Ammankovil Narayanan and Leela Narayanan v. District Collector Kannur, Arbitrator under National Highways Act, Special Deputy Collector, LA& Competent Authority, Mini Civil Station, Talipparamba, Kannur; Project Director, National Highways Authority of India

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE MURALI PURUSHOTHAMAN** **WEDNESDAY, THE 29[TH] DAY OF NOVEMBER 2023 / 8TH AGRAHAYANA, 1945** ## **WP(C) NO. 36762 OF 2023** ## **PETITIONER/S:** **1 AMMANKOVIL NARAYANAN AGED 72 YEARS S/O. UMMINIYAN, THAMARAMKULANGARA, P.O. EDAT, KUNHIMANGALAM, KANNUR DISTRICT, PIN - 670327 2 LEELA NARAYANAN AGED 62 YEARS W/O. AMMANKOVIL NARAYANAN, KOODACHEERE HOUSE, THAMARAMKULANGARA, KUNHIMANGALAM, P.O. EDAT, KANNUR DISTRICT., PIN - 670327** ## **BY ADV V.N.RAMESAN NAMBISAN** ## **RESPONDENTS:** **1 THE DISTRICT COLLECTOR KANNUR, (ARBITRATOR UNDER THE NATIONAL HIGHWAY ACT, 1956), PIN - 670002 2 THE SPECIAL DEPUTY COLLECTOR, LANH & COMPETENT AUTHORITY, MINI CIVIL STATION, TALIPARAMBA, KANNUR., PIN - 670141 3 THE PROJECT DIRECTOR, NATIONAL HIGHWAY AUTHORITY OF INDIA, MELE CHOVVA, KANNUR, PIN – 670006 R BY SR.GP ADV.BIMAL K.NATH R BY SC, ADV.B.G.BIDAN CHANDRAN** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON** **29.11.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C) NO. 36762 OF 2023 : 2 :** ## **CR** ## **JUDGMENT** A parcel of land measuring 0.0026 hectares, comprised in resurvey No.84/1A (Old Survey No.84/6) of Kunhimangalam Village, Kannur District, owned by the petitioners, a husband and wife, was acquired by the 2[nd] respondent, the Competent Authority, for the purpose of widening of National Highway-66. The Competent Authority determined the compensation due to the petitioners under Section 3G(1) of the National Highways Act, 1956 (hereinafter referred to as the 'NH Act' for short) and passed an award on 28.06.2018. Aggrieved by the amount determined by the Competent Authority, the petitioners preferred Ext. P1 application under Section 3G(5) of the NH Act. The said application was dismissed by the 1[st] **WP(C) NO. 36762 OF 2023 : 3 :** respondent, the Arbitrator, by Ext. P2 order dated 17.06.2023 stating that the petitioners have failed to produce the copy of the award, which is mandatory as stipulated in the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Arbitration Act' for short). Aggrieved by Ext. P2, the petitioners have preferred this writ petition. 2. It is stated that Ext. P1 application was filed on 01.03.2019 and was posted before the Arbitrator for the first time on 17.12.2022 and, on the said day, there was no sitting. The application was then posted to 07.01.2023 and then to 01.04.2023 for the counter statement of the respondents, namely the Competent Authority and the Project Director, National Highways Authority of India (NHAI). No counter statements were filed and the application **WP(C) NO. 36762 OF 2023 : 4 :** was posted to 17.06.2023, on which date the impugned order was passed. 3. Sri. Ramesan Nambisan, the learned counsel for the petitioners contends that, Ext. P2 order is arbitrary and is passed contrary to the provisions of the Arbitration Act. It is further contended that the arbitration cannot be on application rejected technical grounds and since the scope of challenge to the arbitral award under the Arbitration Act is very limited, this Court has to interfere in exercise of the powers under Article 226 of the Constitution of India. It is submitted that the petitioners are senior citizens hailing from a remote village of Kannur District and they are not familiar with the provisions of law and instead of outrightly dismissing the application, the Arbitrator ought to **WP(C) NO. 36762 OF 2023 : 5 :** have given them a chance to produce the copy of the award and to contest the application on merits. 