The Orissa High Court has clarified that once a land acquisition compensation dispute is referred to a Principal Civil Court under Section 3-H(4) of the National Highways Act, 1956, the reference cannot be arbitrarily withdrawn. This ruling reinforces the statutory mandate for judicial adjudication in apportionment disputes and invalidates procedural shortcuts that deprive parties of their right to a fair hearing.
Background & Facts
The Dispute
The dispute arose from the acquisition of land for the expansion of National Highway 6 (49) in Deogarh district, Odisha. Land acquisition proceedings were initiated under LA Case No.12 of 2021 by the Competent Authority for Land Acquisition (CALA)-cum-Tahsildar, Deogarh. An award under Section 3(G) of the National Highways Act, 1956, was passed, but a dispute emerged among the claimants regarding the apportionment of compensation among legal heirs of the recorded tenants.
Key Facts
- The land in question was originally held by Late Mochiram Pradhan, whose legal heirs include Opposite Parties No.4 and 5 (Debananda Pradhan and Khirodini Swain)
- Petitioners (Bholeswar Sahu and others) are also claimants asserting rights over the same land
- A dispute arose over the division of compensation awarded under Section 3(G)
- Opposite Parties No.4 and 5 filed an application before the CALA seeking referral of the apportionment dispute to the Principal Civil Court-cum-District Judge, Deogarh
- The CALA referred the matter under Section 3-H(4) of the Act, and it was registered as LA Reference Case No.5 of 2022 on the file of the District Judge
- Without notice to any party, the District Judge allowed withdrawal of the reference based on an unverified memo filed by the CALA’s counsel
- The Petitioners and Opposite Parties No.4 and 5 were not served with a copy of the memo or the order of withdrawal
- The Petitioners and Opposite Parties filed objections to the withdrawal, which were ignored by the CALA
- On 05.09.2024, the Orissa High Court, in W.P.(C) No.21485 of 2024, directed the CALA to consider the joint objection within three months
Procedural History
- 2021: Land acquisition initiated under LA Case No.12 of 2021
- 2022: LA Reference Case No.5 of 2022 registered before District Judge, Deogarh under Section 3-H(4)
- 17.05.2023: District Judge allowed withdrawal of LA Reference Case No.5 of 2022 based on unverified memo
- 2024: Petitioners and Opposite Parties filed objections to withdrawal; CALA ignored them
- 05.09.2024: Orissa High Court directed CALA to consider objections within three months
- 02.12.2025: CALA passed impugned order directing equal distribution of compensation among five heirs, pending production of a stay order
- 16.03.2026: Present writ petition disposed of by Division Bench
The Parties' Positions
Petitioners (Sahu family): Argued that the reference under Section 3-H(4) was statutorily mandated and could not be withdrawn without adjudication. They were denied access to the memo and the withdrawal order, violating natural justice.
Opposite Parties No.4 and 5 (Pradhan and Swain heirs): Agreed with the Petitioners. They contended that the District Judge’s withdrawal of the reference was illegal and deprived them of their right to have the apportionment decided on merit.
CALA and NHAI: Did not contest the illegality of the withdrawal but failed to produce the memo or justify the procedure.
Relief Sought
The Petitioners sought:
- Setting aside of the order dated 17.05.2023 withdrawing LA Reference Case No.5 of 2022
- Setting aside of the order dated 02.12.2025 passed by the CALA
- Restoration of LA Reference Case No.5 of 2022 before the District Judge for adjudication on merits
- Direction to the District Judge to hear all parties and determine apportionment of compensation
The Legal Issue
The central question was whether Section 3-H(4) of the National Highways Act, 1956 permits the withdrawal of a reference to the Principal Civil Court once it has been duly initiated for apportionment of compensation, and whether such withdrawal without notice or adjudication violates statutory and constitutional rights.
Arguments Presented
For the Petitioner
Mr. Akshaya Kumar Sahoo argued that Section 3-H(4) creates a mandatory statutory mechanism for resolving apportionment disputes. Once referred, the Civil Court acquires exclusive jurisdiction to adjudicate. Withdrawal based on an unverified memo, without notice or hearing, is a nullity. He cited principles of natural justice and the mandatory nature of statutory references under the Act.
For the Respondent
Mr. Swapnil Ray, for Opposite Parties No.4 and 5, supported the Petitioners’ submissions. He emphasized that the District Judge’s failure to exercise jurisdiction and the CALA’s unilateral action rendered the entire process void. He contended that the withdrawal order was not only illegal but also an abuse of process.
The Court's Analysis
The Bench observed that Section 3-H(4) of the National Highways Act, 1956, provides a clear statutory pathway for resolving disputes over apportionment of compensation: once a reference is made, the Civil Court must adjudicate the matter on its merits. The provision is not directory but mandatory, designed to ensure impartial and judicial determination of rights.
"Once a matter is referred under Section 3-H(4) of the Act to the learned Principal Civil Court for answering a reference, the same has to be adjudicated on merit. The same could not have been allowed to be withdrawn by the learned District Judge-cum-Principal Civil Court, Deogarh."
The Court found that the withdrawal of LA Reference Case No.5 of 2022 was based on an unverified memo, not on any application by the parties, and without affording any party an opportunity of hearing. This violated Article 14 and Article 21 of the Constitution. The District Judge’s failure to exercise jurisdiction amounted to abdication of judicial responsibility.
The Court further held that the CALA’s subsequent order dated 02.12.2025, which directed equal distribution of compensation without adjudicating the apportionment dispute, was legally unsustainable. The reference mechanism under Section 3-H(4) exists precisely to prevent arbitrary distribution by administrative authorities.
The Verdict
The writ petition succeeded. The Orissa High Court set aside the order dated 17.05.2023 withdrawing LA Reference Case No.5 of 2022 and the order dated 02.12.2025 passed by the CALA. The District Judge-cum-Principal Civil Court, Deogarh, is directed to restore LA Reference Case No.5 of 2022 and adjudicate the apportionment dispute on its merits, giving full opportunity of hearing to all parties. The Court ordered that the District Judge act upon the certified copy of this judgment. No costs were awarded.
What This Means For Similar Cases
Statutory References Cannot Be Circumvented
- Practitioners must challenge any administrative attempt to bypass Section 3-H(4) referrals by filing writ petitions under Articles 226 and 227
- Any order distributing compensation without a judicial reference is void ab initio
- The CALA or NHAI cannot unilaterally decide apportionment even if parties appear to agree
Judicial Abdication Is Not Tolerated
- Civil Courts must actively exercise jurisdiction under Section 3-H(4); withdrawal without cause is judicial misconduct
- Petitioners may seek contempt proceedings against judges who improperly withdraw statutory references
- Certified copies of such judgments must be immediately transmitted to the concerned Civil Court to prevent further delay
Procedural Fairness Is Non-Negotiable
- All orders affecting property rights must be served on all parties
- Ex parte withdrawals based on unverified memos violate natural justice
- Any future reference under Section 3-H(4) must be treated as a civil suit, with pleadings, evidence, and reasoned orders
