# AND 220 NATIONAL HIGHWAYS AUTHORITY OF INDIA v. M. HAKEEM & ANR

- **Citation:** [2021] 5 S.C.R. 368
- **Court:** Supreme Court of India
- **Decided:** 2021-07-20
- **Case number:** Civil Appeal No. 2756 of 2021
- **Bench:** R. F. Nariman, B. R. Gavai
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/and-220-national-highways-authority-of-india-v-m-hakeem-anr-35321
- **Pages:** 40

## Headnote

Arbitration and Conciliation Act, 1996: s.34 - Modification
of award by court, permissibility - Held: Power of a court under
s.34 of the Act, 1996 to "set aside" an award of an arbitrator would
not include the power to modify such an award - To state that the
judicial trend appears to favour an interpretation that would read
into s.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 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 s.34 is co-terminus with the 'limited right', namely,
either to set aside an award or remand the matter under the
circumstances mentioned in s.34 of the Arbitration Act, 1996 -
National Highway Authority of India Act, 1956.
National Highway Authority of India Act, 1956: ss.3G, 3H -
The object of the NH Amendment Act, 1997 is to expedite the process
of acquisition - This has been achieved by cutting down the period
for hearing of objections from 30 days under s.5A of the Land
Acquisition Act to 21 days under s.3C of the National Highways
Act - Further, unlike the Land Acquisition Act, the moment a
notification under s.3D(2) of the National Highways Act (equivalent
to s.6 Land Acquisition Act) is made, the land vests absolutely in the
Central Government free from all encumbrances - Thereafter, where
land has vested in the Central Government and the amount
determined by the competent authority under s.3G as compensation
has been deposited by the Central Government in accordance with
s.3H(1), the competent authority may then direct that possession be
taken within 60 days of service of notice by it. Also, injunctions
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against highway projects have now become impossible to obtain in
view of s.20A of the Specific Relief Act, which has been introduced
w.e.f. 01.10.2018 - Land Acquisition Act, 1894 - ss.5A, 6.
Land Acquisition: Differential compensation - Held: Cannot
be awarded on the ground that a different public purpose is sought
to be achieved.
Dismissing the appeals, the Court
HELD: 1. As per NHAI Act, the competent authority, as
defined, in Section 3 (a) is to first determine an amount which is
payable by way of compensation for compulsory acquisition of
land. Under Section 3G(5), if the amount determined by the said
authority is not acceptable to either of the parties, the amount
shall, on application by either of the parties, be determined by an
arbitrator to be appointed by the Central Government. The
'competent authority' is a person or authority authorised by the
Central Government by notification to determine the amount of
compensation. In the present case, a notification designating a
Special District Revenue Officer as the competent authority has
been made. The amount determined by the aforesaid authority
has then to be sent to an arbitrator, on application by either of
the parties. The said arbitration is not a consensual process with
both parties having a hand in appointing the arbitrator. As a matter
of fact, the land owner has no say in the appointment of the
arbitrator, who is to be appointed only by the acquiring authority,
that is the Central Government. [Para 12][382-C-F]
2. Section 34 provides only for setting aside awards on very
limited grounds, such grounds being contained in sub-sections
(2) and (3) of Section 34. Secondly, as the marginal note of Section
34 indicates, "recourse" to a court against an arbitral award may
be made only by an application for setting aside such award in
accordance with sub-sections (2) and (3). "Recourse" is defined
by P Ramanatha Aiyar's Advanced Law Lexicon (3rd Edition) as
the enforcement or method of enforcing a right. Where the right
is itself truncated, enforcement of such truncated right can also
be only limited in nature.What is

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 [2021] 5 S.C.R. 368
368
THE PROJECT DIRECTOR, NATIONAL HIGHWAYS NO. 45 E
AND 220 NATIONAL HIGHWAYS AUTHORITY OF INDIA
v.
M. HAKEEM & ANR.
(Civil Appeal No. 2756 of 2021)
JULY 20, 2021
[R. F. NARIMAN AND B. R. GAVAI, JJ.]
Arbitration and Conciliation Act, 1996: s.34 - Modification
of award by court, permissibility - Held: Power of a court under
s.34 of the Act, 1996 to "set aside" an award of an arbitrator would
not include the power to modify such an award - To state that the
judicial trend appears to favour an interpretation that would read
into s.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 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 s.34 is co-terminus with the 'limited right', namely,
either to set aside an award or remand the matter under the
circumstances mentioned in s.34 of the Arbitration Act, 1996 -
National Highway Authority of India Act, 1956.
