NHAI Need Not Deposit Compensation Amount Until Challenge To Arbitrator's Award Is Finalized: Kerala High Court

The Kerala High Court has held that the National Highways Authority of India need not submit compensation awarded during pendency of challenge posed to the award.

The Court was considering an Appeal against a judgment of the single judge directing the Appellants to pay solatium and interest thereon, passed under the National Highways Act, 1956.

The Division Bench of Justice A. Muhamed Mustaque and Justice Harisankar V. Menon observed, "As rightly pointed out by the learned Standing Counsel for the NHAI, we find that the direction to deposit the amount before exhausting the statutory remedies under the law is legally unsustainable."

The Appellant was represented by Advocate Lejo Joseph George, while the Respondent was represented by Advocate Rose Michael.

Facts of the Case

The compensation fixed by the Special Deputy Collector was challenged before the District Collector/ Arbitrator by the Claimants, and awards were passed by the Arbitrator. The awards of the Arbitrator were challenged before the District Court under Section 34 of the Arbitration and Conciliation Act, 1996, read with Section 3G(6) of the Act, by the Claimants, and the same were modified by the District Court. 

It was challenging one of the orders of the District Court that the Appellant approached the Court by filing an Arbitration Appeal under Section 37 of the Act, 1996. In the meantime, the Claimants approached the Court seeking direction to the Appellant to pay the solatium and interest thereon, which resulted in the impugned judgment. Later, a stay on the same was granted.

Counsel for the NHAI submitted that, in the light of the National Highways (Manner of Depositing the Amount by the Central Government; Making Requisite Funds Available to the Competent Authority for Acquisition of Land) Rules, 2019, they are not bound to deposit the amount in view of the challenge they already made.

Taking note of the fact that a stay has already been granted in the Appeal preferred by the NHAI against the same award, the Court set aside the impugned judgment.

The Appeal was accordingly allowed.

Cause Title: National Highways Authority Of India vs. Lawerence (2025:KER:68397)

Appearances:

Appellant- Advocate Lejo Joseph George, Advocate E.C. Kuriakose, Advocate B.G. Bidan Chandran

Respondents- Advocate Rose Michael, Advocate Meeramol Jiji, Advocate Michael Paul Chittinappilly, Advocate C.P. Wilson, Advocate E.C. Kuriakose, Senior Government Pleader K.V. Manojkumar

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