Disposed

Western Dedicated Freight Corridor Corporation of India Ltd. v. Original Claimants

Gujarat HC2 Jul 2018FA/1979/2018

Case brief

AI extract

What is this about?

Two First Appeals challenging an Additional Sessions Judge's dismissal of petitions to set aside an arbitrator's interim award. The award granted extra compensation to private landowners based on government land valuation, with 60% solatium and 15% interest. The High Court upheld the excess compensation but modified the award to reflect only 9% statutory interest and directed secure deposit of fun

What did the court decide?

Interim award modified; appellant to deposit compensation with 60% solatium and 9% interest, subject to final award.

Western Dedicated Freight Corridor Corporation of India Ltd. Vs… — Arbitration | Gujarat HC (2018)

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C/FA/1977/2018 JUDGMENT

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

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R/FIRST APPEAL NO. 1977 of 2018 With R/FIRST APPEAL NO. 1978 of 2018 With R/FIRST APPEAL NO. 1979 of 2018 With R/FIRST APPEAL NO. 1980 of 2018 With R/FIRST APPEAL NO. 1981 of 2018 With R/FIRST APPEAL NO. 1982 of 2018 With R/FIRST APPEAL NO. 1983 of 2018 With R/FIRST APPEAL NO. 1984 of 2018 With R/FIRST APPEAL NO. 1985 of 2018 With R/FIRST APPEAL NO. 1986 of 2018 With R/FIRST APPEAL NO. 1987 of 2018 With R/FIRST APPEAL NO. 1988 of 2018 With R/FIRST APPEAL NO. 1989 of 2018 With R/FIRST APPEAL NO. 1991 of 2018 With R/FIRST APPEAL NO. 1993 of 2018 With R/FIRST APPEAL NO. 1996 of 2018 With R/FIRST APPEAL NO. 1997 of 2018 With R/FIRST APPEAL NO. 1998 of 2018 With R/FIRST APPEAL NO. 1999 of 2018 With R/FIRST APPEAL NO. 2000 of 2018

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FOR APPROVAL AND SIGNATURE:

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HONOURABLE MR.JUSTICE AKIL KURESHI

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Page 1 of 17

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C/FA/1977/2018 JUDGMENT

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and HONOURABLE MR.JUSTICE B.N. KARIA

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==========================================================

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1 Whether Reporters of Local Papers may be allowed to see the judgment ?

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2 To be referred to the Reporter or not ?

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3 Whether their Lordships wish to see the fair copy of the judgment ?

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4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?

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WESTERN DEDICATED FREIGHT CORRIDOR CORPORATION OF INDIA LTD

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Versus ORIGINAL CLAIMANTS

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==========================================================

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Appearance:

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MS ARCHANA U AMIN(2462) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 . for the RESPONDENT(s) No. 1.1,1.2,1.3,1.4

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MR.DHAWAN JAYSWAL, AGP for the RESPONDENT(s) No.1 in First Appeal Nos.1977 to 1987 of 2018

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MS.SNUSHA S. JOSHI, AGP for the RESPONDENT(s) No.1 in First Appeal Nos.1988, 1989, 1991, 1993 and First Appeal Nos.1996 to 2000 of 2018 MR GHANSHYAM AMIN(123) for the RESPONDENT(s) No. 1.1,1.2,1.3,1.4 MR SAURABH G AMIN(2168) for the RESPONDENT(s) No. 1.1,1.2,1.3,1.4

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========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI

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and HONOURABLE MR.JUSTICE B.N. KARIA

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Date : 02/07/2018

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COMMON ORAL JUDGMENT

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(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

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1.Looking to the controversy involved, we have

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heard the First Appeals finally at this very stage
with the consent of learned advocate Shri Saurabh
Amin for the respondents-claimants. These appeals

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arise in common background. They arise out of interim

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Page 2 of 17

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C/FA/1977/2018 JUDGMENT

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awards passed by the arbitrator for acquisition of
lands for special railway project. Basic facts are
common. Variation is in the villages where the lands
are under acquisition and the precise amount of
interim compensation awarded by the arbitrator. We
may record facts from First Appeal No.1977 of 2018.

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2.This appeal is filed by the Western Dedicated
Freight Corridor Corporation of India Ltd.
(hereinafter to be referred to as 'the Corporation'
for short). The appellant Corporation has challenged
a judgment dated 18.03.2017 passed by the learned
Additional Sessions Judge, Anand, in Misc. Civil
Application No.123 of 2016 filed by the Corporation
as well as an order dated 30.11.2017 passed in Misc.
Civil Application No.1 of 2017.

