Judicial scrutiny under Sections 34 and 37 cannot extend to re-appreciating evidence for land valuation.

The National Highways Authority of India (NHAI) challenged an arbitral award passed under Section 3G(5) of the National Highways Act, 1956. The Arbitrator had re-determined the market value of the acquired land by utilizing 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 (6th Additional District Judge, Ahmedabad), arguing that the award was unreasoned, arbitrary, 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

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

2. Whether the arbitral award was "unreasoned" or violated the fundamental policy of Indian law, warranting interference under Sections 34 or 37 of the Arbitration Act

The court applied Section 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 specific criteria for determining market value, including the use of jantri rates

It relied on the precedent National Highways Authority of India v. Nagraju [(2022) 15 SCC 1], which settles that compensation must align with the 2013 Act

Furthermore, it applied the restrictive standards for judicial review under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, which prohibit the re-appreciation of evidence unless the award is patently illegal or shocks the conscience of the court

The High Court observed that the Arbitrator conducted a factual inquiry based on material evidence and Section 26 of the 2013 Act to determine market value

The court reasoned that the use of the jantri rate—a government-fixed guideline—ensures transparency and uniformity, and thus cannot be deemed arbitrary or illegal

Regarding the NHAI’s claim that the award was unreasoned, the court noted that the Commercial Court had already verified that the Arbitrator acted within the statutory framework and that the award did not "shock the conscience" of the court

The Court emphasized that a First Appeal under Section 37 is even more circumscribed than Section 34; it cannot act as an appellate court to re-examine the methodology of valuation or re-appreciate facts already settled by the Arbitrator

The Court affirmed the Commercial Court’s decision, ruling that the Arbitrator's reliance on jantri rates was a valid exercise of statutory power

The judgment and order dated 31.12.2025 were upheld, and the connected Civil Application for stay was disposed of