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TMI Blog2021 (7) TMI 1343X X X X Extracts X X X X X X X X Extracts X X X X ..... pointing the arbitrator. As a matter of fact, the land owner has no say in the appointment of the arbitrator, who is to be appointed only by the acquiring authority, that is the Central Government. It is settled law that a Section 34 proceeding does not contain any challenge on the merits of the award. There can be no doubt that given the law laid down by this Court, Section 34 of the Arbitration Act, 1996 cannot be held to include within it a power to modify an award. In KRISHNA BHAGYA JALA NIGAM LTD. VERSUS G. HARISCHANDRA REDDY ANR. [ 2007 (1) TMI 498 - SUPREME COURT] , a judgment of this Court referred to in para 36, this Court reduced the rate of interest for the pre-arbitration period, pendente lite and future interest. It also referred to a suggestion that a certain amount be reduced from the awarded amount from Rs.1.47 crores to Rs.1 crore, which the learned counsel for the respondent therein fairly accepted. Obviously, these orders were also made under Article 142 of the Constitution of India and do not carry the matter very much further. From these judgments, to deduce, in para 39, that the judicial trend appears to favour an interpretation which would read into Section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ARISING OUT OF SLP (CIVIL) NO.13235 OF 2020], CIVIL APPEAL NO. 2778OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13354 OF 2020], CIVIL APPEAL NO. 2779OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13408 OF 2020], CIVIL APPEAL NO. 2780OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13292 OF 2020], CIVIL APPEAL NO. 2781OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13236 OF 2020], CIVIL APPEAL NO. 2782OF 2021, [ARISING OUT OF SLP (CIVIL) NO.13632 OF 2020] CIVIL APPEAL NO. 2783OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13269 OF 2020], CIVIL APPEAL NO. 2784OF 2021 [ARISING OUT OF SLP (CIVIL) NO.14905 OF 2020], CIVIL APPEAL NO. 2785OF 2021 [ARISING OUT OF SLP (CIVIL) NO.12988 OF 2020], CIVIL APPEAL NO. 2786OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13936 OF 2020], CIVIL APPEAL NO. 2787OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13232 OF 2020] CIVIL APPEAL NO. 2788OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13002 OF 2020] CIVIL APPEAL NO. 2789OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13013 OF 2020] CIVIL APPEAL NO. 2790OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13231 OF 2020] CIVIL APPEAL NO. 2791 OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13330 OF 2020] CIVIL APPEAL NO. 2792 OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13234 OF 2020] CIVIL APPEAL NO. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar lands. The result is, in all these cases, that abysmally low amounts were granted by the competent authority. As an example, in SLP (Civil) No.13020 of 2020, amounts ranging from Rs.46.55 to 83.15 per square meter were awarded. In the arbitral award made by the District Collector in all these cases, being an appointee of the Government, no infirmity was found in the aforesaid award, as a result of which the same amount of compensation was given to all the claimants. In Section 34 petitions that were filed before the District and Sessions Judge, these amounts were enhanced to Rs.645 per square meter and the award of the Collector was therefore modified by the District Court in exercise of jurisdiction under Section 34 Arbitration Act to reflect these figures. In the appeal filed to the Division Bench, the aforesaid modification was upheld, with there being a remand order to fix compensation for certain trees and crops. 4. Shri Tushar Mehta, learned Solicitor General of India, has taken us through the scheme of the National Highways Act, and has argued that since it was necessary to speed up the acquisition process for a very important public purpose, that is construction of nati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on a reading of Section 34 itself as well as a number of judgments of this Court and High Courts that this well settled position cannot possibly be given a go-by when it comes to arbitration under the National Highways Act, in which either party can ask for the appointment of an arbitrator who is then appointed not by the parties, but by the Central Government. He attacked the Division Bench judgment, arguing that the fact that either party could approach the Central Government to appoint an arbitrator, unlike the Land Acquisition Act, and that it is the Central Government who appoints the arbitrator, the arbitration thus not being consensual in nature, would make no difference to the interpretation of Section 34 of the Arbitration Act in its application to the National Highways Act. He therefore argued that the impugned judgment was wrong on law and equally wrong in following an earlier Single Judge judgment of the Madras High Court in which it was held, in a situation not under the National Highways Act but under the Arbitration Act itself (arising from a consensual arbitration), that the court, under Section 34, can modify the arbitral award. He attacked the learned Single Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awards that are passed by yet another government servant. He argued that if Section 34 were to be construed in the manner suggested by the learned Solicitor General, then for a very grievous wrong there would be no remedy as all that the District Judge could then do in the Section 34 jurisdiction is to set aside the award, resulting in a fresh arbitration before either the self-same bureaucrat or another bureaucrat appointed by the Central Government. This being the case, these appeals even on merits ought to be dismissed. 