WA No. 1378 of 2022

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR** ## **&** ## **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **THURSDAY, THE 5[TH] DAY OF JANUARY, 2023 / 15TH POUSHA, 1944** ## **WA NO. 1378 OF 2022** [AGAINST THE JUDGMENT DATED 30.11.2021 IN WP(C) NO. 23142/2021 OF HIGH COURT OF KERALA] ## **APPELLANTS/RESPONDENTS 4, 7 & 8:** - 1 PROJECT DIRECTOR, NATIONAL HIGHWAYS AUTHORITY OF INDIA, PROJECT IMPLEMENTATION UNIT, TC 36/414(5), KOYIKKAL VEEDU, KAVU LANE, PALKULANGARA P.O., THIRUVANANTHAPURAM, PIN - 695024. - 2 PROJECT DIRECTOR, NATIONAL HIGHWAYS AUTHORITY OF INDIA (HEAD OFFICE), DWARAKA SECTOR 10, SOUTH WEST DELHI, P.O., NEW DELHI - 110075. - 3 CHAIRMAN, NHAI, G-5 & 6, SECTOR - 10, DWARAKA, SOUTH WEST DELHI P.O., NEW DELHI , PIN - 110075. BY ADVS. SRI. B.G.BIDAN CHANDRAN SRI. LEJO JOSEPH GEORGE SRI. B.G.HARINDRANATH (K/378/1984) ## **RESPONDENTS/PETITIONERS 1 & 2 AND RESPONDENTS 1,2,3,5 & 6:** - 1 MOHAMMAD SALAHUDDIN, AGED 70 YEARS S/O. MOHAMMED KUTTY, SHIRAZ, KAYAMKULAM P. O., KEERIKKAD PART, ALLEPPEY, PIN - 690502. 2 LAZARUS ALOYSIUS, AGED 78 YEARS S/O. SEBASTIAN LAZARUS, MARIYALAYAM, SAKTHIKULANGARA P.O., KOLLAM, PIN - 691581. - 3 SPECIAL DEPUTY COLLECTOR, LAND ACQUISITION (NH), COLLECTORATE, CIVIL STATION WARD, ALLEPPEY P.O., PIN - 688001. WA.1378/2022 2 - 4 SPECIAL DEPUTY COLLECTOR LAND ACQUISITION (NH), COLLECTORATE, CIVIL STATION ROAD, CIVIL STATION P.O., KOLLAM , PIN - 691013. - 5 STATE OF KERALA, REPRESENTED BY ITS SECRETARY, PUBLIC WORKS DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM P. O., PIN - 695001. - 6 UNION OF INDIA, REP. BY SECRETARY, MINISTRY OF ROAD TRANSPORT & HIGHWAYS, GOVERNMENT OF INDIA, CENTRAL DELHI P.O., NEW DELHI , PIN - 110001. - 7 DIRECTOR GENERAL (ROAD DEVELOPMENT) & SPECIAL SECRETARY ROOM NO.213, MINISTRY OF ROAD TRANSPORT & HIGHWAYS, TRANSPORT BHAVAN, 1, PARLIAMENT STREET, CENTRAL DELHI P. O., NEW DELHI, PIN - 110001. - R1 & R2 BY ADV. SRI. P.SATHISAN R2 BY SENIOR ADVOCATE SRI. T.KRISHNANUNNI R3, R4 & R5 BY ADV. SRI. K.P.HARISH, SENIOR GOVERNMENT PLEADER BY ADV. SRI. S MANU, DSG BY ADV. SMT. MINI GOPINATH - CGS MOHAMMED SHAH SHAH BY ADVS. SHRI RENOY VINCENT(K/000580/2017) SMT. HELEN P.A.(K/000084/2019) SRI. ARUN ROY(K/413/2019) SRI. SHAHIR SHOWKATH ALI(K/000584/2019) SMT. ALEESHA SHEREEF(K/1959/2022) THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 05.01.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA.1378/2022 3 ## **JUDGMENT** ## **S. MANIKUMAR, CJ** Instant writ appeal is filed by respondents 4, 7 and 8 in W.P.(C) No.23142 of 2021, viz., Project Director, National Highway Authority of India, Project Implementation Unit, Thiruvananthapuram; Project Director, NHAI (Head Office), New Delhi, and its Chairman, challenging the judgment dated 30.11.2021, by which, writ court directed the Competent Authority for Land Acquisition (CALA), to consider the case of the writ petitioners/respondents 1 and 2 herein, that they do not intend to appropriate the salvage from the acquired property and, therefore, are entitled to full compensation determined under the provisions of National Highways Act, 1956. 2. Writ court further ordered in the impugned judgment that the direction, of course, will apply only in the event of the awards in favour of the petitioners have not been issued until today and not otherwise; and if, on the contrary, such awards have already been passed, the writ petitioners will certainly have to challenge the same, in terms of Section 3G(5) of the NH Act, with the afore directions ceasing to have any effect thereupon. 3. Brief facts leading to the filing of the writ petition by respondents 1 and 2 herein are that; writ petitioners are the residents of Kollam and WA.1378/2022 4 Alappuzha districts. They are having properties abutting National Highway66. For the purpose of widening National Highway-66, their properties situated on the side of National Highway, were acquired by the respondents therein, for which, Sections 3A and 3D notifications were issued, as evident from Exhibits-P1, P1(a) and P2. 4. Petitioners have further stated that their properties comprised of civil constructions and buildings. Section 3G Award under National Highways Act, 1956 had been settled, wherein, apart from the purported deduction of salvage value of the civil construction in the property, subjected to acquisition, a deduction of 6% of the compensation, with respect to the structure, had been effected. 5. Petitioners have also stated that salvage value could be deducted only if the landowner takes the remnants, after demolition of the civil construction/structure and not otherwise, when the remnants were taken away by the acquisitioning authority. In the case on hand, writ petitioners are not seeking to take away the remnants of demolished structure, rather, they have specifically intimated the concerned that they do not require any of the demolished structure/remnants of civil constructions. 