Full Judgment Text
AA 6-15 @ Connected Appeals 1 Common Judgment
IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR.
ARBITRATION APPEAL NO. 06 OF 2015
Rishabhkumar s/o Babulal Jejani,
Occ. Business, r/o 548, Plot No.3,
New Cotton Market Road, Ghat Road,
Nagpur, Tq. And Distt. Nagpur. APPELLANT
-VERSUS-
1. Secretary to the Government of India,
Ministry of Road Transport and Highways,
Transport Bhawan, 1, Parliament Street,
New Delhi - 110001.
2. National Highways Authority of India,
Through its Project Director, Project
Implementation Unit, Pandhurna (Madhya Pradesh)
having its registered office at Bunglow No.2,
Shubhankar Apartment, Plot No.159,
Ambazari Hill Road, Ram Nagar,
Nagpur (M.S.) 440033.
3. The Additional Commissioner, Nagpur Division,
Nagpur and the Arbitrator under the National Highways
Act, 1956, having his office at Old Secretariate
Building, Civil Lines, Nagpur (M.S.) 440001.
4. The Deputy Collector,
Land Acquisition (General),
Nagpur and the Competent authority for acquisition
of Land for National Highways, Collectorate Building,
Civil Lines, Nagpur (M.S.) 440001. R ESPONDENTS
WITH
ARBITRATION APPEAL NO. 08 OF 2015
Bhupinder Singh,
S/o Sardar Ratan Singh Arneja, R/o “Gurukrupa”,
Gurunanakpura Nagar, Nagpur. APPELLANT
-VERSUS-
1. The Secretary to the Government of India,
Ministry of Road Transport and Highways,
New Delhi.
2. National Highways Authority of India,
Through its Project Director, Project
Implementation Unit, Pandhurna (M.P.)
having its registered office at Bunglow No.2,
Shubhankar Apartment, Plot No.159,
Ambazari Hill Top, Ram Nagar,
Nagpur 440033.
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3. The Additional Commissioner, Nagpur
and Arbitrator under the National Highways
Act, 1956, having office at Old Secretariate
Building, Civil Lines, Nagpur 440001.
4. The Deputy Collector,
(Land Acquisition-General), Nagpur (Maharashtra)
and Competent Authority for Acquisition of Land
for National Highways, Collectorate, Nagpur. RESPONDENTS
WITH
ARBITRATION APPEAL NO. 09 OF 2015
1. M/s Omanand Industries, Nagpur
A Registered Partnership Firm, Through its
Partner Jivraj S/o Ramjibhai Patel,
R/o Ashirwad Palace, Near Sule High School,
Abhyankar Road, Dhantoli, Nagpur,
Tah. & Dist. Nagpur.
2. M/s Om Enterprises,
(M/s Omanand Enterprises), A Registered
Partnership Firm, Through its Partner Jivraj S/o
Ramjibhai Patel, R/o Nagpur
Tah. & Dist. Nagpur. APPELLANTS
-VERSUS-
1. The Secretary to the Government of India,
Ministry of Road Transport and Highways,
New Delhi.
2. National Highways Authority of India,
Through its Project Director, Project
Implementation Unit, Pandhurna (M.P.)
having its Registered Office at Bunglow No.2,
Shubhankar Apartment, Plot No.159,
Ambazari Hill Top, Ram Nagar,
Nagpur - 440033.
3. The Additional Commissioner, Nagpur
and Arbitrator under the National Highways
Act, 1956, having office at Old Secretariate
Building, Civil Lines, Nagpur - 440001.
4. The Deputy Collector,
(Land Acquisition-General), Nagpur (Maharashtra)
and Competent Authority for Acquisition of Land
for National Highways, Collectorate, Nagpur. RESPONDENTS
WITH
ARBITRATION APPEAL NO. 10 OF 2015
Baliram Girdharilal Sahajramani,
R/o 14, Sindhu Nagar, Jaripatka,
Nagpur, Tah. & Dist. Nagpur. APPELLANT
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-VERSUS-
1. The Secretary to the Government of India,
Ministry of Road Transport and Highways,
New Delhi.
2. National Highways Authority of India,
Through its Project Director, Project
Implementation Unit, Pandhurna (M.P.) having its
registered office at Bunglow No.2, Shubhankar
Apartment, Plot No.159, Ambazari Hill Top,
Ram Nagar, Nagpur 440033.
3. The Additional Commissioner, Nagpur
and Arbitrator under the National Highways
Act, 1956, having office at Old Secretariate
Building, Civil Lines, Nagpur 440001.
4. The Deputy Collector,
(Land Acquisition-General), Nagpur (Maharashtra)
and Competent Authority for Acquisition of Land
for National Highways, Collectorate, Nagpur. RESPONDENTS
WITH
ARBITRATION APPEAL NO. 11 OF 2015
1. Anurag Gajanan Khemuka,
Aged Major, Occu.- Private, R/o 134/B, Near
Hanuman Mandir, Gandhi Nagar, Nagpur.
2. M/s Tringle Estate Consultancy,
Through its Proprietor Tarun Jeevraj Patel,
R/o C - Shib Shree Apartments, Tikekar Road,
Dhantoli, Nagpur.
3. Nagpur Modern Hospitality Private Limited,
th
704-706, 7 Floor, Embassy Centre, Nariman Point,
Mumbai - 400 021, through its Directors,
James Jayant Jain S/o R.K. Jain.
4. N. H. Construction Private Ltd.
Nagpur, G-68, Connaught Circle,
New Delhi - 110001, through its
Directors James Masih S/o Yunus Masih. APPELLANTS
-VERSUS-
1. The Secretary to the Government of India,
Ministry of Road Transport and Highways,
Dwarka, New Delhi - 110075.
2. National Highways Authority of India,
Through its Project Director, Project
Implementation Unit, Pandhurna (M.P.)
having its registered office at Bunglow No.2,
Shubhankar Apartment, Plot No.159,
Ambazari Hill Top, Ram Nagar,
Nagpur - 440033.
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3. The Additional Commissioner, Nagpur
and Arbitrator under the National Highways
Act, 1956, having office at Old Secretariate
Building, Civil Lines, Nagpur - 440001.
4. The Deputy Collector,
(Land Acquisition-General), Nagpur (Maharashtra)
and Competent Authority for Acquisition of Land for
National Highways, Collectorate, Nagpur. RESPONDENTS
WITH
ARBITRATION APPEAL NO.12 OF 2015
Yash Travels and Tours Private Limited,
Nagpur, through its Chief Manager (Accountant),
Prashant Kailash Sharma. APPELLANT
-VERSUS-
1. The Secretary to the Government of India,
Ministry of Road Transport and Highways,
New Delhi.
2. National Highways Authority of India,
Through its Project Director, Project
Implementation Unit, Pandhurna (M.P.) having
its registered office at Bunglow No.2, Shubhankar
Apartment, Plot No.159, Ambazari Hill Top,
Ram Nagar, Nagpur 440033.
3. The Additional Commissioner, Nagpur
and Arbitrator under the National Highways
Act, 1956, having office at Old Secretariate
Building, Civil Lines, Nagpur - 01.
4. The Deputy Collector,
(Land Acquisition-General), Nagpur (Maharashtra)
and Competent Authority for Acquisition of Land for
National Highways, Collectorate, Nagpur. RESPONDENTS
WITH
ARBITRATION APPEAL NO.13 OF 2015
Nikhil Prabhakar Mundle,
R/o 164, Shivaji Nagar,
Nagpur, Tah. & Dist. Nagpur. APPELLANT
-VERSUS-
1. The Secretary to the Government of India,
Ministry of Road Transport and Highways,
New Delhi.
2. National Highways Authority of India,
Through its Project Director, Project
Implementation Unit, Pandhurna (M.P.) having
its registered office at Bunglow No.2, Shubhankar
Apartment, Plot No.159, Ambazari Hill Top,
Ram Nagar, Nagpur - 440033.
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3. The Additional Commissioner, Nagpur
and Arbitrator under the National Highways
Act, 1956, having office at Old Secretariate
Building, Civil Lines, Nagpur - 440001.
4. The Deputy Collector,
(Land Acquisition-General), Nagpur (Maharashtra)
and Competent Authority for Acquisition of Land for
National Highways, Collectorate, Nagpur. RESPONDENTS
WITH
ARBITRATION APPEAL NO.14 OF 2015
1. Karnal Singh Gurudas Singh Saini,
R/o 446, Hanuman Nagar, Nagpur
Tah. & Dist. Nagpur.
2. Baliram Girdharilal Sahajramani
R/o Sindhu Nagar, Jaripatka, Nagpur
Tah. & Dist. Nagpur. APPELLANTS
-VERSUS-
1. The Secretary to the Government of India,
Ministry of Road Transport and Highways,
New Delhi.
2. National Highways Authority of India,
Through its Project Director, Project
Implementation Unit, Pandhurna (M.P.) having
its Registered office at Bunglow No.2, Shubhankar
Apartment, Plot No.159, Ambazari Hill Top,
Ram Nagar, Nagpur - 440033.
3. The Additional Commissioner, Nagpur
and Arbitrator under the National Highways
Act, 1956, having office at Old Secretariate
Building, Civil Lines, Nagpur - 440001.
4. The Deputy Collector,
(Land Acquisition-General), Nagpur (Maharashtra)
and Competent Authority for Acquisition of Land for
National Highways, Collectorate, Nagpur. RESPONDENTS
WITH
ARBITRATION APPEAL NO.15 OF 2015
Chandrashekhar Kashinath Shiralkar,
R/o Q-14, Laxmi Nagar,
Tah. And Dist. Nagpur. APPELLANT
-VERSUS-
1. The Secretary to the Government of India,
Ministry of Road Transport and Highways,
New Delhi 110001.
2. National Highways Authority of India,
Through its Project Director, Project
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Implementation Unit, Pandhurna (M.P.) having
its registered office at Bunglow No.2, Shubhankar
Apartment, Plot No.159, Ambazari Hill Top,
Ram Nagar, Nagpur - 440033.
3. The Additional Commissioner, Nagpur
and Arbitrator under the National Highways
Act, 1956, having his office at Old Secretariate
Building, Civil Lines, Nagpur - 440001.
4. The Deputy Collector,
(Land Acquisition-General), Nagpur (Maharashtra)
and Competent Authority for Acquisition of Land for
National Highways, Collectorate, Nagpur. RESPONDENTS
WITH
ARBITRATION APPEAL NO.16 OF 2015
Durgadevi Baliram Sahajramani,
R/o 14, Sindhu Nagar, Jaripatka,
Nagpur, Tah. & Dist. Nagpur. APPELLANT
-VERSUS-
1. The Secretary to the Government of India,
Ministry of Road Transport and Highways,
New Delhi.
2. National Highways Authority of India,
Through its Project Director, Project
Implementation Unit, Pandhurna (M.P.) having
its registered office at Bunglow No.2, Shubhankar
Apartment, Plot No.159, Ambazari Hill Top,
Ram Nagar, Nagpur-440033.
3. The Additional Commissioner, Nagpur
and Arbitrator under the National Highways
Act, 1956, having office at Old Secretariate
Building, Civil Lines, Nagpur - 440001.
4. The Deputy Collector,
(Land Acquisition-General), Nagpur (Maharashtra)
and Competent Authority for Acquisition of Land for
National Highways, Collectorate, Nagpur. RESPONDENTS
WITH
ARBITRATION APPEAL NO.17 OF 2015
Dayanand @ Jaiprakash S/o Baliram Sahajramani,
Aged about - years, R/o 14, Sindhu Nagar,
Jaripatka, Nagpur, Tah. & Dist. Nagpur. APPELLANT
-VERSUS-
1. The Secretary to the Government of India,
Ministry of Road Transport and Highways,
New Delhi.
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2. National Highways Authority of India,
Through its Project Director, Project
Implementation Unit, Pandhurna (M.P.) having
its registered office at Bunglow No.2, Shubhankar
Apartment, Plot No.159, Ambazari Hill Top,
Ram Nagar, Nagpur - 440033.
3. The Additional Commissioner, Nagpur
and Arbitrator under the National Highways
Act, 1956, having office at Old Secretariate
Building, Civil Lines, Nagpur - 440001.
4. The Deputy Collector,
(Land Acquisition-General), Nagpur (Maharashtra)
and Competent Authority for Acquisition of Land for
National Highways, Collectorate, Nagpur. RESPONDENTS
WITH
ARBITRATION APPEAL NO. 05 OF 2016
1. Cheruvu Mahalaxmi wd/o Cheruvu Vittal,
Aged 48 years, Occ. Housewife, R/o 101,
Vasant sudha Apartment, Kalanagar, Vijaywada,
District Krishna, Andhra Pradesh.
2. M/s Vidarbha Infrastructure Private Limited,
A Private Limited Company registered under
the Indian Companies Act, 1956 having its
registered corporate office at R-001, Universal
Meadows, New Sneh Nagar, Wardha Road,
Nagpur through its Director K. Venkateswara Rao
S/o Srimannarayana. APPELLANTS
-VERSUS-
1. The Secretary to the Government of India,
Ministry of Road Transport and Highways,
Dwarka, New Delhi - 110075.
2. National Highways Authority of India,
Through its Project Director, Project
Implementation Unit, Pandhurna (M.P.) having
its Registered office at Bunglow No.2, Shubhankar
Apartment, Plot No.159, Ambazari Hill Top,
Ram Nagar, Nagpur - 440033.
3. The Additional Commissioner, Nagpur
and Arbitrator under the National Highways
Act, 1956, having office at Old Secretariate
Building, Civil Lines, Nagpur - 440001.
4. The Deputy Collector,
(Land Acquisition-General), Nagpur (Maharashtra)
and Competent Authority for Acquisition of Land for
National Highways, Collectorate, Nagpur. RESPONDENTS
WITH
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ARBITRATION APPEAL NO.04 OF 2016
M/s Vidarbh Homes Private Limited, A Private l imited
company registered under the Indian Companies Act, 1956
having its registered corporate office at R-001,
Universal Meadows, New Sneh Nagar, Wardha Road,
Nagpur through its Director K. Venkateswara Rao
S/o Srimannarayan. APPELLANT
-VERSUS-
1. The Secretary to the Government of India,
Ministry of Road Transport and Highways,
Dwarka, New Delhi - 110075.
