Bombay High Court Admits Arbitration Appeal Against Order Setting Aside Arbitral Award; Challenge to District Judge's Quashing of Enhanced Compensation for Non-Agricultural Land Acquired for National Highway. The Appeal Rests on Limited Scope of Section 34 of Arbitration and Conciliation Act, 1996 and Arbitrator's Power to Determine Evidentiary Weight Under Section 19(4).

Arbitration appeal challenging the judgment and order dated 11/09/2023 passed by the learned District Judge-10, Nagpur, which quashed and set aside the Arbitral Award dated 22/11/2021 under Section 34 of the Arbitration and Conciliation Act, 1996.

Appellant sought quashing and setting aside of the impugned judgment and order dated 11/09/2023 passed by the learned District Judge-10, Nagpur in Arbitration Case No. 272/2022, thereby restoring the Arbitral Award dated 22/11/2021.

The learned District Judge allowed the Section 34 application filed by Respondent Nos. 1 and 2, setting aside the Arbitral Award which had granted enhanced compensation; the appellant was aggrieved by this order.

Arbitral Award dated 22/11/2021 in Arbitration Case No. 193/ARB/2019-20 partly allowed the appellant's claim and enhanced compensation to Rs. 3588 per sq. mtr for 1394 sq. mtr; District Judge-10, Nagpur by judgment/order dated 11/09/2023 in Arbitration Case No. 272/2022 allowed the Section 34 application of Respondent No.1-NHAI and set aside the award.

Whether the learned District Judge erred in setting aside the Arbitral Award dated 22/11/2021 under Section 34 of the Arbitration and Conciliation Act, 1996 by exceeding the limited scope of judicial review. Whether the Arbitral Award lacked reasoning in holding that the acquired land was at par with non-agricultural land, and whether the District Judge failed to provide reasoning for finding the award patently illegal and against public policy. Whether the learned Arbitrator properly determined market value by relying on a single sale deed and whether such reliance was permissible under Section 19(4) of the Arbitration and Conciliation Act, 1996. Whether the appellant was entitled to statutory benefits including interest under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

Appellant argued that the learned District Judge erroneously found no reasons in the Arbitral Award, as the Arbitrator had considered all documentary evidence and given a detailed finding that the land was non-agricultural, with the sale transaction executed in nearest vicinity of the acquired land. Appellant contended that the District Judge failed to give reasoning for concluding that the award was patently illegal and against public policy, and that the scope of Section 34 of the Arbitration and Conciliation Act, 1996 does not permit re-appreciation of evidence. Appellant submitted that under Section 19(4) of the Arbitration and Conciliation Act, 1996, the Arbitral Tribunal has power to determine admissibility, relevance, materiality and weight of evidence, and therefore reliance on a single sale deed could not be interfered with by the District Judge. Respondent No.1 argued that the District Judge properly appreciated the evidence and followed the provisions of the Arbitration and Conciliation Act, 1996, and that the Arbitral Award was arbitrary, unjustified, and in breach of provisions of the 2013 Act. Respondent No.1 contended that the land was properly determined as fallow land by the Competent Authority, and no proper legal evidence was filed by the appellant regarding non-agricultural potential; the Arbitrator considered only a single sale deed dated 29/03/2017 over a specific objection, and statutory Arbitrator must follow CPC, Evidence Act, and principles of natural justice.

Ratio not explicitly mentioned

ADMIT. Heard finally by consent of learned Counsel for the respective parties. The learned Arbitrator has passed an Arbitral Award, thereby partly allowing the Application and granting enhanced amount of compensation @ Rs. 3588/- per Sq. Mtrs. for the acquired land of 1394 Sq. Mtrs. along with statutory benefits. The learned District Judge observed that the learned Arbitrator has not assigned any reasons in support of the Award in holding that the acquired land is at par with the Non-Agricultural land. The learned Arbitrator has also given a finding that the sale transaction executed is in nearest vicinity of the acquired land. Therefore, the said Sale-Deed is applicable to the present case for determination of compensation. It is submitted that Section 19(4) of the Act of 1996 is very clear on the point that the power of Arbitral Tribunal includes the power to determine the admissibility, relevance, materiality and weight of evidence.

On 27/03/2018, the Deputy Collector Land Officer (General), Nagpur acquired 0.1394 hectares of land out of 0.91 hectares for National Highway No. 547-E in Land Acquisition Case No. 71/A-65/2016-2017. On 30/12/2019, the appellant filed an application under Section 3(G)(5) of the National Highways Act, 1956 before the Additional Commissioner appointed as Arbitrator seeking proper compensation. On 22/11/2021, the learned Arbitrator passed an Arbitral Award in Arbitration Case No. 193/ARB/2019-20 partly allowing the application and granting enhanced compensation at Rs. 3588 per square meter. Both the appellant and Respondent No.1 NHAI filed applications under Section 34 of the Arbitration and Conciliation Act, 1996 before the District Judge-10, Nagpur. On 11/09/2023, the learned District Judge passed judgment and order in Arbitration Case No. 272/2022, allowing the Section 34 application filed by Respondent No.1 NHAI and setting aside the Arbitral Award. The appellant filed the present Arbitration Appeal No. 39/2023 before the High Court, which was admitted and heard finally by consent; judgment was pronounced on 05/06/2025.

• Arbitration and Conciliation Act, 1996: 34, 19(4), 28, 31(3)
• National Highways Act, 1956: 3(G)(5)
• Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: 26