Arbitration Case No. 36 of 2017 · Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 IN THE HIGH COURT OF ORISSA AT CUTTACK ARBA No.30 of 2024 (From the Judgment/Order dated 12.8.2024 passed by the Learned District Judge, Cuttack in an Application filed under Section 34 of the A & C Act, 1996 i.e. in ARBP No.10 of 2023) Land Acquisition Officer (N.H.) & Competent Authority, Bhubaneswar …. Appellant (s) -versus- Kavita Jain and Anr. …. Respondent (s) Advocates appeared in the case through Hybrid Mode: For Appellant (s) For Respondent (s) : : Mr. Ajit Patnaik, Adv. Mr. Ashok Parija, Sr. Adv. Along with Mr. Arnab Behera, Adv. (For Res. No.1). CORAM: DR. JUSTICE SANJEEB K. PANIGRAHI DATE OF HEARING:-23.07.2025 DATE OF JUDGMENT:-26.08.2025 Dr. S.K. Panigrahi, J. 1. This Appeal under Section 37 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the “A&C Act”) is preferred by the Appellant challenging the Judgment/Order dated 12.8.2024, in ARBP No. 10 of 2023, passed by the Learned District Judge, Cuttack, in an Application filed under Section 34 of the A & C Act, which was filed against the Arbitral Award, dated 23.8.2023, in L.A. Arbitration Case No.36 of 2017, Page 1 of 17 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 passed by the Arbitrator-cum-Collector, Cuttack, wherein the learned District Judge, Cuttack, allowed the aforesaid Application setting aside the aforesaid Arbitral Award being contrary to the law as also passed directions for enhancement of compensation amount to be paid to present Respondent No. l. I. FACTUAL MATRIX OF THE CASE: 2. The facts giving rise to the present Petition can be pithily summarised as under: a. The present Appellant is the Land Acquisition Officer & Competent Authority (NH), Khordha, appointed and designated by the Central Government by Notification in the Official Gazette as the "Competent Authority", under the provisions of Clause (a) of Section 3 of the National Highways Act, 1956, to perform the functions of such Authority, under the NH Act, for such areas as is specified in the Notification, in respect of acquisition of land for the building (widening/six-laning, etc.), maintenance, management and operation of the National Highway No. 16 (Old NH-5), in the State. In this connection, the Competent Authority & Land Acquisition Officer (hereinafter referred to as ’CALA’) is authorised to assess the valuation of ’Land’, hear the objections of the land-loser, and award due compensation for the same. b. In the instant case, the Central Government issued the Preliminary Notification under Section 3A of NH Act, 1956, in the Official Gazette on 3.10.2012, declaring its intention to acquire land, in respect of various Villages (Mouza), including the impugned land of the Respondent No. l, located at Mouza- Page 2 of 17
Facts
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 Bandalo, under Plot No. 1403, in Khata No. 751/159, pertaining to an area of Ac.1.670 dec., in Kisam-Gharabari, for the public purpose, namely, expansion and four-laning of the National Highway No. 16. Later, the same was published in the local newspapers on 19.11.2012 as mandated under Section 3A(3) of the NH Act, 1956. Subsequently, as mandated under extant law, the Land Acquisition Proceeding, was initiated for the purpose, by the present Appellant, vide L.A. Case No. 38/81/2013. c. The Competent Authority-cum-Land Acquisition Officer (CALA) awarded a compensation of Rs. 1,38,18,998/- for acquisition of Ac 0.170 decimals, Kisam - Gharabadi pertaining to Khata No. 751/159, Plot No. 1403, Mouza - Bandalo belonging to the Respondent No. 1. The said compensation was awarded on the basis of benchmark valuation report of the CALA, which calculated Rs. 20 lakh/ acre for Mouza- Bandalo. d. Aggrieved by the compensation granted by the CALA, Respondent No.1 invoked arbitration under Section 3G(7) of the NH Act. The primary contention of Respondent No.1 was that the CALA has not followed the procedure laid down under Section 26 of the RFCTLAR&R Act, 2013. e. Vide award dated 23.8.2023, in L.A. Arbitration Case No.36 of 2017, the Arbitrator-cum-Collector, Cuttack was pleased to hold that the CALA had followed proper procedure and the present Respondent No. 1 had not made out any case for higher compensation. Page 3 of 17 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 f. On appeal under Section 34 of the Arbitration Act, at the behest of the Respondent No.1, the Ld. District Judge vide the impugned order has held that the Ld. Arbitrator has committed "patent illegality" in contravention of Section 3G(7)(a) of the NH Act read with Section 26 of the RFCTLAR&R Act, 2013 and remanded the matter for re-consideration strictly in line with the relevant provisions. It is pertinent to mention here that the present Appellants were set ex-parte for non-appearance on 11.7.2024 by the Ld. District Judge. 3. At this juncture, the Petitioner has preferred the present Appeal challenging the legality and validity of the impugned order. As the facts leading up to the instant Petition have been laid down, this Court shall endeavour to summarise the contentions of the Parties and the broad grounds that have been raised to seek the exercise of this Court’s writ jurisdiction. II. APPELLANT’S SUBMISSIONS: 4. The Ld. Counsel for the Appellant vehemently submits that the assessment of compensation has been made on the basis of sale statistics/bench mark valuation of the area and as the information was present, there was no legal requirement to take the neighbouring area’s valuation into consideration. 5. It is submitted that there is no patent illegality in the award as all the grounds put forth by the present Respondent No.1 have been considered by the competent authority at the time of arriving at the valuation of land and therefore, the order of the Ld. District Judge ought to be set aside. Page 4 of 17 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 III. RESPONDENT NO.1’S SUBMISSIONS:
Legal Reasoning
