(Prayer: This MFA is filed under Section 37(1)(C) of the Arbitration and Conciliation Act, against the judgment and decree dated 01.02.2024 passed in A.P.No.59/2022 on the file of the Prl. District and Sessions Judge, Chitradurga, and consequently allow the arbitration application filed before the 3rd Respondent the file of ARB CR No.45/2019 by also setting aside the order of the 3rd respondent dated 06.01.2022 and grant the compensation as prayed for.

This MFA is filed under Section 37(1)(C) of the Arbitration and Conciliation Act, against the judgment and award dated 01.03.2024 passed in A.P.No.34/2023 on the file of the Principal District and Sessions Judge, Chitadurga and consequently allow the arbitration application filed before the 3rd Respondent on the file of ARB CR No.169/2019 by also setting aside the order of the 3rd Respondent dated 16.06.2022 and grant the compensation as prayed for.)

C.A.V. Judgment

Vibhu Bakhru, CJ.

1. The appellants have filed their respective appeals under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 [A&C Act], impugning the orders passed by the Principal District and Sessions Judge, Chitradurga [District Court] in their respective applications under Section 34 of the A&C Act to set aside the arbitral awards rendered by respondent No.2 [Arbitral Tribunal]. The arbitral awards were rendered in respect of the applications filed by the appellants under Section 3G(5) of the National Highways Act, 1956 [NH Act].

2. The appellants owned lands located in various survey numbers of Doddasiddavvanahalli Village, Chitradurga Taluk. These lands or portions thereof, were acquired under the NH Act and respondent No.3 [SLAO] had determined the compensation payable for the same. The appellants being dissatisfied with the compensation as determined had filed their applications seeking enhancement of the compensation for their respective lands, which were the subject matter of acquisition under the NH Act. The appellants are aggrieved, as the compensation determined in respect of their lands is significantly less than the compensation fixed for lands acquired under various survey numbers in the adjoining village, Madakaripura Village, Chitradurga Taluk. The appellants claim that both villages, Madakaripura Village and Doddasiddavvanahalli Village, are in the same region, and the nature and value of the lands acquired in both villages are similar. The Arbitral Tribunal rejected their claim and found no fault with the compensation determined by the Special Land Acquisition Officer [SLAO]. The only question that arises in the present appeals are whether the arbitral awards rendered by the Arbitral Tribunal are vitiated by patent illegality and are thus liable to be set aside.

3. The controversy involved in the present appeals is similar. The learned counsel also submits that the evidence and material relied upon by the appellants for seeking enhancement of compensation fixed for their respective parcels of land is the same. In view of the above, the present appeals have been heard together. MFA.No.3519/2024 is considered the lead matter. The learned counsel agreed that the decision rendered in this appeal would be dispositive of other appeals as well. Thus, for the present appeals, we shall refer to the facts relevant to MFA.No.3519/2024.

Prefatory Facts

4. The appellant is the owner of land measuring a total of 2 acres falling in Survey No.359/1P-P1, situated at Doddasiddavvanahalli Village, Kasaba Hobli, Chitradurga Taluk. Out of the aforesaid parcel of land, 3030 sq.mtrs. of land amongst other tracts of land, was the subject matter of a notification dated 29.01.2016, issued under Section 3A(1) of the NH Act. The said lands were proposed to be acquired for the formation/widening of National Highway No.48. The final notification under Section 3D(1) of the NH Act was issued on 19.10.2016.

5. The SLAO passed a common award dated 28.10.2017, determining the compensation payable for the acquired lands in Doddasiddavvanahalli Village. In terms of the said award, the value of the dry land was determined at Rs.247.11 per sq. mtr. The appellant claimed that the said compensation was fixed arbitrarily and in violation of the method prescribed under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 [2013 Act].

6. The SLAO had determined the total compensation payable to the appellant with respect to the subject land at Rs.31,31,347/-.

7. The appellant moved an application (ARB.CR.No.45/2019) under Section 3G(5) of the NH Act impugning the compensation as determined by the SLAO. The appellant essentially sought reconsideration of the method adopted by the SLAO for determining the amount of compensation.

8. The Arbitral Tribunal dismissed the said application by an arbitral award dated 06.01.2022 [impugned award]. The Arbitral Tribunal found no infirmity with the compensation determined by the SLAO and therefore rejected the appellant's application.