2. National Highways Authority of India,
Through its Project Director, Project
Implementation Unit, Pandhurna (M.P.) having
its R egistered office at Bunglow No.2, Shubhankar
Apartment, Plot No.159, Ambazari Hill Top,
Ram Nagar, Nagpur - 440033.
3. The Additional Commissioner, Nagpur
and Arbitrator under the National Highways
Act, 1956, having office at Old Secretariate
Building, Civil Lines, Nagpur - 440001.
4. The Deputy Collector,
(Land Acquisition-General), Nagpur (Maharashtra)
and Competent Authority for Acquisition of Land for
National Highways, Collectorate, Nagpur. RESPONDENTS
WITH
ARBITRATION APPEAL NO. 06 OF 2016
M/s Vidarbh Homes Private Limited,
A Private Limited Company registered under
the Indian Companies Act, 1956 having its
registered corporate office at R-001,
Universal Meadows, New Sneh Nagar, Wardha Road,
Nagpur through its Director K. Venkateswara Rao
S/o Srimannarayana. APPELLANTS
-VERSUS-
1. The Secretary to the Government of India,
Ministry of Road Transport and Highways,
Dwarka, New Delhi - 110075.
2. National Highways Authority of India,
Through its Project Director, Project
Implementation Unit, Pandhurna (M.P.) having
its registered office at Bunglow No.2, Shubhankar
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Apartment, Plot No.159, Ambazari Hill Top,
Ram Nagar, Nagpur - 440033.
3. The Additional Commissioner, Nagpur
and Arbitrator under the National Highways
Act, 1956, having office at Old Secretariate
Building, Civil Lines, Nagpur - 440001.
4. The Deputy Collector,
(Land Acquisition-General), Nagpur (Maharashtra)
and Competent Authority for Acquisition of Land for
National Highways, Collectorate, Nagpur. RESPONDENTS
__________________________________________________________________________
Shri A.S. Jaiswal, Senior Advocate with Shri S.B. Walekar, Advocate
for appellants in A.A. Nos.4 to 6/2016.
Shri R.P. Joshi, Advocate for appellant in A.A. No.6/2015.
Shri S.P. Bhandarkar, Advocate for appellants in A.A. Nos.8/2015 to 17/2015.
Shri A.M. Ghare, Advocate with Shri A.A. Kathane, Advocate for respondent-
NHAI.
Smt. S.S. Jachak, Assistant Government Pleader for respondent-State.
CORAM : A. S. CHANDURKAR AND G.A. SANAP, JJ.
TH
DATE ON WHICH ARGUMENTS WERE HEARD : 29 OCTOBER , 2021 .
TH
DATE ON WHICH JUDGMENT IS PRONOUNCED : 26 NOVEMBER, 2021 .
JUDGMENT (PER : A.S. CHANDURKAR, J.)
These arbitration appeals filed under Section 37 of the
Arbitration and Conciliation Act, 1996 (for short, ‘the Act of 1996’) can be
conveniently decided together since they relate to acquisition of lands by
the National Highways Authority of India under the provisions of the
National Highways Act, 1956 (for short, ‘the Act of 1956’). The
appellants herein would be referred to as the ‘land owners’ while the
acquiring body would be referred to as ‘the National Highways
Authority’.
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2. Various pieces of land situated at Mouza Gawsi Manapur,
Mouza Parsodi and Mouza Jamtha were the subject matter of acquisition
under the provisions of the Act of 1956. The notification under Section 3-
A of the Act of 1956 came to be issued on 21.06.2010. These lands were
sought to be acquired for the purposes of widening, maintenance and
operation of a portion of National Highway No.7. The Special Land
Acquisition Officer (General), Nagpur was appointed as the ‘Competent
Authority’ and he passed an award on 23.12.2011 awarding
compensation for the acquired lands. The land owners not being satisfied
with the quantum of compensation as awarded initiated proceedings
under Section 3-G(5) of the Act of 1956. The Additional Commissioner,
Nagpur Division, Nagpur was appointed as Arbitrator for conducting
arbitration proceedings in terms of Section 3-G(5) of the Act of 1956.
Pursuant thereto each land owner filed statement of claim alongwith
various documents in support of the prayer for enhancement in the
amount of compensation. The National Highways Authority opposed each
claim application and filed replies to the same. The Arbitrator thereafter
passed his award in the case of each land owner and partly enhanced the
amount of compensation principally by relying upon sale instance dated
09.07.2009 pertaining to a piece of land at Mouza Jamtha and report of
the Government Approved Valuer dated 31.03.2010. The National
Highways Authority being aggrieved by the enhancement granted by the
Arbitrator approached the District Court, Nagpur by filing proceedings
under Section 34 of the Act of 1996. These proceedings were contested
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by the land owners and the learned Principal District Judge-‘hereinafter
referred to as the learned Judge’, by passing separate judgment in the
case of each land owner set aside the award passed by the Arbitrator by
holding that the Arbitrator had taken into consideration photo-copies of
the sale-deed dated 09.07.2009 and the report of the Government
Approved Valuer without he being examined. He found that there were
errors on the face of the record and as the mandatory procedure
prescribed under the Act of 1996 had not been followed, conduct of the
Arbitrator amounted to misconduct within the purview of Section 34 of
the Act of 1996. On these counts, the applications preferred by the
National Highways Authority under Section 34 of the Act of 1996 came to
be allowed. The said adjudication has given rise to these appeals under
Section 37 of the Act of 1996.
3. Shri A.S. Jaiswal, learned Senior Advocate for the land
owners in Arbitration Appeal Nos.4, 5 and 6 of 2016 submitted that the
learned Judge committed an error in setting aside the award passed by
the Arbitrator. The learned Judge exercised jurisdiction under Section 34
of the Act of 1996 by treating the proceedings as an appeal. The grounds
that weighed with the learned Judge for setting aside the award could not
amount either to an error apparent on the face of the record or
misconduct on the part of the Arbitrator while passing the award.
Referring to the order passed by the learned Judge it was submitted that
the grounds that weighed with the learned Judge were that no certified
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copies of the sale instances were placed on record, the Government
Approved Valuer whose report was taken into consideration had not been
examined, the Arbitrator passed the award by applying his personal
knowledge in the absence of any material pleadings in the statement of
claim and further the manner in which the market value was determined
was contrary to law. The aforesaid grounds it was urged were grounds
that could be considered in exercise of appellate jurisdiction by the Court
and not while considering a challenge to an award under Section 34 of
the Act of 1996. Inviting attention to the provisions of Section 34 of the
Act of 1996 it was submitted that the only ground that could be gathered
in the applications preferred by the National Highways Authority of India
was relatable to sub-Section 2(b)(ii) of Section 34 of the Act of 1996.
There was no material on record to indicate that the arbitral award was in
conflict with the public policy of India and to substantiate this contention
the learned Senior Advocate placed reliance on the decision in Associate
Builders Versus Delhi Development Authority [(2015) 3 SCC 49] to
contend that examination of the merits of the award was not permissible
in proceedings under Section 34 of the Act of 1996. It was then
submitted that in view of the provisions of Section 19(1) of the Act of
1996, the Arbitrator was not bound by the strict rules of procedure and
under Section 19(4) the Arbitrator was empowered to determine the
admissibility, relevance, materiality and weight of the evidence on record.
It was submitted that after the land owners placed on record various sale
instances, genuineness of those transactions was never doubted by the
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National Highways Authority. No objection was also raised to the filing of
the photo-copies on record by the land owners. The National Highways
Authority did not make any request for cross-examining any land owner
or the Government Approved Valuer for that matter. In absence of any
such plea being raised in the reply filed by the National Highways
Authority, the Arbitrator could not be blamed for taking into
consideration the photo-copies placed on record. It was also pertinent to
note that the National Highways Authority did not bring on record any
other sale instance to substantiate its plea that the Competent Authority
had awarded excess compensation. The only material brought on record
was that by the land owners and not a single document was placed on
record by the National Highways Authority. It was also submitted that
provisions of Section 23 of the Act of 1996 had been complied with by
granting due opportunity to all the parties. It was not the grievance of
the National Highways Authority that equal treatment was not given to it
as contemplated by Section 18 of the Act of 1996.
It was then submitted that the provisions of Section 24 of
the Act of 1996 were also duly complied. Written notes of arguments
were filed by the parties including the National Highways Authority and it
never demanded an oral hearing. All statements and documents relied
upon by the land owners were duly supplied to the National Highways
Authority as required by Section 24(3) of the Act of 1996. It was not the
case that material that was not on record had been considered by the
Arbitrator nor was it the case that there was no evidence whatsoever on
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record to sustain the enhancement in the amount of compensation. This
indicated absence of any perversity in the award passed by the Arbitrator.
In the light of the fact that the principles for determining the market
value as envisaged under the Land Acquisition Act, 1894 were not
applicable in these proceedings, the Arbitrator was justified in relying
upon the sale-deed dated 09.07.2009. A reasoned award having been
passed the material considered could not be minutely scrutinized to find
out the defects therein as that was beyond the scope of Section 34 of the
Act of 1996. It was urged that though the learned Judge observed that
there was breach of procedural law by the Arbitrator, which procedural
law was not followed was not indicated in the impugned award.
Similarly, no established norm was brought on record to indicate that the
same had not been followed. The learned Judge was not justified in
observing that the Arbitrator sought to rely upon his personal knowledge
while passing the award. No personal knowledge touching to the facts of
the case was referred to and mere reference was made to the location of
various lands in the vicinity for the purposes of gauging the potentiality of
the acquired lands which information was in the public domain. Even
otherwise, it was not shown that what was referred to as regards location
of various complexes/institutions was either incorrect or totally wrong.
Similarly, there was no material on record to shock the conscience of the
Court though the learned Judge referred to the same in the impugned
award. No breach of any substantive law was pointed out and it was thus
submitted that the learned Judge exceeded the jurisdiction conferred
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under Section 34 of the Act of 1996. The award passed by the Arbitrator
was liable to be restored.
4. Shri R.P. Joshi, learned counsel for the land owner in
Arbitration Appeal No.6 of 2015 besides adopting the aforesaid
submissions urged that the Special Land Acquisition Officer had passed a
common award and the entire material was before the Arbitrator for
consideration as he was required to determine the market value of the
acquired lands that were located in the vicinity of each other. Though
various photo-copies of sale instances and other documents were on
record it was open for the National Highways Authority to have sought
verification of the same by calling upon the land owners to furnish the
original documents. This was however not done. There was no illegality
in relying upon the photo-copies of various sale instances and in that
regard the learned counsel placed reliance on the decision in Land
Acquisition Officer & Mandal Revenue Officer Versus V. Narasaiah
[(2001) 3 SCC 530]. Inviting attention to the reply filed by the National
Highways Authority before the Arbitrator, he submitted that in the
absence of any specific objection being raised on the reliance placed on
various photo-copies, the objection in that regard was deemed to have
been waived by the National Highways Authority. Inviting attention to
the decision in M/s Kapoor Nilokheri Co-op. Dairy Farm Society Ltd.
Versus Union of India & Others [AIR 1973 SC 1338], it was submitted
that having failed to raise any objection whatsoever to the admissibility of
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the photo-copies of the documents it was not now permissible for the
National Highways Authority to raise such grievance. The learned Judge
erred in upholding that contention raised by the National Highways
Authority. On the aspect of the award being set aside by the learned
Judge as the Arbitrator had allegedly applied his personal knowledge it
was submitted that a general reference to the location of various other
lands in the vicinity and the facilities available there would not amount to
personal knowledge of the facts of the dispute. It was open for the
Arbitrator to use his expertise or general knowledge about a particular
trade while deciding the proceedings as held in P.R. Shah, Shares & Stock
Brokers (P) Ltd. Versus B.H.H. Securities (P) Ltd. [(2012) 1 SCC 594].
He then submitted that the land owners had relied upon certain
agreements of sale of lands in the vicinity. These agreements were duly
registered by paying appropriate stamp duty. The lands under the
agreements had also been acquired and therefore the agreements were
the best pieces of evidence that could have been taken into consideration
for determining the market value. In absence of any counter evidence by
the National Highways Authority the adjudication by the Arbitrator could
not be faulted. Reference was made to the decision in Special Land
Acquisition Officer Versus Sidappa Omanna Tumari & Others [1995
Supp.(2) SCC 168]. A grievance was raised that the Arbitrator while
rd
determining the amount of compensation had proceeded to deduct 2/3
of the value of the land when it was a settled position that such deduction
rd
ought to be only 1/3 of the market value determined. The learned
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counsel submitted that as the provisions of Section 3-J of the Act of 1956
had been struck down as being violative of Article 14 of the Constitution
of India in Union of India Versus Tarsem Singh & Others [(2019) 9 SCC
304] the land owners were entitled for payment of solatium and interest
in these facts for which purpose Civil Application No.(CAM) 22 of 2021
was filed. Reference was also made to the judgment of the learned Single
Judge in Arbitration Appeal No.28 of 2019 [Sarjuprasad Sangmlal Gupta
Versus National Highways Authority of India & Others] alongwith
connected appeals decided on 26.08.2021 wherein the aforesaid aspect
was considered. He also referred to the decisions in Project Director,
National Highways No.4SE and 220 National Highways Authority of India
Versus M. Hakeem & Another [AIR 2021 SC 3471] and PSA SICAL
Terminals Pvt. Ltd. Versus The Board of Trustees of V.O. Chidambranar,
Port Trust Tuticorin & Others [2021 (8) SCALE 579] in that regard. It was
thus submitted that the judgment of the learned Judge rendered under
Section 34 of the Act of 1996 was liable to be set aside and appropriate
relief ought to be granted to the land owner.
