Dismissed

National Highway Authority v. Smt. Nirmala W/O Shree Umesh Kumar

Rajasthan HC18 Jul 2025CMA/4085/2024

Case brief

AI extract

What is this about?

Appeal under Section 37 challenging the District Judge's setting aside of an arbitral award that had upheld a reduced land-acquisition compensation award. The High Court held the acquired strip between a road and a petrol pump was commercial land, the revised award conflicted with public policy, and dismissed the appeal.

What did the court decide?

None granted to appellant; the Section 34 order setting aside the revised award, restoring the original award with interest, stands affirmed.

National Highway Authority Vs Smt. Nirmala W/O Shree Umesh Kumar — Arbitration | Rajasthan HC (2025)

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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

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S.B. Civil Miscellaneous Appeal No. 4085/2024

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National Highway Authority, through its Project Director, NHAI Unit, Kota.

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----Appellant/Non-Applicant

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Versus

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Smt. Nirmala W/o Shree Umesh Kumar, R/o Village Phitapura Mauja, Sathur Tehsil, Hindauli Dist.- Bundi.

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…..Respondent/Applicant

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Competent Authority, (Land Acquisition) And Additional District Collector (Siling), Bundi, Rajasthan.

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District Collector, Bundi (Rajasthan) Arbitrator, Bundi Rajasthan.

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----Proforma Respondents/Non-Applicant

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For Appellant(s)	: Mr.	Deepak Sharma
For Respondent(s)	: Ms.	Sumati Bishnoi

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HON'BLE MR. JUSTICE GANESH RAM MEENA

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Judgment

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Reserved on	:::	July 08, 2025
Pronounced on	:::	July 18, 2025

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Instant civil misc. appeal has been filed by the appellant/non-applicant under Section 37(1) of Arbitration and Conciliation Act, 1996 (hereinafter is to be referred to as ‘the Act of 1996’) against the judgment and order dated 09.07.2024 passed by the Court of learned District Judge, Bundi (Rajasthan) (in short ‘the Court below’) in Civil Misc. (Reference) No.25/2015 (C.I.S. No.04/2015) titled as Nirmala Vs. NHAI & Ors., whereby the application filed by the respondent/applicant under Section 34 of the Act of 1996 was

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allowed and the judgment dated 09.12.2014 passed by the Court of Collector (Arbitrator), Bundi (Raj.) (in short ‘the learned Arbitrator’) in case No.102/Application/2012, by which the arbitration application was dismissed, was set aside.

¶21

The facts borne out from the pleadings are that National Highway 12 was converted into four lane for which one agricultural land Khasra No.160 0.1100 Hectare situated at village Shola Ki Jhopdiyan was acquired by publishing the same under 3A National Highway Act gazette notification dated 30.10.2009 and 3D National Highway Act gazette notification dated 20.05.2010. An Award dated 09.05.2011 was passed in favour of respondent/applicant/land owner of Rs.63,77,222/which was received by the respondent/applicant. The land was considered to be the commercial land and accordingly the compensation amount was computed. The appellant/non-applicant believing that the said land is agricultural one in nature and the award has been received by the respondent/applicant by deceiving the Land Acquisition Officer (in short ‘LAO’). The appellant/nonapplicant submitted an application to the LAO to reconsider the award to which notice was issued to respondent/applicant and after giving opportunity of hearing to both the parties, the LAO allowed the application of the appellant/nonapplicant and passed the order dated 23.12.2011 by

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reviewing the award and passed the fresh award of Rs.3,33,082/- after considering the above stated land to be the agricultural land. The LAO also initiated the recovery proceedings against the respondent/applicant/land owner to refund the amount of Rs.59,80,368/-, which was given in excess.

¶26

The respondent/applicant/land owner challenged the order dated 23.12.2011 before the High Court in S.B. Civil Writ Petition No.3474/2012, whereby the High Court vide its order dated 24.07.2012 upheld the order dated 23.12.2011 and ordered criminal prosecution i.e. lodging of the F.I.R. against the respondent/petitioner /land owner for doing fraud with the LAO. After registration of F.I.R., the respondent/applicant refunded the excess amount and challenged the order of Single Bench before the Division Bench by filing D.B. Special Appeal (Writ) No.1095/2012, which was disposed of vide order dated 23.08.2012 allowing the respondent/applicant to withdraw the writ petition and set aside the order dated 24.07.2012 passed by the Single Bench by granting the liberty to the respondent / applicant to approach the concerned Collector by availing the alternative remedy under Section 3G-5 of the National Highways Act, 1956 (hereinafter is to be referred to as ‘the Act of 1956’).

