2026 Supreme(Online)(HP) 3150

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
HON'BLE MR. JUSTICE ROMESH VERMA
NATIONAL HIGHWAYS AUTHORITY OF INDIA – Appellant
Versus
NIKKA RAM AND ANR – Respondent
ARB.A/9/2022

Headnote:(A) National Highways Act, 1956 - Sections 3A, 3D, 3G(5), 3J; Arbitration and Conciliation Act, 1996 - Sections 34 and 37; Land Acquisition Act, 1894 - Sections 23(1-A), 23(2) and 28 - Scope of interference under Section 37 of the Arbitration and Conciliation Act - The jurisdiction of the Court under Section 37 is extremely limited and narrow, especially when an award has been upheld under Section 34 - Appellate Courts must respect the finality of arbitral awards and the autonomy of parties - Reappraisal of evidence or alternate interpretation of contractual clauses is not permissible - Awards cannot be interfered with on grounds of mere illegality or unreasonableness unless findings are patently illegal or manifestly arbitrary (Paras 23, 25, 26 and 27).

(B) Arbitration and Conciliation Act, 1996 - Section 37 - The court cannot undertake an independent assessment of the merits of the award or act as a regular court of appeal to find out if the decision is right or wrong upon reappraisal of evidence - Interference is only permissible if the court exercising power under Section 34 has exceeded or failed to exercise its jurisdiction or if the award is contrary to the substantive provision of law (Paras 30, 32 and 34).

(C) National Highways Act, 1956 - Compensation - Following the declaration of Section 3J of the Act as unconstitutional by the Apex Court, provisions of the Land Acquisition Act relating to solatium and interest under Sections 23(2) and 28 apply to acquisitions under the National Highways Act - However, landowners are not entitled to the grant of additional market value under Section 23(1-A) of the Land Acquisition Act (Paras 36, 37, 38 and 40).

Facts of the case:
Land and specific structures were acquired for the widening of a national highway. The competent authority passed awards for the land and structures. The respondents sought enhancement of compensation before the Arbitrator, who subsequently increased the value of the structures and granted dismantling charges and interest. The appellant challenged this award under Section 34 of the Arbitration and Conciliation Act before the lower court, which dismissed the objections and affirmed the Arbitrator's findings. The appellant then approached the High Court under Section 37 of the Arbitration and Conciliation Act.

Findings of Court:
The Court found that the Arbitrator passed a reasoned and exhaustive award based on the material evidence on record. The Court held that it cannot act as a court of appeal to re-evaluate evidence under Section 37. Regarding the award of interest, the Court noted that while solatium and interest are permissible based on Apex Court precedents, the grant of additional market value under Section 23(1-A) of the Land Acquisition Act is not legally sustainable.

Issues: 1. Whether the findings of the Arbitrator regarding the valuation and age of the structures were perverse or illegal warranting interference under Section 37. 2. Whether the grant of interest at 12% per annum under Section 23(1-A) of the Land Acquisition Act was permissible.

Ratio Decidendi: The Court reasoned that the supervisory role of Courts under Section 37 is very restricted and cannot be used to substitute the court's view for that of the Arbitrator unless there is patent illegality that goes to the root of the matter. On the issue of compensation, the Court applied the legal position that while solatium and interest are now granted in National Highways Act cases, a specific clarification by the Apex Court excludes the benefit of additional market value under Section 23(1-A) of the Land Acquisition Act.

Result: Appeal partly allowed; judgment of the lower court is set aside only to the extent it awarded interest @ 12% per annum on the enhanced amount of the market value of the land.