Court dismisses NHAI's appeal against arbitral award, reinforcing principles of limited judicial review under Arbitration and Conciliation Act, 1996.
In a significant ruling, the Division Bench of the Gujarat High Court, consisting of Chief Justice Sunita Agarwal and Justice D.N. Ray, dismissed the National Highway Authority of India's (NHAI) appeal against an arbitral award related to land compensation under the National Highways Act, 1956. The appeal, filed under Section 37 of the Arbitration and Conciliation Act, 1996, challenged the arbitral award on several grounds, including alleged illegality in the valuation methodology used.
The NHAI contended that the arbitrator, appointed under Section 3G(5) of the National Highways Act, employed an incorrect method by using the highest jantri value of the land and adding a 5% increment, which they argued was arbitrary and unsupported by statutory provisions. Moreover, the NHAI claimed that the award was unreasoned and ignored evidence presented by them.
The High Court, while rejecting the appeal, reiterated the limited scope of judicial interference in arbitral awards as delineated under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. The Court emphasized that reassessment of evidence or reappreciation of facts is not permissible. An arbitral award can only be set aside if it contravenes the fundamental policy of Indian law, justice, or morality, or suffers from patent illegality apparent on its face.
The judgment highlighted that objections based on procedural issues or valuation methodology fall within the exclusive domain of the Arbitrator. The use of jantri value, a government-prescribed guideline, was deemed a transparent and uniform approach, and not illegal or arbitrary.
The Court further observed that the District Collector, acting as the arbitrator, followed statutory guidelines in determining the market value, aligning with Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The High Court found no substantial proof that the arbitral process violated legal principles or statutory provisions.
In dismissing the appeal, the High Court upheld the ruling of the 6th Additional District Judge, Ahmedabad, who had previously rejected NHAI's application under Section 34 of the Arbitration and Conciliation Act, 1996. The judgment reinforces the principle that mere disagreement with an arbitral award's outcome or methodology does not suffice for judicial overturning unless it is demonstrably against the law or public policy.
Bottom line:-
Arbitration - Challenge to arbitral award - Limited scope of judicial interference under Section 34 and Section 37 of Arbitration and Conciliation Act, 1996 - Re-assessment of evidence and re-appreciation of facts not permissible - Arbitral award cannot be set aside unless it violates the fundamental policy of Indian law, justice, or morality, or suffers from patent illegality on its face.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 - Sections 34, 37, 31(3);
National Highways Act, 1956 - Section 3G(5);
Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - Section 26.
