Judicial scrutiny under Section 37 cannot re-examine arbitral valuation based on Jantri rates.

The National Highways Authority of India (NHAI) challenged an arbitral award passed by the District Collector (acting as a statutory Arbitrator) under Section 3G(5) of the National Highways Act, 1956

The Arbitrator had re-determined the market value of the acquired land by taking the highest "jantri" (government guideline) value of the village and adding a 5% annual enhancement

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

The Commercial Court dismissed the challenge, leading to this First Appeal under Section 37 of the 1996 Act

1. Whether the Arbitrator committed a patent illegality by applying the highest village jantri rate plus a 5% enhancement to determine market value under the National Highways Act

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 contrary to 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 provides criteria for assessing market value, including the use of state-prescribed rates (jantri)

National Highways Authority of India v. Nagraju [(2022) 15 SCC 1], which settled that market value determination under the 1956 Act must follow Section 26 of the 2013 Act

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 the re-examination of factual inquiries unless there is a patent illegality or violation of fundamental policy

The High Court observed that the Arbitrator is legally mandated to determine market value based on various criteria under Section 26 of the 2013 Act, and "jantri" value is a valid statutory parameter for such assessment

The Court held that the Arbitrator's decision—based on collected material and evidence—constitutes a factual inquiry that cannot be re-examined by a Section 37 court, as it would amount to an impermissible re-appreciation of evidence

Adopting the Commercial Court’s reasoning, the High Court noted that the scope of Section 34 is limited; mere disagreement with the valuation methodology or the amount of compensation is insufficient for interference

It affirmed that since "jantri" is a government-fixed guideline, its application ensures uniformity and transparency and does not shock the conscience of the court or constitute a "patent illegality"

The Court found no reason to interfere with the lower court's judgment dated 31.12.2025, confirming that the award was neither arbitrary nor contrary to the fundamental policy of Indian law

All connected civil applications were disposed of accordingly