The petitioners are the decree holders and owners of the land bearing survey No.604 measuring 05 acres 05 guntas, on which the NHAI took possession of an area of 10,220 sqm for the construction of a flyover. In relation to the lands acquired, the competent authority had issued an award. The petitioners, however, were displeased with the verdict and filed a reference for arbitration on October 31, 2012, under Section 3G(5) of the National Highway Act, 1956, requesting an increase in compensation.
The Single Bench of Justice Suraj Govindaraj concluded that a compensation award made by the Land Acquisition Officer under the Land Acquisition Act or any other statute with a similar purpose is valid.
In the instant case titled Shalini v. NHAI the issues raised before the Karnataka High Court for clarification were:
Whether the existence of an arbitration agreement is a precondition or not?
Is the MSME Council's decision on jurisdiction an order under Section 16 of the Arbitration Act or an interim award?
With regard to the first issue, the existence of an arbitration agreement is a need for conducting arbitral proceedings, according to the Court. According to Section 7 of the A&C Act, an arbitration agreement is an agreement entered into between the parties to subject to arbitration any disputes that have arisen or may arise between them in respect of a defined legal relationship, whether contractual or not.
With regard to the second issue, the Karnataka High Court ruled that stamp duty is not due on a compensation award granted under the National Highways Authority of India Act. The Court decided that an award issued under the NHAI Act and an award made under Section 11 of the Karnataka Stamp Act, 1957 are not interchangeable.
The Court categorically held that:
"The state cannot take away the compensation awarded to the land-loser by imposing a duty to make payment of stamp duty on the said award, which is an additional burden on the land-loser to obtain just compensation on account of loss of his land. It is also clear from the fact that, while calculating the compensation payable, there is no calculation of the value of the stamp duty payable on the award made. The requirement to make payment of stamp duty on the award would amount to reduction of just compensation, which is not permissible."