Landowners cannot claim 12% Additional Market Value u/s 23(1-A) of Land Acquisition Act: Madras HC

The Madras High Court has ruled that while landowners are entitled to solatium and interest for highway acquisitions, they cannot claim the 12% additional market value. The Bench struck down a District Court's order for granting benefits under Section 23(1-A) of the Land Acquisition Act, 1894, declaring such an award a 'patent illegality' that exceeds the judicial mandate under the Arbitration and Conciliation Act, 1996.

A division bench comprising Justice P. Velmurugan and Justice GK. Muthukumaar adjudicated upon a batch of appeals filed by the National Highways Authority of India (NHAI). The appeals challenged a common order of the Principal District Judge, Tiruppur, which had modified an arbitral award to include additional financial benefits for land losers whose properties were acquired for the six-laning of National Highway 47.

Key Takeaways

Exclusion of Section 23(1-A) Benefits

Landowners whose properties are acquired under the National Highways Act, 1956 are ineligible for the 12% additional value, a benefit specifically reserved for acquisitions under older general laws.

Limited Judicial Intervention

Courts exercising jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996 cannot modify arbitral awards or grant reliefs not prayed for before the Arbitrator, as doing so constitutes patent illegality.

Entitlement to Solatium and Interest

Following the striking down of Section 3-J of the National Highways Act, 1956, landowners remain entitled to 30% solatium and statutory interest, ensuring parity with other acquisition processes.

Compensation for Land Acquisition

The Madras High Court observed that while the legal landscape regarding solatium and interest shifted following the Supreme Court's decision in Union of India v. Tarsem Singh ( "(2019) 9 SCC 304": 2019 CaseBase(SC) 1697), the scope of Section 23(1-A) remained distinct. The bench noted that the District Judge erred by granting benefits that were neither prayed for before the Arbitrator nor supported by the prevailing legal framework for National Highway acquisitions.

On entitlement of 12% additional market value under Land Acquisition Act, 1894, the Madras High Court observed that "...the benefit under Section 23(1-A) i.e., the 12% additional value for the period from the date of notification till the date of award, does not apply to acquisitions under the National Highways Act. To this extent, the impugned order awarding 12% additional value as per Section 23(1-A) to the land owners in respect of the acquisition proceedings by NHAI is unsustainable..."

Constraints on Modifying Awards

Referring to the limits of Section 34 of the Arbitration and Conciliation Act, 1996, the Court reiterated that judicial intervention is restricted. The Madras High Court, in its reasoning, observed: "It is also equally well settled that while exercising jurisdiction under Section 34 of the Arbitration and Conciliation Act, the Court has got limited power to interfere with an arbitral award, unless it suffers from patent illegality."

Ratio

Landowners whose lands are acquired under the National Highways Act, 1956 are entitled to solatium and interest as per the principles in [Union of India v. Tarsem Singh ( "(2019) 9 SCC 304": 2019 CaseBase(SC) 1697), but they are not entitled to the 12% additional value under Section 23(1-A) of the Land Acquisition Act, 1894. Furthermore, a Court under Section 34 of the Arbitration and Conciliation Act, 1996 lacks the power to modify an arbitral award by granting additional statutory benefits not awarded by the Arbitrator, as such modification constitutes a patent illegality.

Background

The dispute originated from land acquisition proceedings initiated in 2010 for the expansion of NH-47 (Chengapalli to Walayar Section) in Tiruppur District. The Competent Authority had fixed compensation rates for agricultural lands, which the landowners challenged before the District Collector/Sole Arbitrator. The Arbitrator, relying on Union of India v. Tarsem Singh ( "(2019) 9 SCC 304": 2019 CaseBase(SC) 1697), granted 30% solatium and interest but did not award additional value under Section 23(1-A).

NHAI challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996. The Principal District Judge confirmed the solatium and interest but unilaterally granted a 12% additional value. NHAI appealed this modification, citing Project Director, NHAI v. Hakeem and others and Delhi Airport Metro Express Pvt. Ltd. vs. Delhi Metro Rail Corporation Ltd. ( "(2022) 1 SCC 131": 2021 CaseBase(SC) 1299) to argue that Courts cannot rewrite or modify awards. The Madras High Court, following the precedent in National Highways Authority of India and another v. Tehal Singh and others, allowed the appeals to the limited extent of setting aside the 12% additional value while upholding the rest of the compensation package.

Case Details:
Case No.: Arb Appeal Nos. 103, 109, 110, 113 of 2026
Case Title: The DGM (T) and Project Director, National Highways Authority of India vs. The District Collector and Sole Arbitrator (LA) and others
Appearances:
For the Petitioner(s): Mr. Su. Srinivasan
For the Respondent(s): Mr. Karthik Selvaraj, Additional Government Pleader for R1 & R2; Mr. V. Anandhamoorthy for R3; Ms. T. Gowri for R3

Source: 2026 CaseBase(MAD) 23819