not under sec. 300 but under sec. 304 IPC = the ingredients of murder as explained in Section 300 of the IPC are missing in this case. The intention of Tularam was to cause bodily injury to Bhadri Lodhi and piercing the chest of Bhadri Lodhi with a spear was such an injury that could possibly cause his death. This knowledge must be attributed to Tularam. 15. Under the circumstances, the conviction of Tularam of an offence punishable under Section 302 of the IPC is set aside but he is convicted of an offence punishable under the second part of Section 304 of the IPC. The appellant has been behind bars for almost 14 years. His sentence is altered to the period of incarceration he has already undergone. He be released forthwith.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.663 OF 2018
(ARISING OUT OF S.L.P. (CRIMINAL) NO.7483 OF 2017)
Tularam …..Appellant
versus
The State of Madhya Pradesh …..Respondent
JUDGMENT
Madan B. Lokur, J.
1. Leave granted.
2. The appellant Tularam was accused and convicted of having
committed the murder of Bhadri Lodhi during an altercation that took
place on 9th June, 2002.
3. On that date, a quarrel took place between Ramnath and Raju at
about 6 p.m. in the flourmill of Ramnath. The details of this quarrel are
not available on record but it appears that subsequently at about 7.30 p.m.
after Ramnath closed his flourmill and was returning home, he was
accosted by Raju. A quarrel again ensued between the two and in the
midst of that quarrel, they were joined by Bipatlal Lodhi, the grandfather
Crl. A. No.663 of 2018 (@SLP (Crl.) No.7483 of 2017) page 1 of 6
of Raju who came with a lathi, Santu, the nephew of Ramnath and Bhadri
Lodhi, brother of Ramnath. The quarrel escalated into the altercation and
these persons were joined by Tularam, uncle of Raju who came with a
ballam (this is a wooden or bamboo stick with a spear attached at the
end). Another person Sakharam (also an accused but not before us)
joined the fray carrying a lathi. During the course of the altercation
which turned violent, Tularam pierced Bhadri Lodhi with the ballam on
the left side of his chest and he fell down. Bhadri Lodhi was thereafter
taken home where he was declared dead.
4. Some other persons involved in the altercation sustained injuries
including Sakharam who was accused of having dealt a lathi blows on
Santu.
5. During the trial that took place as a result of the altercation and the
death of Bhadri Lodhi, the prosecution examined several eye witnesses
including Ramnath (PW1), Maltibai (PW-3), Mahasingh (PW-5), Shanta
Bai (PW-7), Singh Singh Gond (PW-8) Jogi Lodhi PW-10) and Hori Lal
(PW-11). Each of these witnesses confirmed the altercation and the fact
that Tularam had pierced Bhadri Lodhi on the left side of the chest with a
ballam. The injuries were confirmed after an autopsy by Dr. S.N.
Bhaskar (PW17) and the post mortem report is Exh.P.32. This shows one
penetrating wound having a size of 3” x ½” x ¼” on the left 5th intercostal
Crl. A. No.663 of 2018 (@SLP (Crl.) No.7483 of 2017) page 2 of 6
space, medial to left nipple.
6. On these broad facts of which there is no dispute, Tularam was
convicted of an offence punishable under Section 302 of the Indian Penal
Code for having murdered Bhadri Lodhi.
7. We have gone through the record of the Trial Court as well as of
the High Court and the only limited issue before us is whether Tularam
had the intention of causing the death of Bhadri Lodhi.
8. Section 299 of the IPC explains culpable homicide as causing
death by doing an act with the intention of causing death, or with the
intention of causing such bodily injury as is likely to cause death, or with
the knowledge that the act complained of is likely to cause death. The
first two categories require the intention to cause death or the likelihood
of causing death while the third category confines itself to the knowledge
that the act complained of is likely to cause death. On the facts of this
case, the offence of culpable homicide is clearly made out.
9. Section 300 of the IPC explains what is murder and it provides that
culpable homicide is murder if the act by which the death is caused is
done with the intention of causing death or the act complained of is so
imminently dangerous that it must in all probability cause death or “such
bodily injury as is likely to cause death.” There are some exceptions
when culpable homicide is not murder and we are concerned with
Crl. A. No.663 of 2018 (@SLP (Crl.) No.7483 of 2017) page 3 of 6
Exception 4 which reads:
“Exception 4. - Culpable homicide is not murder if it is
committed without premeditation in a sudden fight in the heat of
passion upon a sudden quarrel and without the offender having
taken undue advantage or acted in a cruel or unusual manner.”
Explanation. - It is immaterial in such cases which party offers
the provocation or commits the first assault.
10. Recently in Surain Singh v. State of Punjab1
it was observed that:
“The help of Exception 4 can be invoked if death is caused (a)
without premeditation, (b) in a sudden fight, (c) without the
offenders having taken undue advantage or acted in a cruel or
unusual manner, and (d) the fight must have been with the person
killed. To bring a case within Exception 4 all the ingredients
mentioned in it must be found. It is to be noted that the “fight”
occurring in Exception 4 to Section 300 IPC is not defined in
IPC……… A fight is a combat between two and more persons
whether with or without weapons. It is not possible to enunciate
any general rule as to what shall be deemed to be a sudden
quarrel. It is a question of fact and whether a quarrel is sudden or
not must necessarily depend upon the proved facts of each case.
For the application of Exception 4, it is not sufficient to show that
there was a sudden quarrel and there was no premeditation. It
must further be shown that the offender has not taken undue
advantage or acted in a cruel or unusual manner. The expression
“undue advantage” as used in the provision means “unfair
advantage”.
11. The facts of the present case indicate that all the ingredients of
Exception 4 to Section 300 of the IPC are present. The fight was sudden
and not premeditated (this is the finding of both the courts) and Tularam
is not found to have taken undue advantage of his carrying a ballam in the
sense of inflicting any other serious injury, except a contusion to
Ramnath. That being the position, it cannot be held that Tularam had the
intention to murder Bhadri Lodhi or to cause him such bodily injury as is
1 (2017) 5 SCC 796
Crl. A. No.663 of 2018 (@SLP (Crl.) No.7483 of 2017) page 4 of 6
likely to cause death.
12. Section 304 of the IPC provides the punishment for culpable
homicide not amounting to murder. Part I of this Section provides that if
the act by which death is caused is done with the intention of causing
death or causing such bodily injury as is likely to cause death then the
punishment may extend up to imprisonment for life. On the other hand,
Part II of Section 304 provides that if the offending act is done with the
knowledge that it is likely to cause death but without any intention to
cause death or to cause such bodily injury as is likely to cause death then
the punishment may extend to imprisonment for 10 years.
13. The intention to cause death must not be readily inferred. We are
afraid that both the Trial Court as well as the High Court have, on the
basis of the mere fact that Tularam pierced the chest of Bhadri Lodhi with
a ballam, assumed that he intended to cause the death of Bhadri Lodhi.
There is nothing on the record to suggest such an intention and none of
the witnesses have given any indication of Tularam’s intention to cause
the death of Bhadri Lodhi. It is quite clear that during the altercation
Tularam did pierce the chest of Bhadri Lodhi but the intention to kill him
is not apparent. However, Tularam must be attributed with the
knowledge that piercing the left side of the chest with a spear would
result in a bodily injury that is likely to cause death.
Crl. A. No.663 of 2018 (@SLP (Crl.) No.7483 of 2017) page 5 of 6
14. In view of the evidence on record, we are satisfied that the
ingredients of murder as explained in Section 300 of the IPC are missing
in this case. The intention of Tularam was to cause bodily injury to
Bhadri Lodhi and piercing the chest of Bhadri Lodhi with a spear was
such an injury that could possibly cause his death. This knowledge must
be attributed to Tularam.
15. Under the circumstances, the conviction of Tularam of an offence
punishable under Section 302 of the IPC is set aside but he is convicted
of an offence punishable under the second part of Section 304 of the IPC.
The appellant has been behind bars for almost 14 years. His sentence is
altered to the period of incarceration he has already undergone. He be
released forthwith.
16. The appeal is allowed in the aforesaid terms.
……………………J
 ( Madan B. Lokur )
New Delhi; ………………………J
May 2, 2018 ( Deepak Gupta )
Crl. A. No.663 of 2018 (@SLP (Crl.) No.7483 of 2017) page 6 of 6

The parties are bound by the terms and conditions agreed under the policy and the arbitration clause contained in it. It is not a case where mere allegation of fraud is leaned upon to avoid the arbitration. It is not a situation where a stand is taken that certain claims pertain to excepted matters and are, hence, not arbitrable. The language used in the second part is absolutely categorical and unequivocal inasmuch as it stipulates that it is clearly agreed and understood that no difference or disputes shall be referable to arbitration if the company has disputed or not accepted the liability. The High Court has fallen into grave error by expressing the opinion that there is incongruity between Part II and Part III. The said analysis runs counter to the principles laid down in the three-Judge Bench decision in The Vulcan Insurance Co. Ltd (supra). Therefore, the only remedy which the respondent can take recourse to is to institute a civil suit for mitigation of the grievances. If a civil suit is filed within two months hence, the benefit of Section 14 of the Limitation Act, 1963 will enure to its benefit.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2268 OF 2018
(@ S.L.P. (C) No. 33621 of 2017)
Oriental Insurance Company Limited Appellant (s)
VERSUS
M/s Narbheram Power and Steel Pvt. Ltd. Respondent(s)
J U D G M E N T
Dipak Misra, CJI.