6. Having heard learned counsel appearing on both sides, it is important to first set out the relevant sections under the National Highways Act. As has been argued by the learned Solicitor General, the National Highways Act was amended in 1997. Para 2 of the Statement of Objects and Reasons for this amendment is set out hereunder: - "STATEMENT OF OBJECTS AND REASONS One of the impediments in the speedy implementation of highways projects has been inordinate delay in the acquisition of land. In order to expedite the process of land acquisition, it is proposed that once the Central Government declares that the land is required for public purposes for developmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation shall cease to have any effect: Provided that in computing the said period of one year, the period or periods during which any action or proceedings to be taken in pursuance of the notification issued under sub- section (1) of section 3A is stayed by an order of a court shall be excluded. (4) A declaration made by the Central Government under sub-section (1) shall not be called in question in any court or by any other authority. 10. Section 3G with which we are directly concerned and which speaks of the determination of an amount payable as compensation reads as follows: - 3G. Determination of amount payable as compensation. (1) Where any land is acquired under this Act, there shall be paid an amount which shall be determined by an order of the competent authority. (2) Where the right of user or any right in the nature of an easement on, any land is acquired under this Act, there shall be paid an amount to the owner and any other person whose right of enjoyment in that land has been affected in any manner whatsoever by reason of such acquisition an amount calculated at ten per cent, of the amount determined under sub-section (1), for that land. (3) Before procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either of the parties, be determined by an arbitrator to be appointed by the Central Government. What is of importance is that the 'competent authority' is a person or authority authorised by the Central Government by notification to determine the amount of compensation. In the present case, a notification designating a Special District Revenue Officer as the competent authority has been made. The amount determined by the aforesaid authority has then to be sent to an arbitrator, on application by either of the parties. What is important to remember is that the aforesaid arbitration is not a consensual process with both parties having a hand in appointing the arbitrator. As a matter of fact, the land owner has no say in the appointment of the arbitrator, who is to be appointed only by the acquiring authority, that is the Central Government. 13. Section 34 of the Arbitration Act, 1996 occurs in Chapter VII under the title "Recourse against arbitral award". We are directly concerned with sub-sections (1) and (4) of Section 34 which are set out hereunder. 34. Application for setting aside arbitral award. - (1) Recourse to a Court against an arbitral award may be made only by an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (2) of this article. xxx xxx xxx (4) The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal's opinion will eliminate the grounds for setting aside. 16. Redfern and Hunter on International Arbitration (6th edition), states that the Model Law does not permit modification of an award by the reviewing court (at page 570) as follows: "10.06 The purpose of challenging an award before a national court at the seat of arbitration is to have that court declare all, or part, of the award null and void. If an award is set aside or annulled by the relevant court, it will usually be treated as invalid, and accordingly unenforceable, not only by the courts of the seat of arbitration, but also by national courts elsewhere. This is because, under both the New York Convention and the Model Law, a competent court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his decision to the Court: Provided that any time so fixed may be extended by subsequent order of the Court. (3) An award remitted under sub- section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed. 19. As a result therefore, a judgment in terms of the award is given under Section 17 of the 1940 Act which reads as follows: - 17. Judgment in terms of award. Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award. 20. Thus, under the scheme of the old Act, an award may be remitted, modified or otherwise set aside given the grounds contained in Section 30 of the 1940 Act, which are broader than the grounds contained in Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of challenge under Section 34 of the Act. In the event the arbitrator opined that he had no jurisdiction in relation thereto an appeal thereagainst was provided for under Section 37 of the Act. 52. The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it. 24. This statement of the law was followed in Kinnari Mullick v. Ghanshyam Das Damani, (2018) 11 SCC 328 at page 334 (see para 15). 