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Judgment
Ramesh Ranganathan, CJ
Heard Mr. T.A. Khan, learned Senior Advocate assisted by Mr. Rakshit Joshi, learned Advocate for the appellant, Mr. B.S. Parihar, learned
Standing Counsel for the State of Uttarakhand-respondent Nos.2, 4 & 5, and Mr. Naresh Pant, learned Advocate for the National Highways
Authority of India-respondent No.3.
This appeal is preferred against the order passed by the learned Single Judge in WPMS No.09 of 2020 dated 03.01.2020. The appellant herein filed
WPMS No.09 of 2020 seeking a writ of mandamus to the fourth respondent to decide the Arbitration proceedings pending before him, in Arbitration
Case No. 51/01 of 2018, expeditiously; and for a writ of mandamus directing respondent Nos.1 to 3 & 5 not to take possession of the land of the
petitioner, and not to demolish the building of the petitoner situated at Khasra No. 01/946 at village Durgapalpur Parma, Tehsil Lalkua, District Nainital
till the final disposal of Arbitration Case No.51/01 of 2018 pending before respondent no.4.
Facts, to the limited extent necessary, are that the petitioner, a company registered under the Companies Act, is the owner of the subject land on
which they constructed a factory which houses plant and machinery. The National Highways Authority of India (for short the “NHAIâ€) instituted
proceedings for acquisition of the subject land for the purpose of widening the existing road, and to provide for drainage etc. An order was passed on
19.05.2018 determining the compensation as Rs.1,11,17,341/-, for acquisition of the petitioner’s land. The NHAI appears to have called upon the
appellant-writ petitioner to furnish details of their bank account to enable the compensation amount to be deposited therein. The appellant-writ
petitioner, however, invoked the jurisdiction of this Court, and has chosen not to receive the compensation till date. The justification furnished, for
invoking the jurisdiction of this Court, is that, since the proceedings before the Arbitrator (District Magistrate, Nainital), appointed in terms of Section
3(G)(5) of The National Highways Act, 1956 (hereinafter referred as the “1956 Actâ€), is still pending adjudication before him, the petitioner
should not be dispossessed in the integrum since their dispossession, and the consequential demolition of their building and removal of the plant and
machinery, would result in an irreparable situation of the appellant-writ petitioner not being in a position to adduce evidence, regarding the value of the
building, and the plant & machinery located therein, before the arbitrator.
In the order under appeal, the learned Single Judge observed that the matter was referred to arbitration under Section 3(G) of the 1956 Act; the
Arbitral proceedings are still pending; and the arbitration proceedings should be expedited. The Writ Petition was disposed of directing the arbitrator to
decide the arbitration proceedings expeditiously, preferably within three months from the date of production of a certified copy of this order.
In examining the question, whether or not the appellant-writ petitioner is entitled to be granted the relief of not being dispossessed till the arbitral
proceedings are finalized, it is necessary to briefly refers to the relevant provisions of the 1956 Act. Section 3(E) relates to the power to take
possession and, under Section (1) thereof, where any land has been vested in the Central Government under sub-section (2) of section 3D, and the
amount determined by the competent authority under Section 3G with respect to such land has been deposited under sub-Section (1) of Section 3H
with the competent authority by the Central Government, the competent authority may, by notice in writing, direct the owner, as well as any other
person who may be in possession of such land, to surrender or deliver possession thereof to the competent authority within sixty days of service of
notice.
Under Section 3(E)(2), if any person refuses or fails to comply with any direction made under sub-section (1), the competent authority shall apply
(a) in the case of any land situated in any area falling within the metropolitan area, to the Commissioner of Police; (b) in case of any land, situated in
any area other than the area referred to in clause (a), to the Collector of a District; and such Commissioner or Collector, as the case may be, shall
enforce the surrender of the land to the competent authority, or to the person duly authorised by it.
Under Section 3(F), where the land has vested in the Central Government under Section 3D, it shall be lawful for any person, authorised by the
Central Government in this behalf, to enter, and do other acts necessary, upon the land for carrying out the building maintenance, management or
operation of a National Highway or a part thereof, or any other work connected therewith.
Under Section 3(D)(2), on the publication of the declaration under sub-section (1), the land shall vest absolutely in the Central Government free
from all encumbrances. Section 3(D)(1) requires the competent authority to submit a report to the Central Government and for the Central
Government, on receipt of such a report, to declare, by notification in the Official Gazette, that the land shall be acquired for the purpose or purposes
mentioned in sub-section (1) of Section 3A. The moment a declaration is issued, by the Central Government under Section 3(D)(1), the land stands
vested in the Central Government free from all encumbrances. The power to take possession under Section 3(E) is not only contingent on a
declaration being issued by the Central Government under Section 3(D)(2), but also on the amount, determined by the competent authority under
Section 3(G), to be deposited under Section 3(H)(1) of the Act before the competent authority by the Central Government. On such deposit by the
Central Government, Section 3(E)(1) requires the competent authority to issue a notice in writing to the owner, or any other person who is in
possession, to surrender or deliver possession to the competent authority. As Section 3(E) also refers to Section 3(G) and 3(H)(1), it is necessary to
refer to the relevant sub-sections of Section 3(G) and 3(H) of the 1956 Act.