The respondent – M/s Narbheram Power and Steel Pvt.
Ltd. – had entered into a Fire Industrial all Risk Policy No.
31150/11/2014/65 in respect of the factory situated on plot
Nos. 11 and 13, Gundichapada Industrial Estate, District –
Dhenkanal, Odisha. In October 2013, there was a cyclone
2
named as “Phailin” which affected large parts of the State of
Odisha. Because of the said cyclone, the respondent suffered
damages which it estimated at Rs. 3,93,36,224.00. An
intimation was given to the appellant-insurer and it appointed
one Ashok Chopra & Company as surveyor which visited the
factory premises on 20th and 21st November, 2013. A series of
correspondences were exchanged between the respondent and
the insurer. On 22.12.2014, the respondent commented on the
surveyor‟s report and requested the appellant to settle its
claim. As ultimately the claim was not settled, the respondent
sent a communication dated 21.01.2017 intimating the
appellant that it had invoked the arbitration agreement and
requested it to concur with the name of the arbitrator whom it
had nominated.
2. The appellant replied to the said letter repudiating the
claim made by the respondent and declined to refer the
disputes to arbitration between the parties. As the insurer
declined to accede to the request made by the respondent, it
filed an application under Section 11(6) of the Arbitration and
Conciliation Act, 1996 (for brevity, „the 1996 Act‟) for
appointment of an arbitrator so that he could, along with the
3
arbitrator nominated by the respondent, proceed to appoint a
presiding arbitrator to adjudicate the disputes and differences
that had arisen between the parties.
3. The said application was contested by the insurer and the
High Court, considering the language employed in Clause 13 of
the policy and the reasons advanced while repudiating the
claim of the claimant, appointed a retired Judge of the High
Court as arbitrator. The said order is under assail by way of
special leave in this appeal.
4. We have heard Mr. P.K. Seth, learned counsel for the
appellant and Mr. Sachin Datta, learned senior counsel for the
respondent.
5. Placing reliance on Clause 13 of the policy, it is urged by
the learned counsel for the appellant that once the claim was
repudiated and the insurer had disputed or not accepted the
liability under or in respect of the policy, no difference or
dispute could have been referred to arbitration. It is his
further submission that the High Court has adopted an
erroneous approach in the interpretation of the said Clause by
expressing the view that it suffers from ambiguity and it needs
to be purposively read failing which the arbitration clause
4
becomes meaningless. Reliance has been placed on the
decisions in General Assurance Society Ltd. v. Chandumull
Jain and another 1 , Oriental Insurance Co. Ltd. v.
Samayanallur Primary Agricultural Co-op. Bank 2 and
United India Insurance Co. Ltd. v. Harchand Rai Chandan
Lal3.
6. Learned senior counsel for the respondent, per contra,
would contend that the order passed by the High Court is
absolutely impregnable and in the obtaining factual matrix, the
view expressed by the High Court cannot be found fault with.
He would further urge that the letter of repudiation, when
appositely understood, does not relate to disputation and
non-acceptance of the liability under or in respect of the policy
but, in fact, amounts to denial of the claim that basically
pertains to the quantum. Learned counsel has drawn a
distinction between liability and refusal of the claim not having
been substantiated. To bolster the submissions, he has placed
reliance on The Vulcan Insurance Co. Ltd v. Maharaj Singh

1
AIR 1966 SC 1644
2
AIR 2000 SC 10
3
(2004) 8 SCC 644
5
and another 4 , Chloro Controls India Private Limited v.
Severn Trent Water Purification Inc. and others 5 , A.
Ayyasamy v. A. Paramasivam and others 6 , M/s. Jumbo
Bags Ltd v. M/s. The New India Assurance Co. Ltd7 and
Essar Steel India Limited v. The New India Assurance Co.
Ltd8.
7. To appreciate the rival submissions, it is necessary to
scan and scrutinize the arbitration clause, that is, Clause 13 of
the policy. The said Clause reads as follows:-
“13. If any dispute or difference shall arise as to
the quantum to be paid under this policy
(liability being otherwise admitted) such
difference shall independently of all questions
be referred to the decision of a sole arbitrator to
be appointed in writing by the parties to or if
they cannot agree upon a single arbitrator
within 30 days of any party invoking
arbitration, the same shall be referred to a
panel of three arbitrator, comprising of two
arbitrators, one to be appointed by each of the
parties to the dispute/difference and the third
arbitrator to be appointed by such two
arbitrators and arbitration shall be conducted
under and in accordance with the provisions of
the Arbitration and Conciliation Act, 1996.

4
(1976) 1 SCC 943
5
(2013) 1 SCC 641
6
(2016) 10 SCC 386
7
2016-2-L.W.769
8 MANU/MH/0542/2013
6
It is clearly agreed and understood that no
difference or dispute shall be referable to
arbitration as hereinbefore provided, if the
Company has disputed or not accepted liability
under or in respect of this policy.
It is hereby expressly stipulated and declared
that it shall be a condition precedent to any
right of action or suit upon this policy that the
award by such arbitrator/arbitrators of the
amount of the loss or damage shall be first
obtained.”
(Emphasis supplied)
8. When we carefully read the aforequoted Clause, it is quite
limpid that once the insurer disputes the liability under or in
respect of the policy, there can be no reference to the
arbitrator. It is contained in the second part of the Clause. The
third part of the Clause stipulates that before any right of
action or suit upon the policy is taken recourse to, prior award
of the arbitrator/arbitrators with regard to the amount of loss
or damage is a condition precedent. The High Court, as the
impugned order would show, has laid emphasis on the second
part and, on that basis, opined that the second part and third
part do not have harmony and, in fact, sound a discordant
note, for the scheme cannot be split into two parts, one to be
decided by the arbitration and the other in the suit.
7
9. Before we address the factum of repudiation and its
impact on the Clause, we think it appropriate to discuss the
authorities cited by the learned counsel for the parties. In
General Assurance Society Ltd. (supra), the Constitution
Bench, while dealing with the contract of insurance, has
opined that such a contract is entered into on the basis of
commercial transactions and while interpreting the documents
relating to a contract of insurance, the duty of the court is to
interpret the words in which the contract is expressed by the
parties because it is not for the court to make a new contract,
howsoever reasonable.
10. In Oriental Insurance Co. Ltd. (supra), a two-Judge
Bench has opined that insurance policy has to be construed
having reference only to the stipulations contained in it and no
artificial far-fetched meaning could be given to the words
appearing in it.
11. In United India Insurance Co. Ltd. (supra), the Court
has ruled that the terms of the policy shall govern the contract
between the parties and they are bound to abide by the
definitions given therein. That apart, the expression appearing
in the policy should be given interpretation with reference to
8
the terms of the policy and not with reference to the definitions
given in any other law because the parties have entered into
the contract with eyes wide open.
12. The aforesaid principles are in the realm of settled
position of law. The natural corollary of the said propositions
is that the parties are bound by the clauses enumerated in the
policy and the court does not transplant any equity to the same
by rewriting a clause. The Court can interpret such
stipulations in the agreement. It is because they relate to
commercial transactions and the principle of unconscionability
of the terms and conditions because of the lack of bargaining
power does not arise. The said principle comes into play in a
different sphere.
13. In this context, reference to the authority in Deep
Trading Company v. Indian Oil Corporation and others9,
would be instructive. A three-Judge Bench was dealing with
the right of the respondent No. 1 therein to appoint the
arbitrator after expiry of the time period. The Court referred to
Clause 29 of the agreement that provided for procedure for
appointment of the arbitrator. After referring to the authorities

9
(2013) 4 SCC 35
9
in Datar Switchgears Ltd. v. Tata Finance Ltd. and
another10 and Punj Lloyd Ltd. v. Petronet MHB Ltd.11, the
Court held:-
“19. If we apply the legal position exposited by this
Court in Datar Switchgears to the admitted facts, it
will be seen that the Corporation has forfeited its
right to appoint the arbitrator. It is so for the reason
that on 9-8-2004, the dealer called upon the
Corporation to appoint the arbitrator in accordance
with the terms of Clause 29 of the agreement but
that was not done till the dealer had made
application under Section 11(6) to the Chief Justice
of the Allahabad High Court for appointment of the
arbitrator. The appointment was made by the
Corporation only during the pendency of the
proceedings under Section 11(6). Such appointment
by the Corporation after forfeiture of its right is of no
consequence and has not disentitled the dealer to
seek appointment of the arbitrator by the Chief
Justice under Section 11(6). We answer the above
questions accordingly.”
