Madras High Court

The Special District Revenue ... vs Ms.S.Jayalakshmi on 28 September, 2021

                                                                              C.M.A.No.2267 of 2019

                             IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                DATED: 28.09.2021

                                                      CORAM:

                           THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE

                                              C.M.A.No.2267 of 2019
                                            and C.M.P.No.9784 of 2019

                   The Special District Revenue Officer,
                   (Competent Authority Land Acquisition),
                   National Highways, Collectorate,
                   Vellore, District 632 009.                             .. Appellant

                                                         Vs.

                   1. Ms.S.Jayalakshmi

                   2. The District Collector and Sole Arbitrator,
                      Office of Collectorate,
                      Sathuvachari,
                      Vellore - 632 009.

                   3. The Project Director,
                      National Highways Authority of India,
                      PIU, Krishnagiri,
                      No.25/1, Salem Main Road,
                      Near KAKC Petrol Bunk,
                      Krishnagiri.

                   (R3 impleaded vide order of this Court dated
                    05.11.2019 in C.M.P.No.20836 of 2019)                 .. Respondents
                   Prayer: Civil Miscellaneous Appeal filed under Section 37 of the Arbitration
                   and Conciliation Act, 1996 seeking to set aside the Judgement and decree
                   order dated 11.10.2017, made in Arbitration O.P.No.03 of 2010 on the file of

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                   1/16
                                                                                C.M.A.No.2267 of 2019

                   the Principal District Judge, Vellore, Vellore District.


                                For Appellant              : Mr.Edwin Prabakar
                                                             Special Government Pleader (CS)

                                For Respondent 1           : Mr.Ganesh
                                                             for M/s.Ganesh & Ganesh

                                For Respondent 3          : Mr.Su.Srinivasan
                                                            SCGSC
                                                        -----

                                               JUDGMENT

(The case has been heard through video conference)

This appeal has been filed under Section 37 of the Arbitration and

Conciliation Act, 1996 challenging the order dated 11.10.2017, passed by the

learned Principal District Judge, Vellore in A.O.P.No.03 of 2010, filed under

Section 34 of the Arbitration and Conciliation Act modifying the Arbitral

Award dated 19.11.2009, passed under the National Highways Act, 1956 by

the second respondent (District Collector - Arbitrator) by enhancing the

market value of the first respondent property which was the subject matter of

acquisition from Rs.495 per sq.meter to Rs.4,500 per sq.meter.

2. Aggrieved by the arbitral award dated 19.11.2009, fixing the market

value of the property at Rs.495/- per sq.meter, the first respondent filed an

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C.M.A.No.2267 of 2019

application under Section 34 of the Arbitration and Conciliation Act before

the learned Principal District Judge, Vellore in A.O.P.No.03 of 2010. By an

order dated 11.10.2017, passed in A.O.P.No.03 of 2010, the learned

Principal District Judge, Vellore has modified the arbitral award dated

19.11.2009, by passing the following order:

"In the result, this petition is partly allowed

without costs. The Award dated 19.11.2009, made

by the sole arbitrator and District Collector,

Vellore bearing reference Na.Ka.G4.11764/04,

dated 19.11.2009, is hereby set aside. The

petitioner is entitled for Rs.4,500/- per sq.meter as

compensation. The petitioner is not entitled for

other compensations i.e. for Building, Loss due to

purchase of Water, Loss due to reduction of

production and for illegal demolition etc.,. The

petitioner is entitled for the difference of

compensation amount with 9% interest from the

date of petition till realization in full. The

petitioner is not entitled to any interest in the

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C.M.A.No.2267 of 2019

default period i.e. from 11.09.2014 to

14.09.2016."

3. Aggrieved by the order dated 11.10.2017, passed by the learned

Principal District Judge, Vellore in A.O.P.No.03/2010, this appeal has been

filed under Section 37 of the Arbitration and Conciliation Act, by the

appellant, who is the first respondent in A.O.P.No.03/2010.

4. Heard Mr.Edwin Prabakar, learned Special Government Pleader

(CS) appearing for the appellant, Mr.Ganesh, learned counsel appearing for

the first respondent and Mr.Su.Srinivasan, learned SCGSC appearing for the

third respondent.

5. The law is now well settled by the latest decision of the Hon'ble

Supreme Court in the case of Project Director, National Highways Vs.

M.Hakeem and another reported in 2021 SCC Online SC 473, where the

Hon'ble Supreme Court has held that the Court exercising power under

Section 34 of the Arbitration and Conciliation Act does not have the power to

modify the arbitral award.

6. In the case on hand, under the impugned order passed under Section http://www.judis.nic.in

C.M.A.No.2267 of 2019

34 of the Arbitration and Conciliation Act in A.O.P.No.03 of 2010, dated

11.10.2017, the learned Principal District Judge, Vellore, has modified the

arbitral award dated 19.11.2009, by enhancing the market value of the

property belonging to the first respondent, which is the subject matter of

acquisition by the National Highways to Rs.4,500/- per sq.meter instead of

Rs.495 per sq.meter fixed by the second respondent (District Collector -

Arbitrator). The relevant paragraphs of the latest decision of the Hon'ble

Supreme Court in the case of Project Director, National Highways Vs.