National Highway Authority of India Act, 1956: ss.3G, 3H -
The object of the NH Amendment Act, 1997 is to expedite the process
of acquisition - This has been achieved by cutting down the period
for hearing of objections from 30 days under s.5A of the Land
Acquisition Act to 21 days under s.3C of the National Highways
Act - Further, unlike the Land Acquisition Act, the moment a
notification under s.3D(2) of the National Highways Act (equivalent
to s.6 Land Acquisition Act) is made, the land vests absolutely in the
Central Government free from all encumbrances - Thereafter, where
land has vested in the Central Government and the amount
determined by the competent authority under s.3G as compensation
has been deposited by the Central Government in accordance with
s.3H(1), the competent authority may then direct that possession be
taken within 60 days of service of notice by it. Also, injunctions
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against highway projects have now become impossible to obtain in
view of s.20A of the Specific Relief Act, which has been introduced
w.e.f. 01.10.2018 - Land Acquisition Act, 1894 - ss.5A, 6.
Land Acquisition: Differential compensation - Held: Cannot
be awarded on the ground that a different public purpose is sought
to be achieved.
Dismissing the appeals, the Court
HELD: 1. As per NHAI Act, the competent authority, as
defined, in Section 3 (a) is to first determine an amount which is
payable by way of compensation for compulsory acquisition of
land. Under Section 3G(5), if the amount determined by the said
authority is not acceptable to either of the parties, the amount
shall, on application by either of the parties, be determined by an
arbitrator to be appointed by the Central Government. The
'competent authority' is a person or authority authorised by the
Central Government by notification to determine the amount of
compensation. In the present case, a notification designating a
Special District Revenue Officer as the competent authority has
been made. The amount determined by the aforesaid authority
has then to be sent to an arbitrator, on application by either of
the parties. The said arbitration is not a consensual process with
both parties having a hand in appointing the arbitrator. As a matter
of fact, the land owner has no say in the appointment of the
arbitrator, who is to be appointed only by the acquiring authority,
that is the Central Government. [Para 12][382-C-F]
2. Section 34 provides only for setting aside awards on very
limited grounds, such grounds being contained in sub-sections
(2) and (3) of Section 34. Secondly, as the marginal note of Section
34 indicates, "recourse" to a court against an arbitral award may
be made only by an application for setting aside such award in
accordance with sub-sections (2) and (3). "Recourse" is defined
by P Ramanatha Aiyar's Advanced Law Lexicon (3rd Edition) as
the enforcement or method of enforcing a right. Where the right
is itself truncated, enforcement of such truncated right can also
be only limited in nature.What is clear from a reading of the said
provisions is that, given the limited grounds of challenge under
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sub-sections (2) and (3), an application can only be made to set
aside an award. This becomes even clearer from sub-section (4)
under which, on receipt of an application under sub-section (1) of
Section 34, the court may adjourn the Section 34 proceedings
and give the arbitral tribunal an opportunity to resume the arbitral
proceedings or take such action as will eliminate the grounds for
setting aside the arbitral award. It is the opinion of the arbitral
tribunal which counts in order to eliminate the grounds for setting
aside the award, which may be indicated by the court hearing the
Section 34 application. [Para 14][383-C-F]
3. The statutory scheme under Section 34 of the Arbitration
Act, 1996 is in keeping with the UNCITRAL Model Law and the
legislative policy of minimal judicial interference in arbitral awards.
By way of contrast, under Sections 15 and 16 of the Arbitration
Act, 1940, the court is given the power to modify or correct an
award in the circumstances mentioned in Section 15, apart from
a power to remit the award under Section 16. [Paras 17 and
18][384-G-H; 385-A]
4. It is settled law that a Section 34 proceeding does not
contain any challenge on the merits of the award. [Para 21]
[386-D]
MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163 : [2019]
3 SCR 1023 - relied on.
Numaligarh Refinery Ltd. v. Daelim Industrial Co. Ltd.
(2007) 8 SCC 466 : [2007] 9 SCR 724; DDA v. R.S.
Sharma and Co. (2008) 13 SCC 80 : [2008]
12 SCR 785; Royal Education Society v. LIS (India)
Construction Co. (P) Ltd. (2009) 2 SCC 261; Dakshin
Haryana Bijli Vitran Nigam Ltd. v. Navigant
Technologies Pvt. Ltd. 2021 SCC OnLine SC 157 -
held inapplicable.
