The High Court
Case Details
1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF JANUARY, 2025 BEFORE THE HON'BLE MR. JUSTICE H.P. SANDESH MISCELLANEOUS FIRST APPEAL NO.3581/2024 (AA) C/W MISCELLANEOUS FIRST APPEAL NO.3301/2024 (AA) IN MISCELLANEOUS FIRST APPEAL NO.3581/2024: BETWEEN: NATIONAL HIGHWAYS AUTHORITY OF INDIA PROJECT IMPLEMENTATION UNIT-BANGALORE SY NO.13, 14TH KM, NAGADANDRA VILLAGE BANGALOR - TUMKUR ROAD (NH-4) BANGALORE – 560 073 REPRESENTED BY ITS PROJECT DIRECTOR NHAL, PIU, BANGALORE. … APPELLANT (BY SMT. SHILPA GHANSHYAMBHAI SHAH, ADVOCATE) AND: 1 . SRI DAVURU VIJAY KUMAR REDDY SON OF GOPAL KRISHNA REDDY AGED MAJOR RESIDING AT KAMMARAMITTI VILLAGE MATUKUMAR MANDAL, NELLORE POST NELLORE DISTRICT – 524 001, A.P. 2 . THE ARBITRATOR AND SPECIAL DEPUTY COMMISSIONER-1 BANGALORE URBAN DISTRICT (NH-75) (OLD NH-4), K.G.ROAD, 2 NEAR DISTRICT REGISTRAR OFFICE BANGALORE – 560 009. 3 . THE ASSISTANT COMMISSIONER AND COMPETENT AUTHORITY NHAI, MULBAGILU - KOLAR BANGALORE SECTION OF NH- 4 (75) NO.678/3, NEERUBHAVI KEMPANNA LAYOUT, HEBBAL BANGALORE – 560 024 REPRESENTED BY THE SPECIAL LAND ACQUISITION OFFICER. … RESPONDENTS (BY SRI VISHWANATHA M.S., ADVOCATE FOR R1; SRI GOPALAKRISHNA SOODI, AGA FOR R2; VIDE ORDER DATED 20.11.2024, NOTICE TO R3 - DISPENSED WITH) THIS M.F.A. IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT, AGAINST THE ORDER DATED 21.12.2023 PASSED IN A.P.NO.22/2020 ON THE FILE OF THE XXIV ADDITIONAL CITY CIVIL AND SESSIONS JUDGE (CCH-6), BENGALURU, DISMISSING THE PETITION FILED UNDER SECTION 34(2) OF ARBITRATION AND CONCILIATION ACT, 1996 AND ETC. IN MISCELLANEOUS FIRST APPEAL NO.3301/2024: BETWEEN: NATIONAL HIGHWAYS AUTHORITY OF INDIA PROJECT IMPLEMENTATION UNIT-BANGALORE SY.NO.13, 14TH KM., NAGASANDRA, BANGALORE-TUMKUR ROAD (NH-4) BANGALORE – 560 073 REPRESENTED BY ITS PROJECT DIRECTOR NHAL, PIU, BANGALORE. … APPELLANT (BY SMT. SHILPA GHANSHYAMBHAI SHAH, ADVOCATE) 3 AND: 1 . SRI. K. SUNDAR RAJAN SON OF LATE N. KRISHNAN AGED MAJOR RESIDING AT K. PHARMA AVALAHALLI, VIROGNAGAR POST BANGALORE-560049. 2 . THE ARBITRATOR AND SPECIAL DEPUTY COMMISSIONER-1 BANGALORE URBAN DISTRICT, (NH-75), (OLD NH-4) K.G.ROAD, NEAR DISTRICT REGISTRAR OFFICE BANGALORE – 560 009. 3 . THE ASSISTANT COMMISSIONER AND COMPETENT AUTHORITY NHAI, MULBAGILU-KOLAR BANGALORE SECTION OF NH-4 (75) NO.678-3, NEERUBHAVI KEMPANNA LAYOUT, HEBBAL, BANGALORE - 560 024. REPRESENTED BY THE SPECIAL LAND ACQUISITION OFFICER. … RESPONDENTS
Legal Reasoning
appeals would vehemently contend that there is no dispute with regard to issuance of preliminary notification and final notification and also contend that SLO fixed the rate at Rs.420.07 per square meter. It is contended that the land is an agricultural land situated in Bandapura village and SLO passed the award based on the sale statistics but the Arbitrator passed the order enhancing the same determining the compensation at Rs.1,483/- per square meter. The counsel in his arguments would vehemently contend that the impugned orders of the Arbitrator as well as the Civil Court are erroneous. The appellant had specifically contend that arbitral award was not in accordance with the substantive law i.e., Section 3G(7)(a) of the NH Act which provides that the market value of the acquired land has to be determined as on the date of publication of preliminary notification. The appellant had urged that the Arbitrator had relied upon a guidance value notification which had come into effect subsequent to the issuance of the preliminary notification and the same is patently illegal, perverse as it is violative of Section 3G(7) of the NH Act. The Civil Court 8 has made an inherent finding that the appellant herein has not established that the Arbitrator was under an obligation to conduct enquiry. The petitioner had contended before the Civil Court that Section 24 of the Act of 1996 specifically speaks about hearing and the manner in which the Arbitral Tribunal is required to conduct hearing. 8. The counsel also would vehemently contend that the Arbitrator had considered the rates for the period 2007-08 and found that there was no amount fixed during that period. The Civil Court has comes to the conclusion that based on this observation of the Arbitrator, sufficient enquiry had been conducted. The said finding is an erroneous finding. The counsel also would vehemently contend that there was no rates fixed for the year 2007-08 and the same is still an incorrect finding. It is contend that the preliminary notification was issued on 18.12.2006 and therefore, the Arbitrator ought not to have relied upon the notification of the year 2007. The Arbitrator relied on the guidance notification dated 17.04.2007 and