25. Also, in Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1, this Court held: - 36. At this juncture it mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modify the Award even if there is no express provision in the Act permitting it. The Court followed the decision of the Supreme Court in Krishna Bhagya Jala Nigam Ltd. v. Harischandra Reddy (2007) 2 SCC 720. A similar view has been taken by a learned Single Judge of this Court in Union of India v. Modern Laminators2008 (3) Arb LR 489 (Del). There the question was whether in light of the arbitrator having failed to decide the counter claim of the respondent in that case the Court could itself decide the counter claim. After discussing the case law, the Court concluded that it could modify the award but only to a limited extent. It held (Arb LR p. 496): "Such modification of award will be a species of 'setting aside' only and would be 'setting aside to a limited extent'. However, if the courts were to find that they cannot within the confines of interference permissible or on the material before the arbitrator are unable to modify and if the same would include further fact finding or adjudication of intricate questions of law the parties ought to be left to the forum of their choice i.e. to be relegated under Section 34(4) of the Act to further arbitration or other civil remedies." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt to modify an award. If a claim which has been rejected by an Arbitral Tribunal is found to be faulty, the Court seized of the objections under Section 34 of the Arbitration and Conciliation Act, 1996 has to set aside the award and leave the matter at that. It would be open to the party concerned to commence fresh proceedings (including arbitration) and for this view one may for purposes of convenience refer to sub-Section (4) of Section 43 of the Arbitration and Conciliation Act, 1996. It reads: - "43. Limitations- (1) xxxxx (2) xxxxx (3) xxxxx (4) Where the Court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1963, for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted." 28. An instructive judgment of the Delhi High Court in Puri Construction P. Ltd. v. Larsen and Toubro Ltd., 2015 SCC OnLine Del 9126 deals with the authorities of the Madras and Calcutta High Courts on the one hand and the other High Courts dealing with this problem as follows: - 115. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbitral award. The form, in which an application has to be made, cannot curtail the substantial right conferred by the statute. In other words, the right to have recourse to a Court, is a substantial right and that right is not liable to be curtailed, by the form in which the right has to be enforced or exercised. Hence, in my considered view, the power under Section 34(1) includes, within its ambit, the power to modify, vary or revise." The same view had been adopted earlier by Single Bench decisions of the Bombay High Court in Axios Navigation Co. Ltd. v. Indian Oil Corporation Limited, 2012 (114) BOM LR 392 and Angerlehner Structurals and Civil Engineering Co. v. Municipal Corporation of Greater Mumbai, 2013 (7) Bom CR 83 and a Division Bench of the Calcutta High Court in West Bengal Electronics Industries Development Corporation Ltd. v. Snehasis Bhowmick (in A.P.O. No. 240 of 2012). Authorities holding there is no power to Modify, Vary or Remit the award xxx xxx xxx 118. This Court is inclined to follow the decisions in Central Warehousing Corporation, Delhi Development Authority, State Trading Corporation of India Ltd., Bharti Cellular Limited, Cybernetics Network Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated in Section 33… It is also true that there are no parimateria provisions like Sections 15 and 16 of the Act of 1940 in the 1996 Act but still the provisions of Section 34 read together, sufficiently indicate vesting of vast powers in the court to set aside an award and even to adjourn a matter and such acts and deeds by the Arbitral Tribunal at the instance of the party which would help in removing the grounds of attack for setting aside the arbitral award." On the other hand, the Calcutta High Court in Snehasis Bhowmick did not analyse this distinction, or the specific observations of the Supreme Court in McDermott International Inc. quoted above. Further, the decisions in Numaligarh Refinery and Harishchandra Reddy (supra) did not discuss the Court's power to modify, vary or remit the award under Section 34 of the Act. Therefore, in light of the dictum in McDermott International Inc. and the difference in provisions of the 1940 Act and the present Act, this Court holds that the power to modify, vary or remit the award does not exist under Section 34 of the Act. 29. Thus, there can be no doubt that given the law laid down by this Court, Section 34 of the Arbitr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32. Likewise, in Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4 SCC 445, the learned Single Judge correctly observed that the Supreme Court did not specifically address the issue as to whether the court has the power under Section 34 to modify the Award. In stating that the Supreme Court affixed a seal of approval on the decision of the trial court modifying the award would not be wholly correct. In para 12 only one ground was argued in the appeal, which ground found favour with this Court. In any case, a modification of an award upheld on facts without any discussion on the law does not carry the matter very much further. 