Case Note & Summary
The National Highways Authority of India (NHAI) filed an appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996, challenging the judgment dated 06.01.2024 passed by the I Additional District and Sessions Judge, Mangaluru, in A.P.No.89/2022. The District Court had dismissed NHAI's petition under Section 34 of the Act, which sought to set aside an arbitral award dated 19.04.2022 passed by the Arbitrator and Deputy Commissioner, D.K. District, Mangalore (respondent No.2). The arbitral award enhanced the compensation for land acquired for widening of National Highway No.66 at Kotekar village from the initial offer to Rs.1,28,800/- per cent. The factual background involves a notification issued for acquiring land for the highway widening project. The claimant (respondent No.1) was dissatisfied with the compensation determined by the Special Land Acquisition Officer and sought arbitration. The arbitrator passed an award enhancing the compensation. NHAI challenged the award under Section 34, which was dismissed by the District Court. In the appeal, NHAI argued that the arbitrator had not considered the relevant material and that the award was contrary to the public policy of India. The High Court, after hearing both sides, held that the scope of interference under Section 37 is limited and that the appellate court does not sit as a court of appeal over the arbitral award. The court noted that the District Court had correctly applied the principles of Section 34 and found no patent illegality or perversity in the arbitral award. The High Court observed that the arbitrator had considered the evidence on record and the enhancement was based on relevant factors. Consequently, the appeal was dismissed, and the judgment of the District Court was upheld.
Headnote
A) Arbitration Law - Appeal under Section 37 - Scope of Interference - The court considered the scope of interference under Section 37 of the Arbitration and Conciliation Act, 1996 against a judgment dismissing a petition under Section 34 of the Act. Held that the appellate court does not sit as a court of appeal over the arbitral award and interference is limited to grounds of patent illegality or perversity. (Paras 4-6) B) Arbitration Law - Section 34 - Public Policy - The court examined the concept of 'public policy of India' under Section 34 of the Arbitration and Conciliation Act, 1996. Held that an award can be set aside only if it is contrary to the fundamental policy of Indian law, or is in conflict with the most basic notions of justice or morality. (Para 5) C) Land Acquisition - Compensation - Enhancement by Arbitrator - The court upheld the enhancement of compensation by the arbitrator from Rs.1,28,800/- per cent to Rs.1,28,800/- per cent (as per award) for land acquired for widening of National Highway No.66. Held that the arbitrator had considered relevant material and the award was not perverse. (Paras 7-8)
Issue of Consideration
Whether the judgment of the District Court dismissing the petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the arbitral award enhancing compensation for land acquisition, suffers from any infirmity warranting interference under Section 37 of the Act.
Final Decision
The High Court dismissed the appeal, upholding the judgment of the District Court and the arbitral award.
Law Points
- Section 37(1)(c) of Arbitration and Conciliation Act
- 1996
- Section 34 of Arbitration and Conciliation Act
- Public Policy of India
- Patent Illegality
- Perversity
- Land Acquisition Compensation
- National Highways Act
- 1956
