Madhya Pradesh High Court
The National Highways Authority Of ... vs Smt. Anita Singhal on 18 February, 2025
Author: Milind Ramesh Phadke
Bench: Milind Ramesh Phadke
1
IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE MILIND RAMESH PHADKE
ARBITRATION APPEAL No. 47 of 2021
THE NATIONAL HIGHWAYS AUTHORITY OF INDIA
(MINISTRY OF ROAD TRANSPORT AND HIGWAYS) GOVT.
OF INDIA
Versus
SMT. ANITA SINGHAL AND OTHERS
Appearance:
Shri H.K. Goyal - Advocate for the petitioner.
Shri S.S. Rawat - Advocate appeared for respondent no.1.
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Reserved on 07/02/2025
Delivered on 18/02/2025
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ORDER
1. Looking to the similitude in the Arbitration Appeals
No.47/2021, No.48/2021, No.51/2021, No.52/2021, No.53/2021,
No.64/2021 and No.65/2021, with the consent of the parties they
are being heard and decided by this common order.
2. For convenience the facts of Arbitration Appeal No.47/2021
are being referred here to.
3. Invoking the appellate jurisdiction of this Court under
Section 37(1)(C) of the Arbitration and Conciliation Act, 1996
(hereinafter called as "Act of 1996"). The appellant herein i.e.
National Highways Authority of India (Ministry of Road
Transport and Highways) has preferred this appeal questioning the
order passed by 7th Additional District Judge, Shivpuri in MJC
No. AV03/2021 dated 09.02.2021, by which application filed by
the respondent no.1 under Section 34 of the Act of 1996 has been
allowed and while setting aside the Award passed by the
Aribtrator dated 10.10.2017, referred to him under Section 3 (G)
(5) of the National Highways Act, 1956, the matter has been
remitted to the Arbitrator for fresh consideration.
4. Short facts confining to arbitration appeal no.47/2021 are
that on 15.10.2021 as per section 3 (A) of the National Highways
Act, 1956, a Gazette Notification: Extra ordinary was published
by the Ministry of Road Transport and Highways for widening
/construction of the National Highway No. 3 (Shivpuri - Dewas
Section) from Km. 239.937 to Km. 294.19 and for that lands
adjacent to National Highway No. 3 of Village - Tilatil was
proposed to be acquired as per the schedule annexed. The lands of
the present respondents were included in the said schedule.
5. On 18.09.2012 as per Section 3 (D) of the National
Highways Act, 1956 the Gazette Notification: Extra ordinary was
published and the scheduled land, thereafter, vested in the Central
Government free from all encumbrances. With regard to
acquisition, case no.28/2011-12/A-82 was initiated and therein the
Sub Divisional Officer-cum-Competent Authority Land
Acquisition for National Highway No. 3 ,Tehsil - Kolaras, District
-Shivpuri passed an Award dated 28.01.2013 as provided under
Section 3 (GQ)(1)of the National Highways Act, 1956.
6. Being dissatisfied with the award passed by the Competent
Authority Land Acquisition, an application under section 3 (G) (5)
of the National Highways Act, 1956 was preferred by the
respondent no.1 before the Arbitrator-Cum-Divisional
Commissioner, Division Gwalior on 24.04.2014.
7. After receiving reply the Award was passed by the
Arbitrator-Cum-Divisional Commissioner, Division Gwalior on
10.10.2017 which was registered as case no.132/2015-16/R.R.,
whereby an application preferred by the present respondent no.1
was rejected.
8. Against the said Award an application dated 08.01.2018
under Section 34 of the Act of 1996 was preferred by the
respondent no. 1 before the learned District Judge, Shivpuri which
was, thereafter, transferred to 7 th Additional District Judge,
Shivpuri and was registered as MJC No.AV03/2021.
9. On 09.02.2021 learned 7th Additional District Judge,
Shivpuri allowed the objections preferred by respondent no.1 and
remanded the matter as a whole to the Arbitrator-Cum-Divisional
Commissioner, Division Gwalior for re-adjudication on merits.
10. Assailing the aforesaid order, the present appeal has been
preferred.
11. Learned counsel for the appellant submitted that the 7 th
Additional District Judge, Shivpuri while hearing the application
under Section 34(1) of the Act of 1996 can only remit the Award
under Section 34(4) of the Act of 1996 and once the application
under Section 34(1) of the Act of 1996 is decided finally, it cannot
remit the matter back to the Arbitrator invoking the provisions
under Section 34(4) of the Act of 1996 as it has no powers and
jurisdiction to remit the matter to Arbitral Tribunal that too suo-
moto in absence of any application made by any of the parties in
this behalf.
