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2016 DIGILAW 648 (GUJ)

National Highways Authority of India v. Competent Authority and Sub Divisional Magistrate

2016-03-22

AKIL ABDUL HAMID KURESHI, Z.K.SAIYED

body2016
JUDGMENT : Akil Abdul Hamid Kureshi, J. 1. The National Highways Authority of India ("NHAI" for short) has filed this petition challenging an order dated 23.1.2014 as at Annexure-P/1 to the petition passed by respondent No. 1 Competent Authority and Sub-Divisional Magistrate, Mount Abu. 2. Brief facts are as under. NHAI required certain private lands for widening the national highway near Sirohi. For such purpose, the land admeasuring 5283.20 sq. mtrs. of Khasra No. 1240 of village Santrampur belonging to respondent No. 2 came to be acquired by following the procedure provided under the National Highways Act, 1956 ("the said Act" for short). The competent authority appointed under the said Act passed an award on 24.7.2007 determining compensation of Rs. 20,26,671.39 payable to respondent No. 2 for such lands. It is undisputed that respondent No. 2 also received such compensation when the possession of the lands was taken over by the NHAI. Respondent No. 2 objecting to adequacy of compensation, preferred an application under section 3G(5) of the Act for enhancement before the arbitrator. After one round of remand, the competent authority passed its award on 13.5.2013, awarding revised compensation of Rs. 88,84,587.58 to respondent No. 2. In terms of the provisions of the said Act, it was open for NHAI to question such compensation. A reference was therefore, sought before the arbitrator. The arbitrator and the District Collector, Sirohi, by order dated 8.11.2003 rejected such application and thereby confirmed the compensation awarded by the competent authority. 3. Aggrieved by such arbitral award, the petitioner NHAI also filed application for setting aside the same under section 34 of the Arbitration and Conciliation Act, 1996, on 6.1.2014. 4. In the meantime, presumably at the instance of respondent No. 2, in order to seek recovery of the amount of compensation awarded by the competent authority, a communication dated 18.12.2013 was sent by the competent authority to NHAI asking the authorities to issue two cheques of Rs. 88,84,588/- and Rs. 11,66,807/- in favour of respondent No. 2 and the income-tax department towards the tax deduction at source respectively. The Project Director of NHAI however, refused to sign such cheques conveying under letter dated 28.12.2013 to the competent authority that NHAI has decided to challenge the award passed by the arbitrator. 5. 88,84,588/- and Rs. 11,66,807/- in favour of respondent No. 2 and the income-tax department towards the tax deduction at source respectively. The Project Director of NHAI however, refused to sign such cheques conveying under letter dated 28.12.2013 to the competent authority that NHAI has decided to challenge the award passed by the arbitrator. 5. Despite such facts, the competent authority passed the impugned order on 23.1.2014 in which it was recorded that respondent No. 2 herein had filed application for recovery since the amount of Rs. 88,84,588/- and Rs. 11,66,807/- was not paid despite directions contained in the order dated 18.12.2013 for complying with the directions of the arbitrator. Notice on such proceedings was issued and served to NHAI on 15.1.2014 under Order XXI Rule 22 of CPC, despite which, neither any reply was filed by NHAI nor anyone remained present before the competent authority. It was further recorded that the applicant claimant had approached for execution of the award of the arbitrator and for recovery of sum of Rs. 88,84,588/- by way of compensation and Rs. 11,66,807/- towards tax deduction at source. The competent authority therefore, ordered seizure of two bank accounts of NHAI namely, account No. 71201010007938 of Syndicate bank, Gandhidham branch and account No. 10500200000199 of Bank of Baroda, Mount Abu branch for sum of Rs. 88,84,588/- and Rs. 11,66,807/-. It was clarified that in addition to such sum if there is remaining amount in the account, it would be open for the NHAI to operate the account. If the balance in such account is lesser than such sum, all future deposits would be adjusted towards such seizure order. It is this order which NHAI has challenged in this petition. 6. Learned counsel Shri Maulik Nanavati for the petitioner contended that the competent authority had no power or jurisdiction to pass any such order. Our attention was drawn to the provisions contained in the said Act and the National Highways (Manner of Depositing the amount by the Central Government with the Competent Authority for Acquisition of Land) Rules 1998 (here-in-after referred to as "the said Rules of 1998") to contend that the competent authority acted as an executing Court, a power which he simply did not have. It is further pointed out that the award was passed by the arbitrator on 8.11.2013. It is further pointed out that the award was passed by the arbitrator on 8.11.2013. It was open for the petitioner to file proceedings under section 34 of the said Act within 90 days thereof. Long before such limitation period was over, the competent authority first issued directions on 18.12.2013 to issue cheques for recovery of compensation and thereafter, on 23.1.2014 ordered seizure of bank accounts thereby making the application of the petitioner under section 34 of the Act wholly redundant. He submitted that as per the Arbitration and Conciliation Act, 1996, as prevailing at the relevant time, upon filing of such application under section 34 of the said Act, the award would become non executable. 