therefore, it cannot be said that there is a violation of Section 9 28(1)(a). The same is an erroneous finding and the Court has once again overlooked that the market value is required to be determined as on the date of preliminary notification i.e., 18.12.2006. The Civil Court also committed an error in erroneously discussing in page Nos.16 to 18 and failed to consider the judgments which have been quoted before the Trial Court and the similar judgments are quoted before this Court. The appellant herein was never given an opportunity to rebut the document which has been relied upon by the Arbitrator and the said document was not produced by either of the parties and the Arbitrator relied upon that document while passing the arbitral award suo moto and hence, the impugned Arbitral award is contrary to the provision of Section 24(3) of the Act of 1996. 9. The counsel also relied upon the case of Ssangyong and contend that non-disclosure of a document relied upon by the Arbitral Tribunal would affect the case of the parties since they would be unable to present their case and would amount to denial of an opportunity to comment upon the documents relied upon by the Tribunal and shockingly relied upon the guidance 10 notification and committed an error. The counsel also would vehemently contend that inspite of citations referred, the same have not been considered. 10. The counsel in support of his arguments relied upon the judgment reported in AIR 2003 SC 2629 in the case of OIL & NATURAL GAS CORPORATION LTD., vs SAW PIPES LTD., and brought to notice of this Court the discussions made in paragraph 12 wherein question was raised whether the award could be set aside, if the arbitral tribunal has not followed the mandatory procedure prescribed under Sections 24, 28 or 31(3), which affects the rights of the parties. The counsel also brought to notice of this Court paragraph 21 wherein it is held that if the award is patently against the statutory provisions of substantive law which is 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. In all such cases, the award is required to be set aside on the ground of patent illegality. The counsel 11 referring this judgment would vehemently contend that the arbitral award obtained is patent illegality and without giving an opportunity, relied upon the notification. 11. The counsel also relied upon the judgment reported in (2009) 10 SCC 259 in the case of SOM DATT BUILDERS LTD., vs STATE OF KERALA and brought to notice of this Court the discussions made in paragraph 21 that Section 31(3) mandates that the arbitral award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is an arbitral award under Section 30. It was obligatory for the arbitral tribunal to state reasons in support of its award in respect of claim and now it is essential for the arbitral tribunal to give reasons in support of the award. The counsel also brought to notice of this Court the paragraph 25 of the said judgment wherein it is held that requirement of reasons in support of the award under Section 31(3) is not an empty formality. It guarantees fair and legitimate consideration of the controversy by the arbitral tribunal. The reasons must be stated by the arbitral tribunal upon which the award is based. 12 12. The counsel also relied upon the judgment reported in MANU/SC/0705/2019 in the case of SSANGYONG ENGINEERING & CONSTRUCTION CO. LTD., vs NATIONAL HIGHWAYS AUTHORITY OF INDIA (NHAI) and brought to notice of this Court paragraph 45 of the said judgment wherein it is held that there can be no doubt that the government guidelines that were referred to and strongly relied upon by the majority award to arrive at the linking factor were never in evidence before the Tribunal. In fact, the Tribunal relies upon the said guidelines by itself and states that they are to be found on a certain website. If either of the parties not relied upon such guidelines, the Tribunal had no jurisdiction to rely upon the same while deciding the issue before it. The counsel also would vehemently contend that in paragraph 46 of the said judgment it is held that majority award needs to be set aside under Section 34(2)(a)(iii). The counsel also would vehemently contend that the Arbitrator as well as the Trial Court committed an error in relying upon the notification and erroneously comes to the conclusion that no error has been committed. 