Delve into the legal intricacies surrounding the determination of market value in land acquisition cases as analyzed by the court. The case highlights the challenges faced in assessing fair compensation based on various factors and guideline values. Stay tuned to understand the nuances of compensation determination in legal proceedings.
Facts
- NHAI filed an arbitration suit under Section 34 of the Act, 1996 challenging the method of determining market value and compensation.
- SLAO passed awards determining compensation at Rs.2026/- and Rs.17200/- per sq. mtr based on material available.
- SLAO considered sale exemplars and site value from notification for compensation determination.
- Claimants were dissatisfied with the compensation awarded by SLAO and filed petitions before the Arbitrator.
- Arbitrator adopted guideline values for residential and industrial property, but used values from a different notification for a nearby layout.
- The acquisition process was part of forming the Bengaluru-Mysore (NH-275) Highway.
- Arbitrator considered a specific survey number converted for industrial use and awarded compensation based on guideline values.
- Arbitrator also referenced subsequent notifications for guideline values and noted land conversions from agricultural to residential/industrial purposes.
- NHAI challenged the award stating it was against the law, public policy, and principles of natural justice.
- NHAI argued for the relevant market value as of the acquisition notification date, determining compensation at Rs.15,400/- per sq. mtr.
- NHAI appealed the High Court’s judgment in MFA No.2037/2021 and connected matters, with the claimant land losers as respondents.
- NHAI filed arbitration suits under Section 34 of the Act, 1996.
- The awards by the Deputy Commissioners and Arbitrators enhanced compensation from Rs.2026/- per sq. mtr to Rs.15,400/- per sq. mtr and from Rs.17,200/- to Rs.25,800/- per sq. mtr.
- NHAI’s appeals before the High Court were dismissed, upholding the judgments by the Principal District Sessions Judges in Ramanagara and Bengaluru Rural District.
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Arguments
- The Additional Solicitor General highlighted the patent illegality in the award.
- The notification dated 27.10.2014 did not include the value for industrial land.
- The proceedings under Section 34 of the Act, 1996 are summary and do not require framing of issues or leading evidence.
- The Arbitrator considered different guideline notifications in determining market value, which was deemed as illegal.
- The District Judge and High Court did not interfere despite the alleged patent illegality in the award.
- The Arbitrator’s application of different guideline values for industrial land was deemed unsustainable.
- The SLAO and Arbitrator’s reasoning for determining market value was criticized.
- The Arbitrator’s reliance on the 2018 notification was questioned, as it did not align with the specific circumstances of the case.
- The Arbitrator’s lack of appropriate consideration of relevant evidence and guideline values was highlighted as a concern.
- The limited scope for interference under Section 34 of the Act, 1996 was acknowledged.
- Inconsistencies in the judgment were pointed out and clarification was sought.
- The determination of compensation should consider all factors for ‘fair and just compensation’.
- The parameters contained in Section 28 of the RFCTLARR Act, 2013 should also be applied.
- Special instructions and provisions regarding adding percentages to market value were discussed.
- The Arbitrator’s application of different notifications for determining market value was deemed illegal.
- The Arbitrator’s lack of scientific determination of market value for converted lands was criticized.
- Controversy regarding the special instruction under the 2018 Notification discussed.
- The addition of 50% for industrial plot value in the 2014 Notification highlighted.
- Claim of error in the Arbitrator’s award as a patent illegality emphasized.
- Concerns raised by the Additional Solicitor General about the financial burden and potential floodgates of litigation if High Court’s order is interpreted differently.
- The reference to Special Instruction No.6 in the 2014 Notification for determining market value emphasized.
- Arbitrator’s requirement to consider these aspects for reaching a conclusion mentioned.
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Analysis
- Legislative intention behind Section 34(4) in the Arbitration Act is to make the award enforceable after giving the Tribunal an opportunity to correct curable defects
- High Court cannot proceed further to determine issues on merits if curable defects exist in the award
- Land values for ‘Zunadu’ and ‘City Greens’ are separately notified at specific serial numbers
- Unintelligible awards are to be set aside unless parties agree to forgo detailed reasoning
- Important to differentiate between inadequacy of reasons in an award and completely unintelligible awards
- Clarification that certain observations made in previous cases were not based on any specific provision of the Act
- Award in the case was rendered without sufficient reasons and appeared muddled and confused
- Award was perceived as merely restating the contentions of both parties
- Awarding of solatium and interest in relation to national highway acquisitions does not affect compensation determination
- Sections 18, 24(3), and other provisions ensure parties have full opportunity to present their case and access relevant information
- The clarification regarding the timeline of acquisition notifications and guideline value notifications
- Section 26 of the RFCTLARR Act, 2013 provides factors for determining market value by the Collector.
- The Act is deemed to only be applicable to the determination of market value as per the notification dated 28.08.2015.
- The Collector must consider various factors when determining compensation for acquired land.
- These factors include damage to standing crops and trees, damage from severing the land, impact on other properties or earnings, expenses for changing residence or business, and diminution of profits.
- The market value of the land at the time of notification under Section 3A is also a key factor for compensation calculation.
- Patent illegality should be illegality which goes to the root of the matter.
- A contravention of the Arbitration Act itself would be regarded as a patent illegality.
- The expression ‘furnishes proof’ in Section 34 is only to examine the record.
- Patent illegality would mean contravention of the 1996 Act and of terms of the contract.
- An Arbitral Tribunal must decide in accordance with the terms of the contract, but conclusions based on no evidence or ignoring vital evidence are perverse and can be set aside on the ground of patent illegality.
- Consideration of documents not supplied to the other party is a facet of perversity falling within the expression ‘patent illegality.’
- If an Arbitrator gives no reasons for an award and contravenes Section 31(3) of the Act, it amounts to patent illegality on the face of the award.
- Consideration of any other sale transaction higher than the guideline value for arriving at fair compensation
- Disclosure of reasons for not applying guideline value for the acquired lands in the same survey number
- Evaluation of available material and evidence to determine comparability of acquired land with lands in ‘City Greens’ and ‘Zunadu’ layout
- Possibility of awarding compensation based on guidance value for lands in said layout if found comparable
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Decision
- Arbitration proceedings in multiple cases remanded to respective Deputy Commissioners and Arbitrators
- One specific case remanded to Deputy Commissioner and Arbitrator in Bangalore Rural District
- SLP No. 2503/2022 to consider the applicability of appropriate special instructions
- Previous awards dated 13.08.2019 and 06.01.2020 set aside
- Claimants entitled to higher compensation than previously awarded
- Amount deposited and disbursed subject to adjustment based on final compensation decision by the learned Arbitrator
- Judgment in MFA No.2040/2021(AA) and connected matters, as well as MFA No.2041/2021(AA) set aside
Case Title: NATIONAL HIGHWAYS AUTHORITY OF INDIA Vs. P. NAGARAJU @ CHELUVAIAH (2022 INSC 689)
Case Number: C.A. No.-004671-004671 / 2022
