National Highways Authority Of ... vs Raghuram Suvarna
2021 Latest Caselaw 6320 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.6787/2021 (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.     RAGHURAM SUVARNA
       AGED BY MAJOR
       S/O LATE B MONAPPA
       SUVARNA
       KOLYA, KOTEKAR POST
       SOMESHWARA VILLAGE
       MANGALORE - 575022.

2.     THE ARBITRATOR & DEPUTY
       COMMISSIONER
                                -2-

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

     THIS MISCELLANEOUS FIRST APPEAL IS FILED
UNDER SECTION 37(1)(C) OF THE ARBITRATION AND
CONCILIATION ACT, 1996, PRAYING TO AGAINST THE
JUDGMENT AND DECREE DATED 01.12.2020 PASSED IN
A.S.NO.14/2019 ON THE FILE OF THE IV ADDITIONAL
DISTRICT AND SESSIONS JUDGE, DAKSHINA KANNADA,
MANGALURU,     DISMISSING     THE     ARBITRATION
APPLICATION FILED UNDER SECTION 34(2) OF THE
ARBITRATION AND CONCILIATION ACT, 1996.

     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 01.12.2020

made in Arbitration Suit No.14/2019 on the file of the

IV Additional District Judge, Dakshina Kannada,

Mangaluru, dismissing the arbitral application filed

under Section 34(2) of the Arbitration and Conciliation

Act, consequently, confirming the Award dated

16.10.2018 passed by the Arbitrator/defendant No.2

in No.C.DIS.ARB(2) NH.LAQ.CR.282/2016-17.

I. FACTS OF THE CASE;

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

constituted by the National Highways Act, 1956

(herein after referred to as 'the NH Act' for short) 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 NH Act, 1956 and

same was approved by the Central Government vide

notification No.S.O.279(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 NH 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

03.05.2011 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 08.02.2010. 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.1,00,000/- 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

NH 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.1,34,400/- per cent of the acquired land. The

learned arbitrator by the impugned award dated

16.10.2018 has enhanced the compensation amount

to Rs.1,34,400/- 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.14/2019 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 set aside the impugned award dated 16.10.2018 passed in No.C.DIS.ARB (2) NH.LAQ.CR.282/ 2016-17 passed by the Arbitrator/defendant No.2?

2. What Order?

5. Considering the oral and documentary

evidence on record, the learned trial Judge has

recorded the finding that that the plaintiff has not

made out any ground to set aside the impugned

award dated 16.10.2018 passed by the learned

arbitrator. Thereby, the learned trial judge dismissed

the arbitration suit filed by the present appellant

confirming the impugned award passed by the learned

arbitrator dated 16.10.2018 made in

No.C.DIS.ARB(2)NH LAQ.CR.282/2016-17. 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

01.12.2020. It is further contended that the learned

trial judge has failed to consider the contention of the

appellant that the claim of the respondent No.1 before

respondent No.2 insofar as the award dated

16.10.2018 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 NH 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 NH Act,

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"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 NH Act provides

that the provision of the Arbitration and Conciliation

Act would apply to arbitration proceedings under the

NH Act. It is further contended that in 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

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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 NH Act. In such circumstances, the only

provision available to the parties is to invoke Article

137 of the Limitation Act, 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

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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 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

08.02.2010 for acquisition of the land of respondent

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

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National Highways Act for NH 66 from KM 348.500 to

KM 358.000, followed by a final Notification dated

04.02.2011 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

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.1,00,000/- 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 the Deputy Commissioner, Dakshina

Kannada, Mangalore. The learned arbitrator

considering the plaint averments, objections and

material on recorded had allowed the claim application

- 14 -

of respondent No.1 by enhancing compensation

amount at the rate of Rs.1,34,400/- 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.14/2019 had filed the

arbitration suit under the provisions of Section 34 of

the Arbitration and Conciliation Act before the learned

District judge, challenging the award passed by the

learned arbitrator.

12. 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

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

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arbitrator considering the material on record had

proceeded to pass the impugned award enhancing

compensation at the rate of 1,34,400/- for every cent

of the land with 9% interest applicable under Section

3-H(5) of the NH Act to the legal owner of the land

bearing Sy.No.198-10A, measuring 0.07 acre (283

Sq.Mts) of Someshwara Village, Mangaluru Taluk

acquired in Award No.NH.LAQ.SR.03/2011-12 dated

20.08.2011.

13. It is relevant to consider the provisions of

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

reads as under;

"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."

- 16 -

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 NH

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.

14. In the present case, admittedly no such

contention was raised before the learned arbitrator

when the respondent No.1 had filed an application for

enhancement of compensation under the provisions of

Section 3(G)(5) of the NH 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

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by time could be a ground under the provisions of

Section 34 of the Arbitration and Conciliation Act.

15. 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

(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

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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 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

- 19 -

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."

16. 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

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

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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.

17. 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

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

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instance, the appellant has not raised the said

contention before the learned arbitrator.

18. 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

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

Court in the case of Raj Kishan & Company Vs.

- 22 -

National Thermal Power Corporation reported in

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

19. 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

arbitral suit under Section 34 of the Arbitration and

Conciliation Act.

- 23 -

20. 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.

21. 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.34,400/- per cent,

which is not exorbitant, rather it is only just and

reasonable in the opinion of the Arbitrator. Therefore,

the learned trial judge was justified in dismissing the

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suit on merits as well as on the limitation raised for

the first time before the trial Court.

22. 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 judgment and award

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.

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

ORDER

The Miscellaneous First Appeal filed by the NHAI

is hereby dismissed. The impugned judgment and

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decree dated 01.12.2020 made in A.S. No.14/2019 is

hereby confirmed.

Sd/-

JUDGE

Sd/-

JUDGE

PN CT.GD