10 January 2022, Monday

2 years ago

Award set aside because solatium and interest under the Land Acquisition Act not granted for lands acquired under the National Highways Act: Kerala High Court

20 December 2021 | PC Jose v. The Spl. Deputy Collector and others & batch matters | Arbitration Appeal 07 of 2013 & batch | PB Suresh Kumar & CS Sudha JJ | Kerala Court of India

The Kerala High Court has set aside arbitral awards in a batch appeal involving acquisitions under the National Highways Act, 1956 (“NH Act”) because solatium and interest were not awarded. The court ruled that a judgment of the Punjab and Haryana High Court in Golden Iron and Steel Forging 2008 SCC OnLine P&H 498 had decided the issue. It was binding on everyone throughout India subject to the application of the NH Act [citing Supreme Court’s Kusum Ingots (2004) 6 SCC 254]. Ignoring it, the court said, contravened the fundamental policy of Indian law.

The court also rejected an argument that the objection should not be considered because it was not taken in the set-aside petition. It said that the ground was available to the court on its own [see Section 34 (2) (b) ACA “(A)n arbitral award may be set aside by the Court only if ... the Court finds that …”]. On this point, see also our Biweekly Highlight on Supreme Court’ Sal Udyog here.

The High Court noted the request for modification of the award but did not grant it in view of the law laid down in M Hakeem 2021 SCC OnLine SC 473. Read our Update on the Supreme Court’s M Hakeem here. It also has a snapshot of the mechanism under the NH Act.

Read the decision here.

Some background information for the interested reader

The Land Acquisition Act, 1894—a pre-independence statute—dealt with compulsory land acquisitions for a public purpose. The NH Act, as originally enacted, did not provide for the acquisition of land. All acquisitions for National Highways were made under the Land Acquisition Act, and the owners were given, in addition to market value, solatium, as well as interest under the Land Acquisition Act. The National Highways Laws (Amendment) Act, 1997, brought several changes. Section 3(J) postulated that nothing in the Land Acquisition Act, 1894 shall apply to an acquisition under this Act, thus ousting the possibility of payment of solatium and interest. Section 3 (G) provided a mechanism to determine compensation (minus interest and solatium).

In Golden, a 2-judge bench of the Punjab and Haryana High Court, insofar as they affected solatium and interest, declared Sections 3 (J) and 3 (G) unconstitutional and struck them down. That High Court followed Golden in other judgments, some of which, in turn, went to the Supreme Court and were decided in Tarsem Singh (2019) 9 SCC 304. A 2-judge bench of RF Nariman and Surya Kant JJ approved Golden and other decisions in an elaborate judgment.

The LA Act was repealed by this time, and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, came into force. In 2015, a notification provided that the 2013 Act compensation provisions will apply to acquisitions under the NH Act. “The result is that both before the 1997 Amendment Act and after the coming into force of the 2013 Act, solatium and interest is payable to landowners whose property is compulsorily acquired for purposes of National Highways.” [para 13, Tarsem]. Justice Nariman noted this as an “important” circumstance to be borne in mind when judging the constitutional validity of the 1997 Amendment Act for the interregnum period from 1997 to 2015.

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