Section 37 courts may not disturb reasoned arbitral awards absent patent illegality.

The National Highways Authority of India (NHAI) acquired 607 sq. m. in Survey No. 107/3, Kudupu Village, for widening NH-169.

The SLAO treated the land as agricultural dry land and awarded compensation at that classification.

The landowner, Centre for Development Studies and Education Trust, sought arbitration under Section 3G(5) of the National Highways Act, 1956.

The Arbitrator enhanced compensation after finding that the land had been converted for residential use under orders made in 1991 and 1992.

NHAI’s Section 34 challenge was dismissed by the I Additional District and Sessions Judge, Dakshina Kannada, which affirmed the award.

NHAI then appealed under Section 37, contending, among other things, that the land was reserved for road widening and that the award lacked reasons and an independent market-value assessment.

Whether the Trial Court erred in dismissing NHAI’s Section 34 petition and whether the arbitral award suffered from patent illegality or contravened the fundamental policy of Indian law, warranting interference under Section 37.

Whether the Arbitrator’s treatment of the acquired land as residentially converted land, and the reasons given for enhancing compensation, disclosed a ground for setting aside the award under Section 34.

Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 confine judicial review of arbitral awards: a Section 37 court cannot exceed the limits applicable under Section 34 or reappreciate evidence merely because another view is possible; intervention is warranted only on a recognised statutory ground, including patent illegality going to the root of the matter.

Section 31(3) requires an arbitral award to state reasons, while Sections 3G(5) and 3G(7) of the National Highways Act govern arbitration and the determination of compensation.

The Court relied on the Ministry of Road Transport and Highways notification dated 13 January 2016, Section 24(1) and Sections 26–28 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, and NHAI v. P. Nagaraju in holding that the 2013 Act’s compensation provisions applied.

It also relied on Associate Builders v. DDA, Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd., MMTC Ltd. v. Vedanta Ltd., and PSA SICAL Terminals Pvt. Ltd. v. Board of Trustees concerning the limited scope of review under Sections 34 and 37.

Article 300A was noted as requiring compensation for compulsory acquisition to reflect fair value and potentiality.

The High Court held that the record contained valid residential-conversion orders for the acquired land, which the SLAO had disregarded when classifying it as agricultural dry land.

The Arbitrator considered those orders, the land’s location adjoining NH-169, severance, and local market potentiality, and gave reasons for adopting residentially converted rates.

The Court therefore found the determination plausible and reasoned, satisfying Section 31(3), and concluded that NHAI had not established patent illegality or another ground for setting aside the award under Section 34.

The asserted MUDA reservation and alleged relinquishment did not persuade the Court to interfere; it reiterated that Section 37 did not permit a fresh assessment of the merits or evidence.

It dismissed the appeal and affirmed the Trial Court’s order dated 6 November 2025, which had confirmed the arbitral award dated 10 December 2024.