14. In this regard, a reference to the authority in Newton
Engineering and Chemicals Limited v. Indian Oil
Corporation Limited and others12 is fruitful. In the said case,
there was an express, clear and unequivocal arbitration clause
between the parties which provided that disputes shall be
referred to the sole arbitration of the Executive Director

10 (2000) 8 SCC 151
11 (2006) 2 SCC 638
12 (2013) 4 SCC 44
10
(Northern Region) of the respondent Corporation and if the said
authority was unable or unwilling to act as the sole arbitrator,
the matters shall be referred to the person designated by such
ED (NR) in his place who is willing to act as the sole arbitrator.
The arbitration clause further provided that if none of them is
able to act as an arbitrator, no other person should act as a
sole arbitrator and if the office of the said authority ceases to
exist in the Corporation and the parties are unable to arrive at
any agreed solution, the arbitration clause would not survive
and has to be treated having worked its course. The Court,
interpreting the clause, expressed the view that in such a
situation, the Court has no power to appoint an arbitrator for
resolution of the disputes.
15. In The Vulcan Insurance Co. Ltd (supra), a three-Judge
Bench was interpreting Clauses 13, 18 and 19 of the policy
involved therein. For proper appreciation, we think it
appropriate to refer to the Clauses of the policy that arose for
consideration in the said authority. They read as follows:-
“13. If the claim be in any respect fraudulent, or if
any false declaration be made or used in support
thereof, or if any fraudulent means or devices are
used by the insured or anyone acting on his behalf
to obtain any benefit under this Policy; or, if the loss
11
or damage be occasioned by the wilful act, or with
the connivance of the insured; or, if the claim be
made and rejected and an action or suit be not
commenced within three months after such
rejection, or (in case of an arbitration taking place
in pursuance of the 18th condition of this Policy)
within three months after the Arbitrator or
Arbitrators or Umpire shall have made their award,
all benefit under this Policy shall be forfeited.
x x x
18. If any difference arises as to the amount of any
loss or damage such difference shall independently
of all other questions be referred to the decision of
an Arbitrator, to be appointed in writing by the
parties in difference, or, if they cannot agree upon a
single Arbitrator to the decision of two disinterested
persons as Arbitrators ....
* * *
And it is hereby expressly stipulated and declared
that it shall be a condition precedent to any right of
action or suit upon this policy that the award by
such Arbitrator, Arbitrators or Umpire of the
amount of the loss or damage if disputed shall be
first obtained.
19. In no case whatever shall the company be liable
for any loss or damage after the expiration of twelve
months from the happening of the loss or damage
unless the claim is the subject of pending action or
arbitration.”
In the said case, the company repudiated its liability to
pay any amount of loss or damage as claimed by the claimant.
The Court opined that the dispute raised by the company
appertained to its liability to pay any amount of damage
whatsoever and, therefore, the dispute raised by the appellant
12
company was not covered by the arbitration clause. The Court
scanned the anatomy of Clauses 13 and 18 and then referred
to the decision in Scott v. Avery13 naming the clause to be
Scott v. Avery clause and quoted a passage from Russel on
Arbitration which is to the following effect:-
“Even a clause of this type, however, is not absolute
in effect: where the court orders that the arbitration
agreement cease to have effect in relation to a
particular dispute, it has a discretion to order
further that the Scott v. Avery clause cease to have
effect too. (Vide pp. 57, 58 of Russel on Arbitration,
Eighteenth Edn.).
In the said case, reliance was placed on Viney v.
Bignold14 wherein it had been held that the determination of
the amount by arbitration was a condition precedent to the
right to recover on the policy and if any action was brought
without an award obtained in arbitration, it was not
maintainable. The other decision that was pressed into service
was Caledonian Insurance Company v. Andrew Gilmour15.
The Court commented that the said decision was dealing with a
case that contained a comprehensive arbitration clause and

13 (1856) 25 LJ Ex 308 : 5 HLC 811 : 4 WR 746
14 (1888) 20 QBD 171,172
15 1893 AC 85 : 9 TLR 146 : 57 JP 228
13
justified the applicability of Scott v. Avery as a bar to the
maintainability of action without an award.
16. The three-Judge Bench noted that in O’connor v.
Norwich Union Fire and Life Insurance Society 16 , the
decision in Viney v. Bignold (supra) was distinguished and
went on to reproduce a passage from Holmes, J.:-
“Now, if it was a term of the contract that a
difference of this kind was to be settled by
arbitration, I should not hesitate to stay the action
....
* * *
But there is no provision in the plaintiff‟s policy that
such a controversy as has arisen is to be referred to
arbitration. There is a carefully drawn clause, by
which it is agreed that the amount to be paid, as
distinguished from liablity to pay anything, is to be
settled by arbitrators, and that no action can be
commenced until they shall have determined such
amount. One result of this clause may be to render
two proceedings necessary where there is a dispute
as to the amount of the loss as well as a denial of all
liability; but this ought not to be a ground of
complaint to either of the parties who have made it
a term of the contract;”
After reproducing the said passage, the Court concurred
with the said view.

16 (1894) 2 Irish LR 723 : 28 Irish LT 95
14
17. Reliance was placed upon a few paragraphs of the Fifth
Edition of MacGillivray on Insurance Law by the learned
counsel for the respondent. The said passage reads thus:-
“There is a rule of law that parties cannot by their
private contract oust the jurisdiction of the court;
but it has been held that parties to a contract may
nevertheless agree that no cause of action shall
arise upon it until any matter in dispute between
them shall have been determined by arbitration and
then only upon the arbitrators‟ award.”
On behalf of the respondent, the following passage was
taken aid of:-
“As a rule, where the amount of the loss or damage
is the only matter which the parties refer to
arbitration, then if the insurers repudiate any
liability on the policy there is no obligation on the
assured to arbitrate as to the amount before
commencing an action on the policy.”
18. It is apt to mention here that the Bombay High Court in
Eagle Star and British Dominions Insurance Company v.
Dinanath and Hemraj17 had interpreted identical Clause 13.
The High Court had eventually ruled:-
“But in clause 13 there are various contingencies
set out which if established entitle the insured to
bring an action without an award having been made
by arbitrators. One of these contingencies is „if the
claim be made and rejected‟ which if established

17 ILR 47 Bom 509 : AIR 1923 249 : 25 Bom LR 164
15
gives a right of action, the period of limitation
provided for the suit being fixed at three months
from the date of the rejection. While it is also
provided that where arbitration takes place in
pursuance of Condition 18 of the policy, three
months‟ time should be allowed for a suit to be
brought after the award has been made. Therefore it
is quite obvious that a right of action accrued after
the company rejected the claim. Naturally that
question would have first to be decided by suit as
under clause 18 that question could never have
been referred to arbitration.”
This Court in The Vulcan Insurance Co. Ltd (supra)
approved the view of the Bombay High Court.
19. At this stage, we may state, in brief, the factual score in
The Vulcan Insurance Co. Ltd. case. In the said case, the
respondent therein had filed an application under Section 20 of
the Arbitration Act, 1940 in the Court at Muzaffarnagar in
Uttar Pradesh. As objection was taken to the jurisdiction of
that Court, the respondent re-filed it in the Delhi Court. The
trial court at Delhi dismissed the application holding that the
dispute arising out of the repudiation of the liability under
Clause 13 by the insurance company was within the scope of
the arbitration agreement contained in Clause 18 and a
reference to arbitration could be made, but, as per Cause 19,
the petition was barred by limitation. On an appeal being
16
preferred, the Delhi High Court reversed the judgment by
opining that Clause 18 was restricted to differences as to the
amount of loss or damage; that reference to arbitration was not
ousted and the arbitration clause covered the dispute even if
the insurance company had repudiated the claim in toto; that
the Arbitration Clause 18 was inoperative unless the conditions
contained in Clause 19 were satisfied; that the condition
mentioned therein was satisfied because the Respondent No. 1
had commenced the arbitration on the date when he issued the
notice dated October 1, 1963; and that his claim was the
subject of a pending arbitration within the meaning of
Clause 19. Being of this view, the High Court had allowed the
appeal. Dislodging the judgment of the High Court, this Court
ultimately held:-
“24. But in this case on a careful consideration of
the matter we have come to the definite conclusion
that the difference which arose between the parties
on the company‟s repudiation of the claim made by
Respondent 1 was not one to which the arbitration
clause applied and hence the arbitration agreement
could not be filed and no arbitrator could be
appointed under Section 20 of the Act. Respondent
1 was ill-advised to commence an action under
Section 20 instead of instituting a suit within three
months of the date of repudiation to establish the
company‟s liability.”
