Bangalore District Court
A.P./70/2020 on 27 October, 2022
IN THE COURT OF THE II ADDITIONAL CITY CIVIL AND
SESSIONS JUDGE AT BANGALORE (C.C.H. No.17)
Dated this the 27 th day of October, 2022.
PRESENT:
Smt. Sheila, M.Com.,LLM.
II Addl. City Civil and Sessions Judge, Bangalore.
: A.P. NO.70/2020 :
PETITIONER :
National Highways Authority of India,
Project Implementation
Unit- Bengaluru
Sy.No. 13, 14th km
Nagasandra
Bengaluru - Tumkur Road (NH-4)
Bengaluru -560 073
Represented by its Project Director
(By Sri. SJP, Advocate)
-VERSUS-
RESPONDENTS :
1) Sri. Ramesh A
S/o Appayanna
Major
Residing at Vidyanagara Cross
Bettahalasuru post
Bengaluru - 562 157.
2) The Arbitrator & Special Deputy
Commissioner-I
Bengaluru Urban District,
Hyderabad - Bengaluru Section (NH-7)
Office of the Deputy Commissioner,
-2- : A.P. No.70/2020
1st Floor, K.G. Road,
Bengaluru - 560 009.
3) The Special Land Acquisition &
Competent Authority,
National Highways Authority of India,
Hyderabad - Bengaluru Section (NH-7)
No.678/3, Neerubhavi Kempanna
Layout, Hebbal, Bengaluru
Represented by the SLAO
( R-2 & 3 - Exparte )
(R-1 - Sri. VHB, Advocate)
: JUDGMENT :
The petitioner has filed this petition under Section 34(2) of the Arbitration and Conciliation Act 1996 and requested this Court to set aside the Arbitral Award dated 21.01.2020 passed in case No.LAQ/ARB/NH- 7/CR/144/2011-12 pertaining to Sy.No.33 to an extent of 660 sq. feet by respondent No.2 .2. In the petition it is stated that National Highways Authority of India was constituted by an Act of the Parliament, "the National Highways Authority of India Act, 1988" . It is responsible for the development,
-3- : A.P. No.70/2020 maintenance and management of National Highways entrusted to it and for matters connected thereto.
.3. It is stated that the Central Government for the purpose of widening / upgradation maintenance, management and operation of NH-7 on the stretch of land from kms. 524.720 to kms. 556.840 of Hyderabad
- Bengaluru Section issued preliminary notification dated 09.12.2009 under Section 3-A(1) of the National Highways Act, 1956 in-respect of acquisition of lands situated at Kadiganahalli village, Bengaluru North Taluka. The final notification was published in the official Gazette on 02.07.2010.
.4. It is stated that under the said notification for 2nd stage of acquisition, amongst other lands the gramathana lands in Sy.No. 33 to an extent of 660 sq. feet situated at the said village belonging to the respondent No. 1 were also acquired.
.5. It is stated that in accordance with Section 3(a) of the NH Act, the respondent No. 3 was appointed as the competent Authority by the Central Government to
-4- : A.P. No.70/2020 perform task related to acquisition of land. The respondent No. 3 vide award bearing No. LAQ:NH- 7:NHAI:CR:(A)5:2010-11 dated 03.02.2011 determined the market value of both gramathana and non- agricultural lands at Rs. 1314/- per sq. feet. In order to determine the market value, the respondent No. 3 obtained the sale statistics for the period from 08.12.2008 to 09.12.2009 as well as the guidance values for the relevant period of the said village from the office of the Sub Registrar, Bengaluru North Taluka. The respondent No. 3 observed that the average of the sale statistics of NA lands was Rs. 586/- per sq. feet, whereas, the guidance value was Rs. 600/- per sq. feet. Since both the average of the sales statistics as well as the guidance value was found by the respondent No. 3 to be on a lower side. The respondent No. 3 relied guidance value fixed for NA lands situated at adjacent village Chikkajala was double the average sale statistics of Rs. 1314/- per sq. feet was determined as the market
-5- : A.P. No.70/2020 value of NA lands of Kadiganahalli village accordingly. The same rate was adopted even for gramathana lands.