9. Aggrieved by the same, the appellant preferred an application under Section 34 of the A&C Act, before the learned District Court (Arbitration Petition No.59/2022) for setting aside the impugned award. The learned District Court did not find any grounds for setting aside the impugned award and accordingly rejected the said application by an order dated 01.02.2024 [impugned order], which is impugned in the present appeal (MFA.No.3519/2024).

Impugned Award

10. The appellant had challenged the compensation fixed by the SLAO on various grounds. First, the subject lands acquired in Doddasiddavvanahalli Village for the project were similar to the lands acquired in Madakaripura Village, which was adjacent to Doddasiddavvanahalli Village. The lands in both the villages were acquired for the same project. However, the compensation for land in Madakaripura Village had been awarded at a market price of Rs.617.76 per sq.mtr. (Rs.25 lakhs per acre). But the value of the lands in Doddasiddavvanahalli Village was determined at Rs.247.11 per sq. mtr. (Rs.10 lakhs per acre). The appellant contended that the compensation fixed was discriminatory and violated Article 14 of the Constitution of India. Second, it contended that the market value of the lands at Doddasiddavvanahalli Village exceeded the guidance value adopted by the authorities. The appellant claims that it prayed before the High Court for enhancement of the basic value of the land from Rs.10,00,000/- per acre to Rs.28,02,363/-. Third, the appellant referred to a purchase deed dated 08.10.2015 and claimed that the value at which the said transaction was concluded ought to be taken as the market value.

11. The learned Arbitral Tribunal noted that the compensation for the subject land had been determined at Rs.247.11 per sq.mtr. and applied a multiple factor of 2, as the land was situated at a distance of 7 kilometers from the boundary of the Chitradurga city. The market value of the subject land was determined at Rs.14,97,487/-. The value was enhanced by 12% from the date of the preliminary notification, amounting to Rs.1,36,373/-. Further 100% compensation of Rs.14,97,487/- was added as solatium payable under the 2013 Act. Thus, total compensation was determined at Rs.31,31,347/- in terms of an award dated 28.10.2017. The Arbitral Tribunal also noted that the said amount was paid on 10.04.2018.

12. Insofar as the purchase deed dated 08.10.2015 is concerned, the Tribunal found that the price has been determined after taking the average price as mentioned in forty-four separate purchases and sale transactions, which included the transaction value in the purchase deed dated 08.10.2015.

13. The Arbitral Tribunal held that the compensation for the subject property had been fixed at the guidance price considering the local circumstances and there was no scope to assess the value of the land in the neighbouring village.

14. The Arbitral Tribunal found no fault with the method used by the SLAO for determining the compensation and accordingly rejected the appellants' applications for enhancement of compensation.

Reasons and Conclusion

15. At the outset, it is relevant to refer to the common award dated 28.10.2017 made by the SLAO determining the compensation payable for parcels of lands acquired in Doddasiddavvanahalli village. The said award indicates that the SLAO had examined the details of ninety-two numbers of sale transactions from 29.01.2013 to 29.01.2016 for similarly situated lands. Of the transactions examined, the SLAO had excluded four on the ground that the transaction value was very high and the extent of land was less than 10 guntas.

16. After excluding four (4) transactions, as stated above, eighty-eight (88) transactions remained and out of the said transactions, the SLAO had taken into account forty-four (44) transactions of the higher value and the remaining forty-four transactions, where the value of the land is lower were then excluded.

17. Based on the selected transactions, the average value of dry land is computed at Rs.3,03,332/- per acre. However, this was lower than the guidance value for agricultural dry lands of Doddasiddavvanahalii village, which abutted NH-48 (old NH-4). The said guidance value was Rs.10,00,000/- per acre. Accordingly, the value of the acquired lands was calculated at Rs.10,00,000/- per acre, which translated to Rs.247.11 per square meter.

18. Since the said lands were in rural areas beyond 7.5 kilometers from Chitradurga city, a multiplication factor of 2 was considered appropriate in terms of the notification issued by the State Government.

19. Additionally, the SLAO also computed interest at the rate of 12% per annum for the period commencing on the date of publication of the preliminary notification or the date of taking over of the land, whichever was earlier, till the date of the award.

