Vijaybhai Bhailalbhai Patel vs Union Of India
2023 Latest Caselaw 8529 Guj

Gujarat High Court

Vijaybhai Bhailalbhai Patel vs Union Of India on 8 December, 2023

Author: Sunita Agarwal

Bench: Sunita Agarwal

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      C/SCA/17199/2023                              ORDER DATED: 08/12/2023

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             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

              R/SPECIAL CIVIL APPLICATION NO. 17199 of 2023

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                         VIJAYBHAI BHAILALBHAI PATEL
                                    Versus
                               UNION OF INDIA
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Appearance:
MR SAURABH G AMIN(2168) for the Petitioner(s) No.
1,10,11,12,13,14,15,16,17,18,19,2,20,21,22,23,24,25,26,27,28,29,3,30,31,32,
33,34,35,4,5,6,7,8,9
 for the Respondent(s) No. 1,2,3,4,5
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 CORAM:HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE
       SUNITA AGARWAL
       and
       HONOURABLE MR. JUSTICE ANIRUDDHA P. MAYEE

                               Date : 08/12/2023

                        ORAL ORDER

(PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL)

1. By means of the present petition, the petitioners

seek to challenge the vires of various provisions of the

Railways Act, 1989, which pertain to determination of

compensation; criteria for determination, market value of the

land and interest on the excess amount of compensation

determined by the Arbitrator. Section 20N of the Railways

Act, 1989, whereby the provisions of the Land Acquisition

Act, 1894 are excluded, is also subject matter of the

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challenge herein.

2. One of the main prayer made in the writ petition is to

challenge the notification dated 21.06.2010 issued by the

Central Government, Ministry Railways appointing the

respondent Nos. 2 to 5, officers working in the State of

Gujarat, as Arbitrator to adjudicate the disputes pertaining to

the determination of compensation under Section 20F(2) by

the competent authority. The prayer is to declare

appointment of respondent Nos. 2 to 5 as Arbitrators being

illegal and to hold that they are not competent or qualified for

appointment of Arbitrator and further declare the competent

Civil Court having territorial jurisdiction over the acquired

land to decide applications / references for enhancement of

compensation of the acquired land; the proceedings in the

arbitration applications pending since 2013 be forwarded to

the competent Civil Court. Further prayer is to prohibit the

respondent Arbitrator to proceed in the pending application

filed in the year 2013 under Section 20F(6) of the Railways

Act, 1989.

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3. In essence, the petitioners herein are challenging the

provisions pertaining to reference of the dispute about the

amount determined by the competent authority, to the

Arbitrator in accordance with Section 20F(6) of the Railways

Act, 1989, and would submit that the appointment of

Arbitrator by the Central Government under the said

provisions to decide the dispute, is liable to be set aside.

4. When the matter was taken up, the Court has raised

a specific query to the learned counsel for the petitioners to

answer the question of delay noticing that the present writ

petition challenging the appointment of Arbitrator vide

notification dated 21.06.2010 has been filed in the month of

September, 2023. We may further note that the acquisition

of the land-in-question in accordance with the provisions of

the Railways Act, 1989 was made vide notification dated

29.09.2008 under Section 20A and the declaration

notification dated 15.09.2009 under Section 20E of the

Railways Act. The acquisition was for the purpose of

execution, maintenance, management and operation of the

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special railway project known as Western Dedicated Fright

Corridor in the district Vadodara.

5. The award dated 13.04.2010 was passed by the

competent authority determining the market value of the

land, which was disputed by the petitioners on the ground

that the market value determined by the competent authority

was at illusory rates based on the jantri rates of the

agricultural land prescribed by the State Government. The

market value of the land-in-question noticing the intended

land use (commercial) has been ignored. Further, no interest

has been provided from the date of notification under Section

20A to the date of award.

