Judicial interference under Section 37 is barred where arbitral determination of compensation follows statutory Jantri rates.

The National Highways Authority of India (NHAI) challenged an arbitral award passed under Section 3G(5) of the National Highways Act, 1956, regarding compensation for land acquisition.

The Arbitrator determined the market value by adopting 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, arbitrary, and violated principles of natural justice.

The Commercial Court dismissed the application on 31.12.2025, leading to the present appeal under Section 37 of the 1996 Act.

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

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

The court applied Section 3G(5) and 3G(7) of the National Highways Act, 1956, in conjunction with Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, which mandates the criteria for assessing market value.

It relied on the precedent NHAI v. Nagraju (2022) 15 SCC 1, establishing that market value must be determined per the 2013 Act.

Furthermore, it applied the restrictive scope of judicial interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, which prohibits the court from acting as an appellate body or reappreciating evidence.

The High Court observed that the Arbitrator conducted a factual inquiry based on material evidence and Section 26 of the 2013 Act, which specifically lists jantri value as a valid criterion for assessment.

The Court reasoned that NHAI’s grievances regarding the methodology of valuation and the use of highest village rates were matters of merit and evidence evaluation, which fall within the exclusive domain of the Arbitrator.

It affirmed the Commercial Court’s finding that the award did not shock the conscience of the court nor violate "fundamental policy of Indian law," as it merely sought to compensate landowners using government-prescribed rates.

The Court emphasized that since the scope of scrutiny under Section 37 is even more circumscribed than Section 34, it could not interfere with a plausible view taken by the Arbitrator.

The court concluded that the valuation based on jantri rates ensures transparency and uniformity, and the appellant failed to prove any violation of the restricted grounds available under Section 34 of the Act.

The judgment of the Commercial Court dated 31.12.2025 was upheld.