¶27

The respondent/applicant approached the Arbitrator under Section 3G-5 of the Act of 1956 against the order

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dated 23.12.2011, whereby the learned Arbitrator vide its order dated 09.12.2014 after hearing both the parties dismissed the application filed by the respondent/applicant and upheld the order dated 23.12.2011

¶32

The respondent/applicant challenged the order dated 09.12.2014 passed by the learned Arbitrator by filing application under Section 34 of the Act of 1996. The Court vide its order dated 09.07.2024 allowed the application and set aside the arbitral award dated 09.12.2014 and also quashed the review order dated 23.12.2011 and upheld the original award dated 09.05.2011 in favour of the respondent/applicant and directed the appellant/nonapplicant to repay the amount of Rs.59,80,368/- with 12.5% simple interest within three months.

¶33

Learned counsel for the appellant/non-applicant submitted that the Court below has dealt with the reasons for setting aside the award, including the ground of patent illegality. The impugned order is against the facts available on record. Learned counsel further submitted that an application for setting aside the arbitral award can only be made in accordance with the provisions of Section 34 of the Act of 1996 in respect of the scope of interference. He further submitted that the Court below may interfere with the arbitral award in terms of Section 34(2)(b)(ii) of the Act of 1996 but such interference does not entail the merits of the dispute

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and it is limited to the situations where the findings of the Arbitrator are arbitrary, capricious or perverse or when the conscience of the Court is shocked or when the illegality is not trivial but goes to the root of the matter. He also submitted that the arbitral award may not be interfered with if the view taken by the arbitrator is a possible view based on the facts. He further submitted that after enactment of the Arbitration and Conciliation (Amendment) Act, 2015, it is envisaged in Explanation-1 that an award shall be considered in conflict with public policy of India only if: (I) the making of the award was induced or affected by the fraud or corruption or was in violation of Section 75 or Section 81; or (II) it is in contravention with the fundamental policy of Indian Law; or (III) it is in conflict with the most basic notions of morality and justice.

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Explanation-2 for the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian Law shall not entail a review on merits on the dispute. (2-A) An arbitral award arising out of arbitration other than international commercial arbitration, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality on the facts of award provided that an award shall not be set aside merely on the ground of an erroneous application of law or by re-appreciation of evidence.

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Learned counsel further submitted that the award passed by the LAO initially was on the wrong facts presented by the respondent/applicant/landowner. After passing the award, actual facts i.e. the land is of agriculture in nature instead of commercial came into consideration of LAO to which initial award was recalled after affording reasonable opportunity of hearing to both the parties. He further submitted that the High Court in S.B. Civil Writ Petition No.3474/2012 recorded this fact that the award assailed by the respondent/applicant was by doing fraud with the LAO and for this, the Court directed to register the F.I.R. against the respondent/applicant/land owner. He further submitted that the learned Court below cannot give the new findings to the facts which were not the part of pleadings before the learned Arbitrator and passing the compensation award by the LAO is an administrative function and the same can be reviewed if some new facts come into his/her consideration.

¶43

In support of the submissions, the counsel appearing for the appellant/ applicant has placed reliance upon the judgment delivered by the Hon’ble Apex Court in the case of Project Director, National Highways No.45 E and 220 National Highways Authority of India v. M. Hakeem & Anr., reported in (2021) 9 SCC 1.

¶44

Learned counsel appearing for the respondent/applicant controverted the submissions advanced

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by the learned counsel for the appellant/non-applicant and supported the impugned judgment and award passed by the learned Arbitrator.

¶49

In support of the submissions, the counsel appearing for the appellant/ applicant has placed reliance upon the order dated 23.08.20212 passed by the Division Bench of this Court in D.B. Special Appeal (Writ) No.1095/2012 in S.B. Civil Writ Petition No. 3474/2012, Smt. Nirmala v. Competent Authority (Land Acquisition) & Addl. District Collector (Ceiling), Bundi & Anr .

¶50

Considered the submissions made at bar and gone through the pleadings, including the record of the case.

¶51

Counsel appearing for the appellant/non- applicant submitted that in view of the provisions of section 34 of the Act of 1996, the court below could only set aside the arbitral award and has no jurisdiction to modify the award.