Gayatri Balaswamy v. ISG Novasoft Technologies Ltd.,
2014 SCC OnLine Mad 6568; Ssangyong Engg. &
Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 :
[2019] 7 SCR 522; Renusagar Power Co. Ltd. v.
General Electric Co., 1994 Supp (1) SCC 644 : [1993]
3 Suppl. SCR 22; Maharashtra State Electricity
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Distribution Co. Ltd. v. Datar Switchgear Ltd., (2018)
3 SCC 133 : [2018] 1 SCR 733; McDermott
International Inc. v. Burn Standard Co. Ltd., (2006) 11
SCC 181 : [2006] 2 Suppl. SCR 409; Kinnari Mullick
v. Ghanshyam Das Damani (2018) 11 SCC 328; Dyna
Technologies (P) Ltd. v. Crompton Greaves Ltd. (2019)
20 SCC 1; Cybernetics Network Pvt. Ltd. v. Bisquare
Technologies Pvt. Ltd. 2012 SCC OnLine Del 1155;
Nussli Switzerland Ltd. v. Organizing Committee
Commonwealth Games 2014 SCC OnLine Del 4834;
Puri Construction P. Ltd. v. Larsen and Toubro Ltd.,
2015 SCC OnLine Del 9126; Gautam Constructions
and Fisheries Ltd. v. National Bank for Agriculture &
Rural Development (2000) 6 SCC 519; Tata HydroElectric Power Supply Co. Ltd. v. Union of India (2003)
4 SCC 172; Hindustan Zinc Ltd. v. Friends Coal
Carbonisation, (2006) 4 SCC 445; Krishna Bhagya
Jala Nigam Ltd. v. G. Harischandra Reddy, (2007) 2
SCC 720 : [2007] 1 SCR 698; Central Warehousing
Corpn. v. A.S.A. Transport, 2007 SCC OnLine Mad
972; ISG Novasoft Technologies Limited v. Gayatri
Balasamy 2019 SCC OnLine Mad 15819 - referred
to.
5. 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. [Para 40][399-D-F]
6. Coming to the submission in support of the impugned
judgment that the fact that the Central Government appoints an
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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. [Para 42][400-C-D]
Jaishri Laxmanrao Patil v. Chief Minister 2021 SCC
OnLine SC 362; Rameshwar Prasad (VI) v. Union of
India (2006) 2 SCC 1 : [2006] 1 SCR 562; Eera v.
State (NCT of Delhi) (2017) 15 SCC 133 : [2017] 7
SCR 924 - referred to.
M'Culloch v. State of Maryland 17 US 316 (1819) -
referred to.
7. 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 of an award exists in Section 34 of
the Arbitration Act, 1996. [Para 46][402-A-B]
8. In several cases, the NHAI has not filed appeals even in
matters which are similar i.e., arising from the same Section 3A
Notification, as a result of which certain land owners have got
away with enhanced compensation given to them by the District
Court. Also, the arbitrator has awarded compensation on a
completely perverse basis i.e., by taking into account 'guideline
value' which is relevant only for stamp duty purposes, and not
taking into account sale deeds which would have reflected the
proper market value of the land. Given the fact that the awards in
all these cases are therefore perverse, the District Judge rightly
interfered with the same. [Para 47][402-C-E]
Union of India v. Tarsem Singh (2019) 9 SCC 304:
[ 2019] 13 SCR 49 - referred to.
9. The object of the NH Amendment Act, 1997 is to expedite
the process of acquisition. This has been achieved by cutting
down the period for hearing of objections from 30 days under
Section 5A of the Land Acquisition Act to 21 days under Section
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3C of the National Highways Act. Further, unlike the Land
Acquisition Act, the moment a notification under Section 3D(2)
of the National Highways Act (equivalent to Section 6 Land
Acquisition Act) is made, the land vests absolutely in the Central
Government free from all encumbrances. Thereafter, where land
has vested in the Central Government and the amount determined
by the competent authority under Section 3G as compensation
has been deposited by the Central Government in accordance
with Section 3H(1), the competent authority may then direct that
possession be taken within 60 days of service of notice by it.
