NATIONAL HIGHWAYS AUTHORITY OF INDIA v. SRI. HANUMANTAPPA

(BY SRI. MALLIKARJUNA G CONTRACTOR, ADVOCATE FOR R1; SRI. MANJUNATHA RAYAPPA, AGA FOR R2 AND R3) THIS MISCELLANEOUS FIRST APPEAL IS FILED UNDER SECTION 37(1)(c) OF ARBITRATION AND CONCILIATION ACT,

1996. THIS MISCELLANEOUS FIRST APPEAL IS LISTED FOR HEARING, THIS DAY, THE JUDGMENT IS DELIVERED AS UNDER: ORAL JUDGMENT Smt.Shilpa Ghanshyambhai Shah., counsel appellant, Sri.Mallikarjuna G.Contractor., counsel respondent No.1 and Sri.Manjunatha Rayappa., Additional Government Advocate for respondents 2 and 3 have appeared in person.

2. The appeal is filed to set aside the judgment dated

21.06.2021, passed by the Principal District and Sessions Judge, Davanagere, in A.P.No.15/2020, as far as the direction for the payment of solatium and the statutory interest to respondent No.1 is concerned, and consequently to restore the - 3 - NC: 2026:KHC:6251 MFA No. 249 of 2022 HC-KAR Arbitral Award dated 21st August 2017, passed by the second respondent.

3. The Central Government, for the construction of four laning from Kms.378.200 to Kms.418.500 (Hospet to Chitradurga Section) issued a final notification under Section 3D (1) and (2) of the National Highways Act and the same was published in the official gazette, declaring that amongst other lands, the lands in Survey No.42/1 to an extent of 1,414 square meters situated at the said village rest absolutely with the Central Government, free from all encumbrances. The third respondent was appointed as the competent authority under Section 3(a) of the National Highways Act, determined the value at Rs.2,00,000/- per acre, equivalent to Rs.49.50/- per square meter vide award dated 26.03.2013. Being dissatisfied with the market value determined by the respondent No.3, Sri.Hanumantappa, the owner of the acquired lands, approached respondent No.2 seeking enhancement of compensation. The second respondent, with a common arbitral award dated 21.08.2017, rejected the claims of the land owners, including that of the first respondent, thereby - 4 - NC: 2026:KHC:6251 MFA No. 249 of 2022 HC-KAR confirming the market value determined by respondent. The first respondent aggrieved by the Arbitral Award, approached the Principal District and Session Judge at Davangere by filing a suit under Section 34 of the Arbitration and Conciliation Act, 1996 seeking setting aside the Arbitral Award and enhancement of the compensation., which later came to be registered as A.P.No.15/2020 and after transfer to and re-transfer from Commercial Court to the Principal District and Sessions Judge, Davanagare. The appellant, through its counsel, contested the matter by way of filing a written statement, contended that there was no Scope for modification of the arbitral award, and the relief sought in the petition was outside the scope of Section 34 of the Arbitration Act. The appellant also brought to the notice of the District Court that, as on the date of the hearing of the main arguments, the application seeking modification of the order dated 19.09.2019 passed by the Hon'ble Supreme Court was still pending before the Supreme Court. The District Court after dismissing the suit, passed further orders awarding solatium - 5 - NC: 2026:KHC:6251 MFA No. 249 of 2022 HC-KAR and statutory interest on the market value determined by the respondent No.3. Under these circumstances, the appellant has filed the appeal on several grounds as setout in the Memorandum of appeal.

4. Counsel for the respective parties presented several contentions. Counsel for the appellant placed reliance on the following decisions:

1. SRI.H.M.SHANKARAMURTHY V/S. NATIONAL HIGHWAYS AUTHORITY OF INDIA AND OTHERS reported in ILR 2010 KAR 3711.

2. NATIONAL HIGHWAYS AUTHORITY OF INDIA V/S. MAHADEVI AND OTHERS reported in 2017 (4) KAR.L.J. 674.

3. S.V.SAMUDRAM V/S. STATE OF KARNATAKA AND ANOTHER reported in (2024) 3 SCC 623.

4. THE UNION OF INDIA AND ANOTHER V/S. SRI.KOTHARI SUBBARAJU AND OTHERS reported in MFA NO.6525/2016 (AA). Counsel for respondent No.1 placed reliance on the following decisions: - 6 - NC: 2026:KHC:6251 MFA No. 249 of 2022 HC-KAR

1. UNION OF INDIA AND ANOTHER V/S. TARSEM SINGH AND OTHERS reported in 2025 SAR (CIV)

2. UNION OF INDIA AND ANOTHER V/S. TARSEM SINGH AND OTHERS reported in 2020 AIR (SC) CIVIL 1447.

3. THE DEPUTY GENERAL MANAGER AND ANOTHER V/S. SHIVANGOUDA AND ANOTHER reported in MFA NO.100425/2024 (AA).

4. UNION OF INDIA AND ANOTHER V/S. TARSEM SINGH AND OTHERS reported in MISC. APPLICATION NO.1773/2021 IN CIVIL APPEAL NO.7064/2019.

5. NATIONAL HIGHWAYS AUTHORITY OF INDIA V/S. VENKATESH AND OTHERS reported in MFA NO.161/2022 (AA).

5. Heard the arguments and perused the papers with care.

6. The facts are sufficiently said and do not require reiteration. The core issue for determination is whether the award of solatium and statutory interest is legally sustainable when the primary suit has been dismissed. - 7 - NC: 2026:KHC:6251 MFA No. 249 of 2022 HC-KAR

7. In the present case, the lands were acquired for a public purpose and compensation was duly awarded by the SLAO; the arbitrator rightly rejected the petition on

21.08.2017. As the suit was dismissed, the Trial Court acted without jurisdiction in awarding solatium and interest. It is a well-settled principle of law that under Section 34 of the Arbitration and Conciliation Act, 1996, the Court's jurisdiction is confined to either upholding or setting aside an arbitral award; it does not possess the power to modify the award's substantive findings. Moreover, the claimants did not pray for the grant of solatium and statutory interest; hence, the award of solatium and interest is untenable. In the absence of a plea for the grant of solatium and statutory interest, the award of the same was untenable. Needless to observe upon dismissal of the suit, the Court became functus officio regarding the subject matter, rendering the award of solatium and interest is null and void. Counsel for the respective parties placed reliance on the decisions referred to supra. But I do not think that the law is in - 8 - NC: 2026:KHC:6251 MFA No. 249 of 2022 HC-KAR doubt. Each decisions turns on its own facts. The present case is also tested in the light of the aforesaid decisions.

8. For the foregoing reasons, the appeal deserves to be allowed and the judgment dated 21.06.2021, passed by the Principal District and Sessions Judge, Davanagere, A.P.No.15/2020, as far as the direction for the payment of solatium and the statutory interest to the first respondents is set aside, and the Arbitral Award dated 21st August 2017, passed by the second respondent, is restored.

9. Resultantly, the appeal is allowed. Because of disposal of the appeal, interim order granted if any stands discharged and pending interlocutory applications if any are disposed of. MRP List No.: 1 Sl No.: 70 SD/- (JYOTI M) JUDGE