn.

The National Highway Authority of India (NHAI) initiated land acquisition proceedings (LA Case No. 02 of 2022) for the expansion of NH 6 (49), and an award was passed under Section 3(G) of the National Highways Act, 1956.

A dispute arose regarding the apportionment of the compensation between the Petitioners and Opposite Party Nos. 4 and 5.

Consequently, the matter was referred by the Competent Authority for Land Acquisition (CALA)-cum-Tahasildar to the Principal Civil Court-cum-District Judge, Deogarh, under Section 3(H)(4) of the Act, registered as LA Reference Case No. 6 of 2022.

However, the District Judge allowed the reference to be withdrawn based on a memo filed by the CALA.

Following this, the CALA issued an order on 02.12.2025, directing the parties to produce a stay order within 30 days, failing which compensation would be disbursed to the recorded tenants.

The Petitioners challenged both the withdrawal of the reference and the subsequent order of the CALA.

1. Whether a reference made to the Principal Civil Court under Section 3(H)(4) of the National Highways Act, 1956, can be withdrawn via a memo without adjudication on merits

2. Whether the Principal Civil Court failed to exercise its jurisdiction by allowing the withdrawal of the reference

3. Whether the CALA’s order dated 02.12.2025, directing parties to obtain a stay or face disbursement, was legally sustainable

Section 3(H)(4) of the National Highways Act, 1956, which mandates that if a dispute arises as to the apportionment of the compensation amount or any part thereof, the competent authority shall refer the dispute to the decision of the principal civil court of original jurisdiction within whose limits the land is situated.

The principle that once a statutory reference is made to a judicial authority for adjudication, that authority is bound to decide the matter on its merits and lacks the jurisdiction to allow a summary withdrawal of such reference.

The High Court expressed "surprise" at the procedure adopted by the District Judge.

Under Section 3(H)(4) of the Act, the Principal Civil Court is vested with the specific jurisdiction to answer a reference regarding compensation disputes.

Once such a reference is registered, the court is duty-bound to provide the parties an opportunity to be heard and to adjudicate the dispute on its merits.

The Court held that the District Judge "miserably failed to exercise the jurisdiction vested in him" by allowing the withdrawal of the case based on a mere memo from the CALA.

The CALA's subsequent order dated 02.12.2025 was deemed a byproduct of this illegal withdrawal; since the original dispute remained unresolved due to the improper termination of the reference case, any consequential direction for disbursement by the CALA was inherently flawed.

The Court also quashed the CALA’s order dated 02.12.2025 regarding the disbursement of compensation.

The District Judge-cum-Principal Civil Court, Deogarh, was directed to restore the LA Reference Case No. 6 of 2022 to its file and adjudicate the same on its merits after hearing the concerned parties.

No order was made as to costs.