Facts
The National Highway Authority of India (NHAI) challenged an arbitral award passed under Section 3G(5) of the National Highways Act, 1956.
Source reference: no citationThe Arbitrator (District Collector) had re-determined the market value for land acquisition by adopting the highest jantri (government-fixed guideline) value of the village and adding a 5% annual enhancement.
Source reference: no citationNHAI filed an application under Section 34 of the Arbitration and Conciliation Act, 1996, before the Commercial Court (6th Additional District Judge, Ahmedabad) to set aside the award, alleging it was unreasoned, arbitrary, and ignored NHAI's evidence.
Source reference: no citationThe Commercial Court dismissed the challenge on December 31, 2025
Source reference: p. 6NHAI subsequently filed this First Appeal under Section 37 of the Arbitration Act.
Source reference: no citationIssues
1. Whether the Arbitrator committed a patent illegality by adopting the highest jantri value plus a 5% increase for determining market value under the National Highways Act
Source reference: p. 22. Whether the arbitral award was liable to be set aside under Section 34 for being unreasoned or violating principles of natural justice
Source reference: p. 33. Whether the High Court, in its appellate jurisdiction under Section 37, can re-appreciate evidence used by the Arbitrator to determine compensation
Source reference: p. 2-3Law Applied
The Court applied Section 3G(7) of the National Highways Act, 1956, and Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, which mandates using jantri values as a criteria for assessment
Source reference: p. 2National Highways Authority of India v. Nagraju [(2022) 15 SCC 1] to establish that market value must be determined per the 2013 Act
Source reference: p. 2Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, which strictly limit judicial interference to grounds of patent illegality or conflict with public policy, prohibiting the re-appreciation of evidence
Source reference: p. 4Reasoning
The Court observed that the Arbitrator is statutorily empowered to determine market value based on various criteria under Section 26 of the 2013 Act, including jantri rates
Source reference: p. 2It held that the Arbitrator’s decision to apply the highest jantri rate and a 5% enhancement was a factual inquiry based on material evidence, which falls within the exclusive domain of the Arbitrator and cannot be re-examined by a Section 34 or 37 court
Source reference: p. 2-3, 5The Court upheld the Commercial Court’s finding that there was no "patent illegality" because the use of government-prescribed jantri rates ensure transparency and does not shock the conscience of the court
Source reference: p. 5Furthermore, the challenge regarding the award being "unsigned" was rendered moot as the original signed award was produced from the Arbitrator's office during the lower court proceedings
Source reference: p. 5Holding
The High Court dismissed the appeal, holding that the powers of judicial scrutiny under Section 37 are highly circumscribed and do not permit acting as an appellate authority over factual findings
The Court affirmed that the valuation methodology based on jantri rates is legally permissible and does not violate the fundamental policy of Indian law
Source reference: p. 5The judgment of the Commercial Court dated 31.12.2025 was upheld, and all connected civil applications were disposed of
Source reference: p. 6Original Court PDF
NATIONAL HIGHWAY AUTHORITY OF INDIAvsGANDHUBHAI POPATBHAI BHARWAD
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