M. Jothi v. The Project Director, National Highways Authority of India & Others; Tmt. Ambika v. The Project Director, National Highways Authority of India & Others

What happened

The appellants are landowners whose lands were acquired under the National Highways Act, 1956 at the request of the Project Director, National Highways Authority of India (NHAI), the first respondent, with the Special District Revenue Officer (Land Acquisition), Salem as the competent authority, the second respondent, who fixed the compensation. The appellants sought enhancement of the compensation through arbitration before the District Collector, Villupuram as arbitrator, the third respondent, and the arbitral awards enhanced it. NHAI challenged the awards under section 34 of the Arbitration and Conciliation Act, 1996 before the Principal District Judge, Villupuram (Arbitration O.P. Nos. 171 of 2018 and 19 of 2019), saying that the arbitrator had issued no notice to it and given it no opportunity, and by an order of 11 January 2021 the District Judge set the awards aside solely on that ground. In their appeals under section 37 the landowners argued that the arbitrator had sent a notice of hearing to all concerned including NHAI, that NHAI had suppressed the fact of receipt and produced no records, that the court should have called for the arbitrator's records or remitted the matter to the arbitrator, and that setting the awards aside without doing so denied their right under article 300A. NHAI said that even in the notice relied on by the appellants no notice was addressed to it and only a copy was marked to it, which could not be treated as notice of the arbitration, and the Special Government Pleader produced the dispatch register showing that notice was sent to NHAI.

Questions before the court

• Could the arbitral awards enhancing compensation under the National Highways Act be set aside under section 34 solely because NHAI said that no notice of the arbitration had been issued to it?

Why the court ruled this way

The Court began with article 300A, under which no person may be deprived of property except by authority of law, and noted that the appellants had been deprived of their land under the National Highways Act at NHAI's request, that the compensation fixed by the competent authority was not denied, and that NHAI claimed that it had no notice or knowledge of the arbitration (paragraph 6). The dispatch register of the arbitrator's office, produced by the Special Government Pleader, evidenced despatch of notice of the proceedings to NHAI, and NHAI said only that a copy was marked to it and did not deny receiving the notice, which meant that it had knowledge of the arbitral proceedings begun by the appellants to enhance the compensation (paragraphs 4 and 6). Having that knowledge, a public authority taking a technical ground to deny rights under article 300A could not be appreciated, and it had not explained why it remained a lame duck (paragraph 6). The court below had not looked into these aspects, no documents had been filed before the section 34 court to support its finding that no notice had been issued, it had not appreciated the notice sent by the arbitrator even though NHAI was only marked a copy, and it had returned findings against NHAI on the merits but set the awards aside only because no notice had been issued (paragraph 6).

Controlling point

Where the National Highways Authority of India had knowledge of the arbitration, as shown by the dispatch register and the notice marked to it, and did not deny receipt, its technical plea of no notice could not justify setting aside awards enhancing landowners' compensation, and the order under section 34 could not stand.

Order and next steps

The Court set aside the order of 11 January 2021 of the Principal District Judge, Villupuram in Arbitration O.P. Nos. 171 of 2018 and 19 of 2019, allowed both appeals, affirmed the awards made by the arbitrator, made no order as to costs and closed the connected miscellaneous petitions.

Practical implications

A public authority that is a party to compensation arbitration under the Act and receives a notice, even only as a marked copy, should appear and take its objections before the arbitrator instead of relying on a later plea of non-service, and a landowner should keep the arbitrator's dispatch register and proof of the notices sent.

Limits of this ruling

• The Court did not examine the correctness of the enhanced compensation fixed by the arbitrator or the merits findings of the court below, which the judgment records were against NHAI. It decided the matter on the material before the section 34 court, in which NHAI had filed no documents to show that notice was not served.
• The copy of the judgment on the court's website shows that the matter was reserved on 15 July 2026 and was uploaded on 30 September 2026, and gives September 2026 as the month of pronouncement without the day, so the date shown for this note is the upload date.