¶52

Counsel appearing for the respondent/ applicant submitted that the court below has not modified the arbitral award but has set aside the arbitral award and also the review order dated 23.11.2011 passed by the Competent Authority (Land Acquisition) & Addl. District Collector (Ceiling), Bundi (Raj.).

¶53

As per the facts on record, initially an award was passed by the Competent Authority (Land Acquisition) & Addl.

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District Collector (Ceiling), Bundi (Raj.) on 09.05.2011 for an amount of Rs.63,13,450/- for the acquired land of the respondent. On an application filed by the appellant, the award was modified vide order dated 23.11.2011. Aggrieved by the order dated 23.11.2011 whereby the original award was modified, the respondent preferred a writ petition before the Single Bench of this Court bearing S.B. Civil Writ Petition No.3474/2012 which was dismissed vide order dated 24.07.2012 holding that the petrol pump falls beyond 35 meters of the central line of the road in issue and the land acquired was within 35 meters and consequently, the land acquired was not converted for commercial user.

¶58

Aggrieved by the order of the learned Single Judge passed on 24.07.2012, the respondent preferred D.B. Special Appeal (Writ) No. 3474/2012 which was disposed of vide order dated 23.08.2012. The respondent (appellant/writ petitioner) sought permission to withdraw the writ petition and the Hon’ble Division Bench allowed the respondent to withdraw the writ petition and observed that the order passed by the Single Bench, adjudicating the matter on merits, goes. The respondent (writ petitioner) was further allowed to approach the concerned Collector under the provisions of Section 3G(5) of the Act of 1956 for seeking arbitration.

¶59

After having liberty from the Hon’ble Division Bench, the Court of the Collector (Arbitrator), Bundi vide its

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order dated 09.12.2014 dismissed the application filed by the respondent under section 3G(5) of the Act of 1956.

¶64

Against the order of the Collector (Arbitrator), Bundi, the respondent preferred an application under section 34 of the Act of 1996 before the Court of learned District Judge, Bundi, which was allowed vide order dated 09.07.2024, the operative part of which is quoted as under:-

¶65

^^ 35vr% izkfFkZ;k Jherh fueZyk dh vksj ls vkfcZVªs”ku ,.M dkWfUlfy,”ku ,DV] 1996 dh /kkjk&34 ds rgr izLrqr dh xbZ gLrxr ;kfpdk Lohdkj dh tkdj fo}ku ftyk dyDVj] cwUnh ds }kjk e/;LFk ds ukrs ikfjr fd;s x;s [email protected]; fnukad 09-12-2014 ,oa fo}ku Hkwfe vokfIr vf/kdkjh ¼vfrfjDr ftyk dyDVj] flfyax] cwUnh½ }kjk ikfjr fjO;w vkns”k fnukad 23-12-2011 dks vikLr fd;k tkdj fo}ku Hkwfe vokfIr vf/kdkjh ¼vfrfjDr ftyk dyDVj] flfyax] cwUnh½ }kjk ikfjr ewy vokMZ fnukad 09-05-2011 dks cgky fd;k tkrk gSA

¶66

36izkfFkZ;k ewy vokMZ fnukad 09-05-2011 ds rgr vnk dh xbZ jkf”k :i;s 63]13]450@& vizkFkhZ la[;k&1 ls izkIr djus dh vf/kdkfj.kh gSA

¶67

37vizkFkhZx.k dh vksj ls izkfFkZ;k ls olwy dh xbZ jkf”k :i;s 59]80]368@& izkfFkZ;k okil izkIr djus dh vf/kdkfj.kh gSA

¶68

38izkfFkZ;k mDr jkf”k :i;s 59]80]368@& ij olwy fd;s tkus dh fnukad ls okil izkIr djus dh fnukad rd dk 12-5 izfr”kr lk/kkj.k okf’kZd dh nj ls C;kt Hkh izkIr djus dh vf/kdkfj.kh gSA

¶69

39vizkFkhZ la[;k&01 }kjk vizkFkhZ la[;k&2 ds ek/;e ls mijksDr jkf”k :i;s 59]80]368@& e; C;kt rhu ekg ds vUnj izkfFkZ;k dks vnk dh tkosxh] vU;Fkk izkfFkZ;k btjk; ds tfj;s olwy djus dh vf/kdkfj.kh gksxh ,oa rc izkfFkZ;k vkt fu.kZ; dh fnukad ls rkolwyh 12-5 izfr”kr lk/kkj.k okf’kZd ds LFkku ij 15 izfr”kr lk/kkj.k okf’kZd dh nj ls C;kt izkIr djus dh vf/kdkfj.kh gksxhA **

[CMA-4085/2024]

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The learned court below has set aside the arbitral award dated 09.12.2014 passed by the Court of District Collector (Arbitrator), Bundi and has further set aside the modified award dated 23.11.2011. The aforesaid facts clearly say that the learned court below has completely set aside the award of the Arbitrator along-with the modified award and restored the original award. In the facts and circumstances of the case, as stated above, this Court can safely held that the learned court below has set aside the arbitral award and it cannot be said that it was modified. The court below was quite competent to set aside the arbitral award so also the modified award in view of the observations of the Court.