4. Per contra, Sri. B.G.Bidan Chandran, the learned Standing Counsel for the NHAI, would contend that, the production of copy of the award along with the arbitration application is mandatory and without producing the same, the arbitration application itself is not maintainable. Since the copy of the award was not produced along with the application, the Arbitrator has rightly declined jurisdiction and once the Arbitrator has declined jurisdiction, the remedy of the petitioners lies under Section 37(2) of the Arbitration Act. Sri. Bidan Chandran relied on the decision of the Apex Court in **SBP and Co** _**v**_ **. Patel Engineering Ltd and Another** [(2005) 8 SCC 618: AIR 2006 SC 450: 2005 **WP(C) NO. 36762 OF 2023 : 6 :** KHC 1909] and **Bhaven Construction** _**v**_ **. Executive Engineer, Sardar Sarovar Narmada Limited & another** [(2022) 1 SCC 75: 2021 KHC 6007] to contend that interference under Article 226 of the Constitution with arbitral process is not permissible. 5. Sri. Bimal K. Nath, the learned Senior Government Pleader appearing for the Arbitrator and the Competent Authority, submits that the Deputy Collector (LA) had informed the petitioners by letter dated 06.09.2019 that the arbitration application is defective as they have not produced the copy of the award and despite such intimation, the petitioners have not produced the copy of the award. Sri. Bimal contends that, Ext. P2 being an arbitral award, the remedy of the petitioners is to **WP(C) NO. 36762 OF 2023 : 7 :** invoke the provisions of Section 34 of the Arbitration Act. 6. Sri. Nambisan submits that the petitioners have not received the letter stated to have been sent by the Deputy Collector (LA) on behalf of the Arbitrator. 7. Section 3A of the NH Act deals with the power of the Central Government to acquire land. Section 3G (1) provides that, where any land is acquired under the NH Act, there shall be paid an amount which shall be determined by an order of the Competent Authority. Section 3G (5) provides that, if there is a dispute regarding the amount determined by the Competent Authority, the amount shall, on an application by either of the parties, be **WP(C) NO. 36762 OF 2023 : 8 :** determined by the Arbitrator to be appointed by the Central Government. Section 3G (6) of the NH Act provides that subject to the provisions of the NH Act, the provisions of the Arbitration Act shall apply to every arbitration under the NH Act. Arbitration under the NH Act is statutory. An Arbitrator appointed under the provisions of the NH Act, pursuant to a notification issued by the Central Government, acts as a statutory authority and is not a creature of any contract. The Arbitrator derives jurisdiction to resolve the dispute from the NH Act and not from any arbitration agreement. Copy of the award of the Competent Authority is therefore not required to establish or to invoke the jurisdiction of the Arbitrator. Therefore, the contention of NHAI that, without producing the copy of the award, the **WP(C) NO. 36762 OF 2023 : 9 :** Arbitrator cannot invoke jurisdiction under the NH Act cannot be sustained. 8. The remedy, ordinarily a party has to resort to against an arbitral award under Section 3G(5) of the NH Act, is to invoke the provisions of Section 34 of the Arbitration Act. The extent of judicial intervention in arbitration proceedings is also limited by the _non obstante_ clause of Section 5 of the Arbitration Act. In **SBP and Co** (supra), the Constitution Bench of the Hon'ble Supreme Court considered the issue as to whether the order passed by an arbitral tribunal during arbitration, would be capable of being challenged under Art.226 or Art.227 of the Constitution. The Court held thus: "45. It is seen that some High Courts have proceeded on the basis that any order passed by **WP(C) NO. 36762 OF 2023 : 10 :** an Arbitral Tribunal during arbitration, would be capable of being challenged under Art.226 or Art.227 of the Constitution. We see no warrant for such an approach. S.37 makes certain orders of the Arbitral Tribunal appealable. Under S.34, the aggrieved party has an avenue for ventilating its grievances against the award including any in - between orders that might have been passed by the Arbitral Tribunal acting under S.16 of the Act. The party aggrieved by any order of the Arbitral Tribunal, unless has a right of appeal under S.37 of the Act, has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act. The Arbitral Tribunal is, after all, a creature of a contract between the parties, the arbitration agreement, even though, if the occasion arises, the Chief Justice may constitute it based on the contract between the parties. But that would not alter the status of the Arbitral Tribunal. It will still be a forum chosen by the parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the Arbitral Tribunal is capable of being corrected by the High Court under Art.226 or Art.227 of the Constitution. Such an intervention by the High Courts is not permissible. 