7. On the other hand, learned counsel Shri Mehul Shah for respondent No. 2 opposed the petition contending that NHAI has availed alternative remedies by filing recall application before the competent authority as well as by challenging the very same order before the District Court at Sirohi. Counsel further submitted that no part of the cause of action has arisen within the jurisdiction of this Court and that therefore, this writ petition is not maintainable. In this context, reliance was placed on the following decisions:- (1) Union of India and Others vs. Adani Exports Ltd. and Another, AIR 2002 SC 126 . (2) M/s. Kusum Ingots and Alloys Ltd. vs. Union of India and Another, AIR 2004 SC 2321 . (3) Alchemist Limited & Another vs. State Bank of India, AIR 2007 SC 1812 . 8. We may first consider the issue of petitioner having availed alternative remedy. It is true that soon after the order was passed by the competent authority, the petitioner had applied to competent authority for recall of the same order. Regarding the petitioner's proceedings before the District Collector, Sirohi for challenging the order of the competent authority, counsel Shri Nanavati clarified that such prayer is made in application under section 34 of the Arbitration and Conciliation Act filed by the petitioner challenging the award of the arbitrator. Whatever be the nature of such proceedings, when we are in the process of deciding this writ petition, which has already been admitted, we would not be deterred from doing so and instead direct the petitioner to abandon such proceedings irrespective of outcome of such petition, a formula to which learned counsel for the petitioner agreed. Whatever be the nature of such proceedings, when we are in the process of deciding this writ petition, which has already been admitted, we would not be deterred from doing so and instead direct the petitioner to abandon such proceedings irrespective of outcome of such petition, a formula to which learned counsel for the petitioner agreed. In other words, once this petition is disposed of, the incidental proceedings wherever pending, be it before the competent authority or the District Court in connection with seizure of the petitioner's bank account at Gandhidham, same would abate. 9. Coming to the question of territorial jurisdiction, we may recall that the competent authority had by the impugned order directed seizure of two bank accounts of the petitioner. One was in the Gandhidham branch of Syndicate bank, another was of the Mount Abu branch of Bank of Baroda. We are concerned with the former. We have noticed background leading to the competent authority passing such order. We may recall the competent authority had awarded enhanced compensation to respondent No. 2 upon the proceedings being remanded before the said authority by the arbitrator. This fresh award was challenged by NHAI before the arbitrator. Arbitration petition was dismissed. Long before the period of limitation for challenging such arbitral award in terms of section 34 of the Arbitration and Conciliation Act, 1996 was over, respondent No. 2 approached the competent authority and sought execution of the award as confirmed by the arbitrator. It was on this application that the competent authority passed the impugned order and seized the two bank accounts of the petitioner to the tune of Rs. 88,84,588/- and Rs. 11,66,807/-. 10. By amendment in the year 1976, clause (2) of Article 226 in the current form was introduced. It provides that power under clause (1) to issue directions, orders or writs to any Government authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories. From this clause, two things emerge. From this clause, two things emerge. First is that for ascertaining territorial jurisdiction, the question of cause of action arising either wholly or part would be relevant and second that the writs would have extra-territorial implication as long as either wholly or in part cause of action has arisen within the jurisdiction of such Court. In this context, it is stated often enough that even if a small part of the cause of action arises within its jurisdiction, it would be sufficient to vest the High Court with jurisdiction to issue the writ. It may be that considering the facts, the Court may refuse to exercise such jurisdiction on the ground of convenience. 