13 13. Per contra, the learned counsel appearing for respondent No.2 in his arguments would vehemently contend that the property was acquired for road widening of Mulabagil – Kolar road which is adjacent to the Highway. The Arbitrator has taken note of the said fact into consideration and potentiality of the property was also considered. The Civil Court in paragraph 12, in detail discussed and taken note of 30% of guidance value and reasons were given while dismissing the petitions and hence, it does not requires any interference. The counsel also would vehemently contend that the SLO fixed the rate at Rs.420.07 per square meter is only a peanut and when the property comes within the purview of K.R.Puram Taluk which is adjacent to the Bengaluru city and the same is a developed area, the Arbitrator rightly taken the guidance notification and passed an award and hence, it does not requires any interference. 14. The learned counsel for respondent No.1 would vehemently contend that award passed by the Arbitrator is based on the material available on record as well as the guidance notification and the amount awarded by the SLO is 14 very meager and guideline was taken while enhancing the same and even the enhancement made by the Arbitrator is very less having taken note of the potentiality of the property and hence, it does not requires any interference. 15. Having heard the learned counsel appearing for the respective parties and also on perusal of the material available on record as well as considering the principles laid down in the judgments referred supra, the points that would arise for the consideration of this Court are: 1. Whether the award passed by the Arbitrator and also the judgment passed by the Civil Court invoking Section 34 of the Act of 1996 requires interference? 2. What order? Point No.1: 16. Having heard the learned counsel appearing for the respective parties and also on perusal of the material available on record, it discloses that it is not in dispute that lands to the tune of 550 square meters and 154 square meters were acquired by the National Highway Authority. It is also not in dispute that 15 the land is acquired for the purpose of widening of the road of Mulabagil – Kolar road. It is also not in dispute that the properties are situated in K.R.Puram taluk and the same is abutting to the Bengaluru City. It is also important to note that the main contention of the appellant that substantive law has not been considered by both the Arbitrator as well as Civil Court. The Arbitrator relied upon the document of guideline notification on his own and the same has not been produced by either of the parties and hence, it is against Sections 24 and 28 of substantive law and the document which has been relied upon is not part of record and even not notified to the parties and communicated and hence, the counsel would vehemently contend that in view of the principles laid down, it requires to be set aside and needs to be set aside based on the relevant discussions made by the Apex Court in the judgments referred supra. 17. It has to be noted that the SLO has fixed the rate at Rs.420.07 per square meter. It is also not in dispute that the properties are an agricultural land situated at Bandapura village and the Arbitrator while passing an award taken note of extent 16 of land which was acquired for the purpose of widening the road. It is also important to note that the Arbitrator also taken note of the fact that the land was acquired in the year 2006 by way of preliminary notification and final notification was issued in the year 2007. The arbitrator also taken note of Section 3G(5) of the NH Act and also taken note of Section 28 of the Act of 1996 wherein it discloses that Arbitral Tribunal shall decide the dispute in accordance with substantive law for time being in force in India and also discussed the same in the award itself that 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 the market value of the land on the date of publication of the notification under Section 3A. The Arbitrator also had taken note of the fact that the land which was acquired is an agricultural and non-agricultural land wherein rate is fixed at Rs.420.07 per square meter and in respect of NAK/Site, an amount of Rs.1.506.90 per square meter. It is also important to note that the arbitrator also taken note of the notification dated 17.04.2007 and the same is of the year 2007-08, the amount of Rs.60,00,000/- has been fixed per 17 acre in terms of the said notification. But in respect of 2007-08, rate was not fixed and in terms of the notification, if the property comes within the purview of CMC and the converted land and also if it is within the gramatana, 30% has to be added. The Arbitrator relied upon the notification dated 17.04.2007 guidelines value for 2007-08 and an amount of Rs.60,00,000/- is fixed and if it is converted into gunta it comes to Rs.1,50,000/- hence, taken Rs.1,483/- per square meter and hence after deducting the SLO amount fixed, taken Rs.1,063/- per square meter and passed an order. The appellant not disputes the fact that issuance of said notification but only contend that same was not part of the record and admittedly the said guidelines notification was issued by the Government. 