- 1 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF JULY, 2025 BEFORE THE HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR MISCELLANEOUS FIRST APPEAL NO. 161 OF 2022 (AA) BETWEEN: NATIONAL HIGHWAYS AUTHORITY OF INDIA PIU-CHITRADURGA HAVING ITS OFFICE AT NEAR J.M.I.T NH-48 (OLD NH-4) (KM.202) CHITRADURGA-577 502 REPRESENTED BY ITS PROJECT DIRECTOR SRI. D. SRINIVASULU NAIDU …APPELLANT (BY SMT. SHILPA GHANSHYAMBHAI SHAH, ADVOCATE) AND: 1. SRI. VENKATESH S/O MUGAPPA AGED ABOUT 45 YEARS 2. SRI GOVINDPPA S/O MUGAPPA AGED ABOUT 35 YEARS RESPONDENTS NO.1 AND 2 ARE THE LEGAL REPRESENTATIVE OF LATE MUGAPPA RESIDING AT BANGARAKKANAGUDDA VILLAGE, JAGALUR TALUK DAVANAGERE DISTRICT-577 228 R Digitally signed by ANJALI M Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 3. THE ARBITRATOR/DEPUTY COMMISSIONER HOSPET-CHITRADURGA SECTION OF NH-13, (OLD NH-48) DISTRICT ADMINISTRATIVE OFFICE HARIHAR-DAVANAGERE ROAD DAVANAGERE DISTRICT- 577 004 4. SPECIAL LAND ACQUISITION OFFICER AND COMPETENT AUTHORITY, NH-48 NATIONAL HIGHWAYS AUTHORITY OF INDIA P.G BUILDING, NEAR KSRTC BUS DEPOT CHITRADURGA DISTRICT-577 502 REPRESENTED BY ITS SPECIAL LAND ACQUISITION OFFICER …RESPONDENTS (RESPONDENTS NO.1 TO 4 ARE SERVED AND UNREPRESENTED) THIS MFA IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT, AGAINST THE JUDGMENT DATED 21.06.2021 PASSED IN AP.NO.13/2020 ON THE FILE OF THE PRL. DISTRICT AND SESSIONS JUDGE, DAVANAGERE, DISMISSING THE SUIT FILED UNDER SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT 1996. THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR - 3 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 ORAL JUDGMENT This appeal is filed under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as `A & C Act) by the appellant - National Highways Authority of India (in short `the NHAI'), being aggrieved by the judgment and order dated 21.06.2021 passed in AP No.13/2020 by the Court of the Prl. District and Sessions Judge, Davanagere. 2. By the said order, the learned District Court declined to interfere with the arbitral award in so far as quantum of compensation was concerned, but, held that, the land owners are entitled to solatium and statutory interest based on binding precedent of Hon'ble Supreme Court of India. Brief facts of the case are as under: 3. The land measuring 1212 sq.mtrs. bearing Sy.No.42/2 situated in Bangarakkanagudda Village, Jagalur Taluk, Davanagere District belonging to one late Sri Mugappa was acquired by the appellant under the - 4 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 provisions of the NHAI Act, for the purpose of widening of NH-13. The competent authority determined compensation at the rate of Rs.49.50 per sq. mtrs and awarded a total sum of Rs.60,000/- which was disbursed to the land owner. 4. Dissatisfied with the compensation awarded, the land owners preferred proceedings before the Arbitrator appointed under the provisions of NHAI Act. However, by the award dated 21.08.2017 the Arbitrator rejected the claim for enhancement of compensation. Thereafter, the legal representatives of the land owner filed AP No.13/20 under Section 34 of the A & C Act seeking to set aside the Arbitral award and for remand to consider enhancement of compensation and other benefits. 5. The learned District Judge after hearing both the side held that, enhancement of compensation does not fall within the permissible grounds under Section 34 of A & C Act, nevertheless held that, the land owners are entitled - 5 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 to solatium and interest as per law declared by the Hon'ble Supreme Court in Union of India Vs. Tarsem Singh, reported in (2019) 9 SCC 304, which struck down Section 3(j) of the NHAI Act to the extent it excluded the applicability of Secs.23(1)(A), 23(2) and 28 of Land Acquisition Act, 1894 (In short `the LA Act'). 6. Being aggrieved by the impugned order of granting solatium and interest, now the appellant-NHAI has preferred this appeal. The principal contention urged by the appellant herein is that, learned District Judge travelled beyond the scope of jurisdiction conferred under 34 of A & C Act by modifying the award and granted solatium and statutory interest which, according to the appellant amounted to rewriting the award contrary to the limited grounds available for interference under Section 34 of A & C Act. In support of her submission, learned Counsel Smt. Shilpa Shah relied upon the following judgments: - 6 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 (i) Sri H.M.Shankaramurthy vs. National Highways Authority of India & others (ILR 2010 KAR 3711) (ii) National Highways Authority of India vs.Mahadevi & Others (2017(4) Kar.L.J.3674 (iii) S.V.Samudram vs. State of Karnataka and another (2024) 3 SCC 623. 7. The learned counsel for the respondent though served with the notice, remained absent. 