6. Being aggrieved by the discrimination shown by the respondents WA.1378/2022 5 therein that, in spite of taking away the remnants of structure after demolition in the acquired land by the acquisitioning authority, the deduction of 6% towards salvage value is effected against the compensation fixed for the structure in the acquired lands, and hence, the writ petition has been preferred with the following prayers: - (i) Issue a writ of mandamus or such other writ or direction, directing the respondents to pay the petitioners the amount deducted as salvage at 6% of the compensation amount in Section 3G awards, within a time frame fixed by this Court, with interest at 12% per annum from the date of deduction till payment. - (ii) Issue a writ of mandamus of such other writ or direction or order, declaring that the deduction of salvage amount at 6% from compensation entitled and awarded to the landowners when the structural remnants are not taken over by the landowners as illegal, arbitrary and unsustainable. - (iii) Pass such other orders or directions which this Court may find deem fit and proper in the circumstances of the case and, - (iv) Award costs of the proceedings to the petitioners. ## 7. After considering the rival submissions, vide judgment dated ## 30.11.2021 in W.P(C). No.23142 of 2021, writ court ordered as under: “6. When I consider the afore submissions, prima facie it appears that the instructions of the MoRTH, with respect to the salvage, is only in the case where the owner of the property and the building takes away the remnants of the demolished structure; however, in case where an owner decides not to do so, the entire compensation may have to be determined and paid to him. WA.1378/2022 6 7. In the afore circumstances, I direct the CALA to consider the case of the petitioners - that they do not intend to take away the salvage from the acquired property and, therefore, that they are entitled to full compensation determined under the provisions of the NH Act. This direction, of course, will apply only in the event the Awards in favour of the petitioners have not been issued until today and not otherwise; and if, on the contrary, such Awards have already been issued, then petitioners will certainly have to challenge the same in terms of Section 3G(5) of the NH Act, with the afore directions ceasing to have any effect thereupon. 8. To enable an expeditious compliance of the afore directions, I direct the petitioners to mark appearance before the CALA at 11 A.M. on 06.12.2021; and if the Awards have not yet been issued, then their contentions shall be taken into account, while settling it in terms of the “NH Act”.” 8. Being aggrieved, instant writ appeal is filed by the respondents 4, 7 and 8 before the writ court, on the following grounds: - A. The impugned judgment passed by the writ court is materially irregular and legally unsustainable. Deduction of 6% from the structure value on account of salvage is exercised by virtue of the policy guideline framed by the NHAI acting under the directions of MoRTH. The Competent Authority Land Acquisition (CALA) and the Statutory Arbitrator are obligated to follow this guideline while exercising the powers conferred upon them by the National Highways Act, 1956. The aforesaid NHAI Policy is to deduct 6% from the structure value on account of salvage irrespective of whether the landowners take away the remnants of the demolished structure. In this regard, the observation of the writ court that in cases where the landowners do not intend to take away the remnants, entitles them to have the entire compensation value awarded to them without deducting 6% salvage is misplaced and misconceived. - B. The impugned judgment is both factually and legally WA.1378/2022 7 unsustainable in law, in as much as the same was passed in a peremptory manner. Compensation for assets is paid on the basis of the prevailing Basic Schedule of Rates of the State Public Works Department. As regards the value of structures, the principle generally followed is that in the first instance, a view is formed regarding the quality of construction. The value is then worked out on the basis of the applicable Schedule of Rates (SOR), which is then depreciated based on the age of the structure. The annual depreciation is multiplied by the number of years the asset was depreciated, resulting in total depreciation. If the formula is applied, based on which depreciation is calculated, the value of the structure that has been acquired would be in the negative. The Competent Authority on the basis of the SOR has decided to uniformly deduct 6% of the total compensation paid for the structure. - C. Appellants have also contended that the writ petitioners have neither challenged the SOR or the approved valuation method, and therefore, they cannot now heard to contend that the deduction of 6% towards the salvage is bad. - D. Appellants have further contended that the impugned judgment has been passed mechanically and without any due consideration. The CALA/Statutory Arbitrator, while exercising the powers under National Highways Act, 1956, has no jurisdiction to consider the refund of 6% deducted on account of salvage from the structure value in Awards passed under Section 3G of the Act, 1956. Therefore, the writ court vide the impugned judgment could not have directed the writ petitioners to approach the said authorities to adjudicate on the refund of 6% deducted from the structure value on account of salvage. 9. Placing reliance on the letter dated 23.10.2019 bearing No. NHAI/11013/LA/RO-Kerala/2019/FTS-100, addressed to the Regional Officer, RO-Kerala, National Highway Authority of India, by the General Manager (Land Acquisition), appellants have contended that the said letter confirms WA.1378/2022 8 the policy of NHAI, which comes under the Ministry of Road Transport and Highways (MoRTH), to deduct salvage value @ 6% on the structures. 