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. 1-2The Arbitrator had re-determined the market value of the acquired land by utilizing the highest "jantri" (government-fixed guideline) value of the village and adding a 5% annual enhancement.
Source reference: p. 1-2NHAI filed an application under Section 34 of the Arbitration and Conciliation Act, 1996, before the Commercial Court, alleging the award was unreasoned, arbitrary, and violated principles of natural justice.
Source reference: p. 3The Commercial Court dismissed the challenge on 31.12.2025.
Source reference: p. 6NHAI subsequently filed this First Appeal under Section 37 of the 1996 Act.
Source reference: p. 1Issues
1. Whether the Arbitrator committed a patent illegality by adopting the highest jantri value and applying a 5% annual enhancement for market value determination
Source reference: p. 22. Whether the arbitral award was liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996, for being unreasoned or in violation of natural justice
Source reference: p. 3-43. Whether the High Court, in its appellate jurisdiction under Section 37, can re-appreciate evidence or merits of the arbitral award
Source reference: p. 2-3, 5-6Law 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 the criteria for determining market value.
Source reference: p. 2The precedent NHAI v. Nagraju (2022) 15 SCC 1, establishing that market value must be determined per Section 26 of the 2013 Act.
Source reference: p. 2Restrictive scope of judicial interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, which prohibits re-appreciation of evidence or facts unless the award is patently illegal or shocks the conscience of the court.
Source reference: p. 4-5Reasoning
The High Court observed that the Arbitrator conducted a factual inquiry into market value based on Section 26 of the 2013 Act and material evidence.
Source reference: p. 2It held that using the "jantri rate"—a government-prescribed guideline—ensures transparency and does not constitute an illegal or arbitrary method for compensation.
Source reference: p. 5The Court concurred with the Commercial Court's finding that the scope of Section 34 is limited to fundamental policy violations or patent illegality; mere disagreement with the quantification or procedure (such as the 5% enhancement) does not satisfy these grounds.
Source reference: p. 4Regarding natural justice, the Court noted that NHAI participated in the proceedings without prior objection and that a signed original award was indeed on record.
Source reference: p. 5The Court emphasized that under Section 37, its power of scrutiny is even more circumscribed than under Section 34, precluding any re-examination of the merits.
Source reference: p. 5-6Holding
The High Court dismissed the appeal, holding that the Arbitrator’s determination of compensation based on jantri rates was within the statutory framework and did not suffer from patent illegality.
The Court affirmed the Commercial Court’s judgment dated 31.12.2025, concluding that there were no grounds for interference under Section 37 of the Arbitration and Conciliation Act, 1996.
Source reference: p. 6Original Court PDF
NATIONAL HIGHWAY AUTHORITY OF INDIAvsJEEVRABHAI BHAGVANBHAI
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