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17 December 2021, Friday

2 years ago

It is patent illegality not to allow parties present their case to the expert appointed by the tribunal: Kerala High Court

9 November 2021| VGT Thankamani v. National Highway Authority of India | Arbitration Appeal No. 31 of 2016 | PB Suresh Kumar and CS Sudha JJ | Kerala High Court | 2021 SCC OnLine Ker 4096

In a case for acquisition of land for National Highway, since the compensation was not acceptable to the appellants, they preferred an application under the National Highways Act for determination of the compensation by the arbitrator appointed by the Central Government. The District Collector was the arbitrator. He called for a report on the value of the land from a District Level Arbitration Committee formed by the government. He was also the Chairman of that Committee. Later, he passed an award enhancing the land value as recommended by the Committee.

Still dissatisfied, the appellants applied to set the award aside under Section 34 ACA. The application was dismissed.

In an appeal under Section 37 ACA, several questions were considered.

First, when the arbitrator appoints an expert under Section 26 (1) (a) ACA, is it discretionary or mandatory to require the parties to give the expert any information or document relevant for the purpose of drawing up the report? The court answered:

  1. It is mandatory because if Section 26(1) ACA is not interpreted in that fashion, it would be unfair on the part of the arbitrator to rely on the report. Also, Section 19(3) ACA does not come in the way because that provision clarifies it would apply only subject to other provisions.

Second, whether non-compliance of the requirements in Section 26(1)(b) ACA is a ground to set aside an award? The court concluded, yes:

  1. The ground under Section 34(2)(a)(iii) ACA gets attracted also if a party was otherwise unable to present his case.
  2. This expression needs to be interpreted to include cases where the parties were not able to present their case before the expert appointed under Section 26(1)(a) ACA. Noncompliance of Section 26 (1) (b) would be patent illegality.

Could the report be acted upon? The court answered, no:

  1. The principle that a dispute shall be adjudicated only by a neutral and impartial adjudicator is a principle of natural justice which is deeply embedded in our jurisprudence. It is therefore a fundamental policy of Indian law.
  2. The contention that the objection was not raised earlier is without any substance. The point of violation of the principles of natural justice could be urged at any stage of the proceedings.

Read our Update on the Supreme Court’s M Hakeem here for a snapshot of the mechanism under the NH Act.

Read the judgment here.

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Categories: Application for Setting Aside Arbitral Award | Arbitration Appeals | Determination of Rules of Procedure | Expert Appointment by Arbitral Tribunal | Fair Hearing | Flexibility of Procedure | Fundamental Policy of Indian Law | Inability to Present Case | Independence and Impartiality of Arbitrator | Most Basic Notions of Morality or Justice | Natural Justice | Otherwise Unable to Present His Case | Patent Illegality | Procedure in Arbitration | Proper Notice | Public Policy of India | Rules of Procedure | Section 19 ACA | Section 26 ACA | Section 34 (2) (a) (iii) ACA | Section 34 ACA | Section 37 ACA

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