TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 1343
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....2020], CIVIL APPEAL NO. 2767OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13410 OF 2020], CIVIL APPEAL NO. 2768OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13363 OF 2020], CIVIL APPEAL NO. 2769OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13502 OF 2020], CIVIL APPEAL NO. 2770OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13373 OF 2020], CIVIL APPEAL NO. 2771OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13371 OF 2020], CIVIL APPEAL NO. 2772OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13494 OF 2020], CIVIL APPEAL NO. 2773OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13382 OF 2020], CIVIL APPEAL NO. 2774OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13366 OF 2020], CIVIL APPEAL NO. 2775OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13303 OF 2020], CIVIL APPEAL NO. 2776OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13477 OF 2020], CIVIL APPEAL NO. 2777OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13235 OF 2020], CIVIL APPEAL NO. 2778OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13354 OF 2020], CIVIL APPEAL NO. 2779OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13408 OF 2020], CIVIL APPEAL NO. 2780OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13292 OF 2020], CIVIL APPEAL NO. 2781OF 2021 [ARISING OUT OF SLP (CIVIL) NO.13236 OF 2020], CIVIL APPEAL NO. 2782OF 2021, [ARISING OUT OF SLP (CI....
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....ng down as a matter of law that, at least insofar as arbitral awards made under the National Highways Act, 1956 ["National Highways Act"], Section 34 of the Arbitration Act must be so read as to permit modification of an arbitral award made under the National Highways Act so as to enhance compensation awarded by a learned Arbitrator. 3. The facts in all these appeals concern notifications issued under the provisions of the National Highways Act and awards passed thereunder. These notifications are all of the years 2009 onwards and consist of awards that have been made by the competent authority under the Act, who is a Special District Revenue Officer. In all these cases, awards were made based on the 'guideline value' of the lands in question and not on the basis of sale deeds of similar lands. The result is, in all these cases, that abysmally low amounts were granted by the competent authority. As an example, in SLP (Civil) No.13020 of 2020, amounts ranging from Rs.46.55 to 83.15 per square meter were awarded. In the arbitral award made by the District Collector in all these cases, being an appointee of the Government, no infirmity was found in the aforesaid award, as a result of....
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....not a challenge on the merits of the award. The court's limited power under the said Section is wholly unlike the power of an appellate court under the Land Acquisition Act, and hence such power is only limited to either setting aside the award or remitting the award to the arbitrator under Section 34(4) so as to eliminate any ground of challenge under Section 34. He argued that this was in contrast to the Arbitration Act, 1940 which contained a specific provision to remit an award under Section 15, and further argued that the Arbitration Act, 1996, being based on the UNCITRAL Model Law on International Commercial Arbitration, 1985, has specifically restricted the grounds of challenge and the consequent remedy, which is only to set aside or remit in limited circumstances. He argued, based on a reading of Section 34 itself as well as a number of judgments of this Court and High Courts that this well settled position cannot possibly be given a go-by when it comes to arbitration under the National Highways Act, in which either party can ask for the appointment of an arbitrator who is then appointed not by the parties, but by the Central Government. He attacked the Division Bench judgm....
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....rits, he pointed out the facts of his case and the fact that an abysmally low sum had been given as compensation which was then raised by the District Judge, having regard to the relevant sale deeds in the vicinity. He then copiously read from the learned Single Judge's judgment of the Madras High Court in Gayatri Balaswamy's case and supported this line of reasoning. He also supported the impugned judgment to argue that even if the learned Single Judge in Gayatri Balaswamy had not laid down the law correctly so far as matters arising under the Arbitration Act are concerned, yet the impugned judgment correctly makes the distinction between consensual arbitration and an arbitrator appointed by the Central Government, who is none other than some government servant who merely rubber stamps awards that are passed by yet another government servant. He argued that if Section 34 were to be construed in the manner suggested by the learned Solicitor General, then for a very grievous wrong there would be no remedy as all that the District Judge could then do in the Section 34 jurisdiction is to set aside the award, resulting in a fresh arbitration before either the self-same bureaucrat or an....
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....the objection under subsection (2) of that section, the competent authority shall, as soon as may be, submit a report accordingly to the Central Government and on receipt of such report, the Central Government shall declare, by notification in the Official Gazette, that the land should be acquired for the purpose or purposes mentioned in sub-section (1) of section 3A. (2) On the publication of the declaration under sub-section (1), the land shall vest absolutely in the Central Government free from all encumbrances. (3) Where in respect of any land, a notification has been published under sub-section (1) of section 3A for its acquisition but no declaration under sub-section (1) has been published within a period of one year from the date of publication of that notification, the said notification shall cease to have any effect: Provided that in computing the said period of one year, the period or periods during which any action or proceedings to be taken in pursuance of the notification issued under sub- section (1) of section 3A is stayed by an order of a court shall be excluded. (4) A declaration made by the Central Government under sub-section (1) shall not be called in qu....
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....nd, by reason of the acquisition injuriously affecting his other immovable property in any manner, or his earnings; (d) if, in consequences of the acquisition of the land, the person interested is compelled to change his residence or place of business, the reasonable expenses, if any, incidental to such change. 11. Section 3J then states: 3J. Land Acquisition Act 1 of 1894 not to apply. - Nothing in the Land Acquisition Act, 1894 shall apply to an acquisition under this Act. 12. It will be seen that the competent authority, as defined, is to first determine an amount which is payable by way of compensation for compulsory acquisition of land. Under Section 3G(5), if the amount determined by the said authority is not acceptable to either of the parties, the amount shall, on application by either of the parties, be determined by an arbitrator to be appointed by the Central Government. What is of importance is that the 'competent authority' is a person or authority authorised by the Central Government by notification to determine the amount of compensation. In the present case, a notification designating a Special District Revenue Officer as the competent authority has been made.....
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.... proceedings and give the arbitral tribunal an opportunity to resume the arbitral proceedings or take such action as will eliminate the grounds for setting aside the arbitral award. Here again, it is important to note that it is the opinion of the arbitral tribunal which counts in order to eliminate the grounds for setting aside the award, which may be indicated by the court hearing the Section 34 application. 15. It is important to remember that Section 34 is modelled on the UNCITRAL Model Law on International Commercial Arbitration, 1985, under which no power to modify an award is given to a court hearing a challenge to an award. The relevant portion of the Model Law reads as follows: Article 34. Application for setting aside as exclusive recourse against arbitral award (1) Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (2) of this article. xxx xxx xxx (4) The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to re....
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....e or an error arising from an accidental slip or omission. 16. Power to remit award. (1) The Court may from time to time remit the award or any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms as it thinks fit- (a) where- the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred; or (b) where the award is so indefinite as to be incapable of execution; or (c) where an objection to the legality of the award is apparent upon the face of it., (2) Where an award is remitted under sub- section (1) the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court: Provided that any time so fixed may be extended by subsequent order of the Court. (3) An award remitted under sub- section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed. 19. As a result therefore, a judgment in terms of the award is given under Section 17 of the 1940 Act which ....
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....3 (at 170), that the court hearing a Section 34 petition does not sit in appeal (see para 51). 23. As a matter of fact, the point raised in the appeals stands concluded in McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181, where this Court held: - 51. After the 1996 Act came into force, under Section 16 of the Act the party questioning the jurisdiction of the arbitrator has an obligation to raise the said question before the arbitrator. Such a question of jurisdiction could be raised if it is beyond the scope of his authority. It was required to be raised during arbitration proceedings or soon after initiation thereof. The jurisdictional question is required to be determined as a preliminary ground. A decision taken thereupon by the arbitrator would be the subject-matter of challenge under Section 34 of the Act. In the event the arbitrator opined that he had no jurisdiction in relation thereto an appeal thereagainst was provided for under Section 37 of the Act. 52. The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only....
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.... be allowed by this Court in exercise of its powers under Section 34(4) of the Act? 48. Under Section 34(4) of the Act, the Court while deciding a challenge to an arbitral award, can either "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 the arbitral tribunal will eliminate the grounds for setting aside the arbitral award". This necessarily envisages the Court having to remit the matter to the Arbitral Tribunal. This is subject to the Court finding it appropriate to do so and a party requesting it to do so. 49. In Union of India v. Arctic India2007 (4) Arb LR 524 (Bom), a learned Single Judge of the Bombay High Court opined that the Court can modify the Award even if there is no express provision in the Act permitting it. The Court followed the decision of the Supreme Court in Krishna Bhagya Jala Nigam Ltd. v. Harischandra Reddy (2007) 2 SCC 720. A similar view has been taken by a learned Single Judge of this Court in Union of India v. Modern Laminators2008 (3) Arb LR 489 (Del). There the question was whether in light of the a....
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....ourt will be acting no different from an appellate court which would be contrary to the legislative intent behind Section 34 of the Act. Accordingly, this Court declines to itself decide the claims of CNPL that have been wrongly rejected by the learned Arbitrator. 27. The Delhi High Court in Nussli Switzerland Ltd. v. Organizing Committee Commonwealth Games, 2014 SCC OnLine Del 4834, held: - 34. A party like the Organizing Committee which has its claims rejected, except a part, but which subsumes into the larger amount awarded in favour of the opposite party, even if succeeds in the objections to the award would at best have the award set aside for the reason the Arbitration and Conciliation Act, 1996 as distinct from the power of the Court under the Arbitration Act, 1940, does not empower the Court to modify an award. If a claim which has been rejected by an Arbitral Tribunal is found to be faulty, the Court seized of the objections under Section 34 of the Arbitration and Conciliation Act, 1996 has to set aside the award and leave the matter at that. It would be open to the party concerned to commence fresh proceedings (including arbitration) and for this view one may for purpo....
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.... was modified. The learned Single Judge in Canara Bank relied upon a decision of a Single Judge of the Madras High Court in Gayatri Balaswamy v. ISG Novasoft Technologies Ltd., (2015) 1 MLJ 5. The Court in Gayatri Balaswamy examined the issue in significant [sic] and held as follows: "Therefore, in my considered view, the expression 'recourse to a Court against an arbitral award' appearing in Section 34(1) cannot be construed to mean only a right to seek the setting aside of an award. Recourse against an arbitral award could be either for setting aside or for modifying or for enhancing or for varying or for revising an award. The expression 'application for setting aside such an award' appearing in Section 34(2) and (3) merely prescribes the form, in which, a person can seek recourse against an arbitral award. The form, in which an application has to be made, cannot curtail the substantial right conferred by the statute. In other words, the right to have recourse to a Court, is a substantial right and that right is not liable to be curtailed, by the form in which the right has to be enforced or exercised. Hence, in my considered view, the power under Section 34(1) includes, withi....
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....nalogous to Section 16 of the Arbitration Act, 1940 in the present Act. Section 16 of the 1940 Act specifically armed courts with the power to remit the matter to arbitration. Noticeably, the scope of remission under the present Act is confined to that prescribed in sub-section (4) of Section 34. Besides the Division Bench rulings of this Court in Delhi Development Authority, State Trading Corporation of India Ltd., this was also noted by a Full Bench of the Bombay High Court in R.S. Jiwani v. Ircon International Ltd., 2010 (1) Bom CR 529, where the Court held: "An award can only be set aside under the provisions of Section 34 as there is no other provision except Section 33 which permits the arbitral tribunal to correct or interpret the award or pass additional award, that too, on limited grounds stated in Section 33... It is also true that there are no parimateria provisions like Sections 15 and 16 of the Act of 1940 in the 1996 Act but still the provisions of Section 34 read together, sufficiently indicate vesting of vast powers in the court to set aside an award and even to adjourn a matter and such acts and deeds by the Arbitral Tribunal at the instance of the party which wo....
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....the Court to modify an Award for granted. The comment made in para 31 does not appear to be justified. Obviously, the power used was the power to do complete justice between the parties, which is a power relatable to the Constitution vested only in the Supreme Court of India as a final court of last resort under Article 142 of the Constitution of India. 31. The next judgment referred to in para 32 is the judgment in Tata Hydro-Electric Power Supply Co. Ltd. v. Union of India, (2003) 4 SCC 172. In para 21, this Court modified the award qua interest, granting interest at the same rate but with reference to a different period from that stated in the award. There is no doubt that the award was in fact "modified" by the Supreme Court - again referable to Article 142 of the Constitution of India. 32. Likewise, in Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4 SCC 445, the learned Single Judge correctly observed that the Supreme Court did not specifically address the issue as to whether the court has the power under Section 34 to modify the Award. In stating that the Supreme Court affixed a seal of approval on the decision of the trial court modifying the award would not be....
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....n again if it is desired. Hence, in an application taken out under section 34 of the Act, the Court can set aside the award leaving the parties free to begin the arbitration again if it is desired. 19. Therefore, the order of the learned single judge setting aside the award is confirmed for the reasons given by us. However, the other observations of the learned single Judge are set aside. The issue is left open to the parties to proceed further. The appeal is disposed of in the above terms. However, there is no order as to costs. The connected miscellaneous petition is closed. 35. This judgment was not cited before the learned Single Judge, being a binding Division Bench judgment, which specifically decided, following McDermott's case (supra), that the power of modification is not available under Section 34 of the Arbitration Act, 1996. Even otherwise therefore, the learned Single Judge's judgment was rendered per incuriam. 36. However, a later Division Bench of the High Court of Madras vide judgment dated August 8th, 2019 reported in ISG Novasoft Technologies Limited v. Gayatri Balasamy, 2019 SCC OnLine Mad 15819 agreed with the learned Single Judge, without adverting to the e....
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.... 445 to drive home the point that the Court has power under Section 34 to modify the award passed by the Arbitrator. We are also in entire agreement with the reasoning of the learned single Judge that merely because the word "modify" or "vary" is not indicated in Section 34 of the Act, it will not take away the jurisdiction of the Court exercising under jurisdiction Section 34 of the Act to interfere with the award passed by an arbitrator partially. If such a power is not vested with the Court, it will only lead to multiplicity of proceedings, which is not intended by the legislature while framing Section 34 of the Act. A reasonable interpretation to Section 34 would only lead to an irresistible conclusion that the Court can modify or vary the award of the arbitrator if it is contrary to the material evidence adduced by the parties. Even otherwise, as contemplated under Section 34(2)(v)(b)(ii) of the Act, when the award passed by the Arbitrator is in conflict with the public policy in our Country, reversal or modification of such award passed by the arbitrator is well within the provisions contained under Section 34 of the Act itself. In the present case, as rightly observed by the....
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.... in Redfern and Hunter on International Arbitration, makes it clear that, given the limited judicial interference on extremely limited grounds not dealing with the merits of an award, the 'limited remedy' under Section 34 is co- terminus with the 'limited right', namely, either to set aside an award or remand the matter under the circumstances mentioned in Section 34 of the Arbitration Act, 1996. 41. A look at the Arbitration Acts of England, the United States, Canada, Australia and Singapore also lead to the same conclusion. In each of those legislative measures, there are express provisions which permit the varying of an award, unlike Section 34 of the present Act. In para 51, the learned Single Judge then refers to recourse to a court against an arbitral award, and argues that a statute cannot be interpreted in such manner as to make the remedy worse than the disease. As has been pointed out by us, the "disease" can only be cured in very limited circumstances thus limiting the remedy as well. Also, to assimilate the Section 34 jurisdiction with the revisional jurisdiction under Section 115 of the Code of Civil Procedure, 1908 [the "CPC"], is again fallacious. Section 115 of the....
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....ion is to provide a continuing framework for the legitimate exercise of governmental power and, when joined by a Bill or Charter of Rights, for the unremitting protection of individual rights and liberties. Once enacted, its provisions cannot easily be repealed or amended. It must, therefore, be capable of growth and development over time to meet new social, political and historical realities often unimagined by its framers. The judiciary is the guardian of the Constitution and must, in interpreting its provisions, bear these considerations in mind." This quote has been cited in Rameshwar Prasad (VI) v. Union of India, (2006) 2 SCC 1 (at pages 91,92). 45. "Purposive construction" of statutes, relevant in the present context, is referred to in a recent concurring judgment by Nariman, J. in Eera v. State (NCT of Delhi), (2017) 15 SCC 133, as the theory of "creative interpretation". However, even "creative interpretation" has its limits, which have been laid down in the aforesaid judgment as follows: - 139. A reading of the Act as a whole in the light of the Statement of Objects and Reasons thus makes it clear that the intention of the legislator was to focus on children, as common....
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....nt only for stamp duty purposes, and not taking into account sale deeds which would have reflected the proper market value of the land. Given the fact that the awards in all these cases are therefore perverse, the District Judge rightly interfered with the same. 48. There is no doubt that, as argued by Col. Balasubramanian, the arbitral award in these cases is given by a government servant appointed by the Central Government, the result being the rubber stamping of compensation awarded on a completely perverse basis. Given the fact that, in these petitions at least, the constitutional validity of the NH Amendment Act, 1997 has not been challenged, we must proceed on the basis that grave injustice would be done if we were to interfere on facts, set aside the awards and remand the matter to the very government servant who took into account depressed land values which were relevant for purposes of stamp duty only. It may be mentioned at this juncture that a limited challenge was made to Section 3J of the National Highways Act when it excluded the provisions of the Land Acquisition Act in the context of solatium and interest not being granted under the National Highways Act. Thus, in ....
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....3D(2) of the National Highways Act (equivalent to Section 6 Land Acquisition Act) is made, the land vests absolutely in the Central Government free from all encumbrances. Thereafter, where land has vested in the Central Government and the amount determined by the competent authority under Section 3G as compensation has been deposited by the Central Government in accordance with Section 3H(1), the competent authority may then direct that possession be taken within 60 days of service of notice by it. 51. Also, injunctions against highway projects have now become impossible to obtain in view of Section 20A of the Specific Relief Act, which has been introduced w.e.f. 01.10.2018. The said provision reads as follows: 20A. Special provisions for contract relating to infrastructure project. - (1) No injunction shall be granted by a court in a suit under this Act involving a contract relating to an infrastructure project specified in the Schedule, where granting injunction would cause impediment or delay in the progress or completion of such infrastructure project. Explanation. -For the purposes of this section, section 20B and clause (ha) of section 41, the expression "infrastructure ....
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....id depending upon the public purpose involved or the statute involved. 55. Take the case of a single owner of land who has two parcels of land adjacent to each other. One parcel of land abuts the national highway, whereas the other parcel of land is at some distance from the national highway. Can it be said that the land which abuts the national highway, and which is acquired under the National Highways Act, will yield a compensation much lesser than the adjacent land which is acquired under the Land Acquisition Act only because in the former case, an award is by a government servant which cannot be challenged on merits, as opposed to an award made under Part III of the Land Acquisition Act by the reference Court with two appeals in which the merits of the award can be gone into? There can be no doubt that discrimination would be writ large in such cases. 56. As a matter of fact, 7 learned Judges of this Court in Nagpur Improvement Trust v. Vithal Rao, (1973) 1 SCC 500 held as follows: - 26. It is now well-settled that the State can make a reasonable classification for the purpose of legislation. It is equally well-settled that the classification in order to be reasonable must ....