Dismissed

National Highway Authority of India v. Meena

Rajasthan HC14 Aug 2024CMA/131/2022

Case brief

AI extract

What is this about?

The High Court dismissed the appeal under Section 37 of the Arbitration and Conciliation Act, 1996. It held that the appellant waived its right to challenge the Arbitrator's order remanding the matter to the Competent Authority by not objecting earlier under Section 4 of the Act. The Court found no error apparent on the face of the record and confirmed the limited scope of interference under Secti

What the court decided

AI extract

National Highway Authority of India Vs Meena — Public Procurement and Tenders | Rajasthan HC (2024)

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HIGH COURT of JUDICATURE FOR RAJASTHAN AT JODHPUR

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S.B. Civil Misc. Appeal No. 131/2022

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National Highway Authority of India, Project Director, Project Implementation Unit, Palanpur (Gujarat)

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----Appellant

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Versus

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Meena W/o Gopal, Abu Road, District Sirohi

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Gopal S/o Keshavram, Abu Road, District Sirohi

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Competent Authority (Land And Acquisition), SubDivisional officer, Abu Paravat, District Sirohi

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Arbitration And Conciliation officer (Arbitrator), District Collector, Sirohi

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----Respondents

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For Appellant(s)	: Mr. Vinay Kothari
	Mr. Ayush Goyal
For Respondent(s)	: Mr. Rajesh Joshi, Sr. Adv. Assisted by
	Mr. Anirudh Kothari

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HON'BLE JUSTICE DR. NUPUR BHATI Judgment

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Reserved on: 02/08/2024

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Pronounced on: 14/08/2024

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The present misc. appeal has been filed by the appellant under Section 37 of the Arbitration and Conciliation Act, 1996 (‘Act of 1996’) assailing the award passed by the learned District Judge, Sirohi, dated 03.09.2021 (Annex.9), whereby the application filed by the appellant under Section 34 of the Act of 1996 has been dismissed. The appellant has also laid a challenge to the amended award passed by the Competent Authority vide order dated 13.05.2013 (Annex.5) and the consequential award dated 15.01.2014 (Annex.7).

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Briefly stated, the facts of the case are that the appellant issued a Gazette Notification on 27.09.2004 under Section 3A of the National Highways Act, 1956 (‘NHAI Act’) for the purpose of

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constructing 4-lane highway on N.H.-14 from 246.000 km to 306.000 km and on N.H.-76 from 0.000 km to 21.400 km, which was published on 18.10.2004. Thereafter, objections were received by the Competent Authority and the same were dealt and dismissed vide order dated 04.04.2005 and subsequently, the declaration was issued by the Central Government in accordance with Section 3D of the Act of 1956 and thus, vide the publication made thereto, the said land vested with the Central Government, viz-a-viz the appellant.

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Thereafter, the Competent Authority vide orders dated 02.08.2008 (Annex.1), determined the compensation to be given to respondents no. 1 and 2, from whom the land bearing Khasra No. 977/1 was acquired for the purpose of construction of the said national highway. Among the land falling under Khasra No.977/1, the land ad-measuring 0.0124 hectares was jointly owned by respondents no. 1 and 2 while the land ad-measuring 0.0088 hectares and 0.0033 hectares was owned by respondent no. 1 and 2 respectively, independently and the nature of the said land being Abadi Land. The Competent Authority determined Rs.1,29,081.21/-, Rs.8,51,229.72/- and Rs.53,20,237.26/respectively for acquiring the said land for the purpose of construction of highway.

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The said compensation determined by the Competent Authority was challenged by the respondents before the District Collector, Sirohi (Arbitrator) in accordance with Section 3G(5) of the Act of 1956 and subsequently, Arbitrator vide order dated 03.11.2009 (Annex.2), decided the application of respondents no. 1 and 2 and remanded the matter back to the respondent no. 3,

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the Competent Authority, directing it to take documents of respondents no. 1 and 2 on record, and pass a speaking order pursuant to Sections 3G(7)(c) and 3G(7)(d) of the Act of 1956. The Competent Authority reheard the matter and held, vide order dated 21.11.2011 (Annex.3) that the awarded amount was justified and legally correct and further observed that once an award is passed, it does not have the power to make amendments to the said award.

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Another application was preferred by the respondent nos. 1 and 2, subsequent to the order dated 21.11.2011 (Annex.3) passed by the Competent Authority, before the Arbitrator, pursuant to Section 3G(5) of the NHAI Act and again the Arbitrator remanded back the matter to the Competent Authority vide order dated 23.07.2012 (Annex.4) while directing the Competent Authority to pass a speaking order after taking all the relevant documents into consideration. Pursuant to the order dated 23.07.2012 (Annex.4), the Competent Authority, vide order dated 13.05.2013 (Annex.5) stated that it does not have the power to modify the award and that, the same can only be done on the directions of the Arbitrator.