6. It may be noted that on the reference made by the

petitioners seeking enhancement of compensation, the matter

was referred to the Arbitrator and the Arbitration Application

Nos. 375 of 2013 to 437 of 2013 and 951 of 2013 (in all 64

cases) had been registered. After a period of 13 years, from

the date of registration of the arbitration application, the

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petitioners herein are raising a dispute with regard to the

appointment of Arbitrator by the Central Government vide

notification dated 21.06.2010, on the premise that the

respondents - Arbitrators were unilaterally appointed by the

Central Government which itself is a party to the dispute

being the acquiring body. The Arbitrators being government

officials cannot be said to be neutral persons. They have no

knowledge or experience of law to adjudicate the matter

pertaining to the determination of compensation. The

determination of compensation is a judicial function with

respect to which the Arbitrators appointed under Section 20F

are incompetent.

7. Lastly, it is submitted that delay of merely 13 years

in not adjudicating the disputes raised by the petitioners by

the Arbitrator is against the mandate of the Arbitration Act'

1996 which provides period of 12 months for completion of

proceedings by the Arbitral Tribunal.

8. All other prayers made in the writ petition as noted

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hereinabove are pertaining to the provisions for

determination of market value and the payment of interest

etc. thereon. However, noticeable is the fact that the

challenge to the provisions of Railways Act specifically the

provisions under Section 20F(6) and 20F(7) of the Railways

Act, 1989 along with the notification dated 21.06.2010 has

been made after a period of 13 years from the date of

declaration of the award and appointment of Arbitrator.

9. As the question raised is about the validity of the

provisions pertaining to the appointment of Arbitrators which

was made in the year 2010, we are of the considered view

that the petitioners cannot be permitted to raise this

challenge after a period of 13 years, on the premise that the

Arbitrators appointed by the Central Government did not

decide the dispute in a time bound manner. For the laches

and delay in approaching this Court, raising the issue with

regard to the manner of appointment of Arbitrators by the

Central Government vide notification dated 21.06.2010, no

good ground has been made out.

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10. So far as the delay in making the award by the

Arbitrator from the averments made in the writ petition, it

may be noted that some dispute was initially raised with

regard to demand of arbitration fee, 50% of which was

supposed to be paid by the landowners. On a challenge by

some of the landowners in Special Civil Application No. 8140

to 8162 of 2013, this High Court has passed a common order

dated 08.05.2013 observing that the Arbitrator and Revenue

Inquiry Commissioner shall proceed with the arbitration

proceedings irrespective of any obligation for the payment by

the petitioners and that the Government of India, Ministry of

Railways shall make provisions regarding the administrative

and other expenses of Arbitrator, without any delay, so that

the proceedings for the purpose of compensation of the

claimants are not delayed. A copy of the order dated

08.05.2013 passed by this Court as noted hereinabove is

appended as Annexure 'O' (page '139' of the paper-book).

11. A perusal of the order dated 08.05.2013 passed by

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this Court indicates that prayer was made therein to issue

directions to the Arbitrators to hear Section 7 applications for

determination the market value of the acquired land of the

petitioners therein. The Railways, on the other hand, raised a

dispute that the proceedings before the Arbitrators were

initiated by the landowners and the Railways which was

dragged to the arbitration proceedings, cannot be asked to

pay entire cost which has to be shared by both the sides as

per the Arbitration and Conciliation Act, 1996. On the said

issue, it was held by this Court that if the Railways desires

the implementation and progress of the projects like

Dedicated Freight Corridor expeditiously, it is also under the

obligation that the aspect of compensation is not delayed and

it should not resort to such provisions of Arbitration Act,

1996 to fasten the liability on the persons whose land have

been acquired, which will be adding insult to the injury as

they would be made to shell out the portion of compensation

when they were praying for enhanced compensation on the

ground that the amount determined was lessor then the

market value. Direction was, thus, given to the Union of

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India, Ministry of Railways to make necessary arrangements

for expeditious disposal of the arbitration proceedings.

12. It seems that the dispute remained pending for

sometime and the landowners had preferred applications for

interim award to grant interim compensation at rate at which

the adjoining government land were valued. It seems that an

award dated 15.01.2016 had been passed by the Arbitrator in

Arbitration Reference No. 8 of 2012, whereby the arbitration

reference preferred by the claimants therein against the

award dated 08.06.2011 was rejected. Similar orders were

passed rejecting the other arbitration reference appended

with the writ petition as Annexure 'V'.

