National Highways Authority Of ... vs Sri Padupanamboor Nalkoor
2021 Latest Caselaw 6318 Kant

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

     DATED THIS THE 17TH DAY OF DECEMBER., 2021

                      PRESENT

        THE HON'BLE MR. JUSTICE B. VEERAPPA

                        AND

      THE HON'BLE Mrs. JUSTICE K.S. HEMALEKHA

MISCELLANEOUS FIRST APPEAL No.6778/2021 (AA)


BETWEEN:

NATIONAL HIGHWAYS
AUTHORITY OF INDIA
PROJECT IMPLEMENTATION UNIT
DOOR NO.3-29, BETHEL
THARETHOTA, NEAR PUMPWELL
(NH-66) MANGALORE - 575005
REP. BY ITS PROJECT DIRECTOR.
                                       ...APPELLANT

(BY SRI SREENATH V.K, ADVOCATE)

AND:

1.     PADUPANAMBOOR NALKOOR
       DAIVASTHANA
       PADUPANAMBUR HALEYANGADY POST
       MANGALORE - 574146
       KAKSHIN KANNADA DISTRICT
       REP. BY ITS PRESIDENT
       SRI D JAGADISH ACHARYA

2.     THE ARBITRATOR & DEPUTY
                              -2-


      COMMISSIONER, D.K DISTRICT
      MANGALORE - 575001.
                                          ...RESPONDENTS
                             ****

     THIS MISCELLANEOUS FIRST APPEAL IS FILED
UNDER SECTION 37(1)(C) OF THE ARBITRATION AND
CONCILIATION ACT, AGAINST THE ORDER DATED
03.11.2020, PASSED IN A.S NO.90/2019 ON THE FILE OF
THE IV ADDITIONAL DISTRICT AND SESSIONS JUDGE,
DAKSHINA KANNADA, MANGALURU, DISMISSING THE
ARBITRATION FILED UNDER SECTION 34(2) OF THE
ARBITRATION AND CONCILIATION ACT.

     THIS MISCELLANEOUS FIRST APPEAL COMING ON
FOR ADMISSION THIS DAY, B.VEERAPPA J., DELIVERED
THE FOLLOWING:

                     JUDGMENT

The present Miscellaneous First appeal is filed by

the appellant- National Highways Authority of India

(hereinafter referred to as 'NHAI' for brevity) against

the impugned judgment and decree dated 03.11.2020

made in Arbitration Suit No.90/2019 on the file of the

IV Additional District Judge, Dakshina Kannada,

Mangaluru, allowing the application filed under Section

34(3) of the Arbitration and Conciliation Act, 1996 for

condonation of delay in filing the application and

dismissing the arbitral application filed under Section

34(2) of the Arbitration and Conciliation Act,

consequently, confirming the Award dated 28.05.2019

passed by the Arbitrator/defendant No.2 in

No.C.DIS.ARB(2) NH. LAQ.CR.274/2016-17.

I. FACTS OF THE CASE;

It is the case of the appellant that the 'NHAI' was

constituted by the National Highways Act, 1956 by the

Parliament and entrusted with the task of

development of the National Highways. The

Government of India has taken the policy decision to

bring infrastructure facility of the Nation on par with

other developed countries. Because Highways are

considered as means for the economic growth of the

Nation. The plaintiff has entrusted the work of

building (widening) of National Highway-17 from K.M

358.000 to K.M 375.300, National Highway-48 from

K.M 328.000 to K.M. 345.000 and National Highway-

13 from K.M 743.900 to K.M 745.000 in D.K.District,

State of Karnataka. It is contended that the lands

being required for public purpose, the Government

has declared by way of preliminary notification for the

lands, which are to be required in Padupanamburu

Village, under Section 3A(1) of the National Highways

Act, 1956 and same was approved by the Central

Government vide notification No.S.O.2128(E). It is

further contended that the land losers are entitled to

receive the compensation on the value of the property

on the date of publication under Section 3A(3) of the

National Highways Act, 1956.

2. It is further contended that the Special

Land Acquisition Officer and the Competent Authority

determined the amount of compensation under

Section 3G(5) of NH Act, 1956, after issue of notice to

the public in two local daily newspapers 'Udayavani'

(Kannada) and 'Times of India' (English) on

07.10.2008 intimating that, the claimants/land owners

have to appear along with the relevant records

substantiating their right/interest over the land

acquired. It is further contended that, the enquiry was

conducted for determination of compensation after

giving individual notices to the land owners/claimants

and the land owners have filed claim application with

the competent authority and accordingly the

competent authority went about to determine the

market value of the said property on the date of

publication of Section 3A of Notification by the

Government on 28.08.2008 and 08.09.2012.

