Reference Court Under NH Act Can Decide Title Disputes, Supreme Court Holds

A bench of Justices Vikram Nath and Sandeep Mehta holds that Section 3H(4) of the National Highways Act empowers the principal civil court to adjudicate title when compensation entitlement is in dispute.

The Supreme Court has held that a Reference Court acting under Section 3H(4) of the National Highways Act, 1956 has jurisdiction to determine questions of title to acquired land where such determination is necessary to identify the person entitled to compensation. The decision also settles a secondary point: a High Court cannot, in a second round of litigation, repudiate the very jurisdictional basis on which it had itself ordered a remand in the first round. The Court set aside the Karnataka High Court's judgment of 19 December 2023 and restored the first appeal for fresh disposal on the merits, directing that the jurisdictional question shall not be reopened.

The Dispute Over Acquired Land Near Nelamangala

The acquired land in question was notified for highway development by the Central Government in 2002–03 under the National Highways Act. The Special Land Acquisition Officer determined compensation at Rs. 20,32,931 under Section 3G of the Act.

Before disbursement could occur, rival claims surfaced. The appellants — the son and daughters-in-law of one Late Kempaiah — contended that Kempaiah had purchased the land in a public auction around 1950–51, and that title devolved on them as his legal heirs. Respondent No. 1 countered that the land had belonged to her grandfather. The acquisition authority withheld payment in view of these competing claims.

The appellants moved the Karnataka High Court by way of Writ Petition No. 44750 of 2003. On 8 March 2004, the High Court directed the acquisition authority to determine entitlement under Section 3H(3) of the Act and observed that if a dispute persisted, it could be referred to the Reference Court under Section 3H(4). The authority was unable to resolve the rival claims and the dispute was accordingly referred to the Senior Civil Judge, Nelamangala.

Two Rounds Before the Reference Court and the First Remand

In the first round, the Reference Court answered in favour of the appellants by its judgment and award dated 21 March 2009 in LAC No. 267 of 2007, rejecting respondent No. 1's claim entirely. Respondent No. 1 appealed. The High Court, by judgment dated 9 March 2012 in Regular First Appeal No. 1349 of 2010, found the Reference Court's reasoning defective because the appellants had not produced the sale certificate or foundational title document showing Kempaiah's acquisition of the land. The survey number recorded in the exhibited document did not match the land's survey number.

Rather than dismiss the appellants' case, the High Court remanded the matter to the Reference Court with a specific direction: to afford both sides an opportunity to adduce further evidence and then decide whether Survey No. 94 at Sompura village had been the subject of the public auction, and whether title had passed to Kempaiah or remained with the grandfather of respondent No. 1. Neither party challenged the remand order.

On remand, the Reference Court recorded additional evidence. By its judgment and award dated 25 July 2014 in LAC No. 57 of 2012, it again decided in favour of the appellants, this time on the basis of a certified copy of the sale certificate showing Kempaiah's acquisition of the suit property. Respondent No. 1 appealed once more, giving rise to Regular First Appeal No. 1381 of 2014.

The High Court's Second Intervention: A Jurisdictional U-Turn

The Division Bench of the Karnataka High Court, by the impugned judgment of 19 December 2023, took a different approach. It held that the jurisdiction of the Reference Court under Section 3H(4) is confined to apportionment of compensation among known claimants and does not extend to adjudicating disputes relating to title. On that basis, the High Court partly allowed respondent No. 1's appeal and set aside the Reference Court's declaration that the appellants were the owners of the acquired land and entitled to the compensation.

The Supreme Court found this reasoning fundamentally flawed. Justice Vikram Nath, writing for the bench, observed that the High Court had committed a basic oversight: it had overlooked the fact that its own remand order of 9 March 2012 had specifically directed the Reference Court to determine which party held title to the acquired land. By subsequently holding that the Reference Court lacked jurisdiction to enter that inquiry, the High Court had “in substance, sat in review over its own earlier order.”

The Court pointed out that the remand order had attained finality between the parties because neither side had challenged it further. Once the remand directions became binding, the proceedings that followed had necessarily to be conducted within those directions. The High Court's jurisdictional objection in the second round was therefore foreclosed.

The Scope and Meaning of Section 3H(4)

Going beyond the finality point, the bench also examined the true scope of Section 3H of the NH Act. Sub-section (1) requires the Central Government to deposit the determined compensation with the competent authority before taking possession. Sub-section (2) obliges the authority to pay out to the person or persons entitled. Sub-section (3) requires the authority to determine, where several persons claim, who is entitled and in what share. Sub-section (4) then provides that if any dispute arises “as to the apportionment of the amount or any part thereof or to any person to whom the same or any part thereof is payable,” the competent authority must refer it to the principal civil court of original jurisdiction.

The Court held that the phrase “any person to whom the amount is payable” cannot be read narrowly. Entitlement to receive compensation flows necessarily from having a legal right over the acquired property at the time of acquisition. Where two claimants assert competing rights to the land itself, the court cannot identify who is to receive the compensation without first deciding who held title. That inquiry into title is, the Court said, “incidental and integral to the jurisdiction conferred under Section 3H(4).”

The bench warned that a narrow reading would produce an absurd result: parties with disputed title to acquired land would be forced to separately file civil suits for declaration of title even while the compensation lay undisburse, defeating the legislative object of concentrating the dispute before the principal civil court.

The Doctrine of Approbate and Reprobate

The Court also rejected respondent No. 1's conduct on a second, independent ground. Respondent No. 1 had obtained the remand order of 9 March 2012 — an order whose whole purpose was to enable the Reference Court to determine title. She then participated in the fresh proceedings before the Reference Court. When the findings went against her, she argued in the High Court that the Reference Court had no jurisdiction to enter the title question at all.

The Court held this was impermissible. A litigant who takes the benefit of a remand order cannot later challenge the jurisdiction of the forum to which the matter was remitted simply because the outcome is unfavourable. If respondent No. 1 had genuine doubts about the Reference Court's competence, the proper course was to seek clarification or modification of the remand order, or to challenge it. Having allowed it to attain finality and having participated in the remanded proceedings, she could not turn around on the jurisdictional point.

Outcome

The Supreme Court set aside the judgment of the Karnataka High Court dated 19 December 2023 in Regular First Appeal No. 1381 of 2014 and restored that first appeal to the High Court's file for fresh disposal. The Court imposed three clear constraints on the restored proceedings.

First, the issues concluded by the earlier remand order of 9 March 2012 shall not be reopened. Second, the correctness of the Reference Court's assumption of jurisdiction to adjudicate title shall not be reopened, the question having attained finality by virtue of the remand order and, in any event, in view of the Court's interpretation of Section 3H of the NH Act. Third, the High Court is to confine itself to whether the Reference Court's findings on the merits, recorded pursuant to the remand, are sustainable on the evidence and in accordance with the remand directions.

The Court directed that the compensation amount deposited pursuant to the acquisition shall not be disbursed to any party until the restored first appeal is finally decided, and that the outcome of the appeal shall govern disbursement. Having noted that the dispute has remained pending for over two decades, the bench requested the High Court to dispose of the restored appeal as expeditiously as possible.