Dismissed

National Highways Authority of India v. Sri.B.P.Ravi

Karnataka HC26 Jul 2021MFA/2042/2021

Case brief

AI extract

What is this about?

The High Court dismissed appeals by NHAI challenging arbitral awards in statutory land acquisition proceedings. The Court held that the arbitrator's application of guideline values under the LARR Act, 2013 was a plausible view not shocking the conscience of the court, and thus not perverse or patently illegal. The trial court's confirmation of the award was upheld as the scope of interference unde

What did the court decide?

null

National Highways Authority of India Vs… — Public Procurement and Tenders | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 26^TH DAY OF JULY, 2021

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PRESENT

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THE HON’BLE MRS.JUSTICE S.SUJATHA

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AND

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THE HON’BLE MR. JUSTICE E.S.INDIRESH

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M.F.A.No.2037/2021 c/w M.F.A.No.2038/2021, M.F.A.No.2039/2021, M.F.A.No.2040/2021, M.F.A.No.2042/2021 & M.F.A.No.2043/2021 (AA)

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IN M.F.A.No.2037/2021:

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BETWEEN :

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NATIONAL HIGHWAYS AUTHORITY OF INDIA PROJECT IMPLEMENTATION UNIT RAMANAGARA NEAR BASAVANAPURA (RAMADEVARAPADA) RAMANAGARA-562 128 RAMANAGARA DISTRICT REP BY ITS GENERAL MANAGER (TECH) AND THE PROJECT DIRECTOR B.T.SRIDHARA ...APPELLANT

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(BY SRI K.ARUN KUMAR, SENIOR COUNSEL FOR SMT.SRUTI CHAGANTI, ADV.)

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AND :

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1 . SRI P.NAGARAJU @ CHELUVAIAH S/O LATE CHELUVAIAH AGED ABOUT 50 YEARS R/AT MAYAGANAHALLI VILLAGE KASABA HOBLI, RAMANAGARA TALUK & DISTRICT-562128

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2 . THE ARBITRATOR AND DEPUTY COMMISSIONER

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RAMANAGARA DISTRICT RAMANAGARA-562128 …RESPONDENTS

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(BY SRI M.R.RAJAGOPAL, ADV. FOR R-1; SRI T.P.SREENIVASA, AGA FOR R-2.)

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THIS M.F.A. IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT AGAINST THE JUDGMENT AND DECREE DATED 26.02.2021 PASSED IN A.S.NO.18/2019 ON THE FILE OF THE PRINCIPAL DISTRICT AND SESSIONS JUDGE, RAMANAGARA, DISMISSING THE SUIT FILED UNDER SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT.

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IN M.F.A.No.2038/2021:

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BETWEEN :

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NATIONAL HIGHWAYS AUTHORITY OF INDIA PROJECT IMPLEMENTATION UNIT RAMANAGARA

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NEAR BASAVANAPURA (RAMADEVARAPADA) RAMANAGARA-562 128 RAMANAGARA DISTRICT REP BY ITS GENERAL MANAGER (TECH) AND THE PROJECT DIRECTOR B.T.SRIDHARA ...APPELLANT

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(BY SRI K.ARUN KUMAR, SENIOR COUNSEL FOR SMT.SRUTI CHAGANTI, ADV.)

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AND :

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1 . SRI P.NAGARAJU @ CHELUVAIAH S/O LATE CHELUVAIAH AGED ABOUT 50 YEARS R/AT MAYAGANAHALLI VILLAGE KASABA HOBLI, RAMANAGARA TALUK & DISTRICT-562128

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2 . THE ARBITRATOR AND DEPUTY COMMISSIONER RAMANAGARA DISTRICT

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RAMANAGARA-562128 …RESPONDENTS

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(BY SRI M.R.RAJAGOPAL, ADV. FOR R-1; SRI T.P.SREENIVASA, AGA FOR R-2.)

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THIS M.F.A. IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT AGAINST THE JUDGMENT AND DECREE DATED 26.02.2021 PASSED IN A.S.NO.19/2019 ON THE FILE OF THE PRINCIPAL DISTRICT AND SESSIONS JUDGE, RAMANAGARA, DISMISSING THE SUIT FILED UNDER SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT.

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IN M.F.A.No.2039/2021:

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BETWEEN :

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(BY SRI K.ARUN KUMAR, SENIOR COUNSEL FOR SMT.SRUTI CHAGANTI, ADV.)

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AND :

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1 . SRI P.NAGARAJU @ CHELUVAIAH S/O LATE CHELUVAIAH AGED ABOUT 50 YEARS R/AT MAYAGANAHALLI VILLAGE KASABA HOBLI, RAMANAGARA TALUK & DISTRICT-562128

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2 . THE ARBITRATOR AND DEPUTY COMMISSIONER RAMANAGARA DISTRICT RAMANAGARA-562128 …RESPONDENTS

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(BY SRI M.R.RAJAGOPAL, ADV. FOR R-1; SRI T.P.SREENIVASA, AGA FOR R-2.)

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THIS M.F.A. IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT AGAINST THE JUDGMENT AND DECREE DATED 26.02.2021 PASSED IN A.S.NO.21/2019 ON THE FILE OF THE PRINCIPAL DISTRICT AND SESSIONS JUDGE, RAMANAGARA, DISMISSING THE SUIT FILED UNDER SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT.

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IN M.F.A.No.2040/2021:

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BETWEEN :

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(BY SRI K.ARUN KUMAR, SENIOR COUNSEL FOR SMT.SRUTI CHAGANTI, ADV.)

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AND :

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1 . SRI P.NAGARAJU @ CHELUVAIAH S/O LATE CHELUVAIAH AGED ABOUT 50 YEARS R/AT MAYAGANAHALLI VILLAGE KASABA HOBLI, RAMANAGARA TALUK & DISTRICT-562128

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2 . THE ARBITRATOR AND DEPUTY COMMISSIONER RAMANAGARA DISTRICT RAMANAGARA-562128 …RESPONDENTS

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(BY SRI M.R.RAJAGOPAL, ADV. FOR R-1; SRI T.P.SREENIVASA, AGA FOR R-2.)

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THIS M.F.A. IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT AGAINST THE JUDGMENT AND DECREE DATED 26.02.2021 PASSED IN A.S.NO.22/2019 ON THE FILE OF THE PRINCIPAL DISTRICT AND SESSIONS JUDGE, RAMANAGARA, DISMISSING THE SUIT FILED UNDER SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT.

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IN M.F.A.No.2042/2021:

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BETWEEN :

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NATIONAL HIGHWAYS AUTHORITY OF INDIA PROJECT IMPLEMENTATION UNIT RAMANAGARA

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NEAR BASAVANAPURA (RAMADEVARAPADA) RAMANAGARA-562 128 RAMANAGARA DISTRICT REP BY ITS GENERAL MANAGER (TECH) AND THE PROJECT DIRECTOR B.T.SRIDHARA ...APPELLANT

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(BY SRI K.ARUN KUMAR, SENIOR COUNSEL FOR SMT.SRUTI CHAGANTI, ADV.)

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AND :

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1 . SRI B.P.RAVI S/O LATE PUTTALINGAIAH AGED ABOUT 55 YEARS R/AT BASAVANAPURA VILLAGE, KASABA HOBLI RAMANAGARA TALUK & DISTRICT-562128.

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2 . THE ARBITRATOR AND DEPUTY COMMISSIONER RAMANAGARA DISTRICT RAMANAGARA-562128 …RESPONDENTS

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(BY SRI JAYAKUMAR S. PATIL, SENIOR COUNSEL FOR SRI DEVI PRASAD SHETTY, ADV. FOR R-1; SRI T.P.SREENIVASA, AGA FOR R-2.)