5. Shri S.P. Bhandarkar, learned counsel for the land owners in
Arbitration Appeal Nos.8 to 17 of 2015 adopted the aforesaid submissions
and in addition urged that the learned Judge by evaluating the material
on record exceeded the jurisdiction conferred under Section 34 of the Act
of 1996. He submitted that the Arbitrator being the Head of the Revenue
Division was bound to have knowledge as to the location of the lands in
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question and the projects or institutions that were in the vicinity of those
lands. While conducting proceedings under Section 3-G(5) of the Act of
1956, the usual practice and procedure prevalent was followed by the
Arbitrator. It was open for the National Highways Authority to have
exercised the rights conferred by Section 19(2), 23(1), (2) and 24(1) of
the Act of 1996. At no point of time did the National Highways Authority
make any grievance with regard to the procedure followed by the
Arbitrator or about the authenticity or genuineness of the documents
relied upon by the land owners. He then submitted that though the
learned Judge set aside the award passed by the Arbitrator on the ground
that the Arbitrator was guilty of legal misconduct, such ground was
available only under Section 30(a) of the Arbitration Act, 1940 (for short,
‘the Act of 1940’). The present proceedings having been decided in the
light of the provisions of the Act of 1996 it was not permissible for the
learned Judge to have set aside the award on the ground of misconduct.
Even otherwise, no ground under Section 34(2) of the Act of 1996 was
made out. He sought to highlight the fact that though the proceedings
were required to be adjudicated by having resort to the Act of 1996 there
was no written arbitration agreement between the parties. Much
therefore depended on the statement of claim and reply filed thereto as
well as the conduct of the parties. In absence of breach of any principles
of natural justice and there being no perversity in the determination of
material findings by the Arbitrator it was not permissible for the learned
Judge to have set aside the award under Section 34 of the Act of 1996. It
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was thus submitted that on all the aforesaid counts, the judgment of the
learned Judge was liable to be set aside. The learned counsel placed
reliance on the decisions in PSA Sical Terminals Pvt. Ltd. Versus Board of
Trustees of V.O. Chidambranar Port Trust Tuticorin & Others [AIR 2021 SC
4661], Delhi Airport Metro Express Pvt. Ltd. Versus Delhi Metro Rail
Corporation Ltd. [2021 SCC Online SC 695], Sahyadri Earth Movers
Versus L and T Finance Ltd. & Another [2011(4) Mh.L.J. 200], Project
Director, National Highways No.45E and 220 National Highways
Authority of India Versus M. Hakeem & Another [AIR 2021 SC 3471],
Ssangyong Engineering and Construction Company Limited Versus
National Highways Authority of India (NHAI) [(2019) 15 SCC 131], Dyna
Technologies Pvt. Ltd. Versus Crompton Greaves Limited [(2019) 20 SCC
1] Associate Builders Versus Delhi Development Authority [(2015) 3
SCC 49], Sutlej Construction Limited Versus Union Territory of
Chandigarh [(2018) 1 SCC 718], K.Sugumar & Another Versus Hindustan
Petroleum Corporation Limited & Another [(2020) 12 SCC 539],
Municipal Corporation of Delhi Versus M/s Jagannath Ashok Kumar &
Another [(1987) 4 SCC 497], Inder Sain Mittal Versus Housing Board,
Haryana & Others [(2002) 3 SCC 175] and Jagjeet Singh Lyallpuri
(Dead) Through Legal Representatives & Others Versus Unitop
Apartments & Builders Limited [(2020) 2 SCC 279] to substantiate his
contentions.
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6. Shri A.M. Ghare alongwith Shri A.A. Kathane, learned
counsel for the National Highways Authority opposed the aforesaid
submissions and supported the judgment of the learned Judge in the
proceedings under Section 34 of the Act of 1996. It was submitted that
the Arbitrator conducted the proceedings under Section 3-G(7) of the Act
of 1956 in a most casual manner which resulted in a perverse
determination of the market value of the acquired lands. The learned
Judge was justified in concluding that there was an error apparent on the
face of the award passed by the Arbitrator especially as he relied upon
various photo-copies of sale instances and the report of the Government
Approved Valuer. No opportunity was granted to the National Highways
Authority to cross-examine the Valuer whose report was accepted as a
gospel truth. Inviting attention to the Scheme of Chapter-V of the Act of
1996 it was submitted that the provisions therein and the procedure
prescribed had been violated at each stage thus resulting in the learned
Judge concluding that the Arbitrator had misconducted himself while
passing the award. It was submitted that in absence of any agreement
between the parties as to the procedure to be followed by the Arbitrator,
the Arbitrator was required to conduct the proceedings in an appropriate
manner. Firstly, the Arbitrator failed to call upon the parties to agree on a
common procedure. Having failed to do so, the Arbitrator proceeded in
his own manner which resulted in causing prejudice to the National
Highways Authority. This was clear from the perusal of the roznama of
the proceedings. Though under Section 19(4) the Arbitrator had the
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power to determine the admissibility and relevance of any evidence, the
same would not mean that the basic principles in that regard could be
given a go-bye. The claim as made by the land owners had been
specifically objected to by the National Highways Authority by raising
appropriate defence under Section 23. The Arbitrator also failed to
decide whether to hold oral hearing for presentation of evidence or for
oral arguments as required by Section 24(1) of the Act of 1996. As
regards the provisions of Section 24(3) it was submitted that if the
Arbitrator intended to rely upon the report of the Government Approved
Valuer, the same ought to have been indicated by the Arbitrator as
contemplated by the latter part of Section 24(3) of the Act of 1996.
Having failed to indicate that the report of the Government Approved
Valuer would be relied upon, the National Highways Authority had no
opportunity to counter that piece of material. This also resulted in
violation of the principles of natural justice.
The learned counsel then submitted that the Arbitrator by
applying wrong principles proceeded to award exorbitant compensation
for the acquired lands. Reference was made to the decisions in U.P. Awas
Eevam Vikash Parishad Versus Asha Ram [AIR 2021 SC 2832],
Shankarrao Bhagwantrao Patil Versus State of Maharashtra [2021 SCC
OnLine 763], State of Haryana Versus Ram Singh [(2001) 6 SCC 254]
and MIDC Versus Kailashchandra Ratanlal Chaudhary [2018 SCC OnLine
Bom 811] in that regard. The reliance placed on the sale-deed dated
09.07.2009 was without any justifiable basis since the land therein was
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located at Mouza Jamtha which was at a distance from the acquired
lands. The said sale instance could hardly be said to be a comparable sale
instance. Even the report of the Government Approved Valuer could not
have been relied upon for determining the market value of the acquired
lands. Since non-acceptable evidence had been considered by the
Arbitrator it was a case of no evidence and hence the findings recorded
were perverse. The learned Judge was justified in concluding that the
Arbitrator had passed his award by applying his personal knowledge. It
was not permissible for the Arbitrator to have relied upon such personal
knowledge since there was no opportunity granted to the National
Highways Authority to counter that aspect. The entire burden for seeking
enhanced compensation was on the land owners and by failing to place
on record any justifiable material in that regard, the learned Arbitrator
committed an error which was apparent on record while enhancing the
amount of compensation. The learned Judge was justified in concluding
that the award as passed shocked the conscience of the Court. The
learned counsel placed reliance on the decisions in Ssangyong
Engineering and Construction Company Limited Versus National
Highways Authority of India (NHAI) [(2019) 15 SCC 131], National
Highways Authority of India Versus Sayedabad Tea Company Limited &
Others [(2020) 15 SCC 161], Bi-Water Penstocks Ltd. Versus Municipal
Corporation of Gr. Bombay & Another [2011(3) Mh.L.J. 706], Prakash
Kumar Sinha Versus Konkan Mercantile Co-operative Bank Ltd. & Others
[2012(6) Mh.L.J. 274] and the judgment of the Delhi High Court in
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Degremont Limited Versus Yamuna Gases & Chemicals Limited & Others
[2012 (186) DLT 343]. As regards the prayer made for grant of solatium
in view of the provisions of Section 3-J of the Act of 1956 being struck
down, it was urged that granting such relief would amount to modifying
the award which was impermissible in law. On these counts, it was
submitted that the award passed by the Arbitrator was rightly set aside by
the learned Judge and there being no merit in the challenges as raised by
the land owners, all the appeals were liable to be dismissed.
7. We have heard the learned counsel for the parties at length.
The learned counsel have also taken us through the records of the
proceedings before the Arbitrator that were called for perusal. We have
given our thoughtful consideration to the rival submissions. Our findings
are recorded under the following heads:-
a) Scope of proceedings under the Act of 1956.
b) Yardsticks for interference under Section 34 of the Act of
1996.
c) Procedural infirmities, if any.
d) Perversity in the award, if any.
e) Grant of statutory amounts under Section 37 consequent
upon Section 3-J of the Act of 1956 being struck down as
unconstitutional.
(a) S cope of proceedings under the Act of 1956 :
8. The Act of 1956 has been enacted to provide for the
declaration of certain highways to be national highways and for matters
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connected therewith. The Act of 1956 under which the lands in question
have been acquired and especially Section 3-A to Section 3-J is in the
nature of a comprehensive code in itself for the purposes of acquisition of
lands which includes determination of compensation, its disbursement,
settlement of disputes and payment of compensation as held in
Sayedabad Tea Company Limited & Others (supra). The determination of
the amount of compensation by the Competent Authority has been made
subject to enhancement/reduction by having recourse to arbitration under
Section 3-G(5) of the Act of 1956.
In M. Hakeem & Another (supra) it was noticed that the
process of arbitration under the Act of 1956 could not be said to be a
consensual process with both parties having a hand in appointing an
Arbitrator. The Competent Authority who is required to arbitrate is a
person or Authority authorized by the Central Government by notification
to determine the amount of compensation. In Sayedabad Tea Company
Limited & Others (supra) while considering the question as to whether an
application for appointment of an Arbitrator filed under Section 11(6) of
the Act of 1996 would be maintainable under the scheme of the Act of
1956, it was held that the power to appoint an Arbitrator under the Act of
1956 exclusively vested with the Central Government in view of
provisions of Section 3-G(5) of the Act of 1956 and hence an application
under Section 11 of the Act of 1996 for said purpose was not tenable.
It is thus clear that the process of arbitration as envisaged
by Section 3-G(5) of the Act of 1956 is in the nature of statutory
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arbitration in which the Arbitrator is appointed by the Central
Government and subject to the provisions of the Act of 1956, the
provisions of the Act of 1996 are made applicable to arbitration under
Section 3-G(5) of the Act of 1956. Though the amount of compensation
is determined by the Competent Authority authorized by the Central
Government and such determination is made subject to arbitration before
the Arbitrator also appointed by the Central Government, the same is not
found sufficient to permit a challenge to the award as passed on merits
under Section 34 of the Act of 1996 as held in M. Hakeem (supra).
(b) Yardsticks for interference under Section 34 of the Act of 1996:
9. Since Section 3-G(6) of the Act of 1956 makes the
provisions of the Act of 1996 applicable, remedy under Section 34 of the
Act of 1996 is available to the party aggrieved by the award passed by the
Arbitrator. It may be noted that Chapter VII of the Act of 1996 in which
Section 34 finds place refers to recourse against an arbitral award. The
Hon’ble Supreme Court in M. Hakeem (supra) in that context has
observed that Section 34 far from being an appellate provision only
provides for setting aside awards on very limited grounds.
In these appeals the challenge to the arbitral award is
principally based on the provisions of Section 34(2)(b)(ii) of the Act of
1996 namely that the arbitral award as passed is in conflict with the
public policy of India. At the outset, it may be noted that all the applications
under Section 34 of the Act of 1996 have been filed prior to 23.10.2015
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on which date Act No.3 of 2016 amending the provisions of Section 34
came into force. In Ssangyong Engineering (supra) it has been held that
the provisions of Section 34 as amended by Act No.3 of 2016 would apply
only to Section 34 applications that have been made to the Court on or
after 23.10.2015 even if the arbitration proceedings may have
commenced prior to that date. It is thus clear that the provisions of
Section 34 prior to being amended by Act No.3 of 2016 would have to be
considered while adjudicating the challenge to the awards passed by the
Arbitrator.
10. The Hon’ble Supreme Court in Associate Builders (supra)
has dealt with the aspect of public policy of India in detail. While
considering the provisions of Section 34(2)(b)(ii) of the Act of 1996
before its amendment by Act No.3 of 2016 reference was made to the
decision in Renusagar Power Co. Ltd. Versus General Electric Company
[1995 Supp.(1) SCC 644] wherein while construing the expression ‘public
policy’ in the context of a foreign award, three heads namely (i) the
fundamental policy of Indian Law, (ii) the interest of India and (iii) justice or
morality were enumerated. Thereafter in ONGC Ltd. Versus Saw Pipes
Ltd. [(2003) 5 SCC 705] the aspect of patent illegality was added as a
fourth head. Under the head of the fundamental policy of Indian law, it
was clarified in Associate Builders (supra) that disregarding the binding
effect of the judgment of a superior Court would also be violative of the
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fundamental policy of Indian law. Certain relevant observations that are
required to be kept in mind are reproduced as under:-
“29. It is clear that the juristic principle of a “judicial
approach” demands that a decision be fair, reasonable
and objective. On the obverse side, anything arbitrary
and whimsical would obviously not be a determination
which would either be fair, reasonable or objective.”
“31. The third juristic principle is that a decision which
is perverse or so irrational that no reasonable person
would have arrived at the same is important and
requires some degree of explanation. It is settled law
that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account
something irrelevant to the decision which is arrives at;
or
(iii) ignores vital evidence in arriving at its
decision,
such decision would necessarily be perverse.”
“33. It must clearly be understood that when a Court is
applying the “public policy” test to an arbitration award,
it does not act as a Court of appeal and consequently
errors of fact cannot be corrected. A possible view by
the arbitrator on facts has necessarily to pass muster as
the arbitrator is the ultimate master of the quantity and
quality of evidence to be relied upon when he delivers
his arbitral award. Thus an award based on little
evidence or on evidence which does not measure up in
quality to a trained legal mind would not be held to be
invalid on this score. Once it is is found that the
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arbitrators approach is not arbitrary or capricious, then
he is the last word on facts.”