33. In Krishna Bhagya Jala Nigam Ltd. v. G. Harischandra Reddy, (2007) 2 SCC 720, a judgment of this Court referred to in para 36, this Court reduced the rate of interest for the pre-arbitration period, pendente lite and future interest. It also referred to a suggestion that a certain amount be reduced from the awarded amount from Rs.1.47 crores to Rs.1 crore, which the learned counsel for the respondent therein fairly accepted. Obviously, these orders were also made under Article 142 of the Constitution of India and do not carry the matter very muc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 34 of the Arbitration Act, 1996. Even otherwise therefore, the learned Single Judge's judgment was rendered per incuriam. 36. However, a later Division Bench of the High Court of Madras vide judgment dated August 8th, 2019 reported in ISG Novasoft Technologies Limited v. Gayatri Balasamy, 2019 SCC OnLine Mad 15819 agreed with the learned Single Judge, without adverting to the earlier Division Bench judgment of the same court, as follows: 41. It is no doubt true that the legislators did not intend to use the word "modify" anywhere in Section 34 of the Act but what was contemplated is only to "set aside" an award passed by the Arbitrator if it falls within the realm of Section 34 of the Act. It is trite that an arbitrator being a Judge chosen by the parties, his decision would ordinarily be final unless one or the other conditions contained in Section 34 of the Act is satisfied for the purpose of setting aside his award. The Court's jurisdiction in this behalf is to see whether the arbitrator has exceed his jurisdiction or not and therefore, the scope of judicial review of the arbitral award is a narrow one. 42. In order to arrive at a conclusion as to whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial evidence adduced by the parties. Even otherwise, as contemplated under Section 34(2)(v)(b)(ii) of the Act, when the award passed by the Arbitrator is in conflict with the public policy in our Country, reversal or modification of such award passed by the arbitrator is well within the provisions contained under Section 34 of the Act itself. In the present case, as rightly observed by the learned single Judge, the non-constitution of a committee as per the direction of the Honourable Supreme Court in Vishaka case is to be regarded as a statutory violation and contravention of public policy prevailing in India and therefore, the appellant is entitled for a just and fair compensation. 37. This judgement suffers from the same infirmities as the learned Single Judge's judgement which it affirms. 38. Col. Balasubramanian also referred to three other judgments to buttress the very same submission, namely, Numaligarh Refinery Ltd. v. Daelim Industrial Co. Ltd., (2007) 8 SCC 466; DDA v. R.S. Sharma and Co., (2008) 13 SCC 80 and Royal Education Society v. LIS (India) Construction Co. (P) Ltd., (2009) 2 SCC 261. Each of these judgments also does not carry the matter further in that, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be interpreted in such manner as to make the remedy worse than the disease. As has been pointed out by us, the "disease" can only be cured in very limited circumstances thus limiting the remedy as well. Also, to assimilate the Section 34 jurisdiction with the revisional jurisdiction under Section 115 of the Code of Civil Procedure, 1908 [the "CPC"], is again fallacious. Section 115 of the CPC expressly sets out the three grounds on which a revision may be entertained and then states that the High Court may make 'such order as it thinks fit'. These latter words are missing in Section 34, given the legislative scheme of the Arbitration Act, 1996. For all the aforesaid reasons, with great respect to the learned Single Judge, it is not correct in law and therefore stands overruled. 42. Coming to the submission in support of the impugned judgment that the fact that the Central Government appoints an arbitrator and the arbitration would therefore not be consensual, resulting in a government servant rubber stamping an award which then cannot be challenged on its merits, cannot possibly lead to the conclusion that, therefore, a challenge on merits must be provided driving a coach and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a v. State (NCT of Delhi), (2017) 15 SCC 133, as the theory of "creative interpretation". However, even "creative interpretation" has its limits, which have been laid down in the aforesaid judgment as follows: - 139. A reading of the Act as a whole in the light of the Statement of Objects and Reasons thus makes it clear that the intention of the legislator was to focus on children, as commonly understood i.e. persons who are physically under the age of 18 years. The golden rule in determining whether the judiciary