Also, injunctions against highway projects have now become
impossible to obtain in view of Section 20A of the Specific Relief
Act, which has been introduced w.e.f. 01.10.2018. [Paras 50,
51][403-G-H; 404-A-B]
10. There can be no doubt that differential compensation
cannot be awarded on the ground that a different public purpose
is sought to be achieved. Also, the legislature cannot say that,
however laudable the public purpose and however important it is
to expedite the process of land acquisition, differential
compensation is to be paid depending upon the public purpose
involved or the statute involved. [Para 54][405-D-E]
11. Take the case of a single owner of land who has two
parcels of land adjacent to each other. One parcel of land abuts
the national highway, whereas the other parcel of land is at some
distance from the national highway. Can it be said that the land
which abuts the national highway, and which is acquired under
the National Highways Act, will yield a compensation much lesser
than the adjacent land which is acquired under the Land
Acquisition Act only because in the former case, an award is by a
government servant which cannot be challenged on merits, as
opposed to an award made under Part III of the Land Acquisition
Act by the reference Court with two appeals in which the merits
of the award can be gone into? There can be no doubt that
discrimination would be writ large in such cases. [Para 55]
[405-E-G]
Taherakhatoon v. Salambin Mohammad (1999) 2 SCC
635 : [1999] 1 SCR 901 - referred to.
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12. Given the fact that in several similar cases, the NHAI
has allowed similarly situated persons to receive compensation
at a much higher rate than awarded, and given the law laid down
in Nagpur Improvement Trust, exercise of jurisdiction under
Article 136 is declined in favour of the appellants on the facts of
these cases. Also, given the fact that most of the awards in these
cases were made 7-10 years ago, it would not, at this distance in
time, be fair to send back these cases for a de novo start before
the very arbitrator or some other arbitrator not consensually
appointed, but appointed by the Central Government. [Para
58][407-E-F]
Nagpur Improvement Trust v. Vithal Rao (1973) 1 SCC
500 : [1973] 3 SCR 39 - relied on.
Case Law Reference
[2019] 3 SCR 1023
relied on
Para 21
[2019] 7 SCR 522
referred to
Para 22
[1993] 3 Suppl. SCR 22
referred to
Para 22
[2018] 1 SCR 733
referred to
Para 22
[2006] 2 Suppl. SCR 409
referred to
Para 23
(2018) 11 SCC 328
referred to
Para 24
(2019) 20 SCC 1
referred to
Para 25
(2000) 6 SCC 519
referred to
Para 30
(2003) 4 SCC 172
referred to
Para 31
(2006) 4 SCC 445
referred to
Para 32
[2007] 1 SCR 698
referred to
Para 33
[2007] 9 SCR 724
held inapplicable
Para 38
[2008] 12 SCR 785
held inapplicable
Para 38
(2009) 2 SCC 261
held inapplicable
Para 38
[2006] 1 SCR 562
referred to
Para 44
[2017] 7 SCR 924
referred to
Para 45
[ 2019] 13 SCR 49
referred to
Para 48
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[1973] 3 SCR 39
relied on
Para 56
[1999] 1 SCR 901
referred to
Para 57
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2756
of 2021.
From the Judgment and Order dated 13.02.2020 of the High Court
of Madurai Bench of Madras in C.M.A. (MD) No.760 of 2018.
With
Civil Appeal Nos.2797, 2757, 2758, 2759, 2760, 2761, 2762, 2763,
2764, 2765, 2766, 2767, 2768, 2769, 2770, 2771, 2772, 2773, 2774, 2775,
2776, 2777, 2778, 2779, 2780, 2781, 2782, 2783, 2784, 2785, 2786, 2787,
2788, 2789, 2790, 2791, 2792, 2793, 2794, 2795, 2796, 2798, 2799, 2800,
2801, 2802, 2803, 2804, 2805, 2806 and 2807 of 2021.
Tushar Mehta, SG, Vikramjit Banerjee, ASG, P. V. Yogeswaran,
Su. Srinivasan, Ashish Kumar Upadhyay, Rajat Nair, Kanu Agrawal, Y.
Lokesh, Ms. V. Keerthana, Anubhav Chaturvedi, Advs. for the Appellant.
R. Balasubramanian, Sr. Adv., V. Balaji, Chandrashekhar, C.
Kannan, Ms. Neha Singh, Rakesh K. Sharma, K.V. Jagdishvaran, Ms.