.6. It is stated that a sum of Rs. 8,67,240/- was disbursed as compensation to the respondent No.1 towards the subject lands. Being dissatisfied with the amount awarded by the respondent No.3 the respondent No.1 approached the respondent No.2 under Section 3-G (5) of the NH Act. It is stated that the petitioner entered appearance and filed its statement of objections with documents in support of his defence. The respondent No.2 by its common Arbitral Award passed on 21.01.2020 in-respect of 37 cases, redetermined the market value at Rs. 1500/- per sq. feet for NA lands and Gramathana lands of Kadiganahalli village acquired in the 2 nd stage of acquisition. It is stated that the respondent No. 2 awarded interest at the rate of 9% p.a. on the enhanced compensation amount from the date of taking possession of the subject lands till actual deposit. Since there were several errors in the description of the names
-6- : A.P. No.70/2020 of the claimants as well as the extent of the lands, the 1st and 2nd corrigendum correcting the errors in the impugned Arbitral Award came to be passed by the respondent No. 2 on 03.03.2020 and 12.06.2020 respectively.
.7. Being aggrieved by the impugned Arbitral Award, the petitioner has preferred this petition on the following grounds:
(a) The impugned Arbitral Award passed by the respondent No.2 is perverse, patently illegal;
(b) The respondent No. 2 has grossly erred in not following the provisions of NH Act i.e., Section 3G(7)(a), the substantive Law while passing the impugned award which is contrary to the provisions of Section 28 of Arbitration and Conciliation Act and accordingly, the impugned Arbitral Award is patently illegal and the same required to be set aside.
(c) The respondent No. 2 has not complied with the provision of Section 28 of the
-7- : A.P. No.70/2020 Arbitration and Conciliation Act while passing the impugned award and therefore, it is patently illegal and requires to be set aside.
(c) The respondent No. 2 could not have relied upon a notification which came into effect after a lapse of more than 21 months from the date of publication of preliminary notification and the same is not in accordance with Section 3-G(7)(a) of the NH Act. The impugned Arbitral Award is erroneous on the face of it which renders the same patently illegal.
(d) The respondent No. 2 has incorrectly mentioned that the respondent No. 3 had arrived at the market value of Rs. 1,314/-
based on the sale statistics received from the office of the Sub-registrar. The respondent No. 2 has not even examined the award of the respondent No. 3 before making such an observation.
(e) No procedure was decided or set down by the respondent No. 2 before the commencement of the proceedings.
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(f) A perusal of the imugned Arbitral Award clearly establishes that the respondent No. 2 has not at all taken the trouble of independently conducting an enquiry into the market value of the subject lands as on the date of publication of preliminary notification. The respondent No. 2 has given the benefit of enhancement to the respondent No. 1 without production by the respondent No. 1 of any records or evidence in support of such enhancement which is completely arbitrary.
.8. It is stated that the impugned Arbitral Award was passed on 21.01.2020 and received copy on 13.02.2020. 1st Corrigendum was passed on 03.03.2020 and 2nd corrigendum was passed on 12.06.2020. The Hon'ble High Court of Karnataka has issued notification dated 05.08.2020. The top noted petition is being filed in accordance with the notifications issued by the Hon'ble High Court of Karnataka from time to time and the notification dated 05.08.2020 issued by the Hon'ble High Court of Karnataka extending the closure of this
-9- : A.P. No.70/2020 Court till 30.09.2020 for the purpose of Section 4 of the Limitation Act, 1963. Hence, the petition is in time.
.9. The respondent No.1 has filed Cross objections stating that the land in question is converted land for non-agricultural purpose. The Arbitrator has not considered the value of the acquired land and awarded meager amount, which is not enough to acquire alternative land. It is stated that the Arbitrator has failed to appreciate with respect to increase of land value. Further failed to appreciate the acquired land was capable of being used as commercial purpose. The Court below has relied upon land acquisition order based on notification numbered CVC 19/2010 dated 21.09.2011 and has fixed the rate at Rs. 1500/- per sq. feet without considering the ground reality and the commercial value, which is bad in law. The value of the land should have been assessed at least Rs. 5,000/- per sq. feet, which is just and proper assessment under Section 3G(2) of National Highways Authority Act. Solatium has not been awarded, further additional
- 10 - : A.P. No.70/2020 market value under the prevailing circumstances was not considered while passing award.
.10. The petitioner has filed objections to the cross objections filed by the respondent No. 2 stating that the cross objection filed by the respondent No. 1 seeking setting aside of the Arbitral Award dated 21.01.2020 along with a direction to reconsider the matter at prevailing market value is not maintainable and the same is filed with an ulterior motive of seeking relief/s without any challenge to the Arbitral Award dated 21.01.2020 under Section 34(2) of the Arbitration and Conciliation Act. It is stated that if the respondent No. 1 is aggrieved by the Arbitral Award he has to prefer an independent application under Section 34(2) of the Arbitration and Conciliation Act within the time period as stipulated under Section 34(3) of the Arbitration and Conciliation Act and he cannot seek for any relief in an application which is filed by the petitioner.