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Thus, aggrieved of the said order dated 13.05.2013 (Annex.5), the appellant filed an application before the District Collector (Arbitrator) laying a challenge to the award dated 13.05.2013 (Annex.5) and again the matter was remanded back to the Competent Authority, vide order dated 28.11.2013 (Annex.6), directing them to take into consideration the income tax return, commercial tax returns and documents of income/expenditure of hotels and then pass the amended award.

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In response to this, the Competent Authority passed an order dated 15.01.2014 (Annex.7) whereby the award was enhanced. Subsequently, being aggrieved of the arbitral award dated 28.11.2013 (Annex.6), the appellant preferred an application (Annex.8) under Section 34 of the Act of 1996 before the District Judge, Sirohi for setting aside the arbitral award passed on 28.11.2013 (Annex.6). The said application was dismissed by the learned Trial Court vide order dated 03.09.2021 (Annex.9).

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Thus, being aggrieved of the impugned judgment and award passed by the learned Trial Court vide order dated 03.09.2021 (Annex.9), the appellant has preferred this appeal under Section 37 of the Act of 1996. 8. Learned counsel for the appellant submitted that on various ocassions the Arbitrator has remanded back the matter to the Competent Authority which in turn, passed amended or fresh awards de hors its powers prescribed under Section 3G(5) of the NHAI Act. He further submitted that Section 3G of the NHAI Act provides for the constitution of an arbitral tribunal and the scope of the said arbitral tribunal includes only the power to redetermine the award and in no circumstance mentions the power of the Arbitrator to remand back the matter to the Competent Authority at any stage and pass an amended or fresh award. He placed reliance upon the judgment passed by the Hon’ble High Court of Allahabad in the case of Bhartiya Rashtriya Rajmarg Pradhikaran v. Rajesh Kaushik reported in AIR 2021 All 33 . The relevant paras of the judgment are reproduced as under:

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“10. While it may be true that in the conduct of such an arbitration proceeding, the order passed by the competent authority may come to be read in evidence, however, the

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subject matter of the arbitral proceedings under Section 3- G (5) of the Highways Act would never be to uphold or to set-aside the existing order passed by the competent authority but to independently determine the amount of compensation payable to the claimant. It is possible that no enhancement may arise upon arbitration however, it would not, and it cannot amount to upholding the order of the competent authority.

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Irrespective of the fate of the arbitration proceedings, the order of the competent authority would not merge in the award rather it would continue to exist, though its enforceability (as to quantum of compensation payable), may, in given facts be eclipsed by the arbitral award. It is so because, the terms of reference arise from the plain language of Section 3-G (5) of the Highways Act. That provision of law would ever limit the scope of arbitration proceedings and command the arbitrator to himself determine the just amount of compensation.

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Thus, in no event, the arbitrator may set aside the order passed by the competent authority and he may never remit the matter to the original/competent authority to pass a fresh order. Typically, that power is a power of a Court or Tribunal sitting in appeal or revision that too, if specifically granted by statute, and not implied. In absence of any such power given to the arbitrator either under the Highways Act or the Act, the direction issued by the arbitrator is a nullity in law.

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Perusal of the order passed by the arbitrator again does not leave any manner of doubt that he has not determined the amount of compensation to be paid, since, he has neither mentioned the rate at which compensation may be awarded for 2400 sq. mtrs of land nor he has quantified the total compensation amount. In fact, he has specifically remitted the matter to the competent authority for that purpose. That direction clearly falls foul with Section 3-G (5)of the Highways Act.

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Hence the award was open to challenge in terms of Section 34(2)(a)(iv) of the Act being beyond the scope of reference to arbitration and also under Section 34(2)(b)(ii) of the Act, being contrary to be public policy of India.”

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Learned counsel for the appellant also submitted that the Competent Authority under the NHAI Act cannot modify, amend or pass a fresh award once the final award has been passed by the it under the provision of Section 3G(5) of the NHAI Act. He also submitted that the Competent Authority had erred in passing the amended award and the Arbitrator had erred in affirming the said amended award passed by the Competent Authority.

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Learned counsel for the appellant further submitted that compensation under the NHAI Act is to be calculated while taking into account the market value of the property which was prevailing at the time of publication of the notification under Section 3A of the NHAI Act, i.e. on 27.09.2004, however, in the present case, the Competent Authority while passing the award dated 13.05.2013 relied upon the DLC rates which were decided in the District Level Committee Meeting dated 01.07.2005.

