A Very Consequential Supreme Court Ruling

A Very Consequential Supreme Court Ruling

When govt values land unjustly, landowners cannot seek full remedy in lower courts

Sunil Gupta

11.09.2021

Construction of national highways and acquisition of land for that purpose is an important GoI project. The state always has the power to compulsorily acquire any person’s property for public purpose but in lieu of fair compensation. Fair compensation is a constitutional right. However, now, under a recent Supreme Court judgment in Project Director, NHAI vs M Hakeem, GoI can acquire land for highways without a fair mechanism for compensation. SC has always taken pride in laying down the law for upholding constitutional rights. But it has failed this time.

Why is govt arbitration one-sided?

Under the National Highways Act, 1956 (amended 1997), when GoI acquires land for highways, compensation is fixed by a government servant. A dissatisfied landowner can seek reconsideration but even reconsideration is done by another government servant called an ‘arbitrator’ who is appointed not with the landowner’s consent but unilaterally by GoI.

A non-consensual ‘arbitrator’ is an oxymoron. Fulsome remedies of appeal are not available to the landowner under the Land Acquisition Act if the arbitrator’s compensation award is inadequate. Only a truncated remedy on technical grounds under Section 34 of the Arbitration Act is provided, where a court has limited power.

The court under this remedy can either set aside the award or leave it to be re-decided by the arbitrator but cannot modify the award and increase the compensation itself. Arbitrariness is writ large. Still, the apex court refused to concede to lower courts (below it) the right to enhance NHA awards.

SC’s view could have been acceptable had the arbitrator been appointed with the landowner’s consent. An HC had found that the governmentappointed arbitrator had simply ‘rubber-stamped’ the collector’s measly compensation of Rs 46.55-83.15 per sq mt, although the market value (from sale-deeds of identical lands) was Rs 645 psm.

Therefore, HC, instead of setting aside the award or remitting it for a completely new hearing and decision by yet another government-appointed bureaucrat arbitrator, enhanced the compensation itself. It held that, at least, as regards NHA awards, Section 34 should be construed liberally as permitting the court to modify and enhance the compensation itself. This view gave landowners at least one full and fair judicial remedy in a court.

What did the Supreme Court say?

Time and again, SC has itself adopted ‘dynamic’ and ‘creative’ interpretation of statutes to facilitate justice. It has constitutional power to do ‘complete justice’. However, this time, despite NHA’s unfair consequences, SC disagreed with HC and adopted a surprisingly conservative approach.

SC expressed regret that under NHA the wholesome regime of appeals has been replaced by a nonconsensual arbitrator’s award challengeable only on limited grounds but left it to Parliament to amend NHA. Yet it simultaneously ruled that the mere fact that such a process would enable a government servant to ‘rubber-stamp’ an award cannot mean that a challenge on merits should be provided under Section 34. Such an approach by the all-powerful highest court is disconcerting.

Ironically enough, SC did note the ‘perverse’ and ‘abysmally low amounts’ granted to landowners by the Arbitrator. Yet it disapproved the HC’s enhancement but at the same time refused to disturb this particular enhancement on the ground that the NHA amendment’s constitutional validity hasn’t been challenged, therefore, grave injustice would be done if SC were to set aside the HC decision or leave it for re-decision by the very government servant arbitrator who had applied the ‘depressed land values’.

Why does the status quo continue?

However, SC has denied lower courts (below it) the right to modify and enhance NHA awards. They can only set aside an award or remit it back for ‘arbitration’. Landowners cannot challenge the NHA amendment’s validity in their purely statutory petitions under Section 34. That can happen only in a writ petition in HCs or SC under the Constitution. This leaves lower courts spectators when confronted with unjust awards.

Future cases of inadequate NHA compensation under Section 34 leave landowners (mostly poor farmers and agriculturists) and lower courts in a bind. For landowners, SC has ruled a ‘limited right’ and ‘limited remedy’ to ‘cure’ awards. Lower courts are hamstrung by a lakshman rekha.

The writer is a Senior Advocate, Supreme Court of India