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  • The Kerala HC, in the case of V.G.Thankamani and ors vs. National Highway Authority of India and ors. has held that non compliance with the principles of natural justice is a valid ground for setting aside an arbitral award and can be pleaded at any stage.
  • The instant appeal was preferred against the order of the Arbitrator. The appellants held lands which were along National Highway 47. 347 metres of their lands were acquired by the District Collector for widening the highway. The appellants claimed a compensation of 8 lakhs per cent. But, the land value that was fixed was only Rs.5,88,100 per acre. On objecting to the same, the matter was referred for arbitration.
  • The report that was called for by the arbitrator from the District Level Arbitration Committee recommended that the land value should be increased by 30%. This report was accepted by the Arbitrator and he passed an award enhancing the land value. This was challenged by the appellants in the lower court, but the court dismissed the same. Aggrieved, they filed an appeal before the HC.
  • One of the grievances raised by the appellants was that the Arbitrator appointed was the District Collector himself and he was also the Chairman of the Committee from which the report was called for.
  • Hence, it was contended by the appellants that the award was in violation of the principles of natural justice and also the public policy of India and was liable to be set aside.
  • The Hon’ble HC observed that even though the arbitration proceedings lack state sponsorship, they nevertheless adjudicate on matters which have a direct bearing upon the rights and liabilities of the parties. Therefore, it is vital that these proceedings comply with the principles of fairness and neutrality.
  • The Court also held that neutrality and independence of the Adjudicator forms the basis of the adjudicatory system and the same is also in compliance with the principles of natural justice.
  • It was also added by the Court that only an arbitrator who is fair, neutral , disinterested and equitable can be said to be an impartial adjudicator. This principle of neutrality is deeply embedded in the Indian jurisprudence and is hence a fundamental policy of Indian law.
  • Observing the fact that even though the District Collector may not be personally interested in the outcome of the proceedings, he cannot be said to be neutral and impartial.
  • Thus, by virtue of Section 34(2)(b) of the Act, the award in the instant case was liable to be set aside as it was in conflict with the public policy of India.
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