“34. It is with this very important caveat that the two
fundamental principles which form part of the
fundamental policy of Indian Law (that the arbitrator
must have a judicial approach and that he must not act
perversely) are to be understood.”
Patent Illegality
“40. We now come to the fourth head of public policy
namely, patent illegality. It must be remembered that
under the explanation to section 34 (2)(b), an award is
said to be in conflict with the public policy of India if the
making of the award was induced or affected by fraud or
corruption. This ground is perhaps the earliest ground on
which courts in England set aside awards under English
law. Added to this ground (in 1802) is the ground that
an arbitral award would be set aside if there were an
error of law by the arbitrator. This is explained by
Denning, L.J. in [R v. Northumberland Compensation
Appeal Tribunal, ex p Shaw., (All ER p. 130 D-E : KB
p.351)]
“Leaving now the statutory tribunals, I turn to the
awards of the arbitrators. The Court of King's Bench
never interfered by certiorari with the award of an
arbitrator, because it was a private tribunal and not
subject to the prerogative writs. If the award was not
made a rule of Court, the only course available to an
aggrieved party was to resist an action on the award or
to file a bill in equity. If the award was made a rule of
Court, a motion could be made to the court to set it aside
for misconduct of the arbitrator on the ground that it
was procured by corruption or other undue means (see
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Statute 9 and 10 Will. III, C. 15). At one time an award
could not be upset on the ground of error of law by the
arbitrator because that could not be said to be
misconduct or undue means, but ultimately it was held
in Kent v. Elstob, that an award could be set aside for
error of law on the face of it. This was regretted by
Williams, J., in Hodgkinson v. Fernie, but is now well
established.”
41. This, in turn, led to the famous principle laid
down in Champsey Bhara Company v. Jivraj Balloo Spg.
and Wvg. Co. Ltd., where the Privy Council referred to
Hodgkinson and then laid down: (IA pp 330-32)
“The law on the subject has never been more clearly
stated than by Williams, J. in the case of Hodgkinson v.
Fernie [CB(NS) p.202 : ER p.717]
“The law has for many years been settled, and remains
so at this day, that, where a cause or matters in
difference are referred to an arbitrator, whether a
lawyer or a layman, he is constituted the sole and final
Judge of all questions both of law and of fact. ……
The only exceptions to that rule are cases where the
award is the result of corruption or fraud, and one
other, which though it is to be regretted, is now, I think
firmly established viz. where the question of law
necessarily arises on the face of the award or upon
some paper accompanying and forming part of the
award. Though the propriety of this latter may very
well be doubted, I think it may be considered as
established.”
“Now the regret expressed by Williams, J. in
Hodgkinson v. Fernie has been repeated by more than
one learned Judge, and it is certainly not to be desired
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that the exception should be in any way extended. An
error in law on the face of the award means, in Their
Lordships’ view, that you can find in the award or a
document actually incorporated thereto, as for instance,
a note appended by the arbitrator stating the reasons
for his judgment, some legal proposition which is the
basis of the award and which you can then say is
erroneous. It does not mean that if in a narrative a
reference is made to a contention of one party that
opens the door to seeing first what that contention is,
and then going to the contract on which the parties’
rights depend to see if that contention is sound. Here it
is impossible to say, from what is shown on the face of
the award, what mistake the arbitrators made. The only
way that the learned judges have arrived at finding
what the mistake was is by saying: “Inasmuch as the
Arbitrators awarded so and so, and inasmuch as the
letter shows that then buyer rejected the cotton, the
arbitrators can only have arrived at that result by totally
misinterpreting Rule 52.” But they were entitled to give
their own interpretation to Rule 52 or any other article,
and the award will stand unless, on the face of it they
have tied themselves down to some special legal
proposition which then, when examined, appears to be
unsound. Upon this point, therefore, Their Lordships
think that the judgment of Pratt, J. was right and the
conclusion of the learned Judges of the Court of Appeal
erroneous.”
This judgment has been consistently followed in India
to test awards under Section 30 of the Arbitration Act,
1940.
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42. In the 1996 Act, this principle is substituted by
the ‘patent illegality’ principle which, in turn, contains
three sub heads :
42.1 (a) A contravention of the substantive law of India
would result in the death knell of an arbitral award.
This must be understood in the sense that such illegality
must go to the root of the matter and cannot be of a
trivial nature. This again is a really a contravention of
Section 28(1)(a) of the Act, which reads as under:
“28. Rules applicable to substance of dispute.—(1)
Where the place of arbitration is situated in India,—
(a) in an arbitration other than an international
commercial arbitration, the arbitral tribunal shall
decide the dispute submitted to arbitration in
accordance with the substantive law for the time being
in force in India;”
42.2 (b) A contravention of the Arbitration Act itself
would be regarded as a patent illegality- for example if
an arbitrator gives no reasons for an award in
contravention of section 31(3) of the Act, such award
will be liable to be set aside.
42.3 (c) Equally, the third sub-head of patent illegality is
really a contravention of Section 28 (3) of the
Arbitration Act, which reads as under:
“28. Rules applicable to substance of
dispute.—
(1)-(2)
(3) In all cases, the arbitral tribunal shall decide in
accordance with the terms of the contract and shall take
into account the usages of the trade applicable to the
transaction.”
This last contravention must be understood with a
caveat. An arbitral tribunal must decide in accordance
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with the terms of the contract, but if an arbitrator
construes a term of the contract in a reasonable
manner, it will not mean that the award can be set
aside on this ground. Construction of the terms of a
contract is primarily for an arbitrator to decide unless
the arbitrator construes the contract in such a way that
it could be said to be something that no fair minded or
reasonable person could do.”
11. To summarize what has been laid down in Associate
Builders (supra), an award passed (a) disregarding the binding effect of
the judgment of a superior Court (b) in absence of a ‘judicial approach’
resulting in something arbitrary or whimsical (c) in breach of the ‘audi
alteram partem’ principle (d) that is so perverse or irrational that no
reasonable person would have arrived at such conclusion is liable to be
set aside. Perversity would include a finding based on no evidence, taking
into account something irrelevant or ignoring vital evidence could also
result in the award being set aside being contrary to the fundamental
policy of Indian Law. On the aspect of patent illegality, an award that is
so unfair or unreasonable that it shocks the conscience of the Court is also
susceptible to interference under Section 34(2) of the Act of 1996 as held
in Centrotrade Minerals and Metals Inc. Versus Hindustan Copper
Limited [(2006) 11 SCC 245] and DDA Versus R.S. Sharma & Company
[(2008) 13 SCC 80]. Patent illegality should go to the root of the matter
and it should not be a trivial illegality as observed in J.G. Engineers (P)
Ltd. Versus Union of India [(2011) 5 SCC 758].
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On the other hand, the caution to be exercised under
Section 34 of the Act of 1996 as laid down in Associate Builders (supra) is
not to act as a Court of appeal and correct errors of fact. It has to be kept
in mind that the arbitrator is the ultimate master of the quality and
quantity of evidence to be relied upon in the proceedings. An award
could be based upon little evidence or evidence which does not measure
up in quality to a trained legal mind. Dissecting and re-assessing factual
aspects of the case to come to a conclusion that the award needs
intervention and thereafter dubbing the award to be vitiated by perversity
or patent illegality has to be avoided as observed in Delhi Airport Metro
Express Pvt. Ltd. (supra). It is not enough that the Court thinks that the
award is unjust on facts and then seek to substitute its view for that of the
arbitrator to do what it considers to be ‘justice’ as held in Sutlej
Construction Limited (supra). The perversity in the award ought to be
unpardonable as can be seen from the observations in Dyna Technologies
Pvt. Ltd. (supra) wherein the Hon’ble Supreme Court held that ‘the Courts
need to be cautious and should defer to the view taken by the Arbitral
Tribunal even if the reasoning provided in the award is implied unless
such award portrays perversity unpardonable under Section 34 of the
Arbitration Act.”
12. We may in the passing refer to the observations in State of
Rajasthan & Others Versus Basant Nahata [(2005) 12 SCC 77] wherein
in the context of the words “public policy’ referred to in Section 23 of the
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Indian Contract Act, 1872 it was held that what was opposed to public
policy would be a matter depending upon the nature of the transaction.
The pleadings of the parties and material brought on record would be
relevant to enable a decision to be taken as to what was in public good or
in public interest. In other words, the importance of pleadings of the
parties and the material brought on record in that context has material
importance. This aspect has also been considered in McDermott
International Inc. Versus Burn Standard Company Limited [(2006) 11
SCC 181] and Centrotrade Minerals and Metals Inc. Versus Hindustan
Copper Limited [(2006) 11 SCC 245].
It is on the aforesaid legal premise that the challenge as
raised would have to be considered.
(c) Procedural infirmities, if any:-
13. Under Section 23(1) of the Act of 1996 a claimant
approaching the Arbitral Tribunal is required to state necessary facts for
supporting his claim, the points at issue and the relief or remedy sought.
The respondent is thereafter required to state his defence in respect of the
particulars as given by the claimant and unless the parties have otherwise
agreed, as to the required elements of those statements. Under Section
23(2) of the Act of 1996 the parties can submit with their statements,
such documents that they consider to be relevant or they may make a
reference to the documents or other evidence that they would submit.
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The aforesaid provisions thus clearly indicate that after the
claimant states the necessary facts for supporting his claim and also
places documents found to be relevant in that regard, the respondent in
the proceedings has to state his defence in respect of the facts stated and
can also file documents disputing the claim as made. In other words, the
facts put forward in support of the claim alongwith documents found
relevant and the defence as raised would be the basis on which the
arbitration proceedings would proceed. Thus at the initial stage of the
proceedings itself the party opposing the claim as made is required to put
forth its defence alongwith the documents if any found relevant. Even
thereafter, an opportunity to amend or supplement the statement of claim
or defence is available to the parties under Section 23(3), unless
otherwise agreed by the parties.
14. In this context, reference is also required to be made to the
provisions of Section 4 of the Act of 1996. Thereunder, a party on
knowing that the other party is likely to derogate from any provision of
Part I (which comprises of Sections 2 to 43) has an opportunity to object
to such derogation. However, failure to state such objection as regards
non-compliance in that regard is deemed to amount to waiver of the right
to object. For the present purpose, provisions of Section 19(2) and 24(1)
of the Act of 1996 dealing with procedural aspects can possibly be
derogated by a party. If therefore there is no agreement between the
parties to the arbitration as regards the procedure to be followed by the
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arbitral tribunal or whether oral hearings for presentation of evidence
should be held or for oral arguments and thereafter the arbitral tribunal
has proceeded in terms of Section 19(3) to conduct the proceedings in the
manner it considers appropriate, the same cannot be subsequently
objected to when the opportunity to object to the same is not availed of
before the Arbitrator. Such procedural objections would be deemed to be
waived in the light of provisions of Section 4 of the Act of 1996 if not
raised at an appropriate stage before the Arbitrator. That a mandatory
provision which is in the interests of a party but not conceived in public
interest can also be waived by such party is well settled in view of the
dictum in Dhirendra Nath Versus Sudhir Chandra [AIR 1964 SC 1300].
For the aforesaid conclusion we seek to draw support from
the decision in Narayan Prasad Lohia Versus Nikunj Kumar Lohia
[(2002) 3 SCC 572] where the question as to whether a mandatory
provision in the Act of 1996 could be waived by the parties was decided
on reference. The facts therein indicate that arbitration was undertaken
by two arbitrators. An objection based on Section 10(1) of the Act of
1996 was raised since there were even number of arbitrators. One of the
contentions raised was that Section 10 was a provision from which a
party cannot derogate while matters from which a party could derogate
were those provided under Sections 11(2), 19(1) and (2), 20(1) and (2),
22(1), 24 to 26 and 31(3). It was held that on a conjoint reading of
Sections 10 and 16 it was clear that an objection to the composition of an
arbitral tribunal was a matter which was derogable as a party was free
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not to object within the time prescribed in Section 16(2) of the Act of
1996. If a party chose not to so object there would be deemed waiver
under Section 4 of the Act of 1996. It was held that as the respondents
therein had not raised any objection to the composition of the arbitral
tribunal they had deemed to have waived their right to object.
15. As regards the contention raised by the learned counsel for
the National Highways Authority that the Arbitrator committed an error
apparent on the face of record by taking into consideration the photo-
copies of the aforesaid sale-deed and report of the Government Approved
Valuer, that contention does not merit acceptance. Under Section 19(1)
of the Act of 1996 the arbitral tribunal is not bound by the Code of Civil
Procedure, 1908 or the Indian Evidence Act, 1872. Admittedly, in the
present case it has not been shown that the parties had agreed upon the
procedure to be followed by the arbitral tribunal in conducting its
proceedings and therefore as permissible under Section 19(3), the arbitral
tribunal proceeded to conduct the proceedings in the manner it
considered appropriate. Section 19(4) specifically provides that the
power of the arbitral tribunal under Section 19(3) includes the power to
determine the admissibility, relevance, materiality and weight of any
evidence.
Thus when the arbitral tribunal proceeds to determine the
admissibility, relevance, materiality and weight of any evidence it would
naturally be guided by the respective pleadings of the parties. The
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approach of the arbitral tribunal in this regard would undoubtedly be
guided by the stand taken by the parties vis-a-vis a particular piece of
evidence. In a given case, if the existence or genuineness or validity of
any piece of evidence is not disputed by the other side, the said factor
definitely would have a bearing on the aspect of determination of the
admissibility, relevance, materiality and weight of such evidence. On the
other hand, if any piece of evidence is disputed or doubted or any similar
reason is put forth, the arbitral tribunal could require the party relying
upon such piece of evidence to substantiate the same while determining
the admissibility, relevance, materiality and weight of that piece of
evidence. In Dyna Technologies Pvt. Ltd. (supra) it has been held that
even if the Court finds gaps in the reasoning for the conclusions reached
by the Arbitrator, the Court needs to have regard to the documents
submitted by the parties and contentions raised before the Arbitrator.