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THIS M.F.A. IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT AGAINST THE JUDGMENT AND DECREE DATED 26.02.2021 PASSED IN A.S.NO.17/2019 ON THE FILE OF THE PRINCIPAL DISTRICT AND SESSIONS JUDGE, RAMANAGARA, DISMISSING THE SUIT FILED UNDER SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT.

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IN M.F.A.No.2043/2021:

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BETWEEN :

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NATIONAL HIGHWAYS AUTHORITY OF INDIA PROJECT IMPLEMENTATION UNIT RAMANAGARA

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NEAR BASAVANAPURA (RAMADEVARAPADA) RAMANAGARA-562 128 RAMANAGARA DISTRICT REP BY ITS GENERAL MANAGER (TECH) AND THE PROJECT DIRECTOR B.T.SRIDHARA ...APPELLANT

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(BY SRI K.ARUN KUMAR, SENIOR COUNSEL FOR SMT.SRUTI CHAGANTI, ADV.)

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AND :

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1 . SRI P.NAGARAJU @ CHELUVAIAH S/O LATE CHELUVAIAH AGED ABOUT 52 YEARS R/AT MAYAGANAHALLI VILLAGE KASABA HOBLI, RAMANAGARA TALUK & DISTRICT-562128

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2 . THE ARBITRATOR AND DEPUTY COMMISSIONER RAMANAGARA DISTRICT RAMANAGARA-562128 …RESPONDENTS

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(BY SRI M.R.RAJAGOPAL, ADV. FOR R-1; SRI T.P.SREENIVASA, AGA FOR R-2.)

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THIS M.F.A. IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT AGAINST THE JUDGMENT AND DECREE DATED 26.02.2021 PASSED IN

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A.S.NO.20/2019 ON THE FILE OF THE PRINCIPAL DISTRICT AND SESSIONS JUDGE, RAMANAGARA, DISMISSING THE SUIT FILED UNDER SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT.

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THESE APPEALS HAVING BEEN HEARD AND RESERVED, COMING ON FOR PRONOUNCEMENT OF JUDGMENT, THIS DAY, S. SUJATHA, J ., DELIVERED THE FOLLOWING:

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J U D G M E N T

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Since common and akin issues are involved in these appeals, they are heard together and disposed of by this common judgment.

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These appeals are filed under Section 37[1][c] of the Arbitration and Conciliation Act, 1996 [‘Act, 1996’ for short] challenging the orders dated 26.02.2021, passed under Section 34 of the Act by the Principal District and Sessions Judge, Ramanagara [‘Trial Court’ for short] in A.S.Nos.18/2019, 19/2019, 21/2019, 22/2019, 17/2019 and 20/2019.

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The subject lands were acquired under Section 3-A[1] of the National Highways Act, 1956 [‘NH Act’ for short] vide Preliminary Notification dated

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01.02.2016. Final Notification dated 23.06.2016 was

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issued under Section 3-D[1] of the Act. Special Land

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Acquisition Officer and Competent Authority [SLAO and

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CA] passed the awards under Section 3-G[7] of the NH

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Act relating to the subject lands as under:

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Sl No	MFA No.	Sy.No	Acquired land in Sq. Mtrs	Village	Date of Conversion	Award by SLAO	Arbitrator price
1	2037/ 21	42/1 & 92/2	631+50 Sq. Mtr	Mayaga nahalli	3/07/1970 [Residential purpose]	Rs.7833/- per Sq.Mtr Rs.2026/- per Sq.Mtr for 50 Sq. Mtr.	Rs.15,400/ - per Sq. Mtr.
2	2038/ 21	35/3	505 Sq. Mtr	Madap ura	22/1/2011 [Commercial purpose]	Rs.2026/- per Sq. Mtr, treated as dry land	Rs.15,400/ - per Sq. Mtr.
3	2039/ 21	90/2 A	2121 Sq. Mtr	Mayaga nahalli	20/5/1992 [Industrial purpose]	Rs.2026/- per Sq. Mtr, treated as dry land	Rs.15,400/ - per Sq. Mtr.
4.	2040/ 21	92/1	1818 Sq. Mtr.	Mayaga nahalli	20/5/1992 [Residential purpose]	Rs.2026/- per Sq. Mtr, treated as dry land	Rs.15,400/ - per Sq. Mtr.
5	2042/ 21	24	3743 Sq. Mtr.	Kallugo pahalli	16/3/2015 [Commercial purpose]	Rs.8102/- per Sq. Mtr, treated as dry land	Rs.15,400/ - per Sq. Mtr.
6	2043/ 21	37/1	3518 Sq. Mtr.	Madap ura	29/10/1991 [Industrial purpose]	Rs.2026/- per Sq. Mtr., treated as dry land	Rs.15,400/ - per Sq. Mtr.

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Being dissatisfied with the quantum of compensation awarded by the SLAO, arbitration proceedings were initiated by the land losers. Claim petitions were filed by the land losers before the Arbitrator under Section 3-G[5] of the NH Act. Objections were filed by the SLAO & CA and the appellants herein. Arbitrator passed awards determining the compensation of Rs.15,400/- per square meter and enhanced the compensation accordingly. Being aggrieved, the appellants preferred petition under Section 34 of the Act, 1996 which came to be rejected. Hence, the present appeals by the National Highway Authority of India [NHAI].

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Learned senior counsel Sri.K.Arunkumar representing the appellants submitted that the Trial Court failed to appreciate that the award passed by the SLAO & CA was in accordance with the revenue records and the statutory principles set out in Section3-G[7] of

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the NH Act and the relevant provisions of the Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 [‘Act 2013’ for short]. Learned Arbitrator enhanced the compensation awarded by the SLAO arbitrarily, without application of mind and in violation of established principles of law. The Trial Court exercising the powers under Section 34 of the Act, 1996 ought to have interfered with the award of the learned Arbitrator, setting aside the same and restoring the order passed by the SLAO. Learned senior counsel submitted that no reasons are assigned for treating the subject lands similar to the lands in City Greens Layout of Mayaganahalli village in MFA Nos.2037 to 2040 and 2043/2021 and in Zanadu in MFA No.2042/2021 despite guideline value issued under the Indian Stamp Act, 1989 relating to the subject lands. Inviting the attention of the Court to section 26[1] of the Act 2013, it was argued that the market value may be assessed either [a] with the aid of guideline value applicable to

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the area in which the acquired lands are situated as on the date of the preliminary notification or [b] from the average sale price for similar type of land situated in the nearest village or nearest vicinity area. In the event market value is to be assessed on the basis of the average sale price of lands in the vicinity, the Explanation to Section 26[1][b] stipulates that such average price shall be determined by taking into account register sale deeds/agreements to sell for similar type of area in the near village from the immediately preceding 3 years from the date of preliminary notification of acquisition. The learned arbitrator erred in assessing market value under Section 26[1][b] of the Act on the basis of guideline value applicable to City greens Layout/Zanadu Extension.

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Learned senior counsel submitted that the Learned Arbitrator grossly erred in taking note of the

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guideline value notified vide notification dated 28.03.2016 issued subsequent to the date of preliminary notification dated 01.02.2016, the same is in violation of the statutory mandate of Section 3-G[7][a] of the NHAI Act. It was further submitted that no reasons are assigned by the Learned Arbitrator in applying the guideline value of Rs.15,400/- per sq. meter as per the notification dated 28.03.2016 relating to the City Greens Layout/Zanadu notwithstanding the guideline value notified in respect of converted lands in Mayaganahalli village/Kallugoppahalli village relating to the survey numbers in question vide notification dated 07.11.2014.