M.Hakeem reported in 2021 SCC Online SC 473 reads as follows:

"39. As has been pointed out by us hereinabove, McDermott (supra) has been followed by this Court in Kinnari Mullick (supra). Also, in Dakshin Haryana Bijli Vitran Nigam Ltd. v.Navigant Technologies Pvt. Ltd., 2021 SCC Online SC 157, a recent judgment of this Court also followed McDermott (supra) stating that there is no power to modify an arbitral award under Section 34 as follows:—

(f) In law, where the Court sets aside the award passed by the majority members of the tribunal, the underlying disputes would require to be decided afresh in an appropriate proceeding.

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Under Section 34 of the Arbitration Act, the Court may either dismiss the objections filed, and uphold the award, or set aside the award if the grounds contained in sub-sections (2) and (2A) are made out. There is no power to modify an arbitral award.

40. It can therefore be said that this question has now been settled finally by at least 3 decisions of this Court. Even otherwise, to state that the judicial trend appears to favour an interpretation that would read into Section 34 a power to modify, revise or vary the award would be to ignore the previous law contained in the 1940 Act; as also to ignore the fact that the 1996 Act was enacted based on the UNCITRAL Model Law on International Commercial Arbitration, 1985 which, as has been pointed out in Redfern and Hunter on International Arbitration, makes it clear that, given the limited judicial interference on extremely limited grounds not dealing with the merits of an award, the ‘limited remedy’ under Section 34 is co-terminus with the ‘limited right’, namely, either to set aside an award or remand the matter under the circumstances mentioned in Section 34 of the Arbitration Act, 1996.

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41. A look at the Arbitration Acts of England, the United States, Canada, Australia and Singapore also lead to the same conclusion. In each of those legislative measures, there are express provisions which permit the varying of an award, unlike Section 34 of the present Act. In para 51, the learned Single Judge then refers to recourse to a court against an arbitral award, and argues that a statute cannot be interpreted in such manner as to make the remedy worse than the disease. As has been pointed out by us, the “disease” can only be cured in very limited circumstances thus limiting the remedy as well. Also, to assimilate the Section 34 jurisdiction with the revisional jurisdiction under Section 115 of the Code of Civil Procedure, 1908 [the “CPC”], is again fallacious. Section 115 of the CPC expressly sets out the three grounds on which a revision may be entertained and then states that the High Court may make ‘such order as it thinks fit’. These latter words are missing in Section 34, given the legislative scheme of the Arbitration Act, 1996. For all the aforesaid reasons, with great respect to the learned Single Judge, it is not correct in law and therefore stands overruled.

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42. Coming to the submission in support of the impugned judgment that the fact that the Central Government appoints an arbitrator and the arbitration would therefore not be consensual, resulting in a government servant rubber stamping an award which then cannot be challenged on its merits, cannot possibly lead to the conclusion that, therefore, a challenge on merits must be provided driving a coach and four through Section 34 of the Arbitration Act, 1996. The impugned judgment is also incorrect on this score.

43. Col.Balasubramanian, however referred to a passage in Jaishri Laxmanrao Patil v. Chief Minister, 2021 SCC OnLine SC 362 (at paras 412 to 415). He argued that ‘purposive construction’ referred to by Bennion in his classic on Statutory Interpretation must be applied by us on the facts of this case as in legislations dealing with land acquisition, a pragmatic view is required to be taken and the law must be interpreted purposefully and realistically so that the benefit reaches the masses. We may only add that the judgment cited by Col. Balasubramanian is a judgment dealing with a

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constitutional provision - Article 342A of the Constitution. We must never forget the famous statement of Chief Justice Marshall in M'Culloch v. State of Maryland, 17 US 316 (1819) that “it is a constitution we are expounding” - and the Constitution is a living document governing the lives of millions of people, which is required to be interpreted in a flexible evolutionary manner to provide for the demands and compulsions of changing times and needs.

44. The distinction between constitutional and statutory interpretation was felicitously put by Justice Aharon Barak, President of the Supreme Court of Israel thus:

“The task of expounding a Constitution is crucially different from that of construing a statute. A statute defines present rights and obligations. It is easily enacted and as easily repealed. A Constitution, by contrast, is drafted with an eye to the future. Its function is to provide a continuing framework for the legitimate exercise of governmental power and, when joined by a Bill or Charter of Rights, for the unremitting protection of individual rights and liberties. Once enacted, its provisions cannot easily be repealed or amended.

It must, therefore, be capable of growth

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and development over time to meet new social, political and historical realities often unimagined by its framers. The judiciary is the guardian of the Constitution and must, in interpreting its provisions, bear these considerations in mind.”

