Market value for highway land compensation must follow statutory higher of stamp duty rates or average similar land sales using multiple deeds; single dissimilar sale deed use creates patent illegality in arbitral award.

JUDGMENT :

SANJAY KUMAR, J

1. Leave granted.

2. Acquisition of land for four-laning of National Highway No. 547-E entailed payment of compensation. National Highways Authority of India (NHAI) is aggrieved by enhancement of the compensation payable to a landowner, Alfa Remidis Ltd. Hence, this appeal.

3. By order dated 14.11.2025, this Court directed NHAI to deposit Rs.50,00,000/- and permitted Alfa Remidis Ltd. to withdraw the same. Operation of the judgment dated 05.06.2025 passed by the High Court of Judicature at Bombay, Nagpur Bench, in Arbitration Appeal No. 39 of 2023, presently under challenge, was stayed.

4. Alfa Remidis Ltd., respondent No. 1, claimed ownership over an extent of 1,394 square meters in Survey No. 66 of Mouza Pardi (Rithi) in Tahsil-Saoner, Nagpur District. Notification dated 09.05.2017 was issued under Section 3A(1) of the National Highways Act, 1956¹[For brevity, ‘the NH Act’], for acquisition of this extent of land along with other lands for widening NH No. 547-E. The Deputy Collector, Land Acquisition (General), Nagpur, being the competent authority, determined the compensation payable for this land under Section 3G(1) of the NH Act, by order dated 27.03.2018. He classified the land as fallow (agricultural category) or dry crop land and awarded compensation @ Rs.161.63 per square meter, on the basis of three sale deeds relating to agricultural land in Mouza Pardi (Rithi).

5. Aggrieved thereby, respondent No. 1 filed an application under Section 3G(5) of the NH Act before the Arbitrator, viz., the Additional Commissioner, Nagpur Division, taken on file as Arbitration Case No. 193/ARB/2019-20. Respondent No. 1 asserted therein that its land had wrongly been treated as agricultural land, as it was being used for an industrial purpose. Documents were produced in proof thereof. Further, it cited the Ready Reckoner, wherein the Government rate of Rs.2,020/- per square meter was set down for levy of stamp duty on sale transactions involving lands, akin to the subject land, abutting the highway. It also placed reliance on the registered sale deed dated 29.03.2017 pertaining to a residential plot of 195.09 square meters, wherein the price shown was Rs.3,588/- per square meter. This sale deed related to Mouza Saoner, which was near Mouza Pardi (Rithi). Thereupon, by Award dated 22.11.2021, the Arbitrator accepted that the subject land was in non-agricultural use and, applying the rate quoted in the sale deed dated 29.03.2017, he directed payment of compensation to respondent No. 1 at Rs.3,588/- per square meter.

6. Aggrieved by this enhancement, NHAI and the Government of India filed an application in Arbitration Case No. 272 of 2022, under Section 34 of the Arbitration and Conciliation Act, 1996²[For brevity, ‘the Arbitration Act’], before the learned District Judge-10, Nagpur. They sought setting aside of the Award dated 22.11.2021 on various grounds. One of the grounds was that the Arbitrator had erred in effecting enhancement of compensation contrary to Section 26 (1) of the RIGHT TO FAIR COMPENSATION AND TRANSPARENCY IN LAND ACQUISITION, REHABILITATION AND RESETTLEMENT ACT , 2013.³ [For brevity, ‘the 2013 LA Act’] By judgment dated 11.09.2023, the learned District Judge held in their favour, agreeing that the Arbitrator had acted in contravention of Section 26 of the 2013 LA Act, and set aside the Award dated 22.11.2021.

7. Assailing the said judgment, respondent No. 1 approached the High Court by way of Arbitration Appeal No. 39 of 2023, under Section 37 of the Arbitration Act. By the impugned judgment dated 05.06.2025, the High Court restored the Award dated 22.11.2021