Writ Maintainable Against An Award Passed By Statutory Arbitrator Violating The Principles Of Natural Justice: Calcutta High Court

The Bench of Justices Arijit Banerjee and Kausik Chanda held the availability of an alternative efficacious remedy under Section 34 of the A&C Act cannot be a bar to the maintainability of the writ petition against an award passed violating the principles of natural justice.

The Court further held that the action of the arbitrator in disposing of 299 petitions for enhanced compensation in a single day, without hearing the parties, is a gross violation of the principles of natural justice muss less the compliance of the Arbitration and Conciliation Act,1996.

Facts

The respondent/NHAI in the year 2009 acquired the lands of the appellants under the National Highways Act, 1956. Thereafter, in the year 2015, the respondent served the notice on the appellants to collect the compensation amounts and they were also informed of their right to claim enhanced compensation before the arbitrator.

Accordingly, the appellants applied for enhanced compensation. However, no notice of arbitration was ever served on the appellants and the arbitrator passed the award without hearing the parties. Aggrieved, by the award, the appellants, preferred a writ petition challenging the award.

The single bench disposed of the petition with a direction to the appellants to challenge the award under Section 34 of the A&C Act. Against the decision of the Court, the appellants preferred the present appeal.

The contention of the parties

The appellants challenged the award on the following grounds:

• The appellants were never served with the notice of arbitration, thus, the award is passed without any opportunity to the appellants to present their case.
• The appellants were also not aware of the outcome of the arbitration proceedings as they were not served with a copy of the award either.
• The arbitrator determined the compensation without taking into account the relevant provisions of law.

The respondent objected to the maintainability of the petition on the following grounds:

• The arbitrator after hearing all the stakeholders passed an award and enhanced the rate of compensation.
• The enhanced rate of compensation has been deposited with the competent authority in terms of Section 3H(6) of the Act and the appellants have also received the enhanced compensation.
• The single judge was correct in directing the appellants to avail the alternative efficacious remedy under Section 34 of the A&C Act as the grievance related to arbitral awards should not be entertained by the High Court in its writ jurisdiction.

Analysis by the Court

The Court observed that while disposing of 299 petitions for enhanced compensation, only 96 land owners were present and only 3 parties were given a chance to present their cases. It held that the act of the arbitrator is violative of the principles of natural justice.

The Court held that an award passed by the statutory arbitrator under National Highways Act, 1956 where neither the notice of arbitration was served nor the copy of the award was given to the appellants is violative of principles of natural justice.

The Court also observed that availability of alternative efficacious remedy under Section 34 of the A&C Act cannot be a bar to the maintainability of the writ petition against an award passed in flagrant violation of natural justice.

Accordingly, the Court set aside the arbitral award and remanded the matter back to the officer, who is now authorised to act as the arbitrator to determine the compensation only after hearing the appellants on the merit of their cases.

Case Title: Sri Ganesh Chandra and Ors. v. The State of West Bengal and Ors. M.A.T. No. 1520 of 2019.

Citation :2022 LiveLaw (Cal) 304

Date: 07.09.2022

Counsel for the Appellants: Mr. Partha Pratim Roy, Adv., Mr. Sarbananda Sanyal, Adv., Mr. Anirban Das, Adv., Mr. Dyutiman Banerjee, Adv.

Counsel for the State: Mr. Chandi Charan De, Ld. A.G.P., Mr. Supratim Dhar, Adv., Mr. Anirban Sarkar, Adv

Counsel for NHAI: Mr. Shamit Sanyal, Adv., Ms. Manika Roy, Adv.

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