These observations emphasize the importance of documents submitted
and contentions raised by parties. For these reasons, the judgment of
learned Single Judge in Prakash Kumar Sinha (supra) is distinguishable
on facts as the contesting party therein had joined issue on the evidentiary
value of documents relied upon by the other side. The facts in Bi-Water
Penstocks Ltd. (supra) also indicate a serious objection being raised to
documents filed by the other side and the Arbitrator by ignoring the same
committed legal misconduct. Such are not the facts in these cases.
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16. It thus depends on the facts of each case before the arbitral
tribunal as regards the manner in which it proceeds to weigh and
consider any piece of evidence. Where a particular piece of evidence
relied upon by the claimant is neither disputed nor opposed and a mere
plea is raised as regards its relevancy, the discretion exercised by the
arbitral tribunal in determining the admissibility, relevance, materiality
and weight of that piece of evidence will have to be respected. For, the
Court exercising jurisdiction under Section 34 of the Act of 1996 does not
sit in appeal over the quality and quantity of evidence relied upon by the
Arbitrator except as regards a challenge to the same on the ground of
perversity. Appraisement of evidence by the arbitrator is ordinarily not a
matter which the Court questions and considers was held in Municipal
Corporation of Delhi (supra). As stated above in the present case except
stating that the material relied upon by the land owner was not relevant
for determining the market value no other defence has been raised on the
basis of which the arbitral tribunal would have been justified in calling
upon the land owner to substantiate the documentary material sought to
be relied upon by him.
We may in this context refer to the observations of the
Lahore High Court made almost a century ago, in J. Kaikobad Versus F.
Khambatta [AIR 1930 Lahore 280(2)] wherein while considering a
similar contention that the Arbitrator had relied upon the documents that
were legally inadmissible was raised. It was observed that the documents
relied upon by the concerned Authority were admissible under the
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provisions of the Evidence Act, 1872. Even if they were not so admissible,
the Arbitrator was clearly not bound to follow its technical provisions.
Another test of perversity recognized in Ssangyong Engineering &
Construction Co. Ltd. (supra) of a finding based on documents taken
behind the back of a party by the Arbitrator also cannot be applied in
these proceedings as there is no such grievance raised. We may also note
that in PSA SICAL Term Pvt. Ltd. (supra) it has been held that a finding
based on no evidence at all or an award which ignores vital evidence in
arriving at its decision would be perverse and liable to be set aside on the
ground of patent illegality.
17. In the light of the aforesaid position and having perused the
records of each arbitration case we do not find any procedural infirmity in
the conduct of proceedings before the Arbitrator. Objections raised now
were never raised before the Arbitrator for had they been raised at the
appropriate stage, the Arbitrator could have taken cognizance of the same
and if found meritorious the same could have been rectified by the
landowners. The procedural objections are therefore deemed to have
been waived by the National Highways Authority before the Arbitrator.
The same cannot be permitted to be raised belatedly after the award was
passed. Even otherwise, the procedural aspects now raised are not of
such magnitude that would constitute a ground for setting aside the
award under Section 34 of the Act of 1996.
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d) Perversity in the award, if any.
18. The Arbitrator while dealing with the application preferred
by the land owner under Section 3-G(5) of the Act of 1956 has taken into
consideration two material pieces of evidence while determining the
market value of the acquired land. A sale-deed dated 09.07.2009
pertaining to sale of land located at Mouza Jamtha admeasuring 1.01
Hectare (2.50 Acres) for a consideration of Rs.5,68,75,000/- (Rupees Five
Crores Sixty Eight Lakhs Seventy Five Thousand) which is about
Rs.5,63,11,881/- (Rupees Five Crores Sixty Three Lakhs Eleven Thousand
Eight Hundred Eighty One) per Hectare or Rs.2,27,50,000/- (Rupees Two
Crores Twenty Seven Lakhs Fifty Thousand) per Acre was relied upon. It
has been noted by the Arbitrator that this sale-deed was executed shortly
prior to the date of issuance of notification under Section 3-A(1) of the
Act of 1956 and hence was a relevant sale instance for determining the
market value of the land under acquisition. It was noted that the said
land was situated at Mouza Jamtha which was at a much further distance
from Nagpur City than the land under acquisition. That land was about 1
to 1½ kilometers away from the highway. The Arbitrator further noted
that the land under acquisition was nearer to the City and hence had
more commercial potential and greater market value. He then observed
that the Competent Authority ought to have taken into consideration said
sale-deed while determining the market value of the land in question.
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19. The other piece of evidence relied upon was the report of
the Government Approved Valuer M/s Kukde & Kukde Associates. The
said report dated 31.03.2010 was prepared after inspecting the spot and
the land admeasuring 1 Hectare 28 R situated at Parsodi belonging to the
land owner in Arbitration Appeal No.15 of 2015 was valued at
Rs.20,72,10,000/- (Rupees Twenty Crores Seventy Two Lakhs Ten
Thousand). The price of the land in the year 2010 was stated to be
Rs.16,18,82,810/- (Rupees Sixteen Crores Eighteen Lakhs Eighty Two
Thousand Eight Hundred Ten) per Hectare which comes to
Rs.6,55,39,599/- (Rupees Six Crores Fifty Five Lakhs Thirty Nine
Thousand Five Hundred Ninety Nine) per Acre. The Arbitrator then
found that as regards the ready-reckoner rates of the lands was
concerned, the cost of lands at Parsodi was about 2½ times more than the
lands at Mouza Gawsi Manapur. On that basis the Arbitrator concluded
that the cost of lands at Mouza Parsodi was about 2½ times more than
the cost of land at Mouza Gawsi Manapur. After noting that the
Competent Authority had awarded compensation at the rate of
Rs.6,93,00,000/- (Rupees Six Crores Ninety Three Lakhs) per Hectare for
lands at Gawsi Manapur, he held that the applicant who owned land at
Mouza Parsodi was entitled to the rate which would be 1 ½ times of the
rate granted for the lands at Gawsi Manapur. It is on the aforesaid basis
that he has determined the compensation at the rate of Rs.10,39,50,000/-
(Rupees Ten Crores Thirty Nine Lakhs Fifty Thousand) per Hectare for the
lands at Mouza Parsodi.
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As regards land admeasuring 0.64 R situated at Mouza
Gawasi Manapur belonging to the landowner in Arbitration Appeal No.06
of 2015, the landowner placed on record of the Arbitrator two valuation
reports dated 14.04.2010 and 15.07.2011. The Arbitrator has discarded
the subsequent valuation report on the ground that it was prepared after
issuance of the notification under Section 3-A of the Act of 1956. The
Arbitrator has however considered the first valuation report indicating the
value of the land to be Rs.2,000/- per square foot. The Arbitrator has
then referred to his earlier adjudication that is the subject matter of
challenge in Arbitration Appeal No.09 of 2015 with regard to land at the
northern boundary of the land in Arbitration Appeal No.06 of 2015. On
the basis of the valuation report dated 31.03.2010 that was relied upon in
the award passed in Arbitration Appeal No.09 of 2015 it was held that
though the value of the said land was shown by the valuer to be
Rs.2,000/- per square foot, the market value was being fixed at
Rs.1,250/- per square foot. The Arbitrator while determining the market
value has referred to deductions made on account of size of the acquired
land.
With regard to the land acquired from Mouza Jamtha that is
the subject matter of Arbitration Appeal No.06 of 2016, the Arbitrator has
relied upon the sale-deed dated 09.07.2009 pertaining to sale of land
from Mouza Jamtha itself.
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20. It was thus urged on behalf of the National Highways
Authority that the Arbitrator was not justified in placing reliance on the
sale-deed dated 09.07.2009 and the report of the Government Approved
Valuer dated 31.03.2010 principally on the ground that the land owners
had placed on record mere photo-copies of the said two documents and
the authenticity of the said documents had not been proved. The
contents thereof were accepted as gospel truth and without any further
verification, reliance on the same was placed by the Arbitrator for
determining the market value. It was urged that the sale transaction
pertained to land located at Mouza Jamtha which was at a distance from
the acquired lands and the fact that the land under the sale instance was
located at a longer distance from the City of Nagpur was hardly a relevant
aspect for taking the said sale instance into consideration for determining
the market value of the acquired lands.
21. We would examine this contention on the touchstone of
perversity and patent illegality. It would therefore be necessary to first
refer to the pleadings of the land owner in Arbitration Appeal No.15 of
2015. These proceedings pertain to acquisition of land from Mouza
Parsodi. In the application that was filed under Section 3-G(5) of the Act
of 1956 the pleadings with regard to the aforesaid sale-deed dated
09.07.2009 and the report of the Government Approved Valuer dated
31.03.2010 can be found in paragraphs 8 to 10. The averments in the
said paragraphs read as under:-
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“8. The applicant further submits that the Sahara
Company has entered into a registered agreement with
one Abdul Anees Shaikh Musa, resident of Plot No.202,
Teachers Colony, Thakur Plots, near M. M. Taj High
School, Nagpur, whereby the Sahara Company agreed to
sell a residential unit in the project that is to be developed
on the 106.75 acres of land situated at village Gawsi
Manapur on Wardha Road, Tahsil and District Nagpur
having area of 177.90 square meter, plot area of 171.32
square meter and terrace area of 86.18 square meters for
a total consideration of Rs.94,75,200/- only. A copy of
th
the aforesaid registered agreement of sale dated 8 of
July 2010 entered into between the Sahara Company and
said Shri Abdul Anees Shaikh Musa is annexed herewith
and marked as Annexure-G to the application for the
Hon’ble Authority’s ready reference and kind perusal.
From the perusal of the aforesaid registered sale
agreement, it is clear that the cost of the land situated in
Gawsi Manapur in the year 2010 was Rs.2,514/- per
square foot.
It is, thus, clear that the cost of the land at Gawsi
Manapur is increasing day by day.
9. One Shri Zaminbhai Amin, resident of 10, Sial
Layout, Takli Feeder Road, Nagpur, Tahsil and District
th
Nagpur has, vide sale-deed dated 9 of July, 2009, sold
his land bearing Khasra No.110/2-3 of Mouza Jamtha,
Tahsil and District Nagpur admeasuring 1.01 Hectares
(2.50 acres) to Maberest Hotels Private Limited, having its
th
Registered Office at 18 June Road, Panaji (Goa) for a
total consideration of Rs.5,68,75,000/-. A copy of the
th
aforesaid sale-deed dated 9 July, 2009 is annexed
herewith and marked as Annexure-H to the application
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for the Hon’ble Authority’s ready reference and kind
perusal. As per the aforesaid sale-deed, the price of
aforesaid land comes to Rs.5,63,11,881/- (Rs.Five Crores
Sixty Three Lakhs Eleven Thousand Eight Hundred Eighty
One) per hectare i.e. Rs.2,27,50,000/- (Rupees Two
Crores Twenty Seven Lakhs Fifty Thousand) per acre.
The aforesaid land has been purchased by Maberest
Hotels Private Limited for the purpose of opening a Five
State Hotel.
10. The applicant further most respectfully submits
that as per the information received by the applicant one
Shri Anurag Khemuka, resident of 134-B, Near Hanuman
Mandir, Gandhinagar, Nagpur and M/s. Triangle Estate
Consultancy, through its Proprietor Shri Tarun Jeevraj
Patel, resident of C-7, Shib-Shree Apartments, Tikekar
Road, Dhantoli, Nagpur have entered into a registered
agreement in respect of the land bearing Khasra No.2/2
KH, Patwari Halka No.42, Mouza Gawsi Manapur, Tahsil
Nagpur (Rural), District Nagpur, Occupancy Class I Right,
admeasuring 1.93 hectares to Nagpur Modern Hospitality
Private Limited, Embassy Centre, Nariman Point, Mumbai
th
for an amount of Rs.10,45,41,680/- dated 24 of
November, 2008 and the land bearing Khasra No.3/2,
Patwari Halka No.42, Mouza Gawsi Manapur, Tahsil
Nagpur (Rural), District Nagpur, Occupancy Class I Right,
admeasuring 1.49 hectares to N. H. Construction Private
Limited, G-68, Cannought Circus, New Delhi, for a total
consideration of Rs.7,88,05,420/- vide a registered
th
agreement of sale dated 24 of November, 2008. The
aforesaid land was agreed to be purchased for
construction of a Five Star Hotel and the Assistant
Director, Town Planning has actually approved the map in
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respect of the hotel building to be constructed on Khasra
No.2/2 KH and for transfer godown on Khasra No.3/2,
thereby granting 12042.592 square meters and 9377.496
square meters plotable area, respectively. It is relevant to
mention here that village Gawasi Manapur is just adjacent
to village Parsodi. On Southern side of village Parsodi is
the village Gawasi Manapur and on the Northern side of
village Parsodi, is the Nagpur City. Thus, village Gawasi
Manapur is at a longer distance from Nagpur City than
that of village Parsodi. As has been demonstrated
hereinabove, the prices of the lands in village Gawasi
Manapur are, day-by-day touching the sky. Since village
Parsodi is nearer to Nagpur City and the Metro Region,
the prices of the lands at village Parsodi are naturally
higher than that of lands at village Gawasi Manapur. If
the rates of lands at village Gawasi Manapur and at
village Parsodi as given in the Ready Reckoner are
compared, one can see that the rate of lands at village
Parsodi are 5-6 times the rates of lands at Mouza Gawasi
(Manapur).”