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3.The said Corporation is specially constituted
for execution of the work of Dedicated Freight
Corridor of the Indian Railways. The Dedicated
Freight Corridor would exclusively handle the freight
traffic. Understandably to lay down the railway
lines and construct the freight corridor, the railway
administration would require vast areas of Government

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Page 3 of 17

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C/FA/1977/2018 JUDGMENT

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as well as public lands. Being a notified special
railway project, the acquisition proceedings were
undertaken in terms of chapter IV-A of the Railways
Act, 1989 ('the Act' for short). Private lands of
Village:Ruun, Taluka:Sojitra, District:Anand, were
compulsorily acquired under the said chapter.
Notification under section 20A of the Act was
published on 29.05.2009. Subsequent steps were taken
by the competent authority. Award was passed on
09.02.2011. Compensation was awarded at the rate of
Rs.17.13 per sq.mtrs. The aggrieved land owners
approached the arbitrator for enhancement of the
compensation. In such reference, since the final
award would take considerable time, they requested

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the arbitrator to pass interim award. Their main
contention was that several parcels of Government
land of the same village have been acquired by the
railway authorities for the same purpose, under the

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same notification under section 20A. A specially
constituted committee (hereinafter to be referred to
as 'the committee' for short) assessed the market

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value of the land for the purpose of transfer of the
land from the State Government to the railways. The

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Page 4 of 17

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C/FA/1977/2018 JUDGMENT

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committee headed by the Collector and Chairman of the
Valuation Committee gave a report on 20.10.2014, in
which, the market value of the land was assessed at
Rs.630/- per sq.mtrs. According to the claimants,
the railway administration accepted such valuation,
paid the resultant compensation and has also acquired
the State land for the purpose of the said project.
The Claimants therefore urged the arbitrator to pass
an interim award granting compensation on the basis
of this assessment of the market value of the land by
way of interim measure.

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4.The railway administration strongly opposed this
prayer contending that the assessment of the market
value by the committee constituted for entirely
different purpose cannot be automatically adopted in
the present case and in any case, there is no
occasion to pass an interim award.

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5.The arbitrator passed interim award dated
16.05.2016, in which, he awarded additional
compensation of Rs.252/- per sq.mtrs by way of
interim measure for the lands in question. Such
amount would carry solatium at the rate of 60% and

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Page 5 of 17

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C/FA/1977/2018 JUDGMENT

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interest at the rate of 15% from the date of award
passed by the competent authority till actual
payment.

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6.Appellant filed Misc. Civil Application before
the District Court, requesting for setting aside such
interim arbitral award. Such application came to be
dismissed by the learned Additional District Judge,
by the impugned order dated 18.03.2017. The
appellant filed Review Petition which also came to be
dismissed by order dated 30.11.2017. These orders
are therefore challenged in this appeal.

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7.Learned counsel Ms.Archana Amin for the

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appellant Corporation vehemently contended that the
arbitrator committed a serious error in passing the
interim award and awarding compensation at an
exorbitant rate of Rs.252/- per sq.mtrs. She
criticized the award on following main grounds:

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I.That there was no basis for comparing the
market value of the acquired land with the
assessment of the value of the Government lands
carried out by the committee. Firstly, because
this assessment itself is not final. The railway

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Page 6 of 17

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C/FA/1977/2018 JUDGMENT

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administration has strongly opposed the contents
thereof. Secondly, in any case, there is no
basis for awarding compensation for private
lands at the rate on which inter-government
transactions take place.

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II.Awarding solatium at the rate of 60% was
not permitted.

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III.Interest at the rate of 15% is not
statutorily recognized.

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8.On the other hand learned counsel Shri Saurabh
Amin for the respondent-claimant contended that the
committee had determined the market value of the
Government land at Rs.630/- per sq.mtrs. The railway
administration has accepted such valuation and has
paid price at such rate for acquiring lands of the
State Government. The railways now cannot offer
lower compensation for private lands. The arbitrator
has awarded additional compensation only at the rate
of Rs.252/- per sq.mtrs. which is barely about 40% of
the market value assessed by the committee. Awarding
solatium or interest is not impermissible.

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Page 7 of 17

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C/FA/1977/2018 JUDGMENT

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9. Before discussing the factual material on

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record, we may refer to the statutory provisions.
Chapter IV-A of the Act pertains to land acquisition
for a special railway project. Whenever a railway

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project is recognized and notified as a special
railway project, land for execution of such a project
would be acquired under the provisions of the said

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chapter. The said chapter makes provisions for
quicker and smoother acquisition of land for special
projects as also for compensating land loosers
adequately for acquisition of their lands. We are

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not concerned with initial stages of acquisition
where publication of notification of intention of
acquisition and other steps before the land is

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finally acquired. We may straightway refer to
section 20F pertaining to determination of amount
payable as compensation. Relevant portion of this
section reads as under:

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Section 20F. Determination of amount payable at compensation-

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“(1)Where any land is acquired under this Act,
there shall be paid an amount which shall be
determined by an order of the competent
authority.