11. In case of National Textile Corporation Ltd. and Others vs. Haribox Swalram and Others, (2004) 9 SCC 786 , it was reiterated that cause of action as understood in civil proceedings means every fact which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court. It is bundle of facts which taken with law applicable to them, gives the plaintiff a right to relief against the defendant. 12. In case of S. Subramaniam Balaji vs. State of Tamil Nadu and Others, (2013) SCC 659, the State of Tamil Nadu had raised an issue of jurisdiction stating that political parties are not State within the meaning of Article 12 of the Constitution of India and that they therefore, would not be amenable to writ jurisdiction under Articles 226 or 32 of the Constitution. Such objection was not raised before the High Court. The Supreme Court however, entertained such objection distinguishing the objection of jurisdiction on the matters relating to pecuniary jurisdiction and territorial jurisdiction where it was observed that such objection has to be taken at the earliest possible opportunity. These observations would suggest that even in context of territorial jurisdiction under Article 226 of the Constitution, the Court may insist on the requirement of raising such objection at the earlier point of time. This remark were made in the context of respondents not having filed a formal reply and taking up this contention at-least in writing before the writ petition was admitted. 13. This remark were made in the context of respondents not having filed a formal reply and taking up this contention at-least in writing before the writ petition was admitted. 13. Undoubtedly the effect of the order passed by the competent authority would be of seizing the bank accounts of the petitioner NHAI which is situated within the territorial jurisdiction of this Court. This is an essential, integral part of cause of action where direct and immediate effect of an order adverse to the petitioner is felt. It cannot be disputed that if the impugned order is allowed to operate, it would immediately have the extremely unpleasant consequences of the petitioner's bank account being seized and its bank balance to the tune of more than Rs. 88 lakhs frozen. In fact, the competent authority has provided that if the current bank balance is short of the decreetal amount, even the future deposits in such bank account would be adjusted towards the remaining limit. The objection of territorial jurisdiction needs to be rejected. 14. We may now refer to judgements cited by Shri Shah for respondent No. 2. (1) In case of Union of India and Others vs. Adani Exports Ltd. and Another (supra), the Supreme Court observed that merely the fact that the respondent was carrying on business of import and export at Ahmedabad would not vest jurisdiction to the Court since the issue pertained to Pass Book Scheme which was issued by the authority of Madras and the exports were also made from the said port. (2) In case of M/s. Kusum Ingots and Alloys Ltd. vs. Union of India and Another (supra), the Supreme Court observed that cause of action does not include entire bundle of facts pleaded but only material and integral facts. It was reiterated that accrual of even small fraction of cause of action within jurisdiction of the Court would confer the jurisdiction in such Court. It may however, not compel the High Court to decide the matter on merits and the Court may refuse the writ, invoking doctrine of forum convenient. (3) In case of Alchemist Limited & Another vs. State Bank of India (supra), the Supreme Court held that the expression cause of action has not been defined in the Constitution or Code of Civil Procedure. (3) In case of Alchemist Limited & Another vs. State Bank of India (supra), the Supreme Court held that the expression cause of action has not been defined in the Constitution or Code of Civil Procedure. It is however, described as bundle of essential facts necessary for the plaintiff to prove before he can succeed. 15. Coming to the merits of the case, we may refer to the relevant provisions of National Highways Act, 1956. Power to acquire land for construction of national highway flows from section 3A of the Act. Section 3D of the Act pertains to declaration of acquisition after following the procedure laid down in sections 3B and 3C. Section 3G of the Act pertains to determination of amount payable as compensation. In terms of sub-section (1) of section 3G where any land is acquired under the said Act, the compensation to be paid would be determined by the competent authority. Under sub-section (5) of section 3G if the amount determined by the competent authority by way of compensation is not acceptable to either of the parties, the same would be determined by the arbitrator to be appointed by the Central Government. Sub-section (6) of section 3G provides that subject to the provisions of the Act, the provisions of Arbitration and Conciliation Act 1996 shall apply to every arbitration under the Act of 1956. Sub-section (1) of section 3H provides that the amount determined under section 3G shall be deposited by the Central Government in such manner as may be laid down by rules made in this behalf by that