¶74

The another issue raised by the counsel appearing for the appellant is that the land which has been acquired is an agricultural land and the award dated 09.05.2011 has been received by the land owner/ respondent by deceiving the Land Acquisition Officer. He further submitted that on the date of issuance of the Notification of the land in question, the land of the respondent was recorded as an agricultural land and therefore, the original award passed by the Land Acquisition Officer computing the compensation amount for the acquired land treating it to be a commercial one, is contrary to the facts on record. He further submitted that for setting aside the arbitral award, the Court has to confine its verdict given under section 34 of the Act of 1996. He further

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submitted that no ground as mentioned in section 34 of the Act of 1996 exists for setting aside the arbitral award.

¶79

Counsel appearing for the respondent submitted that the land in question of the respondent which has been acquired by the appellant is situated in between the main road and the petrol pump. She further submitted that the land situated in between the main road and the petrol pump can never be used for agriculture purposes but it can only be used for commercial purposes i.e. for allied activities of the petrol pump and in such circumstances the compensation for the said land is supposed to be calculated treating it to be commercial and thus, the Land Acquisition Officer has rightly passed the original award dated 09.05.2011. Counsel also submitted that it is the basic public policy that a land owner whose land is being acquired must receive fair and just compensation for the acquired land. Counsel further submitted that the adjacent land behind the land in question is a commercial land. The acquired land is of more value as it is on the main road and the land on which the petrol pump is installed is behind the land in question and therefore, under the policy of just and fair compensation, the land owner/ respondent is entitled for the compensation treating the land in question to be the commercial land.

¶80

After having gone through the record, the Court finds that the acquired land is situated in between the main

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road and a petrol pump. The land of the petrol pump is commercial one and the land in between the petrol pump and the road, can only be used for commercial activities that may be the allied activities of the petrol pump. It is the basic policy of the Government that a land owner should be allowed just and fair compensation. While computing the compensation, it is obligatory upon the Land Acquisition Officer to see that for what purpose the land which is being acquired is being actually used or could be used. There is nothing on the record that the land in question was being used for agriculture purpose. The material available on the record clearly speaks that the land which is being acquired is meant for commercial activities only and therefore, the findings of the learned court below in no manner can be said to be perverse or contrary to the record.

¶85

Counsel appearing for the appellant has also submitted that no ground as given in section 34 of the Act of 1996 subsists so as to set aside the arbitral award.

¶86

It is the basic Public Policy of the Government to allow just and fair compensation to the land owner for his acquired land.

¶87

Section 34 of the Act of 1996 clearly speaks that the arbitral award can be set aside if it is in conflict with the Public Policy of the India.

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The Public Policy of the India is that one should get just and fair compensation for the acquired land and the Land Acquisition Officer is under an obligation to keep in mind the actual use of the land in question while computing the compensation. The facts on record, as has been observed above, clearly speak that the land in question is in between the petrol pump and the main road and it is only for commercial use. The learned court below has rightly held that the modified award is in conflict with the Public Policy of India and has rightly set aside the said award.

¶92

After making extensive scrutiny of the material available on record and in view of the discussion made above, this Court finds no perversity or illegality in the findings and observations of the Court below and there exists no ground to interfere with the order passed by the learned court below.

¶93

Accordingly, the misc. appeal filed by the appellant is bereft of merit and accordingly stands dismissed.

¶94

Since the main appeal has been dismissed, the stay application and pending application(s), if any, also stand dismissed.

¶95

Record of the case be sent back to the court concerned forthwith.

¶96

(GANESH RAM MEENA),J

¶97

Sharma NK/Dy. Registrar

National Highway Authority v. Smt. Nirmala W/O Shree Umesh Kumar

Case brief

What is this about?

What did the court decide?

National Highway Authority v. Smt. Nirmala W/O Shree Umesh Kumar

Case brief

What is this about?

What did the court decide?

What the court decided

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