1. Land acquisition for national highway — Compensation enhancement dispute under National Highways Act, 1956. (Para 2 )
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2026 Supreme(Online)(HP) 2281
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
HON'BLE MR. JUSTICE ROMESH VERMA
NHAI – Appellant
Versus
PRAKASH CHAND – Respondent
ARB.A/549/2025
Petitioner Advocates:Shreya Chauhan ,Respondent Advocate: Yuyutsu Singh Thakur Shardul Thakur Munish Kumar
The court affirmed that Section 37 appeals have limited scope, small plot sale deeds can determine large tract values, development charges are not applicable for highway widening, and Section 23(1-A) of the Land Acquisition Act does not apply to National Highways Act acquisitions.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 34 and 37 - National Highways Act, 1956 - Sections 3A, 3D, and 3G - Land Acquisition Act, 1894 - Section 23(1-A) - Scope of interference under Section 37 is extremely circumscribed; the court cannot undertake an independent assessment of the merits of the award or re-appreciate evidence, but must only determine if the Section 34 court exercised its jurisdiction properly without exceeding its scope (Paras 10-13).
(B) Market value Determination - There is no absolute bar against using sale instances of smaller chunks of land to determine the value of a large tract of acquired land, provided reasonable deductions are made to arrive at a fair market value (Paras 14-16).
(C) Development charges - Deductions for development charges are not applicable when land is acquired solely for the purpose of widening a National Highway, as no further development is required (Paras 17-18).
(D) Compensation - Landowners are not entitled to additional market value under Section 23(1-A) of the Land Acquisition Act, 1894 for acquisitions made under the National Highways Act, 1956 (Paras 26-30).
Facts of the case:
Land was acquired by the acquiring body for the widening of a national highway. The competent authority's award was subsequently enhanced by an arbitrator. The lower court, while dismissing an application under Section 34 of the Arbitration Act, upheld the arbitrator's award and further granted the respondent 12% interest per annum on the enhanced market value of the land. The acquiring body challenged this order under Section 37, contesting the reliance on a small-plot sale deed, the absence of development charge deductions, and the grant of interest under Section 23(1-A) of the Land Acquisition Act.
Findings of Court:
The court held that the reliance on a small-plot sale deed was permissible and that development charges are not applicable for highway widening. However, it found that the grant of 12% interest under Section 23(1-A) of the Land Acquisition Act was erroneous based on the prevailing law.
Issues: Whether a small sale instance can be used to determine the value of a large tract of land; whether development charges should be deducted in highway widening projects; and whether landowners are entitled to interest under Section 23(1-A) of the Land Acquisition Act in acquisitions under the National Highways Act.
Ratio Decidendi: The court ruled that Section 37 appeals have a limited supervisory role and cannot substitute the view of the lower court unless the decision is perverse or illegal. It affirmed that small plot sales are valid indicators of value and that highway widening does not warrant development charge deductions. It further established that the benefit of additional market value under Section 23(1-A) of the Land Acquisition Act does not extend to acquisitions under the National Highways Act.
Result: Appeal partly allowed; judgment of the lower court set aside only to the extent of awarding 12% interest per annum on the enhanced amount of the market value of the land.
Legal Category Hierarchy
- arbitration
-
land acquisition
- national highways act 1956
- land acquisition act 1894
- practice and procedure
Table of Contents
2. Challenges to reliance on small sale deed, deduction for development charges, and award of 12% interest. (Para 6 )
3. Small sale deeds can be used for large tracts with deductions; no development charges deduction for highway widening. (Para 15 , 16 , 17 , 18 , 19 )
4. Under Section 37 of Arbitration Act, court cannot re-appreciate evidence; interference limited to patent illegality or perversity. (Para 10 , 11 , 12 , 13 )
5. Appeal partly allowed; award of 12% interest under Section 23(1-A) set aside; rest of award upheld. (Para 31 , 32 )
6. Can sale deeds of small pieces of land be used to determine market value of a large tract of acquired land?
Yes, there is no absolute bar; such sale deeds can be used with reasonable deductions for development. (Para 14 , 15 )
7. Is deduction for development charges justified when land is acquired for widening a national highway?
No, because the purpose is only widening, not development; the acquiring body must prove such charges with evidence. (Para 17 )
8. What is the scope of interference by an appellate court under Section 37 of the Arbitration and Conciliation Act, 1996?