G. Indira, Advs. for the Respondents.
The Judgment of the Court was delivered by
R. F. NARIMAN, J.
1. Applications for substitution are allowed. Leave granted.
2. The appeals in the present case raise an interesting question of
law - as to whether the power of a court under Section 34 of the
Arbitration and Conciliation Act, 1996 ["Arbitration Act"] to "set aside"
an award of an arbitrator would include the power to modify such an
award. A Division Bench of the Madras High Court has disposed of a
large number of appeals filed under Section 37 of the said Act laying
down as a matter of law that, at least insofar as arbitral awards made
under the National Highways Act, 1956 ["National Highways Act"],
Section 34 of the Arbitration Act must be so read as to permit modification
of an arbitral award made under the National Highways Act so as to
enhance compensation awarded by a learned Arbitrator.
3. The facts in all these appeals concern notifications issued under
the provisions of the National Highways Act and awards passed
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thereunder. These notifications are all of the years 2009 onwards and
consist of awards that have been made by the competent authority under
the Act, who is a Special District Revenue Officer. In all these cases,
awards were made based on the 'guideline value' of the lands in question
and not on the basis of sale deeds of similar lands. The result is, in all
these cases, that abysmally low amounts were granted by the competent
authority. As an example, in SLP (Civil) No.13020 of 2020, amounts
ranging from Rs.46.55 to 83.15 per square meter were awarded. In the
arbitral award made by the District Collector in all these cases, being an
appointee of the Government, no infirmity was found in the aforesaid
award, as a result of which the same amount of compensation was
given to all the claimants. In Section 34 petitions that were filed before
the District and Sessions Judge, these amounts were enhanced to Rs.645
per square meter and the award of the Collector was therefore modified
by the District Court in exercise of jurisdiction under Section 34 Arbitration
Act to reflect these figures. In the appeal filed to the Division Bench,
the aforesaid modification was upheld, with there being a remand order
to fix compensation for certain trees and crops.
4. Shri Tushar Mehta, learned Solicitor General of India, has taken
us through the scheme of the National Highways Act, and has argued
that since it was necessary to speed up the acquisition process for a
very important public purpose, that is construction of national highways,
the National Highways Act was amended in 1997 by the National
Highway Laws (Amendment) Act, 1997 ["NH Amendment Act"], to
include Sections 3 to 3J under which, notifications were issued under
Sections 3A to 3D. Before vesting takes place of the land acquired
under Section 3E, compensation is determined under Section 3G of the
Act, which is an amount determined by the competent authority who is
set up under Section 3(a) of the Act. Unlike the Land Acquisition Act,
1984 ["Land Acquisition Act"], if the amount determined by the
competent authority is not acceptable to either the National Highways
Authority of India ["NHAI"] or the land-owner, on application by either
of the parties, the amount of compensation will be determined by an
arbitrator who is appointed only by the Central Government. Then, subject
to the provisions of the National Highways Act, the provisions of the
Arbitration Act apply. The competent authority and the arbitrator, while
determining the amount of compensation, must take into account, under
Section 3G(7), the market value of the land on the date of publication of
the notification under Section 3A, damage sustained and various other
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factors mentioned in the sub-section. Importantly, under Section 3J, the
Land Acquisition Act does not apply to such acquisitions. The learned
Solicitor General argued that, given the object sought to be achieved by
the Act, a speedy procedure was provided by which a challenge to the
arbitrator's award is then made only under Section 34 of the Arbitration
Act, which, as has been held by a catena of judgments, is not a challenge
on the merits of the award. The court's limited power under the said
Section is wholly unlike the power of an appellate court under the Land
Acquisition Act, and hence such power is only limited to either setting
aside the award or remitting the award to the arbitrator under Section
34(4) so as to eliminate any ground of challenge under Section 34. He
argued that this was in contrast to the Arbitration Act, 1940 which
contained a specific provision to remit an award under Section 15, and
further argued that the Arbitration Act, 1996, being based on the
UNCITRAL Model Law on International Commercial Arbitration, 1985,
has specifically restricted the grounds of challenge and the consequent
remedy, which is only to set aside or remit in limited circumstances. He
argued, based on a reading of Section 34 itself as well as a number of
judgments of this Court and High Courts that this well settled position
cannot possibly be given a go-by when it comes to arbitration under the
National Highways Act, in which either party can ask for the appointment
of an arbitrator who is then appointed not by the parties, but by the
Central Government. He attacked the Division Bench judgment, arguing
that the fact that either party could approach the Central Government to
appoint an arbitrator, unlike the Land Acquisition Act, and that it is the
Central Government who appoints the arbitrator, the arbitration thus not
being consensual in nature, would make no difference to the interpretation
of Section 34 of the Arbitration Act in its application to the National
Highways Act. He therefore argued that the impugned judgment was
wrong on law and equally wrong in following an earlier Single Judge
judgment of the Madras High Court in which it was held, in a situation
not under the National Highways Act but under the Arbitration Act itself
(arising from a consensual arbitration), that the court, under Section 34,
can modify the arbitral award. He attacked the learned Single Judge's
judgment in Gayatri Balaswamy v. ISG Novasoft Technologies Ltd.,
2014 SCC OnLine Mad 6568 arguing that once the Supreme Court
had laid down as a matter of law that no modification of an award is
possible, it was not open to a single judge to differ from such view. He
also argued that under Section 34, post setting aside of an award, a fresh
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arbitration could ensue as a matter of law, and it was not open to his
client or anybody to thwart a fresh arbitration in case an award is set
aside under Section 34.