12. In support of his contentions he had placed reliance in the
matter of Radha Chemicals vs. Union of India passed in Civil
Appeal No.10386/2018 dated 10.10.2018, in the matter of Steel
Authority of India Limited, Bhilai Steel Plant vs. Kumaon
Refractories reported in 2017 (4) MPJR 3 (CHH), in the matter
of Priyatam Chemicals Pvt. Ltd. vs. Chhattisgarh Rajya
Sahkari Vipanan Sangh Maryadit reported in 2017 (3) MPJR
112(CHH) and in the matter of Kinnari Mullick and Another vs.
Ghanshyam Das Damini reported in 2018(11) SCC 328, wherein
the Apex Court has expounded that the power of the Court under
Section 34 of the Act of 1996 is not to remand the matter to the
Arbitral Tribunal after setting aside the arbitral Award.
13. Learned counsel while further placing reliance in the matter
of Bombay Slum Redevelopment Corporation Pvt. Ltd. vs.
Samir Narain Bhojwani reported in 2024 (7) SCC 218, in the
matter of Union of India vs. Madan Mohan Jain & Sons and
Ors reported in 2019(1) RLW 360 (Rajasthan HC) and in the
matter of Secretary to the Government vs. Additional
Commissioner reported in 2023 (2) Mh.L.J. 261 (Bombay HC)
had argued that in the Arbitration Act there is no statutory
embargo on the power of the appellate Court under Section 37 (1)
(c) to pass an order of remand. However, looking to the scheme of
the Arbitration Act, the Appellate Court can exercise the power of
remand only when exceptional circumstances make an order of
remand unavoidable, therefore, the order of remand by the
Appellate Court under Section 37 of the Arbitration Act can be
made only in exceptional cases and there cannot be a cut and
dried or straight jacket formula governing the exercise of the
discretionary power.
14. On merits learned counsel has argued that the Court below
while passing order dated 09.02.2021 has held that no opportunity
to adduce oral and documentary evidence was accorded by the
Arbitrator-Cum-Divisional Commissioner Gwalior to respondent
no.1 which looking to the record is a perverse finding as from the
date when the application under Section 3 (G) (5) of the National
Highways Act, 1956 on 24.04.2014 till the final Award dated
10.10.2017 was passed, the respondent no.1 had not sought time
to produce any evidence in support of his application and when
respondent no.1 himself had not chosen to adduce evidence in
support of his application, she was estopped from raising the
ground before the 7th Additional District Judge since the same was
not raised before the Arbitrator. Also principle of weaver would
be applicable in the present case.
15. While referring to para 30 of the impugned order, it was
argued that the ground mentioned therein for allowing the
objections are in total derogation of the guidelines issued by the
Apex Court as well as this Court in catena of its judgments
wherein guidelines have been laid down on which the Court can
set aside the aribtral Award under Section 34(2) of the Act of
1996. One of the judgments has been quoted by the learned Court
below itself of Oil and National Gas Corporation Ltd vs Saw
Pipes Ltd reported in 2003 (5) SCC 705 and since the aforesaid
ground does not come within the four corners of the guidelines,
the very order of setting aside the award and remitting the matter
was per se illegal.
16. Shri S.S. Rawat, learned counsel for the respondent
submitted that the order passed by learned 7 th Additional District
Judge, Shivpuri is in accordance with law and no interference is
called for in the impugned order and, therefore, the appeal
deserves to be dismissed.
17. Heard the counsels for the parties and perused the record.
18. In the matter of Radha Chemicals (supra) and Kinnari
Mullick and Another (supra) the jurisdiction of the Court hearing
the objections under Section 34 of the Act of 1996 and remanding
the matter back to the arbitrator for fresh decision while setting
aside the arbitral award has already been put to rest and it has
been held that the Courts while deciding a Section 34 petition has
no jurisdiction to remand the matter to the Arbitrator for fresh
decision.
19. In light of the aforesaid settled preposition of law, this
Court at the very threshold finds that the order of remand by the
7th Additional District Judge to the Arbitrator is bad in law,
accordingly, the said observation is hereby set aside.
20. So far as the decision of the Court below while deciding the
objections under Section 34 (2)(b) of the Act of 1996 on merits
holding the Award passed by the Arbitrator to be against public
policy is concerned, the phrase "Public Policy of India" is not
defined under any Act and the said term is required to be given
meaning in context and also considering the purpose of the
section and scheme of the Act. It has been repeatedly stated by
various authorities that the expression 'public policy' does not
admit of precise definition and may vary from generation to
generation and from time to time. Hence, the concept 'public
policy' is considered to be vague, susceptible to narrow or wider
meaning depending upon the context in which it is used. Lacking
precedent the Court has to give its meaning in the light and
principles underlying the Arbitration Act, Contract Act and
Constitutional provisions.
