Supreme Court Clarifies Compensation Under National Highways Act: Union of India vs. Balwant Singh (2019)

Date of the Judgment: September 03, 2019
Citation: Civil Appeal Nos. 6981-6982 of 2019 (Arising out of SLP (C) Nos. 10200-10201/2019) with Civil Appeal Nos. 6983-6984 of 2019 (Arising out of SLP (C) Nos. 11117-11118/2019)
Judges: Justice Rohinton Fali Nariman and Justice Surya Kant
Can a judgment applicable to the Land Acquisition Act be applied to the National Highways Act? The Supreme Court addressed this question in a recent judgment, clarifying the distinct mechanisms for determining compensation under these two acts. The core issue revolved around whether a previous judgment concerning the Land Acquisition Act could be applied to cases under the National Highways Act. The Supreme Court, in this case, held that the mechanisms under both the Acts are different and thus the previous judgment is not applicable to the present case. The judgment was delivered by a two-judge bench comprising Justice Rohinton Fali Nariman and Justice Surya Kant.

Case Background

The appeals before the Supreme Court arose from a judgment that had applied a precedent related to the Land Acquisition Act to cases under the National Highways Act. The Union of India challenged this application, arguing that the two Acts have different schemes for determining compensation. The respondents, on the other hand, contended that the point raised by the Union of India was not raised in the review petition, and thus, should not be considered.

Timeline

Course of Proceedings

The Supreme Court noted that the impugned judgment had incorrectly followed the case of Madishetti Bala Ramul (D) through LRs vs. The Land Acquisition Officer, 2007 (3) RCR (Civil) 455, which was specific to the Land Acquisition Act. The Union of India argued that Section 3G(5) of the National Highways Act provides a different scheme for compensation than the Land Acquisition Act. The respondents argued that the point raised by the Union of India was not raised in the review petition. However, the Supreme Court observed that a Special Leave Petition had been filed against the judgment dated 03.02.2016, where this point was raised.

Legal Framework

The Supreme Court highlighted the difference between the Land Acquisition Act and the National Highways Act, specifically focusing on Section 3G(5) of the National Highways Act. The Court noted that under the Land Acquisition Act, an award by the Land Acquisition Officer is considered an offer from the government, which cannot be challenged by the government itself as per Section 25 of the Land Acquisition Act. However, Section 3G(5) of the National Highways Act provides that if either party is not satisfied with the amount determined by the competent authority, the matter can be referred to an arbitrator appointed by the central government.

The relevant provision is:

“Section 3G(5) of the National Highways Act: If the amount determined by the competent authority under sub-section (1) or sub-section (2) is not acceptable to either of the parties, the amount shall, on an application by either of the parties, be determined by the arbitrator to be appointed by the Central Government.”

Arguments

Arguments by the Union of India:

• The primary argument of the Union of India was that the High Court had erred in applying the judgment of Madishetti Bala Ramul (D) through LRs vs. The Land Acquisition Officer, 2007 (3) RCR (Civil) 455, which was specific to the Land Acquisition Act, to cases under the National Highways Act.
• The Union of India contended that the scheme under Section 3G(5) of the National Highways Act is entirely different from that of the Land Acquisition Act.
• It was argued that under the Land Acquisition Act, the award by the Land Acquisition Officer is an offer from the government and cannot be challenged by the government, as per Section 25 of the Act.
• The Union of India submitted that under Section 3G(5) of the National Highways Act, either party can apply for arbitration if they are not satisfied with the compensation determined by the competent authority.

Arguments by the Respondents:

• The respondents argued that there was a considerable delay in the matter, which was condoned by the Court.
• They also pointed out that a review petition was filed, which was limited to two types of land, and the point raised by the Union of India was not urged in that review petition.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues but the core issue was whether the judgment of Madishetti Bala Ramul (D) through LRs vs. The Land Acquisition Officer, 2007 (3) RCR (Civil) 455, which was based on the Land Acquisition Act, could be applied to cases under the National Highways Act.

