Scope of Section 37 interference is limited where Arbitrator determines compensation using government-prescribed Jantri rates.

The National Highways Authority of India (NHAI) appealed against a judgment dated 31.12.2025 by the Commercial Court (6th Additional District Judge, Ahmedabad).

The Commercial Court had dismissed NHAI’s application under Section 34 of the Arbitration and Conciliation Act, 1996, which challenged an arbitral award passed by the District Collector (acting as statutory Arbitrator).

The Arbitrator had re-determined compensation for land acquired under the National Highways Act, 1956, by applying the highest Jantri (guideline) rate of the village and adding a 5% annual increase.

NHAI contended the award was unreasoned, ignored its evidence, and lacked statutory basis for the 5% enhancement.

1. Whether the Arbitrator’s methodology of using the highest Jantri rate and applying a 5% annual increase constitutes a patent illegality or a violation of the fundamental policy of Indian law under Section 34 of the Act, 1996.

2. Whether the High Court, in an appeal under Section 37 of the Act, 1996, can re-examine the factual inquiry and evidence appreciation conducted by the Arbitrator.

Section 3G(5) and 3G(7) of the National Highways Act, 1956, which governs the determination of compensation by an Arbitrator.

Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, which provides criteria for market value assessment, including Jantri values.

National Highways Authority of India v. Nagraju [(2022) 15 SCC 1], establishing that Section 26 of the 2013 Act must be followed in NHAI arbitrations.

Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, which severely restrict the scope of judicial interference in arbitral awards to cases of patent illegality or conflict with public policy.

The Court reasoned that the Arbitrator is legally mandated to determine market value based on Section 26 of the 2013 Act, and the use of Jantri rates—a government-fixed guideline—ensures transparency and uniformity rather than arbitrariness.

The Court held that the NHAI’s grievances regarding the 5% enhancement and the weightage given to evidence were essentially requests for the re-appreciation of facts, which is prohibited under Section 34.

since the Commercial Court had already found that the award did not shock the conscience or violate fundamental policy, there was no ground for interference under Section 37, where judicial scrutiny is even more circumscribed.

The Court dismissed the claim that the award was "non-speaking," observing that the Arbitrator acted within the statutory framework.

under Section 37 of the Act, 1996, it cannot act as an appellate court to re-evaluate the merits of an arbitral award.

The High Court dismissed the First Appeal and the connected Civil Application, upholding the Commercial Court’s decision. No order as to costs was made.