Under Section 3H(4), the Reference Court may incidentally determine title disputes affecting compensation entitlement.

Land was acquired under the National Highways Act, 1956 for construction, widening, maintenance and operation of NH-306 from Km 0+000 to Km 20+000 in Cachar district. Dag No. 15 of 2nd RS Patta No. 7 was included in the Section 3D acquisition notification dated 21.07.2023. The names of Respondent Nos. 6 and 7, and their predecessors-in-interest, appeared in the notification and the Section 3G award, whereas the petitioners’ names did not. Respondent Nos. 6 and 7 were also in possession of the acquired land

The Central Government deposited the compensation for disbursement. The petitioners, claiming rights over the land and asserting that they had instituted a civil suit regarding title, disputed Respondent Nos. 6 and 7’s entitlement and sought apportionment of the compensation. By speaking order dated 07.01.2025, the Additional District Commissioner/Competent Authority directed that 50% of the zirat compensation be paid to Respondent Nos. 6 and 7 to enable them to shift, while the remaining 50% would be deposited before the District and Sessions Judge, Cachar

The petitioners challenged that order. During the proceedings, the Court had directed that no compensation be released without its leave. The writ petition was thereafter taken up for final disposal along with the application seeking vacation of the interim order

1. Whether the Competent Authority’s decision to release 50% of the zirat compensation to Respondent Nos. 6 and 7, while depositing the balance before the civil court, called for interference under Article 226 of the Constitution

2. Whether the dispute regarding the competing entitlement of the petitioners and Respondent Nos. 6 and 7 was required to be referred to the principal civil court under Section 3H(4) of the National Highways Act, 1956, including for incidental determination of title

3. Whether release of part of the compensation should be conditioned upon an undertaking and indemnity bond to secure recovery if Respondent Nos. 6 and 7 ultimately failed before the reference court

The Court applied Sections 3G and 3H of the National Highways Act, 1956. Section 3G provides for determination of compensation, while Section 3H governs its deposit and payment. Under Section 3H(3), where several persons claim an interest, the Competent Authority must determine the persons entitled to receive the amount; under Section 3H(4), any dispute regarding apportionment or the person to whom compensation is payable must be referred to the principal civil court of original jurisdiction.

The Court relied on K. Venkataswamy v. Gowramma, 2026 SCC OnLine SC 1487, holding that the Section 3H(4) reference court has jurisdiction to incidentally determine questions of title insofar as necessary to decide entitlement to or apportionment of compensation.

The Court further applied the principle that disputed compensation may be conditionally released against suitable security, such as an undertaking and indemnity bond, to safeguard eventual recovery.

The Court found that Respondent Nos. 6 and 7 were named in the Section 3D notification and Section 3G award and were in possession of the acquired land, whereas the petitioners’ claim was founded on a competing assertion of title and a pending suit.

Since the dispute concerned the identity of the persons entitled to compensation and its apportionment, Section 3H(4) mandated reference to the principal civil court. In light of K. Venkataswamy, the reference court could also incidentally adjudicate the title-related questions necessary to determine compensation entitlement; therefore, the petitioners’ pending civil claim did not justify withholding the entire compensation or invalidating the Competent Authority’s order.

However, the Court considered it necessary to protect the petitioners’ interests by requiring Respondent Nos. 6 and 7 to furnish an undertaking and indemnity bond before receiving the 50% payment.

Respondent Nos. 6 and 7 were permitted to receive 50% of the zirat compensation upon furnishing an undertaking to return the amount if the reference proceedings were decided against them and executing an indemnity bond in favour of the Competent Authority.

The remaining 50% was directed to be deposited before the District Judge and disbursed in accordance with the decision in the Section 3H(4) reference.

The interim order was vacated, and there was no order as to costs.