The Kerala High Court in its hearing of a writ petition, ruled that if an arbitrator appointed by the Central Government refuses to entertain an application under Section 3G(5) of the National Highways Act, 1956, the Courts can entertain a petition under Article 226, but only to the extent of referring the dispute to arbitration.

The matter was heard by the division bench consisting of Justices A. Muhamed Mustaque and S. Manu.

Section 3G(5) imposes a statutory duty on the District Collector, acting as an arbitrator, to accept applications for the adjudication of disputes concerning the determination of compensation.

Case Brief:

A writ petition under Article 226 of the Constitution was filed by the Claimant to challenge an order issued by the District Collector, who serves as the statutory arbitrator under the National Highways Act. In the writ appeal, the Court observed that a writ petition is not maintainable when challenging an arbitral award.

The Court treated the order in question as an arbitral award and concluded that the matter being challenged was an award issued by the arbitrator under the National Highways Act.

The Court noted that the term 'award' is not comprehensively defined under the Arbitration and Conciliation Act (A&C Act). According to Section 2(1)(c) of the A&C Act, an arbitral award includes an interim award, and its meaning must be derived from the general principles of civil law. Additionally, Section 2(2) of the Code of Civil Procedure defines a 'decree' as a formal expression of adjudication that conclusively determines the rights of the parties.

In Janaki and Ors. v. V.R.S. Krishnan and Ors. [2024 (3) KHC 287] laid down essential characteristics of the decree which are as follows:

ii. The decision must have been on the right of the parties with regard to any matter in controversy in the suit.

iv. the decision of the Court formally expressed such controversy in the suit.

v. On determination, nothing left for the parties for future except by recourse to challenge by way of appeal or otherwise”

The Court observed that the arbitral proceedings began on the date when the respondent received a Section 21 notice requesting the dispute to be referred to arbitration. Any decision made before the commencement of the proceedings cannot be considered an award. The definition of a decree under the Code of Civil Procedure provides guidance on the types of decisions that can be classified as an award.

The Court stated that for a decision to be considered an award, there must be a commencement of arbitral proceedings. The award should be issued by the arbitrator following the required procedure, and it must resolve all or some of the issues in the proceedings. Furthermore, the award must either finally decide the matter in controversy or serve as an interim award.

The Court held that the decision of the District Collector, acting as an arbitrator, to refuse admission of the dispute referred for arbitration cannot be classified as an award, as it was made before the commencement of the arbitral proceedings. Since the Central Government has designated the District Collector as the arbitrator, if the District Collector refuses to entertain an application under Section 3G(5) of the National Highways Act, such a refusal can be challenged under Article 226 of the Constitution.

The Court further observed that the District Collector has a statutory obligation to receive applications under Section 3G(5) of the National Highways Act and adjudicate them in accordance with the procedure set out in the A&C Act. Essentially, if the arbitrator refuses to entertain an application under Section 3G(5), the Court can exercise its jurisdiction under Article 226 to the limited extent of directing the arbitrator to initiate the arbitral proceedings. Consequently, the Court referred the parties to arbitration.

Case Title: P.V. George v. National Highway Authority of India And Ors.

Case Number: RP No. 1088 of 2024 & 1117 of 2024 in WA No. 1600 of 2022

Counsel for the petitioner: Mr. T. Rajasekharan Nair Adv.

Counsel for the Respondent: Ms. Nisha Bose, Senior Government Pleader