Thereafter, the Special Land Acquisition Officer while

determining the compensation for the lands in

Padupanamburu Village, including the land of the

defendant No.1, adopted the rates of residential lands

as on the date of acquisition and awarded the

compensation of Rs.27,000/- per cent.

3. Being aggrieved by the compensation

amount determined by the Special Land Acquisition

Officer, the defendant No.1- respondent No.1 herein

had filed an application before the learned arbitrator

and the Deputy Commissioner of D.K. District-

respondent No.2 herein as under Section 3G(5) of the

National Highways Act and the Arbitration and

Conciliation Act for enhancement of the compensation

determined by the Special Land Acquisition Officer. It

is contended before the learned arbitrator that, the

compensation determined by the Special Land

Acquisition Officer is inadequate and the compensation

be enhanced to Rs.50,400/- and Rs.56,000/- per cent

of the acquired land. The learned arbitrator by the

impugned award dated 28.05.2019 has enhanced the

compensation amount to Rs.50,400/- and Rs.56,000/-

per cent with 9% interest to the respondent No.1.

Thereby, the present appellant- NHAI being aggrieved

by the said award has filed Arbitration Suit

No.90/2019 under the provisions of Section 34 of the

Arbitration and Conciliation Act, challenging the said

award mainly contending that the learned arbitrator

has not decided the point raised that the arbitration

application filed is barred by limitation and has also

raised various other contentions.

4. The learned trial judge while considering

the rival contentions has framed the following two

issues;

1. Whether the plaintiff has made out grounds to allow the application filed under Section 34(3) of the Arbitration and Conciliation Act to condone the delay?

2. Whether the plaintiff has made out any grounds to set aside the impugned award dated 28.05.2019 passed in No.C.DIS.ARB (2) NH.LAQ.CR.274/2016-17 passed by the Arbitrator/defendant No.1?

5. Considering the oral and documentary

evidence on record, the learned trial Judge has

recorded the finding that the plaintiff has made out

ground to allow the application for condonation of

delay under Section 34(3) of the Arbitration and

Conciliation Act and further held that the plaintiff has

not made out any ground to set aside the impugned

award dated 28.05.2019 passed by the learned

arbitrator. Thereby, the learned trial judge allowed the

application for condonation of delay and ultimately

dismissed the arbitration suit filed by the present

appellant confirming the impugned award passed by

the learned arbitrator dated 28.05.2019 made in

No.C.DIS.ARB(2)NH LAQ.CR.274/2016-17. Hence, the

present appeal is filed.

II. Arguments advanced on behalf of the

appellant:

6. We have heard the learned counsel for the

appellant.

7. Sri Sreeath V.K., learned counsel appearing

for the appellant contended with vehemence that the

impugned judgment and decree passed by the learned

trial judge dismissing the suit filed under the

provisions of Section 34 of the Arbitration and

Conciliation Act is erroneous, contrary to material on

record and cannot be sustained. He would further

submit that the appellant had specifically contended

before the trial Court that the arbitral award passed

by respondent No.2 is illegal, contrary to law and

against the substantial provisions of law and hence

liable to be set aside. But Same has not been

considered by the learned trial Judge while passing

the impugned judgment and decree dated

03.11.2020. It is further contended that the learned

trial judge has failed to consider the contention of the

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appellant that the claim of the respondent No.1 before

respondent No.2 insofar as the award dated

22.09.2011 was barred by law of limitation and

therefore, the application filed by respondent No.1

before the respondent No.2 under Section 3G(5) of

the National Highways Act was liable to be dismissed

as barred by limitation. Same has not been

considered by the trial Court. Therefore, the

impugned judgment and decree cannot be sustained.

He would further contend that under Sub-Section (5)

of Section 3G of the National Highways Act, "any

person aggrieved by the determination of the amount

by the competent Authority under sub-Section (1) of

3G can make an application before the Arbitrator to be

appointed by the Central Government." Section 3G(6)

of the National Highways Act provides that the

provision of the Arbitration and Conciliation Act 1996

would apply to arbitration proceedings under the

National Highways Act. It is further contended that in

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view of the provisions of Section 43(1) of the

Arbitration and Conciliation Act, the Limitation Act

applies to arbitration proceedings under the

Arbitration and Conciliation Act. Same has not been

considered by the learned trial judge and has

erroneously dismissed the arbitral suit which cannot

be sustained. Therefore, sought to allow the present

Miscellaneous First Appeal.

8. In support of his contentions, learned

counsel has relied upon the dictum of the Co-ordinate

Bench of this Court in the case of T.Yunis

Vs.National Highways Authority of India and

Others reported in ILR 2012 KAR 6055, at

paragraph No.13 held that "No period of limitation has

been stipulated to seek a reference under Section

3G(5) of the National Highways Act. In such

circumstances, the only provision available to the

parties is to invoke Article 137 of the Limitation Act,

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which provides three years from the date on which

right to apply accrues". In the present case, the

application under Section 3G(5) was not filed within

the time stipulated, thereby, it was barred by

limitation.

