Karnataka High Court
The Manager (Tech) And Office Of The ... vs Chandrashekhara So Shivappa Arani on 3 December, 2024
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NC: 2024:KHC-D:17777
MFA No. 101960 of 2024
IN THE HIGH COURT OF KARNATAKA,
DHARWAD BENCH
DATED THIS THE 3RD DAY OF DECEMBER, 2024
BEFORE
THE HON'BLE MR. JUSTICE C.M. POONACHA
MISCELLANEOUS FIRST APPEAL NO.101960 OF 2024 (AA)
BETWEEN:
THE MANAGER (TECH), AND OFFICE OF
THE COMPETENT AUTHORITY FOR
LAND ACQUISITION, NHAI, 2ND CROSS,
SATTUR COLONY, VIDYAGIRI, DHARWAD,
NOW AS THE PROJECT DIRECTOR NHAI,
PIU, CHITRADURGA, NEAR JMIT OLD NH - 4,
CHITRADURGA - 577 501.
...APPELLANT
(BY SRI B. P. MATHAPATI, ADVOCATE)
AND:
CHANDRASHEKHARA SO SHIVAPPA ARANI,
SINCE DECEASED BY HIS LRS.,
1. JAGADISH S/O. CHANDRASHEKHARAPPA ARANI,
AGE: MAJOR, OCC: AGRICULTURE,
R/O: NETAJI NAGAR, IJJARI - LAKMAPURA,
Digitally signed by
CHANDRASHEKAR
LAXMAN
TQ AND DIST: HAVERI - 577 401.
KATTIMANI
Location: High
Court of Karnataka
2. THE ARBITRATOR FOR NATIONAL
HIGHWAYS AUTHORITY OF INDIA,
AND DEPUTY COMMISSIONER,
HAVERI - 581 110.
...RESPONDENTS
(BY SRI S.M.KALAWAD, ADVOCATE FOR
SRI JAYAVANT KAMBALI AND
SRI ASHOK C. ANGADI, ADVOCATE FOR R1;
SMT. KIRTILATA R. PATIL, HCGP FOR R2)
THIS MFA IS FILED U/S.37(1) OF ARBITRATION AND
CONCILIATION ACT, 1996, PRAYING TO ALLOW THIS APPEAL AND
SET ASIDE THE JUDGMENT PASSED BY THE PRINCIPAL DISTRICT
AND SESSIONS JUDGE, HAVERI IN ARBITRATION PETITION
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NC: 2024:KHC-D:17777
MFA No. 101960 of 2024
NO.23/2021 DATED 29.08.2023 IN THE INTEREST OF JUSTICE AND
EQUITY AND ETC.,
THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: THE HON'BLE MR. JUSTICE C.M. POONACHA
ORAL JUDGMENT
(PER: THE HON'BLE MR. JUSTICE C.M. POONACHA) The present appeal is filed under Section 37(1) of the Arbitration and Conciliation Act, 19961 challenging the judgment dated 29.08.2023 passed in Arbitration Petition No.23/2021 by the Principal District and Sessions Judge, Haveri2.
2. The relevant facts in a nutshell leading to the present appeal are that the respondent No.1 made an application under Section 3G(5) of the National Highways Act, 19563 before the respondent No.2-Arbitrator/Deputy Commissioner, Haveri for enhancement of compensation paid for acquisition of his land. Respondent No.2-Arbitrator/Deputy Commissioner vide order dated 17.03.2021 partly allowed the applications and enhanced the compensation from ₹35.65 per 1 Hereinafter referred to as " the 1996 Act" 2
Hereinafter referred to as "the District Court"3
Hereinafter referred to as "the 1956 Act" -3-
NC: 2024:KHC-D:17777 MFA No. 101960 of 2024 sq.meter to ₹346/- per sq.meter and further awarded interest @ 9% per annum on the enhanced compensation for three years from the date of notification. Being aggrieved, respondent No.1 filed an application under Section 34 of the 1996 Act before the District Court in Arbitration Petition No.23/2021. The District Court vide its common judgment dated 29.08.2023 partly allowed the arbitration petition and passed the following:
"ORDER The Arb. Petition Nos.23/2021 and 24/2021 filed by the respective petitioners, are hereby partly allowed, confirming the Arbitrator Award dated 17.3.2021, relating to fixation of market value at Rs.346/- per sq.mtr., with following clarification.
The awards passed in LAQ/ARBT/NH/CR/ No.16/2010-11 and LAQ/ARBT/NH/CR/ No.543/2009- 10 are hereby partly confirmed; and it is further ordered that, petitioners are entitled to solatium at 30% on the enhanced compensation and interest at 9% on enhanced payment of compensation for one year from the date of 3A notification or possession taken whichever is earlier and 15% for the remaining -4- NC: 2024:KHC-D:17777 MFA No. 101960 of 2024 period, till realisation of full and final payment in the light of Civil Appeal No.7064/2019 passed by the Hon'ble Apex Court. Rest of the award is ordered to be remained in tact.
Under the circumstances, the parties are directed to bear their own cost.
Keep the original judgment in Arb.Petition No.24/2021 and copy thereof in other case.
Send Arbitral Proceedings Records (T.C.Rs.) to the learned Arbitrator, along with copy of this judgment.
3. Being aggrieved, the present appeal is filed.
4. Heard the submissions of learned counsel Sri. B. P. Mathapati for the appellant and learned counsel Sri. S. M. Kalawad for respondent No.1 as also the learned HCGP Smt. Kirtilata R Patil for respondent No.2.
5. It is the contention of the learned counsel for the appellant that the District Court by its judgment dated 29.08.2023 has awarded interest exceeding three years, which was specifically awarded only for three years by respondent No.2-Arbitrator/Deputy Commissioner since the application was -5- NC: 2024:KHC-D:17777 MFA No. 101960 of 2024 filed belatedly. It is further contended that the District Court could not have directed the payment of solatium and interest for the entire. In support of his contentions, learned counsel relies upon the judgment of the Hon'ble Supreme Court in the case of the Project Director National Highways v. M. Hakeem4 as well as the judgment of the Hon'ble Supreme Court in the case of S.V.Samudram v. State of Karnataka and another5.
6. Per contra, learned counsel for the respondent No.1 opposing the above appeal contends that the appellant had not contested the proceedings before the District Court and hence, it is not open for the appellant to prefer the above appeal invoking Section 37 of the 1996 Act. It is further contended that the District Court had specifically noticed that awarding of further benefits was pursuant to the judgment of the Hon'ble Supreme Court in the case of Union of India and another v. Tarsem Singh and others6 and further ordered that the granting of the benefits in terms of the judgment of the Hon'ble Supreme Court, is not a modification of the arbitration award 4 AIR 2021 SC 3471 5 (2024) 3 SCC 623 6 (2019) 9 SCC 304 -6- NC: 2024:KHC-D:17777 MFA No. 101960 of 2024 but recognition of the statutory amount payable to the landowners. Hence, he seeks for dismissal of the above appeal.
7. The learned HCGP places the relevant facts on record.
8. It is forthcoming that the respondent No.2- Arbitrator/Deputy Commissioner, while noticing that there was a delay in making the application under the provisions of the 1956 Act, has held as follows:
"Admittedly, there is a delay in filing case before this court. The delay is not intentional one. The party no.1 explained the delay and shown sufficient cause for the delay. The party no.1 are village illiterate persons and have lost their lands and property which is their only source of livelihood, approached this court for enhancement of compensation. The Honourable Supreme Court of India in a ruling reported in 2014(1) Kar.L.J Page 34(SC) has held that a good cause and a sufficient cause in the considering condoning the delay would be sufficient. In the present case considering the economic status; illiteracy and lack of legal knowledge of party no.1 and relying on the observation of the Honourable Supreme Court, I feel that these are fit cases to condone the delay on the condition that the enhanced compensation -7- NC: 2024:KHC-D:17777 MFA No. 101960 of 2024 amount for three years from the date of final notification would only be admissible. Hence the delay in filing this case is condoned and interest on enhanced compensation is restricted to 3 years only."
(Emphasis supplied)
9. The District Court while considering the appeal of respondent No.1 with regard to statutory benefits, ordered as follows:
"20. Regarding the award of statutory benefits entitling the owners (land losers due to acquisition of their lands) in Tarsem's case, it is held that, they are entitled to statutory benefits under Section 23(1-A) & 2 of Section 28 of the Land Acquisition Act. Therefore, it is important to reproduce the observation regarding clarification of award at para No.21 of the said judgment, while considering the judgment passed by Hon'ble Bombay High Court, referring the judgment reported in 2022(1) M.L.J. 290, relating to powers of District Court u/S.34 of 1996 Act, wherein grant of interest was challenged before the Bombay High Court and also considered declaration of law made in the judgment of Hon'ble Supreme Court in Tarsem's case. The relevant portion reads thus, "21. The position of law laid down by the Hon'ble Supreme Court in the above quoted paragraph in the case of Narain Das Jain vs. -8- NC: 2024:KHC-D:17777 MFA No. 101960 of 2024 Agra Nagar Mahapalika (supra) would show that payment of solatium and interest under the aforesaid provisions i.e. Section 23(2) and 28 of the Land Acquisition Act, would spontaneously spring up and become payable to the land owners, once the compensation as per market value stands determined. Therefore, to that extent when the District Court in the impugned judgments and orders directed payment of solatium and interest under clauses (i) and (iii) of the operative portions of the orders, it cannot be said that there was modification of the Award, even though the District Court while recognizing grant of such amounts stated that the Award was being modified."
21. Thus, it has made it clear that, "since it is not amounting to modification of arbitration award, but
(a) It is recognition of statutory amount payable to the land owners upon determination of compensation as per market value, (b) It shall automatically flow to the land owners upon determination of such compensation."
(Emphasis supplied)
10. However, it is relevant to note that the District Court, while considering the petition/application of respondent No.1 in Arbitration Petition No.23/2021 has confirmed the -9- NC: 2024:KHC-D:17777 MFA No. 101960 of 2024 award and further ordered that the petitioners are entitled to solatium and interest.
11. With regard to the scope of power exercisable by the District Court under Section 34 of the 1996 Act, it is relevant to note that the Hon'ble Supreme Court in the case of M. Hakeem4 held as follows:
"39. ........Under Section 34 of the Arbitration Act, the Court may either dismiss the objections filed, and uphold the award, or set aside the award if the grounds contained in sub-sections (2) and (2A) are made out. There is no power to modify an arbitral award.
40. It can therefore be said that this question has now been settled finally by at least 3 decisions of this Court. Even otherwise, to state that the judicial trend appears to favour an interpretation that would read into Section 34 a power to modify, revise or vary the award would be to ignore the previous law contained in the 1940 Act; as also to ignore the fact that the 1996 Act was enacted based on the UNCITRAL Model Law on International Commercial Arbitration, 1985 which, as has been pointed out in Redfern and Hunter on International Arbitration, makes it clear that, given the limited judicial interference on extremely limited grounds not dealing with the merits of an award, the 'limited remedy' under Section 34 is co- terminus with
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NC: 2024:KHC-D:17777 MFA No. 101960 of 2024 the 'limited right', namely, either to set aside an award or remand the matter under the circumstances mentioned in Section 34 of the Arbitration Act, 1996."
(Emphasis supplied)
12. Further, the Hon'ble Supreme Court in the case of S. V. Samudram5 has held as follows:
"17. It would be useful to examine the expositions of this Court on the scope to interfere with arbitral awards under Sections 34 and 37 of the A&C Act. The judgment and order of the learned Civil Judge was dated 22-4-2010. The position as to whether an arbitral award can be modified in the proceedings initiated under Sections 34/37 of the A&C Act is no longer res integra. While noting the provisions, more specifically, Section 34(4) of the A&C Act; the decisions rendered by this Court, including the principles of international law enunciated in several decisions recorded in the treatise Redfern and Hunter on International Arbitration, 6th Edn., this Court in NHAI v. M.Hakeem, categorically held that any Court under Section 34 would have no jurisdiction to modify the arbitral award, which at best, given the same to be in conflict with the grounds specified under Section 34 would be wholly unsustainable in law. The Court categorically observed that any attempt to
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NC: 2024:KHC-D:17777 MFA No. 101960 of 2024 "modify an award" under Section 34 would amount to "crossing the Lakshman Rekha".
(Emphasis supplied)
13. Hence, it is clear from the enunciation of law as noticed above that under Section 34 of the 1996 Act does not open to the District Court to modify the award and the only course of action that is open to the District Court is either to set aside the award or to remand the matter to the Arbitrator.
14. A Division Bench of this Court in the case of the Deputy General Manager (Tech) and the Project Director, National Highways Authority of India and another v. Basavaraj S/o. Fakkirappa Sali and another7 has noticed the dicta of the Hon'ble Supreme Court in the case of M.Hakeem4 and following the said judgment has held as follows:
"5. In view of the above judgment of the Apex Court, it is clear that the District Court in a suit filed under Section 34 of the Act has only power either to confirm the order passed by the Arbitrator or set aside the order and remand the matter to the Arbitrator. But, in the case on hand, the learned District Judge has modified the order passed by the Arbitrator and the 7 Order dated 28.10.2024 in MFA No.102314/2024 (AA)
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NC: 2024:KHC-D:17777 MFA No. 101960 of 2024 same is contrary to Section 34 of the Arbitration and Conciliation Act. Hence, the impugned order is unsustainable.
6. Accordingly, the appeal is allowed. The order dated 27.01.2024 passed by the Court of the Principal District and Sessions Judge, Haveri in Arbitration Petition No.78/2023 filed under Section 34 of the Arbitration and Conciliation Act, is set aside. The matter is remanded to the Court of the Principal District and Sessions Judge, Haveri.
7. The learned District Judge is directed to reconsider the matter afresh and in accordance with law."
(Emphasis supplied)
15. It is the vehement contention of learned counsel for respondent No.1 that the Hon'ble Supreme Court in the case of Tarsem Singh6 has ordered for payment of solatium and interest. It is relevant to note that the Hon'ble Supreme Court in the case of Tarsem Singh6 has held as follows:
"52. There is no doubt that the learned Solicitor General, in the aforesaid two orders, has conceded the issue raised in these cases. This assumes importance in view of the plea of Shri Divan that the impugned judgments should be set aside on the ground that when the arbitral awards did not provide for solatium
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NC: 2024:KHC-D:17777 MFA No. 101960 of 2024 or interest, no Section 34 petition having been filed by the landowners on this score, the Division Bench judgments that are impugned before us ought not to have allowed solatium and/or interest. Ordinarily, we would have acceded to this plea, but given the fact that the Government itself is of the view that solatium and interest should be granted even in cases that arise between 1997 and 2015, in the interest of justice we decline to interfere with such orders, given our discretionary jurisdiction under Article 136 of the Constitution of India. We therefore declare that the provisions of the Land Acquisition Act relating to solatium and interest contained in Section 23(1A) and (2) and interest payable in terms of section 28 proviso will apply to acquisitions made under the National Highways Act. Consequently, the provision of Section 3J is, to this extent, violative of Article 14 of the Constitution of India and, therefore, declared to be unconstitutional. Accordingly, Appeal @ SLP (C) No. 9599/2019 is dismissed."
(Emphasis supplied)
16. The reliance placed by the learned counsel for respondent No.1 on the judgment of the Hon'ble Supreme Court in the case of Bhanu Kumar Jain v. Archana Kumar and another8 will not aid the case of respondent No.1 inasmuch as in the said case. In the said case, the appeal was 8 2005 (1) SCC 787
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NC: 2024:KHC-D:17777 MFA No. 101960 of 2024 filed under Section 96 of the Code of Civil Procedure, 19089 and while considering the said appeal, it was held that it was not open for the appellant to contend regarding the correctness of the ex-parte decree passed by the Trial Court and the appellant having invoked his remedy to file an appeal instead of filing a petition under Order IX Rule 13 of CPC, the appellant was required to agitate regarding the order of the Trial Court on its merit.
17. In the present case, having regard to the position of law as laid down in the case of M. Hakeem4 and in the case of Tarsem Singh6, the District Court is required to pass suitable orders in accordance with law even if it is for consideration of the statutory benefits in terms of the judgment of the Hon'ble Supreme Court in the case of Tarsem Singh6. Hence, the following:
ORDER
i) The above appeal is allowed.
ii) The judgment dated 29.08.2023 passed in Arbitration Petition No. 23/2021 by the 9 Hereinafter referred to as "CPC"
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NC: 2024:KHC-D:17777 MFA No. 101960 of 2024 Principal District and Sessions, Judge, Haveri is set aside.
iii) The appellant and respondent No.1 shall
appear before the District Court on
16.12.2024 in Arbitration Petition No.23/2021 without the requirement of any further notice being issued in this regard.
iv) Pursuant to the appearance of the parties, the District Court shall pass appropriate orders in accordance with law keeping in mind the discussion made above.
v) All contentions of the both parties kept open.
Sd/-
(C.M. POONACHA) JUDGE YAN/CT-ASC List No.: 1 Sl No.: 0