Denial Of Compensation Under A Particular Head Under NH Act Can Be Arbitrated: Rajasthan High Court

The Rajasthan High Court has held that the expression “amount determined” under the National Highways Act includes even cases where compensation is completely denied under a particular head, allowing landowners to challenge such decisions before an arbitrator.

Justice Sanjeet Purohit ruled, “The expression 'amount determined' cannot be confined to the narrower meaning of 'amount quantified.' Determination is a process whereby a claim is examined in light of the material available on record and adjudicated upon after due application of mind and recording of reasons. Acceptance of a claim in whole or in part, or its rejection in toto or under a specific head, is merely the consequence of such determination.”

The court further held, “Claims which are undervalued and claims assigned a nil value cannot be treated differently. Section 3G(5) provides a statutory mechanism for adjudication of all disputes relating to the award of compensation under the National Highways Act. An omission or refusal by the CALA to value a compensable component itself constitutes a dispute falling within the jurisdiction of the Arbitrator.”

The Court was dealing with a batch of writ petitions filed by landowners whose lands in Rajasthan's Sriganganagar district were acquired for the Bharatmala Project.

According to the petitioners, while compensation for the acquired land was awarded, compensation for standing kinnu and date palm trees was denied. The Competent Authority for Land Acquisition (CALA) held that the trees appeared to have been planted solely to claim enhanced compensation and therefore declined compensation under that head.

Aggrieved by the compensation awarded, particularly the denial of compensation for standing trees, the petitioners approached the arbitrator under Section 3G(5) of the National Highways Act.

However, the arbitrator refused to entertain the applications, holding them non-maintainable on the ground that since no amount had been quantified or awarded under the head of standing trees, there was no “determination of amount” under that head, and therefore no dispute regarding inadequacy or insufficiency of compensation could arise.

Before the High Court, the petitioners contended that once the CALA examined their claim for compensation for trees and rejected it by assigning reasons, that itself amounted to a determination under that compensation head, making the dispute arbitrable under Section 3G(5).

Accepting this contention, the Court held that claims relating to trees and other items attached to acquired land form part of the overall compensation payable, and disputes arising from either undervaluation or complete denial can be examined by the arbitrator.

“A decision refusing compensation, when supported by reasons, reflects due application of mind by the competent authority and therefore constitutes a 'determination,' albeit in the form of denial,” the Court observed.

The Court further observed that accepting the arbitrator's interpretation would create an anomalous situation where landholders whose claims were merely undervalued could seek arbitration, while those whose claims were completely rejected under a particular head would be left without an effective remedy.

Holding that the arbitrator had committed manifest illegality and jurisdictional error, the Court allowed the writ petitions, set aside the impugned orders, and remanded the matters to the arbitrator for adjudication on merits.

For Petitioners: Advocate Gopi Ram Goyal

For Respondents: Government Counsel Sanjay Raj Paliwal; Advocate Devki Nandan Vyas