Arbitration Not Available Under WB Premises Requisition Act After Requisition Lapses: Calcutta High Court

The Calcutta High Court has recently refused to appoint an Arbitrator to determine compensation for the period from April 1, 1992 to January 12, 2023, during which the Kolkata Municipal Corporation (KMC) continued to occupy a private property after expiry of requisition, holding that once the requisition ended, the statutory arbitration mechanism under the West Bengal Premises Requisition and Control (Temporary Provision) Act, 1947, could no longer be invoked.

Dismissing the writ petition, Justice Hiranmay Bhattacharyya held that compensation for the period during which the State remained in possession “without any authority of law” cannot be fixed by an Arbitrator under Section 11(1)(b) of the 1947 Act.

“The rent compensation for a premises cannot be fixed by the Arbitrator under Section 11(1)(b) of the 1947 Act during the period the property continues to remain with the State without any authority of law,” the Court observed, concluding that “no direction can be passed upon the State Government to appoint an Arbitrator under Section 11(1)(b) of the 1947 Act for determination of compensation for the period from April 1, 1992 till January 12, 2023.”, it said.

The plea was dismissed without any order as to costs.

The case concerned premises at 2 Garstin Place, Kolkata, portions of which were requisitioned in 1965, 1979 and 1986 under the 1947 Act for use by KMC's election department. Though acquisition proceedings were initiated under Sections 4 and 6 of the Land Acquisition Act, 1894, they lapsed after no award was published within the time prescribed under Section 11A.

In earlier proceedings under Section 11 of the 1947 Act, a District Judge was appointed as Arbitrator by consent of the parties. By an award dated April 18, 2007, rent compensation was assessed from the date of requisition till July 27, 1989, along with interest at 9 per cent per annum on amounts remaining unpaid after 60 days from the date of the award.

Subsequently, by judgment and order dated August 10, 2018, a co-ordinate Bench recorded that after expiry of the extended period under the proviso to Section 10B at midnight on March 31, 1992, KMC's possession became “palpably wrongful and/or illegal.”

The State Government was directed to take steps relating to revision of compensation from that date until the property was acquired or, if no acquisition proceedings were initiated, to deliver physical possession to the owners.

Possession of the requisitioned portions was ultimately restored on January 13, 2023. The First Land Acquisition Collector thereafter assessed revised rent compensation in two phases covering April 1, 1992 to March 2019 and April 2019 to January 12, 2023. The owners recorded their dissatisfaction with the quantum but accepted the amounts “without prejudice” to their rights and contentions.

Contending that no agreement had been reached on the revised compensation, the owners approached the High Court under Article 226 seeking a writ of mandamus directing the State to appoint an Arbitrator under Section 11(1)(b) for determination of compensation for the period from April 1, 1992 till delivery of possession.

The Court looked at how the 1947 Act operates, noting that if the parties cannot agree on compensation while a property is under requisition, Section 11 permits the appointment of an Arbitrator to decide the amount. It also referred to Section 14A, which deals with how rent compensation may be revised.

Justice Bhattacharyya held that Section 11 applies to fixing compensation during the subsistence of requisition and framed the issue as whether an Arbitrator under Section 11(1)(b) could be appointed to determine compensation for a period when KMC remained in possession without authority of law after the expiry of the requisition.

Relying on the Supreme Court's decision in Punalur Paper Mills Ltd. v. W.B. Mineral Development Corporation (2021), the Court held that compensation for the period after requisition ended cannot be assessed by an Arbitrator under Section 11, which is confined to compensation “during the period of requisition.”

Applying that principle, the Court concluded that no direction could be passed upon the State Government to appoint an Arbitrator for the post-March 31, 1992 period.

The Court further noted that since compensation during the requisition period had already been fixed by the award dated April 18, 2007, any subsequent revision of rent compensation would have to be undertaken in accordance with Section 14A(3) and (4) of the 1947 Act.

There was no statutory basis to reopen the issue through a fresh round of arbitration for the period during which possession had already been declared wrongful and/or illegal.

Holding that the arbitration mechanism under Section 11 does not extend beyond the subsistence of requisition, the court refused to grant any relief.

For Petitioners (Aditya Almal & Anr.): Advocates Arijit Bardhan, Soumyajit Mishra, A. Mondal.

For Respondents (State Authorities): Advocates Noelle Banerjee, Swagata Ghosh.