17
It is our obligation to mention here that though the
respondent has placed reliance upon the said authority, yet the
same does not assist him. On the contrary, it dispels the
perception of ambiguity in Part II and Part III of the arbitration
clause as perceived by the High Court. That apart, it throws
light on the issue of repudiation.
20. We may presently refer to the decision of the Madras High
Court in M/s. Jumbo Bags Ltd. (supra). In the said case,
learned Chief Justice was interpreting Clause 13 of the policy
conditions. Referring to The Vulcan Insurance Co. Ltd.
(supra), he has held thus:-
“The dispute which is not referable to arbitration,
being not covered by the clause cannot be over the
subject matter of arbitration, and the remedy of the
insured in this case is only to institute a suit.”
And again :-
“I am of the view that the remedy of arbitration is
not available to the petitioner herein in view of the
arbitration clause specifically excluding the mode of
adjudication of disputes by arbitration, where a
claim is repudiated in toto. The remedy would thus
only be of a civil suit in accordance with law.”
 We concur with the said view.
18
21. In Essar Steel India Limited (supra), the learned Single
Judge of the Bombay High Court was dealing with a situation
where the insurer had taken the stand that the policy was void
ab initio. Repelling the said stand, the learned Single Judge
held that the disputes could be referred to arbitration since the
plea advanced by the owner could be decided by the arbitrator.
We do not intend to dwell upon the correctness of the said
decision as the issue involved in the present case is quite
different.
22. In A. Ayyasamy (supra), a two-Judge Bench was
concerned with the issue as to whether the plea of fraud can be
adequately taken care of by the arbitrator. Sikri. J., analyzing
the facts, opined:-
“28. We, therefore, are of the opinion that the
allegations of purported fraud were not so serious
which cannot be taken care of by the arbitrator. The
courts below, therefore, fell in error in rejecting the
application of the appellant under Section 8 of the
Act. Reversing these judgments, we allow these
appeals and as a consequence, application filed by
the appellant under Section 8 in the suit is allowed
thereby relegating the parties to the arbitration.”
Chandrachud J., in his concurring opinion, after referring
to many an authority and literature in the field of arbitration,
came to hold:-
19
“53. The Arbitration and Conciliation Act, 1996,
should in my view be interpreted so as to bring in
line the principles underlying its interpretation in a
manner that is consistent with prevailing
approaches in the common law world.
Jurisprudence in India must evolve towards
strengthening the institutional efficacy of
arbitration. Deference to a forum chosen by parties
as a complete remedy for resolving all their claims is
but part of that evolution. Minimising the
intervention of courts is again a recognition of the
same principle.”
He has further held that the mere allegation of fraud in
the factual scenario was not sufficient to detract the parties
from the obligation to submit their disputes to arbitration
keeping in view the letter and spirit of the 1996 Act. The
decision, in our considered view, is not applicable to the case at
hand.
23. Though the learned counsel for the respondent has
referred to the case of Chloro Controls India Private Limited
(supra), yet the same need not be analyzed as it is not an
authority remotely relevant for deciding the lis in the present
case.
24. It does not need special emphasis that an arbitration
clause is required to be strictly construed. Any expression in
the clause must unequivocally express the intent of arbitration.
20
It can also lay the postulate in which situations the arbitration
clause cannot be given effect to. If a clause stipulates that
under certain circumstances there can be no arbitration, and
they are demonstrably clear then the controversy pertaining to
the appointment of arbitrator has to be put to rest.
25. In the instant case, Clause 13 categorically lays the
postulate that if the insurer has disputed or not accepted the
liability, no difference or dispute shall be referred to
arbitration. The thrust of the matter is whether the insurer has
disputed or not accepted the liability under or in respect of the
policy. The rejection of the claim of the respondent made vide
letter dated 26.12.2014 ascribes the following reasons:-
“1. Alleged loss of imported coal is clearly an
inventory shortage.
2. There was no actual loss of stock in process.
3. The damage to the sponge iron is due to inherent
vice.
4. The loss towards building/sheds etc. are
exaggerated to cover insured maintenance.
5. As there is no material damage thus business
interruption loss does not triggered.”
21
26. The aforesaid communication, submits the learned senior
counsel for the respondent, does not amount to denial of
liability under or in respect of the policy. On a reading of the
communication, we think, the disputation squarely comes
within Part II of Clause 13. The said Part of the Clause clearly
spells out that the parties have agreed and understood that no
differences and disputes shall be referable to arbitration if the
company has disputed or not accepted the liability. The
communication ascribes reasons for not accepting the claim at
all. It is nothing else but denial of liability by the insurer in
toto. It is not a disputation pertaining to quantum. In the
present case, we are not concerned with regard to whether the
policy was void or not as the same was not raised by the
insurer. The insurance-company has, on facts, repudiated the
claim by denying to accept the liability on the basis of the
aforesaid reasons. No inference can be drawn that there is
some kind of dispute with regard to quantification. It is a denial
to indemnify the loss as claimed by the respondent. Such a
situation, according to us, falls on all fours within the concept
of denial of disputes and non-acceptance of liability. It is not
one of the arbitration clauses which can be interpreted in a
22
way that denial of a claim would itself amount to dispute and,
therefore, it has to be referred to arbitration. The parties are
bound by the terms and conditions agreed under the policy and
the arbitration clause contained in it. It is not a case where
mere allegation of fraud is leaned upon to avoid the arbitration.
It is not a situation where a stand is taken that certain claims
pertain to excepted matters and are, hence, not arbitrable. The
language used in the second part is absolutely categorical and
unequivocal inasmuch as it stipulates that it is clearly agreed
and understood that no difference or disputes shall be referable
to arbitration if the company has disputed or not accepted the
liability. The High Court has fallen into grave error by
expressing the opinion that there is incongruity between Part II
and Part III. The said analysis runs counter to the principles
laid down in the three-Judge Bench decision in The Vulcan
Insurance Co. Ltd (supra). Therefore, the only remedy which
the respondent can take recourse to is to institute a civil suit
for mitigation of the grievances. If a civil suit is filed within two
months hence, the benefit of Section 14 of the Limitation Act,
1963 will enure to its benefit. 
23
27. In view of the aforesaid premised reasons, the appeal is
allowed and the order passed by the High Court is set aside. In
the facts and circumstances of the case, there shall be no order
as to costs.
 …………………………....CJI.
(Dipak Misra)
………………………….….J.
 (A.M. Khanwilkar)
……………………………..J.
(Dr. D.Y. Chandrachud)
New Delhi;
May 02, 2018

land compensation can be fixed basing on Potential of the land - Even though the valuation of the acquired land cannot be fixed as stated in those sale deeds, it could be fixed to its potential at the rate of Rs. 2,500/- per cent as compensation to the claimants.= Manimegalai .- Versus - The Special Tahsildar

1
 REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
 CIVIL APPEAL NOs. 2294-2295 OF 2011
Manimegalai .... Appellant(s)
Versus
The Special Tahsildar
(Land Acquisition Officer)
Adi Dravidar Welfare .... Respondent(s)
 J U D G M E N T
R.K. Agrawal, J.
1) The above appeals have been filed against the judgment
and order dated 06.11.2009 passed by the High Court of
Judicature at Madras in A.S. Nos. 88 and 601 of 2001 and
Cross Objection No. 27 of 2007 whereby learned single Judge
of the High Court allowed the appeal filed by the respondent
while dismissing the cross objection filed by the appellant
herein.
2
2) Brief facts:
(a) On 15.09.1993, the Government of Tamil Nadu, issued a
Notification under Section 4(1) of the Land Acquisition Act,
1894 (in short ‘the LA Act’) for acquisition of dry lands for the
purpose of providing house sites to 250 landless poor Adi
Dravidars in Acharapakkam Village, Madurandagam Taluk,
Chengai, MGR District, Madras, having an extent of 4.30.0
hectares or 10.62 acres.
(b) The lands belonging to the appellant herein in Survey
Nos. 300/2A2, 300/3, 302/1A, 302/4, 317/1B2, 302/2B2B
and 320/2C2 were part of the said acquisition. The Land
Acquisition Officer, after complying with the formalities
required in connection with the acquisition of land under the
LA Act, passed an Award dated 22.03.1995, determining a
sum of Rs. 400/- per cent as compensation to the appellant
herein.
(c) Being aggrieved by the meager compensation, a
Reference under Section 18 of the LA Act was sought, seeking
market value for the acquired lands at the rate of Rs. 20,000/-
3
per cent before the Subordinate Court, Madurantagam which
was filed as L.A.O.P. No. 120 of 1998. Learned subordinate
Judge, vide judgment and order dated 27.03.2000, granted
compensation at the rate of Rs. 2,500/- per cent together with
30% solatium and 12% additional amount from the date of
issue of Notification dated 15.09.1993.