10. Referring to the letter No.11018/NHAI/PIU/KOZ/CALA-KAS/20181493 dated 03.12.2018, addressed to the Special Deputy Collector LA (NH), Kasaragod, the Project Director, NHAI Project Implementation Unit, Kozhikode, appellants have further stated that salvage value of the structures at 6% of the valued amount shall be invariably deducted from the compensation for the structures under valuation as this is as per NHAI policy in this regard. 11. Appellants have also stated that for the purpose of land acquisition for National Highways in the State of Kerala, the valuation of land for the purpose of compensation is carried out, in accordance with the Kerala Public Works Department Manual Revised Edition, 2012 (Revised as per G.O.(P) No.13/2012/PWD dated 01/02/2012). 12. Referring to clause 5.1 of the said Manual, which deals with Land Acquisition for Special Projects other than Roads, in particular, sub clause (ii), it is submitted that the value of construction will be assessed without depreciation. Likewise, clause 5.2 of the Manual deals with Land Acquisition for Road Projects, wherein sub-clause (ii) states that value of construction WA.1378/2022 9 and improvements shall be assessed without depreciation. However, when it comes to Land Acquisition for National Highways, as stipulated in clause 5.3, the Manual states that Land Acquisition for National Highways shall be carried out in accordance with the NHAI Act. 13. Hence, it is submitted that a plain reading of the abovesaid Manual would convey that unlike clauses (5.1) and (5.2), where it was specifically mentioned that value of construction has to be assessed without depreciation, when it comes to Land Acquisition for National Highways, the manual does not specifically convey the same and instead place compliance on the NHAI Act. 14. That apart, it is stated that MoRTH has issued a Manual of Guidelines on Land Acquisition for National Highways under the NH Act, 1956, in the year 2018, in order to carry out land acquisition for the purpose of National Highways, in a seamless manner. CALA is appointed by the Central Government under Section 3(a) of the National Highways Act, 1956, for the purpose for land acquisition. According to the appellants, CALA being appointed by the Central Government under Section 3(a) of the National Highways Act, is duty bound to act as per the aforementioned Manual. 15. It is further contended that although Annexure-4 provides for WA.1378/2022 10 depreciation based on the age of the structure, it was decided not to value structures by accounting. According to the appellants, the structures are valued by applying the latest Plinth Area Rates (PAR), without accounting for any depreciation and this method of valuation has been formally adopted considering the hardship that the landowners shall be subjected to, with respect to compensation. If the structures are individually valued after accounting for depreciation based on the age of each structure. 16. Further, reference is made to the object of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. It is, therefore, submitted that the uniform deduction of 6% from the value of the structure, instead of accounting for depreciation based on its age has been done, in lieu of depreciation, to arrive at a fair market value for structures. 17. It is further contended that the writ court, in paragraph (6) of the impugned judgment, has gone against the policy adopted by NHAI, in uniformly deducting 6% towards salvage invariably, in lieu of depreciation irrespective of whether the landowners takeaway the remnants of the structures acquired from them. For the foregoing reasons, appellants have prayed for setting aside the impugned judgment and declare that NHAI is WA.1378/2022 11 entitled to invariably deduct 6% of the value of structure irrespective of whether the remnants are taken away by the landowners. 18. Refuting the averments in the appeal, writ petitioner/1[st] respondent herein has filed a counter affidavit, wherein he, _inter alia_ , contended that there is no legal provision whatsoever for deduction of 6% salvage; that if 6% deduction is permitted, it could be 60% or 100% in future; that unless there is a legal provision for deduction as per Section 3G(7) of the National Highways Act, 1956 or as per Section 28 of the Act 30 of 2013, there cannot be any deduction of salvage; that the same is an arbitrary exercise of power by the appellant and its officials; and that the legal provisions cannot be supplemented, modified or abridged by any executive action or decision. 19. The 3[rd] respondent - Special Deputy Collector, Land Acquisition (NH), Alleppey P.O., has filed a statement, wherein it is contended that the value of the structures in the area under acquisition has been evaluated through the agency duly appointed by NHAI and vetted by the State PWD authorities, and that, in the Structure Valuation Certificate, one of the declarations is that as per NHAI letter No.11191/RO-Kerala/LAMiscellaneous-15545 dated 01.12.2020, valuation report is prepared, without adopting depreciation of the structure. Further, 6% salvage value on WA.1378/2022 12 the total structure value is deducted in the valuation as per letter No.NHAI/Tech/KL/Thala-Chenga NH 17/2017-18(Pt) dated 04.10.2019. 20. It is further contended by the 3[rd] respondent that the valuation prepared by them was considered and compensation fixed. Before obtaining the orders of this Court, Section 3G(1) determination was completed and CALA became _functus officio_ . Therefore, respondents 1 and 2 sought statutory remedy under Section 3G(5) of the NH Act, 1956 and the same is pending before the District Collector. 