Whether Award under National Highways Act can be Challenged under Section 34 Arbitration Act [JUDGMENT]

National Highways Act, 1956 - Arbitration and Conciliation Act, 1996 - Section 34 – Application for setting aside arbitral award - Claim for Enhancement of Compensation - When the award of an arbitrator appointed under the National Highways Act is challenged in an application filed under Section 34(1) of the Arbitration Act, the power of the court to interfere with such award is very limited.

The court cannot consider the application filed under Section 34(1) of the Arbitration Act as a reference made under Section 18 of the Land Acquisition Act, 1894 and direct payment of compensation at an enhanced rate. The award of the arbitrator can be set aside only on the grounds mentioned under Section 34(2) of the Arbitration Act and not otherwise. [Para 21]

Arbitration and Conciliation Act, 1996 - Section 34 – The court exercising the power under Section 34 of the Arbitration Act cannot remit an award to the arbitral tribunal. It can only defer proceedings for a period of time, that too, upon a written request by one of the parties, under Section 34(4) of the Arbitration Act, in order to give the arbitral tribunal an opportunity to eliminate the grounds for setting aside the award.

Section 34(4) of the Arbitration Act provides that on receipt of an application under sub-section (1), the court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award. The limited discretion available to the court under Section 34(4) of the Arbitration Act can be exercised only upon a written application made in that behalf by a party to the arbitration proceedings and that the court cannot exercise this limited power of deferring the proceedings before it suo motu. [Para 18]

National Highways Act, 1956 - Arbitration and Conciliation Act, 1996 - Section 34 – Since the appellants have no documents with them to prove the market value of the land acquired on the date of publication of the notification under Section 3A of the Highways Act, no purpose would be served by remanding the cases to the District Court.

Arbitration and Conciliation Act, 1996 - Section 34 – When the party making the application under Section 34(1) of the Arbitration Act was not able to present his case before the arbitrator and if he furnishes proof for such inability, it constitutes a ground under Section 34(2)(iii) of that Act to set aside the award.

There is no merit in the contention of the appellants that they did not get sufficient opportunity to adduce evidence before the arbitrator. Even as per the averments in the applications filed by them under Section 34(1) of the Arbitration Act, the case was posted for hearing before the arbitrator on 23.03.2011. On that day, the case was adjourned to 27.04.2011. There was no sitting on 27.04.2011 and the case was again adjourned to 13.07.2011. Even on 13.07.2011, the appellants were not ready to adduce any evidence before the arbitrator. The arbitration case files produced by the learned Government Pleader for our perusal show that the appellants Divakaran and Krishnakumar had filed statement before the arbitrator on 13.07.2011 in which it is mentioned that they had no documents to produce in support of their claim for enhancement of compensation. In such circumstances, there is no merit in the plea that the appellants did not get sufficient opportunity to adduce evidence before the arbitrator. [Para 15 & 16]

Right to Fair Compensation And Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - National Highways Act, 1956 - Arbitration and Conciliation Act, 1996 - Section 34(1) - No sufficient ground to interfere with the impugned orders passed by the learned District Judge. The appeals are dismissed. No costs.

IN THE HIGH COURT OF KERALA AT ERNAKULAM

V. CHITAMBARESH & R. NARAYANA PISHARADI, JJ.

Arb.A.Nos.28 of 2016, 30 of 2016 & 33 of 2016

Dated this the 16th day of January, 2019

AGAINST THE ORDER DATED 27-01-2016 IN AR.OP 2/2012 of D.C PALAKKAD

APPELLANT/PETITIONER/APPLICANT:

RAMADAS M.R.