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The sum and substance of the arguments

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advanced by the learned Senior Counsel is that: [1] Value of the acquired land has to be determined as prevailing on the date of the preliminary notification as per Section 3-G[7] of the NH Act. [2] The arbitration

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being statutory, learned arbitrator is bound by the statute. Compensation has to be reckoned as per the provisions of the NH Act. [3] No reasonable opportunity has been provided to the parties to meet the contention raised by the opposite party or the reference made to the guideline notification dated 28.03.2016 by the arbitrator to consider the same as the basis for determining the compensation. [4] No proper reasoning being assigned by the learned arbitrator for applying the guideline value prescribed in the notification dated 28.03.2016, the award is void ab initio and has draconian effect. Learned

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senior counsel has referred to the following judgments:

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Associate Builders V/s. Delhi Development Authority [(2015) 3 SCC 49]

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Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd. [(2019) 20 SCC 1]

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Som Datt Builders Ltd., V/s. State of Kerala [(2009) 10 SCC 259]

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Board of Control for Cricket in India V/s. Deccan Chronicle Holdings Ltd., [Comm. Arbitration Petition [L] No.4466 of 2020, D.D 16.06.2021]

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Learned Senior Counsel Sri.Jayakumar S.

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Patil appearing for appellant in MFA No.2042/2021 submitted that the subject lands situated in Sy.No.24 in Kallugoppanahalli village were converted into commercial purpose as per the conversion order dated 16.03.2015.

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Inviting the attention of the Court to para 2 of the claim petition submitted before the learned arbitrator, it was argued that the claimants had taken a specific stand that the acquired lands in Sy.No.24 of Kallugoppanahalli village were converted for commercial purpose. The property abutting the acquired lands which are converted to residential purpose was fetching higher rate as per the guideline value prescribed by the office of the Subregistrar, Ramanagara. The acquired land being converted land and abuts the Bengaluru – Mysuru National Highway, 50% has to be added to the present

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market value. Further, in paragraph 5 of the claim petition, it was categorically mentioned that the acquired land was converted to commercial purpose and the value of such lands keeps on raising from time to time and accordingly the average of 5 years market value subsequent to issuance of the preliminary notification has to be considered.

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It was further submitted that objections were filed by the NHAI denying the contentions of the appellants inasmuch as hike in the price of the lands in the surrounding areas of Bidadi town acquired for national highway. Further additional claim petition was filed by the appellants specifically indicating the conversion order dated 16.03.2015 wherein the acquired lands were converted into commercial purpose and the value of such lands would be Rs.15,400/- + 50% i.e., equal to Rs.32,240/- as per the Annexure-1 to the guidance value As such sale price ought to have

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been determined at Rs.32,240/per Sq. meter

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considering the provisions of Section 26 of Act, 2013. Thus, it was further claimed that considering the guidance value of the lands converted to residential purpose in Kallagopahalli [Zanadu], market value of the subject lands ought to have been determined. Joint survey was conducted to ascertain the nature of the lands acquired wherein it was indicated that as per the survey document, the present acquired lands are converted lands. Drawing the attention of the Court to the petition filed under section 34 of the Act by the NHAI in A.S.No.17/2019, more particularly to ground No.16, it was argued that the NHAI has contended that the arbitrator has enhanced the compensation at the rate of Rs.15,400/- per Sq. meter for the subject lands without reference/supporting documents, thereby committed serious irregularity which is against the terms of reference. The Trial Court has given a finding on this aspect as regards the status of lands in City Greens and

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Zanadu with the subject lands acquired as similarly situated. Thus, it was submitted that all the material were placed on record before the arbitrator and there was no breach of principles of natural justice in not providing an opportunity to the appellant – NHAI to meet the contention of the claimants/appellants with reference made to the notification dated 28.03.2016. No ground was made out by the appellant – NHAI to warrant interference of the Trial Court either under Section 34[2][a][iii] or under 34[2][b][ii]. Since all the connected matters were clubbed and heard together, the notification dated 28.03.2016 was made available before the Arbitrator which is found in the records maintained by the arbitrator relating to C.R.No.132/2017-2018.

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Learned counsel has relied on the following judgments:

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1 . The National Highway Authority of India V/s. Arbitrator – District Collector, Jaipur,

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Rajasthan [Hon’ble High Court of Rajasthan in S.B.Civil Misc.Appeal No.2770/2016]

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2. Ramdas M.R. V/s. National Highway Authority of India [Hon’ble High Court of Kerala in Arb. A. No.28/2016]

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Nagpur Improvement Trust and Others V/s. Vithal Rao and Others [AIR 1973 SC 689]

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Union of India and Another V/s. Tarsem Singh and Others [(2019) 9 SCC 304].

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Learned counsel Sri. M.R.Rajagopal

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appearing for the appellant in MFA No.2037/2021 submitted that the lands notified for acquisition under the proceedings are located adjacent to BengaluruMysuru Highway i.e., National Highway-275 and the lands are fertile lands because of the location of the lands. All the lands are converted for non-agricultural purposes even long prior to issuance of the preliminary Notification and some of the land owners claimed that the conversion is for residential purposes and few lands

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are converted for commercial purposes by virtue of an order passed by the competent Authority under the

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Karnataka Land Revenue Act. While considering the compensation by the SLAO, the same has not been taken note of and the compensation has been determined considering the acquired lands as agricultural lands. There is a gap of more than 1½ years between the date of preliminary Notification and date of passing of the award. As a consequence of that, obviously there is hike in the value of the lands and that was not appreciated by the SLAO. Though the preliminary Notification was issued on 01.02.2016, on the date of determining the compensation, the market value of the subject property was revised by the Government under the Stamp Act and that was not considered by the SLAO.

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By virtue of the Notification issued under sub-section (3) of Section 105 of the Act, 2013, the SLAO also has failed to determine the compensation by taking into consideration the factors specified under

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Sections 26 to 28 of the said Act despite the Central Government issued the Notification in 2015, as per sub-section 105(3) of the Act, 2013. The SLAO has failed to take note of the market value of the near vicinity of the lands in question while determining the market value of the acquired lands. No time was sought by the NHAI to tender any evidence except filing the written submissions in conclusion of their case. Now, it cannot be alleged that no opportunity was provided to NHAI to meet the reference made to the Notification dated 28.03.2016. The claimants have produced various documents before the arbitrator but no material was placed by the NHAI to impeach or rebut the evidence placed by the claimants. The arbitrator has passed the final order after considering the written arguments filed by the parties, fixing the market value of the subject acquired lands at Rs.15,400/- per Sq. meter.

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In arbitration suits filed by the NHAI, the

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trial Court has rightly observed that the SLAO had determined the compensation relating to the subject lands as dry lands despite the same being converted

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and materials were available on record. It was submitted that the scope of interference of the Court as against the award passed by the Arbitrator being limited, the grounds urged by the appellants would not come within the terrain of the parameters set out in section 34(2)(a)(iii) and 34(2)(b)(ii). The power of the Court under Sections 34 and 37 cannot be equal to the power of the Court in regular appeal. As such, the impugned judgment and order passed by the Trial Court rejecting the arbitration suits deserves to be confirmed.