45. This quote has been cited in Rameshwar Prasad (VI) v. Union of India, (2006) 2 SCC 1 (at pages 91, 92).

46. “Purposive construction” of statutes, relevant in the present context, is referred to in a recent concurring judgment by Nariman, J. in Eera v. State (NCT of Delhi),(2017) 15 SCC 133, as the theory of “creative interpretation”. However, even “creative interpretation” has its limits, which have been laid down in the aforesaid judgment as follows:

"139. A reading of the Act as a whole in the light of the Statement of Objects and Reasons thus makes it clear that the intention of the legislator was to focus on children, as commonly understood i.e. persons who are physically under the age of 18 years.

The golden rule in determining whether the judiciary has crossed the Lakshman Rekha in the guise of interpreting a statute is really whether a Judge has http://www.judis.nic.in

C.M.A.No.2267 of 2019

only ironed out the creases that he found in a statute in the light of its object, or whether he has altered the material of which the Act is woven. In short, the difference is the well-known philosophical difference between “is” and “ought”. Does the Judge put himself in the place of the legislator and ask himself whether the legislator intended a certain result, or does he state that this must have been the intent of the legislator and infuse what he thinks should have been done had he been the legislator. If the latter, it is clear that the Judge then would add something more than what there is in the statute by way of a supposed intention of the legislator and would go beyond creative interpretation of legislation to legislating itself. It is at this point that the Judge crosses the Lakshman Rekha and becomes a legislator, stating what the law ought to be instead of what the law is.

47. Quite obviously if one were to include the power to modify an award in Section 34, one would be crossing the Lakshman Rekha and doing what, according to the justice of a case, ought to be done. In interpreting a statutory provision, a Judge must put himself in the shoes of Parliament and then ask whether Parliament intended this result. Parliament very clearly intended that no power of modification

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of an award exists in Section 34 of the Arbitration Act, 1996. It is only for Parliament to amend the aforesaid provision in the light of the experience of the courts in the working of the Arbitration Act, 1996, and bring it in line with other legislations the world over.

***

49. There is no doubt that, as argued by Col. Balasubramanian, the arbitral award in these cases is given by a government servant appointed by the Central Government, the result being the rubber stamping of compensation awarded on a completely perverse basis. Given the fact that, in these petitions at least, the constitutional validity of the NH Amendment Act, 1997 has not been challenged, we must proceed on the basis that grave injustice would be done if we were to interfere on facts, set aside the awards and remand the matter to the very government servant who took into account depressed land values which were relevant for purposes of stamp duty only. It may be mentioned at this juncture that a limited challenge was made to Section 3J of the National Highways Act when it excluded the provisions of the Land Acquisition Act in the context of solatium and interest not being

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C.M.A.No.2267 of 2019

granted under the National Highways Act. Thus, in Union of India v. Tarsem Singh, (2019) 9 SCC 304, this Court dealt with a batch of appeals in which the question was set out thus:—

1. … A batch of appeals before us by the Union of India question the view of the Punjab and Haryana High Court which is that the non-grant of solatium and interest to lands acquired under the National Highways Act, which is available if lands are acquired under the Land Acquisition Act, is bad in law, and consequently that Section 3-J of the National Highways Act, 1956 be struck down as being violative of Article 14 of the Constitution of India to this extent.

***

54. It can be seen from the aforesaid provisions that the speeding up of acquisition of land needed for national highways has been achieved. The challenge process to an award passed will, of necessity, take its own time, both under Section 3G of this Act as well as under the provisions of the Land Acquisition Act. This being the case, it is a little difficult to appreciate as to why the wholesome regime of appeals under the Land Acquisition Act has been replaced by a regime in which an award passed by an Arbitrator, who is not consensually appointed but appointed by the Central Government, can only be challenged not on http://www.judis.nic.in

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merits, but on the limited grounds contained in Section 34 of the Arbitration Act, 1996.

***

58. Given the fact that the NH Amendment Act, 1997 has not been challenged before us, we refrain from saying anything more. Suffice it to say that, as has been held in Taherakhatoon v. Salambin Mohammad, (1999) 2 SCC 635 (at para

20), even after we declare the law and set aside the High Court judgment on law, we need not interfere with the judgment on facts, if the justice of the case does not require interference under Article 136 of the Constitution of India..."

7. Since the law is well settled, there is no scope for modification of the

arbitral award. The learned Principal District Judge, Vellore under the

impugned order has erroneously given a go-by to the settled law by

modifying the arbitral award by enhancing the market value of the first

respondent property. No appeal has been filed by the first respondent

aggrieved by the order dated 11.10.2017, which is subject matter in this

appeal. This being the case, this Court has got no other go but to allow the

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appeal filed by the appellant in terms of the judgement of the Hon'ble

Supreme Court referred to supra as the learned Principal District Judge,

Vellore has erroneously modified the arbitral award, which he does not have