Commercial Court Can't Hear S. 34 Arbitration Act Application Challenging Compensation Awarded Under NH Act: Allahabad HC

The Allahabad High Court has observed that the Commercial Courts have no Jurisdiction to hear Applications filed under Section 34 of the Arbitration and Conciliation Act, 2013 challenging the quantum of compensation awarded under the National Highways Act, 1956.

The bench of Justice J. J. Munir though clarified that an award of the Statutory Arbitrator under Section 3G(5) of the National Highways Act, 1956 can be challenged by an application under Section 34 of the Arbitration and Conciliation Act before the appropriate forum.

In other words, the Court observed that a person aggrieved by the award/compensation of the Statutory Arbitrator appointed under Section 3G(5) of the 1956 Act with regard to a piece of land acquired under the National Highways Act, 1956, may move an application under Section 34 of the Arbitration and Conciliation Act before the appropriate forum, but not before the Commercial Courts as the same isn't a commercial transaction.

Advocate Pranjal Mehrotra appeared on behalf of the National Highway Authority of India and advocate Nand Kishor Mishra appeared for the petitioners.

The case in brief

A piece of land belonging to the petitioners was acquired by the Central Government for the widening of a National Highway in August 2017. In July 2018, the concerned authority passed an award in July 2018, assessing compensation for the entire land (including petitioners' land) acquired on the basis that it is agricultural land. Aggrieved by the award passed, the petitioners moved the Statutory Arbitrator, appointed by the Central Government under Section 3G(5) of the Act of 1956, seeking enhancement of the compensation awarded. However, the Statutory Arbitrator upheld the order of the concerned authority.

Aggrieved by the Statutory Arbitrator's award, the petitioners moved the Commercial Court, Jhansi under Section 34 of the Arbitration and Conciliation Act, 1996 with a prayer to set aside the Statutory Arbitrator's award. However, the Commercial Court, Jhansi held that the Statutory Arbitrator's award could not be questioned under Section 34 of the Act and the petitioners' remedy was to seek a reference under S. 67 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 to the Land Acquisition and Rehabilitation and Resettlement Authority.

Accordingly, the Presiding Officer, Commercial Court, Jhansi directed the return of the applications under Section 34 of the Act of 1996 under Order VII Rule 10 CPC for presentation to the proper Court. This order of the Presiding Officer, Commercial Court, Jhansi was challenged in the instant plea.

Court's observations

At the outset, the Court noted that though it was right that a commercial court can not entertain such a plea, the Court, however, held that the award of the Statutory Arbitrator under Section 3G(5) of the National Highways Act 1956 can very well be challenged by an application under Section 34 of the Act.

"There is nothing in the scheme of Section 3G of the Act of 1956 to exclude the application of Section 34 vis-à-vis the award of the Statutory Arbitrator, passed under Section 3G(5) of the Act of 1956. An award by the Statutory Arbitrator may be questioned before the Court of competent jurisdiction under Section 34 of the Act of 1996, like any other award by an Arbitrator," the Court remarked as it differed with the view taken by the Commercial Court, Jhansi.

Regarding the commercial court's view that the petitioners should seek a reference to the Land Acquisition and Rehabilitation and Resettlement Authority under the RFCTLARR Act, 2013, the Court clarified thus:

"...the provisions of the Act of 2013 have been made applicable to acquisitions under the Act of 1956 only for a the limited purpose of calculation of compensation and entitlement to solatium, interest etc. in order to place land oustees under both the statutes at par and that it is not that the entire procedure, including remedies for determination and assailing the quantum of compensation awarded under the Act of 1956, have been subsumed by the Act of 2013 by the limited extension of certain benefits under the Act of 2013 to acquisitions made under the Act of 1956."

With this, the Court held that the provisions of reference to the Land Acquisition, Rehabilitation and Resettlement Authority under the Act of 2013 for the purpose of seeking enhancement of compensation awarded available to a land oustee, would not be available to a land oustee, whose land is acquired under the Act of 1956 and that his remedies are confined to the four corners of Section 3G of the Act of 1956.

In this regard, the Court referred to the ruling of the Apex Court in the case of Union of India and another v. Tarsem Singh and others, (2019) 9 SCC 304.

Now regarding the question as to which forum should be approached by the petitioners, the Court made it clear that upon return of the application under Section 34 of the Act of 1996, it would be open to them, subject of course to the law of limitation, to institute proceedings, if so advised, before the Court of competent jurisdiction, entitled to hear an application under Section 34 of the Act of 1996.

However, the Court specifically clarified that since the petitioner's land was acquired for the purpose of a National Highway, thus, it was by no means a 'commercial dispute' within the meaning of Section 2(1)(c) of the Commercial Courts Act, 2015 and therefore, the application under Section 34 of the Act of 1996 would not be maintainable before the Commercial Court.

With this, the plea was dismissed.

Appearances:

Counsel for Petitioner:- Nand Kishor Mishra, Shilpa Ahuja

Counsel for Respondent:- A.S.G.I.,C.S.C., Jai Krishna Narain Sharma, Pranjal Mehrotra

Case title - Smt. Tulsarani And Another v. Union Of India And 3 Others [MATTERS UNDER ARTICLE 227 No. - 56 of 2022]

Case Citation: 2022 LiveLaw (AB) 462

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