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Learned counsel submitted that Act 2013 being the beneficial legislation dealing with upgradation of land enacted to provide for just and fair compensation and make adequate provision for

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rehabilitation for the affected persons and their families has introduced for the first time provisions for social interaction analysis. Though the National Highways Act 1956 was listed in the IV Schedule of the Act 2013, by virtue of the judgment of the Hon'ble Apex Court in Tarsem Singh and Others supra, the provisions of Sections 26 to 28 are made applicable to the acquisition made under the NH Act.

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Learned counsel has referred to host of cases in support of his contentions which would be discussed infra.

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On our request, learned AGA has placed the records of the learned arbitrator. The Government Notification dated 28.03.2016 is available in the file relating to MFA No.2040/2021 [CR.No.132/2017-18].

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Adverting to the arguments advanced by the

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learned counsel for the parties, the points that arise for

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our consideration are:

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1]. Whether the award passed by the learned arbitrator enhancing the compensation amount warrants interference?

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2]. Whether the order impugned passed by the Trial Court exercising the power under Section 34 of the Act is justifiable?

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Re. Point No.1:

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The appellants being inter alia the

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implementing authority for upgrading/widening of National Highway No.275, Bangalore – Mysore Division, from KM 18.000 to KM 135.304, has acquired the lands belonging to the respondents vide Preliminary Notification dated 01.02.2016 issued under section 3- A[1] of the NH Act. The Final Notification under Section 3-D[1] of the Act was issued on 23.09.2016, the tabulated summary of the same is as under:

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S. No. MFA No.	Village	Sy.No.	Extent [in sq.m]	Original Dat Date	SLAO Aw 01.0 e of 3D N Land Type Consd	ard Date 2.2016 tfn: 23.0 Rate [in Rs. Per sq. m.]	of 3A Ntfn: 9.2016 Total value of land [in Rs.]	Proceedings before the Arbitrator	Arbitral A Land Type considered by Arbitrator	ward Date of Guideline value Notification considered by Arbitrator	Rate fixed by Arbitrator [per sq. m.]	Total Value of Land as fixed by Arbitrator (in Rs.)
1. 2037/2021	Mayaganahalli	42/1	631	10.03.17	RES	7833	1,54,84,358	LAQ[A]/NH- 275/CR/134/	Converted	28.03.16	15400	3,04,42,884
	Mayaganahalli	92/2	50	10.03.17	AGR	2026	3,17,355	2017-18	Residential
2. 2038/2021	Madapura	35/3	505	09.03.17	AGR	2026	32,04,948	LAQ[A]/NH- 275/CR/136/ 2017-18	Converted Commercial	28.03.16	15400	2,43,61,399
3. 2039/2021	Mayaganahalli	90/2A	2112	10.03.17	AGR	2026	1,34,62,193	LAQ[A]/NH- 275/CR/132/ 2017-18	Converted Industrial	28.03.16	15400	10,23,28,615
4. 2040/2021	Mayaganahalli	92/1	1818	10.03.17	AGR	2026	1,15,39,023	LAQ[A]/NH- 275/CR/137/ 2017-18	Converted Residential	28.03.16	15400	8,77,10,242
5. 2042/2021	Kallugopahalli	24	3743	11.03.07	RES	8102	6,46,89,471	LAQ[A]/NH- 275/CR/139/ 2017-18	Converted Commercial	28.03.16	15400	12,29,59,498
6. 2043/2021	Madapura	37/1	3518	09.03.017	AGR	2026	2,23,26,745 13,07,06,737	LAQ[A]/NH- 275/CR/41/ 2019-20	Converted Industrial	28.03.16	15400	16,97,09,708

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20. The aforesaid Arbitral awards are confirmed

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by the Court exercising the power under Section 34 of the Act. Under the Scheme of the NH Act, each of the highways specified in the Schedule has been declared to be the National Highway. As per Section 2[2], of the NH

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Act, the Central Government may, by notification in the Official Gazette, declare any other highway to be a national highway and on the publication of such notification such highway shall be deemed to be specified in the Schedule. The Central Government may, by like notification, omit any highway from the Schedule and on the publication of such notification, the highway so omitted shall cease to be a national highway. The subject matter in this batch of cases relates to the acquisition of lands for widening of the national highway No.275, Bengaluru-Mysuru division.

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Section 3A of the NH Act, empowers the central Government to acquire land for the public purpose. If such land is required for the building, maintenance, management or operation of a national highway or part thereof, by issuing notification in the Official Gazette declaring its intention to acquire such land.

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Section 3G of the Act provides for

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determination of amount payable to the acquired lnds. As per Sub-Section [1], where any land is acquired under the NH Act, there shall be paid an amount which shall be determined by an order of the competent authority. As per Sub-section [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. As per Sub-section [5], If the amount determined by the competent authority under sub-section (1) or subsection (2) is not acceptable to either of the parties, the amount shall, on an application by either of the parties, be determined by the arbitrator to be appointed by the

¶160

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Central Government. As per Sub-section [6], Subject to the provisions of the NH Act, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to every arbitration under NH Act. As per Subsection [7], the competent authority or the arbitrator while determining the amount under sub-section (1) or sub-section (5), as the case may be, shall take into consideration —

¶162

(a) the market value of the land on

¶163

the date of publication of the notification

¶164

under section 3A;

¶165

(b) the damage, if any, sustained by the

¶166

person interested at the time of taking possession of the land, by reason of the severing of such land from other land;

¶167

¶168

person interested at the time of taking possession of the land, by reason of the acquisition injuriously affecting his other

¶169

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¶170

immovable property in any manner, or his

¶171

earnings;

¶172

acquisition of the land, the person interested is compelled to change his residence or place of business, the reasonable expenses, if any, incidental to such change.

¶173

Act, 2013 has come into force on 01.01.2014 vide SO3739 [E] dated 19.12.2013 published in the Gazette of India, extra. Section 103 of the said Act contemplates that the provisions of the said Act shall be in addition to and not in derogation of, any other law for the time being in force. Section 105 contemplates that the provisions of the said Act shall not apply in certain cases or to apply with certain modifications. As per Subsection [1] of Section 105, subject to Sub-section [3], the provisions of the said Act 2013 shall not apply to

¶174

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¶175

enactments relating to land acquisition specified in the Fourth Schedule. Sub-section [3] provides that the Central Government shall, by notification, within one year from the date of commencement of this Act, direct that any of the provisions of this Act relating to the determination of compensation in accordance with the First Schedule and rehabilitation and resettlement specified in the Second and Third Schedules, being beneficial to the affected families, shall apply to the cases of land acquisition under the enactments specified in the Fourth Schedule or shall apply with such exceptions or modifications that do not reduce the compensation or dilute the provisions of this Act relating to compensation or rehabilitation and resettlement as may be specified in the notification, as the case may be.

¶176

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¶177

The National Highways Act, 1956 has been

¶178

listed in Sl.No.7 of the List of Enactments shown in the IV Schedule of the Act, 2013.

¶179

The issue whether the provisions of the Act, 2013 would be applicable to the acquisition made under the provisions of NH Act was the question that fell for consideration before the Hon'ble Apex Court in the case of Tarsem Singh and Others supra. In the said case, the Hon'ble Apex Court has categorically held thus:

¶180

“51. We were also referred to an order in Sunita Mehra v. Union of India (2016) SCC OnLine 1128, in which this Court held : [SCC paras 5-7]

¶181

submissions advanced. In Gurpreet Singh v. Union of India, (2006) 8 SCC 457, this Court, though in a different context, had restricted the operation of the judgment of this Court in Sunder v. Union of India, (2001) 7 SCC 211

¶182

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¶183

and had granted the benefit of interest on solatium only in respect of pending proceedings. We are of the view that a similar course should be adopted in the present case also. Accordingly, it is directed that the award of solatium and interest on solatium should be made effective only to proceedings pending on the date of the High Court order in Golden Iron & Steel Forgins v. Union of India i.e. 28.03.2008. Concluded cases should not be opened. As for future proceedings, the position would be covered by the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (came into force on 01.01.2014), which Act has been made applicable to acquisitions under the National Highways Act, 1956 by virtue of notification/order issued under the provisions of the Act of 2013.