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Per contra , learned counsel of the respondents submitted that in the first two instances where the matter was remanded, it is pertinent to note that the appellant had appeared before the Competent Authority when the orders dated 21.11.2011 (Annex.3) and 13.05.2013 (Annex.5) were passed and that, it was at the instance of the appellant’s application, laying a challenge the order passed by the Competent Authority dated 13.05.2013, that the Arbitrator remanded back the matter for the third time to the Competent Authority for reconsideration, vide order dated 28.11.2013 (Annex.6), and thus, the appellant cannot take the benefit of the argument that the matter was remanded back three times, de hors the powers prescribed in the statute.

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Learned counsel for the respondents also submitted that the appellant did not lay challenge to the order passed by the Arbitrator on 03.11.2009 (Annex.2) whereby the directions were given to the Competent Authority to pass a speaking order while taking into account the documents on record and thus, has waived his right to raise objections under Section 4 of the Act of 1996, which stipulates that when a party who knows that any provision of Part I of the Act of 1996 from which the parties may derogate

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or any requirement under the arbitration agreement has not been complied with and still proceeds without stating his objection to such non-compliance without undue delay, or in case a time limit has been provided for stating the objection, then within such time limit, shall be deemed to have waived his right to so object. He thus submitted that in the present case, the appellant did not raise any objection to the said order of the Arbitrator remanding back the matter, and therefore, the appellant has waived his right to object. He further placed reliance upon the judgment passed by the Hon’ble Apex Court in the case of Union of India v. Susaka Pvt. Ltd. And Ors. reported in 2018 (2) SCC 182 . The relevant paras are reproduced as under:

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“25. Though we find that the appellant raised this ground, for the first time, in Section 34 proceedings [see-ground (cc)] before the Single Judge but again this ground was not pressed at the time of arguments. It is clear from the perusal of the Single Judge’s order. Not only that, the appellant again did not raise this plea before the Division Bench.

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In the light of aforementioned factual scenario emerging from the record of the case, we cannot grant any indulgence to the appellant (Union of India) to raise such plea for the first time here. In our view, it is a clear case of waiver or/and abandonment of a plea at the initial stage itself.

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Everyone has a right to waive and to agree to waive the advantage of a law made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right or public policy. Cuilibet licet renuntiare juri pro se introducto. (See Maxwell on The Interpretation of Statutes 12 th Edition at page 328).”

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He also placed reliance upon the judgment passed by the Hon’ble Apex Court in the case of Quippo Construction Equipment Ltd. v. Janardan Nirman Pvt. Ltd. reported in 2020 (18) SCC 277 wherein the Hon’ble Apec Court observed that the respondent in the said case had waived his right to contest the arbitration venue by not raising objections during the arbitration process. The relevant paras are reproduced as under:

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“23. It was possible for the respondent to raise submissions that arbitration pertaining to each of the agreements be considered and dealt with separately. It was also possible for him to contend that in respect of the agreement where the venue was agreed to be at Kolkata, the arbitration proceedings be conducted accordingly. Considering the facts that the respondent failed to participate in the proceedings before the Arbitrator and did not raise any submission that the Arbitrator did not have jurisdiction or that he was exceeding the scope of his authority, the respondent must be deemed to have waived all such objections.

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In the circumstances, the respondent is now precluded from raising any submission or objection as to the venue of arbitration, the conclusion drawn by the Court at Alipore while dismissing Miscellaneous Case No.298 of 2015 was quite correct and did not call for any interference. The High Court, in our view, was in error in setting aside said Order. In any case, the fact that the cause title showed that the present appellant was otherwise amenable to the jurisdiction of the Alipore Court, could not be the decisive or determining criteria.”

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Learned counsel for the appellant, in rebuttal submitted that any act or instance of the party does not make a wrong, right, i.e. even if the third remand order was passed by the Arbitrator on 28.11.2013 (Annex.6) upon the application of the appellant, it still does not empower the Arbitrator to pass such an award which is

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de hors the statute. He further submitted in his rebuttal that after the said order dated 28.11.2013 (Annex.6), the appellant has duly preferred an application under Section 34 of the Act of 1996 challenging the award of the Arbitrator passed in the absence of jurisdiction and that, the question of jurisdiction can be raised at any stage.

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Heard learned counsel for the parties, perused material available on record and judgments cited at the Bar. 15. This Court finds that in the application (Annex.8) preferred by the appellant under Section 34 of the Act of 1996, laying a challenge to the award passed by the Arbitrator on 28.11.2013 (Annex.6), the appellant has not pleaded that the said order is bad in law on the ground that it violates Section 3G(5) of the NHAI Act.