5. Col. R. Balasubramanian, learned senior advocate appearing
on behalf of the respondent in SLP (Civil) No. 12987 of 2020, raised by
way of a preliminary point, that in at least three cases arising out of the
same notification for the same village and the same purpose as in his
case, the NHAI had deposited the compensation before the learned
court concerned and the same was received by the claimants. The
judgment of the learned District Judge was thus complied with. He also
pointed out that in two other cases being, AROP No. 9,10,11 of 2014 and
CMA No.650 to 680 of 2013, the NHAI had deposited the entire award
amount with the accrued interest before the District Judge in accordance
with the District Judge's judgment, no appeal being filed therefrom. He
therefore argued that the NHAI being 'State' under Article 12 of the
Constitution of India, cannot pick and choose as to when it will file appeals
against certain District Judge judgments and not against others. On this
ground alone, according to the learned senior advocate, all these appeals
ought to be dismissed. On merits, he pointed out the facts of his case
and the fact that an abysmally low sum had been given as compensation
which was then raised by the District Judge, having regard to the relevant
sale deeds in the vicinity. He then copiously read from the learned Single
Judge's judgment of the Madras High Court in Gayatri Balaswamy's
case and supported this line of reasoning. He also supported the impugned
judgment to argue that even if the learned Single Judge in Gayatri
Balaswamy had not laid down the law correctly so far as matters arising
under the Arbitration Act are concerned, yet the impugned judgment
correctly makes the distinction between consensual arbitration and an
arbitrator appointed by the Central Government, who is none other than
some government servant who merely rubber stamps awards that are
passed by yet another government servant. He argued that if Section 34
were to be construed in the manner suggested by the learned Solicitor
General, then for a very grievous wrong there would be no remedy as all
that the District Judge could then do in the Section 34 jurisdiction is to
set aside the award, resulting in a fresh arbitration before either the selfsame bureaucrat or another bureaucrat appointed by the Central
Government. This being the case, these appeals even on merits ought to
be dismissed.
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6. Having heard learned counsel appearing on both sides, it is
important to first set out the relevant sections under the National
Highways Act. As has been argued by the learned Solicitor General, the
National Highways Act was amended in 1997. Para 2 of the Statement
of Objects and Reasons for this amendment is set out hereunder: -
"STATEMENT OF OBJECTS AND REASONS
One of the impediments in the speedy implementation of highways
projects has been inordinate delay in the acquisition of land. In
order to expedite the process of land acquisition, it is proposed
that once the Central Government declares that the land is required
for public purposes for development of a highway, that land will
vest in the Government and only the amount by way of
compensation is to be paid and any dispute relating to compensation
will be subject to adjudication through the process of arbitration."
7. The "competent authority" under the National Highways Act
is defined in Section 3(a) as follows:
3. Definitions. - In this Act, unless the context otherwise
requires, -
(a) "competent authority" means any person or authority authorised
by the Central Government, by notification in the Official Gazette,
to perform the functions of the competent authority for such area
as may be specified in the notification;
8. Section 3A of the Act states: -
3A. Power to acquire land, etc.-
(1) Where the Central Government is satisfied that for a public
purpose any land is required for the building, maintenance,
management or operation of a national highway or part thereof, it
may, by notification in the Official Gazette, declare its intention to
acquire such land.
(2) Every notification under sub-section (1) shall give a brief
description of the land.
(3) The competent authority shall cause the substance of the
notification to be published in two local newspapers, one of which
will be in a vernacular language.
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9. After objections are then heard under Section 3C, the requisite
declaration is made under Section 3D which reads as follows: -
3D. Declaration of acquisition. -
(1) Where no objection under sub-section (1) of section 3C has
been made to the competent authority within the period specified
therein or where the competent authority has disallowed the
objection under subsection (2) of that section, the competent
authority shall, as soon as may be, submit a report accordingly to
the Central Government and on receipt of such report, the Central
Government shall declare, by notification in the Official Gazette,
that the land should be acquired for the purpose or purposes
mentioned in sub-section (1) of section 3A.
(2) On the publication of the declaration under sub-section (1),
the land shall vest absolutely in the Central Government free from
all encumbrances.
(3) Where in respect of any land, a notification has been published
under sub-section (1) of section 3A for its acquisition but no
declaration under sub-section (1) has been published within a
period of one year from the date of publication of that notification,
the said notification shall cease to have any effect:
Provided that in computing the said period of one year, the period
or periods during which any action or proceedings to be taken in
pursuance of the notification issued under sub-section (1) of section
3A is stayed by an order of a court shall be excluded.
(4) A declaration made by the Central Government under subsection (1) shall not be called in question in any court or by any
other authority.
10. Section 3G with which we are directly concerned and which
speaks of the determination of an amount payable as compensation reads
as follows: -
3G. Determination of amount payable as compensation.
(1) Where any land is acquired under this Act, there shall be paid
an amount which shall be determined by an order of the competent
authority.
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(2) Where the right of user or any right in the nature of an easement
on, any land is acquired under this Act, there shall be paid an
amount to the owner and any other person whose right of
enjoyment in that land has been affected in any manner
whatsoever by reason of such acquisition an amount calculated
at ten per cent, of the amount determined under sub-section (1),
for that land.
(3) Before proceeding to determine the amount under sub-section
(1) or sub-section (2), the competent authority shall give a public
notice published in two local newspapers, one of which will be in
a vernacular language inviting claims from all persons interested
in the land to be acquired.
(4) Such notice shall state the particulars of the land and shall
require all persons interested in such land to appear in person or
by an agent or by a legal practitioner referred to in sub-section (2)
of section 3C, before the competent authority, at a time and place
and to state the nature of their respective interest in such land.
(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-
(6) Subject to the provisions of this Act, the provisions of the
Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to
every arbitration under this Act.
(7) The competent authority or the arbitrator while determining
the amount under sub-section (1) or sub-section (5), as the case
may be, shall take into consideration-
(a) the market value of the land on the date of publication of
the notification under section 3A;
(b) the damage, if any, sustained by the person interested at
the time of taking possession of the land, by reason of the
severing of such land from other land;
(c) the damage, if any, sustained by the person interested at
the time of taking possession of the land, by reason of the
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acquisition injuriously affecting his other immovable property
in any manner, or his earnings;
(d) if, in consequences of the acquisition of the land, the person
interested is compelled to change his residence or place of
business, the reasonable expenses, if any, incidental to such
change.
11. Section 3J then states:
3J. Land Acquisition Act 1 of 1894 not to apply. -
Nothing in the Land Acquisition Act, 1894 shall apply to an
acquisition under this Act.
12. It will be seen that the competent authority, as defined, is to
first determine an amount which is payable by way of compensation for
compulsory acquisition of land. Under Section 3G(5), if the amount
determined by the said authority is not acceptable to either of the parties,
the amount shall, on application by either of the parties, be determined
by an arbitrator to be appointed by the Central Government. What is of
importance is that the 'competent authority' is a person or authority
authorised by the Central Government by notification to determine the
amount of compensation. In the present case, a notification designating
a Special District Revenue Officer as the competent authority has been
made. The amount determined by the aforesaid authority has then to be
sent to an arbitrator, on application by either of the parties. What is
important to remember is that the aforesaid arbitration is not a consensual
process with both parties having a hand in appointing the arbitrator. As a
matter of fact, the land owner has no say in the appointment of the
arbitrator, who is to be appointed only by the acquiring authority, that is
the Central Government.
13. Section 34 of the Arbitration Act, 1996 occurs in Chapter VII
under the title "Recourse against arbitral award". We are directly
concerned with sub-sections (1) and (4) of Section 34 which are set out
hereunder.
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).
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xxx xxx xxx
(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.
xxx xxx xxx
14. What is important to note is that, far from Section 34 being in
the nature of an appellate provision, it provides only for setting aside
awards on very limited grounds, such grounds being contained in subsections (2) and (3) of Section 34. Secondly, as the marginal note of
Section 34 indicates, "recourse" to a court against an arbitral award
may be made only by an application for setting aside such award in
accordance with sub-sections (2) and (3). "Recourse" is defined by P
Ramanatha Aiyar's Advanced Law Lexicon (3rd Edition) as the
enforcement or method of enforcing a right. Where the right is itself
truncated, enforcement of such truncated right can also be only limited
in nature.What is clear from a reading of the said provisions is that,
given the limited grounds of challenge under sub-sections (2) and (3), an
application can only be made to set aside an award. This becomes even
clearer when we see sub-section (4) under which, on receipt of an
application under sub-section (1) of Section 34, the court may adjourn
the Section 34 proceedings and give the arbitral tribunal an opportunity
to resume the arbitral proceedings or take such action as will eliminate
the grounds for setting aside the arbitral award. Here again, it is important
to note that it is the opinion of the arbitral tribunal which counts in order
to eliminate the grounds for setting aside the award, which may be
indicated by the court hearing the Section 34 application.
15. It is important to remember that Section 34 is modelled on the
UNCITRAL Model Law on International Commercial Arbitration, 1985,
under which no power to modify an award is given to a court hearing a
challenge to an award. The relevant portion of the Model Law reads as
follows:
Article 34. Application for setting aside as exclusive
recourse against arbitral award
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(1) Recourse to a court against an arbitral award may be made
only by an application for setting aside in accordance with
paragraphs (2) and (2) of this article.
xxx xxx xxx
(4) The court, when asked to set aside an award, may, where
appropriate and so requested by a party, suspend the setting aside
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 arbitral tribunal's
opinion will eliminate the grounds for setting aside.
16. Redfern and Hunter on International Arbitration (6th
edition), states that the Model Law does not permit modification of an
award by the reviewing court (at page 570) as follows:
"10.06 The purpose of challenging an award before a national
court at the seat of arbitration is to have that court declare all, or
part, of the award null and void. If an award is set aside or annulled
by the relevant court, it will usually be treated as invalid, and
accordingly unenforceable, not only by the courts of the seat of
arbitration, but also by national courts elsewhere. This is because,
under both the New York Convention and the Model Law, a
competent court may refuse to grant recognition and enforcement
of an award that has been set aside by a court of the seat of
arbitration. It is important to note that, following complete
annulment, the claimant can recommence proceedings because
the award simply does not exist-that is, the status quo ante is
restored. The reviewing court cannot alter the terms of an award
nor can it decide the dispute based on its own vision of the merits.
Unless the reviewing court has a power to remit the fault to the
original tribunal, any new submission of the dispute to arbitration
after annulment has to be undertaken by commencement of a
new arbitration with a new arbitral tribunal."
17. The statutory scheme under Section 34 of the Arbitration Act,
1996 is in keeping with the UNCITRAL Model Law and the legislative
policy of minimal judicial interference in arbitral awards.
18. By way of contrast, under Sections 15 and 16 of the Arbitration
Act, 1940, the court is given the power to modify or correct an award in
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the circumstances mentioned in Section 15, apart from a power to remit
the award under Section 16 as follows: -
15. Power of Court to modify award.
The Court may by order modify or correct an award-
(a) where it appears that a part of, the award is upon a matter not
referred to arbitration and such part can be separated from the
other part and does not affect the decision on the matter referred;
or
(b) where the award is imperfect in form, or contains any obvious
error which can be amended without affecting such decision; or
(c) where the award contains a clerical mistake or an error arising
from an accidental slip or omission.
16. Power to remit award.
(1) The Court may from time to time remit the award or any
matter referred to arbitration to the arbitrators or umpire for
reconsideration upon such terms as it thinks fit-
(a) where- the award has left undetermined any of the matters
referred to arbitration, or where it determines any matter not
referred to arbitration and such matter cannot be separated
without affecting the determination of the matters referred; or
(b) where the award is so indefinite as to be incapable of
execution; or
(c) where an objection to the legality of the award is apparent
upon the face of it.,
(2) Where an award is remitted under sub- section (1) the Court
shall fix the time within which the arbitrator or umpire shall submit
his decision to the Court: Provided that any time so fixed may be
extended by subsequent order of the Court.
(3) An award remitted under sub- section (1) shall become void
on the failure of the arbitrator or umpire to reconsider it and submit
his decision within the time fixed.
19. As a result therefore, a judgment in terms of the award is
given under Section 17 of the 1940 Act which reads as follows: -
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17.