¶184

54. In these matters, this ground has been raised and argued sometimes at the Section 34 stage, sometimes at the Section 37 stage, and sometimes at both stages. The

¶185

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¶186

burden to prove that the land in question is within 50m of the National Highway, and that it does not have commercial potentiality, is on the NHAI but, on facts, has never been discharged. This being the case in all these appeals, they stand dismissed.”

¶187

Hence, it cannot be gainsaid that the Fourth Schedule to the Act, 2013 now has to be read in the light of the judicial pronouncement made by the Hon'ble Apex Court in Tarsem Singh supra. Further, it is significant to note that notification has been issued by the Central Government under Section 105 of the Act, 2013 which reads thus:

¶188

“MINISTRY OF RURAL DEVELOPMENT

¶189

ORDER

¶190

New Delhi, the 28-8-2015

¶191

S.O. 2368(E).— Whereas, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (30 of 2013) (hereinafter referred to as the RFCTLARR Act) came into effect from 1st January, 2014;

¶192

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¶193

And whereas, sub-section (3) of Section 105 of the RFCLTARR Act provided for issuing of notification to make the provisions of the Act relating to the determination of the compensation, rehabilitation and resettlement applicable to cases of land acquisition under the enactments specified in the Fourth Schedule to the RFCTLARR Act;

¶194

And whereas, the notification envisaged under sub- section (3) of Section 105 of RFCTLARR Act was not issued, and the RFCTLARR (Amendment) Ordinance, 2014 (9 of 2014) was promulgated on 31st December, 2014, thereby, inter-alia, amending Section 105 of the RFCTLARR Act to extend the provisions of the Act relating to the determination of the compensation and rehabilitation and resettlement to cases of land acquisition under the enactments specified in the Fourth Schedule to the RFCTLARR Act;

¶195

And whereas, the RFCTLARR (Amendment) Ordinance, 2015 (4 of 2015) was promulgated on 3rd April, 2015 to give

¶196

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¶197

continuity to the provisions of the RFCTLARR (Amendment) Ordinance, 2014;

¶198

And whereas, the RFCTLARR (Amendment) Second Ordinance, 2015 (5 of 2015) was promulgated on 30th May, 2015 to give continuity to the provisions of the RFCTLARR (Amendment) Ordinance, 2015 (4 of 2015); And whereas, the replacement Bill relating to the RFCTLARR (Amendment) Ordinance, 2015 (4 of 2015) was referred to the Joint Committee of the Houses for examination and report and the same is pending with the Joint Committee;

¶199

As whereas, as per the provisions of article 123 of the Constitution, the RFCTLARR (Amendment) Second Ordinance, 2015 (5 of 2015) shall lapse on the 31st day of August, 2015 and thereby placing the land owners at the disadvantageous position, resulting in denial of benefits of enhanced compensation and rehabilitation and resettlement to the cases of land acquisition under the 13 Acts specified in the Fourth Schedule to the RFCTLARR Act as extended to the land owners under the said Ordinance;

¶200

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¶201

And whereas, the Central Government considers it necessary to extend the benefits available to the land owners under the RFCTLARR Act to similarly placed land owners whose lands are acquired under the 13 enactments specified in the Fourth Schedule; and accordingly the Central Government keeping in view the aforesaid difficulties has decided to extend the beneficial advantage to the land owners and uniformly apply the beneficial provisions of the RFCTLARR Act, relating to the determination of compensation and rehabilitation and resettlement as were made applicable to cases of land acquisition under the said enactments in the interest of the land owners;

¶202

Now, therefore, in exercise of the powers conferred by sub-section (1) of Section 113 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (30 of 2013), the Central Government hereby makes the following Order to remove the aforesaid difficulties, namely;-

¶203

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¶204

1. (1) This Order may be called the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Removal of Difficulties) Order, 2015.

¶205

(2) It shall come into force with effect from the 1st day of September, 2015.

¶206

2. The provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, relating to the determination of compensation in accordance with the First Schedule, rehabilitation and resettlement in accordance with the Second Schedule and infrastructure amenities in accordance with the Third Schedule shall apply to all cases of land acquisition under the enactments specified in the Fourth Schedule to the said Act.

¶207

[F.No. 13011/01/2014-LRD]

¶208

K. P. KRISHNAN, Addl. Secy.”

¶209

On issuance of the Preliminary and Final

¶210

Notifications under the NH Act, the SLAO/CA has

¶211

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¶212

passed the award in respect of the lands acquired for the purpose of widening of the road.

¶213

As discussed above, notification dated

¶214

28.08.2015 has been issued by the Central Government exercising the power under Section 113 of the 2013 Act. In Tarsem Singh and Others supra, it is made clear that the provisions of the Act 2013 relating to the determination of compensation in accordance with the First Schedule, rehabilitation and resettlement in accordance with the Second Schedule and infrastructure amenities in accordance with the Third Schedule shall apply to all cases of land acquisition under the enactments specified in the Fourth Schedule to the said Act. It has been further clarified that concluded cases should not be reopened. Thus, no doubt section 3-G[7][a] of the NH Act contemplates that the market value of the land on the date of publication of the notification under Section 3A has to be taken into

¶215

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¶216

consideration but the same has to be read along with

¶217

Section 26 of the Act, 2013 which reads thus:

¶218

“26. Determination of market

¶219

value of land by Collector.– (1)The Collector shall adopt the following criteria in assessing and determining the market value of the land, namely:—

¶220

(a) the market value, if any, specified in the Indian Stamp Act, 1899 (2 of 1899) for the registration of sale deeds or agreements to sell, as the case may be, in the area, where the land is situated; or

¶221

(b) the average sale price for similar type of land situated in the nearest village or nearest vicinity area; or

¶222

(c) consented amount of compensation as agreed upon under sub-section (2)of section 2 in case of acquisition of lands for private companies or for public private partnership projects, whichever is higher:

¶223

Provided that the date for determination of market value shall be the date on which the notification has been issued under section 11.

¶224

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¶225

Section 26 cannot be read in isolation for determination of compensation, Sections 27 and 28 of the Act, 2013 would also certainly have a bearing. As per Section 28, the seventh parameter contemplated to be considered by collector in determination of award is any other ground which may be in the interest of equity, justice and beneficial to the affected families. It is the contention of the learned counsel appearing for the NHAI that the notification dated 07.11.2014 is applicable to the lands acquired during 01.02.2016 and not the notification dated 28.03.2016 which has wrongly been applied by the learned arbitrator.

¶226

In terms of Clause[2], as per Annexure-1 to the notification dated 07.11.2014 published in the Gazette for the land converted but not fully developed, additional rate is prescribed as per Clause[2] which reads as under:

¶227

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[i]	Industrial	50% [above 10 guntas of land]
[ii]	Residential	60% [above 10 guntas of land]
[iii]	Commercial	75% [above 10 guntas of land]

¶229

As per Clause [3], for properties abutting National Highways and State Highways but not included in the revised rates, 50% and 25% more than that of other properties shall be fixed respectively. As per Clause [4], For Commercial, Non-Commercial [Excluding Industry] sites 40% more than that of Residential Sites be fixed in respective areas, except those for which rate has been already fixed.

