The Punjab & Haryana High Court has ruled that writ courts exercising jurisdiction under Articles 226 and 227 of the Constitution are justified in applying a broader supervisory scrutiny to statutory arbitrations conducted under the National Highways Act, 1956, to ensure fairness and parity for landowners.

It modified an arbitral award to grant statutory interest under the 2013 Land Acquisition Act from the date of possession, observing that the possibility of perceived institutional bias cannot be ruled out when arbitrators are unilaterally appointed by the Central authority, and that the restrictive remedy under Section 34 of the Arbitration Act—which allows only setting aside and not modifying an award—fails to provide effective relief to aggrieved landowners.

The Bench of Justice Harkesh Manuja observed, “Although the scope of interference under writ jurisdiction against arbitral awards rendered under the Arbitration and Conciliation Act, 1996 is undoubtedly limited, the same principle cannot be applied with equal rigidity to arbitration proceedings conducted under the National Highways Act, 1956…Also, given that these statutory arbitrators are appointed by the Central authority itself, the possibility of perceived institutional bias or a lack of complete neutrality cannot be altogether ruled out. In such circumstances, a writ court exercising jurisdiction under Articles 226/227 of the Constitution of India may be justified in exercising a broader supervisory scrutiny to ensure justice, fairness, and parity to the aggrieved landowner.”

Advocate Manoj Pundir appeared for the Petitioners, while ASG Karunesh Kaushal and Advocate Komal Bishnoi appeared for the Respondents.

Factual Background

The petitioners were the owners of a certain parcel of agricultural land situated in Village Tibber, Tehsil and District Gurdaspur. The said land was acquired by the competent authorities for a public purpose, specifically for the development of the Delhi-Amritsar-Katra National Highway. The statutory process for acquisition was initiated and completed through notifications issued under the provisions of the National Highways Act. Subsequently, the Competent Authority for Land Acquisition (CALA) passed an initial award, assessing the market value of the acquired land on an acreage basis as agricultural land.

Dissatisfied with the assessment made by the CALA, the petitioners invoked the statutory arbitration clause under the National Highways Act. The learned Arbitrator, upon considering the matter, enhanced the market value of the land. In addition to the enhanced value, the Arbitrator directed the payment of a cent percent solatium along with an additional percentage of interest from the date of the initial notification up to the date of the award.

While granting relief, the learned Arbitrator directed the payment of interest on the enhanced amount at a specific rate, calculated from the date of filing the arbitration application until the actual deposit of the amount, rather than granting the statutory sliding scale of interest from the date of possession. Aggrieved by the restriction placed on the interest component by the learned Arbitrator, the petitioner-landowners instituted the present writ petition before the High Court, seeking a writ in the nature of mandamus to direct the respondents to pay the statutory benefit of interest in strict compliance with the beneficial legislation.

Contentions of the Parties

The petitioners contended that the learned Arbitrator erred in law by directing the interest to be paid from the date of filing the application instead of the date on which possession of the land was taken. It was argued on behalf of the landowners that they were legally entitled to the statutory benefit of interest at the rate of 9% per annum for the first year, and 15% per annum for the subsequent period, on the enhanced compensation amount.

The petitioners asserted that the provisions of Section 72 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, were pari materia to Section 28 of the erstwhile Land Acquisition Act, 1894. Relying on settled judicial precedents of the Supreme Court of India, they argued that provisions relating to solatium and interest were applicable to acquisitions made under the National Highways Act, and any denial would amount to impermissible discrimination between similarly situated landowners, thereby violating Article 14 of the Constitution of India.

Per contra, the Respondents strongly opposed the petition and raised a preliminary objection regarding its maintainability. It was contended that the present writ petition was not maintainable at all as the petitioners had an efficacious alternative remedy available to them. The respondents maintained that if the petitioners were aggrieved by the award passed by the learned Arbitrator, their remedy lay in filing objections under Section 34 of the Arbitration and Conciliation Act, 1996.

On the strength of the available statutory alternative remedy, the respondents contended that the extraordinary writ jurisdiction of the High Court could not be invoked, and therefore, the present petition was liable to be dismissed outright.

