Appellate Court Cannot Reassess Valuation Findings in Arbitration Appeal: Jammu & Kashmir and Ladakh High Court

The High Court of Jammu & Kashmir and Ladakh has held that an arbitral award determining compensation under the National Highways Act cannot be interfered with in a Section 37 appeal merely because another view on valuation is possible.

Dismissing two appeals filed by the National Highways Authority of India (NHAI), Justice Javed Iqbal Wani reiterated that Section 37 of the Arbitration and Conciliation Act, 1996 provides only a limited right of appeal.

“Section 37 of the Act of 1996 provides a limited statutory right of appeal only against orders expressly enumerated therein and does not per se confer a general or unrestricted right of appeal,” the Court observed.

The Court further clarified:

"The Appellate Court under Section 37 supra cannot re-appreciate the evidence, re-evaluate factual findings or substitute its own view merely because another view is possible and that the errorsof fact or erroneous appreciation of evidence by the Arbitrator would not constitute valid grounds for interference, unless such errors go to the root of the matter and fall within the narrow category of patent illegality or contravention of fundamental policy of Indian law"

It added that where a Section 37 appeal challenges an order passed under Section 34, “the scope of scrutiny becomes even more circumscribed.”

The dispute arose from acquisition of land in Village Kundrorian, Tehsil Katra, District Reasi, for construction of the Delhi–Ludhiana–Amritsar–Katra Expressway. Notifications under Sections 3A and 3D of the National Highways Act, 1956, resulted in the vesting of the land in the Central Government.

The Competent Authority for Land Acquisition fixed compensation under Section 3G(1). NHAI invoked arbitration under Section 3G(5). The Divisional Commissioner, Jammu, acting as statutory Arbitrator, reassessed the sale deeds relied upon and reduced the compensation to Rs.56,62,466 per local kanal. Revised awards were subsequently issued.

NHAI challenged the arbitral awards under Section 34, alleging perversity, improper reliance on small-plot sale deeds, and violation of public policy. The Principal District Judge, Reasi, dismissed the challenge.

Affirming that decision, the High Court held that questions relating to comparability of sale deeds and valuation methodology fall within the domain of the arbitrator. The appellate court “would not sit as a court of correction over the arbitral award.”

The Court also rejected the plea of denial of natural justice, noting that NHAI had participated in the arbitral proceedings and raised objections.

Finding no perversity, illegality, or jurisdictional error in the Section 34 court's order, the High Court dismissed the appeals.

In a connected writ petition, the court directed disbursement of compensation in terms of the revised award, holding that once the award attained finality and the land stood vested under Section 3D, the authorities were required to act in accordance with the statutory scheme.