NOTES ON ARBITRATION IN THE MATTERS

OF LAND ACQUISITION UNDER THE

NATIONAL HIGHWAYS ACT, 1956
Arbitrator and Arbitration proceedings:

• An Arbitrator is a person chosen to decide a dispute or settle

differences, especially one formally empowered to examine the
facts and decide the issue.
• Arbitrationis a procedure in which a dispute is submitted, by
agreement of the parties, to one or more arbitrators who
make a binding decision on the dispute. In choosing
arbitration, the parties opt for a private dispute resolution
procedure instead of going to court.
Appointment of Arbitrator by Central Government under
National Highways Act, 1956:
• Under the National Highways Act, 1956, Arbitrator
is unilaterally appointed by the Central Government.
The Appointment is made under Section 3 (G) (5) of the
National Highways Act, 1956. The Hon'ble Apex Court in the
matter of National Highways Authority of India Vs.
Sayedabad Tea Company Ltd. And others (Civil Appeal Nos.
6958-6959/ 2009 and 6965-6966 of 2009) has held that,
Appointment of Arbitrator by Central Government under
National Highways Act, 1956:

“23. We are also of the considered opinion that in view of

the power being vested exclusively with the Central
Government to appoint an Arbitrator
under Section 3G(5) of the Act 1956, being a special
enactment, the application filed under Section 11 (6) of the Act
1996 for appointment of an Arbitrator was not maintainable and
provisions of the Act, 1996 could not be invoked for the
purpose.”
3G. Determination of amount payable as compensation.-

• (5) 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-
• (6) Subject to the provisions of this Act, the provisions of the
Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply
to every arbitration under this Act.
3G. Determination of amount payable as compensation.-

In National Highways Authority of India Versus the Competent

Authority, Land Acquisition-cum-District Revenue Officer,
Ludhiana and others, the Hon 'ble High Court held that,

"The Arbitrator under NHAI Act is conferred with the same

powers as a Reference Court appointed under the Land
Acquisition Act, 1894 or the Right to Fair Compensation,
Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013."
Determination of procedure to be adopted by the
Arbitrator in conducting the Arbitration Proceedings:

• Procedure of Arbitration proceeding (Section 19):

In the Arbitration proceedings of Land Acquisition matters, it
is expected to have uniform procedure to be adopted by every
Arbitrator in conducting the Arbitration proceedings. Therefore, a
proper and suitable procedure is required to be laid down by the
Central Government, which would be uniformly applicable
to all the Arbitrators conducting the Land Acquisition
matters. This would definitely help in speedy disposal of the
Arbitration cases and Awards would be uniform.
Determination of procedure to be adopted by the
Arbitrator in conducting the Arbitration Proceedings:

• Notice of hearing: The Arbitrator must issue notice of

hearing to each of the concerned parties, well in advance so as to
enable them to appear and file their pleadings and evidence.
Determination of procedure to be adopted by the
Arbitrator in conducting the Arbitration Proceedings:
• The Arbitrator is also required to accord every opportunity of
hearing to each of the parties, so that, there should not be any
scope for the parties to challenge the Award in District
Court on this ground.
• So far as possible, the Arbitrator must conduct the village wise
hearing irrespective of the Advocate representing the parties.
This helps in early disposal of the bunch cases.
Determination of procedure to be adopted by the
Arbitrator in conducting the Arbitration Proceedings:
• Passing of Award on the basis of available record
Section 25 (c):
According to Section 25 (c), if the claimant fails to appear to
oral hearing or fails to produce evidence, the Arbitrator may make
Award on the basis of the available record before it. The
important aspect is, the Arbitrators should not grant
unreasonable time for the parties to submit their pleadings
and lead evidence. This results in delay in disposal of the
cases.
Determination of procedure to be adopted by the
Arbitrator in conducting the Arbitration Proceedings:
• The Arbitrator is required to follow the Substantive
provision of the law and the law settled by the decisions of
Hon 'ble High Courts and the Apex Court, while conducting
the Arbitration proceedings. According to Section 28 (a) in an
arbitration other than an international commercial
arbitration, the arbitral tribunal shall decide the dispute
submitted to arbitration in accordance with the substantive law
for the time being in force in India.
Determination of procedure to be adopted by the
Arbitrator in conducting the Arbitration Proceedings:
• Award should be reasoned (Section 31 (3)):
The Arbitrator is required to pass Arbitration Award with
proper and adequate reasons. According to Section 31 (3)
The arbitral award shall state the reasons upon which it is
based.
The bench comprising of Justice N.V.Ramana and Justice
V.Ramasubramanian of Hon'ble Supreme Court of India in the
judgment dated December 18, 2019, in the matter of M/S
Dyan Technologies Private Limited vs M/s.
Crompton Greaves Limited.[1] observed that "the award
passed by the Arbitrator is unintelligible, ambiguous,
muddled and without reasons hence, cannot be sustained.“
Determination of procedure to be adopted by the
Arbitrator in conducting the Arbitration Proceedings:
In Raipur Development Authority v. Chokhamal
Contractors, the constitutional bench held that "the
arbitrator or umpire shall have to give reasons also where the
court has directed in any order such as the one made under
Section 20 or Section 21 or Section 34 of the Act that reasons
should be given or where the statute which governs an arbitration
requires him to do so."
Determination of procedure to be adopted by the
Arbitrator in conducting the Arbitration Proceedings:
In Som Datt Builders Ltd. v. State of Kerala, a Division
Bench indicated that the mandate under Section 31 (3) of the
Arbitration Act, is to have reasoning which is intelligible and
adequate and which can, in appropriate cases, be even implied by
the courts from a fair reading of the award.
Copy of the Award should be delivered to each of the
concerned parties Section 31 (5):
According to Section 31 (5), after the arbitral award is
made, a signed copy shall be delivered to each party. It is
mandatory for the Arbitrators to supply a copy of the award to each
of the concerned parties and their Advocates. Such copy should
be original copy of the Award duly signed by the Arbitrator.
The copy should be provided directly to the concerned party and
also to the Advocates, free of cost. The limitation to challenge
the Arbitration Award under Section
Copy of the Award should be delivered to each of the
concerned parties Section 31 (5):
34 is started from the date of receipt of the Arbitration
Award. If the Arbitrator does not provide the copy of the
Award, the party may take disadvantage of the same and may
apply for the Certified Copy at any time as per his convenience
after years and may challenge in Court. So, to avoid this
situation, it is necessary and also mandatory for the Arbitrator to
immediately supply the original and duly signed copy of the
Arbitration Award to the concerned parties and Advocates, free
of cost.
Correction and interpretation of the Arbitration Award:
According to Section 33 of the Arbitration Act,
33. Correction and interpretation of award; additional
award.-
(1) Within thirty days from the receipt of the arbitral award,
unless another period of time has been agreed upon by the parties-
(a) a party, with notice to the other party, may request the arbitral
tribunal to correct any computation errors. any clerical or
typographical errors or any other errors of a similar nature
occurring in the award;
(b) if so agreed by the parties, a party, with notice to the other
party, may request the arbitral tribunal to give an
interpretation of a specific point or part of the award.
Correction and interpretation of the Arbitration Award:
It is observed that parties are making application under Section
33 for review of the Award passed by the Arbitrator and making
such applications after lapse of period of 30 days from the date
of receipt of the Award. It is a settled law that the Application under
Section 33 cannot be made for review of the Arbitration Award
on merits. Such power of review is not available to the Arbitrator.
Further, even if application for correction or interpretation is
required to be made, it must be made within 30 days from the
date of receipt of the Arbitration Award.
Correction and interpretation of the Arbitration Award:
In State Of Arunachal Pradesh vs M/S. Damani
Construction on 28 February, 2007 "Therefore, the reply given
by the arbitrator does not give any fresh cause of action to the
appellant so as to move an application under Section 34 (3) of the
Act. In fact, when the award dated 12.10.2003 was passed the
only option with the appellant was either to have moved an
application under Section 34 within three months as required under
sub• section (3) of Section 34 or within the extended period of
another 30 days. But instead of that a totally misconceived
application was filed and there too the prayer was for review and
with regard to mode of payment.
Correction and interpretation of the Arbitration Award:
The question of review was totally misconceived as there is no
such provision in the Act for review of the award by the
arbitrator and the clarification sought for as to the mode of
payment is not contemplated under Section 33 of the Act.
Therefore, in this background, the application was totally
misconceived and the reply sent by the arbitrator does not entitle the
appellant fresh cause of action s0 as to file an application under
Section 34(3) of the Act, taking it as the starting point of limitation
from the date of reply given by the arbitrator"
Correction and interpretation of the Arbitration Award:

Frequent or even rarely, NHAI or any party should not make any
application to the Arbitrator for review the Award, as Arbitrator is
functous officeo, and once he signs and publishes the Award other
than for clerical errors to be corrected by giving notices to all the
parties. Same law is applicable to the Award passed by the CALA
U/s 3 (G) of NHAI Act under any circumstances.
Determination of Market Rate under the National
Highways Act, 1956.
• The Arbitrator is required to consider the date of preliminary
Notification (Corresponding Provision Notification under Section 3
A) for determining the Market rate of acquired land.
• Further, under old land acquisition Act and National Highways Act,
1956, the Market Rate is determined by using the comparative sale
instance method.
• Comparable sales method of valuation is preferred because it
furnishes the evidence for determination of the market value of the
acquired land at which a willing purchaser would pay for the
acquired land if it had been sold in the open market at the time of
issue of notification under Section 4 of the Act.
Determination of Market Rate under the National
Highways Act, 1956.
• However, comparable sales method of valuation of land for fixing
the market value of the acquired land is not always conclusive. There
are certain factors which are required to be fulfilled and on fulfilment
of those factors the compensation can be awarded, according to the
value of the land reflected in the sales.
• The other important factors, which are required to be considered
while using comparable sale instance method are as under,
1) the sale must be a genuine transaction, it must be concluded.
2) that the sale deed must have been executed at the time proximate
to the date of issue of notification under Section 4
(Corresponding section 3 (A) of NH Act) of the Act,
Determination of Market Rate under the National
Highways Act, 1956.

1) that the land covered by the sale must be in the vicinity of the
acquired land,
2) that the land covered by the sales must be similar to the acquired
land, and
3) that the size of plot of the land covered by the sales be
comparable to the land acquired.
However, if there is a disimilarity in regard to locality, shape, site or
nature of land between land covered by sales and land acquired, it
is open to the court to proportionately reduce the compensation for
acquired land than what is reflected in the sales depending upon the
disadvantages attached with the acquired land.“
Determination of Market Rate under the National
Highways Act, 1956.
• Compensation for Loss of easement right:
The compensation on account of loss of easement right cannot
be given as of right to every person. It is required to be given
only a proof is furnished that his right of user is lost. Moreover, such
compensation cannot be granted to owner, who has already been
granted compensation for land.
• In Union Of India vs Tarsem Singh on 19 September, 2019 6.
Section 3G/2) makes it clear that rights of user and rights in the
nature of easement being valuable property rights, compensation
must be payable therefor.
Determination of Market Rate under the National
Highways Act, 1956.
• It is obvious that there is no double payment to the owner on this
score as the owner and/or any other person has to prove that a right
in the nature of an easement has also been taken away. Obviously,
the right of user being subsumed in acquisition of ownership, the
owner cannot get a double benefit on this score. The right of user is,
therefore, referable only to persons other than the owner, who may
have tenancy rights, and other rights of license on land which is
acquired under the National Highways Act.
• It is our most respectful submission that a separate Rule may be
codified, comprehensively, dealing with the exclusive procedure for
Arbitration matters under Land Acquisition Act
 Determination of Market Rate under the National
Highways Act, 1956.

as this Arbitration proceedings involve several hundred Crores of

Rupees of Central funds as interest payable to land losers, because of
delay in payment of compensation due to delays causing at
Arbitration proceedings.
• The purpose of resorting to Arbitration is to decide the disputes,
summarily meeting with the principles of equity, justice, good
conscience and fair-play to all the parties. Therefore, a codified
Rules to conduct the Arbitration proceedings by the Arbitrator
needs to be urgently done, so that procedure is uniformly followed,
so that Arbitration should not divert from the set Rules. This brings
the desired results.
Thank You