Arbitration and Conciliation Act, 1996: s.34 – Modification of award by court, permissibility – Held: Power of a court under s.34 of the Act, 1996 to “set aside” an award of an arbitrator would not include the power to modify such an award – To state that the judicial trend appears to favour an interpretation that would read into s.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 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 s.34 is co-terminus with the ‘limited right’, namely, either to set aside an award or remand the matter under the circumstances mentioned in s.34 of the Arbitration Act, 1996 – National Highway Authority of India Act, 1956. National Highway Authority of India Act, 1956: ss.3G, 3H – The object of the NH Amendment Act, 1997 is to expedite the process of acquisition – This has been achieved by cutting down the period for hearing of objections from 30 days under s.5A of the Land Acquisition Act to 21 days under s.3C of the National Highways Act – Further, unlike the Land Acquisition Act, the moment a notification under s.3D(2) of the National Highways Act (equivalent to s.6 Land Acquisition Act) is made, the land vests absolutely in the Central Government free from all encumbrances – Thereafter, where land has vested in the Central Government and the amount determined by the competent authority under s.3G as compensation has been deposited by the Central Government in accordance with s.3H(1), the competent authority may then direct that possession be taken within 60 days of service of notice by it. Also, injunctions against highway projects have now become impossible to obtain in view of s.20A of the Specific Relief Act, which has been introduced w.e.f. 01.10.2018 – Land Acquisition Act, 1894 – ss.5A, 6.
Land Acquisition: Differential compensation – Held: Cannot be awarded on the ground that a different public purpose is sought to be achieved.
Dismissing the appeals, the Court
HELD: 1. As per NHAI Act, the competent authority, as defined, in Section 3 (a) is to first determine an amount which is payable by way of compensation for compulsory acquisition of land. Under Section 3G(5), if the amount determined by the said authority is not acceptable to either of the parties, the amount shall, on application by either of the parties, be determined by an arbitrator to be appointed by the Central Government. The ‘competent authority’ is a person or authority authorised by the Central Government by notification to determine the amount of compensation. In the present case, a notification designating a Special District Revenue Officer as the competent authority has been made. The amount determined by the aforesaid authority has then to be sent to an arbitrator, on application by either of the parties. The said arbitration is not a consensual process with both parties having a hand in appointing the arbitrator. As a matter of fact, the land owner has no say in the appointment of the arbitrator, who is to be appointed only by the acquiring authority, that is the Central Government. [Para 12][382-C-F]
2. Section 34 provides only for setting aside awards on very limited grounds, such grounds being contained in sub-sections
(2) and (3) of Section 34. Secondly, as the marginal note of Section
34 indicates, “recourse” to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-sections (2) and (3). “Recourse” is defined by P Ramanatha Aiyar’s Advanced Law Lexicon (3rd Edition) as the enforcement or method of enforcing a right. Where the right is itself truncated, enforcement of such truncated right can also be only limited in nature.What is clear from a reading of the said provisions is that, given the limited grounds of challenge under sub-sections (2) and (3), an application can only be made to set aside an award. This becomes even clearer from sub-section (4) under which, on receipt of an application under sub-section (1) of Section 34, the court may adjourn the Section 34 proceedings and give the arbitral tribunal an opportunity to resume the arbitral proceedings or take such action as will eliminate the grounds for setting aside the arbitral award. It is the opinion of the arbitral tribunal which counts in order to eliminate the grounds for setting aside the award, which may be indicated by the court hearing the Section 34 application. [Para 14][383-C-F]
3. The statutory scheme under Section 34 of the Arbitration Act, 1996 is in keeping with the UNCITRAL Model Law and the legislative policy of minimal judicial interference in arbitral awards. By way of contrast, under Sections 15 and 16 of the Arbitration Act, 1940, the court is given the power to modify or correct an award in the circumstances mentioned in Section 15, apart from a power to remit the award under Section 16. [Paras 17 and 18][384-G-H; 385-A]
4. It is settled law that a Section 34 proceeding does not contain any challenge on the merits of the award. [Para 21] [386-D]
MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163 : [2019]
3 SCR 1023 – relied on.
Numaligarh Refinery Ltd. v. Daelim Industrial Co. Ltd. (2007) 8 SCC 466 : [2007] 9 SCR 724; DDA v. R.S. Sharma and Co. (2008) 13 SCC 80 : [2008]
12 SCR 785; Royal Education Society v. LIS (India) Construction Co. (P) Ltd. (2009) 2 SCC 261; Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant
Technologies Pvt. Ltd. 2021 SCC OnLine SC 157 – held inapplicable.
