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IN THE HIGH COURT OF ALLAHABAD
HON’BLE SHEKHAR B. SARAF, J.
SMT. Savitri Devi – Appellant
Versus
Union Of India And Others – Respondent
Decided on : 05-07-2024
Appeal Under Section 37 of Arbitration And Conciliation Act 1996 No. – 210 of 2023
ARBITRATION - NATIONAL HIGHWAYS ACT, 1956; ARBITRATION & CONCILIATION ACT, 1996 - Sections 3G(5), 34, 37 of the Arbitration & Conciliation Act, 1996; Sections 23(1A), 23(2), 28 of the Land Acquisition Act, 1894 - The court discussed the provisions of the Arbitration & Conciliation Act, 1996, particularly Sections 34 and 37, which govern the setting aside of arbitral awards and the appeal process. The court emphasized the concept of 'patent illegality' in arbitral awards, interpreting it as a significant error that affects the substantive rights of the parties. The court also referenced the National Highways Act, 1956, and the Land Acquisition Act, 1894, particularly regarding compensation calculations, solatium, and interest, concluding that the failure to consider land valuation constituted a patent illegality warranting recalculation of compensation by the arbitrator.
Fact of the Case:
The Appellant, Smt. Savitri Devi, challenged the valuation of her property acquired for the construction of National Highway No. 28. The initial compensation was deemed inadequate, leading to arbitration, where the arbitrator awarded compensation only for the building, ignoring the land's value. The Appellant contested this decision, claiming patent illegality and seeking a recalculation of compensation.
Finding of the Court:
The court found that the arbitral award suffered from patent illegality due to the arbitrator's failure to consider the land's valuation, which was a critical issue raised by the Appellant. The court emphasized the need for the arbitrator to address all arguments presented and provide reasoning for their decisions.
Issues: 1. Whether the arbitral award dated December 11, 2008 suffers from patent illegality warranting intervention under Section 37 of the Arbitration & Conciliation Act, 1996? 2. Can the Appellant claim benefits under the Supreme Court's judgment in Tarsem Singh regarding solatium and interest?
Ratio Decidendi: The court held that an arbitral award can be set aside if it is patently illegal, particularly if it fails to consider vital evidence or arguments presented by the parties. The court also clarified that the judgment in Tarsem Singh does not apply retroactively to concluded arbitrations, thus the Appellant cannot claim solatium or interest based on that ruling.
Final Decision: The court set aside the arbitral award to the extent that it failed to consider compensation for the land and remitted the matter back to the arbitrator for recalculation of compensation in accordance with the law.
JUDGMENT :
HON'BLE SHEKHAR B. SARAF, J.
1. The instant application under Section 37 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) has been preferred by Smt. Savitri Devi (hereinafter referred to as the ‘Appellant’) against the order dated October 21, 2022 passed by the Additional District Judge, Basti under Section 34 of the Act.
FACTS
2. I have laid down the factual matrix of the instant case below:
b. The total value of the plot and building was computed at Rs. 14,87,493.70/-, out of which the value of the building/house was determined at Rs. 8,44,440/-, the value of trees, hand-pipe etc. was determine at Rs. 27,203/-while the value of the land was determined at Rs. 4,80,624/-by treating it to be agricultural land. Additional compensation of 10% of the value was payable on these components.
c. The amount of Rs. 14,87,493.70/-was paid on December 2, 2008 to the Appellant. Aggrieved by the said valuation, the Appellant submitted an application before the District Magistrate on February 15, 2008. After receiving the said application, the District Magistrate directed the Special Land Acquisition Officer (hereinafter referred to as the ‘SLAO’) to examine the matter and take necessary action.
d. The SLAO on February 23, 2008, directed the Provincial Block PWD, Basti to inspect the site and send a fresh valuation report. The Executive Engineer, PWD, after examining the valuation report, calculated the total cost of the building as Rs. 19,27,003/-as per the PWD schedule rate dated January 1, 2006.
e. The SLAO, on August 14, 2008, wrote a letter to the Executive Engineer, PWD to submit the valuation report to the building standing on the land of the Appellant in the year 2008, to which the Executive Engineer of PWD estimated the value of the building to be Rs. 23,37,500/-in terms of the PWD Schedule Rate dated June 15, 2008.
f. The SLAO vide order dated September 23, 2008 held that both the reports sent by the PWD were contradictory to each other. The SLAO eventually held that because the construction of the National Highway was being conducted by the NHAI, therefore the valuation of the Project Director, NHAI would be considered to be appropriate one.
g. aggrieved by the order dated September 23, 2008, the Appellant approached the District Magistrate, Basti and filed an application for arbitration under Section 3G(5) of the NH Act, 1956.
h. The Arbitrator vide order dated December 11, 2008, re-determined the valuation of the building only, and awarded Rs. 18,67,881/-to the Appellant towards the value of the building.
i. NHAI, being aggrieved by the award of enhanced compensation of Rs. 18,67,881/-moved an application under Section 34 of the Act before the Court of Additional District Judge under Section 34 of the Act challenging the order dated December 11, 2008. The Appellant also challenged the order dated December 11, 2008 under Section 34 of the Act.
j. The Court of Additional District Judge, dismissed the application preferred by the NHAI and the Appellant vide order dated October 21, 2022.
k. Aggrieved by the order of the Additional District Judge dated October 21, 2022, the Appellant has preferred the instant application under Section 37 of the Act before this Court.
CONTENTIONS BY THE APPELLANT
3. The learned counsel appearing on behalf of the Appellant has made the following submissions before this Court:
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The nature and status of the land on the date of notification must be considered in determining compensation for land acquired under the NHAI Act, 1956, and settled legal principles must be applied i....
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