NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI P. NAGARAJU @ CHELUVAIAH & ANR.

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NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]

determining the market value of the acquired land. In view of the said provision, it is open for the SLAO as well as the learned Arbitrator to rely upon the guideline and if the value provided therein is higher than the value of the property indicated from the other documents, it would be open to place reliance on the guideline issued for the purpose of the registration under the Stamp Act to determine the market value to be tendered as compensation for acquisition.

32Copy pinpoint32. In that view, the question that would arise for consideration in the case on hand is as to whether the award passed by the learned Arbitrator would stand vitiated merely because the guideline dated 28.03.2016which is marginally subsequent in point of time is reckoned, when the acquisition notification under Section 3A of NH Act was prior to the same i.e. on 01.02.2016. As already noted, Section3G(7)(a) of NH Act provides for determination of the market value on the date of publication of the acquisition notification under Section 3A. In a normal circumstance, for the determination of the market value, the rate prevailing prior to the date of the notification shall be the basis more particularly when the determination is made based on sale exemplars, as otherwise there is a likelihood of manipulation with escalated price being dishonestly indicated in the subsequent transactions. While taking note of the documents relied on for the purpose of determination of the market value, the existence of appropriate documents in the facts of each case would also become relevant. In circumstances where a document which is proximal to the date of acquisition is not available, it would be open to rely on a document which is much prior in point of time and if the time gap is more, determination could be made by providing for reasonable escalation depending on the area wherein the acquired property is situate and nature of property. Similarly, in a circumstance where no document which is prior to the date of the acquisition notification is available and the exemplars are subsequent to the date of acquisition notification, the value therein could be noted and reasonable de-escalation be considered to determine the appropriate value. Needless to mention that no strait- jacket formula can be applicable to all cases with arithmetical precision in the matter of determination of compensation. G

33Copy pinpoint33. In that backdrop, in the instant case it is no doubt true that the notification issued by the Department of Stamps and Registration on 07.11.2014 is prior to the acquisition notification dated 01.02.2016. It is also to be noted that there was a time gap of more than one year between the two. In a normal circumstance, even if the notification dated H

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A 07.11.2014 was taken into consideration it would be open for the learned Arbitrator to consider certain amount of escalation to determine the market value. The said process could have been adopted if there was no other document. At this juncture, it is necessary to note that the SLAO in fact had relied on the said notification dated 07.11.2014 and determined the market value but had ignored the fact that the lands regarding which the market value was to be determined had been converted for purposes other than agriculture. The SLAO had therefore taken into consideration the registration value which had been fixed in respect of the agricultural property. In that light, firstly it would have been open for the learned Arbitrator to take note of the value fixed for the commercial/industrial lands under that notification itself and provide certain amount of escalation.

34Copy pinpoint34. Notwithstanding such option of providing escalation to the already existing guideline value being available to the learned Arbitrator, what cannot be lost sight in the instant case is that, as evident from the notification dated 28.03.2016 the process for redetermining the guideline value had commenced through the notification bearing No.CBC-25/2014- D 15 dated 14.09.2015 and proceedings of the committee were also held during 2015-2016 which ultimately led to the notification dated 28.03.2016. Further, though the preliminary notification for acquisition was issued on 01.02.2016,the final notification under Section 3D of NH Act was issued on 23.09.2016.During the intervening period the guideline value notification dated 28.03.2016, the process for which had commenced through the notification dated 14.09.2015, was already published. Furthermore, when all these proceedings were in close proximity to the date of the preliminary notification for acquisition and the revision of the market value by the Department of Stamps and Registration itself was within a period of one year and 4 months from the earlier guideline value published on 07.11.2014, it would indicate that the escalation which was otherwise open for being worked out and applied by the learned Arbitrator on taking note of the notification dated 07.11.2014 was undertaken by the Department of Stamps and Registration and the benefit of considering such escalation was available to the learned Arbitrator by taking note of the guideline dated 28.03.2016, though technically published on a date subsequent to the preliminary notification dated 01.02.2016. In that view of the matter, in the present facts and circumstances, the reliance placed on the guideline value notification dated 28.03.2016 for reckoning the market value of the property acquired under the preliminary notification dated 01.02.2016, by itself cannot be accepted to be a patent illegality committed by the learned Arbitrator.