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It is also seen that if the appellant contends that the SubDivisional Magistrate does not have the power to modify or amend the award under Section 3G(5) of the Act of 1996, then the same has to be challenged by the appellant and upon perusal of the record, it is seen that the appellant has not challenged the award of the Arbitrator dated 03.11.2009 (Annex.2) and 23.07.2012 (Annex.4). Thus, in the light of Section 4 of the Act of 1996, which clearly stipulates that, when a party who knows that any provision of Part I of the Act of 1996 from which the parties may derogate or any requirement under the arbitration agreement has not been complied with and still proceeds without stating his objection to such non-compliance without undue delay, or in case a time limit has been provided for stating the objection, then within such time limit, shall be deemed to have waived his right to so object and

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since the appellant has not objected to the said two awards, the appellant has waived his right to object under Section 4 of the Act of 1996. The relevant provision is reproduced as under:

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“ 4. Waiver of right to object.—

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A party who knows that—

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(a) any provision of this Part from which the parties may derogate, or

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(b) any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such noncompliance without undue delay or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.”

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Upon perusal of the record, this Court further finds that the order dated 23.07.2012 (Annex.4) whereby the Arbitrator has remanded back the matter to the Competent Authority to redetermine the compensation in accordance with Section 3G (7) of the NHAI Act, has not been challenged by the appellant, instead the appellant has challenged the order passed by the Arbitrator dated 28.11.2013 (Annex.6). This Court also finds that the order passed by the Arbitrator dated 28.11.2013 (Annex.6), merely directs the Competent Authority to re-determine the compensation and modify the award as per the application of the respondent no. 1 and 2. Thus, this Court finds that the learned Trial Court has rightly observed that the Competent Authority has rightly passed a speaking order under Section 3G (7)(c) and (d) of the NHAI Act upon the directions of the Arbitrator issued vide order dated 28.11.2013 (Annex.6).

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This Court also finds that the learned Trial Court has rightly observed that the Competent Authority vide order dated 28.11.2013 (Annex.6), after hearing both the parties and while taking into consideration the relevant documents as well as merits of the case, has passed a speaking order in accordance with Section 3G (7)(c) and (d) of the NHAI Act. This Court further observes that the learned Trial Court has rightly observed that the Trial Court is not the appellate forum for deciding an application filed under Section 34 of the Act of 1996, challenging the award of the Arbitrator. Thus, this Court, concurs with the finding of the learned Trial Court that under Section 34, the power to set aside the award passed by the Arbitrator is limited and that, the Trial Court cannot exercise appellate jurisdiction in the said matter.

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Moreover, this Court finds that an arbitral award can be set aside only under Section 34(2)(a)(i) to (v) and upon perusal of the record, it is seen that the said order dated 28.11.2013 (Annex.6) has been passed by the Arbitrator on the application of the appellant itself and there is no evidence of any misconduct in the proceedings or misuse of position by the Arbitrator as alleged by the appellant. Thus, this Court concurs with the finding of the learned Trial Court that the appellant has not only got opportunity to be heard, but it had actively participated at every stage of the entire litigation as seen from the awards dated 21.11.2011 (Annex.3), 23.07.2012 (Annex.4), 13.05.2013 (Annex.5) And 28.11.2013 (Annex.6). Thus, the appellant has failed to prove any error apparent to the face of record.

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Furthermore, this Court, while taking into consideration the judgment passed by the Hon’ble Apex Court in the case of M/s

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Larsen Air Condition and Refrigeration Company v Union of

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India [Civil Appeal No(s). 3798 of 2023 decided on 11.08.2023], also finds that under Section 37 of the Act of 1996, that the exercise of power by the Court under Section 34 and 37 can be construed from the legistative intent behind drafting the said provisions itself, which stipulates for limited scope of interference, contrary to the nature of Section 15 of the Arbitration Act of 1940. This Court also finds it pertinent to note that the Hon’ble Apex Court in the case of Larsen (supra) further held that the power given to the Appellate Court under Section 37 of the Act of 1996 is much narrower to review the findings in an award, if it has been upheld or substantially upheld under Section 34. The relevant para of the judgment is reproduced as under:

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“15. The limited and extremely circumscribed jurisdiction of the court under Section 34 of the Act, permits the court to interfere with an award, sans the grounds of patent illegality, i.e., that “illegality must go to the root of the matter and cannot be of a trivial nature”; and that the tribunal “must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground” [ref: Associate Builders (supra)]. The other ground would be denial of natural justice. In appeal, Section 37 of the Act grants narrower scope to the appellate court to review the findings in an award, if it has been upheld, or substantially upheld under Section 34. It is important to notice that the old Act contained a provision which enabled the court to modify an award. However, that power has been consciously omitted by Parliament, while enacting the Act of 1996. This means that the Parliamentary intent was to exclude power to

