Dismissed

Narasimha Murthy v. the Indian National Highway Authority

Karnataka HC8 Dec 2021MFA/5916/2012

Case brief

AI extract

What is this about?

The High Court of Karnataka dismissed a first appeal challenging the dismissal of a petition under Section 34 of the Arbitration Act. It held that the District Court was correct in refusing to modify the arbitrator's award on compensation for land acquisition, as Courts cannot reappreciate evidence or enhance compensation under Section 34.

What did the court decide?

The appeal was dismissed; the impugned order of the learned District Judge was confirmed.

Narasimha Murthy Vs the Indian National Highway… — Writ and Judicial Review | Karnataka HC (2021)

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M.F.A.NO.5916/2012

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 8^TH DAY OF DECEMBER 2021

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BEFORE

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THE HON’BLE MRS JUSTICE K.S.MUDAGAL

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MISCELLANEOUS FIRST APPEAL NO.5916/2012(AA)

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BETWEEN:

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NARASIMHA MURTHY S/O KUMBAIAH AGED ABOUT 56 YEARS NOW RESIDING AT MARULENAHALLI KASABA HOBLI TUMKUR TALUK AND DISTRICT … APPELLANT (BY SRI.T.GOVINDA RAJA, ADV.)

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AND:

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THE INDIAN NATIONAL HIGHWAY AUTHORITY BY IT SPECIAL LAND ACQUISITION OFFICER AND THE COMPETENT AUTHORITY NATIONAL HIGH WAY-4 TUMKUR - HARIHARA ROAD DAVANAGERE NOW HAVING THE NEW ESTABLISHMENT AT CHITRADURGA

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THE DEPUTY COMMISSIONER AND ARBITRATOR, NATIONAL HIGHWAY AUTHORITY OF INDIA TUMKUR TALUK AND DISTRICT … RESPONDENTS

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(BY SRI.SHILPA SHAH, ADVOCATE FOR SINGHANIA AND PARTNERS FOR R1; SRI.BHOJEGOUDA T KOLLER, AGA FOR R2)

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THIS MFA IS FILED UNDER SECTION 37(1) (b) OF THE ARBITRATION AND CONCILIATION ACT, AGAINST THE

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M.F.A.NO.5916/2012

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JUDGMENT AND ORDER DATED 03.04.2012 PASSED IN ARBITRATION CASE NO.3/2006 ON THE FILE OF THE PRINCIPAL DISTRICT AND SESSIONS JUDGE, TUMKUR, DISMISSING THE PETITION FILED UNDER SECTION 34 OF ARBITRATION AND CONCILIATION ACT.

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THIS MFA COMING ON FOR DICTATION THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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J U D G M E N T

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Aggrieved by dismissal of his petition in

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Arbitration Case No.3/2006 by the Prl. District Court, Tumkur, the appellant has preferred the above appeal.

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The first respondent acquired 2½ guntas of land out of Sy.No.82/3P of Oorukere village belonging to the appellant for the purpose of expansion of National Highway No.4 between Tumkur to Harihar Section from 75 kms to 282 kms. Along with the land of the appellant, several contiguous lands were acquired. The notification for acquisition was issued on 11.09.2001 under Section 3D(1)(2) of National Highway Authority of India Act, 1958 (‘NHIA Act’ for short).

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On 11.09.2001 respondent No.1-Land Acquisition Officer and competent authority representing the National Highway of India awarded compensation of

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M.F.A.NO.5916/2012

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Rs.1,26,438/- per acre for dry lands. Dissatisfied with that award, the appellant and 13 others filed application under Section 3G(5) of NHAI Act before the second respondent i.e., Central Government Nominated Arbitrator. He took up the matter in arbitration case No.ARB/LAQ/CR/NH/OORUKERE and passed the award on 04.04.2005 enhancing the compensation for dry lands from 1,26,438/- to 1,72,500/- per acre.

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In the proceedings before the second respondent the appellant was the third petitioner. On service of notice, the appellant appeared before the Arbitrator. Neither he filed the written statement nor produced any document to support his claim. Despite that, considering the written statements of the other claimants and the documents produced by them, based on his personal inspection of the site, sale statistics and guidance value of the registration department and other legal factors, the second respondent enhanced the compensation as aforesaid.