21. It is further contended that as per the office proceedings in LAC No.2060/2019(I) Pathiyoor/BL 57/S.O.817(E) A3/938/2022 dated 30.04.2022, individual award in favour of Sri. Muhammad Salahudeen, S/o. Muhammad Kutty, Shiraz Manzil, Pathiyoor has been issued and an amount of Rs.69,83,703/- has also been transferred and credited to his bank account. Against the same, he has preferred an appeal under Section 3G(5) of the NH Act, 1956 before the Arbitrator and the District Collector, Alappuzha. The same has been numbered as AA 43/2022. 22. It is also submitted that during the hearing of the Arbitration case, the Arbitrator has issued a direction to CALA to conduct site inspection with WA.1378/2022 13 PWD officials and Revenue authorities to ascertain the valuation of structure and land in proper. Accordingly, the 3[rd] respondent has conducted site inspection with the authorities concerned on 19.10.2022 and it was noticed that some constructions made by the individual were omitted to be included in the earlier assessment made by the Agency and PWD authorities. Hence, a report was submitted to the Arbitrator and District Collector. The Arbitration Appeal is still pending adjudication. For the foregoing reasons, the 3[rd] respondent prayed for dismissal of the instant writ appeal. 23. Mr. P. Sathisan, learned counsel for the 1[st] respondent, submitted that in the statement filed by the State, it is stated that the value of the structures in the area under acquisition has been evaluated through the agency duly appointed by NHAI and vetted by the State PWD Authorities and in the Structure Valuation Certificates, one of the declarations is that as per NHAI Letter No.11191/RO-Kerala/LA-miscellaneous-15545 dated 01.12.2020, the valuation report is prepared without adopting the depreciation for the structure. It is also stated that 6% salvage value on the total structure value is deducted in the valuation as per letter No.NHAI/Tech/KL/Thala-Chenga NH 17/2017-18 (Pt.) dated 04.10.2019. 24. According to the learned counsel, the above statement confirms WA.1378/2022 14 that the deduction of 6% salvage is neither based on any policy/guideline of NHAI (though requisition authority is not empowered to do that) and further on any decision of the Government, but based on a letter issued by an executive authority. 25. It is further contended that in the case on hand, the request for non-deduction of salvage was submitted on 11.10.2021; that the judgment of writ court was dated 30.11.2021; that Section 3G award was passed on 30.04.2022; and that the arbitration application was filed on 21.06.2022. That apart, the 3[rd] respondent State has supported the impugned judgment since they have not filed a writ appeal also. 26. Heard the learned counsel for the respective parties and perused the material on record. 27. Exhibit-P5 communication issued by NHAI to its Regional Officer, Thiruvananthapuram, dated 04.10.2019 is reproduced: NHAI/Tech/KL/Thala-Chenga/NH-17/2017-18 (Pt.) “04 OCT 2019 To Regional Officer National Highways Authority of India, Ambly Arcade, Pettah P.O., Thiruvananthapuram-695024 Sub: Package-1 Section-1; Six laning of Thalapady to Chengala Section of NH-17 (New NH-66) from Ch. 17 + 200 (existing km 17+200) to Ch. 56+200 (existing Km 57+200) and Section-2: Six Laning of Chengala to WA.1378/2022 15 Neeleswaram section NH-17 (New Nh-66) from Ch. 56+200 (existing km 57+200) to Ch. 93+468 (existing km 95+650) total length 37.268 km in the State of Kerala on Hybrid Annuity Mode under Bharatmala Pariyojna in the category of residual works under NHDP. Sir, Apropos visit of team from LA Division, NHAI HQ in Aug 2019 and meeting of date with CGM(T)/AD and RO/Kerala in the office of CGM(LA/Coord), the following instructions are issued with reference to the observations of PATSC regarding examination of high LAL cost, particularly of structures: - (a) Respective CALAs be asked to review the awards for arriving at compensation for affected land strictly as per the provisions of NH Act/applicable provisions RFCTLARR Act. - (b) The State Government be approached to issue directions to all CALAs to review valuation of structures as per provisions contained in the Manual. 2. On perusal of the documents, the following observations are intimated in this regard:- - (a) In one case, CALA awarded FLV rates pertaining to Kudlu Village vide award no. A2/448/2013/LANH dated 27.08.2016 (Two individual plots survey no.37/2 and survey no.37/3) where the amount is more than average sale price. Whereas the notifications and compensation award shows the ibid Survey nos. as shown as 'Dry' and 'Garden' respectively, its observed from the fair value of land downloaded from Kerala Government website that the subject land is shown as 'commercially important plot'. The compensation awarded by CALA as per FLV in respect of these two survey number is Rs. 1800 per Sqm. There seems to be inconsistency both in the nature of land use as well as the rate of compensation awarded by CALA. ## (b) Valuation of Structures: (I) In respect of affecting depreciation while calculating compensation for structures, Para 3.5.4 (ii) of Manual of Guidelines of LA issued by MoRTH states that value of structures is to be as per age of structures by including WA.1378/2022 16 depreciation while calculating compensation. This has not been followed in this case. (II) As confirmed during the meeting, deduction of salvage value @ 6% on the structures be confirmed from the State. 