13. It seems that there was some dispute with regard to

determination of compensation for the government land and

letters were written by the Director, Executing Agency

namely DFCCIL to the Principal Secretary, Government of

Gujarat in respect of rates of the acquired lands in the State

of Gujarat for DFCCIL projects. A perusal of one of such

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letter dated 23.02.2017 indicates that the Executing Agency

namely DFCCIL had raised a dispute that the Western

Dedicated Freight Corridor to offer state-of-the-Art High

speed, high capacity freight transport infrastructure is one of

the most ambitious project of the Country. However, in

connection with the land acquisition, for this mega project in

the State of Gujarat, the issue of demand of very high rates

for transfer of Government land, as against the rates of

adjoining private lands arrived at under the provisions of the

Railways Act, 1989, was raised by the DFCCIL in a number of

Forum. It was decided in the high level meeting convened by

the Principal Secretary to the Prime Minister that the

Railways shall submit a proposal to the Government of

Gujarat for charging reasonable rates for transfer of

government land for DFC projects (Dedicated Freight

Corridor). It was asserted that no different methodology can

be adopted for valuing the government lands and private

lands and acquisition for both the lands valuation

methodology as prescribed in Section 20F(8) of the Railways

Act, 1989 will have to be mandatory followed.

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14. It seems that in the interregnum an interim award

dated 16.05.2015 was passed by the Arbitrator which was

confirmed by the concerned Court under Section 34 of the

Arbitration Act, 1996 in the challenge raised by DFCCIL, vide

order dated 18.03.2017. First Appeal No. 1977 of 2018 had

been filed before the High Court, which was decided vide

order dated 02.07.2018 upholding the interim award on the

basis of the report of the Committee which was specially

constituted to determine the market value in view of the

above noted disputes. It was, however, noted that the

interest @ 15% awarded by the Arbitrator is against the

statutory provisions under Section 20H(5) which recognises

9% interest per annum from the date of taking possession till

actual payment. The direction was, thus, issued to deposit

the entire compensation awarded by the Arbitrator under the

interim award with the statutory solatium, but with simple

interest @ 9% per annum from the date of taking possession

to the date of actual deposit before the concerned court. The

claimants were also permitted to withdraw 50% of the

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compensation and remaining was directed to be deposited in

a nationalized bank. This order was passed by the Division

Bench of this Court in the year 2018 in the First Appeal filed

by the Western Dedicated Freight Corridor Corporation of

India.

15. At this stage, we may note that the beneficiary

acquiring body namely Western Dedicated Freight Corridor

Corporation of India Ltd. has not been impleaded in the

present writ petition.

16. It may further be noted that DFCCIL filed a Special

Leave Petition (Civil) Diary No(s) 40985/2018 before the Apex

Court against the judgment and order dated 02.07.2018

passed by this Court which was dismissed after condonation

of delay. A Review Application filed by the Corporation had

also been dismissed vide judgment and order 23.10.2019 by

the Apex Court which is appended at page '323' of the paper-

book.

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17. It is stated in the writ petition that the petitioners

herein filed a Writ Petition(s) (Civil) No(s). 276/2023 @ DY.

No. 40351/2022 under Article 32 of the Constitution of India

before the Apex Court to strike down the provisions of the

Railways Act, however, the Apex Court had refused to

entertain the said petition and observed that the petitioner

may approach the High Court under Article 226 of the

Constitution of India.

18. The contention of the learned counsel for the

petitioners is that the petitioners' right to property being

constitutional right protected under Article 300-A of the

Constitution of India, stood infringed at the instance of the

respondents in view of the discriminatory provisions of the

Railways Act, 1989.

