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Judgment
Soumen Sen, C.J.
Challenging the award passed by the learned Arbitrator, the appellant filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 (the 1996 Act) before the learned II Additional District Judge, Kozhikode. By an order dated 02 June, 2025, the learned Judge dismissed the said application. The said order is under challenge in this appeal.
The limited issue on which we need to deliberate is whether the learned Arbitrator has decided the compensation amount in accordance with law.
While the National Highway Authority of India (the NHAI) has relied upon the “Detailed Valuation Method” as the basis for determining compensation, the appellant/claimant has relied upon the “Plinth Area Valuation Method”. These two competing claims were required to be adjudicated and decided by the learned Arbitrator in the arbitral proceedings. However, the learned Arbitrator disposed of the reference with the following observations:
“Under Section 31 of Arbitration and Conciliation Act 1996 and Section 3G(7) of NH Act 1956. I here by order that
It is understood that the mode of valuation, that is, the Plinth Area Valuation or the Detailed Valuation Statement is resorted based on convenience. Any direction that is received to follow the plinth area valuation is vide a DO letter number PWD-H3/09/202-PWD dated 08.01.2021 by the Secretary to the Government, Public works Department. There is no written intimation or direction seen from the higher officers prior to 08.01.2021. This being so, it can be assumed that the method of calculation is the discretion of the CALA and not to be decided in arbitration.
It is also understood, from the report of the CALA, that the market value of the land is determined in accordance with the provisions contained in Section 26 subsection (b) of RFCTLARR Act 2013 and is reasonable.
Hence I am satisfied with the compensation awarded earlier by the CALA as per section 3G(7) of NH Act 1956. The case for further enhancement has not been substantiated and the compensation awarded earlier is confirmed.”
The learned counsel for the appellant has drawn our attention to the judgment of the learned Single Judge in W.P.(C) No.19127 of 2022 dated 14 June, 2022. In Paragraph 5 thereof, it appears that the writ petitioner namely, the appellant/claimant herein was directed to prefer appropriate application before the first respondent under Section 3G of the National Highways Act, 1956 (the NH Act). The appellant was also directed to file an application before the first respondent under Section 17 of the 1996 Act seeking reliefs of valuation of the building and that of the land.
Prior thereto, it appears that another learned Single Judge, by judgment dated 9 September 2021 in W.P. (C) Nos.13131 and 12598 of 2021, made the following observations:
“At this time Sri.Ramesh Nambisan – learned counsel for the petitioners intervened to say that, in fact, prior to the impugned valuations, ‘Plinth Area' valuation had been done earlier, but that it had been subsequently jettisoned. However, Sri.Mathews K.Philip - learned Standing Counsel for the NHAI, contested this by saying that there were errors in the first valuation, thus constraining the CALA to conduct second valuation adopting the ‘Detailed Valuation Method’.”
The subsequent order was a sequel to the aforesaid order. The order of the learned Arbitrator makes it clear that the learned Arbitrator has completely abdicated his power in assessing the compensation, as it refers to a circular issued by the Government Department. The learned Arbitrator was of the view that as there has been no written intimation or direction seen from the higher officers prior 08.01.2021, he would be bound by the said Circular. The learned Arbitrator has failed to realize that he is not a subordinate officer while discharging his functions as an Arbitrator. There is a manifest error on the face of the award and a failure to exercise his discretionary jurisdiction.
In view thereof, the appeal is allowed, the award is set aside and consequently, the impugned order passed by the learned II Additional District Judge, Kozhikode, is also set aside.
The learned counsel for the NHAI has submitted that in view of the aforesaid order fresh proceedings would be initiated under Section 3G(5) of the NH Act.
In view of the fact that the matter has been pending for a long time, we direct the appointment of an Arbitrator at the earliest and further direct the Arbitrator to conclude the proceedings expeditiously.