3. Action taken in this regard and final outcome may please be intimated to this HQ.” 28. Letter dated 03.12.2018 issued by the NHAI to the Special Deputy Collector LA (NH), Kasaragod is reproduced: “No.11018/NHAI/PIU-KOZ/CALA-KAS/2018/1493 Dt. 03.12.2018 To The Special Deputy Collector LA (NH) Kasaragod. Sub: NHAI-PIU-Kozhikode-4-laning of NH-17 (New NH-66) from Km. 17.200 to Km. 104.000-Land Acquisition in Kasaragod District - **Deduction of Salvage Value from valuation of structures** - Reg. Ref:- RO-Kerala Letter No. NHAI/RO-Kerala/28022/2018/722 Dt. 23.06.2018. Sir, As you are aware, the process of land acquisition and related structure valuation is in progress as per NH Act, 1956 for the above stretch. In this regard, in connection with valuation of structures it is stated that salvage value of the structures of 6% of the valued amount shall be invariably deducted from the compensation for the structures under valuation. This is as per NHAI policy in this regard. It is also requested to provide the approved rates provided by PWD for valuation of structures in the above stretch. Thanking you Yours Faithfully Sd/(Nirmal M Zade) WA.1378/2022 17 DGM (T) & PD PIU-Kozhikode” ## 29. Annexure-A1 letter dated 23.10.2019 addressed to the Regional ## Officer, RO-Kerala, NHAI, Thiruvananthapuram is reproduced: ““No.NHAI/11013/LA/RO-Kerala/2019/FTS-100 Dt. 23.10.2019 To The Regional Officer RO-Kerala National Highways Authority of India TC 36/574-1, Krishna Kripa, ERA-42, Palkulangara Junction, Vallakadavu P.O., Thiruvananthapuram-695008 (Kerala) Sub: Package-1, Section-1; six laning of Thalapady to Chengala section of NH-17 (New NH-66) from Ch. 17+200 (existing km 17+200) to Ch. 56+200 (existing 57+200) and Section 2; Six laning of Chengala to Neeleswaram section of NH-17 (New NH-66) from Ch. 56+200 (existing km 57+ 200) to Ch. 93+468 (existing km 95+650) total length 37.268 km in the State of Kerala on Hybrid Annuity Mode under Bharatmala Pariyojna in the category of residuary works under NHDP - reg. Ref:- TO Letter No.NHAI/11013/LA/RO-Kerala/2019/FTS-100 dated 04.10.2019. Sir, In continuation of this HQ letter under reference, it is once again requested to submit action taken on the following points before case is submitted for consideration of the Competent Authority:- - (a) For taking up review of the awards for arriving at compensation for affected land strictly as per the provisions of NH Act/applicable provisions RFCTLARR Act, that was pointed out in the letter under reference. - (b) Valuation of structures: to confirm deduction of salvage value @6% on the structures. WA.1378/2022 18 2. It is also requested to furnish your comments on the reply of the State Govt. letter dated 10.10.2019 regarding depreciation forwarded by you. This may kindly be accorded on priority. Yours faithfully Sd/(Sanjeev Sharma) General Manager (LA)” ## 30. State Government by G.O(P) No.13/2012/PWD dated 1.2.2012 have examined the revised PWD manual and ordered as under: - (i) The revised PWD Manual with the Quality Assurance / Quality Control Manuals for Minor ft Medium works and Major works appended to the revised PWD Manual is approved. - (ii) The data based on IRC Standards and MORTH specification for road works and CPWD specifications and National Building Code for building works along with PWD schedule of rates revised from time to time will be used for preparing estimates for PWD projects. - (iii) The relevant provisions in the PWD Codes and the other Codes will be revised on the basis of the revised PWD Manual. ## 31. Clause 5.1 of the Kerala Public Works Department Manual Revised Edition, 2012 as per order dated 01.02.2012 reads thus: ## “5.1 **Land Acquisition for Special Projects Other than Roads** i) Land Value shall be based upon the Basic Land Value arrived at by the DLPC & SLEC WA.1378/2022 19 ii) Value of Construction will be assessed without depreciation. iii) Where the project affected person (PAP) is rendered homeless and income of the family is below Rs.75,000/- per annum, alternate land of 3 cents per family shall be assigned for rehabilitation. Such land will be acquired as part of the project and it will be adjacent or close to the project site. This is to ensure that the project affected persons also benefit from the increase in land value and from the developmental activities that take place in the vicinity. The basic amenities viz. power, water and road to rehabilitation site shall be provided, the cost of which shall be borne by the Requisitioning Agency/Department. Such development site shall be handed over to the project affected persons simultaneously with the take over of the acquired land. iv) Where the Requisitioning Authority is a Public Sector Undertaking, action shall be taken to provide employment to one member of the family to the extent feasible. v) The Requisitioning Agency or the Local Self Government institution should construct a shopping Complex on land acquired for this purpose at the cost of the Requisitioning Authority and commercial space should be provided to those displaced from their shops/business centres at a nominal rent for a period of five years. This benefit is meant for the small commercial establishment and shall not be available for companies, banks, financial agencies, PSUs, showrooms, shopping malls etc. vi) Upto 10% of the land acquired may be earmarked for rehabilitation of project affected persons. vii) Option could be provided to project affected persons to claim compensation or to get 25% of the land acquired