1. Heard Sri Pranjal Mehrotra, learned counsel for the appellant through video conferencing and Sri Shesh Kumar Srivastava, learned counsel for the respondent-claimant who is present in Court. Sri Gaurav Pundir, learned counsel is also present through video conference on behalf of a brother of respondent no.1. His impleadment application stands rejected by order dated 25.11.2020. Hence, he was not heard.
2. The present appeal is directed against the order dated 07.03.2020 passed by the District Judge, Mathura in Miscellaneous Arbitration Case No.35 of 2017, Bhartiya Rashtriya Rajmarg Pradhikaran Vs. Rajesh Kaushik & Others. By that order, the learned District Judge, Mathura has rejected the objection filed by the appellant under Section 34 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the 'Act'), as not maintainable. That objection had been filed against the award of the arbitrator dated 25.10.2016, referable to Section 3-G (5) of The National Highways Act, 1956 (hereinafter referred to as the 'Highways Act') - arising from the order dated 31.01.2013 passed by the 'competent authority'. Perusal of that order reveals, amongst others, compensation for the 3600 sq. mtrs land, plot no.332/1M belonging to the respondent had been determined. Being aggrieved, the respondents had invoked arbitration under Section 3-G (5) of the Highways Act. By that award, the learned arbitrator, directed the 'competent authority' under the 'Highways Act' to redetermine the amount of compensation under Section 3-G (1) of the Highways Act.
3. Sole submission advanced by learned counsel for the appellant is, though there was no defect in the arbitration proceedings thus instituted, however, the learned arbitrator has acted without jurisdiction in remitting the matter to the competent authority to redetermine the amount of compensation. Referring to Section 3-G (7) of the Highways Act and a Division Bench decision of this Court in Writ C No.8347 of 2018 (Rajiv Memorial Academy Welfare Society Vs. Union of India & 4 Others, it has been submitted that the only power vested with the arbitrator was to determine the amount of fair compensation. While doing so, the learned arbitrator had no power vested in him, either under the Highways Act or the Act - to act as an appeal court or to even otherwise pass an order to set aside the order of the competent authority and to remit the matter back for redetermination.
4. Then, referring to Section-34(2)(a)(iv) read with Section-34(2)(b)(ii) of the Act, it has been submitted that the award of the learned arbitrator to the extent, he has remitted the matter back for redetermination, is both outside the scope of implied reference and against the public policy of India.
5. On the contrary, learned counsel for the respondent-claimant submits, the competent authority had by order dated 31.01.2013 correctly valued 1200 sq. mtrs. out of the total area 3600 sq. mtrs, as non-agricultural land. The balance area 2400 sq. mtrs was undervalued as agricultural land. Hence arbitration had been sought. By his award dated 25.10.2016, the learned arbitrator has valued the 2400 sq. mtrs. land also as non-agricultural land with commercial potential. The rate of non-agricultural land being specified in the order dated 31.01.2013 passed by the competent authority, the total compensation amount may be paid out to the claimant, accordingly. It is his submission that nothing remains to be done by the competent authority and the respondent-claimant has already become entitled to payment at the enhanced rate. Accordingly, the learned District Judge has rightly rejected the objections filed against the award dated 25.10.2016.
6. Having heard learned counsel for the parties and having perused the record, there can be no two opinions about the scope of the proceedings before the arbitrator. Such proceedings arose purely in terms of the provision of Section 3-G (5) of the Highways Act. For ready reference, the said provision reads as below:
"(5) If the amount determined by the competent authority under sub-section (1) or sub-section (2) is not acceptable to either of the parties, the amount shall, on an application by either of the parties, be determined by the arbitrator to be appointed by the Central Government."
7. Thus, such arbitration may arise only at the instance of a party to whom the amount determined by the competent authority may not be acceptable. That party may apply for determination of the amount by the arbitrator and for no other purpose. The scope or terms of reference have been chosen or determined or limited by the legislature to determination of the amount payable to the claimant. In Ashok Leland Ltd. v. State of Tamil Nadu & Another, (2004) 3 SCC 1 it has been observed:
"94.The word "determination" must also be given its full effect, which presupposes application of mind and expression of the conclusion. It connotes the official determination and not a mere opinion of (sicor) finding".
8. Then the law recognises arbitration as a private dispute resolution mechanism agreed upon by the parties,P. Manohar Reddy & Bros.v.Maharashtra Krishna Valley Development Corpn.,(2009) 2 SCC 494.It is a binding voluntary alternative dispute resolution process by a private forum chosen by the parties, Indian Oil Corp. Ltd. & Others v. M/S Raja Transport (P) Ltd.,(2009) 8 SCC 520.Therein a final determination of a matter in dispute is made by the judgement of one, two or more persons, called the arbitrators/Arbitral Tribunal. The concept of any further or other proceeding to resolve the dispute that may be made a subject matter of reference to an arbitral tribunal, is an absolute anathema to the founding principle of arbitration. It is for that reason, that a limited scope of challenge exists against any award of arbitrator/s, under section 34 of the Act.
9. There is no provision or general principle in law, that may allow an arbitrator to act outside the scope or terms of his reference. An arbitrator to a dispute comes into existence upon an agreement between the parties to the dispute and his jurisdiction is confined to adjudicate the dispute brought by them. Arbitration under section 3-G (5) of the Highways Act is a proceeding to resolve the dispute between the parties to determine the fair amount of compensation, by the arbitrator. It is not a proceeding to judge the correctness of the order already passed by the competent authority.
10. While it may be true that in the conduct of such an arbitration proceeding, the order passed by the competent authority may come to be read in evidence, however, the subject matter of the arbitral proceedings under section 3-G (5) of the Highways Act would never be to uphold or to set-aside the existing order passed by the competent authority but to independently determine the amount of compensation payable to the claimant. It is possible that no enhancement may arise upon arbitration however, it would not, and it cannot amount to upholding the order of the competent authority.
11. Irrespective of the fate of the arbitration proceedings, the order of the competent authority would not merge in the award rather it would continue to exist, though its enforceability (as to quantum of compensation payable), may, in given facts be eclipsed by the arbitral award. It is so because, the terms of reference arise from the plain language of section 3-G (5) of the Highways Act. That provision of law would ever limit the scope of arbitration proceedings and command the arbitrator to himself determine the just amount of compensation.
12. Thus, in no event, the arbitrator may set aside the order passed by the competent authority and he may never remit the matter to the original/competent authority to pass a fresh order. Typically, that power is a power of a Court or Tribunal sitting in appeal or revision that too, if specifically granted by statute, and not implied. In absence of any such power given to the arbitrator either under the Highways Act or the Act, the direction issued by the arbitrator is a nullity in law.
13. Perusal of the order passed by the arbitrator again does not leave any manner of doubt that he has not determined the amount of compensation to be paid, since, he has neither mentioned the rate at which compensation may be awarded for 2400 sq. mtrs of land nor he has quantified the total compensation amount. In fact, he has specifically remitted the matter to the competent authority for that purpose. That direction clearly falls foul with Section 3-G (5) of the Highways Act.
14. Hence the award was open to challenge in terms of Section 34(2)(a)(iv) of the Act being beyond the scope of reference to arbitration and also under Section 34(2)(b)(ii) of the Act, being contrary to be public policy of India.
15. Therefore, the learned District Judge has erred in rejecting the objections raised by the appellant as not maintainable. The above conclusion is also fortified by the view taken by the Division Bench of this Court in Writ C No.8347 of 2018 (Rajiv Memorial Academy Welfare Society Vs. Union of India & 4 Others. Accordingly, the order dated 07.03.2020 cannot be sustained and it is set aside.
16. In absence of any other challenge raised in this appeal and in view of the language of the proviso to Section-34(2)(iv) of the Act, the newly appointed arbitrator may determine the compensation for the land in question on the same parameters as approved in the award dated 25.10.2016. For purpose of clarity, it is provided, it is only the direction of remand that is erroneous, however, the entire award has been set aside on account of peculiar limitation of the law.
17. The award of the arbitrator dated 31.01.2013 is also set aside with leave to the claimant-respondent to seek a fresh arbitration. That arbitration may be held between the appellant and the claimant respondent only. Such exercise may be completed, as expeditiously as possible, preferably within a period of three months from today. The amount that has been paid to the respondent-claimant pursuant to the earlier order passed in the present appeal may remain in deposit with him. It shall abide by the final computation made by the arbitrator, pursuant to this order.
18. With the above observations, the appeal is disposed of. No order as to costs.
Order Date :- 12.1.2021 S.Chaurasia