While Hearing Appeal U/S 37 Of Arbitration Act, Court Must Confine Itself To Grounds U/S 34 Of Arbitration Act: Himachal Pradesh HC
The Himachal Pradesh High Court bench of Ms. Justice Jyotsna Rewal Dua affirmed that supervisory role of Courts is very restricted in dealing with appeals under Section 37 of the Arbitration Act. Scope of interference in a petition under Section 34 of the Act is very narrow. Jurisdiction under Section 37 of the Act is narrower.Therefore, Courts must be very conservative while dealing...
The Himachal Pradesh High Court bench of Ms. Justice Jyotsna Rewal Dua affirmed that supervisory role of Courts is very restricted in dealing with appeals under Section 37 of the Arbitration Act. Scope of interference in a petition under Section 34 of the Act is very narrow. Jurisdiction under Section 37 of the Act is narrower.Therefore, Courts must be very conservative while dealing with arbitral awards and confine themselves to the grounds strictly available under Section 34 of the Act.
Brief Facts
The National Highway Authority of India (for short 'NHAI') feeling aggrieved against the dismissal of its applications on 04.12.2021 under Section 34 of the Arbitration & Conciliation Act, 1996 (for short 'the Act') by the learned District Judge, Mandi (H.P.) has taken recourse to institution of these arbitration appeals under Section 37 of the Act.
This appeal out of the acquisition of land by the appellant in Mohal Thala Tehsil Sundernagar, District Mandi (H.P.).Notification under Section 3A(1) of the National Highways Act, 1956 (for short 'NH Act'), was published in the official Gazettee on 21.04.2012 for acquiring the subject land for four laning of NH-21 ( Ner Chowk-Mandi Section).
For the land covered by the above notifications, the Competent Authority Land Acquisition ('CALA') announced award No.45/2013-14 on 31.10.2013. In terms of the award, market value of the land was assessed at Rs.60,00,000/- per bigha.
Seeking enhancement in the market value of the acquired land, the landowners filed their claim petitions under Section 3G(5) of the NH Act before the notified Arbitrator. Learned Arbitrator passed the award on 31.10.2017 under Section 3G(5) of the NH Act. The claim petitions filed by the landowners were allowed. The market value of the acquired land was enhanced to Rs.81,39,120/- per bigha.
The NHAI feeling aggrieved against the enhancement in the market value determined by the Arbitrator took recourse to Section 34 of the Act and filed applications assailing the awards passed in favour of the landowners before the learned District Judge, Mandi and vide common judgment passed on 04.12.2021, the same were dismissed.
Contentions
The appellant submitted that the proceedings had commenced before the learned Arbitrator on 09.06.2014, whereas the award was passed on 31.10.2017. In view of Section 29A of the Act, which came into force w.e.f. 23.10.2015, the award was required to be passed within 12 months from the date of entering upon reference. The award passed by the learned Arbitrator on 31.10.2017 was non est as the Arbitrator had become functus officio on that date.
That sale deed relied upon by learned Arbitrator pertaining to Mohal Thala was for a very small area compared to large tracts of land acquired under the questioned land acquisition process. It could not have been relied upon for assessing the market value of large tracts of land.
That the Arbitrator had wrongly taken into consideration the inspection report prepared by a retired Officer of the State Administrative Service. Provisions of Civil Procedure Code do not apply to the arbitration proceedings and that the Arbitrator had not followed the procedure & parameters laid down in Section 3G(7) of the NH Act.
Court's Analysis
The court while dismissing the contention pertaining to section 29A of the Arbitration Act referred to its own judgment in P.K. Construction Company & Anr. vs. Shimla Municipal Corporation & Ors.2017 wherein the court has held that provisions of Section 29A of the Act will not be applicable to the arbitration proceedings that had started before the Arbitration & Conciliation (Amendment) Act, 2015 (3 of 2016) came into force.