Gayatri Balaswamy v. ISG Novasoft Technologies Ltd., 2014 SCC OnLine Mad 6568; Ssangyong Engg. &
Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 : [2019] 7 SCR 522; Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644 : [1993]
3 Suppl. SCR 22; Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd., (2018)
3 SCC 133 : [2018] 1 SCR 733; McDermott
International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181 : [2006] 2 Suppl. SCR 409; Kinnari Mullick v. Ghanshyam Das Damani (2018) 11 SCC 328; Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd. (2019)
20 SCC 1; Cybernetics Network Pvt. Ltd. v. Bisquare Technologies Pvt. Ltd. 2012 SCC OnLine Del 1155; Nussli Switzerland Ltd. v. Organizing Committee Commonwealth Games 2014 SCC OnLine Del 4834; Puri Construction P. Ltd. v. Larsen and Toubro Ltd., 2015 SCC OnLine Del 9126; Gautam Constructions and Fisheries Ltd. v. National Bank for Agriculture & Rural Development (2000) 6 SCC 519; Tata HydroElectric Power Supply Co. Ltd. v. Union of India (2003)
4 SCC 172; Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4 SCC 445; Krishna Bhagya Jala Nigam Ltd. v. G. Harischandra Reddy, (2007) 2 SCC 720 : [2007] 1 SCR 698; Central Warehousing Corpn. v. A.S.A. Transport, 2007 SCC OnLine Mad 972; ISG Novasoft Technologies Limited v. Gayatri Balasamy 2019 SCC OnLine Mad 15819 – referred to.
5. 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 co-terminus 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. [Para 40][399-D-F]
6. Coming to the submission in support of the impugned judgment that the fact that the Central Government appoints an arbitrator and the arbitration would therefore not be consensual, resulting in a government servant rubber stamping an award which then cannot be challenged on its merits, cannot possibly lead to the conclusion that, therefore, a challenge on merits must be provided driving a coach and four through Section 34 of the Arbitration Act, 1996. [Para 42][400-C-D]
Jaishri Laxmanrao Patil v. Chief Minister 2021 SCC OnLine SC 362; Rameshwar Prasad (VI) v. Union of India (2006) 2 SCC 1 : [2006] 1 SCR 562; Eera v. State (NCT of Delhi) (2017) 15 SCC 133 : [2017] 7 SCR 924 – referred to.
M’Culloch v. State of Maryland 17 US 316 (1819) – referred to.
7. In interpreting a statutory provision, a Judge must put himself in the shoes of Parliament and then ask whether Parliament intended this result. Parliament very clearly intended that no power of modification of an award exists in Section 34 of the Arbitration Act, 1996. [Para 46][402-A-B]
8. In several cases, the NHAI has not filed appeals even in matters which are similar i.e., arising from the same Section 3A Notification, as a result of which certain land owners have got away with enhanced compensation given to them by the District Court. Also, the arbitrator has awarded compensation on a completely perverse basis i.e., by taking into account ‘guideline value’ which is relevant only for stamp duty purposes, and not taking into account sale deeds which would have reflected the proper market value of the land. Given the fact that the awards in all these cases are therefore perverse, the District Judge rightly interfered with the same. [Para 47][402-C-E] Union of India v. Tarsem Singh (2019) 9 SCC 304: [ 2019] 13 SCR 49 – referred to.
9. The object of the NH Amendment Act, 1997 is to expedite the process of acquisition. This has been achieved by cutting down the period for hearing of objections from 30 days under Section 5A of the Land Acquisition Act to 21 days under Section 3C of the National Highways Act. Further, unlike the Land Acquisition Act, the moment a notification under Section 3D(2) of the National Highways Act (equivalent to Section 6 Land Acquisition Act) is made, the land vests absolutely in the Central Government free from all encumbrances. Thereafter, where land has vested in the Central Government and the amount determined by the competent authority under Section 3G as compensation has been deposited by the Central Government in accordance with Section 3H(1), the competent authority may then direct that possession be taken within 60 days of service of notice by it. Also, injunctions against highway projects have now become impossible to obtain in view of Section 20A of the Specific Relief Act, which has been introduced w.e.f. 01.10.2018. [Paras 50, 51][403-G-H; 404-A-B]
10. There can be no doubt that differential compensation cannot be awarded on the ground that a different public purpose is sought to be achieved. Also, the legislature cannot say that, however laudable the public purpose and however important it is to expedite the process of land acquisition, differential compensation is to be paid depending upon the public purpose involved or the statute involved. [Para 54][405-D-E]
11. Take the case of a single owner of land who has two parcels of land adjacent to each other. One parcel of land abuts the national highway, whereas the other parcel of land is at some distance from the national highway. Can it be said that the land which abuts the national highway, and which is acquired under the National Highways Act, will yield a compensation much lesser than the adjacent land which is acquired under the Land Acquisition Act only because in the former case, an award is by a government servant which cannot be challenged on merits, as opposed to an award made under Part III of the Land Acquisition Act by the reference Court with two appeals in which the merits of the award can be gone into? There can be no doubt that discrimination would be writ large in such cases. [Para 55] [405-E-G]
Taherakhatoon v. Salambin Mohammad (1999) 2 SCC
635 : [1999] 1 SCR 901 – referred to.
12. Given the fact that in several similar cases, the NHAI has allowed similarly situated persons to receive compensation at a much higher rate than awarded, and given the law laid down in Nagpur Improvement Trust, exercise of jurisdiction under Article 136 is declined in favour of the appellants on the facts of these cases. Also, given the fact that most of the awards in these cases were made 7-10 years ago, it would not, at this distance in time, be fair to send back these cases for a de novo start before the very arbitrator or some other arbitrator not consensually appointed, but appointed by the Central Government. [Para 58][407-E-F]
Nagpur Improvement Trust v. Vithal Rao (1973) 1 SCC
500 : [1973] 3 SCR 39 – relied on.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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