Allahabad High Court
Uma Shanker Verma And Ors. vs State Of Uttar Pradesh And Ors. on 6 December, 2019
Author: Jaspreet Singh
Bench: Jaspreet Singh
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH ?Court No. - 6 Case :- ARBITRATION APPEAL No. - 1 of 2017 Appellant :- Uma Shanker Verma And Ors. Respondent :- State Of Uttar Pradesh And Ors. Counsel for Appellant :- Suyesh Pradhan Counsel for Respondent :- A.S.G.,Lavkush Pratap Singh,Samidha Hon'ble Jaspreet Singh,J.
Heard Shri Suyesh Pradhan, learned counsel for the appellants and Ms. Samidha learned counsel for the respondents.
The instant appeal has been preferred under Section 37 of the Arbitration and Conciliation Act, 1996 seeking to set aside the award dated 23.07.2010 passed by the learned arbitrator in Case No.78 (07-08) whereby the sum awarded by the arbitrator was challenged as being inadequate before the District Judge, Barabanki in terms of Section 34 of the Arbitration and Conciliation Act, and the petition of the appellants under Section 34 of the Act of 1996 has also been dismissed by the District Judge by means of order dated 12.09.2017 confirming the award passed by the arbitrator.
In order to appreciate the submissions of the learned counsel for the parties, certain brief facts giving rise to the above appeal are being mentioned herein after.
The National Highway Authority of India which is a body corporate established under the National Highway Authority Act, 1988. In exercise of its power vested under Section 3A(1) of the National Highway Act, 1956, a notification dated 01.06.2005 for the acquisition of land in Kotwa Road, District Barabanki for the widening of national high way no.28 from kilometers 9 to kilometers 360.507 was issued. In terms of the notification which was published on 21.10.2005 under Section 3D(2) of the Act of 1956, the land vested with the Central Government.
In terms of the aforesaid notification, an area measuring 0.016 hectare which is part of Gata No.202 situate in village Kotwa Road, District Barabanki owned by the appellants was made the subject matter of the acquisition. The Competent Authority by means of award dated 22.08.2007 determined the compensation for the aforesaid acquisition of 0.016 hectare and awarded a sum of Rs.55,674.08 in favour of the appellants. The appellants being aggrieved by the aforesaid quantum of compensation preferred Arbitration Case No.78/07-08 (Uma Shankar Verma & others Vs. Union of India & others) under Section 3G (5) of the National Highway Act, 1956. The learned Arbitrator/the District Magistrate, Barabanki after affording an opportunity of hearing to the parties by means of his award dated 23.07.2010 upheld the amount of compensation determined by the Competent Authority on 22.08.2007. However, in addition to the amount already awarded by the Competent Authority, the Arbitrator awarded a sum of Rs.50,000/- to the appellants in terms of Section 3G(7)(d) of the Act of 1956.
The appellants being aggrieved against the aforesaid award preferred a petition under Section 34 of the Arbitration and Conciliation Act, 1996 before the District Judge, Barabanki which was registered as Case No.428 of 2010. The District Judge, Barabanki after hearing the parties by means of its judgment/order dated 12.09.2017 dismissed the application under Section 34 of the Act of 1996 and being aggrieved against the aforesaid, the appellants have preferred the instant appeal under Section 37 of the Arbitration and Conciliation Act, 1996.
The submission of the learned counsel for the appellants is that the Arbitrator as well as the District Judge, Barabanki has failed to take the note of the fact that the land which was made the subject matter of acquisition was being utilized for commercial purposes. It has further been submitted that by virtue of the aforesaid acquisition, ten shops which were constructed by the appellants and was being used for commercial purposes have been rendered useless as such this aspect of the matter has not been considered while determining the compensation. It has been further submitted that while determining the compensation, the Arbitrator ought to have considered that the purpose of grant of compensation is to put the person affected as far as possible in the same position as if the said acquisition had not taken place.