from him (with a maximum extent fixed by the High Level Committee) assigned to him in the vicinity of the project area.” ## 32. Clause 5.2 of the Kerala Public Works Department Manual Revised Edition, 2012 as per order dated 01.02.2012 reads thus: ## “5.2 **Land Acquisition for Road Projects** Kerala, with its linear type development along the existing roads, widening of roads requires linear acquisition which is bound to displace a large number of residential and commercial properties, structures, institutions and other establishments. Since commercial WA.1378/2022 20 tenants and employees in such places and encroachers are not generally entitled to any legal compensation, the Government is of the view that persons/families falling in these categories also deserve special attention and cannot be ignored, primarily in those cases where these persons/families fall in the category of Economically weaker section. Such persons also shall therefore be assisted under the following package; i. Land value shall be determined based on the Basic Land valued arrived at by DLPC & SLEC. ii. Value of constructions and improvements shall be assessed without depreciation. iii. Where the project affected person is rendered homeless and income or the family is below Rs. 75,000/- per annum, alternate land of 3 cents per family shall be assigned for rehabilitation. The basic amenities viz. power, water and road to the Rehabilitation site will be provided. iv. Local Self Government Institutions should endeavour to construct shopping complexes to rehabilitate displaced small shopkeepers for this purpose. Commercial space should be provided to small-scale commercial vendors displaced from their shops/ business centers on a priority basis. This benefit will not be available to companies, banks, large shops, financial agencies, PSUs Shopping Malls etc., v. Option could be provided to project affected persons (PAPs) to claim compensation or to get 22% of the land acquired from him/ her (with a maximum extent fixed by the High Level Committee) assigned to him in the vicinity of the newly-formed road.” ## 33. Clause 5.3 of the Kerala Public Works Department Manual Revised ## Edition, 2012 as per order dated 01.02.2012 reads thus: ## “5.3 **Land Acquisition for National Highways** : Land Acquisition for National Highways will be carried out in accordance with the NHAI Act. However, the Rehabilitation package formulated by the State Government will be applicable for the land acquisition for NH also. Rehabilitation Committee to DLPC constituted under the chairmanship of the District Collector will hear WA.1378/2022 21 the complaints regarding rehabilitation and take remedial measures. A State Level Committee comprising of the Secretaries of PWD and Revenue and the representatives of NHAI, PWD Chief Engineer will scrutinize the complaints and take decisions thereon.” ## 34. Clause 3.5.4 of the Manual of Guidelines on Land Acquisition for National Highways under the National Highways Act, 1956, in the year 2018, issued by the Ministry of Road Transport and Highways, Government of India, reads thus: ## “3.5.4 **Determination of Compensation for the Structures and other assets** (i) Apart from determination of the basic market value of the land under acquisition, the CALA has to take into account the value of assets attached to such land. These assets may be in the form of built-up structures, fruit trees, normal trees, any other such assets. Generally, the CALA is required to get the valuation of such assets carried out from the respective competent authorities e.g. from the PWD or approved valuers in respect of structures, from an Horticulture Officer in respect of fruit trees, from the Forest Officer in respect of general trees etc. (ii) As regards the valuation of structures, the principle generally followed is that in the first instance, a view is formed regarding the quality of construction i.e. A/ B or C category. The value is then worked out on the basis of applicable Schedule of Rates (SOR), which is then depreciated based on the age of the structure. It has come to notice that the Collectors notify the rates for structures from time to time in certain states. In one state the rates so notified have been reported as Rs. 41,000/- per sq mtr, which translates to about Rs. 3800/- per sq ft. It is common knowledge that the cost of new construction of an "A" class structure (unless it is a star hotel) varies between Rs. 15,00 to Rs. 2,000 per sft. Any distortion in the valuation of a structure has a multiplier effect as it also counts for 100% solatium on such assessed value. As such, the CALAs are expected to undertake due diligence in assessing the values of assets attached to the land being acquired.” WA.1378/2022 22 ## 35. That apart, Clause 3.5.5 of the above said Manual of Guidelines ## reads as under: ## “3.5.5 **Compensation for structures on Government Land/ Public Assets** : (i) Once MoRTH has notified any land for acquisition for a road project or associated facilities, the CALA is duty-bound under law to determine the compensation for the subject land and the structures, trees or any other assets attached to such lands or standing thereon as on the date of issue of notification under Section 3A of the NH Act, 1956. However, creation of any such asset or change in the nature of any such asset including value addition therein on or after the issue of Section 3A Notification is not taken into account for payment of any compensation. As such, it is in the