Treatment of the Issue by the Court

Authorities

Cases Relied Upon by the Court:

• Madishetti Bala Ramul (D) through LRs vs. The Land Acquisition Officer, 2007 (3) RCR (Civil) 455 – This case was followed by the High Court but was held to be inapplicable to the National Highways Act by the Supreme Court.

Legal Provisions Considered by the Court:

• Section 25 of the Land Acquisition Act – The Court noted that under this section, the government cannot challenge its own offer of compensation.
• Section 3G(5) of the National Highways Act – The Court highlighted that this section allows either party to seek arbitration if they are not satisfied with the compensation determined by the competent authority.

Judgment

How each authority was viewed by the Court?

• The judgment in Madishetti Bala Ramul (D) through LRs vs. The Land Acquisition Officer, 2007 (3) RCR (Civil) 455* was deemed inapplicable to the National Highways Act due to the different compensation mechanisms.
• Section 25 of the Land Acquisition Act was used to highlight the difference in the scheme of the Land Acquisition Act.
• Section 3G(5) of the National Highways Act was the basis for the court’s reasoning, emphasizing the arbitration mechanism available to both parties.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the distinct legal frameworks of the Land Acquisition Act and the National Highways Act. The Court emphasized that the compensation mechanism under Section 3G(5) of the National Highways Act is fundamentally different from that of the Land Acquisition Act. The Court noted that the Land Acquisition Act treats the award by the Land Acquisition Officer as an offer from the government, which the government itself cannot challenge. However, under the National Highways Act, if either party is not satisfied with the compensation, they can seek arbitration. This difference in the legal framework was the primary reason for the Court to set aside the impugned judgments.

The Court’s reasoning is evident in the following quotes:

“Mr. Mukul Rohatgi, learned Senior Advocate appearing for the Union of India, submits that the impugned judgment passed in these two cases suffers from an obvious error in that the judgment of this Court in the case of Madishetti Bala Ramul (D) through LRs vs. The Land Acquisition Officer, 2007 (3) RCR (Civil) 455 was followed, which judgment applied only to the Land Acquisition Act and which cannot be made applicable to the National Highways Act…”

“The scheme of the National Highways Act, on the other hand, as disclosed by Section 3G (5) is that the amount determined by the competent authority under the said Act may, on application of either of the parties, if it is not so acceptable, be then determined by the Arbitrator to be appointed by the central government.”

“In this view of the matter, it is obvious that the impugned judgments in these two matters are incorrect and are therefore set aside.”

Key Takeaways

• The Supreme Court clarified that judgments related to the Land Acquisition Act cannot be automatically applied to cases under the National Highways Act.
• Section 3G(5) of the National Highways Act provides a distinct mechanism for determining compensation, which includes arbitration if either party is not satisfied.
• The Court emphasized that the government can challenge the compensation awarded under the National Highways Act through arbitration, unlike under the Land Acquisition Act.
• The High Court was directed to decide the cases under Section 37 of the Arbitration Act.

Directions

The Supreme Court remanded the cases to the Punjab & Haryana High Court to be decided under Section 37 of the Arbitration Act. The Chief Justice of the Punjab & Haryana High Court was requested to constitute an appropriate bench to hear these matters at the earliest.

Development of Law

The ratio decidendi of this case is that the compensation mechanism under the National Highways Act, specifically Section 3G(5), is distinct from the Land Acquisition Act. This judgment clarifies that precedents under the Land Acquisition Act cannot be automatically applied to cases under the National Highways Act. This also clarifies that the government can challenge the compensation awarded under the National Highways Act through arbitration, unlike under the Land Acquisition Act.

Conclusion

The Supreme Court’s judgment in Union of India vs. Balwant Singh clarifies the distinct mechanisms for determining compensation under the National Highways Act and the Land Acquisition Act. The Court held that the High Court had erred in applying a precedent related to the Land Acquisition Act to cases under the National Highways Act. The Supreme Court remanded the cases to the High Court to be decided under the Arbitration Act. This judgment ensures that compensation under the National Highways Act is determined through the correct legal procedures.