(d) Respondent herein, being aggrieved by the judgment and
order dated 27.03.2000, filed A.S. No. 88 of 2001 before the
High Court. Learned single Judge of the High Court, vide
judgment and order dated 06.11.2009 allowed the appeal filed
by the respondent herein by reducing the amount of
compensation granted by learned subordinate Judge from Rs.
2,500/- to Rs. 1,670/- with solatium and other statutory
benefits.
(e) Aggrieved by the judgment and order dated 06.11.2009,
the appellant has filed these appeals by way of special leave
before this Court.
3) Heard Mr. V. Prabhakar, learned counsel for the
appellant. None appeared from the side of the respondent and
perused the records.
4
Point for consideration:-
4) Whether in the present facts and circumstances of the
case the decision of the High Court is just and reasonable in
reducing the compensation?
Rival submissions:-
5) Learned counsel for the appellant contended that the
compensation awarded for the acquired lands was grossly
inadequate and abnormally low and does not reflect the
correct market value of the said lands. He further contended
that the market value of the acquired lands at the relevant
time was not less than Rs. 20,000/- per cent. The potential
value of the acquired lands and rise in price were not
considered by the Land Acquisition Officer. Learned counsel
finally contended that the High Court also erred in law while
computing the market value of the lands in question and
interference by this Court is sought for in this regard.
6) It was the stand of the respondent before the courts
below that the entire land belonging to the claimant was not
acquired but a portion of it alone was acquired. The
5
remaining portion could be used by the claimant. Further, the
respondent is not entitled to pay compensation for the
unacquired land. It was further the stand of the respondent
that the compensation awarded to the claimant is already on
the higher side as compared to the compensation awarded to
the lands in vicinity and no interference is sought for by this
Court in this regard.
Discussion:-
7) The Government of Tamil Nadu issued a Notification for
the acquisition of dry lands, also known as punja lands, for
the purpose of providing house sites to the people. Certain
punja lands belonged to the appellant herein in Survey Nos.
300/2A2, 300/3, 302/1A, 302/4, 317/1B2, 302/2B2B and
320/2C2 were also part of the said acquisition. In the
proceedings before the Special Tahsildar, a notice inviting
objections was published in the village on 18.10.1993.
Subsequently, in the enquiry under Section 5A of the LA Act,
the appellant herein submitted her objections to the proposed
acquisition and contended inter-alia that her total holdings
were 6.11 acres and out of the same, an extent of 4.63 acres
6
had been acquired, thereby, leaving a balance of 1.48 acres
and the same would be rendered useless. Hence, she prayed
that even the said extent also be acquired. However, the
respondent herein affirmed the acquisition only in respect of
4.63 acres of land.
8) An Award enquiry was undertaken by the respondent
wherein appellant herein claimed compensation at the rate of
Rs. 20,000/- per cent for the land acquired. The respondent
herein, on the basis of a sale deed dated 15.04.1993, wherein
an extent of 0.26 acres had been sold in Survey No.
294/A/1-B 16, proceeded to determine the value of the land at
Rs. 400/- per cent. In pursuance of the same, the land
measuring 4.63 acres was awarded a sum of Rs. 1,85,200/-
along with 30% solatium to the tune of Rs. 55,560/- and 12%
additional market value to the tune of Rs. 33,540/- thus
totaling to Rs. 2,74,309/-. However, it was held that no
severance compensation would be payable.
9) Aggrieved by the Award, the appellant sought for a
Reference under Section 18 of the LA Act. The appellant thus
made a Reference to the Court of Additional Subordinate
7
Judge, Chengalpattu which was numbered as LAOP No. 54 of
1995. The appellant herein submitted her claim statement on
the file of LAOP No. 54 of 1995 contending that the
compensation awarded by the respondent was grossly
inadequate and abnormally low and did not reflect the correct
market value of the lands and that the correct market value of
the lands acquired was not less than Rs. 20,000/- per cent on
the date of the Notification and that the acquired lands were
situated in the midst of developed areas and is connecting the
major big areas in the vicinity. LAOP No. 54 of 1995, which
was pending on the file of learned Additional Subordinate
Judge, Chengalpattu was transferred to the file of learned
subordinate Judge, Madurantagam and re-numbered as LAOP
No. 120 of 1998. Vide judgment and order dated 27.03.2000,
learned subordinate Judge, granted compensation to the
appellant herein at the rate of Rs. 2,500/- per cent together
with 30% solatium, 12% additional amount from the date of
Notification which was reduced to Rs. 1,670/- per cent with
solatium and other statutory benefits by learned single Judge
8
of the High Court in appeal vide judgment and order dated
06.11.2009.
10) Since the acquired lands are situated in different survey
numbers, different quantum of compensation has been
awarded for the lands so acquired. The general principles
which have been followed in assessing the compensation
payable in all these matters are the location of the lands
sought to be acquired, their potential for development, their
proximity to areas which are already developed and the
exorbitant rise in the value of the lands over the years. In
some of the cases, the authorities have taken recourse to the
comparison method in regard to the sale transactions effected
in respect of similar land in the area under the notifications
close to the date of notification by which the lands of the
appellant were acquired. The courts have also taken recourse
to assessing the value of the lands for the purposes of
compensation on a uniform rate in respect of the lands
acquired, making a special concession in respect of the lands
which are close to the roads and national highways where a
certain amount of development had already taken place.
9
Therefore, value which has to be assessed is the value to the
owner who parts with his property and not the value to the
new owner who takes it over. Fair and reasonable
compensation means the price of a willing buyer which is to be
paid to the willing seller. Though the Act does not provide for
“just terms” or “just compensation”, but the market value is to
be assessed taking into consideration the use to which it is
being put on acquisition and whether the land has unusual or
unique features or potentialities.
11) Similarly, public purpose is not capable of precise
definition. Each case has to be considered in the light of the
purpose for which acquisition is sought for. It is to serve the
general interest of the community as opposed to the particular
interest of the individual. Public purpose broadly speaking
would include the purpose in which the general interest of the
society as opposed to the particular interest of the individual
is directly and vitally concerned. Generally the executive would
be the best judge to determine whether or not the impugned
purpose is a public purpose. Yet it is not beyond the purview
of judicial scrutiny. The interest of a section of the society may
10
be public purpose when it is benefited by the acquisition. The
acquisition in question must indicate that it was towards the
welfare of the people and not to benefit a private individual or
group of individuals joined collectively. Therefore, acquisition
for anything which is not for a public purpose cannot be done
compulsorily.
12) In the case at hand, it is a matter of record that the said
land is fit for using the same for house sites and situated
adjacent to the National highway and is also near to the busy
area with various facilities. During the course of proceeding,
various sale deeds of adjacent lands were brought to our
knowledge. It is also undisputed fact that the entire land
belonging to the appellant herein was not acquired but a
portion of it alone had been acquired. It is the grievance of the
appellant that the acquisition of land to the extent of 4.63
acres out of total holding of 6.11 acres, rendering the balance
land to be an uneconomical holding for the purpose of
continuing agriculture operations. There is no doubt that the
land owners have to suffer when their lands acquired under
11
the LA Act. Hence, they must be compensated properly in lieu
of their lands to do proper justice.
13) Since the point of consideration before this Court is
related to the amount of compensation, we confine ourselves
to that point only. Learned subordinate Judge, vide judgment
and order dated 27.03.2000 rightly held as under:-
“….There is a railway track in between the data land and
acquired land. Therefore, while considering on the said
angle, the nature of the acquired land and the data land are
not similar. On considering the plan marked on behalf of
the claimant and on behalf of the respondent i.e. Exh. B-2, it
is evident that acquired lands are situated in between the
national highway and railway track. The acquired lands are
nearer to the National highway. The respondent has
admitted in the cross examination that the acquired lands
are acquired for housing purpose, as it is fit for using as
housing plots. As the acquired lands are fit for housing
purpose, the claimants have relied on sale transactions that
are sold nearer to the acquired land, i.e. Exh. A-1, a sale
deed dated 20.11.1992 relating to land in S.No. 323, under
which 9374 sq ft. of land has been sold for Rs. 1,03,200/- at
the rate of Rs. 4,919/- per cent. Similarly, under the sale
deed dated 22.03.1993, an extent of 8 cents have been sold
for Rs. 39,150/- at the rate of Rs. 4,893/- per cent. Under
Exh. B-3 sale deed dated 09.07.1993 an extent of 3 ½ cents
in S.No. 326/1W2 and 325/1A4A have been sold for Rs.
22,900/- at the rate of Rs. 6,545/- per cent.
14) Learned subordinate Judge, further held as under:-
13) In Exh.B-4, an extent of 2 cents of land in S. No. 123 has
been sold for Rs. 4,752/-. The above sale transactions took
place prior to the notification issued under Section 4(1) but
the said transactions have been considered and rejected by
the respondents. The reason for rejecting Exh. B-3 is that
the land is a house site situated adjacent to the national
12
highway. While considering the reason for rejection is
acceptable or not, the respondents themselves have admitted
that the acquired lands are fit to be converted as house sites.
