Case Title: National Highways Authority of India V. P.Nagaraju @ Cheluvaiah
The Supreme Court noted that a Court cannot amend the arbitrator's judgement under Sections 34 or 37 of the Arbitration and Conciliation Act.
The bench made up of Justices Indira Banerjee and AS Bopanna stated that the option would be to revoke the judgement and remand the case.
The National Highways Authority of India (NHAI) has appealed the High Court of Karnataka's decision in Bengaluru, which had maintained the awards made by the Deputy Commissioner and Arbitrator of National Highway 275 (Land Acquisition) and the Deputy Commissioner-1 and Arbitrator of Bengaluru Urban District. By the aforementioned rulings, the respective Arbitrators increased the compensation from what the Special Land Acquisition Officer (SLAO for short) had set at Rs. 2026 per square metre and Rs. 17,200 per square metre to Rs. 15,400 per square metre and Rs. 25,800 per square metre, respectively.
One of the arguments made in this appeal was that since the Arbitrator, in recalculating the compensation, took into account the guideline value as provided under the notification dated 28.03.2016 issued by the Department of Stamps and Registration, which is notably the market value fixed on a date after the acquisition notification dated 01.02.2016, the award made by the Arbitrator is ex-facie incorrect and amounts to patent illegality. Two additional issues were raised in this appeal: (1) whether the Arbitrator gave proper consideration to applying the market value designated as a guideline value under the notification dated 28.03.2016, and (2) whether the way the said guideline was taken into consideration deprived the NHAI of an opportunity and violated principles of natural justice as incorporated under Section 28. Whether the guideline value determined for "City Greens" and "Zunadu" being applied automatically to the subject land was justified and whether the learned Arbitrator has indicated sufficient reasons to place such reliance because the failure to assign reasons or engage in the discussion would also constitute patent illegality in violation of Section 31(3) of Act of 1996.
On the first point, the court decided that the Arbitrator had not clearly violated any laws by relying on the guideline value notice dated 28.03.2016 to determine the market value of the property acquired under the preliminary notification dated 01.02.2016. Regarding the other arguments, the court noted that the Arbitrator had not provided sufficient justification for his decision to unanimously approve the value of Rs. 15,400 per square metre set in respect of lands in a pattern that was specifically included in the announcement. The court also noted that the arbitrator had not provided enough justification, which would have made the award made by the knowledgeable arbitrator clearly unconstitutional and in violation of Sections 28(2) and 31(3) of Act, 1996. The bench, therefore, allowed the appeal by observing this:
"That being the fact situation and also the position of law being clear that it would not be open for the court in the proceedings under Section 34 or in the appeal under Section 37 to modify the award, the appropriate course to be adopted in such event is to set aside the award and remit the matter to the learned Arbitrator in terms of Section 34(4) to keep in view these aspects of the matter and even if the notification dated 28.03.2016 relied upon is justified since we have indicated that the same could be relied upon, the further aspects with regard to the appropriate market value fixed under the said notification for the lands which is the subject matter of the acquisition or comparable lands is to be made based on appropriate evidence available before it and on assigning reasons for the conclusion to be reached by the learned Arbitrator. In that regard, all contentions of the parties are left open to be put forth before the learned Arbitrator."