Bombay High Court Upholds Enhanced Compensation in NH Land Acquisition Arbitration

The Bombay High Court, in National Highways Authority of India v. Bhaskar Ninu Zambare & Ors. and connected appeals (Arbitration Appeal Nos. 103, 104, 106, 108 of 2025, judgment dated April 1, 2026), dismissed a batch of appeals filed by the National Highways Authority of India (NHAI), thereby upholding arbitral awards granting enhanced compensation to landowners whose lands were acquired for highway widening under the National Highways Act, 1956.

The dispute arose from acquisition proceedings initiated pursuant to a notification under Section 3A of the National Highways Act dated November 11, 2011 for widening of National Highway No. 6. The Competent Authority for Land Acquisition (CALA) awarded compensation at ₹340 per square meter along with 10% towards easementary rights. Dissatisfied, the landowners invoked arbitration under Section 3G(5) of the Act, seeking enhanced compensation and statutory benefits.

The learned Arbitrator, relying on multiple sale instances, placed primary reliance on a registered sale deed dated February 13, 2012, executed shortly after the notification, and determined the market value at ₹2800 per square meter. Compensation was also granted for severance, loss of easementary rights, and impact on the remaining land. NHAI’s challenge under Section 34 of the Arbitration and Conciliation Act, 1996 was rejected by the District Court, leading to appeals under Section 37.

Before the Bombay High Court, the principal issues included whether reliance on a post-notification sale deed was permissible, whether comparable instances were appropriately considered, whether compensation for severance and related losses was justified, and the scope of judicial interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996.

The Court, relying on settled principles laid down in Chimanlal Hargovinddas v. Special Land Acquisition Officer, held that post-notification sale instances may be considered if they are proximate in time, genuine, and not influenced by the acquisition. It found that the sale deed dated February 13, 2012, executed within a short period of the notification, satisfied these criteria and constituted a valid basis for determining market value. The Court further noted that other sale instances, when adjusted appropriately, supported the valuation adopted.

On compensation for severance and related claims, the Court observed that partial acquisition for highway expansion may affect the usability and value of the remaining land. It held that such impact can be assessed based on affidavits and material on record, particularly where such evidence remains uncontroverted.

The Court also reiterated the limited scope of interference with arbitral awards, emphasising that courts under Sections 34 and 37 cannot re-appreciate evidence or act as appellate forums. Interference is confined to cases involving patent illegality, perversity, or violation of public policy.

Applying these principles, the Bombay High Court held that the Arbitrator had relied on relevant material, applied correct legal standards, and arrived at a reasonable determination. Finding no perversity or patent illegality, the Court dismissed the appeals and upheld the arbitral awards.