Market Value Cannot Be Lower Than That Specified As Ready Reckoner Rate: Bombay High Court Upholds Interim Arbitral Award In 75-Year-Old Land Acquisition Dispute
The Court held that municipal body’s defence statement was a clear admission of Ready Reckoner rate, upholding arbitrator’s Section 31(6) interim award issued without formal application.
Justice N.J. Jamadar, Bombay High Court
The Bombay High Court has held that under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, the market value of acquired land can never be assessed lower than the rate specified under the Indian Stamp Act for registration of sale deeds in the area, upholding an interim arbitral award that directed the Municipal Corporation of Greater Mumbai to pay over Rs. 14 crore as interim compensation for land acquired nearly seven decades ago.
The Court further held that admissions made by the Municipal Corporation in its Statement of Defence regarding the applicable Ready Reckoner rate were clear, categorical and unequivocal, notwithstanding that they were made while refuting the claimants' assertion of a higher rate, and that the Arbitral Tribunal committed no jurisdictional error in treating such admissions as the foundation for passing an interim award under Section 31(6) of the Arbitration and Conciliation Act, 1996, even in the absence of a formal application or a specifically framed issue.
A Single Judge Bench of Justice N. J. Jamadar while hearing a commercial arbitration petition filed by the municipal corporation challenging the interim arbitral award passed in favor of the legal heirs of the original landowner, observed, “…the Court cannot be oblivious to the hard facts that the Collector passed the award almost 75 years ago, and the land owners are yet to be paid compensation. At any rate, under the regime of LARR Act, 2013, the market value of the acquired land cannot be lower than that specified as Ready Reckoner Rate. Thus, on the aspect of propriety and justifiability as well, no fault can be found with the interim award. Resultantly, the challenge to the impugned interim award fails”.
Advocate Yashodeep Deshmukh appeared for the petitioner and Advocate Rashmin Khandekar represented the respondents.
The dispute pertained to a plot measuring approximately 1,033 square meters located in Majiwada, Thane, which was originally acquired from the estate of late Dinshaw Cawasji Doongriwalla in 1951 for the construction of a protective wall for the Tansa Lake pipeline. Despite taking possession, the municipal corporation failed to pay fair compensation to the landowners for several decades, prompting extended civil litigation that ultimately culminated in the reference of the quantum of compensation to arbitration.
Pursuant to the earlier High Court directions determining that compensation must be assessed under the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, a Sole Arbitrator was appointed in 2018.
In April 2021, the municipal body filed its Statement of Defence, indicating a lower Ready Reckoner valuation rate. Relying on these statements as unequivocal admissions, the tribunal issued a suo motu interim award of ₹14,15,90,119 on February 15, 2023, which the municipal corporation subsequently challenged under Section 34 of the Arbitration Act.
Rejecting these contentions, the Court held that Section 31(6) of the Arbitration Act is of wide amplitude, permitting an Arbitral Tribunal to pass an interim award "at any time" on "any matter" with respect to which it may make a final award, and that determination of a specifically framed issue is not a precondition.
Applying the principles governing Order XII Rule 6 of the Civil Procedure Code, the Court held the admission was categorical and unequivocal, entitling the claimants to a judgment on admission. On the statutory scheme, the Court held that Section 26(1) of the LARR Act mandates adoption of the higher of three specified valuation criteria, meaning the Ready Reckoner rate operates as a statutory floor below which compensation cannot fall, regardless of the outcome of other valuation methods.
“On a bare textual reading of Section 31(6), and the the use of expressions ‘at any time’ and ‘on any matter’ which do not seem to limit the arbitral Tribunal's power to pass an interim award, save and except that such an award must relate to any matter with respect to which the Arbitral Tribunal may make a final arbitral award, the aforesaid submission premised on the determination of an issue that has been framed or arises for consideration, cannot be acceded to. The true test would be, whether the parties are at issue over a particular matter in respect of which the Arbitral Tribunal is called upon to make a final arbitral award? If the answer is in the affirmative, then the aspect as to whether an issue is settled for determination or not, pales in significance”, the Bench noted.
Dismissing the municipal corporation's petition with costs, the High Court refused to stay the operation of the judgment or the execution of the interim award, noting that given the passage of nearly 75 years since the initial acquisition, any further stay of compensation would cause grave injustice to the respondents.
Cause Title: Municipal Corporation of Greater Mumbai v. Kekobad Dossabhoy Doongriwalla & Anr. (Neutral Citation: 2026:BHC-OS:16990)
Appearances:
Petitioner: Yashodeep Deshmukh, Pooja Yadav, Shivprasad Borade, Advocates.
Respondents: Rashmin Khandekar, Dhawani Bokaria, Akshata Modi, Praharshi Saxena, and Rahul Agrawal (instructed by M/s. Purnanand & Co.), Advocates.