interest of the acquiring agency that the status of any such assets is captured, as early as possible, upon issue of the Notification, through photographs/ videography so as to ensure the genuineness of determination of compensation. (ii) Exceptions to the legal position, as highlighted under para (i) above, are required in cases where the land-owning entity is agreeable to transfer the land without any cost to the Central Government. These land owning entities and the structures thereon may belong to different categories for which the method and process of payment of compensation for the structures is given in the following paragraphs: (iii) Payment of compensation for the Government structures on Government land falling within the project RoW: (a) ‘Government Land’ include land vesting in the Central/ State Government, but does not include the land vesting in the Central/ State owned undertakings and institutions; Local bodies like Municipal Corporations, Municipalities, Gram Panchayats etc., Public Sector Undertakings and Autonomous bodies of the Central/ State Government. (b) Government structures include structures owned by the Central/ State Government, but does not include the structures standing on the land vesting in the Central/ State owned undertakings and institutions; Local bodies like Municipal Corporations, Municipalities, WA.1378/2022 23 Gram Panchayats etc., Public Sector Undertakings and Autonomous bodies of the Central / State Government. (c) The land vesting in the Central/ State Government is transferred to Central Government/ MoRTH free of cost. In cases where ownership of acquired land is vested with the Urban Local Bodies/ Gram Panchayats/ PSUs/ Autonomous Bodies, compensation for the land is payable as per law. (d) As for the payment of compensation for the structures, there could be two options. One option is to pay the compensation for the cost of structures as per the valuation by the Competent Authority of the Government or the valuation done by the approved agency of the project executing agency and vetted by the competent authority of Government, duly recommended by the CALA/ concerned Government. Second option is to pay the estimated/ approved cost of reconstruction of the said facility, net of salvage value of the structure to be demolished, on an alternate piece of land (to be arranged by the State Government at its own cost). (e) In case of reconstruction of such facility at an alternate location, either the work could be executed by the concerned Government agency or it could be got executed by the project implementing agency of MoRTH through its Concessionaire/ Contractor at the approved cost estimates as mentioned above, on the specific request received from the Government Agencies. In all such cases, reconstruction of such structures should be done over the land provided by Government agency. No cost of land for relocation would be paid.” 36. D. O. Letter No.PWD-H3/09/2021-PWD dated 8.1.2021 issued by ## the Secretary to the Government, PWD, Government Secretariat, ## Thiruvananthapuram is reproduced: ## “D.O.Letter No.PWD-H3/09/2021-PWD Dear .......... Date. 08.01.2021 Please refer to the meeting convened by Hon'ble Chief Minister along with Hon'ble Minister (PWD) and Chief Secretary WA.1378/2022 24 on 05.01.2021, wherein following decisions have been taken:- (i) To speed up the structure valuation joint measurements shall be ensured for which one Surveyor from CALA Unit (to demarcate the affected line as per the sub divisional sketch) and one Overseer from PWD (to vet the valuation of structure done by the valuation agency) shall be deployed with each team of structure valuation agency. NHAI shall ensure that sufficient teams of structure valuation agencies are mobilized at site. (ii) To expire the valuation of the structures, the rate adopted in Malappuram District shall be followed for the items which are not available in Plinth Area Rates (PAR)2012 after effected Cost Index for the respective districts. 2. With respect to adoption of structure valuation rates which are not available in Plinth Area Rates (PAR) 2012, it is requested to follow the structure valuation as adopted by EE, PWD, Malappuram as a model for the entire Kerala. Accordingly a copy of the rates as followed in Malappuram submitted by CE PWD (buildings), for adopting rates for structure valuation to be followed for NH projects is enclosed herewith. 3. Hence all Ees, PWD Govt. of Kerala are instructed to follow the above rates after effecting the cost index applicable to respective District. Further in case of any missing items in that list, EE, PWD of a particular District **shall finalize the rate on the same day** either by deriving the unit rate from a detailed calculation of ideal structure or using LMR. If LMR is being followed, then cost index shall not be applied. One Overseer shall be deputed with the structural valuation team as determined by the District Collector. 4. To monitor the progress in each district an efficient officer in the rank of Asst. Executive Engineer will be made as a Nodal Officer for smooth coordination with District Collector, NHAI and structural Valuation Agency. 