20. Since the guidance value of the land was Rs.10,00,000/- per acre, and a multiplication factor of 2 is applied, the value of the land is determined at Rs.20,00,000/- per acre, a solatium equivalent to 100% of the market value is also provided. Thus the final market value of the dry land was determined at Rs.40,00,000/- per acre. The learned Arbitral Tribunal did not find any infirmity with the method of computing the compensation.

21. It is material to note that before the Arbitral Tribunal, the appellants had relied upon two separate sale deeds dated 14.07.2015 and 08.10.2015 (being sale deed Nos.4796/2015-16 and 2807/2015-16). The first sale deed dated 14.07.2015 related to 8½ guntas of land falling in SyNo.418/1B-2. This sale/purchase transaction was excluded by the SLAO on the grounds that the value stated in the said sale deed was disproportionately high and the area was less than 10 guntas. Insofar as the second sale deed is concerned, the transaction was included in the calculation of the average price of land. The Arbitral Tribunal also found no error in the SLAO's exclusion of certain transactions.

22. The only ground that is canvassed before this Court is that the SLAO had determined the compensation payable for land falling in Madakaripura village at a much higher rate. The common Award dated 30.10.2017 passed by the SLAO in respect of acquired lands located in Madakaripura village of Chitradurga Taluk also indicates that the SLAO adopted the same methodology as adopted for determining the lands of Doddasiddavvanahalli village. However in the case of Madakaripura village, the SLAO had used a lower multiplication factor of 1.5, since the said village was situated within a distance of 5 kilometers from the city limits of Chitradurga city. The said multiplication factor was lower than the one used to determine the value of lands in Doddasiddavvanahalli village. However, the determined compensation value was higher, as the average transaction value for lands located in Madakaripura village, as well as the guidance value, was higher. The Arbitral Tribunal rejected the contention of the appellants that the value of lands falling within the limits of Madakaripura village was required to be adopted for valuing the lands falling in Doddasiddavvanahalli village as well. The Arbitral Tribunal held that the value of the lands of another village could not be considered as relevant for determining the value of lands in Doddasiddavvanahalli village. The learned District Court found no fault in the Arbitral Tribunal in rejecting the appellant's contention.

23. Plainly, neither the SLAO nor the Arbitral Tribunal can be faulted for not taking into account the transactions relating to lands falling in Madakaripura village for determining the value of lands falling in Doddasiddavvanahalli village.

24. First of all there is no dispute that the subject land falling in Madakaripura village is situated within 5 kilometers from the boundaries of the city of Chitradurga and the acquired lands falling in Doddasiddavvanahalli village were situated 7.5 kilometers from the boundaries of Chitradurga city. The average value of the transactions of lands falling in Madakaripura village were significantly higher than that of lands falling in Doddasiddavvanahalli village. Although two villages are stated to be adjoining, the difference in value of the lands transacted in the villages were different, perhaps due to the proximity to Chitradurga city.

25. The learned counsel for the appellants relied on the decision of the Supreme Court in Krishnakumar v. State of Haryana: 2025 INSC 638 to support their contention that the lands of adjoining villages should be valued equally. In that case, the Supreme Court faulted the decision to award different compensations for lands in the villages Fazalwas and Kukrola, Tehsil Manesar, District Gurgaon.

26. A plain reading of the said judgment indicates that the Court had analysed the sale exemplars, which formed the basis of the said computation, and found that the differential compensation awarded lacked a sound evidentiary basis and thus violated the principles of equal treatment for similarly situated landowners. However, in the present case, the SLAO had considered a large number of sale deeds (eighty-eight in number) and determined the compensation on the basis of the guidance value since the average price of the land based on the transactions was lower than the guidance price.

27. In the case of lands situated within Madakaripura village, the guidance value assigned to dry lands was Rs.25,00,000/- per acre, which was considerably higher than the guidance value assigned to lands in Doddasiddavvanahalli village. The argument asserting that lands located in two neighbouring villages should not be awarded differing values lacks merit. We are unable to accept that the impugned awards warrants any interference on this basis.

28. We find no infirmity in the impugned awards. In view of the above, the present appeals are unmerited and are accordingly dismissed.