Bombay High Court Holds Denial Of 30% Solatium Is Computational Error In NH Land Acquisition Cases

The Bombay High Court recently held that denial of 30% solatium in arbitral awards arising from compulsory land acquisition for National Highways projects constitutes a computational error, which can be corrected under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, without undertaking a merits review.

Justice Somasekhar Sundaresan allowed a batch of appeals filed by landowners, including Prashant Vasant Koregaonkar and others, challenging arbitral awards in proceedings under the National Highways Act, 1956. It directed payment of 30% solatium to the claimants and modified the impugned awards accordingly.

“The law declared by the Supreme Court renders the computation of the solatium as imperative. Such computation is merely computation of 30% of the value of the compensation. The error in the Arbitral Award is clearly a computational error. Correcting this error would not undermine or impact any other component of the Arbitral Award. Therefore, the mere computation of the 30% amount payable on the compensation awarded for the land acquisition in question, in my opinion, in the facts of this case, falls within the ambit of a computational error.”

The dispute arose from acquisition of land for National Highways projects in Nashik pursuant to a notification dated 3 September 2009. The landowners contended that despite specifically claiming solatium before the arbitral tribunal and the Section 34 court, the awards omitted the statutory 30% solatium under Section 23(2) of the Land Acquisition Act, 1894. The District Court rejected the challenge, holding that arbitral awards could not be modified.

Before the High Court, the appellants argued that the denial was contrary to binding Supreme Court precedent recognising entitlement to solatium in National Highways acquisitions. The Court noted that the notification post-dated the Punjab and Haryana High Court's ruling dated 28 March 2008 in Golden Iron and Steel, which held that exclusion of solatium and interest under the National Highways Act was unconstitutional.

Relying on the Constitution Bench decision in Gayatri Balasamy v. ISG Novasoft Technologies Ltd., the Court held that jurisdictions under Sections 34 and 37 permit correction of computational errors in arbitral awards, so long as there is no re-appreciation of merits or rewriting of the award.

It held that computation of solatium was a purely arithmetical exercise flowing from settled law, and its omission did not disturb the substantive findings of the award.

Accordingly the High Court modified the arbitral awards and directed computation and payment of 30% solatium within 12 weeks.