Observations of the Court

The Court observed that while the learned Arbitrator rightly enhanced the market value and awarded solatium, he erred in law by granting interest on the enhanced amount only from the date of filing the application under Section 3H(5) of the 1956 Act, instead of applying the beneficial provisions of the 2013 Act.

The Court noted that under Section 105(3) of the 2013 Act and a subsequent Ministry of Rural Development Gazette Notification, the statutory schedules governing fair compensation were made fully applicable to National Highways acquisitions to ensure benefits were not reduced or diluted.

Relying on the landmark Supreme Court ruling in Union of India v. Tarsem Singh, the Court highlighted that denying identical solatium and interest to landowners under the 1956 Act violates Article 14 of the Constitution of India.

The Court analyzed the beneficial regime under Sections 72 and 80 of the 2013 Act, which mandates interest at the rate of 9% per annum from the date of possession for the first year, escalating to 15% per annum for any subsequent period until actual payment. The Court said that the respondents cannot restrict interest under Section 3H(5) of the 1956 Act. The petitioners are entitled to statutory interest at the rates of 9% and 15% per annum under Section 72 of the 2013 Act on the enhanced compensation, calculated from the date of possession until actual payment.

The Court further held that the petitioners are equally entitled to interest on the initial amount determined by the CALA from the date of possession until its deposit, in accordance with Section 80 of the 2013 Act.

The Court observed that the learned Arbitrator acted arbitrarily and in clear breach of Article 14 of the Constitution of India by denying parity to identically placed landowners regarding the interest component of the compensation, thereby offending the fundamental principles of fair procedure.

It noted that the statutory remedy available under Section 34 of the Arbitration and Conciliation Act, 1996, would not afford any effective or substantive relief to the landowners, as the scope of the said section is strictly confined to setting aside the arbitral award without conferring any power of modification upon the court.

Under the peculiar facts and circumstances of the case, the Court held that the invocation of the extraordinary writ jurisdiction under Article 226 of the Constitution of India, which is plenary in nature, was fully justified to remedy the manifest arbitrariness and to ensure the securement of just and equitable compensation for the petitioners.

“In the present case, the learned Arbitrator, by denying parity to identically placed landowners—even though only with regard to the interest component of the compensation—has acted arbitrarily and in breach of Article 14 of the Constitution, thereby offending the fundamental principles of fair procedure…The remedy under Section 34 of the Arbitration and Conciliation Act, 1996 would not afford any effective or substantive relief in this scenario. Its scope is strictly confined to setting aside the award, leaving the court without the power of modification to correct specific components like interest…Accordingly, in the peculiar facts and circumstances of the case, the exercise of writ jurisdiction under Article 226 of the Constitution, being plenary in nature, is clearly justified to remedy the manifest arbitrariness and to ensure that the petitioner is granted just and equitable compensation”, the Court said.

The Court observed that while the scope of judicial interference under writ jurisdiction against awards governed by the Arbitration and Conciliation Act, 1996, is undoubtedly restricted, the same rigid principles cannot be strictly applied to proceedings conducted under the National Highways Act, 1956. Unlike commercial, consensual arbitration which is founded upon party autonomy and the mutual choice of disputants, the latter constitutes a form of statutory arbitration where the Arbitrator is unilaterally appointed by the Central Government.

The Court modified the arbitral award to the extent that the petitioner-landowners were held legally entitled to receive interest at the rate of 9% per annum for the first year, and 15% per annum for any subsequent period, on the enhanced compensation amount.

Furthermore, the Court directed that the petitioners were entitled to receive statutory interest on the initial amount of compensation determined by the Competent Authority for Land Acquisition (CALA), calculated in accordance with the beneficial provisions of Section 80 of the 2013 Act.

Accordingly, the petition was disposed of.

Cause Title: Kuldeep Singh and Anr. v. Union of India and Ors. [CWP No. 38070 of 2025 (O&M)]

Appearances:

Petitioner: Advocates Manoj Pundir and Dilpreet

Respondents: ASG Karunesh Kaushal, Advocates Komal Bishnoi and Rishi Kaushal

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