Determination of land compensation based on prevailing government Jantri rates does not constitute patent illegality.

The National Highway Authority of India (NHAI) challenged an arbitral award passed under Section 3G(5) of the National Highways Act, 1956

The Arbitrator (District Collector) had re-determined the compensation for land acquisition by applying the highest 'jantri' (government-fixed guideline) value of the village and adding a 5% annual enhancement

NHAI filed an application under Section 34 of the Arbitration and Conciliation Act, 1996, before the Commercial Court, alleging that the award was unreasoned, ignored NHAI's evidence, and violated principles of natural justice

The Commercial Court dismissed the challenge on December 31, 2025

NHAI subsequently filed this First Appeal under Section 37 of the Arbitration Act

Whether the Arbitrator committed a patent illegality by re-determining market value using the highest jantri rates plus a 5% enhancement

Whether the arbitral award was liable to be set aside under Section 34 or Section 37 of the Arbitration Act, 1996 for being unreasoned or violating the fundamental policy of Indian law

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 the criteria for determining market value, including the use of jantri rates

The court relied on the precedent National Highways Authority of India v. Nagraju [(2022) 15 SCC 1], establishing that market value must be determined as per Section 26 of the 2013 Act

Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, which strictly limit the scope of judicial interference to grounds of patent illegality or violations of fundamental policy, prohibiting the re-appreciation of evidence

The High Court observed that the Arbitrator acted within the statutory framework of Section 26 of the 2013 Act by using jantri values—a transparent, government-prescribed parameter—to ensure uniformity

The Court held that the appellant’s grievances regarding the methodology of valuation and the alleged disregard of NHAI's evidence pertained to the merits of the case and factual inquiries

Under the restrictive scope of Section 34 and 37, the Court cannot act as an appellate authority to re-evaluate evidence or substitute its own view on compensation quantification

The Court concurred with the Commercial Court that the award did not shock the conscience or violate public policy, as it merely sought to compensate landowners for compulsory acquisition

Procedural objections regarding unsigned awards and lack of oral hearings were rejected as the record showed a signed award existed and the appellant had participated in the proceedings without prior objection

The Court affirmed that valuation based on jantri rates is neither arbitrary nor illegal

The judgment dated 31.12.2025 was upheld, and all connected civil applications were disposed of