22. In the reply filed to the aforesaid application by the
National Highways Authority, the following pleadings can be found in
paragraphs 8, 9, 10 and 11:-
“As to para nos. 8 and 9:- As already stated in the
forgoing para the Government has nothing to do with the
agreement with Sahara or any Five Star Hotels. That the
said land has been acquired for the public interest & the
notification also issued for the same in the local news
paper & on page two of the Award Dated 01/12/2011,
‘PUBLICATION OF NOTIFICATION UNDER SECTION 3(A)
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OF THE ACT’ & simultaneously “POWER TO ENTER FOR
SURVEY ETC. UNDER THE PROVISION OF SECTION 3-B
OF THE ACT”. The said paras revel the entire fact of the
said case. There is a Notification issued for the acquisition
of the said land as well as lands adjacent to the same for
the Express Highway No.7. The said notification has
published by the Government of India, New Delhi in the
two local news paper i.e. one Marathi daily “Lokmat “and
Hindi daily “Dainik Bhaskar” Nagpur on 01/08/2010 stating
specifically to submit the objections if any from the
interested persons in the Lands to the proposed
Acquisition Officer & user of the said lands, before the
Competent Authority & Special Land Acquisition Officer
(General) Nagpur, within the period of 21 days from the
date of publication of the said Notification on the News
Papers. The order has been passed as per the ready
reckoner. Rests of the contents are denied.
As to para 10 & 11:- The contents of these paras are
denied. It is submitted that the non-applicant has to do
nothing with whom the Sahara Company is doing
agreement or Maberest Hotels is entering into an
agreement with someone. As already submitted that the
said land is acquired for the public & for the interest of
the Nation. It is already submitted in the foregoing paras,
that the said land has been acquired after following the
due procedure of law & giving the public notice in the
respectable news paper at Nagpur, hence the intimation of
the said order & passing the order of compensation Dated
01/12/2011 is perfect”.
Further perusal of the written notes of arguments filed on behalf of the
National Highways Authority in paragraphs 5 and 6 state the following:-
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“5. So far as sale deeds relied upon by the applicant in
respect of the flats in ‘Sahara City’ are concerned, those
are not applicable to the instant case in as much as
‘Sahara City’ is established far away from the lands under
acquisition and moreover the said flats are purchased for
the residential purpose and that cannot, by any stretch of
imagination, be said to be comparable sales while
calculating the market value of the land under
acquisition.
6. In so far as the valuation of some of the lands by the
Government Approved Valuer is concerned, the said
valuation cannot carry any importance so far as the other
lands are concerned. The Government Approved Valuer
has not, in his certificate, stated the base for concluding
the rate of the land to the extent as stated in the
certificate. The certificate, therefore, cannot be believed
as cogent evidence for the purpose of arriving at the
market rate of the land under acquisition.”
23. Reference can also be made to the pleadings in the claim
petition and reply by the National Highways Authority in Case
No.62/ARB2011-12 leading to Arbitration Appeal No.9 of 2015 which
pertains to acquisition of land from Mouza Gawasi Manapur. Paragraphs
5, 11, 12 and 22 of the claim petition and reply thereto are as under:-
“ 5. The applicants further submit that the applicant
no.1-M/s. Omanand Industries had purchased the
aforesaid property with an intention to use the same for
non-agricultural purpose i.e. for the tiles manufacturing
and the some processing unit. For the purpose of
starting their business on the aforesaid land, the
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applicants have developed the aforesaid land by erecting
a two storied building and sheds having an area of more
than 26000 square feet for factory and stock of raw
material as well as finished goods. The above
mentioned land is situated within the Gaothan limits
and in the vicinity of Sahara City, VCA Stadium,
Ashtavinayak, SEZ, M.A.D.C., Hotel Sun & Sand and has
a great commercial value.
As to para no.5 :- The contents of this para are denied.
It is denied that the said N.A.No.1 has purchased the
said land in question. The said land has been ‘Acquired’
by the N.A.No.1. It may be a matter of record that the
applicant is having a Sale Deed of the said land. It is
true that there is 7/12 extract with the applicant. It is
submitted that the Hon’ble Authority has acquired
Kh.No.52/1 land from the applicant which is required
for the development work in the public interest at large.
The order passed by the Competent Authority is very
reasonable & proper. Rest of the contents needs no
specific reply from this N.A.
11. One Shri Zaminbhai Amin, resident of 10, Sial
Layout, Takli Feeder Road, Nagpur, Tahsil and District
th
Nagpur has, vide sale-deed dated 9 of July, 2009 sold
his land bearing Khasra No.110/2-3 of Mouza Jamtha,
Tahsil and District Nagpur admeasuring 1.01 Hectares
(2.50 acres) to Maberest Hotels Private Limited, having
th
its Registered Office at 19 June Road, Panaji (Goa) for
a total consideration of Rs.5,68,75,000/-. A copy of
th
the aforesaid sale-deed dated 9 of July, 2009 is
annexed herewith and marked as Annexure-J to the
application for the Hon’ble Authority’s ready reference
and kind perusal. As per the aforesaid sale-deed, the
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price of aforesaid land comes to Rs.5,63,11,881/-
(Rupees Five Crores Sixty Three Lakhs Eleven
Thousand Eight Hundred Eighty One) per hectare i.e.
Rs.2,27,50,000/-(Rupees Two Crores Twenty Seven
Lakhs Fifty Thousand) per acre. The aforesaid land has
been purchased by Maberest Hotels Private Limited for
the purpose of opening a Five Star Hotel.
12. It is further most respectfully submitted that the
aforesaid lands of Sahara City and Shri Zaminbhai
Amin are not touching the highway and are residential
and agricultural lands respectively. However, the lands
of the applicants are touching the highway and having
more proximity of urbanized area and, thus, carry high
commercial value.
8. As to para 11 & 12 :- The contents of these paras
are denied. It is submitted that the non-applicant has
to do nothing with whom the Sahara Company is doing
agreement or Maberest Hotels is entering into an
agreement with someone. As already submitted that
the said land is acquired for the public & for the interest
of the nation. It is already submitted that in the
foregoing paras, that the said land has been acquired
after following the due procedure of law & giving the
public notice in the respectable news paper at Nagpur,
hence the intimation of the said order & passing the
order of compensation dated 23/12/2011 is perfect.
22. The applicants further most respectfully submit
that in the said belt of the land, which is closed to the
National Highway, most of the lands are used for non-
agricultural purpose, various trades and businesses like
Hotels, Dhabas, Restaurants, Godowns, Commercial
Shops, etc. Immediately after the publication of
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notification under Section 3-D of the Act of 1956, the
applicants have been deprived of the use of their land
making the applicants entitled to claim rental
compensation in respect of the lands in question.
21. As to para nos. 23, 24 & 25 :- The contents of
the said paras are denied. It is already submitted that
when there is the question of the National Development
& in the public interest, then the Government Authority
can acquired the lands & the Concern Authority gives
the value as per the ready reckoner. This is published in
the news paper as well as by way of notification in
Gazette of India. It is true that most of the land along
highway used for N.A. purpose and for Hotels,
Restaurants, Godown, Commercial Shops, etc., but in
this case all these are immaterial when it comes on the
interest of public as well as for the national
development, hence needs no specific reply from this
N.A.1 and 3.”
24. In Case No. 60/ARB 2011-12 leading to Arbitration Appeal
No.11 of 2015 which also pertains to land acquired from Mouza Gawasi
Manapur, the averments in paragraph 15 and reply thereto are as under:-
“15. It needs to be mentioned here that one Shri
A.K.Shiralkar, who is the owner of land Khasra No.134/2,
Patwari Halka No.42 of Mouza Parsodi, Tahsil Nagpur
(Rural), District Nagpur, admeasuring 1 Hectare 28 R,
got his land evaluated through M/s. Kukde and Kukde
Associates, Architect, Planner, Interior Designer,
Government Approved Valuer and the said valuer has
after inspecting the spot and taking into consideration
all factual aspects valued the land admeasuring 1.28
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st
hectares as on 31 of March,2010 at Rs.20,72,10,000/-.
A copy of the report of the aforesaid Government
Approved Valuer is annexed herewith and marked as
Annexure-P to the application for the Hon’ble
Authority’s ready reference and kind perusal. The
applicants further most respectfully submit that the fact
that the lands in the vicinity of the land of the
applicants are evaluated at much more rate than what
has been granted by the non-applicant no.2-Competent
Authority. It is, thus, clear that the non-applicant no.2-
Competent Authority has committed a grave error in
granting the compensation at the rate which is too less
than the market value of the lands in the vicinity of the
lands of the applicants. The impugned award is, therefore,
liable to be modified accordingly on this ground also.
12. As to para no.5 :- The contents of this para may
being a matter of record needs no specific reply.
18. As to para no.14 & 15 :- The contents of these
paras are denied. It is already stated in the foregoing
para that for what the said land has been acquired. This
is nothing, but the repetition of the earlier paras needs
no specific reply. The said Award has been passed as
per the ready reckoner.”
Thus, from the aforesaid pleadings it is clear that it was
pleaded that the acquired lands were located near the Highway and
various prominent commercial establishments were in the nearby vicinity.
Sale instance dated 09.07.2009 and valuation report dated 31.03.2010
were also referred to. The denial by the National Highways Authority is
in general terms without any specific objection.
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25. From the averments in the claim applications filed under
Section 3-G(5) of the Act of 1956 and the defence raised by the National
Highways Authority in its written reply as well as the written notes of
arguments that were placed before the Arbitrator, it becomes crystal clear
that the National Highways Authority did not dispute the genuineness of
the sale-deed dated 09.07.2009 and the report of the Government
Approved Valuer dated 31.03.2010. Except general statements disputing
the relevance of the said documents there is no specific stand taken that
the sale transaction dated 09.07.2009 was not a genuine transaction or
that it indicated an inflated value of the property sold. Similarly there are
no pleadings disputing the report of the Government Approved Valuer. It
can thus be said that in absence of any specific defence being raised by
the National Highways Authority in its statement of defence or any
contrary material being placed on record by it, the Arbitrator did not err
in relying upon the sale instance dated 09.07.2009 and the report of the
Government Approved Valuer dated 31.03.2010. In other words, the
documentary material placed on record by the land owners was neither
countered nor specifically denied by the National Highways Authority. It
is not the case of the National Highways Authority that the copy of the
sale-deed dated 09.07.2009 or the report of the Government Approved
Valuer dated 31.03.2010 were subsequently placed on record by the land
owners. On the contrary, there were specific pleadings in the claim
petitions of the land owners and copies of documents relied were also
supplied to the other side. The National Highways Authority could have
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called upon the landowners to produce the original documents or could
have sought cross-examination of the Government Approved Valuer. This
course was however not adopted.
Further, the National Highways Authority did not counter
the aforesaid material by placing on record before the Arbitrator some
other material which according to it could be the basis for determination
of the market value of the acquired land. Under Section 3-G(7) of the Act
of 1956 the Arbitrator is duty bound to take into consideration the market
value of the land acquired as on the date of publication of the notification
under Section 3-A of the Act of 1956. When therefore, a claimant places
certain material on record before the Arbitrator which material according
to the claimant ought to be taken into consideration for determining the
market value of the acquired land and that material is neither countered
nor specifically disputed by the other side, there would hardly be any
scope for finding fault with the Arbitrator for relying upon the material
before him. In this backdrop therefore it would be futile to urge that the
Arbitrator misconducted himself while determining the market value of
the acquired lands when he took into consideration the sale-deed dated
09.07.2009 and the report of the Government Approved Valuer dated
31.03.2010. It also must be noted that though the landowners sought to
rely upon various registered agreements of sale to indicate the market
rate of the lands in the vicinity, the Arbitrator did not rely upon any such
agreement of sale while determining the market value of the acquired
lands.
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26. Equally untenable is the contention raised by the National
Highways Authority based on the provisions of Section 24(3) of the Act of
1996 while urging that the Arbitrator ought to have indicated to the
parties that he intended to rely upon the report of the Government
Approved Valuer for determining the market value of the acquired lands.
Sub-section (3) of Section 24 is in two parts. All statements, documents
or other information relied upon by one party has to be supplied to the
other party. In other words, a party should be aware of the statements,
documents or other material relied upon by the other party. By the latter
part of Section 24(3) if the arbitral tribunal intends to rely upon any
expert report or evidentiary document the same has to be indicated by the
arbitral tribunal. The latter part intends to cover that material of which
the parties to the arbitration do not have notice. Thus if the arbitral
tribunal seeks to base its decision on any expert report or evidentiary
document which is not part of any document or other information relied
upon by one party and supplied to the other party under the first part of
Section 24(3), only then would such occasion arise of the arbitral tribunal
on its own seeking to rely upon any expert report or evidentiary
document for making its decision. The object behind the latter portion of
Section 24(3) is to enable the arbitral tribunal to put the parties to
arbitration to notice that it intends to rely upon material of which the
parties did not have notice by virtue of the former portion of Section
24(3). The object behind the latter portion is to seek compliance of fair
play and natural justice by the Arbitrator.
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In the present case, since the sale-deed dated 09.07.2009 as
well as the report of the Government Approved Valuer was referred to by
the landowners in their pleadings and copies thereof were supplied to the
National Highways Authority under Section 23(2) of the Act of 1996,
there was no reason for the Arbitrator to indicate to the parties that he
was basing his decision on the same. Moreover, the former part of
Section 24(3) refers to all statements, documents or other information
while the latter part of Section 24(3) refers to any expert report or
evidentiary document. The reference to all statements, documents or
other information on one hand and reference to any expert report or
evidentiary document on the other appears to be deliberate to indicate
the object and scope of the provision.
27. The National Highways Authority itself having failed to
place on record any material that would have enabled the Arbitrator to
determine the market value of the acquired land in the arbitration
proceedings, no fault can be found with the Arbitrator when he relied
upon the sale-deed dated 09.07.2009 and the report of the Government
Approved Valuer dated 31.03.2010. It would not be open for the National
Highways Authority now to contend in proceedings under Section 34 or
for that matter in appeal under Section 37 of the Act of 1996 that the
basis for determining the market value of the acquired land was flawed
since the Arbitrator determined the same by relying upon a sale-deed that
was not a comparable sale instance. The Arbitrator having considered the
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aforesaid material in detail and having assigned reasons for accepting that
material in absence of any contrary material was justified in determining
the market value of the land as he was required to do the same under
Section 3-G(7) of the Act of 1956. Shri R.P. Joshi, learned counsel for the
appellant in Arbitration Appeal No.6 of 2015 is justified in placing
reliance on the decision in M/s Kapoor Nilokheri Co-op. Dairy Farm
Society Ltd. (supra) wherein in paragraph 11 it has been held as under:-
“11. In the circumstances the appellants should also
be deemed to have waived any objections that they may
have had on the question of privilege. In “Russell on
Arbitration” (Seventeenth Edition) at Page 182
statement of law is given as follows:
‘Objections to a decision of the arbitrator
as to whether or not to admit evidence, may be waived,
like other objections to the manner in which the
proceedings are conducted.
