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Appeal (civil) 1531 of 1999
Union of India
M/s. Banwari Lal & Sons(P) Ltd.
DATE OF JUDGMENT: 12/04/2004
J U D G M E N T
S.B. SINHA, J :
How the quantum of damages should be calculated by an arbitrator for
occupation of a property by the appellant herein pursuant to or in furtherance
of notification issued under the provisions of the Land Acquisition Act
which was declared illegal is the short question involved in this appeal.
The premise in question admeasuring 50,328 sq. ft. is situated at 6,
Ansari Road, Darya Ganj. It was requisitioned by Delhi Administration
under the provisions of Requisition and Acquisition of Immovable Property
Act, 1952. The said Act lapsed on 10th March, 1987. A notification was
issued under Section 4 of the Land Acquisition Act for acquisition of the
entire property on 6th March, 1987 whereafter a declaration purported to be
in terms of Sections 6 and 17 thereof was issued on 10th March, 1987. The
said notification was set aside by the High Court by a judgment dated
04.02.1991 on a writ petition filed by the Respondent herein.
The High Court while quashing the said acquisition proceeding
appointed Justice T.V.R. Tatachari as an arbitrator to determine the damages
payable by the Delhi Administration for occupation of the said property. It
is not in dispute that this Court while permitting the appellant to remain in
possession upto 31.03.1993 directed it to hand over vacant possession on or
before the said date. It was, however, clarified that the arbitrator appointed
by the High Court may give his award and file the same in the High Court
for appropriate orders.
Even if the contention of the appellant to the effect that its possession
in relation to property in question was not of a trespasser is not accepted;
what should be the reasonable amount of damages for occupation thereof
was the question required to be determined by the Arbitrator. The learned
Arbitrator posed unto himself a correct question when he said:
"It has to be remembered that the income a private
property would fetch by being let out, is not a
fixed and rigid figure, but would depend upon
various factors such as the need and urgency of the
lessee, the bargaining ability of the lessor, the
prevailing competition in the locality and the like."
The learned Arbitrator passed a reasoned award. Before the
Arbitrator parties adduced evidences. As many as 16 issues were framed by
the Arbitrator. The learned arbitrator was also required to determine a
question as regard status of the appellant herein vis-`-vis the said property
upon delivery of the judgment of the High Court dated 4.2.1991 declaring
the acquisition proceedings to be illegal on the ground that Section 17 of the
Land Acquisition Act could not have been taken recourse to.
It is now well settled that when a question of law is referred to the
arbitrator the award cannot be set aside only if a different view is possible.
However, it is also trite that if no specific question of law is referred, the
decision of the Arbitrator on that question would not be final, however much
it may be within his jurisdiction and indeed essential for him to decide the
question incidentally. Only in a case where specific question of law touching
upon the jurisdiction of the arbitrator was referred for determining his
jurisdiction by the parties, then the finding of the arbitrator on the said
question between the parties may be binding. (See Rajasthan State Mines &
Minerals Ltd. Vs. Eastern Engineering Enterprises and Another [(1999) 9
SCC 283] and Pure Helium India (P) Ltd. Vs. Oil & Natural Gas
Commission [(2003) 8 SCC 593])
It is also trite that where the award contains reasons, the same may be
interfered, inter alia, when it is based on a wrong proposition of law.
However, when the view of the arbitrator is a plausible one, the Court
would not normally interfere.
The questions raised in this appeal are required to be considered
keeping in view the aforementioned legal principles. Correct determination
of the quantum of damages by the arbitrator would depend upon application
of the correct principles therefor. The authorities on valuation of property
lay down such principles. It has not been shown that the learned Arbitrator
in determining the quantum of damages adopted any known or accepted
principle of valuation. Determination of quantum of damages would depend
upon the fact of the matter as also the terms of the contract and other
relevant factors. (See M.D. Army Welfare Housing Organisation Vs.
Sumangal Services Pvt. Ltd., 2003 (8) SCALE 424)
In Bharat Coking Coal Ltd. Vs. Annapurna Construction [(2003) 8
SCC 154], this Court in no uncertain terms held that the arbitrator cannot act
arbitrarily, irrationally, capriciously or independent of the contract. It was
"There lies a clear distinction between an error
within the jurisdiction and error in excess of
jurisdiction. Thus, the role of the arbitrator is to
arbitrate within the terms of the contract. He has
no power apart from what the parties have given
him under the contract. If he has travelled beyond
the contract, he would be acting without
jurisdiction, whereas if he has remained inside the
parameter of the contract, his award cannot be
questioned on the ground that it contains an error
apparent on the face of the records."
The decision of this Court in Bharat Coking Coal Ltd. (supra) was
followed in M/s. Sathyanarayana Brothers (P) Ltd. Vs. Tamil Nadu Water
Supply & Drainage Board [2003 (9) SCALE 769] where it was emphasised
that the arbitrator while making his award cannot ignore very material and
relevant documents relevant for determining the controversy so as to render
a just and fair decision.
It is further trite that an arbitrator cannot clothe himself with the
jurisdiction when it has none. As the learned Arbitrator did not adopt any known method of
valuation of the property, it must be held that while making the award he
applied a wrong principle of law and, thus, the same cannot be sustained.For the aforementioned reasons, I respectfully concur with the
judgment and order proposed to be delivered by Brother Kapadia, J.