19. It was argued that the Reference made by the

petitioners herein before the Arbitrator had been rejected

vide award dated 06.10.2023 after filing of the instant

petition, which further substantiates the contentions of the

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petitioners that arbitrators appointed by the Central

Government vide notification dated 21.06.2010 have not

acted independently. Being Government servants, they have

illegally rejected the references for enhancement of

compensation preferred by the petitioners. It is argued that

the entire mechanism of appointment of Arbitrators by the

Central Government being unilateral and biased, it is clear

that the process of determination of market value of the

acquired land has not been just and fair, which amounts to

violation of Article 300-A of the Constitution of India. It is,

thus, argued that the petitioners have no other remdy but to

challenge the provisions of appointment of Arbitrators, which

give ample power to the Arbitrators to decide the matter

without taking recourse to the provisions of the law.

20. Having noted the above submissions made by the

learned counsel for the petitioners and in light of the above

noted facts, it is more than evident that the petitioners were

contesting the matter of determination of market value by

the competent authority before the Arbitrator for a period of

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approximately 13 years without any demur or protest in the

matter of appointment of Arbitrator. The proceeding has

been prolonged on account of the dispute raised by the

landowners pertaining to determination of compensation at

the same rates demanded by the Gujarat Government for its

lands. DFCCIL namely the Corporation which is not

impleaded herein, was agitating the demand raised by the

State Government as also the similar rates demanded by the

private landowners of providing compensation at the same

rate at which the compensation was demanded by the State

of Gujarat. It seems that the matter had been prolonged on

account of the said disputes. The interim award was passed

in the year 2016 and challenge to the same was raised upto

the Apex Court, which issue was adjudicated in the year

2019.

21. Be that as it may, throughout these 13 years of

pending disputes between the State Government, the

Corporation DFCCIL and the landowners, the Arbitrators did

not pass any final award, but the petitioners herein have

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never raised any dispute regard to the mode and manner of

their appointment, their independence or their impartiality.

After a period of 13 years, it is not permitted for the

petitioners to challenge the notification for appointment of

Arbitrators on the ground that they being the officials of the

State Government cannot be expected to act independently.

Moreover, the challenge to the vires of the provisions of the

Railways Act, 1989 in relation to the determination of

compensation, the criteria for determination of market value

and the interest rate prescribed under Section 20H(5) of the

said Act, cannot be entertained on the plea of discrimination,

inasmuch as, sub-section (9) of Section 22F provides for

award of a sum of 60% on the market value as solatium, in

consideration of the compulsory nature of acquisition. As far

as interest is concerned, it may be noted that the power to

take possession of the acquired land vested in the Central

Government under the Railways Act is subject to the deposit

of compensation under Section 20H(1) with the competent

authority, which is to be paid to the persons interested in

accordance with Sub-section (2) to (4) of the said Section.

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22. In the present matter, it is more than evident that

the dispute is being raised herein by the petitioners as an

afterthought. In the matter of challenge to the vires of the

provisions of law, raised before the Court by way of writ

petition, the Apex Court in P.G.F. Ltd v. Union of India

reported in (2015) 13 SCC 50, has laid down certain

guidelines as a caution noticing that on many occasion,

challenge to the provisions of law as to its constitutionality is

raised with a view to thwart applicable and rigors of those

provisions and as an escape route from the applicability of

those provisions of law. It is held that it is, therefore,

imperative and worthwhile to examine such frivolous

challenges at the threshold as to whether such challenges

made are bona fide and do require consideration at all by

Writ Court by applying principle of "lifting the veil" and as to

whether there is any hidden agenda in perpetrating such

litigation. The guiding principles laid down therein in

paragraph '37' are relevant to be noted hereinunder : -

"37. The Court can, in the first instance, examine whether there is a prima facie strong ground made