BY ADVS. SRI.SAJAN VARGHEESE K. SRI.LIJU. M.P

RESPONDENTS/RESPONDENTS & ARBITRATOR:

1. THE NATIONAL HIGHWAY AUTHORITY OF INDIA, NEW DELHI,REPRESENTED BY THE PROJECT DIRECTOR,(NATIONAL) HIGHWAY AUTHORITY OF INDIA, PALAKKAD-678 001

2. THE DEPUTY COLLECTOR AND SPECIAL LAND ACQUISITION OFFICER,LAND ACQUISITION (NATIONAL HIGHWAY),PALAKKAD-678 001.

3. STATE OF KERALA REPRESENTED BY THE DISTRICT COLLECTOR, PALAKKAD - -678 001 (THE ARBITRATOR UNDER THE NATIONAL HIGHWAYS ACT, 1956)

SRI. A.K.SUKUMARAN, SR.GP FOR R2 AND R3 SRI. THOMAS ANTONY, SC FOR R1 SRI.PRAKASH.M.P FOR R1

J U D G M E N T

R. Narayana Pisharadi, J

Land owned by the appellants was acquired under the National Highways Act, 1956 (hereinafter referred to as 'the Highways Act') for the purpose of widening of National Highway 47, from Walayar to Vadakkancherry. The competent authority fixed the amount of compensation for land payable to the appellants. The appellants recoursed to arbitration proceedings as provided under the Highways Act. The arbitrator enhanced the amount of compensation payable to the appellants. The appellants challenged the award passed by the arbitrator by filing applications before the District Court under Section 34(1) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Arbitration Act'). As per the impugned orders, the District Court dismissed the aforesaid applications. The owners of the land have come up in appeal.

2. We have heard learned counsel for the appellants and the learned Government Pleader and also the learned counsel for the first respondent. We have also perused the records.

3. Arbitration Appeal No.28 of 2016 relates to acquisition of wet land having an area of 0.0170 hectares. The Land Acquisition Officer granted compensation fixing the value of the land at Rs.28,249/- per Are. The arbitrator enhanced the compensation by refixing the value of the land at Rs. 42,374/- per Are.

4. Arbitration Appeal No.30 of 2016 relates to acquisition of land having an extent of 0.1155 hectares which included dry as well as wet land. The Land Acquisition Officer granted compensation fixing the value of the wet land at Rs.28,249/- per Are and the dry land at Rs.49,400/- per Are. The arbitrator enhanced the compensation by refixing the value of the wet land at Rs. 42,374/- per Are and the dry land at Rs.74,100/- per Are.

5. Arbitration Appeal No.33 of 2016 relates to acquisition of wet land having an extent of 0.0390 hectares. The Land Acquisition Officer granted compensation fixing the value of the land at Rs.28,249/- per Are. The arbitrator enhanced the compensation by refixing the value of the land at Rs. 42,374/- per Are.

6. The National Highways Act, 1956 is enacted specifically for the purpose of acquisition of land for National Highways and for declaration of certain highways as National Highways. Section 3A of the Highways Act gives power to the Central Government to acquire land for public purpose by complying with the procedure prescribed therein. Determination of the amount of compensation payable for the land acquired is dealt with under Section 3G of the Highways Act. Section 3G(1) provides that where any land is acquired, an amount which shall be determined by an order of the competent authority, shall be paid. Section 3G(5) states that if the amount determined by the competent authority under sub-section (1) is not acceptable to either of the parties, the amount shall, on an application by either of the parties, be determined by the arbitrator to be appointed by the Central Government. Section 3G(6) provides that subject to the provisions of that Act, the provisions of the Arbitration Act shall apply to every arbitration under the Highways Act. Sub-section (7) of Section 3G of the Highways Act provides for the matters that shall be taken into account by the competent authority or the arbitrator while determining the amount under sub-section (1) or sub-section (5). The provisions contained in the Highways Act constitute a complete scheme for acquisition of land for the purpose of national highways.

7. Section 2(4) of the Arbitration Act provides that the provisions contained in Part I of that Act, except sub-section (1) of Section 40, Section 41 and Section 43, shall apply to every arbitration under any other enactment, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement. On a conjoint reading of sub-sections (5) and (6) of Section 3G of the Highways Act and Section 2(4) of the Arbitration Act, it is clear that the provisions of Part I of the Arbitration Act will apply to every arbitration under the Highways Act. Of course, this is subject to any specific provision made in the Highways Act regarding arbitration.

8. Section 3J of the Highways Act specifically states that nothing in the Land Acquisition Act, 1894 shall apply to an acquisition under this Act. Therefore, where the amount of compensation which is determined by the competent authority under sub-section (1) or sub-section (2) of Section 3G of the Highways Act is not acceptable, the parties are required to make an application to the arbitrator appointed by the Central Government. Then, the arbitrator would undertake the exercise of determining the amount of compensation by applying the principles as set out in clauses (a) to (d) of sub-section (7) of Section 3G of the Highways Act.

9. The Right to Fair Compensation And Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (hereinafter referred to as '2013 Act') came into force with effect from 01.01.2014, repealing the Land Acquisition Act, 1894. Section 105 of the 2013 Act provides that the provisions of that Act shall not apply to the enactments relating to the land acquisition as specified in the Fourth Schedule. The Highways Act finds a place in the Fourth Schedule as item No.7. However, subsection (3) of Section 105 of the 2013 Act provides that the Central Government is empowered to issue a notification within one year from the date of commencement of that Act relating to the "determination of compensation in accordance with the First Schedule and rehabilitation and resettlement specified in the Second and Third Schedules", as beneficial to the affected families, shall apply to the cases of land acquisition under the enactments specified in the Fourth Schedule.

10. The Central Government by a notification dated 20.08.2015 issued under sub-section (3) of Section 105 of the 2013 Act has issued an order named as the "Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Removal of Difficulties) Order, 2015" and brought it into force with effect from 01.09.2015. Clause (2) of this Order states that the provisions of the 2013 Act, relating to the determination of compensation in accordance with the First Schedule, rehabilitation and resettlement in accordance with the Second Schedule and infrastructure amenities in accordance with the Third Schedule, shall apply to all cases of land acquisition under the enactments specified in the Fourth Schedule to the said Act. Admittedly, the Highways Act is included in the Fourth Schedule of 2013 Act. Consequently, from 01.09.2015 onwards, the provisions of the 2013 Act in regard to determination of compensation in accordance with the First Schedule are applicable to acquisition of land under the Highways Act. It means that the arbitrator appointed under sub-section (5) of Section 3G of the Highways Act, apart from the factors as provided under sub-section (7) of Section 3G, would also be required to take into consideration the provisions of the 2013 Act as made applicable by virtue of the Order mentioned above. However, it needs to be noticed that save and except what has been set out in the notification dated 28.08.2015, the entire provisions of 2013 Act have not been made applicable to the acquisition of land under the the Highways Act.

11. In the instant cases, the acquisition of land was made and arbitration proceedings were terminated long before the date 01.09.2015. Therefore, no question of determination of compensation as per the provisions of the 2013 Act also arises here.

12. The prayer made by the appellants in the applications filed under Section 34(1) of the Arbitration Act is to set aside the award passed by the arbitrator and to direct the government and the requisitioning authority to pay them enhanced compensation as claimed by them.

13. The plea of the appellants before the arbitrator was that they are entitled to get compensation for land at Rs.1,00,000/- per cent. They did not produce any documents before the Land Acquisition Officer or the arbitrator in support of their claim for enhancement of compensation.

14. Learned counsel for the appellants contended that the appellants did not get any opportunity before the arbitrator to adduce evidence. Learned counsel would pray that the matter may be remanded to the District Court to enable the appellants to take necessary steps under Section 34(4) of the Arbitration Act and to adduce evidence.

15. When the party making the application under Section 34(1) of the Arbitration Act was not able to present his case before the arbitrator and if he furnishes proof for such inability, it constitutes a ground under Section 34(2)(iii) of that Act to set aside the award.

16. But, there is no merit in the contention of the appellants that they did not get sufficient opportunity to adduce evidence before the arbitrator. Even as per the averments in the applications filed by them under Section 34(1) of the Arbitration Act, the case was posted for hearing before the arbitrator on 23.03.2011. On that day, the case was adjourned to 27.04.2011. There was no sitting on 27.04.2011 and the case was again adjourned to 13.07.2011. Even on 13.07.2011, the appellants were not ready to adduce any evidence before the arbitrator. The arbitration case files produced by the learned Government Pleader for our perusal show that the appellants Divakaran and Krishnakumar had filed statement before the arbitrator on 13.07.2011 in which it is mentioned that they had no documents to produce in support of their claim for enhancement of compensation. In such circumstances, there is no merit in the plea that the appellants did not get sufficient opportunity to adduce evidence before the arbitrator.

17. The fact remains that the appellants do not even now possess any documents to prove the market value of the land acquired on the date of publication of the notification under Section 3A of the Highways Act. They had not produced any documents in the District Court in that regard. Before this Court, the appellants in Arbitration Appeal Nos.28 and 33 of 2016, have not produced any such documents. The appellant in Arbitration Appeal No.30 of 2016 has produced before this Court two documents. One of them is copy of a sale deed pertaining to the year 2009. The other document is the copy of the notification issued by the government on 14.12.2009, fixing the fair value of the properties in the village concerned. These two documents will not help the appellants to prove the market value of the acquired land on the date of publication of the notification under Section 3A of the Highways Act, that is, 25.10.2005.

18. Since the appellants have no documents with them to prove the market value of the land acquired on the date of publication of the notification under Section 3A of the Highways Act, no purpose would be served by remanding the cases to the District Court. The court exercising the power under Section 34 of the Arbitration Act cannot remit an award to the arbitral tribunal. It can only defer proceedings for a period of time, that too, upon a written request by one of the parties, under Section 34(4) of the Arbitration Act, in order to give the arbitral tribunal an opportunity to eliminate the grounds for setting aside the award. Section 34(4) of the Arbitration Act provides that on receipt of an application under sub-section (1), the court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award. The limited discretion available to the court under Section 34(4) of the Arbitration Act can be exercised only upon a written application made in that behalf by a party to the arbitration proceedings and that the court cannot exercise this limited power of deferring the proceedings before it suo motu (See Kinnari Mullick v. Ghanshyam Das Damani : AIR 2017 SC 2785).

19. The appellants could have filed application before the District Court under Section 34(4) of the Arbitration Act to defer the proceedings to enable the arbitrator to consider the evidence, if any, proposed to be adduced by them before him. No such step was taken by the appellants.

20. The Land Acquisition Officer had fixed the value of the land on the basis of the value of land shown in pre-notification sale deeds, but without taking into consideration the increase in the value of the land between the date of sale transactions and the date of publication of notification. In the absence of any evidence adduced by the appellants, the arbitrator enhanced the amount of compensation by refixing the value of the land after taking into consideration the increase in the value of the land between the two dates. The District Court has rightly held that the appellants did not prove any ground as mentioned under Section 34(2) of the Arbitration Act to set aside the award.

21. When the award of an arbitrator appointed under the National Highways Act is challenged in an application filed under Section 34(1) of the Arbitration Act, the power of the court to interfere with such award is very limited. The court cannot consider the application filed under Section 34(1) of the Arbitration Act as a reference made under Section 18 of the Land Acquisition Act, 1894 and direct payment of compensation at an enhanced rate. The award of the arbitrator can be set aside only on the grounds mentioned under Section 34(2) of the Arbitration Act and not otherwise.

22. In the aforesaid circumstances, we see no sufficient ground to interfere with the impugned orders passed by the learned District Judge. The appeals are dismissed. No costs.