NHAI Need Not Deposit Compensation Amount Until Challenge To Arbitrator's Award Is Decided: Kerala High Court

The Kerala High Court recently held that the National Highways Authority of India (NHAI) need not submit the compensation awarded when the Arbitrator's award is challenged by either party, i.e., the claimant or the NHAI.

The Division Bench of Justice A. Muhamed Mustaque and Justice Harisankar V. Menon was considering a writ appeal preferred by the NHAI challenging the Single Judge's direction to the NHAI to deposit the solatium and interest amount awarded to the claimants while an arbitration appeal was pending before the High Court.

The 3rd respondent Special Deputy Collector had fixed a compensation amount to be awarded to the claimants. This was challenged by the claimants before the Arbitrator, which is the 4th respondent District Collector. Again, a challenge was made to the award made by the 4th respondent before the District Court, leading to a modification. Challenging the District Court's decision, an arbitration appeal was filed by the appellant, NHAI. At this stage, the claimants filed a writ petition before the Single Judge, which lead to the impugned judgment.

The NHAI claimed that there is no obligation for it to deposit the compensation in light of Rule 3(i)(b) 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.

According to the Rule, when the amount determined by the Arbitrator is in excess of the amount awarded by the competent authority, the excess amount and interest awarded by the Arbitrator has to be deposited within 30 days unless the award has been further challenged by either of the aggrieved parties.

Considering the same, the Court observed:

"It is submitted by the learned Standing Counsel for the NHAI that, in the light of the challenge made before this Court, they are not statutorily bound to deposit the amount. It is fairly submitted that once the challenge finally comes to an end, they are bound by the Rules to deposit the amount...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." 

Noting that a stay has already been granted in the appeal filed by the NHAI, the Court thought it fit to allow the appeal and set aside the judgment of the Single Judge.

Case No: WA No. 1801 of 2024

Case Title: National Highways Authority of India v. Lawrence and Ors.

Citation: 2025 LiveLaw (Ker) 599

Counsel for the appellant: Lejo Joseph George, E.C. Kuriakose, B.G. Bidan Chandran - Standing Counsel

Counsel for the respondents: Rose Michael, Meeramol Jiji, Michael Paul Chittinappilly, C.P. Wilson, E.C.Kuriakose, K.V. Manojkumar - Senior Government Pleader

Click to Read/Download Judgment