46. The object of minimising judicial intervention **WP(C) NO. 36762 OF 2023 : 11 :** while the matter is in the process of being arbitrated upon, will certainly be defeated if the High Court could be approached under Art.227 or under Art.226 of the Constitution against every order made by the Arbitral Tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the Arbitral Tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under S.37 of the Act even at an earlier stage." In **Bhaven Construction** (supra), the Hon'ble Supreme Court observed that the power of judicial interference needs to be exercised only in exceptional rarity, where one party is left remediless under the statute or a clear “bad faith” shown by one of the parties. This Court, therefore, has to examine whether the facts and circumstances in the present case warrant interference under Article 226 of the Constitution. **WP(C) NO. 36762 OF 2023 : 12 :** 9. By Ext. P2, the arbitration application under Section 3G(5) of the NH Act has been dismissed. It is contended by the respondents that the petitioners have to avail alternative remedy under the Arbitration Act. It is trite law that, in a proceedings under Section 34 or in an appeal under Section 37, the Court cannot modify or vary the award of the Arbitrator. It can only set aside the award leaving the parties free to begin the arbitration again. If the petitioners are to be relegated to the remedy under Section 34 or Section 37 of the Arbitration Act, that would only delay the final adjudication. The arbitration application was filed in the year 2019 and the same was rejected after four years on the ground that the copy of the award is not produced. The Arbitrator could have given the petitioners an **WP(C) NO. 36762 OF 2023 : 13 :** opportunity to produce the copy of the award and then proceeded to pass an order on merits. Thus, there is violation of the principles of natural justice. Being a creature of the NH Act, the Statutory Arbitrator is bound to act in terms of the Statute and to determine the amount as payable compensation. Ext. P2 order of the Arbitrator does not conform to the terms of the Statute, the requirements of fairness and reasonableness and the same causes substantial injustice to the petitioners. This Court is, therefore, of the view that Ext.P2 order warrants interference under Article 226 of the Constitution. Accordingly, Ext. P2 order is set aside. The petitioners are directed to produce the copy of the award of the competent authority before the 1[st] respondent, within a period of two **WP(C) NO. 36762 OF 2023 : 14 :** weeks from the date of receipt of a copy of this judgment and on receipt of the copy of the award, the 1[st] respondent shall take back Ext. P1 application to file and finally dispose of the application, as expeditiously as possible, preferably within a period of three months therefrom. With the above directions, the writ petition is disposed of. **MURALI PURUSHOTHAMAN JUDGE** SB **WP(C) NO. 36762 OF 2023 : 15 :** ## **APPENDIX** ## **PETITIONER EXHIBITS** |**Exhibit P1**|**TRUE COPY OF THE APPLICATION FILED BY THE**| |---|---| ||**PETITIONERS BEFORE THE 1ST RESPONDENT DATED**| ||**01.03.2019.**| |**Exhibit P2**|**TRUE COPY OF THE ORDER OF THE 1ST RESPONDENT**| ||**IN A.P. NO. 485/2019/KUNHIMANGALAM DATED**| ||**17.06.2023.**| |**Exhibit P3**|**TRUE COPY OF THE INTIMATION DATED 04.08.2023**| ||**FROM THE 1ST RESPONDENT TO THE 1ST**| ||**PETITIONER.**| |**Exhibit**|**TRUE COPY OF THE ACKNOWLEDGMENT CARD DATED**| |**P3(a)**|**05.08.2023.**|