It is akin to Section 34 jurisdiction, narrow and limited to patent illegality, perversity, or public policy violations. (Para 10 , 11 , 12 , 13 )
9. Are landowners entitled to additional market value under Section 23(1-A) of the Land Acquisition Act for acquisitions under the National Highways Act?
No, the Supreme Court has clarified that landowners are not entitled to additional market value under Section 23(1-A). (Para 26 , 27 , 28 , 30 )
Romesh Verma, Judge
1. The present appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (for brevity, “Act of 1996”) arises out of the judgment dated 4.9.2023, as passed by the learned District Judge, Bilaspur, H.P. in Arbitration Petition No. 62/2018, whereby application filed by the appellant/National Highway Authority of India, under Section 34 of the Act of 1996 was dismissed and the award as passed by the Arbitrator was upheld and the respondent/land owner was also held entitled to get 12% interest per annum on the enhanced amount of the market value of the land from the date of the publication of notification under Section 3-A of the National Highways Act, 1956 (for brevity, “Act of 1956”) till the award of the competent authority or till the date of taking possession of the land whichever is earlier, over and apart of 30% solatium and 9% interest per annum awarded by the Arbitrator.
2. Brief facts of the case are that the land of the respondent was acquired by the appellant in Mohal Palthin, Tehsil Ghumarwin for the expansion of National Highway No.21 (four-laning). Notification under Section 3A(1) of the Act of 1956 was published in the official gazette on 21.4.2012 and 17.8.2012 for acquiring the land of the land owners for the aforesaid purpose. Notification under Section 3D(1) of the Act of 1956 was issued by the appellant on 15.12.2012, 8.1.2013 and 15.3.2013. Notification under Section 3G(3) of the Act of 1956 inviting claims from the interested persons was published in the newspaper on 1.4.2013. The competent authority passed an award on 5.8.2013, whereby market value of the land in question was assessed at Rs.18,00,000/- per bigha irrespective of the classification and nature of the land in village Palthin.
3. Feeling dissatisfied by the award, the respondent filed claim petition for enhancement of amount of compensation under Section 3G(5) of the Act before the Arbitrator, which came to be allowed vide award dated 5.9.2017, whereby market value of the acquired land was enhanced from Rs.18,00,000/- to Rs.21,21,000/- per bigha and the respondent was held entitled to 30% solatium on the entire compensation amount and 9% interest on the enhanced amount payable from the date of taking possession till the deposit of the compensation.
4. The appellant feeling aggrieved by the award, dated 5.9.2017 preferred an application under Section 34 of the Act of 1996 before the learned District Judge, Bilaspur on 16.12.2017, who vide order dated 4.9.2023 dismissed the application filed by the appellant, whereby after upholding the award as passed by the Arbitrator, the respondent was held entitled to get 12% interest per annum on the enhanced amount of the market value of the land from the date of the publication of notification under Section 3-A of Act of 1956 till the award of the competent authority or till the date of taking possession of the land whichever is earlier, over and apart of 30% solatium and 9% interest per annum awarded by the Arbitrator.
5. By taking recourse to provisions of Section 37 of the Act of 1996, the appellant has now preferred the instant appeal challenging the order, dated 4.9.2023, as passed by the learned District Judge.
6. It is contended by Ms. Shreya Chauhan, learned counsel appearing of the appellant-NHAI, that impugned order is erroneous, perverse and liable to be quashed and set aside. She has submitted that the learned District Judge has not decided controversy in hand strictly in accordance with the Act of 1996, therefore, the impugned order is liable to be quashed and set aside. Primarily, as urged by learned counsel for the appellant, the impugned order as passed by the learned District Judge has been challenged on the following counts :-
(i) reliance as placed by the learned District Judge as also the Arbitrator on sale deed, Ext. PW2/B dated 16.01.2012, registered on 1.2.2012 pertaining to Mohal Palthin is of a very small area i.e. 1 biswa, as co
