[Arbitration Act] S.37 Not An Efficacious Alternate Remedy After Rejection Of Plea U/S 34 Seeking Enhanced Compensation: Bombay High Court

The Division Bench of Bombay High Court comprising Justices Jitendra Jain and M.S. Sonak allowed writ petitions seeking enhanced solatium under National Highways Act, 1956 in view of the decision of the Supreme Court in Union of India v Tarsem Singh and Ors. While doing so the Court rejected the argument of the Respondent that the petitions ought to be dismissed as the Petitioners have an alternate remedy under Section 37, Arbitration and Conciliation Act, 1996 (“ACA”) The Court held that while exercising its powers under Section 37, ACA the Court is not empowered to modify the award and grant enhanced compensation. This would make Section 37 an inefficacious alternate remedy and in view of this fact the Court can exercise its extraordinary powers under Article 226, Constitution of India. Facts In all these matters, the Petitioners were aggrieved with the compensation amount determined and, therefore, applied for the matter to be resolved through Arbitration as provided under Section 3G(5) of the National Highways Act, 1956. The Arbitrator so appointed made an award, enhancing the compensation. However, the benefit of the decision of the Hon'ble Supreme Court in Union of India v Tarsem Singh and Ors. (2019) 9 SCC 304 (“Tarsem Singh”) was not granted. Therefore, the Petitioners preferred petitions under Section 34, ACA common judgment and order dated 4 May 2023 disposed of these. In this judgment and order, the Principal District Judge, Nashik, (“PDJ”) in fact agreed with the Petitioner's contention that they were entitled to solatium and interest in terms of the decision of the Hon'ble Supreme Court in Tarsem Singh However, the PDJ, being bound by the decision of the Coordinate Bench of this Court in the case of Rishabhkumar Vs Secretary to Government of India, 2021 SCC OnLine Bom 4561 (“Rishabhkumar) felt disabled to modify the Arbitrator's award and grant the Petitioners relief in terms of the decision of the Hon'ble Supreme court in the case of Tarsem Singh. Contentions The Counsel for NHAI contended that these Petitions should not be entertained because all the Petitioners have an alternate remedy under Section 37, ACA. It was further contended that if the Petitioners were affected by non-payment of solatium and interest in terms of decision of the Hon'ble Supreme Court in the case of Tarsem Singh, “the Petitioner should promptly file claims with the Competent Authority, including all necessary documentation and prove that he is entitled for solatium and interest, but the Petitioner without availing the remedy directly approached this Hon'ble Court by way of writ petition, which is against the settled position of law, hence, the writ petition filed by the Petitioner deserves to be dismissed” Observations The Court observed that it is well settled that the rule of exhaustion of alternate remedies is a self-imposed restriction on exercising extraordinary jurisdiction under Article 226, Constitution of India. Before applying this Rule, the court must see whether the alternate remedy is indeed efficacious. The Court placed reliance on Rishabhkumar (supra) wherein it was held that whatever the Principal District Judge in a Petition under Section 34, ACA could not have done, the same cannot be done by the appeal court under Section 37, ACA. Since the court could not have modified the award to grant enhanced solatium in a Section 34 petition, the same could not have been done in an appeal under Section 37, ACA. In view of this, the Court stated that it could not appreciate NHAI's stance of raising the plea that these petitions should not be entertained because the Petitioners have an alternate remedy under Section 37, ACA. The court observed that there is no point in relegating the Petitioners to the remedy under Section 37, ACA when the relief they claim cannot be granted under such proceedings. The Court elucidated that if it were to relegate the Petitioners to the remedy of Section 37, the Appeal Court being bound by the decision in Rishabhkumar (supra), would have no option but to dismiss such appeals by declining to modify the arbitral award. This would be futile. Such a remedy can hardly be called an efficacious one. Accordingly, the Court rejected the contention of NHAI that the petition should not be entertained because the Petitioners have an alternative remedy under Section 37, ACA. The Court highlighted that in these matters, there is no dispute about the Petitioners being entitled to the benefits of solatium and interest under the decision of the Hon'ble Supreme Court in Tarsem Singh. The Court expressed is displeasure over the objections taken by NHAI at this stage after it had submitted before the PDJ that it was willing to pay the solatium amount. The Court observed that these are statutory benefits and such entitlements are never seriously disputed. The Court placed reliance on para 62 and ...

[Arbitration Act] S.37 Not An Efficacious Alternate Remedy After Rejection Of Plea U/S 34 Seeking Enhanced Compensation: Bombay High Court

Arpita Pande

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