.11. It is stated that the respondent No. 1 has further sought for a direction to reconsider the matter
- 11 - : A.P. No.70/2020 as per prevailing market value which indicates that he has sought for remand of the matter back to the respondent No. 2 which is impermissible in the eyes of law.
.12. The market value for acquired land was determined at non-agricultural rate and compensation disbursed was also at non-agricultural rate. The Civil Court while deciding an application under Section 34 cannot sit in a Court of Appeal and re-appreciate the evidence led before the arbitrator especially when there is no independent challenge to the Arbitral Award. It is stated that there is absolutely no scope of considering the prevailing market value or increasing market value since the market value has to be strictly determined as on the date of publication of preliminary notification as provided under Section 3-G(7)(a) of the NH Act.
.13. It is stated that the averments made at para 2 that 10% user charges, solatium and additional market value has not been awarded are all once again irrelevant. If the respondent No. 1 was aggrieved by the
- 12 - : A.P. No.70/2020 non-awarding of the relief/s as stated by him, he had the liberty to approach this Court in accordance with sub-section (2) and (3) of Section 34 of the Arbitration and Conciliation Act. It is stated that the cross objection is misconceived and outside the scope of Section 34(2) of Arbitration and Conciliation Act. Hence, prayed to reject the cross objection.
.14. Perused the written arguments filed by both sides.
.15. The following points that would arise for my consideration are:
(1) Whether petitioner in A.P. No.70/2020 has made out sufficient grounds under Section 34 of Arbitration and Conciliation Act to set aside the arbitral award dated 21.01.2020 passed by respondent No. 2?
(2) Whether the cross objection filed by the respondent No.1 can be considered?
(3) What order or award?
.16. My findings on the above points are:
Point No.1 : In the negative Point No.2 : In the negative Point No.3 : As per final order, for the following:
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REASONS
.17. POINT No.1: Section 34(2) of the Arbitration and Conciliation Act, 1996 provide the circumstances under which an award can be set aside by a civil Court.
It provides that-
1) if a party was under some incapacity; or
2) that the arbitration agreement is not valid under any law which the parties are subjected to ; or
3) the party was not given proper notice of the appointment of the arbitrator or arbitral proceedings; or
4) that the award is not within the terms of the arbitration agreement; or
5) the composition of arbitral tribunal or the arbitral procedure is not accordance with the agreement of parties;
6) The subject matter of the dispute is not capable of settlement by Arbitrator under the law for the time being in force;
7) that the arbitral award is in conflict with the pubic policy of India etc., Explanation shows (1) that an award is in conflict with the pubic policy of India if the making of the award was induced or
- 14 - : A.P. No.70/2020 affected by fraud or corruption or was in violation of Section 75 or Section 81. (2) It is in conflict with contravention with the fundamental policy of Indian Law or iii) It is in conflict with most basic notion of morality or justice.
Explanation 2. The test as to whether there is contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
2A It may also be set aside if the Court finds the award is vitiated by patent illegality appearing on the face of award provided that an award shall not be set aside merely on the ground of an erroneous application of law or by re appreciation of evidence.
.18. In Kwality Manufacturing Corporation Vs. Central Whorehouse Corporation (2009) 5 Sec.142, it has been held that:
"From a catena of other judgments of this Court, it is clear that for the objector / appellant in order to succeed in their challenge against an arbitral award, they must show that
- 15 - : A.P. No.70/2020 the award of the Arbitrator suffered from perversity or an error of law or that the Arbitrator has otherwise misconducted himself. Merely showing that there is another reasonable interpretation or possible view on the basis of the material on the record is insufficient to allow for the interference by the Court."
Bearing in mind the above section and decision, now it has to be seen whether the impugned award suffers from any patent error, illegality as envisaged above.
.19. The petitioner has contended that Arbitrator has relied upon the notification dated 21.09.2011 and it was published on 26.09.2011. Preliminary notification in the present case was issued on 09.12.2009 and award was passed much prior to the notification dated 26.09.2011. It is stated that the respondent could not have relied upon notification, which came into effect after lapse of more than 21 months from the date of preliminary notification.
.20. It is stated that as per the Substantive Law NH Authority Act Section 3-G(7)(a) the Arbitrator while
- 16 - : A.P. No.70/2020 determining the amount shall take into consideration the market value of the land as on the date of publication of the notification under Section 3-A of NH Act. The respondent No. 2 could not have relied upon the notification which came into effect after lapse of 21 months from the date of preliminary notification. No reasons has been assigned by the Arbitrator for considering notification dated 26.09.2011.
