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CASE NO.: Appeal (civil)  1531 of 1999

PETITIONER: Union of India

RESPONDENT: M/s. Banwari Lal & Sons(P) Ltd.

DATE OF JUDGMENT: 12/04/2004

BENCH: S.B. Sinha.

JUDGMENT: 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

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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  further opined: "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

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judgment and order proposed to be delivered by Brother Kapadia, J.