18. It is also important to note that the Civil Court also taken note of the fact that preliminary notification is dated 14.12.2006 i.e., it is in the verge of end of December 2006 and final notification is dated 14.11.2007 and taking note of gap of 11 months, considered the loss for the said period, the compensation is enhanced and the fact that applicant has filed 18 objections and the said fact also not disputed. The fact that the land is adjacent to the National Highway and the said fact is also not in dispute. It is worth about 1.80 crore and as on the date of award it was worth of 6.50 crore and also taken note of the enhancement sought at the rate of Rs.1,800/- per square meter with 9% interest. Even in paragraph 12 discussed that there is no rate fixed for the period of 2007-08 as the notification is dated 17.04.2007, the guidance value is considered and an increase of 30% of the value also taken note of. 19. The main contention of the appellant’s counsel that substantive law has not been considered and at the same time, the Court has to take note of the fact that potentiality of the property. The appellant’s counsel also not disputed the fact that the land which was acquired is abutting to the National Highway for the purpose widening of the road and the Arbitrator also given the reason that land which is abutting to the National Highway is useful for non-agricultural purpose and the lands are also capable of being further developed and detail discussion was made by the Civil Court while confirming the judgment of the 19 Trial Court. No doubt, it is the contention of the appellant’s counsel that Section 3G(7)(a) of the NH Act is not complied and ought to have been fixed based on the market value on the date of publication of the notification and relies on decision in the case of Oil and Natural Gas referred supra and also relied upon the judgment of Kerala High Court as well as Apex Court and brought to notice of this Court Section 24, 28, 31(3) of the Act of 1996. No doubt, in the above judgment it is discussed that it is not an empty formality and discussed the same in paragraphs 15 and 16 of the order. The Civil Court also taken note of the fact that on perusal of the entire award passed by the Arbitrator it discloses the reasons for coming to such a conclusion for enhancement and also taken note of the fact that the Arbitrator has taken into consideration of the fact that the property acquired is adjacent to the National Highway and consideration of the actual market value would be always high and rightly awarded three times compensation. In paragraph 17 also discussed in detail that the Arbitrator has considered the fact that the plaintiff is a farmer and lost the agricultural land though it was an agricultural land but it is adjacent to the National 20 Highway and abutting to the National Highway and hence, there is increase of 30% in the areas within the purview of CMC and converted sites and gramatana and all these factors taken note of by the Trial Court and also taken note of the Government notification and considered the case of the claimants who lost the property. 20. The Trial Court also taken note of the fact that the provisions of Section 23 and 28 of the Land Acquisition Act wherein the land looser is entitled to solatium and interest and also taken note of the fact that in the similar matter, the enhanced compensation is deposited based on the same guidance value but has proceeded to challenge the same with respect to these properties are concerned. The Trial Court also taken note of the judgment reported in AIR 2019 SC 4689 wherein the Apex Court has held that the provisions of Land Acquisition Act relating to solatium and interest are applicable to the National Highways Act also and while confirming the order also reasoned order has been passed. When such reason has been assigned by the Trial Court and Arbitrator also taken note 21 of the factual aspects that the land is abutting to the National Highway and also having taken its potentiality and also located in K.R.Puram taluk which is abutting to Bengaluru, I do not find any error committed by the Arbitrator as well as the Civil Court and in both the matters, considered the material available on record and also though the notification was not the part of the record as contended by the appellant’s counsel, the guidance value is fixed by the Government itself by issuing the