Bombay High Court Dismisses NHAI Appeal Against Enhanced Compensation For Petrol Pump Land Acquisition

The Bombay High Court has dismissed the National Highways Authority of India's (NHAI) appeal, finding no patent illegality in the arbitral award enhancing compensation to a petrol pump owner after partial acquisition of land for highway expansion resulted in loss of business access.

Justice Arun R. Pednekar upheld an arbitral award revising land compensation from Rs 595 to Rs 1,190 per square metre and granting compensation for loss of income, easementary rights, and business impact, while remanding the matter only for recalculation of statutory benefits in accordance with law.

The Court observed:

“The competent authority as well as arbitrator has fixed the loss of income of 10% which is reasonable and based on the material produced on record and that this Court in exercise of powers under section 37 cannot interfere with the same as it cannot be said that it is against the public policy of India nor it can be said that there is patent illegality.”

The dispute arose after NHAI acquired land belonging to Kerman Sam Amroliwala from Gat No. 213 at Pimpri Sekam village in Jalgaon district for highway expansion. Amroliwala was running a petrol pump on the adjoining land.

The competent authority acquired about 2542 sq. m. from the frontal portion and awarded Rs 19,69,229 as compensation at Rs 595 per sq. m., along with additional amounts for structures, the water tank, trees, and easementary components.

Dissatisfied with the valuation, Amroliwala sought enhanced compensation before the statutory arbitrator under the National Highways Act, 1956. By award dated February 12, 2015, with a corrigendum dated March 17, 2015, the arbitrator increased land value to Rs 1,190 per sq. m. and granted compensation towards loss of income, easementary rights, and interest at 9% per annum.

Both sides challenged the arbitral award by filing separate applications before the District Court under Section 34 of the Arbitration and Conciliation Act, 1996.

The Principal District Judge at Jalgaon dismissed both challenges by a common order dated 13 April 2016, after which NHAI and Amroliwala filed appeals before the High Court under Section 37.

NHAI argued that the arbitrator enhanced land compensation without evidence and wrongly granted 10% compensation towards loss of income and easementary rights. Amroliwala contended that the compensation remained inadequate as the land was commercially used for a petrol pump but had been treated only as having non-agricultural potential.

The court held that the arbitrator was justified in enhancing the land value after noting that the land was already being used for commercial purposes. It further recorded:

“Further due to expansion of the road, divider is placed on the road leading to loss of business from the traffic of opposite side of road.”

The court also held that acquisition of the frontal portion of the land affected the remaining petrol pump property and resulted in loss of access and business convenience. It observed:

“It is to be seen that frontal part of the property of the claimant is acquired for expansion of highway and balance land is with the claimant, who is still running the existing petrol pump. The petrol pump has obviously suffered on account of loss of certain frontal space.”

The Court further held:

“Thus, the claimant being also the adjacent land holder where he runs his petrol pump has suffered the loss of easementary right. Thus, granting 10% of loss of easementary right does not travel beyond the law as laid in the case of Tarsem Singh supra.”

Holding that the award did not suffer from patent illegality and that the scope of interference under Section 37 was limited, the Court refused to interfere with the compensation awarded by the arbitrator.

However, relying on the Supreme Court's ruling in Union of India v. Tarsem Singh, the Court remanded the matter to the arbitrator only for the limited purpose of recalculating statutory benefits, including solatium, in accordance with law.

Accordingly, the court dismissed NHAI's appeal and disposed of Amroliwala's appeal with limited directions for recomputation of statutory compensation components.

For Appellant (NHAI PIU Aurangabad): Advocate D.S. Manorkar.

For Appellant (Kerman Sam Amroliwala): Advocate A.B. Kale.

For Respondents: Advocates A.B. Kale, R.D. Sanap, D.S. Manorkar.