The scope of judicial interference under Section 37 is limited where compensation is determined via government-prescribed jantri rates.

The National Highway Authority of India (NHAI) challenged an arbitral award passed under Section 3G(5) of the National Highways Act, 1956. The Arbitrator (District Collector) had re-determined the market value of acquired land by adopting the highest jantri (government-fixed 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, alleging that the award was unreasoned, arbitrary, and violated principles of natural justice by denying oral hearings and disregarding NHAI’s evidence

The Commercial Court (6th Additional District Judge, Ahmedabad) dismissed the challenge on 31.12.2025

NHAI subsequently filed this First Appeal under Section 37 of the 1996 Act

1. Whether the Arbitrator committed a patent illegality by applying the highest jantri rate and a 5% annual increase for land valuation

2. Whether the arbitral award was liable to be set aside under Section 34 for being unreasoned or in violation of the fundamental policy of Indian law

3. Whether the High Court, in its appellate jurisdiction under Section 37, can re-appreciate the evidence used by the Arbitrator to determine compensation

The Court applied 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 provides criteria for determining market value, including the use of jantri rates

The Court relied on the precedent of National Highways Authority of India v. Nagraju [(2022) 15 SCC 1], which settles that compensation must be determined per the 2013 Act

The scope of judicial intervention was governed by Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, which restricts interference to cases of patent illegality or violations of fundamental policy, prohibiting re-appreciation of evidence

The Court observed that the Arbitrator is legally mandated to determine market value based on various criteria under Section 26 of the 2013 Act, and selecting the jantri value is a recognized statutory methodology

The Court held that the factual inquiry into land valuation—based on material collected during proceedings—falls within the exclusive domain of the Arbitrator and cannot be re-examined by a court through a re-appreciation of evidence, as this would exceed the narrow scope of Sections 34 and 37

Regarding procedural objections, the Court noted that NHAI participated in the proceedings without prior objection and failed to demonstrate any "patent illegality" appearing on the face of the award

Since jantri ensures transparency and uniformity, its application does not shock the conscience of the court or violate public policy

The Court affirmed the Commercial Court’s decision, ruling that the use of government-prescribed jantri rates is a valid parameter for compensation and that the award did not suffer from any jurisdictional or legal infirmity. The connected Civil Application for stay was also disposed of