Sanchayita Lahkar

The High Court of Kerala Division Bench of Justice A. Muhamed Mustaque and Justice Harisankar V. Menon allowed an appeal by the National Highways Authority of India, setting aside a Single Judge’s direction to deposit solatium and interest under the National Highways Act, 1956. The Bench held that, in view of Section 3H of the Act and Rule 3 of the 2019 Rules governing deposit of compensation, the Authority was not legally bound to pay the enhanced amount while its challenge to the arbitral award remained pending, especially since an appellate stay was already in force.

The dispute arose from the acquisition of land under the National Highways Act, 1956. The Special Deputy Collector, functioning as the competent authority, determined compensation for the landowners. Dissatisfied, the claimants challenged this determination before the District Collector acting as Arbitrator. The Arbitrator passed awards, which the claimants further contested before the District Court under Section 34 of the Arbitration and Conciliation Act, 1996, read with Section 3G(6) of the National Highways Act. The District Court modified the arbitral awards. Against one such modified order, the National Highways Authority of India (NHAI) filed Arbitration Appeal No. 6 of 2024 under Section 37 of the 1996 Act.

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Meanwhile, the claimants approached the High Court seeking solatium and interest on the compensation amount. A learned Single Judge directed NHAI to pay solatium and interest, leading to the present intra-court writ appeal. NHAI contended that under Section 3H(1) of the 1956 Act and Rule 3 of the National Highways (Manner of Depositing the Amount by the Central Government; Making Requisite Funds Available to the Competent Authority for Acquisition of Land) Rules, 2019, it was not bound to deposit the amount during the pendency of appellate proceedings. The claimants opposed this, seeking enforcement of the Single Judge’s direction.

The Division Bench recorded that the appeal arose from a challenge to the Single Judge’s direction compelling deposit of solatium and interest. It noted: “This intra-court appeal is filed by the National Highways Authority of India (NHAI), challenging the judgment of a learned Single Judge, directing them to pay solatium and interest thereon, passed under the National Highways Act, 1956.”

On the statutory framework, the Bench observed: “Section 3H(1) of the Act directs the NHAI to deposit the amount in such manner as prescribed in the Rules. It is appropriate to refer to Rule 3(i)(b) of the Rules, which reads as follows; ‘Where the amount determined by the Arbitrator under sub-section (7) of section 3-G of the Act is in excess of the amount determined by the competent authority, the excess amount, together with interest, if any, awarded by the Arbitrator, within 30 days of the communication of Arbitrator's award, unless such Award has been further challenged by either of the aggrieved parties.’”

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In considering the submissions, the Court recorded: “As rightly pointed out by the learned Standing Counsel for the NHAI, we find that the direction to deposit the amount before exhausting the statutory remedies under the law is legally unsustainable.”

The Court recorded: “As rightly pointed out by the learned Standing Counsel for the NHAI, we find that the direction to deposit the amount before exhausting the statutory remedies under the law is legally unsustainable.”

“In such circumstances and also taking note of the fact that a stay has already been granted in the appeal preferred by the NHAI against the same award, we set aside the impugned judgment. Accordingly, this appeal stands allowed.

Advocates Representing the Parties

For the Petitioners: Smt. Rose Michael, Smt. Meeramol Jiji, Sri. Michael Paul Chittinappilly, Sri. C.P. Wilson, Sri. E.C. Kuriakose, Sri. K.V. Manojkumar, Senior Government Pleader
For the Respondents: Sri. Lejo Joseph George, Sri. E.C. Kuriakose, Sri. B.G. Bidan Chandran – Standing Counsel

Case Title: National Highways Authority of India v. Lawrence & Ors.
Neutral Citation: 2025:KER:68397
Case Number: W.A. No. 1801 of 2024
Bench: Justice A. Muhamed Mustaque, Justice Harisankar V. Menon