“24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind for alternate dispute resolution would stand opting frustrated. 25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral 2 (2019) 20 SCC 1 Page 8 of 17 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.” 17. It is seen that the scope of interference in an appeal under Section 37 of the Act is restricted and subject to the same grounds on which an award can be challenged under Section 34 of the Act. In other words, the powers under Section 37 vested in the court of appeal are not beyond the scope of interference provided under Section 34 of the Act. 18. In paragraph 14 of MMTC Limited v. Vedanta Limited3 it has been held as under: “14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.” 19. Recently a three-Judge Bench of the Supreme Court in Konkan Railway Corporation Limited v. Chenab Bridge Project Undertaking4 referring to MMTC Limited (supra) held that the scope of jurisdiction under Section 34 and Section 37 of the Act is not like a normal appellate jurisdiction and the courts should not interfere with the arbitral award lightly in a casual and a cavalier manner. The mere possibility of an
Arguments
6. On the other hand, Ld. Counsel for the Respondent No. 1 submits that under the same notification and acquisition process, the CALA has awarded near-by Mouza - Kotsahi 50 lakh per acre, Mouza- Baichuan - 45 lakh per acre, Mouza- Bilteruan - 60 lakh per acre, Mouza - Palasa - 60 lakh per acre, Mouza - Manguli - 65 lakh lakh per acre. On the other hand, for Mouza - Bandala, the CALA awarded only Rs. 20 lakh per acre. Under Section 26(l)(b) of the RFCTLAR&R Act, 2013, the Collector ought to have considered that if the average sale price for similar type of land situated in the nearest village or vicinity area is higher, that amount has to be taken into consideration. 7. Furthermore, it is submitted that prior to publication of notification in vernacular newspapers under Section 3A(3) of the NH Act, the Respondent had entered into an Agreement to Sale dated 12.11.2012 for sale of Ac 0.80 decimals for a consideration of Rs. 5 Iakh per Guntha, which translates to Rs.1.25 crore per Acre. Pertinently, the buyer had paid an advance of Rs. 16 lakh to the Respondent on 5.11.2012 and 9.11.2012 through RTGS as advance which was also not considered by the CALA. The Ld. Arbitrator, while recording all the contentions of the Respondent, gave a cryptic award without dealing with any of the contentions. 8. It is finally submitted that there is patent illegality in the award and therefore, the present Petition ought to be dismissed. IV. ISSUES FOR CONSIDERATION: Page 5 of 17 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 9. Having heard the parties and perused the materials available on record, this Court here has identified the following issues to be determined: A. Whether this Court ought to interfere in the facts of the present case? V. ISSUE A: WHETHER THIS COURT OUGHT TO INTERFERE IN THE FACTS OF THE PRESENT CASE? 10. The object of the A&C Act is to provide for a speedy and inexpensive alternative mode of settlement of dispute with the minimum of intervention of the courts. Section 5 of the Act is implicit in this regard and prohibits interference by the judicial authority with the arbitration proceedings except where so provided in Part-I of the Act. The judicial interference, if any, is provided inter-alia only by means of Sections 34 and 37 of the Act respectively. 11. Section 34 of the Act provides for getting an arbitral award set aside by moving an application in accordance with sub-Section (2) and sub- Section (3) of Section 34 of the Act which inter-alia provide for the grounds on which an arbitral award is liable to be set aside. One of the main grounds for interference or setting aside an award is where the arbitral award is in conflict with the public policy of India i.e. if the award is induced or affected by fraud or corruption or is in contravention with the fundamental policy of Indian law or it is in conflict with most basic notions of morality and justice. A plain reading of Section 34 reveals that the scope of interference by the court with the arbitral award under Section 34 is very limited and the court is not supposed to travel beyond the aforesaid scope to find out if the award is good or bad. Page 6 of 17 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 12. Section 37 of the Act provides for a Forum of appeal inter-alia against the order setting aside or refusing to set aside an arbitral award under Section 34 of the Act. The scope of appeal is naturally akin to and limited to the grounds enumerated under Section 34 of the Act. 13. It is pertinent to note that an arbitral award is not liable to be interfered with only on the ground that the award is illegal or is erroneous in law that too upon reappraisal of the evidence adduced before the arbitral trial. Even an award which may not be reasonable or is non-speaking to some extent cannot ordinarily be interfered with by the courts. It is also well settled that even if two views are possible there is no scope for the court to reappraise the evidence and to take the different view other than that has been taken by the arbitrator. The view taken by the arbitrator is normally acceptable and ought to be allowed to prevail. 14. In paragraph 11 of Bharat Coking Coal Ltd. v. L.K. Ahuja1 it has been observed as under: “11. There are limitations upon the scope of interference in awards passed by an arbitrator. When the arbitrator has applied his mind to the pleadings, the evidence adduced before him and the terms of the contract, there is no scope for the court to reappraise the matter as if this were an appeal and even if two views are possible, the view taken by the arbitrator would prevail. So long as an award made by an arbitrator can be said to be one by a reasonable person no interference is called for. However, in cases where an arbitrator exceeds the terms of the agreement or passes an award in the absence of any evidence, which is apparent on the face of the award, the same could be set aside.” 1 (2001) 4 SCC 86 Page 7 of 17 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 15. It is equally well settled that the appellate power under Section 37 of the Act is not akin to the normal appellate jurisdiction vested in the civil courts for the reason that the scope of interference of the courts with arbitral proceedings or award is very limited, confined to the ambit of Section 34 of the Act only and even that power cannot be exercised in a casual and a cavalier manner. 16. In Dyna Technology Private Limited v. Crompton Greaves Limited2, the Apex Court observed as under: