High Court Remits Case Back to Arbitrator for Reassessment of Compensation
Thiruvananthapuram, July 8, 2026 - In a significant ruling, the Kerala High Court has directed the matter of land acquisition for the NH 47 bypass road to be reconsidered by the arbitrator, following a dispute over the compensation awarded for the acquired land. The judgment delivered by Justice S. Manu holds that the previous arbitral award was flawed, failing to comply with statutory provisions, particularly Section 3G(7) of the National Highways Act, 1956.
The case involves the acquisition of 11.11 ares of land from Sreekala K.V., the appellant, for the construction of the bypass road. The appellant contested the compensation fixed by the Competent Authority, which led to arbitration proceedings that enhanced the compensation initially determined. However, dissatisfaction with the arbitral award prompted the Project Director, N.H. Authority of India, to seek judicial intervention under Section 34 of the Arbitration and Conciliation Act, 1996.
The Additional District Judge's order setting aside the arbitral award was challenged by Sreekala K.V. in an appeal under Section 37 of the Arbitration and Conciliation Act. The appellant argued that the Additional District Judge exceeded jurisdiction by failing to recognize a consensus agreement and misapplying legal precedents, specifically the judgment in Udayakumar v. National Highway Authority of India [2019 (1) KLT 519].
Conversely, the respondent's counsel maintained that the arbitrator neglected mandatory considerations under Section 3G(7) of the National Highways Act and was improperly influenced by the compensation fixed by the District Level Price Committee (DLPC). The High Court concurred, identifying patent illegality in the arbitral award due to non-compliance with statutory requirements and deviation from established reasoning.
Justice S. Manu emphasized the importance of adhering to statutory provisions in arbitration awards, noting that failure to independently assess the market value of the land renders the award invalid. Despite setting aside the award, the High Court, following the Supreme Court's precedent in National Highway Authority of India v. P. Nagaraju, remitted the case back to the arbitrator for fresh consideration in accordance with law.
The arbitrator has been instructed to pass a new award within six months, ensuring compliance with legal mandates and providing just compensation. This decision underscores the judiciary's role in upholding statutory requirements and ensuring fairness in land acquisition processes.
The ruling is expected to have broader implications for arbitration proceedings under the National Highways Act, emphasizing the necessity for thorough and independent evaluation of land value in accordance with legal standards.
Bottom line:-
Arbitration Award - The learned Additional District Judge was justified in setting aside the arbitral award for failing to comply with Section 3G(7) of the National Highways Act, 1956. However, the matter should be remitted to the arbitrator for reconsideration strictly in accordance with the law.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 34, 37; National Highways Act, 1956 Section 3G(7)
Sreekala K.V. v. Project Director, N.H. Authority of India, (Kerala) : Law Finder Doc id # 2940826