A party to an arbitration cannot be
allowed to lie by and then, if the award is unfavourable,
seek to set it aside on the ground that during the
proceedings the arbitrator gave a ruling or decision
contrary to the rules of evidence which the party during
the proceedings took no steps to question.’
We are, therefore, of the opinion that the
Arbitrator cannot be said to have misconducted himself
in the matter of his order on the question of privilege,
nor are the appellants entitled to any relief on the
question of depreciation based on the word ‘provisional’
in the agreement.”
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Shri S.P. Bhandarkar, learned counsel for some of the
landowners has rightly relied upon the decision in Inder Sain Mittal
(supra) wherein it was observed as under:-
“(iii) Where ground is based upon breach of
mandatory provision of law, a party cannot be estopped
from raising the same in his objection to the award even
after he participated in the arbitration proceedings in
view of the well-settled maxim that there is no estoppel
against statute.
(iv) If, however, basis for ground of attack is
violation of such a provision of law which is not
mandatory but directory and raised at the initial stage,
the illegality, in appropriate case, may be set right, but
in such an eventuality if a party participated in the
proceedings without any protest, he would be precluded
from raising the point in the objection after making of
the award.”
28. The learned Judge while setting aside the award passed by
the Competent Authority has observed that the Arbitrator took into
consideration various factual aspects based on his personal knowledge
while determining the amount of compensation payable to the land
owners. He has observed that in the absence of necessary pleadings in
the claim petitions filed under Sections 3-G(5) of the Act of 1956, it was
not permissible for the Arbitrator to have passed his award on the basis of
his personal knowledge about the location of various prominent
commercial establishments in the vicinity of the acquired lands. In this
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regard it has to be kept in mind that the Arbitrator considered various
claim petitions filed under Section 3-G(5) of the Act of 1956 pertaining to
acquisition of various lands situated at Mouza Gawsi Manapur, Mouza
Parsodi and Mouza Jamtha. All these claim petitions were conducted
simultaneously and it is but obvious that since various acquired lands
were adjoining each other or were in the near vicinity it was but natural
that the material available on the record of a particular case was kept in
mind while undertaking the exercise of determination of compensation
for the acquired lands. The pleadings with regard to the location of
various prominent commercial establishments can be found in the
proceedings that gave rise to Arbitration Appeal No.9 of 2015. These
specific averments as regards the existence of the said prominent
commercial establishments and they being located in the vicinity of the
acquired lands were not specifically disputed by the National Highways
Authority in its replies as filed. If, therefore, for the purposes of
determining the market value of a particular piece of land the relevance
of the said prominent commercial establishments was taken into
consideration there is no reason as to why the same yardstick could not
have been applied by the Arbitrator while determining the market value
for another piece of adjoining land.
29. It may be stated that location of any prominent commercial
establishment cannot be said to be within the ‘personal knowledge’ of the
Competent Authority appointed under the Act of 1956. It has to be kept
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in mind that the Competent Authority as appointed under Section 3-G(5)
of the Act of 1956 is by issuing notification in that regard and as is the
practice in this region, the Divisional Commissioner who is the Head of
the Revenue Division of the Region is usually appointed as the Arbitrator.
Location of a prominent commercial establishment is a matter of public
knowledge and having such knowledge cannot be attributed to having
‘personal knowledge’ of the facts of the case. While it is true that it would
not be permissible for an Arbitrator to apply his ‘personal knowledge’ as
regards the facts of the case, during the course of arbitration proceedings,
an Arbitrator would be within his rights if he uses general information
and knowledge as regards location of a prominent commercial
establishment in the vicinity of a piece of land that is acquired.
In this regard, useful reference can be made to the decision
in Municipal Corporation of Delhi (supra) wherein the aspect as to
whether it was open for an Arbitrator to take into consideration
knowledge of certain factual aspects was considered. In paragraph 5
therein it has been observed as under:-
“5. It is familiar learning but requires emphasis that
Section 1 of the Evidence Act, 1872 in its rigour is not
intended to apply to proceedings before an arbitrator. P.
B. Mukharji, J. as the learned Chief Justice then was,
expressed the above view in Ebrahim Kassam
Chochinwall v. Northern Indian Oil Industries Ltd. AIR
1951 Cal 230 and we are of the opinion that this
represents the correct statement of law on this aspect.
Lord Goddard, C.J. in Mediterranean & Eastern Export
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Co. Ltd. V. Fortress Fabrics Ltd. (1948) 2 All ER 186
observed at pp.188/189 of the report as follows :
“A man in the trade who is selected for his
experience would be likely to know and indeed to be
expected to know the fluctuations of the market and
would have plenty of means of informing himself or
refreshing his memory on any point on which he might
find it necessary so to do. In this case according to the
affidavit of sellers they did take the point before the
Arbitrator that the Southern African market has
slumped. Whether the buyers contested that statement
does not appear but an experienced Arbitrator would
know or have the means of knowing whether that was
so or not and to what extent and I see no reason why
in principle he should be required to have evidence on
this point any more than on any other question relating
to a particular trade. It must be taken I think that in
fixing the amount that he has, he has acted on his own
knowledge and experience. The day has long gone by
when the Courts looked with jealousy on the
jurisdiction of the Arbitrators. The modern tendency is
in my opinion more especially in commercial
arbitrations, to endeavour to uphold awards of the
skilled persons that the parties themselves have
selected to decide the questions at issue between them.
If an arbitrator has acted within the terms of his
submission and has not violated any rules of what is so
often called natural justice the Courts should be slow
indeed to set aside his award.”
This in our opinion is an appropriate attitude.”
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30. Shri R.P. Joshi, learned counsel has rightly placed reliance
on the decision in P. R. Shah (supra) wherein it has been reiterated by the
Hon’ble Supreme Court that while an arbitral tribunal cannot make use of
its personal knowledge of the facts of the dispute, an arbitral tribunal can
certainly use its expert or technical knowledge or the general knowledge
about a particular trade in deciding a matter. It was noted that in many
arbitration proceedings persons with technical knowledge were appointed
as they would be well versed with the practices and customs in the
respective fields.
Thus from the aforesaid it is clear that the learned Judge
misdirected himself in coming to the conclusion that the Arbitrator had
relied upon ‘personal knowledge’ when the Arbitrator referred to the
location of various prominent commercial establishments existing in the
vicinity of the acquired lands. Such pleadings were available on the
records of some of the claim petitions and in the absence of any specific
opposition to the said averments, the Arbitrator could not be said to have
committed any ‘patent illegality’ in referring to such material which in any
event was in public domain and could pass off as general knowledge. No
fault therefore could have been found with the aforesaid approach of the
Arbitrator and the conclusion recorded otherwise in that regard by the
learned Judge is found to be unsustainable.
31. One of the grounds that has found favour with the learned
Judge for setting aside the award is misconduct on the part of the
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Arbitrator. According to the learned Judge the Arbitrator proceeded to
determine the matter-in-issue beyond the jurisdiction conferred upon him
under law. The mandatory procedure prescribed under the Act of 1996
was not followed and the determination of market value was based on
surmises and conjectures. The Arbitrator also utilized his personal
knowledge and recorded erroneous findings discernible from the record.
This conduct according to the learned Judge amounted to misconduct
within the purview of Section 34 of the Act of 1996.
Undisputedly, misconduct by an arbitrator was a ground for
setting aside an award under Section 30(a) of the Act of 1940. This
ground does not find place in Section 34(2)(b) of the Act of 1996.
Pertinently, this ground based on misconduct of the Arbitrator has not
been specifically raised by the National Highways Authority in its
applications filed under Section 34 of the Act of 1996. The grounds
principally raised are the non-examination of the Government Approved
Valuer by the landowners and reliance placed by the Arbitrator on various
photo-copies of sale-instances and agreements of sale without the original
documents being produced. The other ground raised is that the
Arbitrator exceeded his jurisdiction while determining the quantum of
compensation. It however appears that the learned Judge considered the
challenge to the award on the touchstone of misconduct and has
proceeded to conclude that the approach of the Arbitrator tantamounted
to misconduct under Section 34 of the Act of 1996. The basis for this
conclusion of the learned Judge is on account of failure to follow the
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provisions of the Act of 1996 and travelling beyond the scope of
jurisdiction as conferred.
32. In our view, a reading of the grounds of challenge to the
award under Section 34 indicate that such challenge was based on the
provisions of Section 34(2)(b)(ii) of the Act of 1996 in the context of
perversity while determining the amount of market value of the acquired
lands. The challenge to the award would have to be considered in that
context. Assuming that challenge based on legal misconduct of the
Arbitrator could be raised, the following observations in State of
Rajasthan Versus Puri Construction Co. Ltd. & Another [(1994) 6 SCC
485] are sufficient to negate such challenge.
“32. The contentions about factual errors and
omissions apparent on the face of record as raised in the
written argument are essentially errors and omissions in
not properly considering the materials on record, in
misreading statements out of their contexts. The
arbitrators have given the award by referring to various
documents and statements available on record and
indicating the reasons for basing the findings. Even if it
is assumed that on the materials on record, a different
view could have been taken and the arbitrators have
failed to consider the documents and materials on
record in their proper perspective, the award is not
liable to be struck down in view of judicial decisions
referred to hereinbefore. Error apparent on the face of
the record does not mean that on closer scrutiny of the
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import of documents and materials on record, the
finding made by the arbitrator may be held to be
erroneous. Judicial decisions over the decades have
indicated that an error of law or fact committed by an
arbitrator by itself does not constitute misconduct
warranting interference with the award. It does not
appear to us that the findings made by the arbitrators
are without any basis whatsoever and are not referable
to documents relied upon and such findings are so
patently unjust or perverse that no reasonable man
could have arrived at such findings. Hence, on the score
of alleged misreading, misconstruction, misappreciation
of the materials on record or failure to consider some of
the materials in their proper perspective, the impugned
award is not liable to be set aside. ……………..”
33. Thus, seen from any angle the award passed by the
Arbitrator can hardly be said to suffer from perversity or patent illegality.
The determination of market value towards compensation for the
acquired lands is on the basis of the sale-deed dated 09.07.2009 and the
report of the Government Approved Valuer dated 31.03.2010. These
documents were placed on record by the landowners and no objection to
their authenticity or genuineness was raised by the National Highways
Authority. The National Highways Authority did not seek to cross-
examine the Government Approved Valuer. It also did not place on record
any counter material to indicate lesser market value of the acquired lands.
If the Arbitrator took into consideration these two documents for
determining the market value, it cannot be said that such determination is
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based on non-existent or irrelevant material so as to attract the brand of
perversity. The Arbitrator being the sole judge of the quality and quantity
of evidence placed before him, his acceptance of the said sale-deed and
report of the Valuer cannot be faulted especially when even the written
statement by the National Highways Authority did not question that
material. We have therefore referred to the pleadings of the parties in
extenso but we have not been able to gather any specific objection to the
aforesaid documentary material placed on record by the landowners.
There is no other material placed on record by the National Highways
Authority to enable the Arbitrator to accept the same in preference to the
aforesaid sale-deed and report of the Valuer.
As regards the procedural aspects it is found that no
objection or grievance was raised by the National Highways Authority
during the arbitration proceedings as a result of which the Arbitrator
proceeded to determine the market value using his experience and
general information available. Having failed to raise any objection at the
appropriate stage, the National Highways Authority is deemed to have
waived the same and such objection cannot be raised at the post-award
stage. Taking an overall view of the matter, the award cannot be said to
be so unfair or unreasonable so as to shock the conscience of the Court
nor is it contrary to the fundamental policy of Indian law.
The learned Judge, in our view, examined the award as an
appellate Court. The power of the Arbitrator to determine the
admissibility, relevance, materiality and weight of the evidence on record
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has been questioned by the learned Judge for untenable reasons, namely,
photo-copies being placed on record and non-examination of the
Government Approved Valuer. The Arbitrator did not apply his personal
knowledge about the facts of the cases but considered general
information as regards location of prominent commercial establishments.
Grievances that ought to have been raised before the Arbitrator but not so
raised were accepted by the learned Judge without going into the aspect
as to whether such grievances/objections were raised before the
Arbitrator. It is thus clear that after applying the tests laid down in
Associate Builders (supra) and other decisions to which reference has
been made earlier, no ground for setting aside the award under Section
34(2)(b)(ii) of the Act of 1996 is found to have been made out. A
reasonable view on the basis of material on record was taken by the
Arbitrator while determining the market value under Section 3-G(5) of
the Act of 1956. The award of the Arbitrator is thus liable to be restored
by setting aside the judgment of the learned Judge passed in exercise of
jurisdiction under Section 34 of the Act of 1996.
e) Grant of statutory amounts consequent upon Section 3-J of the Act of
1956 being struck down as unconstitutional.
34. The landowner in Arbitration Appeal No.6 of 2015 has filed
an application for amendment and has prayed that the landowner be
declared entitled to solatium at the rate of 30% alongwith additional
solatium at the rate of 10% in view of the decision in Tarsem Singh &
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others (supra). The basis for claiming these amounts is that the Hon’ble
Supreme Court in the aforesaid decision was pleased to strike down the
provisions of Section 3-J of the Act of 1956 as being violative of Article 14
of the Constitution of India. Since the said provision has been declared to
be unconstitutional it is urged that the landowner be awarded the
amounts as contemplated by Section 23(1-A) and 23(2) as well as Section
28 Proviso of the Act of 1894. Granting these amounts would not result in
modifying the award as passed by the Arbitrator. This prayer is opposed
by the National Highways Authority on the premise that granting such
amount would result in modifying the award passed by the Arbitrator
which has been held to be impermissible in M. Hakeem & Another
(supra).
