Judicial Review Under Section 37 Cannot Re-Appreciate Evidence or Statutory Compensation Methods Based on Valid Jantri Rates

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 market value of the acquired land by adopting the highest jantri (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 31.12.2025

NHAI subsequently filed this First Appeal under Section 37 of the 1996 Act

1. Whether the Arbitrator committed a patent illegality by adopting the highest jantri rate and adding a 5% annual increase for market value determination.

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

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 provides the criteria for assessing market value

The court relied on the precedent National Highways Authority of India v. Nagraju [(2022) 15 SCC 1], establishing that market value determination under the 1956 Act must follow the parameters of the 2013 Act

the court applied the restrictive 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 of the award unless there is a violation of fundamental policy or patent illegality

The High Court held that the Arbitrator is statutorily empowered to determine market value based on jantri rates as per Section 26 of the 2013 Act

The court observed that the Arbitrator conducted a factual inquiry based on material and evidence adduced by the parties

It affirmed the Commercial Court’s finding that jantri values are government-fixed guidelines that ensure transparency and uniformity; thus, their use cannot be termed arbitrary or illegal

The Court emphasized that a Section 37 appeal does not allow for a re-examination of the valuation methodology or a re-appreciation of evidence, as the scope of judicial scrutiny is severely circumscribed

It rejected the claim that the award was "unreasoned," noting that disagreement with the quantification method is staying within the exclusive domain of the Arbitrator

It held that the appellant failed to demonstrate any patent illegality or violation of the fundamental policy of Indian law

The determination of compensation based on jantri rates was found to be in accordance with the statutory framework and government policy

No costs were ordered