III. The points for determination:

9. Having heard the learned counsel for

appellant, the points that would arise for our

consideration are:

1. Whether the trial Court is justified in dismissing the arbitration suit in view of the contentions raised by learned counsel for the appellant?

2. Whether in the absence of any contention raised before the learned arbitrator with regard to limitation that application filed was barred by time could be a ground under the provisions of Section 34 of the Arbitration and Conciliation Act in the

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facts and circumstances of the present case?

IV. Consideration:

10. We have given our anxious consideration to

the argument advanced by learned counsel for the

appellant and perused the entire material on record

carefully.

11. It is an undisputed fact that the present

appellant had issued a Preliminary Notification dated

28.08.2008 for acquisition of the land of respondent

No.1 under the provisions of Section 3A of the

National Highways Act for NH 66 from KM 348.500 to

KM 358.000, followed by a final Notification dated

29.08.2013 under the provisions of Section 3D of the

National Highways Act for additional acquisition. It is

also not in dispute that the land owners had filed

claim applications before the Special Land Acquisition

Officer. The Special Land Acquisition Officer while

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determining the compensation for the land acquired in

Padupanamburu Village including the land of the

defendant No.1 had adopted the rates of residential

lands and had awarded the compensation of

Rs.27,000/- per cent. It is also not in dispute that

being aggrieved by the said order, the respondent

No.1 had filed an application under Section 3G(5) of

the Arbitration and Conciliation Act before the learned

Arbitrator and Deputy Commissioner, Dakshina

Kannada, Mangalore. The learned arbitrator

considering the plaint averments, objections and

material on recorded had allowed the claim application

of respondent No.1 by enhancing compensation

amount at the rate of Rs.50,400/- and Rs.56,000/- for

every cent of the land acquired along with 9%

interest. It is an undisputed fact that the present

appellant who is plaintiff in Arbitration Suit

No.90/2019 had filed the arbitration suit under the

provisions of Section 34 of the Arbitration and

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Conciliation Act before the learned District judge,

challenging the award passed by the learned

arbitrator.

12. It is specifically stated in paragraph No.15

of the plaint in A.S.No.90/2019 dated 28.05.2019 that

"the arbitrator did not consider the claim of the

defendant herein is barred by time. The compensation

was fixed as on 22.09.2011 and 28.06.2014 and the

application before the Arbitrator was filed on

02.02.2017. Therefore, the Arbitration Application of

the defendant was barred by time and accordingly

would have been dismissed by the Arbitrator."

13. A careful perusal of the application filed

before the learned arbitrator under the provisions of

Section 3G(5) of the Arbitration and Conciliation Act

for enhancement of compensation would depict that

the present appellant was allowed to file objection

before the learned arbitrator. Before the learned

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arbitrator, the present appellant has not raised any

contention with regard to the application filed by

respondent No.1 is barred by limitation. The learned

arbitrator considering the material on record had

proceeded to pass the impugned award enhancing

compensation at the rate of 50,400/- in respect of

land in Sy.No.22/2C and 31/2B, measuring 83,411

sq.mtr. and at the rate of Rs.56,000/- in respect of

the land in Sy.No.22/2C and 31/2B, measuring 405

and 145 sq.mtr acquired as per the Notification

No.S.O.2118(E) dated 28.08.2008 and 08.09.2012

for every cent of the land with 9% interest applicable

under Section 3H(5) of the National Highways Act to

the legal owners of the land of Padupanamburu

Village, Mangaluru Taluk.

14. It is relevant to consider the provisions of

Section 3(G)(5) of the National Highways Act, which

reads as under;

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"Sec.3(G)(5) If the amount determined by the competent authority under sub-section (1) or sub-section (2) is not acceptable to either of the parties, the amount shall, on an application by either of the parties, be determined by the Arbitrator to be appointed by the Central Government."

A careful perusal of the said provision makes it

clear that no period of limitation has been stipulated

to seek a reference under Section 3G(5) of the

National Highways Act. A contention was raised by

learned counsel for the appellant that in those

circumstances, the only provision available to the

parties is to invoke Article 137 of the Limitation Act,

which provides three years from the date of which

'right to apply' accrues.

15. In the present case, admittedly no such

contention was raised before the learned arbitrator

when the respondent No.1 had filed an application for

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enhancement of compensation under the provisions of

Section 3(G)(5) of the National Highways Act. Though

the said contention was raised first time before the

trial Court in the arbitration suit, the fact remains

whether in the absence of any contention raised

before the learned arbitrator with regard to the

application filed is barred by time could be a ground

under the provisions of Section 34 of the Arbitration

and Conciliation Act.

