Government of Karnataka v. Gateway Hotels & Gateway Resorts Ltd. , Mumbai
2015-04-22
B.V.NAGARATHNA, SUBHRO KAMAL MUKHERJEE
body2015
DigiLaw.ai
JUDGMENT : Subhro Kamal Mukherjee, J. 1. This appeal is against the judgment and award dated 6th April, 2013, passed by the it learned District Judge, Kodagu, Madikeri, in A.C. No. 1/2009. 2. The admitted facts are that the Karnataka Forest Development Corporation decided to put up structures to provide boarding and lodging facilities to the tourists, who would visiting Murkal within the limits of Nagarahole National Park. 3. Tenders were invited. Tender of the respondent was accepted. The period of lease was fixed as 18 years and the lease amount was fixed at Rs. 424.75 lakhs. Admittedly, the lease was executed on 25th June, 1994 and in terms of the lease, structures were put up by the respondent. 4. According to the respondent, they had invested huge sum in making the structures. 5. It is not disputed that the lease was executed and in terms of the lease, respondent had constructed the structures in the area, which was leased out to it. 6. Learned Government Advocate submitted that there was a public interest litigation pointing out that the lease was executed by the Government in favour of the respondent without obtaining clearance under Section 2C of the Forest (Conservation) Act. Ultimately, a Division Bench of this Court granted liberty to the Karnataka Forest Development Corporation to approach the Central Government to obtain permission under Section 2C of the Forest (Conservation) Act. However, on 12th November, 1999, the Central Government finally declined to grant permission. 7. Therefore, respondent approached the Karnataka Forest Development Corporation for compensation for the investment. As the compensation was not paid and as there was an Arbitration Clause in the agreement of lease, Arbitrary Tribunal was constituted. After contest, arbitral award was passed in favour of the respondent for Rs. 10,02,40,000/-. The award was not challenged within 90 days from the date of award receiving the copy of the arbitral award. An application for condonation of delay was filed belatedly. The learned District Judge, in exercise of his discretion condoned the delay. However, on merits, the learned District Judge rejected the petition under Section 34 of the Arbitration and Conciliation Act, 1996. 8. We have sufficiently narrated the facts, which show that the respondent/the Karnataka Forest Development Corporation had leased out the property without obtaining permission from the Central Government under the Forest (Conservation) Act.
However, on merits, the learned District Judge rejected the petition under Section 34 of the Arbitration and Conciliation Act, 1996. 8. We have sufficiently narrated the facts, which show that the respondent/the Karnataka Forest Development Corporation had leased out the property without obtaining permission from the Central Government under the Forest (Conservation) Act. When the respondent has put up a huge construction pursuant to the lease granted by the said Corporation by investing huge sum, the respondent is entitled to compensation as the structures could not be put to use. They assessed the claim for Rs. 21,66,39,087/-, but the Arbitrator, upon consideration of the materials awarded only Rs. 10,02,40,000/-. In assessing such amount the Arbitrator did not apply any wrong legal test. 9. The scope of interference under Section 34 of the Arbitration and Conciliation Act, is very limited. The learned trial Judge, in our view, is correct in holding that no case is made out for setting aside of the award. We are of the same view as the one reached by the learned District Judge as the entire difficulty was created by the said Corporation by granting the lease and asking the respondent to put up structures without obtaining proper permission. 10. Consequently, the appeal is dismissed. We make no order as to costs. In view of the dismissal of the appeal, I.A. No. 1/2014 has become infructuous and is dismissed. Appeal dismissed.