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Page 8 of 17

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C/FA/1977/2018 JUDGMENT

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(6)If the amount determined by the competent
authority under sub-section (1) or as the case
may be sub-section (3) 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 in such manner as may be
prescribed.

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(7)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.

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(8)The competent authority or the arbitrator
while determining the amount of compensation
under sub-section (1) or sub-section (6), as the
case may be, shall take into consideration—

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(a) the market value of the land on the
date of publication of the notification
under section 20A;

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(b)the damage, if any sustained by the
person interested at the time of taking
possession of the land, by reason of the
severing of such land from other land;

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(c)the damage, if any, sustained by the
person interested at the time of taking
possession of the land, by reason of the
acquisition injuriously affecting his other
immovable property in any manner, or his
earnings;

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(d) if, in consequences of the acquisition
of the land, the person interested is
compelled to change his residence or place
of business, the reasonable expenses, if
any, incidental to such change.

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(9)In addition to the market-value of the land
as above provided, the competent authority or
the arbitrator, as the case may be, shall in
every case award a sum of sixty per centum on

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Page 9 of 17

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C/FA/1977/2018 JUDGMENT

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such market-value, in consideration of the
compulsory nature of the acquisition.”

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10.Perusal of this section would show that for
acquisition of the land, compensation would be paid
as determined by the competent authority. If the
amount so determined is not acceptable to the either
parties which would mean the land looser or the
railway administration, the issue would be referred
for the arbitrator for his determination. Sub-section
(8) of section 20F provides broad legislative
guidelines for determining the market value of the
land either by the competent authority or by the
arbitrator. Clause (a) whereof provides that while
determining the compensation, the said authorities
would take into consideration the market value of the
land on the date of publication of the notification
under section 20A. Sub-section (9) of section 20F
provides for awarding solatium at the rate of sixty
percent of the market value looking to the compulsory
nature of the acquisition.

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determination of market value of land. Sub-section
(1) thereof provides that the competent authority

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C/FA/1977/2018 JUDGMENT

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shall adopt the following criteria in assessing and
determining the market value viz; (i) the minimum
land value, if any, specified in the Indian Stamp Act
for the registration of the sale deeds in the area,
where the land is situated; or (ii) the average of
the sale price for similar type of land situated in
the village or vicinity, ascertained from not less
than fifty per cent of the sale deeds registered
during the preceding three years, where higher price
has been paid. In plain terms thus, the minimum land
value prescribed for the purpose of stamp duty
collection for the registration of sale deed would be
an important consideration.

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12.Section 20H of the Act pertains to deposit and
payment of amount. Sub-section (5) thereof provides
that where the amount determined under section 20F by
the arbitrator is in excess of the amount determined
by the competent authority, the arbitrator may award
interest at nine per cent per annum on such excess
amount from the date of taking possession under
section 20-I till the date of actual deposit thereof.

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13.We have to deal with interim award of the

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Page 11 of 17

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C/FA/1977/2018 JUDGMENT

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arbitrator and the decisions of the Civil Court in
not interfering with such interim award, in
background of such statutory provisions. While doing
so, we would also be conscious of the limited scope

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of the First Appeal against the order of the Civil
Court refusing to set aside an arbitral award. The
statutory provisions would show that the proceedings

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before the arbitrator would be governed by the
provisions of the Arbitration and Conciliation Act,
1996, which recognizes the authority of an arbitrator

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to pass an interim award. In fact, the present
interim award is not questioned before us on the
ground of competence or the jurisdiction of the
arbitrator to pass such an award. We have noticed
that the land owners, the aggrieved persons had

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placed the report of the valuation committee dated
20.10.2014 assessing market value of the government

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land at Rs.630/- per sq.mtrs. This committee was
specially constituted for assessing the market value
of the State Government land which was required for

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the purpose of the Dedicated Freight Corridor. The

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notification under section 20A was common for the
Government as well as the private land under