notification. I have already pointed out that preliminary notification was in the verge of end of the year 2006 and final notification was passed on 14.11.2007 and guidance notification was issued within a span of three months of preliminary notification that is in the month of April 2007 i.e., in between preliminary notification and final notification in the case on hand and when the Arbitrator relied upon the said notification and taken note of the potentiality of the property and land is abutting to the National Highway, it cannot be termed as arbitrarily and not followed the substantive law and the same is contrary to Sections 24, 28, 31(3) of the Act of 1996 cannot be accepted since the acquisition of land is for purpose of widening the road 22 to a small extent i.e., to the extent of 550 square meter and 154 square meter. Hence, I do not find any merit in the appeals to accept the contention of the appellant’s counsel and it does not requires any interference when reason was given while enhancing and confirming the order of the Arbitrator by the Civil Court. Accordingly, I answer the above point as negative. Point No.2: 21. In view of the discussions made above, I pass the following:
Arguments
(BY SRI VISHWANATHA M.S., ADVOCATE FOR R1; SRI GOPALAKRISHNA SOODI, AGA FOR R2) THIS M.F.A. IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT, AGAINST THE ORDER DATED 21.12.2023 PASSED IN AP.NO.16/2020 THE FILE OF THE XXIV ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU CCH-6, DISMISSING THE ARBITRATION PETITION FILED UNDER SECTION 34(2) OF THE ARBITRATION AND CONCILIATION ACT, 1996 AND ETC. 4 THESE APPEALS HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 17.01.2025 THIS DAY, THE COURT PRONOUNCED THE FOLLOWING: CORAM: HON'BLE MR. JUSTICE H.P.SANDESH CAV JUDGMENT These two Miscellaneous First Appeals are filed under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 challenging the judgment dated 21.12.2023 passed in Arbitration Petition Nos.22/2020 and 16/2020 respectively by the XXIV Additional City Civil and Sessions Judge, Bengaluru as well as challenging the Arbitral award dated 06.01.2020 in Case No.LAQ/ARB/NH-4(BET)/104/2010-11 and case No. LAQ/ARB/ NH-4(BET)/74/2010-11 respectively passed by respondent No.2. 2. Heard the learned counsel appearing for the respective parties. 3. The factual matrix of the case in MFA No.3301/2024 is that the preliminary notification under Section 3A of the National Highways Act 1956 (for short ‘NH Act’) was published 5 by the Central Government declaring its intention to acquire various lands in Bandapura village, K.R.Puram Taluk, Bengaluru Urban District among other villages for the purpose of widening / 6 lane of National Highway No.4(NH4) and the final notification was issued under Section 3D(1) and (2) of the NH Act declaring that amongst others, the agricultural lands in Sy.No.28/2 to an extent of 154 square meters situated at Bandapura village, K.R.Puram Taluk, Bangalore Urban District belonging to respondent No.1 shall vest absolutely with the Central Government and respondent No.3 passed an award fixing the market value of agricultural land at Rs.420.07/- per square meter. 4. In MFA No.3581/2024 also proceedings were initiated under Section 3A of the NH Act in respect of the very same village and also final notification was issued in respect of Sy.No.40 to an extent of 550 square meters situated in the same village belonging to respondent No.1 shall vest absolutely with the Central Government. Being aggrieved by the market value determined by respondent No.3, respective respondent No.1 6 preferred an application before respondent No.2 under Section 3G(5) of the NH Act seeking for enhancement of compensation in respect of Sy.Nos.28/2 and 40. 5. Respondent No.2 vide its order dated 06.01.2020 passed the award enhancing the compensation in both the claims from Rs.420.07 per square meter to Rs.1,483/- per square meter. Being aggrieved by the said order, the appellant herein preferred A.P.Nos.16/2020 and 22/2020 under Section 34(2) of the Arbitration and Conciliation Act, 1996 (for short ‘the Act of 1996’) before the XXIV Additional City Civil and Sessions Judge, Bengaluru seeking to set aside the Arbitral award dated 06.01.2020 passed by respondent No.2 and both the petitions were dismissed and being aggrieved by the said order, the present miscellaneous first appeals are filed before this Court. 6. The issues involved between the parties are one and the same and hence, these appeals are taken up together for common consideration. 7 7. The learned counsel for the appellant in both the
Decision
ORDER The Miscellaneous First Appeals are dismissed. Sd/- (H.P. SANDESH) JUDGE SN