The court upheld that compensation for land acquisition must reflect market value, and salvage deductions are lawful per established guidelines, affirming the limited appellate jurisdiction over arbitral awards.

JUDGMENT :

Soumen Sen, C.J.

This is an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, ‘the Act, 1996’) arising out of an order passed by the learned Additional District Judge-II, Kasaragod, in an application filed under Section 34 of the Act, in which, the Award dated 17.01.2025 in Arbitration Application No. NH/ARBT/KSD/401/2021 and LAC 254/ Chengala was under challenge.

2. The genesis of the dispute is the acquisition of the land with building for the development of National Highway – 66 in Kasaragod District. Consequent upon the decision to acquire the said property, a petition was filed under Section 3G (5) of the National Highways Act, 1956 and the determination of compensation by the Special Deputy Collector, Land Acquisition (NH), Kasaragod, who also is the Competent Authority, was challenged before the Court of Arbitrator and District Collector, Kasaragod, under the Act, 1996.

3. The Competent Authority determined the compensation at Rs.27,55,654/-, in which, the value of the structure was determined at Rs.5,66,219/- and the market value of the bare land was determined at Rs.4,97,330/-. The total compensation amount was determined at Rs.28,23,600/-. The salvage value was deducted at the rate of 6% of the structural value plus 6% of the solatium. This was challenged before the Arbitrator under Section 3G (5) of the National Highways Act, 1956 .

4. The principal ground of challenge appears to be that the land value fixed was inadequate and does not represent the actual prevailing market value. The acquired land is situated in a high potential area and on account of the acquisition, the utility of the remaining land is reduced considerably. Access to the highway line would be lost resulting in the property being landlocked. The Award holder claimed compensation of Rs.10 lakhs for the injurious affection. The petitioner also questioned the deduction of the salvage value, being a sum of Rs.67,946/- as not maintainable. As the competent authority is free to remove the structure, full compensation without deducting salvage value has to be paid under the Statute. The front portion of the house, including three pillars and the whole courtyard, falls in the acquired land. Therefore, the remaining portion of the residential house would be unworthy for use. Hence, the whole house has to be valued and compensated with all statutory benefits.

5. In the counter affidavit, the Competent Authority of Land Acquisition (CALA) has contended that the salvage value was deducted as per the directions and guidelines of the Ministry of Road Transport and Highways (MoRTH)/NHAI. All the structures have been taken into consideration and the value of the same was fixed in accordance with law. The rate of land was fixed after verifying the actual position and lie of the land and also by following the provisions contained in Section 26 (1) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (for short, RFCTLARR Act 2013) and all genuine transactions during the relevant period were taken into consideration without any omission. The CALA further contended that out of six documents considered, three documents were discounted for the reason that the land involved in those documents were not similar to the lands under acquisition. From the remaining three documents, two documents having highest land value and land in A Block were considered for taking the average. Thus, CA