Scope of Judicial Scrutiny Under Sections 34 and 37 Limits Interference with Arbitrator’s Jantri-Based Land Valuation

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

The NHAI initially challenged the award before the Commercial Court (6th Additional District Judge, Ahmedabad) under Section 34 of the Arbitration and Conciliation Act, 1996, arguing that the Arbitrator (District Collector) erroneously determined market value by taking the highest "jantri" value and adding a 5% annual increase without statutory basis.

The Commercial Court dismissed the challenge on December 31, 2025, leading to the present appeal under Section 37 of the Arbitration Act.

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

2. Whether the arbitral award was unreasoned, non-speaking, or violated principles of natural justice and the fundamental policy of Indian law

3. Whether the High Court, under its limited jurisdiction in Section 37 of the Arbitration Act, can re-appreciate the evidence used by the Arbitrator

The Court relied on 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 assessing market value.

It applied the precedent of National Highways Authority of India v. Nagraju [(2022) 15 SCC 1], establishing that market value must be determined per Section 26 of the 2013 Act.

The scope of judicial intervention was governed by Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, which restrict interference to grounds of patent illegality, violation of fundamental policy, or shock to the conscience of the court, while prohibiting the re-appreciation of evidence.

The Court observed that the Arbitrator conducted a factual inquiry based on Section 26 of the 2013 Act using jantri values—a government-fixed guideline—ensuring uniformity and transparency.

The Court held that disagreements over the methodology of valuation or the specific amount of compensation do not constitute "patent illegality" or a violation of "fundamental policy".

It reasoned that the Arbitrator acts within their exclusive domain when quantifying awards based on material collected during proceedings, and the Commercial Court correctly found that the award was neither unreasoned nor unsigned.

Since the appellant participated in proceedings without prior objection to the procedure, they were precluded from raising such challenges as an afterthought.

The Court affirmed the Commercial Court’s judgment dated 31.12.2025, concluding that there were no grounds to interfere with the arbitral award.

All connected civil applications were disposed of accordingly.