Punjab & Haryana HC Grants Landowners 2013 Act Interest Over Arbitrator Award In Land Acquisition For Highway

The Punjab and Haryana High Court has held that denying landowners whose compensation is enhanced in arbitration under the National Highways Act the same interest benefits available to similarly placed landowners would be discriminatory and violative of Article 14.

Justice Harkesh Manuja held, “In the present case, the learned Arbitrator, by denying parity to identically placed landowners even though only with regard to the interest component of the compensation, has acted arbitrarily and in breach of Article 14, thereby offending the fundamental principles of fair procedure.”

The case arose from the acquisition of 284.98 marlas of agricultural land belonging to Kuldeep Singh and another in Village Tibber, Gurdaspur, for the Delhi-Amritsar-Katra National Highway project. Notifications for the acquisition were issued on July 7, 2020 and February 9, 2021, following which the competent authority passed an award on April 9, 2021 fixing compensation at Rs.5,363 per marla, or about Rs.8.58 lakh per acre.

Dissatisfied with the compensation, the landowners sought arbitration, where the Arbitrator enhanced compensation to Rs.15 lakh per acre along with 100% solatium and 12% additional interest from the date of notification till the original award. However, the Arbitrator granted only 9% interest on the enhanced compensation from the date of filing of the arbitration proceedings till deposit, instead of granting statutory interest from the date of possession till actual payment.

The landowners then approached the High Court seeking interest under the 2013 land acquisition law on the enhanced compensation, along with statutory interest on the compensation originally awarded, contending that denying them the same treatment as similarly placed landowners was discriminatory.

NHAI opposed the plea, saying the landowners ought to have challenged the arbitral award through the remedy available under arbitration law rather than invoking the High Court's writ jurisdiction.

The Court rejected the objection, holding that the alternative remedy would not offer effective relief since it only allows an award to be set aside, not correction of a specific component such as interest.

The Court also noted that the proceedings were statutory arbitrations, with the Arbitrator appointed by the Central Government.

Drawing on the Supreme Court's ruling in Union of India v. Tarsem Singh, the High Court said landowners whose property is acquired for national highway projects cannot be denied compensation benefits that are available to others in similar acquisition cases. It emphasised that compensation is not limited to the base amount and solatium but also covers interest for delayed payment.

The Court then modified the arbitral award, directing that the landowners receive interest under the 2013 land acquisition law at 9% for the first year from the date possession was taken and 15% thereafter until the enhanced compensation is fully paid. It also directed payment of statutory interest on the compensation originally awarded

For Petitioners (Kuldeep Singh and another): Advocates Manoj Pundir, Dilpreet.

For Respondents (Union of India and others): Advocates Komal Bishnoi, Rishi Kaushal, Karunesh Kaushal.