In the instant case, the proceedings commenced before the learned Arbitrator on 09.06.2014, whereas Section 29A of the Act came into force from 23.10.2015, therefore, learned District Judge did not err in holding that the award passed in the present case cannot be held to be non est, the court noted.
In Spl. Land Acquisition Officer & Anr. vs. M.K. Rafiq Saheb, 2011 the Supreme Court has held that it is hardly possible for a claimant to produce sale instances of large tracts of land as they are generally very far & few and normally the sale instances would relate to small pieces of land. The Apex Court noted that this limitation of sale transaction cannot operate to the disadvantage of the claimant.
Based on the above, the contention that sale deed with regard to small piece of land could not be considered for determining the market value of a large tract of land was rejected.
In V.Hanumantha Reddy (dead) by LRs vs. The Land Acquisition Officer & Mandal R. Officer, 2003, the Apex Court held that the land might be having high potentialities or proximity to developed area, but that by itself would not be a reason for not deducting developmental charges, the court noted.
The court further noted that in Mala etc. vs. State of Punjab & Ors. 2023, the Apex Court has reiterated that while determining the deduction for development charges, the Court should keep in mind the nature of land, area under acquisition, whether the land is developed or not, if developed, to what extent, the purpose of acquisition etc. The percentage of deduction or the extent of area required to be set apart has to be assessed by the Courts having regard to the size, shape, situation, user etc. of the land acquired.
The court while applying the law discussed above observed that neither the reliance placed upon sale deed, Exhibit-PB, nor increase in value by 7% nor the deduction by 20%, while determining the market value of the acquired land can be faulted.
The court moved ahead to analyse the contention with respect to the tribunal was not justified in relying on the report of a local commissioner and referred to section 26 of the Arbitration which states that unless otherwise agreed by the parties, the Arbitral Tribunal may appoint one or more experts to report to it on a specific issue to be determined by the Tribunal. The Arbitral Tribunal has jurisdiction to appoint an expert.
In view of above facts, learned District Judge has correctly held that the plea that the Arbitrator could not appoint the expert or could not consider the report of the expert was not tenable, the court noted.
The court further while referring to Section 3G(5) of the NH Act noted that the aggrieved party has the right to produce relevant material before the Arbitrator to prove that the compensation determined by Competent Authority Land Acquisition was not correct and required to be enhanced. The grievance projected by the appellant that the Arbitrator had erred in relying upon the evidence inclusive of the report of Local Commissioner, which was not produced before the CALA, is not justified.
The court further noted that in Larsen Air Conditioning and Refrigeration Company vs. Union of India, 2023, the Supreme Court has held that It is by now well-settled that the scope of Appellate Court exercising jurisdiction under Section 37 of the Act to review the findings in an award, is narrow/limited, if the award has been upheld or substantially upheld under Section 34.
In Bombay Slum Redevelopment Corporation Pvt. Ltd. vs. Samir Barain Bhojwani,2024, the Hon'ble Apex Court has held that supervisory role of Courts is very restricted in dealing with appeals under Section 37 of the Act. Scope of interference in a petition under Section 34 of the Act is very narrow. Jurisdiction under Section 37 of the Act is narrower.Therefore, Courts must be very conservative while dealing with arbitral awards and confine themselves to the grounds strictly available under Section 34 of the Act, the court noted.
The court concluded that in the backdrop of above legal position, the award passed by the learned Arbitrator cannot be said to be suffering from any patent illegality, necessitating interference by the Court. The learned District Judge has examined the award in accordance with law vis-à-vis the contentions urged by the appellant and did not find any ground in exercise of jurisdiction under Section 34 of the Arbitration Act for interfering with it.
Having considered the impugned judgment, the award and the contentions now urged, I do not find it a case to interfere in essence of limited jurisdiction under Section 37 of the Act.
Case Title: National Highway Authority of India.Versus Vishesar (Since deceased) through LRs.
Citation: 2024 LiveLaw (HP) 77
Case Reference: Arbitration Appeal No. 145 of 2024
Judgment Date: 14/11/2024