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NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]

35Copy pinpoint35. It is also to be noted that though the notification is dated A 01.02.2016 the award notice is dated 03.07.2017 by which time the guideline value notification dated 28.03.2016 was already in vogue.

36Copy pinpoint36. Having arrived at the conclusion that the learned Arbitrator had not committed any illegality much less patent illegality in reckoning the guideline value notification dated 28.03.2016, the issue that would B still remain for further consideration is as to whether an appropriate consideration has been made by the learned Arbitrator in the matter of applying the market value notified as a guideline value under the notification dated 28.03.2016 and as to whether the manner in which the said guideline was taken into consideration amounts to denial of opportunity to NHAI amounting to violation of principles of natural justice violating C Section 28(2). The further aspect which requires consideration is also as to whether the guideline value fixed in respect of ‘City Greens’ and ‘Zunadu’ being applied automatically to the land in question was justified and as to whether the learned Arbitrator has indicated sufficient reasons to place such reliance since the non-assignment of reasons or discussion would also amount to patent illegality being contrary to Section 31(3) of Act, 1996.

37Copy pinpoint37. To consider this aspect of the matter what is necessary to be taken note is that the SLAO had determined the compensation by taking note of the market value assigned to agricultural property under the notification dated 07.11.2014. The claimants were before the learned Arbitrator in terms of Section 3G(5) of the NH Act, a copy of which is available at Annexure-P6 to the appeal papers. The grievance essentially put forth in the claim petition is that the preliminary notification is dated 01.02.2016 and the notice of award for fixing the amount of compensation for the acquired land has been issued on 03.07.2017. In that light, it was contended that the market value of the non-agricultural lands adjoining the Bengaluru Mysuru National Highway such as the one owned by the claimant has increased considerably after the acquisition of the schedule land and accordingly the Registration Department has revised the guideline value. However, there is no reference to any specific notification relating to the guideline value much less the notification dated 28.03.2016. Further, there is no other indication to the manner in which the notification dated 28.03.2016 was brought on record though the said notification is published in the gazette. Comparison with lands in ‘Zunadu’ and ‘City Greens’ is also not pleaded. Further, as pointed out by the learned Additional Solicitor General the land situate in Madhapura and H

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A Mayaganahalli have been notified at serial Nos.519, 524 and 525 respectively with reference the same survey number as that of the acquired land. The land value for ‘Zunadu’ and ‘City Greens’ are notified separately at Serial Nos.250 and 529. In that circumstance not just to place reliance on the notification dated 28.03.2016 but also to apply the value notified for ‘Zunadu’ and ‘City Greens’ to the acquired lands, B necessary pleading in claim petition and evidence with opportunity to NHAI to rebut the same should have been placed before the learned Arbitrator. Based on the same a consideration in that regard was required to be made by the learned Arbitrator to arrive at a conclusion with regard to the applicability of the guideline value fixed under notification dated C 28.03.2016 for the lands that had been converted to purposes other than agriculture. Further while applying the guideline value fixed for ‘Zunadu’ and ‘City Greens’ to the acquired lands by discarding guideline value for the same survey number, necessary evidence to derive comparison between the lands so as to apply the value fixed in respect of another item of land in the same notification was necessary to be brought on record and was to be considered by the learned Arbitrator by assigning reasons.

38Copy pinpoint38. In that background a perusal of the award passed by the learned Arbitrator would indicate that the only discussion worth noting, after narration of the facts is contained in para 8 of the award which reads as hereunder: “8. On perusal of the written statement and documents produced by the applicant as well as the written statement and documents produced by the respondents, it is seen that the land in dispute has been acquired for the purpose of expansion of National Highway- F 275 and while rendering the Award, the price of the land in question has been arrived at, by considering it as dry land. However, since the land in question, even prior to the issue of 3(A) Land Acquisition Notification, has been converted for residential purpose as per Official Memorandum No.BDS/ALN/SR/89/91-92 dated 20.06.1992 of the Sub-Divisional Officer, Ramanagara Sub- G Division, proper price has to be fixed by considering the lands in question as residential lands. This procedure has not been adopted. Further, by revising the market price, the Stamps and Registration Department has issued a Notification dated 28.03.2016 in respect of the lands belonging to City Greens situated in the Sy.Nos. H coming under the said Mayaganahalli village wherein, the price of

