Compensation Determined Based on Circle Rate; Appeals Against Award Dismissed
The Uttarakhand High Court has upheld an arbitral award concerning compensation for land acquired for the construction of a national highway, dismissing the appeals filed by both the landowners and the National Highway Authority of India (NHAI). The judgment, delivered by Justice Ravindra Maithani on June 19, 2026, addressed two appeals filed under Section 37 of the Arbitration and Conciliation Act, 1996, challenging the arbitral award which set the compensation at Rs. 11,000 per square meter based on the circle rate.
The case originated when Gurbachan Singh and Harjinder Kaur, the appellants, claimed ownership over approximately 0.4929 hectares of land acquired by the NHAI for the construction of NH 125 and a truck parking bay. The Special Land Acquisition Officer had initially set the compensation at Rs. 38,00,000 per hectare, which the appellants contested, leading to arbitration. The Arbitrator subsequently increased the compensation to Rs. 11,000 per square meter.
Both parties challenged the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, but their applications were dismissed by the District Judge. This led to the present appeals under Section 37, which the High Court has now rejected.
In its judgment, the High Court examined the arbitral award's compliance with the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act, 2013. The Court noted that while the Arbitrator had considered various factors, including the circle rate determined by the Collector under the Indian Stamp Act, 1899, the award was in line with statutory requirements.
The Court also reiterated the limited scope for modifying arbitral awards under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, as affirmed by the Supreme Court in previous judgments. It emphasized that the determination of compensation based on circle rates is binding, and neither the arbitral tribunal nor the courts can alter these rates based on potential land use or other considerations.
Despite arguments from the NHAI that the land was agricultural and should not have been compensated at a commercial rate, the Court held that the circle rate determined by the Collector was final and binding. The Court found no patent illegality or perversity in the arbitral award that would warrant judicial interference.
The judgment underscores the adherence to statutory mandates in land acquisition compensation and the restrictive nature of judicial review in arbitral matters, reaffirming the principles laid down by the Supreme Court regarding arbitral awards and the scope of judicial intervention.
Bottom line:-
Arbitration - Compensation under National Highways Act - Determination of compensation based on Section 26 and 28 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - The arbitral award cannot be modified under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, except in limited circumstances.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 34 and 37, National Highways Act, 1956, Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 Sections 26 and 28.
