1. Appeals against award granting compensation including solatium for building rendered unusable by partial land acquisition under National Highways Act. (Para 1 , 2 )
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2026 Supreme(Online)(Ker) 61405
IN THE HIGH COURT OF KERALA AT ERNAKULAM
Soumen Sen, CJ, Syam Kumar V.M., J
THE PROJECT DIRECTOR NHAI – Appellant
Versus
NOUSHAD K.M – Respondent
ARB.A NO. 3 OF 2026
Important Points
Solatium is payable on building structures rendered unusable by partial land acquisition under the 2013 Act. Appellate courts have extremely limited jurisdiction under Section 37 of the Arbitration Act to interfere with such awards unless the findings are manifestly perverse or arbitrary.
Subject
Land Acquisition - Compensation and Arbitration
Act Referred
Headnote
(A) Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - Sections 3(p), 26, 27, 28, 29, and 30 - National Highways Act, 1956 - Section 3G(5) - Compensation for building structure - Whether solatium is payable on a remaining building structure rendered unusable by partial acquisition - Definition of ‘land’ includes assets attached to the earth - Determination of compensation involves assessing damage sustained to other property by reason of acquisition - Solatium is calculated on the total compensation amount determined under Sections 26, 27, and 28, including value of assets attached to the land - If partial acquisition renders a building structure completely unusable, unstable, or uninhabitable, the owner is entitled to compensation for the entire building including solatium. (Paras 11, 12)
(B) Arbitration and Conciliation Act, 1996 - Sections 34 and 37 - Scope of appellate interference - Appellate power under Section 37 is restricted and akin to the jurisdiction under Section 34 - Court shall not substitute its own view for that of the arbitrator unless the award is manifestly perverse, arbitrary, based on no evidence, or in violation of principles of natural justice - Great restraint is required when an arbitral award has been upheld or substantially upheld under Section 34. (Paras 15, 16, 17, 18, 19, 22)
Facts of the case:
The appellants challenged awards directing payment of compensation and solatium for an entire building, despite only a portion of the land being acquired for highway widening. Expert reports from the Public Works Department indicated that the partial demolition and acquisition rendered the remaining structure unstable and unusable. The arbitrator awarded compensation for the entire building, and the district court upheld this decision, including the grant of solatium.
Findings of Court:
The court found that the arbitrator's decision was based on expert evidence and a proper interpretation of the 2013 Act. Since the remaining structure was rendered useless, it fell within the ambit of compensable damage and assets attached to the land, making the award of solatium legally sustainable.
Issues: Whether solatium is payable on structures not formally acquired but rendered unusable by the acquisition, and whether the appellate court can interfere with such an arbitral award under Section 37 of the Arbitration and Conciliation Act, 1996.
Ratio Decidendi: Solatium is calculated on the total compensation determined under Sections 26, 27, and 28 of the 2013 Act, which accounts for damages to remaining property resulting from acquisition. When a structure becomes completely unusable, it is deemed acquired for compensation purposes. Interference under Section 37 is only permissible if the award is perverse or manifestly arbitrary.
Result: Appeals dismissed.
(B) Arbitration and Conciliation Act, 1996 - Sections 34 and 37 - Scope of appellate interference - Appellate power under Section 37 is restricted and akin to the jurisdiction under Section 34 - Court shall not substitute its own view for that of the arbitrator unless the award is manifestly perverse, arbitrary, based on no evidence, or in violation of principles of natural justice - Great restraint is required when an arbitral award has been upheld or substantially upheld under Section 34. (Paras 15, 16, 17, 18, 19, 22)
Facts of the case:
The appellants challenged awards directing payment of compensation and solatium for an entire building, despite only a portion of the land being acquired for highway widening. Expert reports from the Public Works Department indicated that the partial demolition and acquisition rendered the remaining structure unstable and unusable. The arbitrator awarded compensation for the entire building, and the district court upheld this decision, including the grant of solatium.
Findings of Court:
The court found that the arbitrator's decision was based on expert evidence and a proper interpretation of the 2013 Act. Since the remaining structure was rendered useless, it fell within the ambit of compensable damage and assets attached to the land, making the award of solatium legally sustainable.
Issues: Whether solatium is payable on structures not formally acquired but rendered unusable by the acquisition, and whether the appellate court can interfere with such an arbitral award under Section 37 of the Arbitration and Conciliation Act, 1996.
Ratio Decidendi: Solatium is calculated on the total compensation determined under Sections 26, 27, and 28 of the 2013 Act, which accounts for damages to remaining property resulting from acquisition. When a structure becomes completely unusable, it is deemed acquired for compensation purposes. Interference under Section 37 is only permissible if the award is perverse or manifestly arbitrary.
Result: Appeals dismissed.
Legal Category Hierarchy
- property law
- arbitration
- statutory interpretation
Advocates:
For the Appellants/Petitioners: Lejo Joseph George, Bidan Chandran
For the Respondents: Saiby Jose Kidangoor, Benny Antony Parel, Pramitha Augustine, Afsana Khan, Sreeraj S. Rajaram, Adarsh Padmanabhan, Amal Dileep, Anna Paul, Victor Joseph, P. Sathisan, Shibu B.S, Alvin Jewel S.S., Vidhya T.U., Razak M., Sreekarthik S. Menon, Daniel A.J.