¶230

Before proceeding further, it is beneficial to refer to Section 34[2][a]iii] and 34[2][b][ii] of the Act which reads thus:

¶231

“34. Application for setting aside arbitral award .—

¶232

(1) …..

¶233

(2) An arbitral award may be set aside by the Court only if—

¶234

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¶235

(a) the party making the application furnishes proof that, -

¶236

[iii] the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

¶237

(b) the Court finds that,—

¶238

(ii) the arbitral award is in conflict with the public policy of India.

¶239

[Explanation 1.—For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,—

¶240

(i) the making of the award was induced or affected by fraud or

¶241

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¶242

corruption or was in violation of section 75 or section 81; or

¶243

(ii)

¶244

(iii)

¶245

it is in contravention with the fundamental policy of Indian law; or it is in conflict with the most basic notions of morality or justice.

¶246

Explanation 2.—For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.

¶247

[(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:

¶248

Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.]

¶249

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¶250

Admittedly, the amended provisions of

¶251

Section 34 which has come into force with effect from 23.10.2015 shall be applicable to the facts of the present case. The scope of Section 34 of the Act has been considered by the Hon'ble Apex Court in umpteen number of cases. It is apt to refer to the judgments of the Hon'ble Apex Court to ascertain the scope and power of Section 34 of the Act, 1996.

¶252

In Associate Builders supra, the Hon'ble

¶253

Apex Court has held thus:

¶254

“33. It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus an award based on little evidence or on evidence which does not

¶255

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¶256

measure up in quality to a trained legal mind would not be held to be invalid on this score. Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts. In P.R. Shah, Shares & Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd., (2012) 1 SCC 594, this Court held:

¶257

"21. A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or reappreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. The Arbitral Tribunal has examined the facts and held that both the second respondent and the appellant are liable. The case as put forward by the first respondent has been accepted. Even the minority view was that the second respondent was liable as claimed by the first respondent, but the appellant was not liable only on the ground that the arbitrators appointed by the Stock Exchange under Bye-law 248, in a claim against a nonmember, had no jurisdiction to decide a claim against another member. The finding of the

¶258

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¶259

majority is that the appellant did the transaction in the name of the second respondent and is therefore, liable along with the second respondent. Therefore, in the absence of any ground under Section 34(2) of the Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at."

¶260

34. Application for setting aside arbitral award.-

¶261

(2) An arbitral award may be set aside by the Court only if-

¶262

(a) the party making the application furnishes proof that-

¶263

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case;

¶264

xxxxxx

¶265

xxxxxx

¶266

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¶267

The third juristic principle is that a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where-

¶268

1. a finding is based on no evidence, or

¶269

2. an arbitral tribunal takes into account something irrelevant to the decision which it arrives at;

¶270

3. or ignores vital evidence in arriving at its decision,

¶271

such decision would necessarily be perverse. A good working test of perversity is contained in two judgments. In H.B. Gandhi, Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath & Sons, 1992 Supp (2) SCC 312 at p. 317, it was held:

¶272

"7. ...................It is, no doubt, true that if a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring

¶273

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¶274

the blame of being perverse, then, the finding is rendered infirm in law.

¶275

It is with this very important caveat that the two fundamental principles which form part of the fundamental policy of Indian law (that the arbitrator must have a judicial approach and that he must not act perversely) are to be understood.

¶276

Interest of India

¶277

The next ground on which an award may be set aside is that it is contrary to the interest of India. Obviously, this concerns itself with India as a member of the world community in its relations with foreign powers. As at present advised, we need not dilate on this aspect as this ground may need to evolve on a case by case basis.

¶278

Justice

¶279

The third ground of public policy is, if an award is against justice or morality. These are two different concepts in law. An award can be said to be against justice only when it shocks the conscience of the court. An illustration of this can be given. A claimant is

¶280

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¶281

content with restricting his claim, let us say to Rs. 30 lakhs in a statement of claim before the arbitrator and at no point does he seek to claim anything more. The arbitral award ultimately awards him 45 lakhs without any acceptable reason or justification. Obviously, this would shock the conscience of the court and the arbitral award would be liable to be set aside on the ground that it is contrary to "justice".

¶282

Morality

¶283

The other ground is of "morality". Just as the expression "public policy" also occurs in Section 23 of the Indian Contract Act, so does the expression "morality". Two illustrations to the said section are interesting for they explain to us the scope of the expression "morality".

¶284

Patent Illegality

¶285

We now come to the fourth head of public policy namely, patent illegality. It must be remembered that under the explanation to section 34 (2) (b), an award is said to be in conflict with the public policy of India if the

¶286

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¶287

making of the award was induced or affected by fraud or corruption. This ground is perhaps the earliest ground on which courts in England set aside awards under English law. Added to this ground (in 1802) is the ground that an arbitral award would be set aside if there were an error of law by the arbitrator. This is explained by Lord Justice Denning in R v. Northumberland Compensation Appeal Tribunal. Ex Parte Shaw., 1952 1 All ER 122 at page 130:”

¶288

33. In Ssangyong Engineering &

¶289

Construction Co. Ltd.,V/s. NHAI [(2019) 15 SCC 131] , the Hon'ble Apex Court has held thus:

¶290

“19. There is no doubt that in the present case, fundamental changes have been made in the law. The expansion of “public policy of India” in ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705 [“Saw Pipes”] and ONGC Ltd. v. Western Geco International Ltd., (2014) 9 SCC 263 [“Western Geco”] has been done away with, and a new ground of “patent illegality”, with inbuilt exceptions, has

¶291

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¶292

been introduced. Given this, we declare that Section 34, as amended, will apply only to Section 34 applications that have been made to the Court on or after 23.10.2015, irrespective of the fact that the arbitration proceedings may have commenced prior to that date.

¶293

34. What is clear, therefore, is that the expression “public policy of India”, whether contained in Section 34 or in Section 48, would now mean the “fundamental policy of Indian law” as explained in paragraphs 18 and 27 of Associate Builders (supra), i.e., the fundamental policy of Indian law would be relegated to the “Renusagar” understanding of this expression. This would necessarily mean that the Western Geco (supra) expansion has been done away with. In short, Western Geco (supra), as explained in paragraphs 28 and 29 of Associate Builders (supra), would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court’s intervention

¶294

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¶295

would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in paragraph 30 of Associate Builders (supra).

¶296

35. It is important to notice that the ground for interference insofar as it concerns “interest of India” has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the “most basic notions of morality or justice”. This again would be in line with paragraphs 36 to 39 of Associate Builders (supra), as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.

¶297

36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the

¶298

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¶299

fundamental policy of Indian law, as understood in paragraphs 18 and 27 of Associate Builders (supra), or secondly, that such award is against basic notions of justice or morality as understood in paragraphs 36 to 39 of Associate Builders (supra). Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco (supra), as understood in Associate Builders (supra), and paragraphs 28 and 29 in particular, is now done away with.

¶300

37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within “the fundamental policy of Indian law”, namely,

¶301

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¶302

the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.

¶303

38. Secondly, it is also made clear that re-appreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.

¶304

39. To elucidate, paragraph 42.1 of Associate Builders (supra), namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award.Paragraph 42.2 of Associate Builders (supra), however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.

¶305

40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paragraphs 42.3 to 45 in Associate

¶306

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¶307

Builders (supra), namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator’s view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A).

