Section 37 courts may modify arbitral awards to secure just land-acquisition compensation.

The National Highways Authority of India (NHAI) acquired 121 sq. m. (2.98 cents) of Abdul Khadar’s land in Nekkiladi Village for widening National Highway No. 75.

The land was agricultural on the dates of notification but had residential potential; another portion of the same survey number had been converted to non-agricultural use.

The Competent Authority fixed compensation at Rs. 22,906 per cent. On the landowner’s reference under Section 3G(5) of the National Highways Act, the Arbitrator enhanced the value to Rs. 2,22,848 per cent.

NHAI’s Section 34 challenge was dismissed by the District Court.

Whether the arbitral award determining compensation at Rs. 2,22,848 per cent, and the District Court’s refusal to set it aside under Section 34, required interference in the Section 37 appeal.

Whether the Court could modify the award by fixing compensation at Rs. 1,79,716 per cent, having regard to the land’s potentiality and the applicable guidance-value notification.

Sections 3G(5) and 3H(5) of the National Highways Act provide for arbitration of compensation disputes arising from highway acquisitions and payment of compensation, respectively.

Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 govern challenges to arbitral awards and appeals from decisions on those challenges; Section 34 interference is confined to the statutory grounds, including those in Sections 34(2) and 34(2-A).

The Court relied on Gayatri Balaswamy v. ISG Novasoft Technologies Ltd., (2025) 7 SCC 1, paras 41–42, in support of modifying an award rather than ordering a further round of proceedings where modification would meet the ends of justice and avoid unnecessary delay and expense.

It also considered the 27 December 2018 Guidance Value Notification, issued under the Karnataka Stamp Act, which provided that for agricultural holdings of 12.5 cents or less, the value of sites in the relevant area would apply.

The Court accepted that the acquired parcel was not converted, but held that its non-conversion did not eliminate its residential potential, particularly because another portion of the same survey number had been converted and the acquired parcel was only 2.98 cents.

It considered the applicable Guidance Value Notification relevant despite its not having been produced before the Arbitrator or the Section 34 Court, reasoning that it was a publicly available statutory notification and that the authority determining compensation should have taken it into account.

However, the Arbitrator’s reliance on the conversion order did not justify the enhancement to Rs. 2,22,848 per cent.

The Court therefore used the Rs. 1,79,716-per-cent value determined by the Competent Authority for converted land in the same survey number as the appropriate basis, and modified the award rather than remanding the matter.

The Court modified the arbitral award and fixed the market value at Rs. 1,79,716 per cent, with all statutory benefits, including interest.

The amount deposited in Court was directed to be released to the landowner and adjusted against the remaining compensation payable by NHAI; no order as to costs was made.