As the acquisition of land is for house sites, the non
acceptance of value of the house site and acceptance of the
value of agricultural land in S.No. 294, is not acceptable.
The sale deeds Exh.A-1 to A-4 submitted on behalf of the
claimant are relating to the lands in S.No. 323, 325 and 326,
situate adjacent to National Highway and the value of those
lands are more than Rs. 4,000/- per cent which has been
accepted by the government itself, as market value while
registering the document. As the government has accepted
Rs. 4,000/- per cent as market value, the valuation for the
acquired land at the rate of Rs. 400/- per cent is very low.
The acquired lands are situated 2 or 3 survey numbers away
from the lands relating to the survey numbers in Exh. A-1 to
A-4. Even though the valuation of the acquired land cannot
be fixed as stated in those sale deeds, it could be fixed to its
potential at the rate of Rs. 2,500/- per cent as compensation
to the claimants.”
15) An assessment of the compensation payable for land
acquired must take into account several factors, including the
nature of the land, its present use and its capacity for a higher
potential, its precise location in relation to adjoining land, the
use to which neighbouring land has been put to use, the
impact of such use on the land acquired, and so on. In the
case at hand, the respondent determined the value of the suit
land based on the sale deed dated 15.04.1993 under which 26
cents in S.No. 294/A/1-B16 had been sold at the rate of Rs.
400/- per cent which has happened five months prior to the
date of acquisition of the suit land and that land has been
13
taken as data land. Learned subordinate Judge very correctly
appreciated the fact that there is a railway track between the
data land and the acquired land and in that view of the
matter, both the lands cannot be considered as similar. It is
also evident that the acquired lands are in the midst of a
railway track and national highway having capacity for higher
potential. An extent of land in S.No. 323 which was adjacent
to the suit land was sold at the rate of Rs. 4,919/- per cent on
20.11.1992. Similarly, under the sale deed dated 22.03.1993,
an extent of 8 cents has been sold at the rate of Rs. 4,893/-
per cent. There is no doubt that the lands which are situated
adjacent to the main road will fetch good market value than
the lands which are situated beyond the road. Though learned
single Judge of the High Court was of the opinion that there
was no basis of granting Rs. 2,500/- per cent for the suit
lands, we are of the considered opinion that on the basis of the
alleged sale deeds which were done in the proximity within a
very short time amply prove its value in relation to the
adjoining lands. Learned subordinate Judge was right in
holding the potential value of the suit lands.
14
Conclusion:-
16) In view of the above discussion, we do not find any merit
in the order passed by learned single Judge of the High Court.
We set aside the order passed by the High Court dated
06.11.2009 and restore the order passed by the Reference
Court dated 27.03.2000. Consequently, Civil Appeal No. 2294
of 2011 arising out of A.S. No. 88 of 2001 before the High
Court is allowed and Civil Appeal No. 2295 of 2011 arising out
of Cross Objection No. 27 of 2007 before the High Court is
dismissed with no order as to costs.
...…………………………………J.
 (R.K. AGRAWAL)
…………….………………………J.
 (ABHAY MANOHAR SAPRE)
NEW DELHI;
APRIL 16, 2018. 

Arbitration and Conciliation Act - if the parties are not able to agree on the said procedure, or constitute the Arbitral Tribunal to their mutual satisfaction, either of the party has an option to route to an appropriate remedy under Section 11 of the Act, which provides detailed machinery for appointment of Arbitrator through judicial intervention. = IBI Consultancy India Private Limited- Versus - DSC Limited

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
 CIVIL ORIGINAL JURISDICTION
 ARBITRATION CASE (C) NO. 53 OF 2016
IBI Consultancy India Private Limited …Petitioner(s)
Versus
DSC Limited …Respondent(s)
WITH
 ARBITRATION CASE (C) NO. 63 OF 2016
 ARBITRATION CASE (C) NO. 54 OF 2016
 ARBITRATION CASE (C) NO. 57 OF 2016
 J U D G M E N T
R.K.Agrawal J.
1) The IBI Consultancy India Private Limited-the
petitioner-Company is the Indian subsidiary of the IBI Group
based in Canada. The above petitions, under Section 11(6)
read with Section 11(9) of the Arbitration and Conciliation Act,
1996 (hereinafter referred to as ‘the Act’), have been filed by
the petitioner-Company as well as by the IBI Group for
appointment of an Arbitrator to adjudicate the disputes that
2
have arisen between the parties in connection with the
contracts in question.
2) The petitioner-Company has filed two petitions for the
appointment of Arbitrator and its parent company viz., IBI
Group has also filed two petitions of the same nature. Since
the point of consideration is same in all these four petitions,
purpose would be served if we moot the case of either of the
petition and would be disposed off by this common judgment.
Arbitration Case No. 53 of 2016
3) The petitioner-Company is a multi-disciplinary company
engaged in the business of providing system integration and
maintenance service for Toll and Traffic Management Systems
whereas the DSC Limited, the respondent-Company is a
Company registered under the Companies Act, 1956 having
two subsidiary companies. First subsidiary Company of the
respondent-Company is the Lucknow Sitapur Expressway
Limited (LSEL) which is a special purpose vehicle (SPV) of the
respondent-Company and has signed a Concession Agreement
with the National Highways Authority of India (NHAI) for
developing Lucknow-Sitapur Highway Project (LSEL Project)
3
for widening the existing 2-Lane Road to 4-Lane dual
carriageway between Km 413.200 to Km 488.270 on NH-24 in
the State of Uttar Pradesh. Second subsidiary Company of the
respondent-Company is Raipur Expressway Limited (REL),
which is also a special purpose vehicle (SPV) of the
respondent-Company and has signed a Concession Agreement
with the NHAI for developing the Raipur-Aurang Highway
Project (REL Project) for widening the existing 2-lane Road to
4-Lane dual carriageway between Km 239 to Km 281 on NH-6
in the State of Chhattisgarh.
4) Vide e-mail dated 16.02.2010, the respondent-Company
sent a Request for Proposal (RFP) to the petitioner-Company,
inviting technical and commercial proposal for their LSEL and
REL Projects. Vide letter dated 07.06.2010, the
petitioner-Company had given a proposal to execute the
contract for installation, erection and commissioning of the
Toll Collection and Traffic Control Equipments at NH-24. The
respondent-Company, vide letter dated 14.06.2010, accepted
the said proposal. Pursuant thereto, a Contract Agreement
dated 30.08.2010 was executed between the parties. The
4
value of the Contract was mutually finalized at Rs.
1,55,20,700.00 in pursuance of the Contract Agreement. In
total, the IBI group and the petitioner-Company had entered
into 6 (six) separate contracts for the respective LSEL and REL
Projects with the respondent-Company.
5) During completion of the projects, the
respondent-Company defaulted in releasing the agreed
payment to the petitioner-Company and the IBI Group.
Though several verbal and written communication were
exchanged between the parties to this effect, the
respondent-Company could not release the outstanding
payment. On 06.09.2012, a legal notice was sent to the
respondent-Company by the IBI Group as well as by the
petitioner-Company for the recovery of outstanding payment
for all the contracts. Further, on 12.06.2013, a reminder for
outstanding payment was sent to the respondent-Company.
6) On 24.04.2014, a legal notice for invoking Arbitration
Clause and appointment of Arbitrators was sent to the
respondent-Company and the name of Mr. Debashish Moitra,
Advocate was suggested as a Sole Arbitrator, however, there
5
was no reply from the other side. The IBI Group and the
petitioner-herein filed petitions under Section 11 of the Act
before the High Court being Arbitration Petition Nos. 443, 448,
444 and 449 of 2014 before the High Court of Delhi at New
Delhi. Learned single Judge of the High Court, vide order
dated 24.02.2015, disposed of the petitions while holding that
since one of the parties to the petition is an entity incorporated
outside India, therefore, the arbitration of the dispute
involving such an entity would be an ‘international commercial
arbitration’ within the meaning of Section 2(1)(f) of the Act and
for seeking appointment of an Arbitrator in a dispute involving
such an entity, an application will have to be filed before the
Supreme Court under Section 11(9) of the Act. The petitioners
herein have therefore invoked the jurisdiction of this Court by
filing the above petitions.
7) The first and the foremost thing is the existence of an
arbitration agreement between the parties to the petition
under Section 11 of the Act and the existence of dispute(s) to
be referred to Arbitrator is condition precedent for appointing
an Arbitrator under Section 11 of the Act. It is also a well
6
settled law that while deciding the question of appointment of
Arbitrator, court has not to touch the merits of the case as it
may cause prejudice to the case of the parties. The scope
under Section 11(6) read with Section 11(9) is very limited to
the extent of appointment of Arbitrator. This Court has to see
whether there exists an Arbitration Agreement between the
parties and if the answer is affirmative then whether the
petitioner has made out a case for the appointment of
Arbitrator.