16. The provisions of Section 34 of the

Arbitration and Conciliation Act reads as under;

"34 Application for setting aside arbitral award. --

(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section

(2) and sub-section (3).

(2) An arbitral award may be set aside by the Court only if--

(a) the party making the application furnishes proof that--

(i) a party was under some incapacity, or

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(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

(b) the Court finds that--

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

(ii) the arbitral award is in conflict with the public policy of India.

Explanation. --Without prejudice to the generality of sub-clause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by

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fraud or corruption or was in violation of section 75 or section 81.

(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.

(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award."

17. A careful perusal of the aforesaid provisions

of the Act would clearly depict that the grounds

provided as contemplated under the provisions of

Section 34(2) are only available to challenge the

award passed by the learned arbitrator. Admittedly in

the present case, the appellant who is the plaintiff

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before the learned trial judge has not raised any such

contention before the learned arbitrator, thereby, it

was not open for the appellant to raise the issue with

regard to limitation before the learned trial judge in

the suit filed under Section 34 of the Arbitration and

Conciliation Act for the first time, which is

impermissible. What was not pleaded before the

learned arbitrator who is the original authority, cannot

be allowed to plead or urge in the arbitration suit for

the first time, in view of the provisions of the

Arbitration and Conciliation Act, which is a special

enactment.

18. Admittedly in the present case, no such

contention was taken before the learned arbitrator

with regard to law of limitation that the application

filed was not within three years from the date of the

award passed by the Land Acquisition Officer.

Therefore, the contention of learned counsel for the

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appellant that provisions of Article 134 of the

Limitation Act could be applicable to the facts and

circumstances cannot be accepted as at the first

instance, the appellant has not raised the said

contention before the learned arbitrator.

19. It is well settled that "A plea of limitation

cannot be decided as an abstract principle of law

divorced from facts as in every case the starting point

of limitation has to be ascertained which is entirely a

question of fact. A plea of limitation is a mixed

question of law and fact. Once it is clear that the

point of limitation was not raised before the learned

Arbitrator, apart from the fact that it is deemed to

have been waived, the question of entertaining such

point in the proceedings under Section 34 of the

Arbitration and Conciliation Act or in an appeal arising

from the order passed under Section 34 of the

Arbitration and Conciliation Act cannot arise." Our

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view is fortified by the dictum of the Hon'ble Supreme

Court in the case of Raj Kishan & Company Vs.

National Thermal Power Corporation reported in

2012 SCC OnLine Del 4799 (2012) 194 DLT 314.

20. It is also well settled that an appeal is a

continuation of the original proceedings. The entire

matter is at large before an appellate Court. The

arbitrator is the final judge of facts. The Court while

hearing objections does not scrutinize the award as an

appellate forum. The grounds provided to raise

Section 34 does not provide in the absence of any

issue raise before the arbitrator can raise for the first

time before the arbitral suit as contemplated under

the provisions of Section 34 of the Arbitration and

Conciliation Act. In the absence of any plea of

limitation raised before the arbitrator, it is not open

for the appellant/plaintiff to raise a plea of limitation

first time before the learned trial judge while filing

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arbitral suit under Section 34 of the Arbitration and

Conciliation Act.

21. It is also well settled that where the

contention of limitation was not raised before the

arbitral proceedings and no foundation has been laid

in the course of the proceedings before the arbitrator

either in the pleadings or in the evidence, it would be

very difficult to examine the plea as raised first time

before the learned trial judge under the provisions of

Section 34 of the Arbitration and Conciliation Act.

22. Other contentions raised by learned

counsel for the appellant have been considered by the

learned trial judge in detail and dismissed the case on

merits. Even otherwise, the learned arbitrator has

applied his judicious mind, considered and assessed

the market value on the prevailing factors and

enhanced only an amount of Rs.23,400/- and

27,400/-, which is not exorbitant, rather it is only just

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and reasonable in the opinion of the Arbitrator.

Therefore, the learned trial judge was justified in

dismissing the suit on merits as well as on the

limitation raised for the first time before the trial

Court.

23. For the reasons stated above, point No.1

raised is answered in 'Affirmative' holding that the

trial Court is justified in dismissing the suit filed by the

appellant and confirming the judgments and awards

passed by the learned arbitrator and accordingly,

point No.2 is answered in 'Negative' holding that in

the absence of any contention raised before the

learned arbitrator with regard to the application is

barred by law of limitation, could not be a ground

under the provisions of Section 34 of the Arbitration

and Conciliation Act .

24. In view of the above, we pass the following

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ORDER

The Miscellaneous First Appeal filed by the NHAI

is hereby dismissed. The impugned judgment and

decree dated 03.11.2020 made in A.S. No.90/2019 is

hereby confirmed.

Sd/-

JUDGE

Sd/-

JUDGE

PN CT.GD