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out in order to examine the vires of the provisions raised in the writ petition. The Court can also note whether such challenge is made at the earliest point of time when the statute came to be introduced or any provision was brought into the statute book or any long time-gap exists as between the date of the enactment and the date when the challenge is made. It should also be noted as to whether the grounds of challenge based on the facts pleaded and the implication of the provision really has any nexus apart from the grounds of challenge made. With reference to those relevant provisions, the Court should be conscious of the position as to the extent of public interest involved when the provision operates the field as against the prevention of such operation. The Court should also examine the extent of financial implications by virtue of the operation of the provision vis-à-vis the State and alleged extent of sufferance by the person who seeks to challenge based on the alleged invalidity of the provision with particular reference to the vires made. Even if the writ court is of the view that the challenge raised requires to be considered, then again it will have to be examined, while entertaining the challenge raised for consideration, whether it calls for prevention of the operation of the provision in the larger interest of the public. We have only attempted to set out some of the basic considerations to be borne in mind by the writ court and the same is not exhaustive. In other words, the writ court should examine such other grounds on the above lines for consideration while considering a challenge on the ground of vires to a statute or the provision of law made before it for the purpose of entertaining the same as well as for granting any interim relief during the pendency of such writ petitions. For the abovestated reasons it is also imperative that when such writ petitions are entertained, the same should be disposed of as

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expeditiously as possible and on a time-bound basis, so that the legal position is settled one way or the other."

23. It may not be out of place to mention here that as per

the stand of the petitioners in the instant writ petition, on the

applications preferred by the land-owners in the case of the

acquired lands of the village Runn and other villages, interim

award was passed by the Arbitrator granting interim award

@ Rs. 252/- per sq. mtrs. (40% of the rate applied for the

government land being Rs. 630/- per sq. mtrs.). In some of

the matters, final award dated 15.01.2016 had also been

passed by the Arbitrator as early as on 15.01.2016. The

interim award dated 16.05.2016 was confirmed by the

concerned competent Court with the dismissal of the

applications under Section 34 of the Arbitration Act preferred

by the DFCCIL. First Appeals were also dismissed by this

Court in the year 2018.

24. The dispute essentially raised by the petitioners as

well as other land-holders was that the rates demanded by

the Government of Gujarat for adjoining government lands

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shall be applied for determination of the compensation for the

private lands, subject matter of acquisition. The fact that the

negotiations were going on between the Central Government

and the Government of Gujarat with respect to the

government lands which were needed for the project, cannot

be a reason for the petitioners to keep mum and not to

challenge the appointment of arbitrator in the year 2010 by

the notification issued by the Central Government and the

proceedings conducted by it over the period of 13 years.

25. For the delay on the part of the Arbitrator, if any, in

determination of the dispute, appropriate course of action for

the petitioners was to approach this Court by seeking

appropriate relief to expedite the matter by demonstrating

that the Arbitrator sat tight over the matter. In any case, the

grounds taken in the writ petition to strike down the

provisions of Sections 20F(6), 20F(7), 20F(9), 20G(1)(i),

20H(5) and 20N of the Railways Act, 1989 as unconstitutional

being violative of Article 14 of the Constitution of India and to

declare appointment of Arbitrators by the notification dated

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21.06.2010 bad in law, are unsustainable. The contention

that the Arbitrators are not competent or not qualified to be

appointed, is unsubstantiated for the reasons that the State

officers of the concerned departments have been appointed

as Arbitrators, who are having exclusive knowledge about the

nature of the lands-in-question and matters pertaining to

determination of compensation. The assertions that the

Central Government is having control over the State officials,

who have been appointed as Arbitrators by the aforesaid

notifications, are baseless. Moreover, for any error on the

part of the Arbitrators in adjudication the reference,

alternative efficacious remedy to file an application under

Section 34 of the Arbitration and Conciliation Act' 1996

before the competent Court is with the petitioners.

26. For the aforesaid, we do not find any merit in the

writ petition, the same is, accordingly, dismissed. However,

liberty is with the petitioners to challenge the arbitral award

dated 06.10.2023 by invoking the provisions of Section 34 of

the Arbitration and Conciliation Act, 1996 on all available

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grounds with them. It is clarified that any observations made

hereinabove or reference made by us as to the competence of

the Arbitrators or any dispute related to their impartiality,

would not come in the way of the petitioners in raising such

challenge and the First Appellate Court shall be required to

decide all issues raised before it independently without being

influenced by any of the observations made hereinabove.

(SUNITA AGARWAL, CJ )

(ANIRUDDHA P. MAYEE, J.) AMAR SINGH