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modify an award, in any manner, to the court. This position has been reiterated decisively by this court in Project Director, National Highways No. 45E and 220 National Highways Authority of India v M. Hakeem:

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“42. It can therefore be said that this question has now been settled finally by at least 3 decisions [McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181] , [Kinnari Mullick v. Ghanshyam Das Damani, (2018) 11 SCC 328 : (2018) 5 SCC (Civ) 106] , [Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies (P) Ltd., (2021) 7 SCC 657] of this Court. Even otherwise, to state that the judicial trend appears to favour an interpretation that would read into Section 34 a power to modify, revise or vary the award would be to ignore the previous law contained in the 1940 Act; as also to ignore the fact that the 1996 Act was enacted based on the Uncitral Model Law on International Commercial Arbitration, 1985 which, as has been pointed out in Redfern and Hunter on International Arbitration, makes it clear that, given the limited judicial interference on extremely limited grounds not dealing with the merits of an award, the “limited remedy” under Section 34 is coterminous with the “limited right”, namely, either to set aside an award or remand the matter under the circumstances mentioned in Section 34 of the Arbitration Act, 1996.”

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The relevant provision is reproduced as under:

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“ 37. Appealable orders. —

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(1) [Notwithstanding anything contained in any other law for the time being in force, an appeal] shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:—

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(a) refusing to refer the parties to arbitration under section 8;

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(b) granting or refusing to grant any measure under section 9;

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(2) Appeal shall also lie to a court from an order of the arbitral tribunal—

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(a) accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or

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(b) granting or refusing to grant an interim measure under section 17.

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(3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or takeaway any right to appeal to the Supreme Court.”

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It is also seen that the appellant has challenged the award passed by the Arbitrator dated 28.11.2013 (Annex.6), by filing an application under Section 34 of the Act of 1996, before the learned Trial Court, however, in the said application, they have not given a challenge to the awards passed by the Arbitrator dated 03.11.2009 (Annex.2), 23.07.2012 (Annex.4) and the order/enhanced award granted by the Competent Authority dated 15.01.2014 (Annex.7). Upon perusal of the record, this Court also finds that the appellant has challenged the said orders only before this Court, which is not a subject matter of the application filed by the appellant under Section 34 of the Act of 1996. Thus, this Court is of the opinion that inasmuch as the appellant has approached this Court under Section 37 of the Act of 1996, the Court is bound by the law of the land and the precedents set henceforth, wherein the scope of interference under Section 37 of the Act of 1996, by this Court has been limited and therefore, this Court does not deem it fit to grant indulgence in the present appeal.

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Therefore, it is seen that while the appellant contests that the Arbitrator did not have power to remand back the award to the Competent Authority for re-determination of compensation, the appellant at the same time had failed to lay a challenge to the said awards dated 03.11.2009 (Annex.2), 23.07.2012 (Annex.4), and 28.11.2013 (Annex.6) passed by the Arbitrator, remanding the matter back and directing the Competent Authority to redetermine the compensation. It is also seen that at one instance,

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the matter was remanded back and decided by the Arbitrator vide order dated 28.11.2013 (Annex.6) on the application of the appellant itself, and thus, when the appellant has itself participated in all the proceedings, and chose to not raise objection against or lay challenge to the orders and the awards dated 03.11.2009 (Annex.2), 23.07.2012 (Annex.4) and 28.11.2013 (Annex.6) passed by the Arbitrator along with the amended award dated 13.05.2013 (Annex.5) passed by the Competent Authority, the appellant has chosen to waive his right to object as per Section 4 of the Act of 1996. Moreover, this Court observes that the appellant has approached this Court under Section 37 of the Act of 1996, however the appellant has failed to prove any error apparent on the face of record or any misconduct in the proceedings, and therefore, in the absence of being able to demonstrate a case fit for adjudication by this Court under Section 37 of the Act of 1996, under the given circumstances, this Court deems it fit not to grant indulgence in the present matter.

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Accordingly, in the view of the discussion made hereinabove, the instant appeal is dismissed. Stay application as well as all other pending applications, if any, also stand dismissed.

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Record be sent back forthwith. No costs.

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(DR. NUPUR BHATI),J

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1-/amit/-

National Highway Authority of India v. Meena

Case brief

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What the court decided

National Highway Authority of India v. Meena

Case brief

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