Summary
Landowners whose land was acquired for a national highway obtained an enhanced compensation award from the arbitrator. NHAI challenged it under Section 34 of the Arbitration and Conciliation Act, 1996 without obtaining a stay. Instead of executing the award, the landowners filed a writ petition, and the High Court directed NHAI to deposit the whole amount with interest and allowed the landowners to withdraw 75%. The Supreme Court disapproved High Courts entertaining Article 226 petitions to execute arbitral awards, since the award-holder has an efficacious remedy in execution and the High Court would otherwise become an executing court. Following its order in Saraswatibai Chandrakant Shinde, it modified the directions instead of setting them aside.
Issues
- Whether a High Court should entertain a writ petition under Article 226 to enforce payment under an arbitral award for land compensation when the award is executable before the executing court
- What interim directions are appropriate where the award is under challenge under Section 34 without a stay
Provisions considered
- Article 226, Constitution of IndiaA writ petition seeking in substance to execute an arbitral award should not be entertained where execution proceedings are an efficacious alternative remedy. (¶¶ 6.1, 6.2, 7)
- Section 34, Arbitration and Conciliation Act, 1996With the Section 34 challenge pending, the District Court was asked to decide it within six months, and the balance compensation was linked to that outcome. (¶¶ 2, 7.1)
Held
- The reliefs sought, directing NHAI to deposit and pay the awarded compensation, were in substance execution of the arbitral award. (¶¶ 6, 6.1)
- Since the award is executable before the competent executing court, the landowners had an efficacious alternative remedy. The High Court should have relegated them to it instead of converting itself into an executing court under Article 226. Otherwise High Courts would be flooded with such petitions. (¶¶ 4.1, 6.2, 7)
- Though the High Court's order would have been set aside on this ground alone, consistently with the order in Saraswatibai Chandrakant Shinde, NHAI must deposit 50% of the awarded compensation with the executing court for unconditional release. The balance is payable as determined in the Section 34 proceedings. (¶ 7.1)
Result
Appeal disposed of; the High Court's order of 01.04.2022 was modified: NHAI to deposit 50% of the awarded compensation with the executing court within four weeks for unconditional release, the District Court to endeavour to decide the Section 34 proceedings within six months, and the balance as determined to be deposited within four weeks thereafter.