21. In the matter of Kedar Nath Motani and Ors. vs Prahlad
Rai and Ors reported in AIR 1960 SC 213, reversing the order of
the High Court and restoring the decree passed by the trial court
declaring the appellants' title to the lands in suit and directing the
respondents who were the appellants' benamidars to restore
possession, this Court, after discussing the English and Indian law
on the subject which is as under:
"The correct position in law, in our opinion, is that what one has
to see is whether the illegality goes so much to the root of the
matter that the plaintiff cannot bring his action without relying
upon the illegal transaction into which he had entered. If the
illegality be trivial or venial and the plaintiff is not required to rest
his case upon that illegality, then public policy demands that the
defendant should not be allowed to take advantage of the position.
A strict view, of course, must be taken of the plaintiff's conduct,
and he should not be allowed to circumvent the illegality by
resorting to some subterfuge or by misstating the facts. If,
however, the matter is clear and the illegality is not required to be
pleaded or proved as part of the cause of action and the plaintiff
recanted before the illegal purpose was achieved, then, unless it
be of such a gross nature as to outrage the conscience of the court,
the plea of the defendant should not prevail."
22. The aforesaid principle formulated did not apply to the
contracts which are tainted with illegality but are contracts which
contain terms which are so unfair and unreasonable that they
shock the conscience of the court. They are opposed to public
policy and require to be adjudged void.
23. Therefore, in cases where the validity of award is
challenged there is no necessity of giving a narrower meaning to
the term 'public policy of India'. On the contrary, wider meaning is
required to be given so that the 'patently illegal award' passed by
the arbitral tribunal could be set aside. Further if the award is
patently against the statutory provisions of substantive law which
is in force in India or is passed without giving an opportunity of
hearing to the parties as provided under Section 24 or without
giving any reason in a case where parties have not agreed that no
reasons are to be recorded, it would be against the statutory
provisions and in all such cases, the award is required to be set
aside on the ground of 'patent illegality.
24. It is true that Legislature has not incorporated exhaustive
grounds for challenging the award passed by the arbitral tribunal
or the ground on which appeal against the order of the Court
would be maintainable. Hence, if the award has resulted in an
injustice, a Court would be well within its right in upholding the
challenge to the award on the ground that it is in conflict with the
public policy of India. From this discussion it would be clear that
the phrase 'public policy of India' is not required to be given a
narrower meaning. As stated earlier, the said term is susceptible of
narrower or wider meaning depending upon the object and
purpose of the legislation. Hence, the award which is passed in
contravention of Sections 24, 28 or 31 could be set aside.
25. Thus, the prospectus of the aforesaid discussion would lead
that result would be - award could be set aside if it is contrary to:-
(a) fundamental policy of Indian law; or b) the interest of India; or
(c) justice or morality, or (d) in addition, if it is patently illegal.
26. Illegality must go to the root of the matter and if the
illegality is of trivial nature it cannot be held that award is against
the public policy. Award could also be set aside if it is so unfair
and unreasonable that it shocks the conscience of the Court. Such
award is opposed to public policy and is required to be adjudged
void.
27. In the light of the aforesaid discussion, this Court finds that
the learned Court below had not considered the very guidelines
issued by the Apex Court and in the entire order had not discussed
that the Award passed by the Arbitrator was so unfair and
unreasonable that it shooked the conscience of the Court.
28. With regard to non grant of opportunity to adduce evidence
has also not been discussed in its right perspective and in absence
of any material available on record had went on to hold that the
guidelines issued by the stamp Collector with regard to
ascertaining the market value of the land acquired on the basis of
the guidelines for calculating valuation of small portion of land on
the basis of per sq. meter was not followed instead the
compensation was awarded on the basis of the land being
agricultural land, appears to be not a correct preposition.
29. Thus, this Court finds that on both the counts the order
passed by the 7th Additional District Judge allowing the objections
preferred by present respondent no.1 and setting aside the arbitral
Award and remitting the matter back for fresh adjudication
appears to be not sustainable.
30. Since there is no embargo on the appellate power of this
Court under Section 37 of the Act of 1996 to pass an order of
remand, in the exceptional circumstances when this Court has
held that the learned Court below has not properly appreciated the
guidelines as laid down by the Apex Court as well as this Court
with regard to hearing the objections under Section 34 of the Act
of 1996, this Court remits the matter to the Court below for
consideration of the objections under Section 34 of the Act of
1996 preferred by the respondent no.1 in accordance with law. All
the contentions of the parties are kept open. The Trial Court is
directed to decide the dispute expeditiously within a period of
four months from the date of receipt of certified copy of this
Order.
31. Parties are directed to remain present before the concerned
Court on 24.02.2025.
(Milind Ramesh Phadke)
Judge
chandni/ 18/02/2025
PAWA
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Date: 2025.02.18 18:16:50 +05'30'