Section 3(G) relates to determination of the amount payable as compensation and, under sub-section (1), where any land is acquired under the 1956
Act, there shall be paid an amount which shall be determined by an order of the competent authority. Section 3(G)(5) stipulates that, 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. Section 3(G)(6) stipulates that, subject
to the provisions of the 1956 Act, the provisions of the Arbitration and Conciliation Act, 1996 (for short “the 1996 Actâ€) shall apply for every
arbitration under the 1956 Act.
Sub-section (7) of the 3(G) requires the arbitrator, while determining the amount under sub-section (5), to take into considerationâ€
(a) the market value of the land on the date of publication of the notification under section 3A;
(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;
(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; and
(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.
Section 3(H)(1) requires the amount, determined to be deposited under Section 3(G), to be deposited by the Central Government, in such manner
as may be laid down by the rules, with the competent authority before taking possession of the land. Section 3(H)(2) requires the competent authority,
as soon as may be after the amount has been deposited under sub-Section (1), to pay the amount, on behalf of the Central Government, to the person
or persons entitled thereto. Section 3(H)(5) stipulates that, where the amount determined under section 3G 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 3D till the date of the actual deposit thereof. Under sub-section (6) of Section 3(H), when the amount determined by the
arbitrator is in excess of the amount determined by the competent authority, the excess amount, together with interest if any awarded under sub-
section (5), shall be deposited by the Central Government in such manner as may be laid down by rules, with the competent authority, and the
provisions of sub-sections, (2) to (4) shall apply on such deposit. The amount determined, for the acquisition of land by the competent authority under
Section 3(G)(1), is required, in terms of Section 3(H)(1), to be deposited by the Central Government, with the competent authority, before taking
possession of the said land.
Mr. Naresh Pant, learned Standing Counsel, would submit that the amount has been deposited by the Central Government with the competent
authority; and it is only because the petitioner had failed to furnish its bank account, and other relevant details, that the amount could not be paid to
them.
It does appear that it is only because they have invoked the jurisdiction of the arbitrator, questioning the quantum of compensation determined by
the competent authority, has the petitioner chosen not to receive payment. While failure on the part of the petitioner to receive payment may not
disable the competent authority to issue notice to the petitioner to receive compensation and deliver possession and, on its failure to do so, to take
action in terms of Section 3(E)(2)(b) of the 1956 Act, we are concerned, in the present case, with the question whether the petitioner is justified in its
submission, that they may not be dispossessed till the arbitration proceedings conclude, on the plea that demolition of their building, and removal of the
plant and machinery located therein, may disable the arbitrator from effectively adjudicating the value of the building.
The obligation under the 1956 Act is for the competent authority to pay compensation and, on such payment, the said Act confers power on the
competent authority to take possession of the land after complying with the procedural requirements of Section 3(E)(1). The mere fact that the
appellant-writ petitioner had invoked the jurisdiction of the arbitrator under Section 3(G)(5), seeking enhancement of compensation, would not disable
the competent authority from taking possession provided they comply with the procedural requirement of Section 3(E) of the Act.
As noted hereinabove, the provisions of the 1996 Act apply to every arbitration under the 1956 Act subject to the provisions of the 1956 Act.
Section 17 of the 1996 Act relates to the interim measures ordered by the arbitral tribunal and, under sub-section (1)(ii)(C) thereof, a party may, during
the arbitral proceedings, apply to the arbitral tribunal for an interim measure of protection for the inspection of any property which is the subject matter
of dispute in arbitration, or as to which any question may arise therein and authorizing, for any of the aforesaid purposes, any person to enter upon the
land or building in the possession of any party, or authorizing any sample or any observation to be made which may be necessary or expeditious for the
purpose of obtaining full information.
While the provisions of the 1996 Act are, undoubtedly, subject to the provisions of the 1956 Act, no provision of the 1956 Act which disables the
appellant-writ petitioner herein from seeking interim measures, by way of an application to the arbitral tribunal under Section 17 of the 1996 Act, has
been brought to our notice. As the appellant-writ petitioner has the remedy of seeking such an interim measure of inspection of the property, under
Section 17(1)(i)(ii)(c) of the 1996 Act, we see no reason to adjudicate this contention, urged on behalf of the appellant-writ petitioner, as the appellant-
writ petitioner has the remedy of seeking such interim measures by way of an application before the arbitral tribunal.
It is unnecessary for us to elaborately examine this Special Appeal on its merits, since the learned Single Judge has directed the arbitrator to
decide the arbitral proceedings within three months from the date of production of a certified copy of the order. While the arbitral tribunal shall
complete arbitral proceedings strictly within the time frame stipulated in the order passed by the learned Single Judge, we make it clear that the order
under appeal shall not disable the appellant-writ petitioner from seeking interim measures, before the arbitral tribunal, as provided under Section 17(1)
(ii)(c) of the 1996 Act.
The Special Appeal is disposed of accordingly. No costs.
Let a certified copy of this order be furnished to the learned counsel for the parties, on payment of the prescribed charges, by 20.02.2020.