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M.F.A.NO.5916/2012

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The appellant filed Arbitration Case

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No.3/2006 before the Principal District Judge, Tumkur invoking Section 34 of the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’ for short) with a prayer for enhancement of the compensation amount awarded by the second respondent in his award.

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Before the District Judge, the appellant got examined himself as PW.1 and one N.K.Rajkumar as PW.2 and got marked Ex.P1 to P7. The respondents did not lead any evidence. They relied on the arbitrator’s award and the documents produced by the appellant himself.

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The learned District Judge by the impugned order dismissed the Arbitration Case No.3/2006 on the ground that the material on record showed that sufficient opportunity was given to the appellant. Learned District Judge further held that the award can be reversed only on the grounds prescribed under Section 34(2) of the Arbitration Act and there is no scope for appreciation and reappreciation of the

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M.F.A.NO.5916/2012

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evidence. The learned District Judge further held that under Section 34 of the Arbitration Act, the Court can either only set aside the award or confirm that and there is no scope for modification of the order. The appellant challenges the said order in this case.

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The first ground urged in the appeal memo is that the second respondent has not given sufficient opportunity to the appellant and the District Judge failed to appreciate that properly. The other contention is that the property of the appellant consisted of residential house, hotel, one tyre shop, STD Booth centre which was fetching him lot of income, therefore the compensation awarded was very low.

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Reiterating the grounds of appeal, learned counsel for the appellant submits that the arbitrator did not consider the documents produced before him. He further submits that the District Judge should have remanded the matter to the arbitrator for reconsideration on giving opportunity to the appellant. He claims that the award of the arbitrator is unreasoned

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M.F.A.NO.5916/2012

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one, the building and the apartment were not surveyed and there was arithmetical error in the award.

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In support of his contentions, he relied on the following judgments:

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i) Oil and Natural Gas Corpn. Ltd., vs. SAW Pipes Ltd¹

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ii) Gautam Constructions & Fisheries Ltd. vs. National Bank for Agriculture and Rural Development and another² iii) Leela Hotels Ltd. vs. Housing & Urban Development Corporation Ltd.³ iv) Dandasi Sahu vs. State of Orissa⁴

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v) Smt.G.Jayashree vs. The Secretary, Ministry of Surface Transport, New Delhi and others⁵

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vi) M/s. Dyna Technologies Pvt. Ltd. vs. M/s Crompton Greaves Ltd⁶

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1 AIR 2003 SC 2629

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2 AIR 2000 SC 3018

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3 AIR 2012 SC 903

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4 AIR 1990 SC 1128

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5 2013(2) KCCR 1609

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6 (2020)1 SCALE 121

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M.F.A.NO.5916/2012

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Smt.Shilpa Shah, learned counsel for

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respondent and HCGP submit as follows:

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The respondents shall take into consideration the market value of the land as on the date of publication of the notification. The appellant himself admits that the second respondent had served notice on him and he appeared in the proceedings. However, he did not choose to file his statement or adduce evidence. Therefore, it does not lie in his mouth that no opportunity was given.

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Under Section 34 of the Arbitration Act, the scope of interference is very limited. The only ground urged by the appellant was that he was not given sufficient opportunity. That was falsified by the evidence of the appellant himself. Therefore the learned District Judge rightly dismissed the petition. In a petition under Section 34 of the Arbitration Act, the Court cannot decide the quantum of compensation i.e., enhance or reduce, the Court has to either accept the award or quash the award as the Court has no power to remand the matter.

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In support of their contentions, they rely on the following judgments:

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i) H.M.Shankarmurthy vs. National Highways Authority of India and another⁷

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ii) National Highways Authority of India vs. Mahadevi and others⁸

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3. Bhaskar Industrial Development Ltd. vs. South Western Railway⁹

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Having regard to the facts and

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circumstances of the case, the question that arises for consideration of this Court is, “whether the impugned order of the learned District Judge is violative of Section 34 of the Arbitration and Conciliation Act, 1996 ?”.

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The appellant being the owner of 2½ guntas

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of land in Sy.No.82/3P of Oorukere village and acquisition of the same for the purpose of expansion of NH4 are all not in dispute. It is also not disputed that under the same notification, the lands of several other

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7 ILR 2010 Kar 3711

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8 2017(4) Kar.L.J.674

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9 ILR 2016 Kar. 4136

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persons of Oorukere village were acquired. It is also not disputed that the first respondent in the award dated 31.03.2002 granted compensation of Rs.1,26,438/- per acre for the dry lands.