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C/FA/1977/2018 JUDGMENT

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acquisition. The short question is therefore, was it
open for the arbitrator to be influenced if not fully
guided by such assessment and whether he committed a
serious error in awarding interim compensation on the
basis of such assessment. We have perused the report
of the committee. The report records that the market
value of the land as on the date of the report was
assessed by the Anand Town Planner at Rs.627/- per
sq.mtrs. The committee took into account the jantri
rates fixed by the Government and other relevant
materials besides the said report of the Town Planner
to arrive at a figure of Rs.630/- of market value of
the land. The report is somewhat silent on, as on
which date such market value of Rs.630/- per sq.mtrs.
was obtained viz. whether the date of report or the
date of notification under section 20A of the Act.
Be that as it may, under protest, the railway
administration has paid to the State Government
compensation for acquiring State land for the project
in question. It may be, as argued by Ms.Amin for the
appellant, that the request of the railways is to
transfer the State Government land at a lower rate as
is done in the State of Rajasthan or at no cost as is

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Page 13 of 17

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done by the State of Haryana. The private
negotiations between the two government agencies for
transfer of the land from one Government to another
Government by itself cannot determine the true market
value of the land in question. Even if therefore,
there is a proposal for reducing the market value of
the State Government land transferred to the railway
administration, that by itself, would not determine
the compensation payable to the private land owners.
The computation of the market value arrived by the
specially constituted committee cannot be summarily
brushed aside.

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14.Having said that, it cannot be disputed that
such computation requires a closer scrutiny. As
noted, as against the market value of the land in the
opinion of the town planner being Rs.627/- per
sq.mtrs. on the date of the report, the Committee has
assessed the value of the land at Rs.630/- per
sq.mtrs. (presumably as on the date of notification
under section 20A of the Act). This is a grey area
which requires further examination. Further, any
such assessment cannot in absence of a binding
provision on the railway administration be the sole

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C/FA/1977/2018 JUDGMENT

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consideration. The parameters laid down under the
statute for ascertaining the market value would have
to be applied in light of the evidences that may be
brought on record. One of the considerations as
noted which flows from sub-section (1) of section 20G
is the minimum land value specified for calculation
of stamp duty for registration of sale deed which is

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popularly known as jantri rates. The report of the
committee dated 20.10.2014 records that the
Government published jantri rates ranged from Rs.61
per sq.mtrs. to Rs.310/- per sq.mtrs. depending on
the category of land. This is very significant.

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15.The arbitrator in his interim award, has awarded
additional compensation at the rate of Rs.252/- per
sq.mtrs. by taking the basis of the report of the
committee dated 20.10.2014. It is not clear to us
how this adjustment is made from the rate of Rs.630/-
of the committee to additional Rs.262/- awarded by
the arbitrator. Being interim award in nature and
looking to the far reaching effect such award may
have in the process of computation and awarding
compensation to the claimants, we would like to trade
somewhat cautiously. Eventually if the final award

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C/FA/1977/2018 JUDGMENT

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in any manner is lower than the interim compensation
awarded by the arbitrator, serious question of
recovery of the Government monies would arise. Some
adjustment would therefore be necessary.

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16.Before giving final directions, we would dispose
of the two consequential contentions. Solatium at
the rate of sixty percent is statutorily recognized
and mandated. If the basic assessment of the excess
compensation is correct, the awarding solatium at the
prescribed rate cannot be faulted. Interest at the
rate of 15% awarded by the arbitrator does not bear
out any statutory support. As noted, interest
prescribed under sub-section (5) of section 20H is 9%
per annum from the date of taking possession till
actual payment. The arbitrator therefore committed an
error in awarding higher interest, that too without
any discussion.

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17.Under the circumstances, First Appeals are

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disposed of with following directions:

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I.The appellant Corporation shall deposit the
entire amount of additional compensation awarded by
the arbitrator under interim awards with solatium as

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C/FA/1977/2018 JUDGMENT

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directed but simple interest at the rate of 9% per
annum from the date of taking possession till actual
deposit before the concerned District Courts, latest
by 30.10.2018.

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II.It would be open for the claimants to withdraw
50% thereof which withdrawal shall be subject to the
final award that the arbitrator may pass.

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III.Remaining 50% shall be invested in any
nationalized bank in cumulative Fixed Deposit
initially for a period of one year, to be renewed
from time to time till passing of the final award by
the arbitrator. Interim award of the arbitrator
stands modified to this extent.

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18.The orders of the Civil Court also stand merged
in this order.

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19.All First Appeals are disposed of accordingly.

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(AKIL KURESHI, J)

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(B.N. KARIA, J)

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ANKIT SHAH

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Page 17 of 17

Western Dedicated Freight Corridor Corporation of India Ltd. v. Original Claimants

Case brief

What is this about?

What did the court decide?

Western Dedicated Freight Corridor Corporation of India Ltd. v. Original Claimants

Case brief

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