Courts Cannot Interfere With NH Act Compensation Award Based On Section 26 RFCTLARR Assessment: Gujarat HC

The Gujarat High Court on 8 June held that an arbitral award determining compensation under the National Highways Act, 1956 cannot be interfered with under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 where the Arbitrator has assessed market value in accordance with Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 based on the evidence on record.

A Bench of Chief Justice Sunita Agarwal and Justice D.N. Ray dismissed an appeal filed by the National Highways Authority of India (NHAI) and upheld the Commercial Court's order refusing to set aside the arbitral award in favour of Patel Karsanbhai and other landowners, which determined compensation by adopting the highest jantri rate. The judges observed:

“Further Section 26 of the Act of 2013 provides various criteria in assessment and determination of the market value of the land, one of which is jantri value. And the factual inquiry has been made by the Arbitrator in accordance with the provisions of Section 26 of the Act' 2013 based on the material collected by him and the evidence adduced by the parties, which cannot be re-examined by this Court by re-appreciation of evidence, as it would hit on the face of scope of judicial scrutiny under Sections 34 and 37 of the Act' 1996.”

The dispute arose after land belonging to Patel Karsanbhai and other landowners was acquired by NHAI under the National Highways Act. The District Collector, acting as the statutory Arbitrator under Section 3G(5), determined compensation by applying the market value criteria under Section 26 of the 2013 Act. The Arbitrator adopted the highest jantri rate prevailing in the village for all acquired parcels and enhanced the valuation by 5 per cent annually.

Aggrieved by the award, NHAI filed an application under Section 34 of the Arbitration and Conciliation Act before the Commercial Court, contending that the Arbitrator had arbitrarily adopted the highest jantri rate and granted a 5 per cent annual enhancement without any legal basis.

It argued that the Arbitrator ignored the location, nature and varying jantri values of individual parcels as well as the parameters under Section 3G of the National Highways Act. The Commercial Court dismissed the challenge by its order dated 31 December 2025, following which NHAI preferred an appeal under Section 37.

Relying on the Supreme Court's decision in NHAI v. Nagraju, the High Court observed that an Arbitrator appointed under the National Highways Act is required to determine market value in accordance with Section 26 of the 2013 Act. It noted that jantri value is one of the recognised criteria for determining market value under that provision.

The Bench held that the Arbitrator had undertaken a factual inquiry based on the material placed on record and the evidence adduced by the parties. Re-appreciating that evidence in proceedings under Sections 34 and 37 of the Arbitration and Conciliation Act would exceed the limited scope of judicial review.

Accordingly, the High Court dismissed the appeal, finding no patent illegality or other ground warranting interference.