Learned counsel for the appellants has also stressed that the shops in question were being utilized for commercial purposes and it also had a platform ahead which was utilized by the appellants for parking of their vehicles and after acquisition the approach and access to the said shops have been completely done away with as a result the shops have become in accessable and the appellants would have to provide alternative access which would require large construction and re-location and this aspect has not been considered by the Arbitrator nor by the District Judge while dealing with the application under Section 34 of the Arbitration and Conciliation Act.
Per contra Ms. Samidha, learned counsel for the National Highway Authority has refuted the submissions of the learned counsel for the appellants and has submitted that there was no evidence which was brought on record by virtue of which it could be ascertained that the appellants suffered any loss on account of the acquisition. It has been submitted that the acquiring authority has only acquired 0.016 hectare and since the land was recorded as agricultural, accordingly the rates as applicable had been taken note of by the Competent Authority while calculating the amount of compensation in accordance with the provisions of the National Highway Authority Act of 1956.
Learned counsel for the respondents has also submitted that the contentions of the learned counsel for the appellants were neither substantiated before the Arbitrator nor before the District Judge and as such once the finding which are purely based on evidence has become final cannot be disturbed in light of the restrictive scope of an appeal under Section 37 of the Arbitration and Conciliation Act, 1996. Accordingly, it was prayed that the appeal be dismissed.
The Court has heard the learned counsel for the parties and before meeting with the submissions, it will be apposite to note the scope of an appeal under Section 37 of the Arbitration and Conciliation Act, 1996. The Apex Court in the case of MMTC Limited Vs. Vedanta Limited 2019 (4) SCC page 163 has noticed and revisited the law regarding the scope of appeal under Section 37 of the Act of 1996 and has held as under:-
"11. As far as Section 34 is concerned, the position is well- settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided under Section 34(2)(b)(ii), i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the "fundamental policy of Indian law" would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury reasonableness. Furthermore, "patent illegality" itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract.
12. It is only if one of these conditions is met that the Court may interfere with an arbitral award in terms of Section 34(2)(b) (ii), but such interference does not entail a review of the merits of the dispute, and is limited to situations where the findings of the arbitrator are arbitrary, capricious or perverse, or when the conscience of the Court is shocked, or when the illegality is not trivial but goes to the root of the matter. An arbitral award may not be interfered with if the view taken by the arbitrator is a possible view based on facts. (See Associate Builders v. DDA, (2015) 3 SCC 49). Also see ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705; Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4 SCC 445; and McDermott International v. Burn Standard Co. Ltd., (2006) 11 SCC 181).
13. It is relevant to note that after the 2015 amendments to Section 34, the above position stands somewhat modified. Pursuant to the insertion of Explanation 1 to Section 34(2), the scope of contravention of Indian public policy has been modified to the extent that it now means fraud or corruption in the making of the award, violation of Section 75 or Section 81 of the Act, contravention of the fundamental policy of Indian law, and conflict with the most basic notions of justice or morality. Additionally, subsection (2A) has been inserted in Section 34, which provides that in case of domestic arbitrations, violation of Indian public policy also includes patent illegality appearing on the face of the award. The proviso to the same states that an award shall not be set aside merely on the ground of an erroneous application of the law or by appreciation of evidence.
14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the Court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the Court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the Court under Section 34 and by the Court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings."
It is in the aforesaid backdrop that the submission of the learned counsel for the parties has been examined by this Court.
From the perusal of the pleadings and the material on record, it would indicate that it has been the submission of the learned counsel for the appellants that the land in question was being used for commercial purposes since 1992 after the appellants had raised ten shops. It has also been submitted that the said land is being used for commercial purposes for the last 20 years but while calculating the compensation the rate has been adopted as fixed for agricultural land.
