The Madras High Court allowed the respondents to seek withdrawal of the deposited amount while the challenge to their arbitral award was being considered
DATED: 25.08.2023
CORAM :THE HON’BLE MR.SANJAY V.GANGAPURWALA, CHIEF JUSTICE AND
THE HON’BLE MR.JUSTICE P.D.AUDIKESAVALU
W.A.Nos.1672, 1676, 1681, 1686 and 1687 of 2023
Introduction:
This case revolves around appeals filed under Clause 15 of the Letters Patent against orders of the learned Single Judge in writ petitions related to compensation disbursement as per an arbitral award. The appellants are the National Highways Authority of India (NHAI) and the respondents are landowners seeking enhanced compensation for land acquisition for a national highway project. The dispute involves the question of whether the writ petitions are maintainable and whether the compensation should be deposited pending an arbitration challenge.
Background: The appellants acquired land for a national highway project and an arbitrator determined the compensation amount. The respondents, landowners, filed writ petitions seeking directions for the appellants to deposit the enhanced compensation as per the arbitral award. The appellants challenged the maintainability of the writ petitions, arguing that the respondents could resort to execution proceedings under Section 36 of the Arbitration and Conciliation Act, 1996 (the Act).
Key Arguments:
The appellants contended that the writ petitions should not have been entertained as an alternative remedy for execution existed under Section 36 of the Act. They further argued that the arbitral award’s merits should be considered by the court where the challenge under Section 34 of the Act was pending. The appellants claimed that the award was not registered due to administrative reasons and sought a fair assessment of their contentions.
The respondents argued that they had the right to seek payment of the enhanced compensation as per the award. They relied on a previous Division Bench judgment where similar writ petitions were held maintainable. They highlighted that the appellants had already paid the enhanced compensation to other claimants, suggesting selective treatment.
Court Proceedings:
The court began by acknowledging the respondents’ right to execution proceedings under Section 36 of the Act. However, it refrained from commenting on the merits of the arbitral award since its challenge was pending before the District Judge.
Court’s Decision:
While recognizing the respondents’ desire to receive enhanced compensation, the court found that the appellant’s challenge to the arbitral award’s validity needed consideration. In the interest of justice and equity, the court passed the following orders:
1. The appellants were directed to transfer 50% of the enhanced compensation already deposited to the concerned District Judge’s court where the challenge under Section 34 of the Act was pending.
2. The original petitioners (respondents) were granted the liberty to apply for withdrawal of the deposited amount, subject to the District Judge’s decision.
3. The appellants were allowed to seek further orders on their stay petition before the District Judge.
4. Depending on the District Judge’s order on withdrawal and stay, steps could be taken regarding the deposited amount.
5. The District Judge was urged to expedite the decision on the application under Section 34 of the Act.
Conclusion:
This case highlights the balancing act that courts often engage in when dealing with matters of alternative remedies, equitable distribution of compensation, and the pendency of arbitration challenges. The court recognized the importance of both parties’ interests and attempted to provide a fair solution. By allowing the respondents to seek withdrawal of the deposited amount while the challenge to the arbitral award was being considered, the court upheld justice and ensured that neither party was unduly disadvantaged. This case emphasizes the courts’ role in maintaining a fair and efficient legal process while addressing the complexities of arbitration and compensation issues.
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Written by- Shreeya S Shekar