S. 29A Of Arbitration Act Not Applicable To Arbitration Proceedings Which Commenced Before 2015 Amendment: Himachal Pradesh HC

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.

All these appeals arise out of the acquisition of land by the appellant in Mohal Chamukha, 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 NH­21 (Bilaspur­Ner Chowk Section). 2(iii). Notification under Section 3D(1) of the NH Act, was issued in the official Gazette on 01.04.2013.

For the land covered by the above notifications, the Competent Authority Land Acquisition ('CALA') announced award No.45/2013­14 on 31.10.2013. In terms of the award, market value of the land was assessed at Rs.50,00,000/­ 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 28.11.2017 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.68,16,513/­ 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. All these applications moved under Section 34 of the Act by NHAI were clubbed and vide common judgment passed on 04.12.2021, the same were dismissed. Hence, these appeals.

Contentions

The appellant submitted that the proceedings had commenced before the learned Arbitrator on 06.02.2015, whereas the award was passed on 28.11.2017. 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 28.11.2017 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.

That he learned Court below failed to appreciate the fact that while enhancing the market value, 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. Therefore, the aforesaid report could not be looked into.

Per contra, learned counsel for the respondents defended the award passed by learned Arbitrator as also the judgment passed by learned District Judge.

Court's Analysis

The court, at the outset, referred to its own judgment in Construction Company & Anr. vs. Shimla Municipal Corporation & Ors. (2017) wherein it was 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.

The court while applying the above ration for facts of the present case observed that the proceedings commenced before the learned Arbitrator on 06.02.2015, 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 further referred to the judgment of the Supreme Court in Spl. Land Acquisition Officer & Anr. vs. M.K. Rafiq Saheb (2011) wherein it was held that there is no absolute rule that sale instances of smaller chunks of land cannot be considered when a large tract of land is acquired. In certain scenarios, such sale deeds pertaining to smaller pieces of land can be put to use for determining the value of acquired land which is comparatively large in area.

Based on the above, the court held that in the present case, as observed by the learned District Judge, learned Arbitrator had considered the sale deed, for determining the market value, as it was the only piece of evidence of the rate of purchase of land, available before him. The sale deed, however, pertained to the year 2008, whereas notifications in the instant case were issued in the year 2012. Learned Arbitrator justly increased the value by 10%. This increase cannot be said to be excessive.

The court while addressing the contention pertaining to deductions referred to the Supreme Court judgment in Mala etc. vs. State of Punjab & Ors.(2023) wherein it was held 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 above to the present case observed that neither the reliance placed upon sale deed, nor increase in value by 10% nor the deduction by 33%, while determining the market value of the acquired land can be faulted.

The court further rejected the arguments with respect to considering the report of the Local Commissioner and observed that Section 26 of the Arbitration Act provides 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.

Based on the above, the court agreed with the findings of the learned District Judge 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 further rejected the contention that appropriate parameters as laid down under section 3G(7) was not followed and observed that as per this section the Arbitrator is to determine market value of the land as on date of publication of notification under Section 3A of the Act. Damage to land/person/property & reasonable expenses for change of residence etc. are also to be considered.

Based on the above, the court noted that it was the stand of both parties before the learned Arbitrator that circle rate was not relevant for determining the market value. The Arbitrator had considered the sale deed of land pertaining to Mohal Thala, which was admitted to be contiguous to Mohal Chamukha. Learned Arbitrator had allowed 10% increase in the value for covering the gap of five years.

The court further noted that the Arbitrator had considered the potentiality of the land & increased the value keeping in view the proximity from the road and other developed areas. This was justifiable. The increase in value by 10% cannot be said to be excessive. Learned Arbitrator had also allowed deduction of 33% on account of developmental charges therefore stipulated parameters were duly considered by the Arbitrator.

The court concluded that no case is made out to interfere with the impugned judgment dated 04.12.2021, whereby applications moved by the appellant under Section 34 of the Act were dismissed and the award passed by the learned Arbitrator was affirmed. Accordingly, all these appeals under Section 37 of the Act were dismissed.

Case Title: National Highway Authority Of India vs Rishi Singh & Ors

Citation: 2024 LiveLaw (HP) 70

Case Reference: Arbitration Appeal No.53 of 2024 along with Arbitration Appeal Nos. 62 & 78 of 2024

Judgment Date: 05/11/2024

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