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NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]

converted sites/sites of layouts approved by competent authority, has been fixed at Rs.15,400/- per Sq.Mtr. That their lands are more developed than the lands of Green City and has hence prayed for grant of compensation at a higher rate than the same. On perusal of the said Notification of the Stamps and Registration Department, it is seen that the price of the applicant’s converted lands situated in the survey numbers of Mayaganahalli village is fixed at Rs.8,000/- per Sq. Mtr. and the price of the converted lands of Green City in the same village has been fixed at Rs.15,400/ - per Sq. Mtr. Section 26 of the said Act clearly defines the procedure for fixing the market price. Even then, it could be seen that the applicant has not been given the fair price. Therefore, it is opined that instead of the present price fixed for the lands in question, its price has to be fixed on par with the rates fixed by the Stamps and Registration Department on the basis of land conversion value in respect of the similarly situated lands of the same village and that compensation be awarded accordingly. D Further, since the Award has been passed by fixing the value of the assets and structures existing on the lands in question as per the assessment of the concerned officers, the prayer of the applicant to enhance compensation for the same has been rejected and the following order is passed.”

39Copy pinpoint39. The above extracted portion of the award would demonstrate, E prior to said finding being recorded, the learned Arbitrator has not referred to the manner in which the notification dated 28.03.2016 was brought on record and relied upon in the proceedings. The award, except for recording that the notification indicates the value fixed at Rs.8,000/- per sq.mtr in respect of converted land situate in the survey numbers of F Mayaganahalli village and stating that the price of the converted lands of the Green City in the same village has been fixed at Rs.15,400/- per sq.mtr has not referred to any evidence relating to the comparability with that land despite noting the guideline value of Rs.8000/- fixed for claimant’s land. The very fact that the layout is named as ‘City Greens’ and ‘Zunadu’ appears to be that the lands therein are situate in a self- G contained and developed lay out with all civic amenities due to which it is separately indicated in the notification for specifically fixing the guideline value. Even if the lands belonging to the claimants is converted for residential purposes, value for the same was fixed in the notification by specifying the survey number. If the value as fixed under the guideline H

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A for ‘City Greens’ and ‘Zunadu’ was to be adopted as comparable land to the acquired land, necessary reasons ought to have been indicated in the award with reference to the evidence brought on record, with opportunity to NHAI to have their say on that aspect and reasons justifying such comparison should have been recorded. Further the manner in which the notification dated 28.03.2016 has been relied upon and the value fixed under the said notification in respect of two distinct layouts has been automatically made applicable to the lands in question despite noting the guideline value notified for the same survey number would indicate that the said exercise has been undertaken without sufficient opportunity to NHAI. Further, appropriate reasons have not been indicated by the learned Arbitrator to arrive at the conclusion to uniformly adopt the value of Rs.15,400/- per sq.mtr fixed in respect of lands in a layout which was separately indicated in the notification. As stated above, if there is evidence brought on record in the manner known to law with opportunity to the opposite side, it certainly would be open for the learned Arbitrator to adopt the said value. However, from the pleading in the claim petition and from the portion extracted from the award which is the only basis for the ultimate order made by the learned Arbitrator, it would indicate that the NHAI did not have sufficient opportunity before the learned Arbitrator to controvert the material sought to be relied upon by the learned Arbitrator nor has the learned Arbitrator indicated sufficient reasons which to that extent would indicate patent illegality in the award passed by the learned Arbitrator being contrary to Section28(2) and 31(3) of Act, 1996.

40Copy pinpoint40. That being the fact situation and also the position of law being clear that it would not be open for the court in the proceedings under F Section 34 or in the appeal under Section 37 to modify the award, the appropriate course to be adopted in such event is to set aside the award and remit the matter to the learned Arbitrator in terms of Section 34(4) to keep in view these aspects of the matter and even if the notification dated 28.03.2016 relied upon is justified since we have indicated that the same could be relied upon, the further aspects with regard to the appropriate market value fixed under the said notification for the lands which is the subject matter of the acquisition or comparable lands is to be made based on appropriate evidence available before it and on assigning reasons for the conclusion to be reached by the learned Arbitrator. In that regard, all contentions of the parties are left open to be put forth before the learned Arbitrator.

