S.34 Arbitration Act | Court Has Power To Recalculate Compensation Awarded Under NHAI Act: Allahabad High Court

The Allahabad High Court held that the Court adjudicating upon arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 has the power to recalculate compensation awarded under the National Highway Authority of India Act, 1956.The bench comprising of Justice Jaspreet Singh held that if the calculation of compensation is patently illegal and the award is against the public policy of India, the Court under Section 34 ought to interfere and set aside the award. The Court held that “the Additional District Judge while considering the petition under Section 34 of the Arbitration & Conciliation Act, 1996 also erred in holding that it does not have the power to interfere with the award which requires re-calculation as it is apparent that the Additional District Judge did not apply the settled legal principles applicable and defining the realm of jurisdiction, the Court exercises, while adjudicating a petition under Section 34 of the Act of 1996.”Factual BackgroundAppellants lands were acquired under the National Highway Authority of India Act, 1956 under Sections 3-A & 3-D. Sum of Rs. 6,98,923 was awarded to Chandra Kishori vide award dated 11.7.2016 and a sum of Rs. 6,18,051/- to Om Prakash vide award dated 31.07.2015 under Section 3-G of the NHAI Act. Appeals for enhancement of compensation and consequently by appellants were rejected. Subsequent appeals under Section 34 of the Arbitration and Conciliation Act, 1996 were also rejected. Counsel for appellants contended that the lands in question were declared as non-agricultural under Section 143 of the U.P. Zamindari Abolition and Land Reforms Act, 1950, however, compensation was awarded treating them to be agricultural land. Accordingly, the competent authority had erred in applying the rate of compensation. Further, it was argued that the District Judge erred in rejecting the appeal under Section 34 on ground that issue of re-valuation is not within the domain of a dispute nor it is covered under any ground to be adjudicated in terms of Section 34 of the Arbitration & Conciliation Act, 1996. Per Contra, Counsel for NHAI submitted that nature of land as per revenue record on the date of acquisition is relevant. Mere change in land use from agricultural to non-agricultural will not confer any benefit to the appellants. Further, the appellants had failed to prove that non-agricultural activities were being undertaken on the land, it was argued. Counsel for respondent defended the compensation awarded as it was made according to the relevant revenue records and the calculation was done in accordance with Section 3-G (7) of the NHAI Act, 1956 read with Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. Accordingly, there was no error apparent in the face of record in the award of the arbitrator and the order of the District Judge in appeal under Section 34 of the Act of 1996.High Court VerdictTo give meaning to the terms 'patent illegality' and an award being against 'the public policy of India', the Court relied on the decision of the Supreme Court in Batliboi Environmental Engineers Limited Vs. HPCL and another. The Court held that “where the land is acquired by the State, which is in the nature of compulsory acquisition, in exercise of its powers of eminent domain and the compensation which is payable as per the guiding factors enumerated in Section 3-G (7) of the NHAI Act, 1956 read with Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, apparently is an issue, which is absolutely core of the controversy, which requires consideration.”The Court held that jurisdiction under Section 34 of the Act of 1996 should have been exercised under such circumstances, on the grounds of the award by the arbitrator being against 'the Public Policy of India'. Further, the Court held that where the right to land being a constitution right under Article 300-A of the Constitution of India is violated by the State under compulsory acquisition, scrutiny of the Court under Section 34 of the Act of 1996 is warranted. Regarding the scope of interference under Section 37 of the Act of 1996, the Court relied on MMTC Vs. Ltd. Vs. Vedanta Ltd., wherein the Supreme Court had held“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 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...

S.34 Arbitration Act | Court Has Power To Recalculate Compensation Awarded Under NHAI Act: Allahabad High Court

Upasna Agrawal

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