5. The vetting of Structural valuation report submitted by the Agency shall be done within two days. The Nodal Officer shall ensure the same. 6. As the Hon'ble Chief Minister said it is a question of our effectiveness in completion of land acquisition. Therefore, I am to WA.1378/2022 25 request you to bestow your personal intervention in the matter and intake in the matter and initiate steps to implement the above directions through the respective EEs. With ward regards, **==> picture [109 x 42] intentionally omitted <==** 37. The sole question which emerges for consideration is as to whether, the direction issued by the writ court, in the impugned judgment, to CALA, to consider the issue with respect to deduction made against the salvage value, after passage of the order, has to be interfered with or not. 38. As we have pointed out above, the provisions of National Highways Act, 1956 is a self contained Code, by which, modalities are prescribed, in order to deal with acquisition of land, fixation of compensation, passage of order, etc. It is clear from Section 3G(5) of the Act, 1956 that if the amount determined by the competent authority under sub-section (1) or sub-section (2) is not acceptable to either of the parties, the amount shall on an application by either of the parties, be determined by the Arbitrator to be appointed by the Central Government. 39. Admittedly, Collectors of all the districts are appointed as Arbitrators, to sit over the orders rendered by the competent authority under Act, 1956. Perusal of the provisions of Act, 1956 would show that WA.1378/2022 26 once the competent authority takes a decision, with respect to the compensation to be paid, the competent authority becomes a _functus officio_ and, thereafter, the authority is not vested with any powers to re-open the proceedings. 40. However, reading of Section 3-G(5) of the National Highways Act, 1956, makes it clear that any person who is aggrieved by the order passed by the competent authority, is vested with a right to approach the Arbitrator. The Arbitrator is an independent authority to take a decision with respect to the proceedings initiated before it. It may be true that the National Highway Authority might have issued letters/guidelines as to the manner in which a decision is to be taken by the competent authority, but, we only observe, that by itself will not bind the Arbitrator, in order to take a decision in accordance with the provisions of National Highways Act, 1956. 41. In the case on hand, it is an admitted fact that the competent authority has passed an order deducting 6% as salvage for the buildings demolished, in terms of the guidelines/letters issued by the National Highway Authority. 42. It is clear from the counter affidavit/statement filed by the WA.1378/2022 27 Collector that already a challenge is made by the appellants before the Arbitrator, including the issue with respect to the amount deducted towards Salvage. Apparently, a detailed enquiry is also being conducted by the Collector, in terms of the claims made by the writ petitioner, and therefore, in our considered view, the subject matter has to be considered by the Arbitrator, in accordance with law, bearing in mind the empowerment made by the National Highways Act, 1956 on the Arbitrator. 43. We are also of the view that the letters/guidelines issued by the authorities for fixing the compensation in a particular manner _de hors_ the provisions contained under the National Highways Act, 1956, will not detain the Arbitrator under the Act, 1956, to arrive at a just and independent decision and pass an award accordingly. 44. Giving due consideration to the above aspects and the material on record, we are of the view that the direction issued by the learned single Judge in the impugned judgment, to the competent authority, to consider the issue as regards deduction made against the salvage from the acquired property, requires interference. Accordingly, the direction so issued is vacated and the Arbitrator is left with the liberty to consider the issue with WA.1378/2022 28 respect to deduction of Salvage, in the proceedings pending before it, taking into account the provisions of Act, 1956. In the light of the above, writ appeal is allowed in part. Sd/- **S.MANIKUMAR CHIEF JUSTICE** Sd/- **SHAJI P. CHALY JUDGE** krj WA.1378/2022 29 ## **APPENDIX** ## **APPELLANTS' ANNEXURES:-** ANNEXURE-A1:- COPY OF LETTER NO.NHAI/11013/LA/RO-KERALA/2019/FTS-100 DATED 23.10.2019. - ANNEXURE-A2:- COPY OF THE LETTER NO.11018/NHAI/PIU-KOZ/CALA-KAS/2018-1493 DATED 03.12.2018. - ANNEXURE-A3:- COPY OF THE RELEVANT PORTION OF THE KERALA PUBLIC WORKS DEPARTMENT MANUAL REVISED EDITION, 2012 (REVISED AS PER G.O(P) NO.13/2012/PWD ATED 01/02/2012). - ANNEXURE-A4:- COPY OF THE RELEVANT PORTION OF A MANUAL OF GUIDELINES ON LAND ACQUIOSITION FOR NATIONAL HIGHWAYS UNDER THE NATIONAL HIGHWAYS ACT, 1956 IN THE YEAR 2018 ISSUED BY THE MINISTRY OF ROAD TRANSPORT AND HIGHWAYS, GOVERNMENT OF INDIA. ## **RESPONDENTS' ANNEXURES:** - ANNEXURE-R1(A) COPY OF DO LETTER NO.PWD-H3/09/2021-PWD DATED 08.01.2021. - ANNEXURE-R1(B) COPY OF RELEVANT EXTRACT OF THE SCHEDULE OF RATES (RATES FROM DS 2016 INCLUDING COST INDEX AND RATE AS PER PAR 2012) - ANNEXURE-R1(C) COPY OF LETTER NO.A2-1120/2021 DATED 09.08.2021. - ANNEXURE-R1(D) COPY OF LETTER NO.11017/PIU-COCHIN/KOD-EDA/293 DATED 30.03.2021 ISSUED BY NATIONAL HIGHWAY AUTHORITY OF INDIA TO CALA. - ANNEXURE R3(A) COPY OF THE OFFICE PROCEEDINGS IN LAC NO.2060/2019/(1) PATHIYOOR/BL 57/S.O.817(E)A3/938/2022 DATED 30-04-2022, INDIVIDUAL AWARD IN FAVOUR OF SHRI.MUHAMMAD SALAHUDEEN, S/O. MUHAMMAD KUTTY, SHIRAZ MANZIL, PATHIYOOR, FOR AN AMOUNT OF RS.69,83,703/- - ANNEXURE R3(B) COPY OF THE APPEAL UNDER SECTION 3G(5)OF THE NH ACT,1956 BEFORE THE ARBITRATOR AND THE DISTRICT COLLECTOR, ALAPUZHA. //TRUE COPY// P.A. TO C.J.