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NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]

C.A. No.4681/2022 @ SLP(C)No.2503/2022 A Leave granted.

41Copy pinpoint41. In the instant case the land acquired is in Survey No.40/8, Kumbalagodu Village, Bengaluru, South Taluk, Bengaluru District, measuring 121 sq. mtr. The purpose of acquisition is the same as in the earlier cases and the consideration relating to determination of market value and award of compensation is also similar to those cases. However, in the instant case the acquisition is under a different preliminary notification dated 02.02.2016 and the final notification is dated 04.10.2016.

42Copy pinpoint42. Insofar as determination of the market value, both by the SLAO and the learned Arbitrator, it is based on the guideline value notification dated 27.10.2014 published by the Department of Stamps and Registration as per which it is fixed at Rs.17,200/- sq. mtr. The guideline value notification relied upon in this case is prior to the acquisition notification and as such there is no grievance in that regard. Irrespective of the contentions put forth on behalf of the NHAI at this juncture, the award passed by the learned Arbitrator would disclose that the NHAI while opposing further enhancement by the learned Arbitrator had contended to sustain the determination of market value at Rs.17,200/- per sq. ft. made by the SLAO by contending that the market value determined is in accordance with law.

43Copy pinpoint43. Hence, the issue that arises for consideration herein is only as to whether the course adopted by the learned Arbitrator to apply the subsequent notification dated 05.12.2018 issued by the Department of Stamps and Registration to reckon the special instructions contained in that notification so as to enhance the market value by 50% of the guidance value which is provided in the notification dated 27.10.2014 and thus arrive at the market value of Rs.25,800/- per sq. mtr. With the aid of two different guideline value notifications is justified.

44Copy pinpoint44. The learned Additional Solicitor General has highlighted this aspect of the matter as patent illegality in passing the award in this case. It is contended that the learned Arbitrator has chosen to apply the G Notification dated 05.12.2018 to consider enhancement by 50% for industrial land since it was not specifically provided for in the guideline, by relying on the special instruction in guideline of 2018. In such event, the guideline value which was much lesser in the notification of 2018 itself should have been taken into consideration. It is pointed out that the guideline value for residential land in the 2018 Notification works out to H

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A Rs.11,900/- per sq. mtr. If 50% of the same is added to derive the value for industrial land, it will be Rs.16,680/- per sq. mtr. But the learned Arbitrator has chosen to sustain Rs.17,200/- awarded by SLAO based on the guideline value of 2014 notification but relied on the 2018 notification to apply the 50% value addition of the same to determine market value for industrial land, which is not sustainable. It is contended B that if Clause 6 of special instruction was applied the market value will work out to Rs.12,900/- i.e. 75% of Rs.17,200/-.

45Copy pinpoint45. The learned counsel for the claimant contended, the fact remains that the industrial land belonging to the claimant has been acquired. It is contended, in the notification dated 27.10.2014 although C Kumbalagodu Industrial Area is mentioned, the categories of land for which value has been indicated does not include industrial plot. As such the value for industrial plot is to be determined by applying the provision made in special instructions. It is contended, though the learned Arbitrator has noted the special instruction under 2018 Notification, even under the D 2014 Notification, the special instruction provides for addition of 50% to arrive at the value of industrial plot. Hence the enhancement to the tune of Rs.8600/- per sq. mtr. is justified.

46Copy pinpoint46. Insofar as the learned Arbitrator having adopted the guideline issued in 2014, the same is prior to the date of the notification for acquisition and the aspects considered relating to date of notification in the earlier set of cases does not arise. Hence, it is justified. The value indicated at serial no.51 in the notification is for Kumbalagodu Industrial Area, but the value stated therein is for residential sites, the approval for which was obtained from the different authorities. Though reference is to Kumbalagodu Industrial Area, the value of the industrial plot has not been specified. It cannot also be assumed that the value indicated therein itself is for industrial site, since in the same entry in Serial No.51, the value of residential buildings is also indicated. Hence, in the absence of the SLAO undertaking the exercise for determining the market value of the industrial land which was acquired, the learned Arbitrator was required to do so.