8) It is worth mentioning that the position after the
insertion of sub-Section 6(A) of Section 11 of the Act dated
23.10.2015 has been changed. The extent of examination is
now confined only to the existence of the Arbitration
Agreement. At this juncture, it is pertinent to set out Article-1
as well as Clause 3.14 of the Contract Agreement dated
30.08.2010 which are as under:-
7
“Article-1
Contract Documents
The following document shall constitute the Contract
between the client and the contractor, and each shall be
read and construed as an integral part of the Contract;
(i) This Contract Agreement and Appendices hereto
(ii) Letter or indent ref no. No LSEL/Tolling/IBI/HO-2 dated
14th June 2010…..”
“Clause 3.14
Arbitration (as mentioned in ref. No LSEL/Tolling/IBI/HO-1
dated 14th June 2010)
1. In the event of any dispute or difference arising out or
touching upon any of the terms and conditions of this
contract and /or in relation to the implementation or
interpretation hereof, the same shall be resolved initially by
mutual discussion and conciliation but in the event of failure
thereof, the same shall be referred to an independent
arbitrator mutually agreed by the two parties. The decision
of the arbitrator shall be final and binding upon the parties.
The arbitration shall be in Delhi and the arbitrator shall give
his award in accordance with “The Arbitration and
conciliation Act, 1996”.
2. In the event of arbitrator dying, neglected or refusing to
act or resigning or being unable to act for any reason or his
award being set aside by the court for any reason the parties
will mutually agree another to act as Arbitrator.
 (Emphasis supplied by us)”
9) On a careful perusal of Article-1 as well as Clause 3.14 of
the Contract dated 30.08.2010 along with the Letter of Indent
dated 14.06.2010, it is evident that the letter dated
14.06.2010 is a part of the Contract and it shall be read and
construed as an integral part of the Contract. Therefore, the
contention of the respondent-Company that there does not
8
exist any arbitration agreement between the parties is not
sustainable in the eyes of law. We are of the considered view
that Arbitration clause exists in the Contract and we hold this
point in favour of the petitioner-Company.
10) It is a cardinal principle of the Arbitration and
Conciliation Act that the parties are free to decide the number
of arbitrators, provided, it is an odd number, as well as the
procedure for appointing them. However, if the parties are not
able to agree on the said procedure, or constitute the Arbitral
Tribunal to their mutual satisfaction, either of the party has
an option to route to an appropriate remedy under Section 11
of the Act, which provides detailed machinery for appointment
of Arbitrator through judicial intervention.
11) Accordingly, Justice Amitava Roy, a former Judge of this
Court, is appointed as the sole Arbitrator to adjudicate the
disputes between the parties on such fees he may fix.
Nevertheless to say, the said appointment is subject to the
necessary disclosure being made under Section 12 of the Act
and the Arbitrator not being ineligible under Section 12(5) of
the Act. 
9
12) The petitions as well as interlocutory application, if any,
are disposed of accordingly.
..…………….………………………J.
 (R.K. AGRAWAL)
.…....…………………………………J.
 (S. ABDUL NAZEER)
NEW DELHI;
APRIL 16, 2018. 

a cut at the rate of 10 % is very reasonable towards development of acquired land = Mohammad Yusuf and Others Etc. Etc. - Versus- State of Haryana and Others.

 REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.3807-3825 OF 2018
(Arising out of Special Leave Petition (C) No. 35281-35299
OF 2016)
Mohammad Yusuf and Others Etc. Etc. .... Appellant(s)
Versus
State of Haryana and Others. .... Respondent(s)
WITH
CIVIL APPEAL No.3826 OF 2018
(Arising out of Special Leave Petition (C) No. 3585 OF 2017
AND
CIVIL APPEAL Nos. 3827-3859 OF 2018
(Arising out of Special Leave Petition (C) Nos. 4413-4445 OF 2017
J U D G M E N T
R.K.Agrawal,J
1) Leave granted.
2) The above appeals have been filed against the impugned
common judgment and order dated 03.06.2016 passed by
learned single Judge of the High Court of Punjab and Haryana
at Chandigarh in R.F.A. No. 6617 of 2012 (O&M) and other
1
connected matters whereby the High Court partly allowed the
appeal filed by the appellants herein while dismissing the
cross appeals of the respondent-State.
3) Brief Facts:-
(a) The Government of Haryana, Revenue Department, vide
Notification under Section 4 of the Land Acquisition Act, 1894
(hereinafter referred to as ‘the LA Act’) dated 18.10.2005 has
notified the land of Village Ferozpur Namak, Tehsil Nuh,
District Mewat for the construction of Mini Secretariat at
District Mewat, admeasuring 372 karnals 2 marlas (i.e. 46
acres 4 karnals and 2 marlas). Consequently, the Government
of Haryana, vide Notification dated 25.05.2006, issued
declaration that the land is required for a public purpose.
(b) Notice under Section 9 of the LA Act was issued to all the
landholders and interested persons. The Land Acquisition
Collector (LAC), Nuh, Mewat, vide Award No. 1 dated
05.11.2007 assessed the market value of the acquired land at
the uniform rate of Rs 16 lakhs per acre along with 30%
solatium and 12% additional amount to the landholders.
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(c) Being aggrieved, the appellants herein filed a Reference
under Section 18 of the LA Act which was registered as LA
Case No. 394/01.12.10/19.09.11 before the Land Acquisition
Collector-cum-SDO(C) Nuh, Mewat. On 28.08.2012, the
Reference Court, enhanced the compensation to Rs. 72,00,000
lakhs per acre and applied the development cut at the rate of
55% and a further cut of 5% on account of waiting period,
totaling to 60%. Thus, the compensation was determined at
Rs. 28,80,000/- per acre along with the statutory benefits.
(d) Being not satisfied, the appellants herein preferred a
Regular First Appeal (RFA) being No. 6617 of 2012 alongwith
other set of appeals before the High Court. Respondent-State
also filed cross appeals before the High Court. Learned single
Judge of the High Court, vide common judgment and order
dated 03.06.2016, partly allowed the appeals of the
landholders by enhancing the compensation to Rs. 64,80,000
per acre along with other benefits while dismissing the cross
appeals filed by the respondent-State.
3
(e) The landholders, being aggrieved by the judgment and
order dated 03.06.2016, has preferred these appeals by way of
special leave before this Court.
4) Heard Mr. R.S. Suri, learned senior counsel for the
appellants and Mr. P.S. Patwalia, learned senior counsel for
the respondent-State and perused the records.
Point(s) for consideration:-
5) The short point of consideration arises before this Court
is as to whether in the light of present facts and
circumstances of the case, any interference is sought for by
this Court?
Rival contentions:-
6) At the outset, learned senior counsel for the appellants
argued that the High court failed to consider that the land
acquired had great future potential for being developed as
residential as well as commercial area, hence, the
compensation ought to have been awarded accordingly.
Learned senior counsel further contended that the assessment
of the compensation has not been done considering the
following factors like potential value, location of land, future
4
prospects, the development of land in question and the likely
injury to be sustained by the appellants herein for loss of their
future earnings etc. It was also contended that the High Court
has not considered the facts that the acquired land has
immense potential which is situated at a distance of half
kilometers from the Nuh City, and also situated within 30 kms
from the cyber city and could be directly approachable from
Indira Gandhi International Airport, New Delhi.
7) Further, the Reference Court allowed a cut of 55% on
account of development for raising infrastructural activities
and other amenities and a cut of 5% on account of waiting
period which was reduced by the High Court to 10% which is
also not in accordance with law vis-à-vis the fact that the
acquired land has all the infrastructural facilities on the date
of Notification.
8) Per contra, learned senior counsel for the
respondent-State submitted that the High Court has rightly
determined the compensation while condoning the potentiality
of the area and also after having regard to the sale deeds of
adjoining areas and a cut of 10% on the assessed value of the
5
acquired land has been applied in accordance with law
vis-à-vis the fact that the acquired land has all the
infrastructural facilities on the date of Notification.
9) Learned senior counsel further submitted that the
compensation awarded is adequate in terms of principles
incorporated under Section 23 of the LA Act as also
interpreted by this Court in a catena of cases. Learned senior
counsel finally contended that the amount of compensation
has been awarded considering the factors like potential value
location of land, future prospects, the development of land in
question and the likely injury to be sustained by the
appellants, if any, and no interference is sought for by this
Court in the matter.
Discussion:-
10) The intention behind the enactment of the Land
Acquisition Act, 1894 was to acquire land for welfare purposes
and to compensate the owners adequately. It is well known
fact that the Right to Property is a Constitutional Right (earlier
it was a Fundamental Right until 1978) as provided under
Article 300 A of the Constitution of India. The term
6
“compensation” was interpreted by this Court in a number of
cases that it is to be “a just equivalent of what the owner has
been deprived of.” Hence, the acquisition must pass the test of
compensation being reasonable, just and fair. The term justice
as enshrined in the preamble includes justice in economic
terms and the term economic justice in itself mandatorily
requires compensation to be adequate.