.21. The Hon'ble Apex Court in the case of Oil & Natural Gas Corp. Ltd., Vs. SAW Pipes Ltd. (AIR 2003 SC 2629) has held that:
"if the award is contrary to the
Substantive provisions of law or the
provisions of the Act or against the terms of the contract, it would be patently illegal, which could be interfered under Section 34".
The above decision applies to the case on hand. The Arbitrator relying upon guidance value dated 26.09.2011 has fixed the market value at Rs. 1,500/- per acre for agricultural land and at Rs. 125/- per sq.
- 17 - : A.P. No.70/2020 feet for NA lands and gramatana land. It is clear that the respondent No. 2 Arbitrator has ignored the Substantive Law under Section 3-G(7)(a) of National Highways Authority Act and thereby the provisions of Section 28 of Arbitration and Conciliation Act while passing the impugned award. Therefore, the award is patently illegal.
.22. The Arbitrator has relied upon estimated market value of the immovable properties and buildings for registration in Bengaluru dated 21.09.2011. This document is not valid record received from the Arbitrator as none of the parties have produced and this is evident from the record of the Arbitrator. Section 24(3) of the Act provides provision regarding hearing and written proceedings. It reads thus:
"All statements, documents or other information supplied to, or applications made to the aribral tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the arbital tribunal may rely in making its
- 18 - : A.P. No.70/2020 decision shall be communicated to the parties".
.23. As an Arbitrator has relied on the estimated market value of immovable properties and buildings dated 21.09.2011 for Registration in Bengaluru without bringing to the knowledge of the parties and thereby has failed to follow the procedure under Section 24 of the Arbitration and Conciliation Act. So there is patent illegality.
.24. The petitioner has contended that respondent No. 2 had failed to follow the procedure laid down under Section 24 of the Arbitration and Conciliation Act. On perusal of arbitral records it is seen that after issue of notice opportunity has been given to the parties to file their claim statement. The claimant has filed claim statement. The respondent has filed written statement. The case was posted for orders. So, it cannot be said that opportunity was not given to the petitioner herein to have their say.
- 19 - : A.P. No.70/2020 .25. The petitioner has contended that the respondent No. 2 has not assigned any reasons for re- determining the compensation amount at Rs. 1,500/- per sq. feet; that he has not assigned any reasons for enhancing the compensation or for relying upon notification dated 07.10.2005.
.26. Section 3(G) of the National High Ways Act, mandatorily provides that, the competent authority or the Arbitrator to take into consideration the factors mentioned in Sub clause (a) to (d) while determining the market value of the compensation payable in-respect of the acquired lands. But neither the award nor the order sheet shows any materials on record as to how he had followed the said provision.
.27. In Som Dutt Builders Ltd Vs. State of Kerala (2010)2 AWC (supp) 1390 SC) has held that:
"Reasons must be indicated in the award as that would reflect thought process leading to a particular conclusion. To satisfy the requirement of Section 31(3), the reasons must be stated
- 20 - : A.P. No.70/2020 by the Arbitral Tribunal upon which the award is based; want of reasons would make such award legally flawed."
.28. On perusal of the records and the award of the Arbitrator it is seen that the respondent No.2 has neither complied with the procedure provided under Section 24 nor decided the dispute in accordance with Section 28(1)(a) and at the same time has failed to comply with Section 31(3) of the A & C Act, thus rendering the impugned Arbitral Award opposed to settled position of law.
.29. The Hon'ble Apex Court in the case of Oil & Natural Gas Corp. Ltd. Vs. SAW Piles Ltd., (AIR 2003 SC 2629) has held that:
"if the award is patently against the statutory provisions orSubstantive law which is in force in India or is passed without giving an opportunity of hearing to the parties as provided under Section 24 or without giving any reason in a case where parties have not agreed that no reasons are to be recorded, it would be against the
- 21 - : A.P. No.70/2020 statutory provisions. In all such cases, the award is required to be set aside on the ground of 'patent illegality' The above decision applies to the case on hand.
.30. The respondent No.1 has stated that the Arbitrator has not taken into consideration additional market value of 12%, 30% solatium, 9% interest from the date of taking possession of the acquired land and 15% interest on additional market value and solatium.
The Hon'ble Supreme Court has in AIR 2019 SC 4689:
AIR Online 2019 SC 1087 - Union of India and another Vs. Tarsem Singh and others has held that:
"provisions of Land Acquisition Act relating to solatium and interest contained in S.23(1A) and (2) and interest payable in terms of Section 28 proviso - will apply to acquisitions made under National Highways Act - Consequently, S. 3-J to extent of granting compensation without solatium and interest - Is violative of Art. 14 of Constitution and, therefore, declared to be unconstitutional.