8. Having heard the learned counsel for the appellant and on perusal of the entire materials on record, this Court is of the considered view that, there is no illegality or perversity in the order passed by the learned District Judge so as to warrant interference under Section 37 of the A & C Act. 9. The first two judgments relied upon by the learned counsel for the appellant speak with regard to enhancement of compensation and the third judgment speaks with regard to the application of Sec.37(1) of A & C - 7 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 Act. In this case, the claimants are not claiming any enhancement of the compensation. They had challenged the award before the District Court by filing Sec.34 of A & C Act and ultimately said petition came to be dismissed and however, the learned trial Court allowed entitlement of solatium as well as interest on the award amount. 10. Being aggrieved by the said impugned order passed in the petition filed by the claimants, they have not preferred any separate appeal before any forum. It is well settled that the scope of interference with arbitral awards under Section 34 and consequentially under Sec.37 is narrow and circumscribed as rightly submitted by the learned counsel for the appellant. However, exception carved out under Section 34(2)(b)(ii) of A & C permits setting aside of an award if it is found to be in conflict with the public policy of India. 11. In the present case, the arbitral award was completely silent on the aspect of solatium and statutory - 8 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 interest which are now mandatory and statutory entitlements by virtue of the laid down in Tarsem Singh supra. In that decision, the Hon'ble Apex Court clearly held that Sec.3(j) of the NHAI Act, which excluded the applicability of solatium and interest provisions under the LA Act was unconstitutional and void. As a result, land owners whose lands are acquired under the NHAI Act are entitled to solatium under Section 23(2), additional compensation under Sec.23(1)(A) and interest under Sec.28 of the LA Act. 12. This Section Sec.23(1)(A) of Land Acquisition Act reads as under: "23. Matters to be considered in determining compensation (1-A) In addition to the market value of the land, as above provided, the Court shall in every case award an amount calculated at the rate of twelve per centum per annum on such market value for the period commencing on and from the date of the publication of the notification under section 4, sub-section (1), in respect of such land to the date of the award of the Collector or the date - 9 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 of taking possession of the land, whichever is earlier. Explanation. In computing the period referred to in this sub-section, any period or periods during which the proceedings for the acquisition of the land were held up on account of any stay or injunction by the order of any Court shall be excluded." 13. These provisions continued to remain enforceable and are to be read under any acquisition under NHAI Act pursuant to judgment in Tarsem Singh. It is also to be noted, the omission by the arbitrator to grant these statutory entitlements which flow directly from Supreme Court's interpretation of constitutional guarantees under law is not a mere error of fact or law but, an omission that renders an award in conflict with public policy. A judicial authority under Section 34 is empowered and indeed duty bound to correct such an omission to prevent injustice and constitutional illegality. Furthermore, the contention of the appellant that such claims were not specifically pleaded in the petition under - 10 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 Section 34 is untenable. When the right to solatium and interest accrues by operation of law, and the judgment of the Hon'ble Supreme Court is binding on all Courts and authorities, there is no requirement of specific pleading for such statutory benefits. The grant of such benefits is not discretionary, but obligatory. 14. In Tarsem's Singh's case, the Hon'ble Apex Court in para.40 has categorically observed as under: "40. This judgment is again distinguishable in that it was found, having regard to the Bombay Town Planning Act, that the person from whom the land was expropriated gets a package deal in that he may be allotted other lands in the final Town Planning Scheme, apart from compensation that is payable. However, it is worthy of comment that State of Kerala v. T.M. Peter [State of Kerala v. T.M. Peter, (1980) 3 SCC 554] , which was relied upon in this case, expressly followed Nagpur Improvement Trust [Nagpur Improvement Trust v. Vithal Rao, (1973) 1 SCC 500] , holding: 20. xxxx 21. xxxx 22. …… Law keeps alive and “operation pull