For the Appellants/Petitioners: Lejo Joseph George, Bidan Chandran
For the Respondents: Saiby Jose Kidangoor, Benny Antony Parel, Pramitha Augustine, Afsana Khan, Sreeraj S. Rajaram, Adarsh Padmanabhan, Amal Dileep, Anna Paul, Victor Joseph, P. Sathisan, Shibu B.S, Alvin Jewel S.S., Vidhya T.U., Razak M., Sreekarthik S. Menon, Daniel A.J.
Table of Contents
2. NHAI argued solatium not payable for unacquired structure; claimants argued Sections 27, 30 of 2013 Act cover it. (Para 3 , 7 , 8 , 9 , 10 )
3. Court held solatium payable on compensation for assets attached to land, including structures rendered unusable, relying on RB Dealers. (Para 11 , 12 , 14 )
4. Solatium under Section 30(1) of 2013 Act is calculated on market value plus value of assets attached to land as per Sections 26-28. (Para 11 , 12 )
5. Is solatium payable under Section 30 of the 2013 Act for a building structure that becomes unusable due to partial acquisition even if not formally acquired?
Yes, because compensation under Sections 27 and 28 includes damage to other property, and solatium is calculated on total compensation including such damage. (Para 11 , 12 , 14 )
6. What is the scope of an appeal under Section 37 of the Arbitration and Conciliation Act, 1996?
The scope is very limited, akin to Section 34 grounds; the appellate court cannot interfere with plausible findings of fact or substitute its own view. (Para 15 , 16 , 17 , 18 , 19 , 20 )
7. Can a court interfere with an arbitrator's finding that a building is rendered unusable due to acquisition?
No, unless the finding is perverse, arbitrary, based on no evidence, or violates natural justice; here the finding was based on expert reports. (Para 16 , 20 , 21 , 22 )
8. What are the components of the final award under Section 69 of the 2013 Act?
The final award includes compensation determined under Sections 26-28, additional amount under Section 30(1), and solatium of 100% of that compensation. (Para 12 )
JUDGMENT
Dated this the 17 th day of September 2026
SOUMEN SEN, C.J.
Heard Mr. Bidan Chandran and Mr. Lejo Joseph George, learned counsel for the appellants, Mr. P. Sathisan, learned counsel for respondent No.1 in Arb. A. Nos. 4 & 6 of 2026 and Mr. Saiby Jose Kidangoor, learned counsel for the respondent in Arb. A. No. 3 of 2026.
2. The three appeals involving the similar questions of law and facts are heard together and disposed of by this common judgment. However, for the purpose of convenience, Arb. Appeal No. 3 of 2026 shall be considered to be the lead matter. The grounds of challenge in the remaining two appeals are same and similar to Arb. Appeal No. 3 of 2026. Briefly stated, the respondents filed a petition under Section 3G(5) of the National Highways Act, 1956, challenging the compensation awarded by the Special Deputy Collector (LA-NH) & Competent Authority for Land Acquisition (CALA), in LAC 270/Kasaragod, consequent on the acquisition of land for development of National Highway 66 in Kasaragod district. The Court of Arbitrator and the District Collector, Kasaragod, after hearing the parties and on the basis of the materials available on record, partially affirmed the order of the Special Deputy Collector LA(NH) & CALA. The issue raised before the District Collector was violation of the structures and the compensation payable on the entire building, although there has been partial appreciation. When the matter was heard, the parties decided to obtain a detailed report from the Executive Engineer, PWD (Buildings), Kasaragod, and accordingly, the Executive Engineer, PWD was directed to submit a detailed report addressing the present condition of the building in view of the contention raised by the respondent that the utility of the building was reduced due to acquisition. The report submitted revealed that the existing three accesses to the building are to be demolished as part of National Highway widening and the present access from the National Highway would be broken.
2. The Project Director, NHAI objected to the said report stating that the construction activities are carried out at sufficient offset from building and no structural component of building was acquired and therefore, building is safe as earlier and ground floor access will remain unaffected same as present access from cross road and suitable staircase can be constructed on cross road side for accessing first floor of building. Thereafter, further inspection had taken place and a report was submitted from where it appeared that the access to the building has been badly affected due to acquisition. This report of the Executive Engineer, PWD regarding the access to the building was taken into consideration by the Collector in partially allowing the claim of the respondent with regard to the payment of compensation and the relevant observations of the Arbitrator & District Collector, kasaragod, in this regard are stated as under:
“From the above, it is found that partial acquisition and demolition will render the entire building useless. Hence the petitioner is eligible to get compensation for the entire building. Under the above circumstances it is ordered that the petitioner will be granted compensation for the entire building. Respondent No.1 and respondent No.2 herein will take urgent necessary steps to value the building after complying usual formalities and disburse the compensation as per existing statute.
Under the above circumstances I find reason to interfere in certain areas of the award passed by the Respondent No.2 (CALA).
In the result the Arbitration petition is disposed of by allowing it partially as above without cost.”
3. Being aggrieved by the said award, an application was filed before the court of the District Judge, Kasaragod, under Section 34 of the Arbitration and Conciliation Act, 1996, for setting aside the said award. In the said application, it was inter alia alleged that if the court is otherwise of the opinion that the remaining bui