.31. In-spite of the decision of the the Hon'ble Supreme Court the respondent No.2 has ignored the
- 22 - : A.P. No.70/2020 direction of the Supreme Court and thus, he has not granted additional market value and solatium.
.32. Though the Arbitrator has not complied with Section 3-G(7)(a) of the NH Act. Endeavor of the Court should be honour and support the award as far as possible. There is error committed by the Arbitrator in passing the award. Since 12% additional market value, 30% solatium and 9% on that interest for 1 year from taking possession and thereafter 15% till deposit has not been given, I feel if the same is given the compensation which respondent No. 1 would get more or less be the same as awarded by Arbitrator. For the said reason I do not intend to interfere with the award passed by the respondent No.2. Hence, I answer point No.1 in the negative.
.33. Point No.2: The respondent No. 1 has filed the Cross-objection on 17.03.2022 and has contended that the land in question is converted land for non- agricultural purpose. The Arbitrator has not considered the value of the acquired land and awarded meager
- 23 - : A.P. No.70/2020 amount. He failed to appreciate the acquired land was capable of being used for commercial purpose. The value of the land ought to have been assessed at Rs. 5,000/- per sq. feet. It is stated that the solatium has not been awarded, further additional market value under the prevailing circumstances has not considered while passing award and so has requested this Court to set aside the arbitral award and to direct to reconsider at the prevailing value. As per Section 34(1) of the Arbitration and Conciliation Act states that:
"34. Application for setting aside Arbitral Award - (1) Recourse to a Court against an Arbitral Award may be made only by an application for setting aside such award in accordance with Sub-section (2) and Sub-section (3)."
From the above provisions, it is clear that Arbitral Award can be challenged only by an application under Sub Section (2) and there is no other alternative to the challenge. So, the Cross-objection filed by the respondent No. 1 is not maintainable.
- 24 - : A.P. No.70/2020 .34. In ILR 2016 Karnataka 4136 (Bhaskar Industrial Development Ltd., Vs. South Western Railway), wherein it has been held that:
"A plain reading of Section 34 of the Act extracted above will show that parliament has not conferred any power of remand to the Court to remit the matter to the arbitral tribunal except to adjourn the proceedings as provided under Sub section (4) of Section 34 of the Act. The object of Sub- section (4) of Section 34 is to give an opportunity to the arbitral tribunal to resume the arbitral proceedings or to enable it to take such other action which will eliminate the grounds for setting aside the arbitral award. This provision cannot be invoked, once the arbitral award is set aside".
.35. In 2018 (11) SCC 328 (Kinnari Mullick and another Vs. Ghansyham Das Damani), the Hon'ble Supreme Court of India has confirmed the proposition laid down in Bhaskar Industrial Development Lits Vs. Southern Railway, wherein it has been held that:
- 25 - : A.P. No.70/2020 "remitting the matter back to the Arbitrator would constitute an error and that the Parliament has not conferred any power of remand under Section 34 of the Arbitration and Conciliation Act, 1996."
.36. In ILR 2010 Karnataka 3711 ( Sri. H.M. Shankaramurthy Vs. National Highways Authority of India and others) , wherein it has been held that:
"... a provision for setting aside an award contending that the award is not sustainable in law on any one of the grounds as indicated above can never be construed as a provision enabling the land owner seeking for enhancement of the compensation amount as determined by the Arbitrator."
.37. In 2017 (4) Karnataka L.J. 27/14 (NHAI Vs. Mahadevi and others), wherein it has been held that:
"We are satisfied that in view of the settled legal position, which is delineated below, the learned Court below has grossly erred in setting aside the arbitral award and has further compounded the said error by substituting its own valuation and compensation amount which was simply not permitted within the scope of Section
- 26 - : A.P. No.70/2020 34 of the Arbitration and Conciliation Act 1996".
In view of the above decisions, the reliefs sought by the respondent No. 1 to set aside the award and to direct the Arbitrator to re-consider the matter cannot be granted. For the above discussion, point No. 2 is answered in the negative.
.38. Point No.3: In view of the aforesaid finding on point No.1 I proceed to pass the following:
ORDER A.P. No.70/2020 is dismissed.
The common impugned award passed by the respondent No.2 in so far as pertaining to case No.LAQ/ARB/NH-7/CR/144/2011-2012 in-respect of Sy.No.33 acquired to an extent of 660 sq. feet is confirmed.
The Cross-objection filed by respondent No. 1 is dismissed.
(Dictated to the Judgment Writer, transcribed by her, revised by me and after corrections, pronounced in open Court on this the 27 th day of October 2022.) (Sheila B.M.) II Addl. City Civil and Sessions Judge, & Spl. Judge, Bangalore
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