¶308

34. In MMTC Ltd. V/s. Vedanta Ltd., AIR 2019

¶309

SC 1168 , the Hon'ble Apex Court has held thus:

¶310

“10. Before proceeding further, we find it necessary to briefly revisit the existing position of law with respect to the scope of interference with an arbitral award in India, though we do not wish to burden this judgment by discussing the principles regarding the same in detail. Such interference may be undertaken in terms of Section 34 or Section 37 of the Arbitration and

¶311

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¶312

Conciliation Act, 1996 (for short, “the 1996 Act”). While the former deals with challenges to an arbitral award itself, the latter, inter alia, deals with appeals against an order made under Section 34 setting aside or refusing to set aside an arbitral award.

¶313

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,

¶314

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¶315

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.

¶316

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).

¶317

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¶318

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, sub-section (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 re-appreciation of evidence.

¶319

12. 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

¶320

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¶321

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.

¶322

13. Having noted the above grounds for interference with an arbitral award, it must now be noted that the instant question pertains to determining whether the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration. However, this question has been addressed by the Courts in terms of the construction of the contract between the parties, and as such it can be

¶323

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¶324

safely said that a review of such a construction cannot be made in terms of re-assessment of the material on record, but only in terms of the principles governing interference with an award as discussed above.

¶325

14. It is equally important to observe at this juncture that while interpreting the terms of a contract, the conduct of parties and correspondences exchanged would also be relevant factors and it is within the arbitrator’s jurisdiction to consider the same. (See McDermott International Inc. v. Burn Standard Co. Ltd. (supra); Pure Helium India (P) Ltd. v. ONGC, (2003) 8 SCC 593, D.D. Sharma v. Union of India, (2004) 5 SCC 325).”

¶326

In South East Asia Marine Engineering and Constructions Limited [SEAMEC Limited] V/s.

¶327

Oil India Limited [(2020) 5 SCC 164 ], the Hon'ble Apex Court has referred to the decision in Dyna Technologies Pvt. Ltd., supra. Thus, it is held that where two views are possible, the Court cannot interfere

¶328

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¶329

in the plausible view taken by the arbitrator supported

¶330

by reasoning. In Dyna Technologies Pvt. Ltd., supra,

¶331

the Hon'ble Apex Court has held thus:

¶332

“34. The mandate under Section 31(3) of the Arbitration Act is to have reasoning which is intelligible and adequate and, which can in appropriate cases be even implied by the Courts from a fair reading of the award and documents referred to thereunder, if the need be. The aforesaid provision does not require an elaborate judgment to be passed by the arbitrators having regards to the speedy resolution of dispute.

¶333

36. When we consider the requirement of a reasoned order three characteristics of a reasoned order can be fathomed. They are: proper, intelligible and adequate. If the reasoning in the order are improper, they reveal a flaw in the decision-making process. If the challenge to an award is based on impropriety or perversity in the reasoning, then it can be challenged strictly on the grounds provided under Section 34 of the

¶334

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Arbitration Act. If the challenge to an award is based on the ground that the same is unintelligible, the same would be equivalent of providing no reasons at all. Coming to the last aspect concerning the challenge on adequacy of reasons, the Court while exercising jurisdiction under Section 34 has to adjudicate the validity of such an award based on the degree of particularity of reasoning required having regard to the nature of issues falling for consideration. The degree of particularity cannot be stated in a precise manner as the same would depend on the complexity of the issue. Even if the Court comes to a conclusion that there were gaps in the reasoning for the conclusions reached by the Tribunal, the Court needs to have regard to the documents submitted by the parties and the contentions raised before the Tribunal so that awards with inadequate reasons are not set aside in casual and cavalier manner. On the other hand, ordinarily unintelligible awards are to be set aside, subject to party autonomy to do away with the reasoned award. Therefore, the courts are required to

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be careful while distinguishing between inadequacy of reasons in an award and unintelligible awards.”

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In the light of these judgments, it cannot be gainsaid that interference of the Court under Section 34 of the Act against the arbitral award is minimal. Though the arbitration in the present set of facts is statutory, the principles enunciated by the Hon'ble Apex Court inasmuch as the scope of Section 34 would squarely applicable to the cases on hand.

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As regards the determination of market value, in the case of Nagpur Improvement Trust and Others supra , the Hon'ble Apex Court has held thus:

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“23. Can classification be made on the, basis of the public purpose for the purpose of compensation for which land is acquired ? In other words can the legislature lay down different principles of compensation for lands acquired say for a hospital or a school or a Government building ? can the legislature.

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say that for a hospital land will be acquired at 50% of the market value for a school at 60% of the value and for a Government building at 70% of the, market value ? All three objects are Public Purposes and as far as' the owner is concerned it does not matter to him whether it is one Public Purpose or other. Art. 14 confers an individual right and in order to justify a classification there should be something which justifies a different treatment to this individual right. It seems to us that ordinarily a classification based on the public purpose is not permissible under Art. 14 for the purpose of determining Compensation. The Position is different when the owner of the land himself is the, recipient of benefits from an improvement scheme, and the benefit to him is taken into consideration in- fixing compensation. Can classification be made on the basis of the authority acquiring the land ? In other words can differentprinciples of compensation be laid if the land is acquired for or by an Improvement Trust or Municipal Corporation or the Government ? It seems to us that the answer is in the negative

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because as far as the owner is concerned it does not matter to him whether the land is acquired by one authority or the other.

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24. It is equally immaterial whether it is one Acquisition Act or another Acquisition Act under which the land is acquired. If the existence of two Acts enables the State to give one owner different treatment from another equally situated the owner who is discriminated against, can claim the protection of Art. 14.

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26. It will not be denied that a statute cannot tax some owners of land leaving untaxed others equally situated. If the owners of the land cannot be taxed differently how can some owners be indirectly taxed by way of compulsory acquisition ? It is urged that if this were the, law it will tie the hands of the State in undertaking social reforms. We do not agree. There is nothing in the Constitution which debars the State from bettering the lot of millions of our citizens. For instance there is nothing to bar the State from taxing unearned increment if the object is to deny

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owners the full benefit of increase of value due to development of a town. It; seems to us, as we have already said that to accede to the contentions of the appellant and e States would be destructive of the protection afforded by Art.14 of the Constitution. The States would only have to constitute separate acquiring bodies for each city, or Division or indeed to achieve one special public purpose and lay down different principles of compensation.”

¶349

The matters are analyzed in the light of the judgments cited supra. The main ground of challenge that no opportunity was provided to NHAI to meet the determination of the market value of the subject acquired lands on par with the lands situated in Green City layout/Zanadu or the application of the notification dated 23.08.2016 cannot be countenanced for the reason that NHAI has appeared before the arbitrator and filed written submissions. No attempt was made to tender any evidence before the arbitrator. The notification dated 23.08.2016 referred to by the learned

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arbitrator is the gazette notification made available to the public at large. As such it is incumbent upon the SLAO as well as the arbitrator – Deputy Commissioner to know about such notification while determining the market value of the acquired lands. It is imperative that the SLAO or the arbitrator has to consider the relevant notification having regard to the nature of the lands, as per Section 3-G[7] read with Section 26 of the Act, 2013. The NHAI has filed objections and submitted that objections may be treated as written arguments before the Arbitrator. NHAI now cannot contend that no reasonable opportunity was given by the learned arbitrator to present its case. In the proceedings under Section 34 of the Act before the Trial Court the very same contentions now argued were canvassed. The Trial Court has assigned adequate reasons for confirming the award of the arbitrator considering the judgments of the Hon'ble Apex Court inasmuch as the powers and jurisdiction of the Court while exercising Section 34 of

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the Act. It is true that the learned Trial Judge has observed that LCR submitted before the said Court does not disclose copy of gazette notification of department of registration and stamps having fixed rate of Rs.15,400/per square meter. However, it is observed that Gazette Notification dated 28.03.2016 produced discloses [before the Trial Court] that the said rate of Rs.15,400/per square meter was fixed for sites of residential extension in City Green and Zanadu.

