MP High Court Upholds Remand To Arbitrator In NHAI Land Compensation Case After He Ignored Land's Urban Status

The Madhya Pradesh High Court has upheld a district court's decision to send a land compensation dispute back to an arbitrator after finding that the arbitrator ignored that the land had already been declared urban before fixing compensation.

“The power of remand as held by the constitution bench permits the Court to send the award to the Tribunal for reconsideration of specific aspects and it is not an open ended process rather it is a limited power confined to limited circumstances and issues identified by the Court.” the court said.

The dispute arose after land was acquired for a highway project under the National Highways Act. The statutory arbitrator had upheld the compensation fixed by the Land Acquisition Officer, following which the land losers challenged the award before the district court.

The district court found an inherent defect in the award. It noted that the arbitrator had failed to consider a 2003 state government notification declaring the land to be within an urban area.

Based on this, the district court sent the matter back to the arbitrator for reconsideration on this limited issue.

Upholding this approach, the High Court relied on the Supreme Court's ruling in Gayatri Balasamy v ISC Novasoft Technologies Limited.

“It has been held by the Constitution bench that Section 34 (4) does not authorize the Arbitrary Tribunal to rewrite the award on merits or to set it aside but it serves as a curative mechanism available to the Tribunal when permitted by the Court. The primary objective is to preserve the award if the identified defect can be cured avoiding the need to set aside the award. ” the court noted.

“It has been held that a Court may not grant a remand when the defect in the award is inherently irreparable which means that in such cases the only available option would be to set aside the award,” it further observed.

Applying these principles, the High Court said the remand in the present case was limited to reconsideration of a specific aspect, namely the effect of the land being within a notified urban area prior to acquisition.

Finding no error in the district court's reasoning, the High Court dismissed the appeals and directed that the arbitration proceedings be concluded expeditiously.