It is not in dispute that in view of the decision in Tarsem
Singh & Others (supra) Section 3-J of the Act of 1956 has been held to be
violative of Article 14 of the Constitution of India and it has been declared
that the provisions of the Act of 1894 relating to grant of solatium and
interest as per Sections 23(1-A) and 2 as well as 28 Proviso would be
applicable to acquisition made under the Act of 1956. By a subsequent
order in National Highway Authority of India and another Versus Tehal
Singh & others [Misc. Application Diary No.2572 of 2020 in Civil Appeal
No.7086 of 2019] reference to sub-Section (1-A) of Section 23 has been
deleted. Consequent upon such declaration the entitlement of the
landowner to the aforesaid amounts under the Act of 1894 cannot be
disputed. The question however to be considered is whether these
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statutory amounts which were not granted by the Arbitrator could be
granted under Section 37 of the Act of 1996 and whether grant of such
amounts would result in modifying the award passed by the Arbitrator?
35. To consider the aforesaid position reference needs to be
made to the facts in M.Hakeem & Another (supra). Therein, various
lands were acquired under the Act of 1956 and compensation was
granted by the Competent Authority. The award passed by the District
Collector maintained the same amount of compensation that was granted
by the Competent Authority. The landowners then filed the petitions
under Section 34 of the Act of 1996 and the District Court enhanced the
amount of compensation to Rs.645/- per square meter. Thus modifying
the award passed by the Collector under Section 34 of the Act of 1996,
the Division Bench in appeal upheld the said modification in the award.
The National Highways Authority challenged the aforesaid adjudication
before the Hon’ble Supreme Court. The question considered by the
Hon’ble Supreme Court was whether an award as passed could be
modified in exercise of jurisdiction under Section 34 of the Act of 1996.
It was held that the scope of Section 34 of the Act of 1996 would not
include within it a power to modify an award. The Hon’ble Supreme
Court referred to certain earlier decisions rendered by it and noticed that
modifications in the award passed therein were in exercise of jurisdiction
under Article 142 of the Constitution of India for doing complete justice
between the parties. It then held that the judgment of the learned Single
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Judge of the Madras High Court in Gayatri Balaswamy Versus ISG
Novasoft Technologies Limited [2014 SCC Online Madras 6568]
permitting such modification did not lay down the correct law and was
thus overruled. It was observed in clear terms that “if one were to include
the power to modify an award in Section 34, one would be crossing the
Laxmanrekha and doing what according to the justice of a case ought to
be done”. Parliament had very clearly intended that no power of
modification of an award existed in Section 34 of the Act of 1996.
Having held so the Hon’ble Supreme Court considered the
facts of the case before it and noticed that in other similar cases the
National Highways Authority had disbursed compensation to similarly
situated persons at a higher rate than that what was awarded. In that
view of the matter the Hon’ble Supreme Court declined to exercise
jurisdiction under Article 136 of the Constitution of India in the facts of
said cases. It also observed that if the justice of the case did not require
interference under Article 136 of the Constitution of India, the Supreme
Court need not interfere with the judgment on facts.
It is thus clear from the aforesaid decision that (a) it has
been held in clear terms that it is not permissible for the Court to modify
an award while exercising jurisdiction under Section 34 of the Act of
1996. Doing so would result in crossing the Laxmanrekha even if that
may be required to be done according to the justice of a case and (b)
interference with the judgment of the High Court was declined in the
facts of that case after noticing that National Highways Authority had
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permitted other similarly situated persons to receive compensation at a
much higher rate than what was awarded to them. In our view, therefore,
the aforesaid decision clearly recognizes the absence of any power with
the Court to modify an award in exercise of jurisdiction under Section 34
of the Act of 1996.
36. It is thus now settled that in exercise of jurisdiction under
Section 34 of the Act of 1996 the Courts may either set aside the award or
refuse to set it aside on the grounds contemplated therein. The other
course that is permissible for the Court to follow is under Section 34(4) of
the Act of 1996 wherein on the request made by a party the Court may
adjourn the proceedings so as to give the arbitral tribunal an opportunity
to resume the arbitral proceedings or to take such other action as in the
opinion of the arbitral tribunal would enable elimination of the grounds
for setting aside the arbitral award. In any event therefore the power of
modifying an award is not conferred under Section 34 of the Act of 1996.
Pertinently in M.Hakeem & Another (supra), the Hon’ble Supreme Court
has held that modifying an award under Section 34 for ‘doing what,
according to the justice of a case, ought to be done’ (emphasis supplied) is
also not permissible. The expression justice of the case may require’ has
been held to be equivalent to ‘in the interest of justice’ or ‘ends of justice’
in Saga Department Stores Limited Versus Falak Home Developers
Private Limited [2008 (5) ALL MR 565] by the Division Bench of this
Court. Thus doing something that is required to be done in the interest of
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justice or to meet the ends of justice has also been held to be
impermissible under Section 34 of the Act of 1996.
In the present context it is clear that with the provisions of
Section 3-J of the Act of 1956 being struck down as unconstitutional the
provisions of the Act of 1894 relating to grant of solatium and interest
would become applicable to an acquisition made under the Act of 1956.
The landowner would thus be entitled to seek compensation by virtue of
the provisions of the Act of 1894 becoming applicable. Since the land of
the landowner has been acquired under the Act of 1956 and the
provisions of Section 3-J of the Act of 1956 not being in the statute, the
interests of justice or the ends of justice require that such benefit as
admissible under the Act of 1894 be given to the landowner. It can be
said that the justice of the case requires such benefit being given to the
landowner. Despite this, granting such relief according to the justice of
the case in hand would result in modifying the award passed under
Section 34 of the Act of 1996. This has in clear terms been held to be
beyond the jurisdiction and scope of Section 34 or for that matter Section
37 of the Act of 1996. The landowner may be entitled for greater relief in
the present case as a consequence of the provisions of Section 3-J of the
Act of 1956 being struck down. However, in exercise of restricted statutory
jurisdiction under Section 34 or Section 37 of the Act of 1996 it would not
be permissible to grant such relief even if the justice of the case demands
grant of the same for it would amount to modifying the award passed by
the Arbitrator. Such relief cannot be granted without modifying the award.
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The landowner therefore would have to take such steps as are permissible
in law to seek additional relief beyond what has been granted in the award.
37. We may refer to the decision of the learned Single Judge in
Sarjuprasad Sangmal Gupta (supra) on which reliance was placed by the
learned counsel for the landowner to contend that grant of statutory
amounts payable to the landowner under the Act of 1894 on
determination of compensation would not amount to modification of the
award. The facts therein indicate that consequent upon acquisition of
various lands under the Act of 1956 the Competent Authority determined
the amount of compensation payable to the landowners. In proceedings
under Section 3-G(5) of the Act of 1956, the Arbitrator enhanced the
amount of compensation to Rs.3,092/- per square meter and also directed
payment of additional amount of 10% of the total compensation for loss
of easementary rights under Section 3-G(2) of the Act of 1956. The
National Highways Authority preferred applications under Section 34 of
the Act of 1996 challenging the award as passed. The landowners
preferred applications under the provisions of Order XLI Rule 22 read
with Rule 33 of the Code claiming determination of compensation as per
provisions of the Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Re-settlement Act, 2013. The learned
Judge in exercise of jurisdiction under Section 34 of the Act of 1996 did
not set aside the award as sought by the National Highways Authority but
modified the same by directing payment of 30% amount of the award as
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solatium as per Section 23(2) of the Act of 1894 after deducting 10%
amount that was granted for loss of easementary rights under Section 3-
G(2) of the Act of 1956. Further amount of 12% under Section 23(1-A)
of the Act of 1894 as well as 9% interest under Section 28 of the Act of
1894 came to be granted. The landowners as well as the National
Highways Authority filed separate appeals under Section 37 of the Act of
1996. According to the National Highways Authority, the award as
passed by the Arbitrator could not have been modified by the Court and
reliance was placed on the decision in M.Hakeem & Another (supra). The
landowners however submitted that grant of solatium and interest under
the Act of 1894 would not result in modification of award as grant of such
amounts followed determination of the market value of the acquired
lands. The learned Single Judge held that it was not permissible for the
learned Judge to have modified the award passed by the Arbitrator under
Section 34 of the Act of 1996 in view of the law laid down in M.Hakeem
& Another (supra). On that basis the direction to pay the amount as
determined under Section 23(1-A) of the Act of 1894 as well as the
deduction of 10% compensation for loss of easementary rights was set
aside as it amounted to modification of the award as passed. Reliance
was then placed upon the decision in Narayan Das Jain Versus Agra
Nagar Mahapalika [(1991) 4 SCC 212] wherein it was held that the
statutory amounts towards solatium and interest become payable on the
determination of compensation. Hence, granting such amounts would
not result in modification of the award as it was only a recognition of
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statutory entitlement upon determination of compensation as per market
value which flowed automatically upon determination of such
compensation. Thus in effect the amount of solatium and interest which
was not granted by the Arbitrator but was granted by the learned Judge
while modifying the award passed by the Arbitrator was partly
maintained by learned Single Judge by holding that grant of those
statutory amounts did not result in modification of award.
38. In view of the law laid down in Narayan Das Jain (supra) it
is clear that on determination of market value of the acquired land, the
statutory payments contemplated by the Act of 1894 have to be mandatorily
granted. The question however is when such statutory amounts do not
form part of the award, can the same be granted in exercise of jurisdiction
under Section 34 or Section 37 of the Act of 1996 on the premise that
these amounts are statutorily payable to the landowner under the Act of
1894. We find that in the light of the clear dictum of the Hon’ble
Supreme Court in M.Hakeem & Another (supra), an award cannot be
modified under Section 34 of the Act of 1996 even if the Court intends to
do something which according to the justice of the case is required to be
done. The entitlement of the landowner to such statutory amounts
consequent upon provisions of Section 3-J being struck down would be
undisputable but when these statutory amounts do not form part of the
award, in our view it would be impermissible to grant the same since that
would result in modifying the award as passed. Recognition of the
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entitlement to statutory amounts flowing consequent upon determination
of market value would not permit modification of an award already
passed so as to grant additional statutory relief in proceedings under
Section 34 or Section 37 of the Act of 1996. That, in our view is the
purport of the following observations of the Hon’ble Supreme Court in
paragraph 46 of the decision in M.Hakeem & Another (supra):-
“46. …….quite obviously if one were to include the
power to modify an award in Section 34, one would be
crossing the Laxmanrekha and doing what, according to
the justice of a case, ought to be done.”
39. Additionally, what is not permissible to be done under
Section 34 of the Act of 1996 cannot be done under Section 37 of the Act
of 1996. The Hon’ble Supreme Court in M.M.T.C. Limited Versus
Vedanta Limited [(2019) 4 SCC 163] has in clear terms held that
interference under Section 37 cannot travel beyond the restrictions laid
down under Section 34 of the Act of 1996. The Court must only ascertain
that the exercise of power by the Court under Section 34 has not
exceeded the scope of the provision. The jurisdiction in appeal under
Section 37 is limited to what has been conferred under Section 34 of the
Act of 1996 has been clarified in K.Sugumar & Another (supra).
We therefore find that it would be impermissible for the
Court in exercise of jurisdiction under Section 37 of the Act of 1996 to
award any statutory amount to which the landowner would be entitled
consequent upon striking down of Section 3-J of the Act of 1956 if such
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amount has not been granted under the award. Granting such statutory
amount flowing from the determination of compensation if requiring
modification of the award would not be permissible in exercise of
jurisdiction under Section 34 or Section 37 of the Act of 1996. Such
amount would have to be claimed by invoking appropriate jurisdiction in
that regard. Hence, for these reasons the prayer made in Civil Application
(CAM) No.22 of 2021 cannot be granted.
40. Having considered the entire material on the record of the
Arbitrator and as a sequel to the aforesaid discussion we are of the view
that no ground under Section 34(2)(b)(ii) of the Act of 1996 was made
out in the applications filed under Section 34 of the Act of 1996 by the
National Highways Authority. The learned Judge erred in interfering with
the award passed by the Arbitrator. The judgment of the learned Judge
passed under Section 34 of the Act of 1996 deserves to be set aside and
the award passed by the Arbitrator is thus liable to be restored.
Consequently, the following order is passed:
(a) The judgment of the learned Principal District Judge Nagpur
in Civil Miscellaneous Application Nos.421 of 2014, 67 of
2014, 54 of 2014, 66 of 2014, 24 of 2014, 61 of 2014, 62
of 2014, 50 of 2014, 65 of 2014, 60 of 2014, 56 of 2014, 55
of 2014, 48 of 2014, 49 of 2014 decided on 29.08.2015 is
set aside.
(b) The award passed by the Arbitrator in Arbitration Case
Nos.55/ARB/2011-12, 58/2012, 62/ARB/2011-12,
57/2012, 60/2012, 59/ARB/2011-12, 72/2012,
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66/2012, 53/ARB/2011-12, 67/ARB/2011-12, 56/ARB/
2011-12, 36/2011-12, 75/2012 is restored.
(c) Civil Application (CAM) No.22 of 2021 in Arbitration
Appeal No.6 of 2015 is rejected.
(d) Arbitration Appeal Nos.6 of 2015, 8 of 2015, 9 of 2015, 10
of 2015, 11 of 2015, 12 of 2015, 13 of 2015, 14 of 2015, 15
of 2015, 16 of 2015, 17 of 2015, 4 of 2016, 6 of 2016 and 5
of 2016 are allowed.
(e) The parties shall bear their own costs.
(G.A. SANAP, J.) (A.S. CHANDURKAR, J.)
APTE
At this stage, learned counsel for the National Highways
Authority prays that the operation of the judgment be stayed for a period
of eight weeks. This request is opposed by the learned counsel for the
landowners.
In the facts of the case, this judgment shall operate after a
period of eight weeks.
(G.A. SANAP, J.) (A.S. CHANDURKAR, J.)
APTE
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