47Copy pinpoint47. The learned Arbitrator, however, while undertaking the said exercise, as evident from the award has relied on the market value at Rs.17,200/- sq. mtr. based on the guideline value Notification dated 27.10.2014. But for determining the market value, the special instructions in the notification dated 05.12.2018 is relied upon. Such procedure H

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NAGARAJU @ CHELUVAIAH & ANR. [A. S. BOPANNA, J.]

adopted is not justified and amounts to material irregularity on the face A of the award. The learned counsel for the claimant contended that the learned Arbitrator though relied on 2018 notification, the Special Instruction No.3 in the 2014 notification also provides for adding 50% of the rates applicable if the acquired land is adjoining the National Highway.

48Copy pinpoint48. Firstly, when we are of the opinion that the learned Arbitrator B has committed patent illegality in applying two different notifications in determining the market value, keeping in view the scope available under Section 34 of Act, 1996 it would not be open for this Court to substitute our view to that of the learned Arbitrator and modify the award. Further, the learned Additional Solicitor General sought to refer to Special Instruction No.6 in the notification of 2014 to arrive at the market value even if it is accepted that the value of industrial land is not indicated in the notification. These are aspects to which the learned Arbitrator is required to advert so as to arrive at the conclusion. In the circumstance where we have opined that the award passed by the learned Arbitrator suffers from patent illegality and appropriate consideration is necessary, the only course open is to set aside the award and allow the learned Arbitrator to reconsider the matter on that aspect.

49Copy pinpoint49. From the conclusion reached above, in both the set of cases it is evident that awards passed by the learned Arbitrator is to be set aside and the matters be remanded in terms of Section 34(4) of Act, 1996 so as to enable the learned Arbitrators to assign reasons to arrive at their conclusion. In this regard, it is made clear that we have approved the guideline value notification dated 28.03.2016 being reckoned for determining the market value. Hence, the claimants in any event would be entitled to determination of market value at the guideline value indicated vide notification dated 28.03.2016 for the respective properties in F Madhapura, Mayaganahalli etc. as against what is awarded by SLAO if there is no other evidence indicating higher market value. The consideration to be made by the learned Arbitrator however is as to the material and evidence if any available to treat the acquired land as comparable to the lands situate in ‘City Greens’ and ‘Zunadu’ layout G and award the compensation based on the guidance value indicated for the lands in the said layout if found comparable. The reason for not applying the guideline value indicated for the lands in the very survey number of the acquired lands is to be disclosed on such consideration. Needless to mention that any other sale transaction if higher than the guideline value can also be considered to arrive at just and fair H

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A compensation. Since in any event the claimants would be entitled to higher amount than what was awarded by SLAO, the part of the amount awarded by the learned Arbitrator which was deposited before this Court and disbursed to the claimants will be subject to adjustment based on the quantum of compensation that would ultimately be decided by the learned Arbitrator. In the matter arising out of SLP No.2503/2022 the applicability B of the appropriate special instruction, if any, is to be considered.

50Copy pinpoint50. For all the aforesaid reasons, (i) the judgment dated 26.07.2021 in MFA. No.2040/2021(AA) and connected matters approving the Order dated 26.02.2021 in suits under Section 34 of Act, 1996 and in MFA No.2041/2021 (AA) approving order dated 27.01.2021 are set aside. C Consequently, the awards dated 13.08.2019 and connected awards, and the award dated 06.01.2020 which are the subject matter in these appeals are set aside. (ii) The arbitration proceedings bearing Case Nos.: LAQ(A)/NH-275/CR/137/2017-18, LAQ(A)/NH-275/CR/134/2017-18, D LAQ(A)/NH-275/CR/135/2017-18, LAQ(A)/NH-275/CR/132/2017-18, LAQ(A)/NH-275/CR/139/2017-18, LAQ(A)/NH-275/CR/41/2019-20 are remanded to the Deputy E Commissioner and Arbitrator, NH-275, Ramanagar District, Ramanagar and Case No.LAQ/ARB/BNG/NH-275/CR-02/2/2018-19 is remanded to Deputy Commissioner and Arbitrator, Bangalore Rural District.

51Copy pinpoint51. The appeals accordingly are allowed in part with no order as to costs.

52Copy pinpoint52. The pending applications, if any, stand disposed of.

Divya Pandey Appeals partly allowed. (Assisted by : Shubhanshu Das, LCRA)