Government with the competent authority before taking possession of the land. Section 3(I) vests certain powers of Civil Court in the competent authority, but such powers are confined to matters provided in clauses (a) to (e) of the section namely, summoning and enforcing the attendance of any person and examining him on oath; requiring the discovery and production of any document; reception of evidence on affidavits; requisitioning any public record from any Court or office; issuing commission for examination of witnesses. Section 9 of the Act pertains to rule making powers of the Central Government. In exercise of such powers, the Central Government has promulgated the National Highways (Manner of Depositing the amount by the Central Government with the Competent Authority for Acquisition of Land) Rules 1998. Section 9 of the Act pertains to rule making powers of the Central Government. In exercise of such powers, the Central Government has promulgated the National Highways (Manner of Depositing the amount by the Central Government with the Competent Authority for Acquisition of Land) Rules 1998. Rule 2 of the said Rules of 1998 provides that the existing agency authorised by the Central Government would deposit the amount determined under section 3G of the Act and where the amount determined by the arbitrator under section 3G is in excess of the amount determined by the competent authority, such excess amount together with interest, if awarded would be deposited before the competent authority through demand draft within seven days of such determination of the award passed by the arbitrator. 16. These are the only statutory provisions relevant for our purpose. From such provisions, it can be seen that neither under the Act of 1956 nor under the Rules of 1998, the competent authority has any power to execute his own award. He undoubtedly has under sub-section (1) of section 3G power to determine the compensation payable for acquisition of land. To aid him in carrying out such inquiry, section 3(I) vests him with limited power of Civil Court for specified purposes. Under the Rules of 1998, it is the duty of the Central Government to deposit the compensation awarded by the competent authority upon the award being passed. If the arbitrator grants higher compensation, the Government would also deposit additional amount with interest, if so provided, before the competent authority. None of these powers would include the power to execute the order passed by the competent authority. 17. The competent authority therefore, committed a serious error in acting as an executing authority, a power he simply did not possess. He in fact, proceeded to act as an executing officer in terms of the detail provisions of execution contained in the Code of Civil Procedure and froze the bank accounts of NHAI. This seizure of the bank account was simply outside his jurisdiction. 18. He in fact, proceeded to act as an executing officer in terms of the detail provisions of execution contained in the Code of Civil Procedure and froze the bank accounts of NHAI. This seizure of the bank account was simply outside his jurisdiction. 18. What makes the action of competent authority even more unacceptable is that soon after the award was passed by the arbitrator confirming the order of compensation passed by the competent authority, he entertained the application of the claimants and took coercive measures of recovery of the compensation though the time limit available to NHAI to challenge such award in terms of section 34 of the Arbitration and Conciliation Act, 1996 had not yet passed. 19. Under section 34(3) of the Arbitration and Conciliation Act, 1996, an aggrieved party would have three months from the date of receipt of a copy of the award to file application for setting aside the same. Under section 36 of the Act, as it then stood, provided that where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made has been refused, the award shall be enforced under the Code of Civil Procedure in the same manner as if it were a decree of the Court. Thus as the statutory provisions stood then, there was concept of arbitral award not being executable upon presentation of application to set aside the same under section 34(1) of the said Act, as long as the same was filed within the time and till such application was pending. Only after the expiry of period, without filing of such application or if application so filed, upon it being rejected, the award would have to be executed as if it was a decree of the Civil Court. Jettisoning all these provisions, the competent authority discarded the opposition from NHAI and proceeded to pass an order which was wholly without jurisdiction. 20. Under the circumstances, the petition is allowed. The order passed by the competent authority insofar as it pertains to ordering seizure of petitioner's bank account No. 71201010007938 of Syndicate bank, Gandhidham branch, is set aside. Petition is disposed of. 21. Nothing stated in this order would prevent the landowners from enforcing the award through proper mechanism.