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The appellant and 13 other aggrieved persons filed application under Section 3G(5) of NHIA Act and the second respondent was the statutorily nominated arbitrator. As already stated by the award dated 04.04.2005 he enhanced the compensation for the dry lands from Rs.1,26,438/- to 1,72,500/- per acre.

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The petition submitted in Arbitration Case No.3/2006 shows that the challenge to the award was on the ground that the appellant was not given sufficient opportunity and that the residential house, hotel standing on the land were not considered in passing the awards. Section 34(2) of the Arbitration Act enumerates the grounds on which the award can be set aside. The same reads as follows:

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“34. Application for setting aside arbitral award. —

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(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and subsection (3).

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

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(a) the party making the application [establishes on the basis of the record of the arbitral tribunal that] —

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(i) a party was under some incapacity, or

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(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

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(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

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(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

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Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from

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which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

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(b) the Court finds that—

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(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

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(ii) the arbitral award is in conflict with the

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public policy of India .

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[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, —

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(i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or

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(ii) it is in contravention with the fundamental policy of Indian law ; of

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(iii) it is in conflict with the most basic notions of morality or justice .]

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[Explanation 2. — For the avoidance of doubt,

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the test as to whether there is a contravention with the fundamental policy of India law shall not entail a review on the merits of the dispute.]”

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The challenge of the appellant was not on the ground that the arbitration agreement was not valid or he had any incapacity or the matter was not arbitrable or the arbitral procedure was not in accordance with the procedure of the agreement of the

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parties etc. The challenge was not on the ground of violation of Section 34(2) (a) (i) to (v).

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Learned counsel for the appellant claims that no proper opportunity was given to the appellant. Therefore, the award is contrary to the public policy of India. In such case, the claim of the appellant falls under Section 34(b)(ii). The award of the first respondent was produced before the trial Court as well as before this Court.

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The records of AC No.3/2006 are secured in this case which contained the deposition of the appellant, his witness and other documents produced by him. Ex.P4 produced by the appellant himself shows that the second respondent has issued the notice of hearing to the appellant. He even appeared before the second respondent, but he did not choose to file any documentary evidence or file any statement before the arbitrator, though the other claimants filed their statement and led evidence. The proceedings of the

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second respondent further show that he heard the parties and passed the award.

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The other contention was that the award is unreasoned one. As rightly pointed out by the District Court, the award states that while fixing the market value, the second respondent took market value, the guidance value of the registration department and other local factors viz., the value of the malkies and structures and thereafter the compensation was fixed considering the trees, houses and buildings furnished by the technical department.

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The award also indicates that the second respondent conducted the spot inspection of the acquired lands and examined the fertility in the vicinity and situation of the lands acquired. Despite the appellant not producing any documents or filing any statement or leading any evidence, the second respondent on the material available before him and taking into aforesaid circumstances, enhanced compensation from Rs.1,26,438/- to 1,72,500/- per

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acre. Therefore there is no merit in the contention that the order was unreasoned order or opposed the public policy of India. The judgments relied on by the learned counsel for the appellant on that ground are not applicable.

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As rightly held by the trial Court in the proceedings under Section 34 of the Arbitration Act, there is no scope for appreciation or reappreciation of the evidence and there is no scope for enhancement of the compensation or for modifying the award as prayed by the appellant. This view finds support by the judgment of this Court in Shankar Murthy and Mahadevi’s case referred to supra.

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The Division Bench of this Court in Bhaskar Industrial Development Corporation Ltd. ’s referred

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to supra was relied on to contend that under Section 34 of the Arbitration Act, the Court cannot remand the matter to the arbitrator, but no such relief was sought before the District Judge. Therefore that judgment cannot be justifiably applied to the facts of the case.

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This Court does not find any error in the impugned judgment of the District Court warranting interference of this Court. Therefore the appeal is dismissed.

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Sd/JUDGE

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akc

Narasimha Murthy v. the Indian National Highway Authority

Case brief

What is this about?

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Narasimha Murthy v. the Indian National Highway Authority

Case brief

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