In a relief to owners of properties, the High Court of Karnataka has declared that no stamp duty is liable to be paid on the compensation amount awarded by the arbitrator under the National Highways Authority Act, 1956, for the properties acquired by the National Highways Authority of India.
The Court also held that “award of compensation rendered by the arbitrator in terms of Section 3-G of the National Highways Act, 1956, is not an arbitral award in terms of Article 11 of the Karnataka Stamp Act, 1957, requiring it to be stamped in terms of the said Article.”
Justice Suraj Govindaraj passed the order while allowing a petition filed by 78-year-old Shalini, a resident of Tilakwadi in Belagavi, and another person.
The petitioners had questioned Dharwad district court’s order of asking them to pay stamp duty as per Article 11 of Karnataka Stamps Act, 1957, which provides for payment of stamp duty for arbitral award, when they filed execution petition seeking direction to NHAI to pay remaining compensation amount of around ₹2.89 crore as awarded by the arbitrator.
Stating that the Section 3-G of the NHA Act is a provision for approaching the arbitrator, appointed by the Central government, when compensation awarded for the acquired land is not acceptable either for the land owners or for the NHAI, the Court said that this arbitration is a methodology of determination of compensation by the special method in all land acquisition cases.
Observing that though arbitration process under Section 3-G of NHA Act adopts the procedure prescribed for arbitration under the Arbitration and Conciliation (A and C) Act, 1996, the Court said that it does not come under the domain of arbitration as defined under the A and C Act, 1996 in the absence of either an agreement between the land owners or NHAI for arbitration or a contract between the land owners or and the NHAI having a clause for arbitration for settlement of disputes.
“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,” the Court said while pointing out that it is only on account of the statute that the land-loser is compelled to resort to the process of arbitration.
“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,” the Court observed.