down” is de mode. Viewed from this perspective, so far as we are able to see, the only discriminatory factor as between Section 34 of the Act and Section 25 of the Land Acquisition Act vis-à-vis quantification of - 11 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 compensation is the non-payment of solatium in the former case because of the provision in Section 34(1) that Section 25 of the Land Acquisition Act shall have no application. Thus, to achieve the virtue of equality and to eliminate the vice of inequality what is needed is the obliteration of Section 25 of the Land Acquisition Act from Section 34(1) of the Town Planning Act. The whole of Section 34(1) does not have to be struck down. Once we exclude the discriminatory and, therefore, void part in Section 34(1) of the Act, equality is restored. The owner will then be entitled to the same compensation, including solatium, that he may be eligible for under the Land Acquisition Act. What is rendered void by Article 13 is only “to the extent of the contravention” of Article 14. The lancet of the court may remove the offending words and restore to constitutional health the rest of the provision." The learned trial Court has considered this aspect. 15. The only grievance of the appellant-authority is that Section 34 cannot be used for awarding solatium as well as interest. In the judgment of the Hon'ble Apex Court in Gayatri Balasamy v. ISG Novasoft Technologies Ltd., reported in 2025 SCC OnLine SC 986, at para. 49, it is observed by the Apex Court that, "an award under Section 34 possesses the authority to rectify computational, clerical or typographical errors, as well as other manifest errors, provided that, such - 12 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 modification does not necessitate a merit-based evaluation. It is further observed that, there are certain powers inherent to the Court even when not explicitly granted by the Legislature. The scope of these inherent powers depends on the nature of provision, whether it pertains to appellate, reference or limited jurisdiction as in the case of Section 34. The powers are intrinsically connected as they are part and parcel of the jurisdiction exercised by the Court." 16. In catena of judgments, the Hon'ble Apex Court has held that every tribunal or Court is endowed with certain or incidental powers which are necessary to discharge its functions effectively for the purpose of doing justice between the parties (Grindlays Bank Ltd. v. Central Govt. Industrial Tribunal, reported in AIR 1981 SC 606). 17. In the same vein, as these judgments, I hold that, inadvertent errors, including typographical and - 13 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 clerical errors and including awarding of solatium as per the provisions of Land Acquisition Act as well as NHAI Act, be modified by the Court in application under Section 34. Therefore, the argument of the learned counsel for the appellant that, Section 34 of the A & C Act could not have been exercised by the trial Court cannot be accepted. It is a legal entitlement of the claimant to claim compensation when he loses land because of the acquisition proceedings initiated by the appellant-authority. Therefore, to do complete justice between the parties, I do not find any error committed by the trial Court in awarding the solatium and interest. 18. Furthermore, the learned District Court, while dealing with the appeal under A & C Act has not modified the quantum of compensation but, only ensured that the constitutional mandate laid down by the Hon'ble Apex Court is adhered to. It has neither substantiated its findings of the Arbitrator nor resassessed the facts and evidence to arrive at a different conclusion. Instead, it has - 14 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 rightly corrected an error that would otherwise perpetuate an unconstitutional deprivation of rightful compensation. 19. Therefore, the findings of the learned Dist. judge in awarding solatium and interest are in conformity with public policy and settled law. The appellants' challenge under Sec.37 fails to demonstrate any patent illegality, perversity or violation of the statutory scheme that would justify interference by this Court. This Court, therefore, finds no merit in the appeal. Resultantly, I pass the following: ORDER (i) This Appeal is dismissed. (ii) The judgment and order dated 21.06.2021 passed in AP No.13/2020 by the Principal District and Sessions Judge, Davanagere, is hereby confirmed. (iii) The respondents/land owners are entitled to solatium and statutory interest - 15 - HC-KAR NC: 2025:KHC:23817 MFA No. 161 of 2022 in accordance with law as directed in the impugned order. Under the peculiar circumstances, no orders as to costs. Sd/- (RAMACHANDRA D. HUDDAR) JUDGE Sk/-, List No.: 1 Sl No.: 33