From the perusal of the material on record, this Court finds that the land in question continued to remain recorded as agricultural land. Learned counsel for the appellants could not point out any document by which it could be ascertained that the land over which the alleged shops were constructed or over which the commercial activity was being carried out by the appellants, its land use had ever been changed or the appellants had got a declaration under Section 143 of the U.P. Z.A. & L. R. Act of 1950. The appellants have submitted that out of the ten shops so constructed, five had been let out and which were fetching rent. However, learned counsel for the appellants could not point out any evidence filed on record to indicate that the shops were actually let out and the appellants were deriving a rental income therefrom.
The appellants have merely brought on record telephone bills, electricity bills etc. However, the same do not indicate that the activity in itself was commercial in nature and that with the change in land user, the appellants were entitled to carry out such activities.
The District Judge while considering the submissions of the learned counsel for the appellants has clearly noticed that nothing was pointed out nor any evidence was brought on record which could indicate that the acquisition in question had adversely affected the business from the alleged shops which were said to have been constructed.
It will be significant to point out that the land over which the shops are constructed, has not been acquired rather it is the land ahead of the said shops which have been acquired. In such circumstances, once some part of the land has been acquired and the Competent Authority as well as the Arbitrator considering the facts and circumstances has calculated the compensation in accordance with the provision of Act, 1956 on the basis of the nature of the land which was recorded at the time of the notification and also for the platform which was raised which also was the subject matter of the acquisition and for which compensation has been provided. This Court does not find that it is open for the appellate court to look into the finding which are purely based on facts and moreover for which the appellants had failed to substantiate their plea before the Arbitrator as well as before the District Judge in proceedings under Section 34 of the Act.
Thus, from the record, this Court finds that nothing substantial could be established by the learned counsel for the appellants to indicate that after the acquisition of 0.016 hectare, the other remaining part which was not acquired was adversely affected. The record also does not reflect that because of the acquisition, the appellants were deprived of utilizing the other remaining part even for the purposes of parking of their vehicles.
Learned counsel for the appellants in support of his submissions has relied upon the decision of the Apex Court in the case of M/s. MSK Projects Vs. State of Rajasthan and another Civil Appeal No.5417 of 2011 decided on 21st July, 2011 and the case of The State of West Bengal Vs. Mrs. Bela Banerjee and others reported in AIR 1954 SC page 170.
On the strength of the aforesaid two decisions, it has been argued by Shri Suyesh Pradhan that the compensation should be determined and should be payable to the person which should be just and equivalent to what the owner has been deprived of.
The Court upon considering of the aforesaid decisions finds that both the decisions are not applicable in the facts and circumstances of the instant case; inasmuch as the case of M/s. MSK Projects (supra) the issue before the Apex Court was whether it was necessary in view of the agreement between State and the private contractor to issue a notification with barred the vehicle through the market of Bharatpur City and the second issue involved in the said case related to the right to collect toll fee. The aforesaid matter did not relate to compensation to be determined in terms of the Land Acquisition Act and a different issue altogether was involved in the said case and as such because of the aforesaid, the appellants cannot derive any benefit from the said decision.
Similarly in the case of Bela Banerjee (supra) issue before the Apex Court related to the provision of Section 8 of the West Bengal Land Development and Planning Act,1948 wherein the issue regarding the validity of the aforesaid provision was concerned, was involved and the Apex Court found that Section 8(b) offended the provision of the Constitution and was held to be unconstitutional. Thus, the said case also does not help the appellants as it is not applicable to the facts of the present case.
As already indicated above, the demand of the appellants to calculate the compensation at the commercial rate in respect of land which stood recorded as agricultural in the revenue record has also been considered and rejected by the Arbitrator as well as the Court under Section 34 proceedings. Thus, this Court does not find that there is any error patent and apparent on the face of the record which may prod this Court to exercise its power conferred under Section 37 of the Act, 1996 to upset the concurrent findings.
In light of the discussions above, this Court is satisfied that the Arbitrator nor the Court under Section 34 has committed any error. Accordingly, the appeal being devoid of merits is dismissed. There shall be no order as to costs.
Order Date :- 6.12.2019 ank