has crossed the Lakshman Rekha in the guise of interpreting a statute is really whether a Judge has only ironed out the creases that he found in a statute in the light of its object, or whether he has altered the material of which the Act is woven. In short, the difference is the well-known philosophical difference between "is" and "ought". Does the Judge put himself in the place of the legislator and ask himself whether the legislator intended a certain result, or does he state that this must have been the intent of the legislator and infuse what he thinks should have been done had he been the legislator. If the latter, it is clear that the Judge then would add somethi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very government servant who took into account depressed land values which were relevant for purposes of stamp duty only. It may be mentioned at this juncture that a limited challenge was made to Section 3J of the National Highways Act when it excluded the provisions of the Land Acquisition Act in the context of solatium and interest not being granted under the National Highways Act. Thus, in Union of India v. Tarsem Singh, (2019) 9 SCC 304, this Court dealt with a batch of appeals in which the question was set out thus: - 1. … A batch of appeals before us by the Union of India question the view of the Punjab and Haryana High Court which is that the non-grant of solatium and interest to lands acquired under the National Highways Act, which is available if lands are acquired under the Land Acquisition Act, is bad in law, and consequently that Section 3-J of the National Highways Act, 1956 be struck down as being violative of Article 14 of the Constitution of India to this extent. 49. This question was then answered stating: 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 imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) No injunction shall be granted by a court in a suit under this Act involving a contract relating to an infrastructure project specified in the Schedule, where granting injunction would cause impediment or delay in the progress or completion of such infrastructure project. Explanation. -For the purposes of this section, section 20B and clause (ha) of section 41, the expression "infrastructure project" means the category of projects and infrastructure Sub-Sectors specified in the Schedule. (2) The Central Government may, depending upon the requirement for development of infrastructure projects, and if it considers necessary or expedient to do so, by notification in the Official Gazette, amend the Schedule relating to any Category of projects or Infrastructure Sub- Sectors. (3) Every notification issued under this Act by the Central Government shall be laid, as soon as may be after it is issued, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be no doubt that discrimination would be writ large in such cases. 56. As a matter of fact, 7 learned Judges of this Court in Nagpur Improvement Trust v. Vithal Rao, (1973) 1 SCC 500 held as follows: - 26. It is now well-settled that the State can make a reasonable classification for the purpose of legislation. It is equally well-settled that the classification in order to be reasonable must satisfy two tests: (i) the classification must be founded on intelligible differentia and (ii) the differentia must have a rational relation with the object sought to be achieved by the legislation in question. In this connection it must be borne in mind that the object itself should be lawful. The object itself cannot be discriminatory, for otherwise, for instance, if the object is to discriminate against one section of the minority the discrimination cannot be justified on the ground that there is a reasonable classification because it has rational relation to the object sought to be achieved. 27. What can be reasonable classification for the purpose of determining compensation if the object of the legislation is to compulsorily acquire land for public purposes? 28. It would not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Given the fact that the NH Amendment Act, 1997 has not been challenged before us, we refrain from saying anything more. Suffice it to say that, as has been held in Taherakhatoon v. Salambin Mohammad, (1999) 2 SCC 635 (at para 20), even after we declare the law and set aside the High Court judgment on law, we need not interfere with the judgment on facts, if the justice of the case does not require interference under Article 136 of the Constitution of India.
58. Given the fact that in several similar cases, the NHAI has allowed similarly situated persons to receive compensation at a much higher rate than awarded, and given the law laid down in Nagpur Improvement Trust (supra), we decline to exercise our jurisdiction under Article 136 in favour of the appellants on the facts of these cases. Also, given the fact that most of the awards in these cases were made 7-10 years ago, it would not, at this distance in time, be fair to send back these cases for a de novo start before the very arbitrator or some other arbitrator not consensually appointed, but appointed by the Central Government. The appeals are, therefore, dismissed on facts with no order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X
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