09 May 2025 Arbitration Law >> Business & Commercial Law   |   Civil Writ Petition >> Civil & Consumer Law  

The High Court recently issued a significant ruling affirming the right of petitioners to statutory benefits of solatium and interest in line with the Supreme Court's decision in Union of India vs. Tarsem Singh. This ruling came in response to several petitions where the National Highway Authority of India (NHAI) had opposed their maintainability, arguing that the petitioners should have pursued an alternative remedy under Section 37 of the Arbitration and Conciliation Act, 1996.

Background of the Case:

The petitioners in these cases had sought enhanced compensation for land acquisition under the National Highways Act, 1956, and had gone through arbitration proceedings, which resulted in an increased compensation award. However, the benefits of solatium and interest, as mandated by the Supreme Court's Tarsem Singh judgment, were not included in the arbitral awards.

Consequently, the petitioners filed applications under Section 34 of the Arbitration Act. While the Principal District Judge (PDJ) at Nashik acknowledged the petitioners' entitlement to these benefits, the PDJ felt constrained by a prior Bombay High Court decision in Rishabhkumar vs. Secretary to Government of India. This precedent held that a Section 34 court could not modify an arbitral award to grant such monetary benefits. The Rishabhkumar ruling also stipulated that an appellate court under Section 37 of the Arbitration Act would similarly be unable to grant such relief.

High Court's Rejection of Alternate Remedy Plea:

The NHAI, represented by Mr. Sambhaji Kharatmol, contended that the petitioners should have pursued an appeal under Section 37 of the Arbitration Act. However, the High Court strongly rejected this contention, deeming it "unfortunate and unfair."

The Court emphasized that the rule of exhausting alternate remedies is a self-imposed restriction, and its application depends on the efficacy of that remedy. Given the Rishabhkumar precedent, relegating the petitioners to a Section 37 appeal would have been "futile" as the appellate court would have been bound to dismiss such appeals, unable to modify the arbitral award. The Court cited the Supreme Court's ruling in M/s Godrej Sara Lee Ltd. vs. The Excise and Taxation Officer-cum-Assessing Authority, which stated that mere availability of an alternate remedy does not automatically oust the High Court's jurisdiction, especially when the controversy is purely a legal one involving no disputed facts.

Uncontested Entitlement and Statutory Benefits:

The High Court highlighted that there was no serious dispute regarding the petitioners' entitlement to solatium and interest under the Tarsem Singh judgment. Even the NHAI's counsel before the PDJ had expressed willingness to pay the solatium component, albeit from the date of the Tarsem Singh decision. The Court further noted that a miscellaneous application seeking to limit the benefits of Tarsem Singh to its prospective application had already been rejected by the Supreme Court on February 4, 2025.

The High Court also referred to its own prior order dated April 8, 2025, in a similar set of writ petitions, where the NHAI had fairly conceded the applicability of Tarsem Singh. The Court reiterated the binding nature of Supreme Court judgments under Article 141 of the Constitution and the obligation of all authorities to act in aid of the Supreme Court under Article 144.

Conclusion:

Based on these reasons, the High Court overruled the objection to the maintainability of the writ petitions on grounds of alternate remedy. The Court allowed all petitions and directed the NHAI to pay the petitioners the statutory benefits of solatium and interest in terms of the Tarsem Singh decision within four months, without requiring the petitioners to file contempt petitions for non-compliance.

  Section 37, Arbitration and Conciliation Act - 1996  

  Arbitration and Conciliation Act, 1996  

  National Highways Act, 1956