The Madras High Court has observed that Arbitrators are expected to follow the decision of the higher Courts while deciding the compensation payable to the owners of the land acquired under the National Highways Act and not mechanically decide the Award ignoring relevant provisions of the law.
The division-bench of Justice R. Subramanian and Justice N. Sathish Kumar in an appeal filed NHAI remitted the matter back to the Arbitrator for re-evaluation of the cost of land as he overlooked some procedures and precedents.
The National Highways Act requires the competent authority to fix the valuation of the land taking into account certain factors that are enumerated under sub-Section(7) of Section 3G of the Act. In the present case, however, the Court noted that no such exercise was carried out. The land owners, dissatisfied with the award, sought for arbitration, under Section 3G(5) of the National Highways Act. The District Collector, who was appointed as an Arbitrator, confirmed the valuation made by the competent authority.
When NHAI sought setting aside of the award in application under Section 34 of the Arbitration and Conciliation Act, the concerned Judge enhanced the compensation on the basis of certain sale deeds that have been produced by the land owners before him
The above order has been assailed in the appeal.
The learned Additional Solicitor General appearing for NHAI submitted that the order of the learned District Judge, modifying the award will have to be set aside relying on SC ruling in The Project Director, National Highways No. 45 E and 220 National Highways Authority of India Vs. M. Hakeem, 2021 Latest Caselaw 281 SC wherein the Court has held that in an application under Section 34, the Court has no power to modify the award and that it is open to the Court either to set aside the award or to confirm it in toto.
The learned counsel appearing for the respondents/land owners is unable to counter the arguments of the learned Additional Solicitor General, in view of the proposition of law laid down in Hakeem's case referred to supra and therefore accordingly, the Court allowed the appeal and remanded the matter back to the Arbitrator for reconsideration.
Noting that Sub-Section(7) of Section 3G of the Act, mandates the arbitrator to take into consideration the above aspects enumerated under subSection(7), while determining the value of the land, the Court remarked that the District Collector, who was appointed as an Arbitrator, has not followed mandate of subSection(7) of Section 3G of the National Highways Act.
"A perusal of the award of the Arbitrator in the case on hand, clearly shows that he has not done anything that is required of him under sub-Section(7) of Section 3G of the Act. Except referring to the sale deed and saying that the award is proper, there is no consideration of the materials that were placed before him. Therefore, the appeal is allowed and the order of the District Court under Section 34 of the Arbitration and Conciliation Act, 1996 is set aside. The matter is remitted back to the Arbitrator for fixing the value afresh in terms of sub-Section 7 of Section 3G of the Act."
Commenting that Arbitrators are required to look in higheer court rulings while deciding an award, the Court added that it is often seen that the District Collectors do not devote the required attention and awards are being passed mechanically without adverting to the relevant provisions of the law.
It mentioned SC decision in Rane of Vuyyur -vs- Collector of Madras wherein it was held that the land owners would be entitled to have the highest value for the lands acquired by the Government. We find that both the appropriate authority and the District Collectors award only the lower value in a mechanical manner without adverting to the requirements of law, the Court said.
With regard to present case, the Court sepcified directions to the Ld. Arbitrator.
"The Arbitrator is required to take into account the sale deed and the valuation reflected therein and decide the appropriate compensation. The Arbitrator shall also follow the provisions of Section 3G(7) of the National Highways Act, in determining the compensation. The Arbitrator shall pass an award within a period of six months from the date of receipt of a copy of this order."
Case Title: The Union of India, Ministry of Shipping Road, Transport and National Highways, vs J.Auuamar and Ors.
Case Details: C.M.A(MD)No.1734 of 2013
Coram: Justice R. Subramanian and Justice N. Sathish Kumar
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