The Kerala High Court has ruled that non-compliance with the principles of natural justice is a justifiable ground to set aside the arbitral award. The Court was hearing an appeal matter moved by the individuals who held lands abutting National Highway 47 held by the appellants was acquired by the Deputy Collector for widening the National Highway. The appellants claimed the sum of Rs. 8 lakhs per cent.
However, the land value fixed for the purpose of granting compensation to the appellants was only Rs. 588100/- per acre. The appellants contended the same; hence the matter was referred to arbitration. The Arbitrator called for a report as to the value of the acquired land and the structures therein from the District Level Arbitration Committee constituted by the Government.
The committee recommended that the value of the land needs to be enhanced by 30%. The Arbitrator accepted the report of the Committee and passed an award enhancing the land value as recommended.
Case of the Appellants
The appellants challenged the same, before the lower court, the same was dismissed finding no reason for its interference. One of the grievances of the appellants was that the District Collector was the Arbitrator appointed in terms of the Highways Act and the Collector himself was the Chairman of the Committee from the report was called for.
Observation of the Court
The Court found merits in the argument of the appellants and noted that the Arbitrator was examining the acceptability or otherwise of his own report, and the award is one passed by the Arbitrator accepting his own report.
“The provisions of the Act, especially after Act 3 of 2016, in terms of which this Act has been amended substantially, would show that the scheme of the Act is also that an Arbitrator adjudicating a dispute in terms of the provisions of the Act shall be neutral, impartial and independent. It is trite that only an unbiased adjudicator can be said to be a neutral adjudicator.”
The Court also added that only an adjudicator not favoring one party more than another, unprejudiced, disinterested, equitable and just, can be said to be an impartial adjudicator. The Bench added that the principle that a dispute shall be adjudicated only by a neutral and impartial adjudicator is a principle of natural justice that is deeply embedded in our jurisprudence and it is, therefore, a fundamental policy of Indian law.
“No doubt, the Collector may not be interested personally in the outcome of the arbitration proceedings, but he cannot, according to us, be said to be a neutral and impartial adjudicator in a proceeding in which the correctness of a report drawn by him and others is arising for a consideration”.
If that, so be, it was found that the award in the present case was liable to be set aside under Section 34 (2)(b)(ii) of the Act, as one in conflict with the public policy of India. The Court also observed that the contention that the appellants have not raised the objection before the court below is also without any substance, for if an award is found to be vitiated for non-compliance of the principles of natural justice and consequently in conflict with the public policy of India, it is irrelevant whether the parties raised such a contention in the proceedings, for violation of principles of natural justice is a point that can be urged at any stage of proceedings.
Thus, the appeal was allowed and the award was set aside.
Case Details
Before: Kerala High Court
Case Title: V.G. Thankamani & Ors v. National Highway Authority of India & Ors.
Coram: Hon’ble Mr. Justice P.B. Suresh Kumar and Justice C.S. Sudha
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