Facts
The National Highway Authority of India (NHAI) challenged an arbitral award passed by the District Collector (acting as statutory Arbitrator) under Section 3G(5) of the National Highways Act, 1956
Source reference: p. 1The Arbitrator had re-determined the market value of acquired land by adopting the highest jantri (government guideline) rate of the village and adding a 5% annual enhancement
Source reference: p. 2-3the NHAI challenged this award before the Commercial Court (6th Additional District Judge, Ahmedabad) under Section 34 of the Arbitration and Conciliation Act, 1996, alleging that the award was unreasoned, arbitrary, and violated principles of natural justice
Source reference: p. 2-3The Commercial Court dismissed the challenge on December 31, 2025
Source reference: p. 5The NHAI subsequently filed this First Appeal under Section 37 of the Arbitration Act
Source reference: p. 1Issues
1. Whether the Arbitrator committed a patent illegality by applying the highest village jantri rate plus 5% enhancement to determine market value
Source reference: p. 22. Whether the arbitral award was liable to be set aside under Section 34 or 37 of the Arbitration and Conciliation Act, 1996, for being unreasoned or contrary to the fundamental policy of Indian law
Source reference: p. 3-4Law Applied
The court applied Section 3G(5) and 3G(7) of the National Highways Act, 1956, which governs the determination of compensation by an arbitrator
Source reference: p. 1-2market value must be determined per Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (National Highways Authority of India v. Nagraju [(2022) 15 SCC 1])
Source reference: p. 2restrictive standards for judicial interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, which prohibit the re-appreciation of evidence or merits unless the award is patently illegal or shocks the conscience of the court (violating public policy)
Source reference: p. 3-4Reasoning
Section 26 of the 2013 Act explicitly includes jantri values as a criterion for assessing market value; therefore, the Arbitrator's reliance on such government-fixed rates was legally permissible
Source reference: p. 2, 5The Court held that the Arbitrator’s factual inquiry—including the methodology of applying the highest rate and 5% enhancement—falls within the realm of evidence appreciation
Source reference: p. 2-3Under the limited scope of Section 34 and 37 of the 1996 Act, the Court cannot act as an appellate body to re-examine the Arbitrator's quantification or procedure unless a "patent illegality" is apparent on the face of the record
Source reference: p. 4The Court concurred with the lower court that the NHAI participated in the proceedings without prior objection and failed to demonstrate that the valuation method "shocks the conscience" or violates the fundamental policy of Indian law
Source reference: p. 4-5Holding
The High Court dismissed the appeal, holding that the arbitral award did not suffer from patent illegality or procedural defects warranting interference under Section 37 of the Act
The 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 INDIAvsKIRTIKUMAR CHANDUBHAI PATEL
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