Appointing Arbitrator U/S 3(G)(5) Of National Highways Act Does Not Constitute Seat Of Arbitration, Is Rather A Convenient Venue: MP High Court

While holding so the Court highlighted the difference between ordinary arbitral proceedings arising out of a commercial contractual agreement where parties normally agree to a seat as opposed to statutory arbitrations such as the one mandated by NH Act where there is no contractual agreement and no seat or venue has been decided by the parties.

Facts

Th lands of the Respondents were included in acquisition on 18.09.2021 as per Section 3(D) of the NH Act. The Gazette Notification – Extraordinary was published and the scheduled land, thereafter vested in the Central Government free from all encumbrances. On 15.01.2013 an award was passed by SDO-cum-Competent Authority Land Acquisition, National Highway No. 3, Tehsil Kolaras District Shivpuri as provided under Section 3(G)(1), NH Act.

Aggrieved by the aforesaid award, an application under Section 3(G)(5), NH Act was preferred by the Respondents before the Arbitrator-cum-Divisional Commissioner, Division Gwalior on 07.05.2014 for enhancement of compensation amount. On 05.12.2016, Arbitrator-cum-Divisional Commissioner, Division Gwalior passed an award whereby the application preferred by the Respondents was dismissed.

Aggrieved by the said dismissal, on 22.07.2017 an application under Section 34, ACA was preferred by the Respondents before the learned District Judge, Shivpuri which was thereafter transferred to 4^th Additional District Judge, Shivpuri. On 13.09.2021, an order was passed by the 4^th Additional District Judge, Shivpuri whereby the application preferred by the Respondents was allowed and the award dated 05.12.2016 passed by the Arbitrator-Cum-Divisional Commissioner, Gwalior Division was set aside. Being aggrieved by the aforesaid order, the present appeals have been filed.

Contentions

The Counsel for the Appellant argued that the order dated 13.09.2021 passed by 4^th Additional District Judge, Shivpuri was without jurisdiction since as per the notification of Central Government, Commissioner Gwalior Division was notified to be an Arbitrator and both parties had participated in the arbitration proceedings before the Commissioner, Gwalior Division, the seat as well as venue of arbitration proceedings, thus can be said to be at Gwalior, therefore, application for setting aside the award under Section 34, ACA would lie before principal seat of original jurisdiction at Gwalior and not at Shivpuri where the lands were situated.

It was submitted that since the Courts at Shivpuri lacked jurisdiction, the objections heard and allowed by the Court at Shivpuri being per se illegal deserves to be quashed and at the most, Respondents can be directed to file objections before the Courts at Gwalior.

The Counsel for the Respondent submitted that the arbitration which took place between the parties was not an arbitration arising out of a commercial contractual agreement but was a statutory arbitration mandated by the provisions of NH Act and the arbitrator was appointed by the Central Government, thus, when there was no contractual agreement, no seat of arbitration or venue of arbitration can be said to have been decided with the express approval of both the parties, therefore, mere appointment of Commissioner, Gwalior would not construe that it is the seat of arbitration .

Thus, it was submitted that in a case where no arbitration agreement exists and where the cause of action arose at various places, all such places will have jurisdiction to hear the case under Section 34, ACA and as the lands in question were situated at Shivpuri, the objections were rightly filed before the Court at Shivpuri and therefore are well within jurisdiction.

It was also argued that the award has been set aside but the matter has not been remanded back which has left the Respondent remediless since application under Section 11, ACA has been excluded to the arbitration carried out pursuant to Section 3(G)(5), NH Act and therefore, no application further can be moved by the present Respondents to appoint another arbitrator, therefore, remand is the only option in the present factual scenario.

Observations

Th Court observed that in view of the settled position of law, where it is found on the facts of a particular case that either no “seat” is designated by agreement or the so called “seat” is only a convenient “venue”, then there may be several courts where a part of the cause of action arose that may have jurisdiction.

The Court held that in arbitration proceedings relating to NH Act, the parties are not governed by an agreement to regulate the process of arbitration. Under the NH Act, the arbitration is not initiated based on an agreement entered into between the contracting parties under a contract but it is under a statutory provision which provides for such arbitration in lieu of 'reference' under the regime for acquisition of land for public purpose. The Court highlighted that arbitration proceedings under NH Act are not based on a contract providing for mutual obligations but for determination of 'just compensation' in respect of land compulsorily acquired for public purpose.

The Court observed that under Section 3G(5), NH Act Central Government is authorized to appoint an arbitrator in case, the amount determined by the competent authority is not acceptable to either of the parties and it is in this context that the Central Government appointed Commissioner, Gwalior Division as an Arbitrator. Thus, the said appointment cannot be said to be a seat of the Arbitrator rather would be a convenient venue and therefore courts where a part of cause of action had arisen will also have jurisdiction.

On the facts of the case, the Court observed that since the earliest application was made to the Court at Shivpuri where a part of cause of action had arisen, the court at Shivpuri would be the exclusive court under Section 42, ACA which would have control over the arbitration proceedings.

Thus, the Court concluded that wherever there is an express designation of a 'venue', the inexorable conclusion would be that the stated venue is actually the juridical seat of the arbitral proceeding, but here only the Commissioner, Gwalior Division had been appointed as an Arbitrator by the Central Government without there being any express designation of the venue at Gwalior. Thus, it can very well be said that Gwalior was chosen as a venue by the Commissioner, Gwalior Division to conduct arbitration proceeding and this would not amount to Gwalior being the juridical seat of the arbitration proceedings. Therefore, there was no juridical error on the part of the 4^th Additional District Judge, Shivpuri in entertaining the Section 34 application.

As far as the contention of the Respondent that they would be left remediless is concerned, the Court placed reliance on the judgment of the Hon'ble Supreme Court in P Nagaraju alias Cheluvaiah & Anr (2022) 15 SCC 1, that while the Court in a Section 34 petition cannot modify the award but in appropriate cases, it can set aside the award and remit it back to the arbitrator. Thus, the Court remitted the matter to Arbitrator to decide it afresh.

Case Title – National Highways Authority of India v. Dinesh Singh & Others

Case No. – Arbitration Appeal Nos. 99, 100, 101, 103, 105, 106, 107 of 2021

Appearance-

For Petitioner - Shri Ashish Saraswat

For Respondent - Shri Deependra Singh Raghuvanshi

Date – 07.05.2025

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