V. Padmavathy and A. Sankunthala v. National High Way Authority of India, Deputy Collector and Special Land Acquisition Officer, L.A.N.H., Palakkad, and State of Kerala

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR.JUSTICE V.CHITAMBARESH &** **THE HONOURABLE MR. JUSTICE SATHISH NINAN** **TUESDAY, THE 3RD DAY OF JULY 2018 / 12TH ASHADHA, 1940** **Arb.A.No. 29 of 2016** **AGAINST THE ORDER IN AOP 213/2011 OF PRINCIPAL DISTRICT COURT, PALAKKAD DATED 23-01-2016** ## **APPELLANTS (PETITIONERS IN THE COURT BELOW)** **1 V. PADMAVATHY** **W/O.A.APPUKUTTAN (LATE), KALAVAPADAM, MOOLANGODE, KIZHAKKANCHERRY VILLAGE, ALATHUR, PIN-678541.** **2 A.SANKUNTHALA** **W/O.K.PRABHAKARAN, KALAVAPADAM, MOOLANGODE, KIZHAKKANCHERRY VILLAGE, ALATHUR, PIN-678541.** **BY ADVS.SRI.S.VINOD BHAT SRI.LEGITH T.KOTTAKKAL** ## **RESPONDENTS/RESPONDENTS IN THE COURT BELOW:** **1. THE NATIONAL HIGH WAY AUTHORITY OF INDIA. NEW DELHI-REPRESENTED BY THE PROJECT DIRECTOR** - **N.H.A.I., PALAKKAD-678001.** **2. DEPUTY COLLECTOR AND SPECIAL LAND ACQUISITION OFFICER L.A.N.H., PALAKKAD-678001.** **3. STATE OF KERALA REPRESENTED BY DISTRICT COLLECTOR PALAKKAD (ARBITRATOR UNDER N.H.ACT) PIN-678001.** **R2,R3 BY SENIOR GOVERNMENT PLEADER SMT.K.R.DEEPA R1 BY ADV. SRI.THOMAS ANTONY** **THIS ARBITRATION APPEALS HAVING BEEN FINALLY HEARD ON 25-06-2018, THE COURT ON 03-07-2018 DELIVERED THE FOLLOWING:** ## **V.Chitambaresh & Sathish Ninan, JJ. ==============================** ## **Arbitration Appeal No.29 of 2016 ========================== Dated this the 3[rd] day of July, 2018** ## **JUDGMENT** ## **Sathish Ninan, J** An extent of 14.05 Ares of property belonging to the appellants were acquired for the purpose of widening of National Highway, under the provisions of National Highways Act, 1956. The Special Land Acquisition Officer passed an Award fixing the land value at `29,634/- per Are. Aggrieved by the quantum of compensation, they approached the Arbitrator in terms of Section 3(G) of the Act. The Arbitrator enhanced the land value to `44,451/- per Are. Dissatisfied with the Award, the petitioners filed petition under Section 34(2) of the Arbitration and Conciliation Act, 1996, seeking to set aside the arbitral award. As per order dated 23.01.2016 the learned District Judge dismissed the petition. Arbitration Award No.29/2016 2 Challenging the same, this appeal is preferred by the land owners. 2. The notification under Section 3(A)(1) of the Act was published on 21.10.2005. The basic document relied on by the Special Land Acquisition Officer is a Sale Deed bearing number 1234 dated 26.03.2004 in respect of 17.21 Ares of property. That document reflects the value at `34,864/- per Are. The said document is 18 months prior to the notification in question. The Arbitrator found that the the acquired land is having less commercial importance than the property covered by the basic document and that the Special Land Acquisition Officer had made deduction in land value on the said ground. It was also noticed by the Arbitrator that though the basic document was approximately 18 months prior to the notification in question, no enhancement was made while calculating land value for the acquired property. It was also Arbitration Award No.29/2016 3 taken note of that the acquired land abuts National Highway near Karayamkad junction. It was accordingly that the Arbitrator fixed the value at `44,451/- per are. 3. Sri.S.Vinod Bhat, the learned counsel appears for the petitioners would contend that though the petitioners had produced copy of the fair value fixed by the Government before the Arbitrator, the same was not considered by him while fixing the value. It is further contended that though the Arbitrator found that the basic land is not comparable with the acquired land, still, did not proceed to accept the fair value fixed by the Government as the value of the property. The learned counsel for the appellants persuaded us to hold that the award is in conflict with public policy of India or is vitiated by patent illegality appearing on the face of the award. On the other hand, Sri. Thomas Antony the learned counsel for Arbitration Award No.29/2016 4 the respondent would contend that no grounds are made out warranting interference within the realm of Section 34 of the Arbitration Act. 4. The relevant clauses of Section 34 (2) of the Arbitration Act as it stood prior to amendment by Act 3 of 2016 which are relied on by the learned counsel for the appellant read thus; “(2) An arbitral award may be set aside by the Court only if- ............. - (b) the Court finds that- (i).........., or - (ii) the arbitral award is in conflict with the public policy of India. Explanation- Without prejudice to the generality of sub-clause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the Arbitration Award No.29/2016 5 public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81.” 5. The explanation to the Section has undergone a drastic amendment by Act 3 of 2016. After amendment, the explanation to Section 34(2) reads thus: “Explanation 1- For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,- (i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81 ; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice. Arbitration Award No.29/2016 6 Explanation 2- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.” 6. Evidently the meaning of the terms 'conflict to the public policy of India' has been narrowed down. The decision of the Apex Court in **HRD Corporation v Gail (India) Ltd. (2017(10) Scale 371)** clarifies the law that by the amendment the scope of challenge has been whittled down considerably. The amendment came into force with effect from 23.10.2015. In **Border Control for Cricket in India v Kochi Cricket Private Limited and Others (AIR 2018 SC 1549)** the Apex Court has clarified that the amendment Act is prospective in nature and will apply only to those arbitral proceedings that are commenced, as understood by Section 21 of the Principle Act, on or after the Arbitration Award No.29/2016 7 Amendment Act came into force. Therefore, insofar as the present case is concerned, Section 34 as stood prior to amendment by Act 3 of 2016, applies. Therefore, the scope for interference is wider in nature than after the amendment. 7. The only materials available on record to fix the value are sale deed 1234/2004 which is the basic document and the fair value. The arbitrator found that the basic document is not comparable with the acquired land. As regards the fair value, the same was published in the year 2010 whereas the acquisition was in the year 2005. Therefore, both the materials could not be, by itself, the basis for fixation of value of the acquired land. Viewed in such manner, the value fixed by the Arbitrator was not based on any acceptable material. The same would constitute a ground for setting aside the Arbitral Award. In terms of Section 34(4) of the Arbitration Act, pending an Arbitration Award No.29/2016 8 application under Section 34, the court may give opportunity to resume the arbitral proceedings in order to eliminate the grounds for setting aside the award. Section 34(4) of the Arbitration Act reads thus: “(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.” 8. We feel that the party could be given an opportunity to satisfy the Court below that an Arbitration Award No.29/2016 9 opportunity need to be granted in terms of Section 34(4) . 9.In the circumstances the impugned order dated 23.01.2016 in O.P(Arb.) No. 213/2011 of the District Court, Palakkad is set aside. The District Court will pass fresh orders in the light of the observations made above. The appeal is disposed of accordingly. Sd/- **V.Chitambaresh, Judge** Sd/- **Sathish Ninan, Judge** vdv