Arbitral Award Based On Law Prevailing At Time Of Proceedings Cannot Be Held To Be Illegal Due To Subsequent Apex Court Ruling: Allahabad HC
The Allahabad High Court Bench of Justice Piyush Agrawal, held that if parties were allowed to reopen concluded arbitrations based on new judicial rulings, it would lead to a flood of claims seeking to modify or overturn arbitral awards. Moreover, the retroactive application of judicial decisions to arbitral awards would create legal and procedural chaos. Arbitrators make decisions based on the legal framework and precedents available at the time of the arbitration. Expecting them to foresee and apply future judicial decisions is unreasonable and impractical.
Brief Facts
The instant appeal has been filed against the impugned order dated 27.09.2013 passed by the Arbitrator/Collector, Aligarh as well as the judgement & decree dated 15.01.2022 & 21.01.2022 passed by the Additional District Judge, Court No. 3, Aligarh in Arbitration Case No. 80 of 2013.
The dispute stemmed from an objection raised by the appellant to a notification issued for land acquisition on September 27, 2023. Despite demand for enhanced compensation coupled with further objections raised against the land acquisition, the award was passed against them. It was claimed by the appellant that the acquired land was being used for commercial purpose with a water bottling plant established on the premise. The value of their land was not computed fairly and contravened the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.
Contentions
The appellant contended that their objections filed against the notice for land acquisition were not properly considered. It was further argued that market value of the property was not taken into consideration Special Land Acquisition Officer while calculating the amount of compensation as per section 26 of the land acquisition act. It was further contended that section 26 of the act provides that price higher than the circle rate or market value should be paid for land acquisition based on the best examples taken from previous three years. It was further argued that nature of land and surrounding development were not considered while determining the compensation. The appellant relied on the Supreme Court judgment in Union of India v. Tarsem Singh (2019) for claiming solatium and interest.
Per contra, the respondent contended that various factors like circle rates, market value and valuation reports were considered while awarding the compensation. It was further argued that the arbitrator determined the amount of compensation in accordance with the provisions of the National Highways Act and based on the original date of notification. The judgment of the Supreme Court in National Highways Authority of India v. M. Hakeem (2021) was relied upon in which it was held that modification of an arbitral award is not permissible.
Court's Analysis
The court observed that the findings of the arbitrator were based on the available records and detailed reasons while awarding the compensation were given. The court further noted that the award was passed after taking all factors into consideration therefore argument of the appellant with respect to inadequate compensation cannot be countenanced. The court further observed that arbitral award passed should not be casually interfered with under section 34 and section 37 of the Arbitration Act just because an alternative view was possible on appreciation of the same facts unless some patent illegalities or arbitrariness are found.
The court referred to the Supreme Court judgment in Punjab State Civil Supplies Corporation Ltd. & Another Vs. M/s Sanman Rice Mills & Others (2024) wherein it was held that it is pertinent to note that an arbitral award is not liable to be interfered with only on the ground that the award is illegal or is erroneous in law that too upon reappraisal of the evidence adduced before the arbitral trial. Even an award which may not be reasonable or is non-speaking to some extent cannot ordinarily be interfered with by the courts. It is also well settled that even if two views are possible there is no scope for the court to reappraise the evidence and to take the different view other than that has been taken by the arbitrator. The view taken by the arbitrator is normally acceptable and ought to be allowed to prevail.
The court referred to another judgment of the Supreme Court in Bharat Coking Coal Ltd. v. L.K.Ahuja (2004) wherein it was held that it is equally well settled that the appellate power under Section 37 of the Act is not akin to the normal appellate jurisdiction vested in the civil courts for the reason that the scope of interference of the courts with arbitral proceedings or award is very limited, confined to the ambit of Section 34 of the Act only and even that power cannot be exercised in a casual and a cavalier manner.
The court further rejected the argument pertaining to solatium and interest based on the judgment of the Supreme Court in Union of India v. Tarsem Singh (2019) . The court held that award in the present case was passed way back in 2013 and the cited judgment was pronounced after a lapse of 6 years from the date of passing the award.
Furthermore, the court observed that if parties were allowed to reopen concluded arbitrations based on new judicial rulings, it would lead to a flood of claims seeking to modify or overturn arbitral awards. Moreover, the retroactive application of judicial decisions to arbitral awards would create legal and procedural chaos. Arbitrators make decisions based on the legal framework and precedents available at the time of the arbitration. Expecting them to foresee and apply future judicial decisions is unreasonable and impractical.
Conclusion
The court concluded that the impugned award was passed based on available records and there were no infirmities as such in passing the award. The court also held that the arbitrator passes an award while applying rules and regulations prevailing at that time. Accordingly, the present appeals were not allowed and dismissed.
Case Title: Vivek Nayak (Died) And Another v. The Arbitrator / Collector Aligarh And 3 Others
Case Reference: 2024:AHC:165809
Court: Allahabad High Court
Judgment Date: 18/10/2024