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39. As mentioned above, these matters were

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clubbed together and the gazette notification available in one file ought not to have been noticed by the learned Trial Judge. It is trite that the gazette notification is a public journal and an authorized legal document of the Government published, which has authentic information and the same could be safely referred to by the Authorities/ Arbitrators/Courts. No adjudication is warranted while placing reliance on Official Gazettes.

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MFA 2042/2021:

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The acquired lands measuring 32 guntas situated in Sy.No.24, Kallugopahalli were converted for non-agricultural purpose as per the order dated 16.03.2015 issued by the Competent Authority. The said lands were acquired vide preliminary notification dated 01.02.2016 issued under Section 3-A[1] of the NH Act. Award notice was issued on 04.10.2017, fixing the total compensation amount of Rs.6,47,69,211/-.

¶359

Claim petition was filed by the land losers before the arbitrator seeking for enhancement of compensation contending that the SLAO has fixed the market value unscientifically wherein it was specifically contended that in the abutting lands of Bidadi converted for commercial and industrial and residential purposes, the market value of the lands is Rs.3,000/- to Rs.5,000/- per square feet. Similarly, the land situated at one kilometer behind the acquired lands in Zanadu

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extension and other similar extensions, the market value is fixed at Rs.2,500/- to Rs.3,000/- per square feet. Objections were filed by the NHAI, a specific denial was made that in the surrounding area of Bidadi Town the property acquired for National Highway is useful for non-agricultural activity, hence, the price is increased etc. Written submissions were filed by the claimants emphasizing that the acquired lands having converted to commercial purpose as per the order dated 16.03.2015 but the same has been totally lost sight of, by the SLAO while awarding compensation.

¶362

It is pertinent to note that as per the

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Notification dated 07.11.2014 for the lands in Sy.No.24, Kallugopahalli, Rs.8,073/- per square meter was fixed for converted/approved sites. In Sl.No.272, for Zanadu, it is shown as Rs.13,993/- per square meter. In the notification dated 28.03.2016 there is a reference to notification No.CVC 25/2014-15, Bengaluru dated

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14.09.2015. No market value has been fixed for

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converted lands in the notification dated 28.03.2016. However, for the lands in Zanadu, the market value is fixed at Rs.15,400/- per square meter for the lands converted for residential purposes. It is not in dispute that the residential sites in Zanadu are coming within the jurisdiction of Kallugopahalli village and hence, the learned arbitrator has taken the value of the Residential sites of Zanadu as the basis for fixing the rate for the subject lands acquired in Kallugopahalli.

¶367

In view of Tarsem Singh supra, provisions of Section 26[b] and 26[1][b] of the Act 2013 being applicable, average sale price for similar type of land situated in the nearest village or nearest vicinity around where or any other ground which may be in the interest of justice, equity and beneficial to the affected families could be considered by the arbitrator while fixing the market value. The determination of the market value of

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the subject lands on par with the residential sites in Zanadu certainly comes within the jurisdiction of Kallugopahalli village, the same cannot be held to be astronomical shocking the conscience of the Court warranting interference of the Court under Section 34 of the Act.

¶370

MFA Nos.2037/2021 to 2040/2021:

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The details of the acquisition and

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compensation awarded are shown in the table in paragraph No.20 hereinabove. Learned Senior Counsel for the NHAI vehemently argued that the arbitrator has not applied his mind in awarding arbitrary rate of Rs.15,400/- per square meter on par with the residential sites of City Green. It is true that the date of the preliminary notification and the highway number has been wrongly mentioned but the same would not render the award invalid as the entire award has to be read as a whole.

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It is imperative that as per the mandate

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under Section 31[3] of the Act 1996, reasons of the arbitrator is sine-qua-non. Intelligible and adequate reasons in appropriate cases could even be implied by the Courts from a fair reading of the award and documents referred to thereunder, if the need be and the same does not require an elaborate judgment to be passed by the arbitrators having regard to the speedy resolution of dispute. The case on hand would be inadequacy of reasons in the award, not unintelligible award. Awards with inadequate reasons cannot be set aside in a cavalier manner, as held by the Hon'ble Apex Court in Dyna Technologies supra.

¶376

In the aforementioned cases, learned

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arbitrator has referred to the guidance market value as issued in the notification dated 28.03.2016 by the Registration and Stamp Department. Though the gap between the present preliminary notification dated 01.02.2016 and the notification dated 28.03.2016

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referred to, by the arbitrator is of a short period, the same has to be considered in the light of Section 26 of the Act, 2013. In the notification dated 28.03.2016, reference is made to notification No.CVC 25/2014-15, Bengaluru dated 14.09.2015., Central Committee for Fixation of Market Value’s Resolution dated 15.10.2015. In the notification dated 07.11.2014, for converted/approved extension sites, guidance value is prescribed at Rs.7,355/- per square meter in Sl.No.487 for the lands situated in Mayagnahalli relating to the survey numbers mentioned therein. In Sl.No.491 for City Greens coming within the jurisdiction of Mayaganahalli village, Rs.13,993/- is the market value prescribed per square meter. In the notification dated 28.03.2016, for the lands coming within the Sl.No.525, market value is shown as Rs.8,300/- whereas for City greens, it is shown as Rs.15,400/- per square meter. As such, the arbitrator considering the similarity of the lands acquired with City Greens coming within the jurisdiction of the same

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Mayaganahalli village has determined the market value of Rs.15,400/- per square meter for the subject lands. Similarly, Zanadu Extension comes within the village limit of Kallugoppahalli village wherein, the land value is fixed at Rs.15,400/- per Sq. meter. Applying the guidance value prescribed in the notification dated 07.11.2014 for the lands acquired vide preliminary notification dated 01.02.2016 would be unreasonable while comparing with the notification dated 28.03.2016.

¶382

It is trite that the market value of the lands

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would get hiked day by day. As such referring to the notification dated 28.03.2016 which is close to the date of preliminary notification dated 01.02.2016, the market value fixed by the arbitrator having considered the similarity of the lands with the City Greens/Zanadu, cannot be held to be unjustifiable or arbitrary shocking the conscience of the Court. It is settled that the arbitrator is the master of quality and quantity of evidence as held by the Hon'ble Apex Court in

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Associate Builders supra . As aforesaid, NHAI has not made any sincere attempt to tender any evidence before the learned arbitrator and all the grounds were urged for the first time in the arbitral suit which has been rightly rejected by the Trial Judge. The judgment rendered in Board of Control for Cricket in India supra was rendered by the Hon’ble High Court of Bombay in the context of commercial dispute and the same may not be applicable to the present land acquisition cases.

¶386

No patent illegality is found in the

¶387

determination of market value made by the arbitrator. The grounds urged by the appellants would not be available under Section 34 or Section 37 of the Act as this Court is not sitting in appeal to re-appreciate the evidence. If any plausible view is taken by the arbitrator, even if another plausible view is possible, the arbitrator’s view cannot be substituted by another view of the Court exercising the power under Section 34/37

¶388