11) In a catena of cases, this Court has held that
compensation should be adequate and there must be no
injustice with the land owners since they stand deprived from
their very vital right i.e., Right to Property. At the same time, it
is also to be kept in mind that no hypothetical view shall be
taken as it may be harmful to the public exchequer in case of
acquisition for public purposes. Hence, courts must maintain
balance between both the parties. In the cases of land
acquisitions, generally courts confronted with the short but
important question that what ought to be the ideal market
value for the acquired land. This Court, in Major General
Kapil Mehra and Ors. vs. Union of India & Anr. (2015) 2
SCC 262 while dealing with the matter held as under:-
7
“10. Market Value: First question that emerges is what would
be the reasonable market value which the acquired lands are
capable of fetching. While fixing the market value of the
acquired land, the Land Acquisition Officer is required to
keep in mind the following factors:- (i) existing geographical
situation of the land; (ii) existing use of the land; (iii) already
available advantages, like proximity to National or State
Highway or road and/or developed area and (iv) market value
of other land situated in the same locality/village/area or
adjacent or very near to the acquired land.”
12) For the purpose of deciding compensation of land in case
of acquisition, Section 23 of the LA Act is the fundamental
section which says that some vital factors to be considered
while determining compensation. At this juncture, it is
pertinent to re-produce the said section herein below:
23. Matters to be considered in determining
compensation.-(1) In determining the amount of
compensation to be awarded for land acquired under this
Act, this court shall take into considerationFirst,
the market value of the land at the date of the
publication of the notification under section 4,sub-section(1);
Secondly, the damage sustained by the person interested, by
reason of the taking of any standing crops or trees which
may be on the land at the time of the Collector’s taking
possession thereof;
Thirdly, the damage ( if any) sustained by the person
interested, at the time of the Collector’s taking possession of
the land, by reason of severing such land from his other
land;
Fourthly, the damage (if any) sustained by the person
interested, at the time of Collector’s taking possession of the
land ,by reason of the acquisition injuriously affecting his
other property, movable or immovable, in any other manner,
or his earnings;
8
Fifthly , if , in consequence of the acquisition of the land by
the Collector, the person interested is compelled to change
his residence or place of business, the reasonable expenses
(if any) incidental to such change; and
Sixthly, the damage (if any) Bonafide resulting from
diminution of the profits of the land between the time of the
publication of the declaration under section 6 and the time
of the Collector’s taking possession of the land.
13) On a plain reading of Section 23 of the LA Act, it is
evident that the compensation has to be calculated according
to the value of the land to the owner and the question to be
considered is whether the person from whom the land was
taken was to lose by having it taken from him. The probable
use to which the land might be put was necessarily an element
to be taken into consideration for calculating the
compensation of acquired land. The land owners get
compensation on the basis of the value of the land, in its
actual condition at the time of the publication of the
Notification under Section 4 of the LA Act.
14) In the instant case, the appellants contented and invited
our attention to the fact that the valuation of the acquired
land should be assessed on urban land criteria since land had
all basic amenities like water, sewer, electricity and telephone
9
lines were already present on the date of Notification under
Section 4 of the LA Act. However for being an urban area,
there must be some other facilities like commercial activities,
population growth, education activities, paying capacity of
people, healthy public transport, infrastructure etc. It is also a
well established rule that in the cases of calculation of
compensation, there cannot be a straight jacket formula,
hence, each case has to be dealt in the light of circumstances
of each case. Common sense is the best and most reliable
guide.
15) It is a well settled law that when there are several
exemplars with reference to similar land, usually the highest
of the exemplars which is a bonafide transaction, will be
considered. In the present case, the Reference Court, in Para
20 held as under:-
“…..Here in this case, applying the said authority to the facts
and circumstances of this case, I am of the considered
opinion that exemplar sale deed Exhibit P1 hold the fields in
preference to the other sale deeds. Reason for exclusion of
sale deeds Exhibit P2 to P3 is that sale deed Exhibit P1 is of
the highest land 1 kanal 6 marlas and is of the highest
amount, which is very close to the date of notification
because vide sale deed Exhibit P1 dated 5.10.2005, land
measuring 1 kanal 6 Marlas, whose nature was “Narmot”,
10
situated in village Ferozpur Namak, Tehsil Nuh, was sold for
a sale consideration of Rs. 11,70,000/- by one Mahmood son
of Inshe Khan in favour of Smt. Hanisha Khatoon wife of
Mohammad Iqbal of the same village. The value per acre of
the land, as per the said sale deed is calculated as Rs.
72,00,000/- per acre. The said sale deed was executed on
5.10.2005 whereas notification under Section 4 of the Act for
the acquired land was published on 18.10.2005 and thus,
this sale deed Exhibit P1 is proximate to the point of time
from the date of issuance of notification under Section 4 of
the Act. No iota of evidence could be led by the respondents
to rebut the veracity of this sale deed. There is nothing on
record to show that the sale deed is not Bonafide and a
genuine transaction. In fact despite availing number of
opportunities, the respondents failed to lead any evidence to
rebut the evidence led by the petitioners.”
16) On a perusal of the Map of the concerned area which is
produced on record by the appellants, we find that the
acquired land in the present case falls within the control area
of Nuh and newly constructed Nalhar Medical College is at a
distance of 3-4 kms from the acquired land. We also find that
the said acquired land is situated on Palwal Road from one
side and on Delhi Road on the other. However, it is a matter of
record that such acquired land is far away from D.C. office
and other offices. Also, Bus Stand as well as Nuh Town is
situated far away from the acquired land. Hence, acquired
land of Firozpur village in such terms cannot be said to be
situated very near to the urban area of Nuh Town. The
11
appellants produced various sale deeds for the perusal of this
Court. The vital sale deed dated 05.10.2005, wherein land
admeasuring 1 kanal 6 Marlas, situated in village Ferozpur
Namak, Tehsil Nuh, was sold for a sale consideration of Rs.
11,70,000/- by one Mahmood s/o Inshe Khan in favour of
Smt. Hanisha Khatoon w/o Mohammad Iqbal of the same
village. If we calculate the value of per acre in terms of the
above sale deed then it stands at Rs 72 Lakhs per acre. It is
pertinent to mention here that the date of this sale deed is
05.10.2005 which is proximate to the date of Notification i.e.,
18.10.2005 under Section 4 of the LA Act. In the present
case, after having regard to the circumstances of the case and
perusal of the sale deeds of adjourning area, we are of the
considered view that the compensation granted at the rate of
Rs. 72 lacs per acre is as per the law and no injustice has
been occurred to the appellants herein.
17) Now coming to the point of development charges which
applied by the High court @10% on the assessed value of
acquired land. Appellants herein contended that the rate of
deduction as applied by the High Court was not required as
12
the acquired land is situated in the area already developed and
have all the potential for development. It is a matter of record
that the Reference Court determined 60% (55% as
development charges and 5% for waiting period) in totality
towards development charges which later on in appeal reduced
by the High Court to 10%. Deductions may be made for a
variety of reasons, which may differ in different cases.
However, in the backdrop of judicial precedents on this issue,
it is well settled position that all deductions should not
cumulatively be exceeded the upper benchmark of 75% and at
the same time, it should be kept in mind that no hypothetical
view shall be taken in order to calculate the percentage of the
development charges.
18) In the present case, the appellants contended that the
acquired land has all basic facilities such as water, electricity,
sewer, telephone etc which respondent-State has not disputed.
These are, however, not enough to meet the purpose of
acquisition. To make such land suitable for the acquisition
purpose i.e. for the construction of Mini Secretariat at Nuh,
some further development is sine qua non. For calculating the
13
percentage of development charges, various factors need to be
taken into consideration such as location of land, facilities
available in nearby area, size of the land, purpose of
acquisition etc. The present acquired land of Firozpur Namak
village which is located at some distance from the Nuh Town
needs to be developed in proper manner like construction of
better and wide roads etc., to make it suitable for the
acquisition purposes. The fact that facilities already available
such as sewer, electricity etc., seems to be taken into
consideration properly while reducing the development
charges by the High Court from 60% to 10%.
19) In the case at hand, after giving our thoughtful
consideration to the facts and circumstance noticed
hereinabove, we are of the considered view that a cut at the
rate of 10 % is very reasonable towards development of
acquired land as some further development would obviously
be required to make it fit for the purpose for which it was
acquired.
14
20) In view of above discussion, we are not inclined to
interfere with the impugned decision of the High Court.
Accordingly, the appeals are hereby dismissed leaving parties
to bear their own cost.
………….………………………J.
 (R.K. AGRAWAL)
.…....……..………………………………J.
(S. ABDUL NAZEER)
NEW DELHI;
APRIL 16, 2018.
15