Reserved on - 05.06.2026

Delivered on - 19.06.2026

HIGH COURT OF UTTARAKHAND AT NAINIT AL

Appeal from Order No. 224 of 2023

1. Gurbachan Singh S/o Mohan Singh

R/o Baghora, Tehsil – Sitarganj

District – Udham Singh Nagar

2. Harjinder Kaur W/o Gurbachan Singh

R/o Baghora Tehsil – Sitarganj

District – Udham Singh Nagar

….....Appellants

Versus

1. Ministry of Road Transport and National Highways

through Project Director National Highways Authority

of India, Project Implementation Unit/PIU Rudrapur,

3

rd

Floor Guru Angad Dev Shopping Complex,

Rudrapur, District Udham Singh Nagar

2. Competent Authority/Special Land Acquisition Officer,

District Udham Singh Nagar

….….Respondents

Present:-

Mr. Gurbachan Singh, appellant no. 1 in person.

Mr. Narain Dutt, Standing Counsel for the State of Uttarakhand.

Mr. Naresh Pant, Advocate with Mr. Raunak Pant, Advocate for the

respondent no. 1.

Appeal from Order No. 307 of 2023

National Highway Authority of India,

Through its Project Director,

Project Implementation Unit/PIU Rudrapur,

3

rd

Floor Guru Angad Dev Shopping Complex,

Rudrapur, District Udham Singh Nagar

….....Appellant

2

Versus

1. Gurbachan Singh S/o Late Shri Mohan Singh

2. Harjinder Kaur W/o Shri Gurbachan Singh

Both R/o Village – Baghora, Tehsil – Sitarganj,

District Udham Singh Nagar

3. Competent Authority/Special Land Acquisition Officer,

District Udham Singh Nagar

….….Respondents

Present:-

Mr. Naresh Pant, Advocate with Mr. Raunak Pant, Advocate for the

appellant.

Mr. Narain Dutt, Standing Counsel for the State of Uttarakhand.

Mr. Gurbachan Singh, respondent no. 1 in person.

JUDGMENT

Hon’ble Ravindra Maithani, J.

Since common question of law and facts are involved in

all these appeals, they are heard together and decided by this

common judgment. However, for sake of convenience, facts would

be referred from AO No. 224 of 2023 and parties shall be referred to

accordingly, unless otherwise specifically specified.

2. Appellants Gurbanchan Singh and Harjinder Kaur

claimed ownership over land at Khasra No. 43 area 0.1349 Hect.,

Khasra No. 44 area 0.0293 Hect., Khasra No. 49 area 0.1373 Hect. and Khasra No. 50 area 0.1914 Hect., total 0.4929 Hect. (“the land”), which was acquired by the respondent National Highway Authority of India (“NHAI”) vide Notifications under Section 3-A of

the National Highways Act, 1956 (“the NH Act, 1956”) and under

Section 3-D of the NH Act, 1956 dated 19.03.2014 for construction

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of NH 125 and Truck By Lane/Truck Parking. The land is situated

in Sitarganj-Khatima road, near Sitarganj town in District Udham

Singh Nagar, Uttarakhand. The Special Land Acquisition Officer

(“SLAO”), by its Award dated 26.08.2015 fixed the compensation

under Section 3-G of the NH Act, 1956 @ Rs. 38,00,000/- per

hectare. This was done by noticing that the land is agricultural

land and a report of Tehsildar concerned was also taken into

consideration. Aggrieved by it, the appellants filed an application

under Section 3-G(5) of the NH Act, 1956. Accordingly, the

Arbitrator in Application No. 51-72 of the year 2016-17, Gurbachan

Singh and another v. Ministry of Road Transport and National

Highways and another, by its Award dated 17.03.2017 enhanced

the compensation to Rs. 11,000/- per sq. mtr. Both the appellants

and the respondent NHAI filed application s under Section 34 of the

Arbitration and Conciliation Act, 1996 (“the AC Act, 1996”)

challenging the award dated 17.03.2017 of the Arbitral Tribunal

(“AT”) passed in the Arbitration Case No. 51-72 of the year 2016-17.

The application filed by the appellants was registered as Arbitration

Suit No. 28 of 2017, Gurbachan Singh and another v. Ministry of

Road Transport and National Highway and another, in the court of

District Judge, Udham Singh Nagar, Rudapur, which was

dismissed on 30.05.2023. The application filed by the respondent

NHAI under Section 34 of the AC Act, 1996 was registered as

Arbitration Suit No. 46 of 2017, Union of India v. Gurbachan Singh

and others, in the court of District Judge, Udham Singh Nagar and

it was also dismissed on 30.05.2023. Both the appellants and the

respondent NHAI preferred separate appeals under Section 37(1) (c)

of the AC Act, 1996, which have been registered as AO No. 224 of

4

2023 and AO No. 307 of 2023, respectively. They are being decided

by this common judgment.

3. Heard the appellant Gurbachan Singh in-person and

learned counsel for the NHAI.

4. Before proceeding further, it may be apt to record in a

little more detail as to how the AT arrived at the compensation @

Rs. 11,000/- per sq. mtr. by its Award dated 17.03.20 17. In

arbitral proceedings, the AT framed four issues, they are as

follows:-

“(i) Whether the applicants are entitled to get

the market value of the land acquired in

the year 2013 on the basis of the rates for

acquisition of adjoining land in the year

2008 with 10% -15% annual increment?

(ii) Whether the applicants are entitled to get

the market value of the land acquired in

the year 2013 as per the circle rate of

Rs. 11000/- per sq. mtr. prevalent on the

date of notification for acquisition issued

on 09.08.2013?

(iii) Whether the applicants are entitled to get

the market value of the land acquired in

the year 2013 as per the sale deeds

executed in the year 2013?

(iv) To what relief the applicants are entitled

to?”

5

5. On issue No. 1, the AT took note of some land acquired

in the same village in the year 2008 by the Power Grid Corporation,

which had attained finality. The AT increased that rate @ 10-15%

per year and on issue no. 1, held that the market rate of the

appellants’ land is Rs. 12,000/- per sq. mtr., to which they are

entitled.

6. On issue no. 2, the AT though took note of various

commercial potentiality of land and recorded that the commercial

potential is a factor for determining the market value of a land. But,

finally decided that the compensation is to be awarded based on the

circle rate of the land, as notified on 31.02.2012. T he circle rate for

the land in question was Rs. 11,000/- per sq. mtr. Accordingly, the

AT held that the market rate of the land in question as per circle

rate of 31.03.2012 is Rs. 11,000/- per sq. mtr. to which the

appellants are entitled.

7. On issue no. 3, which is with regard to sale deeds

parity, the AT held that in the year 2008, the land adjacent to the

National Highway was sold @ Rs. 7,200/- per sq. mtr. and in the

year 2013, similar type of land was sold @ Rs. 14,000/- per sq. mtr.

and sale deeds were executed accordingly. Therefore, the AT held

that the appellants are entitled to get the compensation of the land

acquired @ Rs. 13,000/- per sq. mtr.

8. Finally, on issue no. 4, the AT decided that the

appellants are entitled to compensation @ Rs. 11,000/- per sq. mtr.

6

9. The appellant no. 1 Gurbachan Singh appeared in

person. He would submit that the AT framed four issues in the

arbitration proceedings and recorded findings on issue nos. 1, 2

and 3 entitling the appellants to compensation @ Rs.12,000/- per

sq. mtr., Rs. 11,000/- per sq. mtr. and Rs. 13,000/- per sq. mtr.

under these three issues respectively, but, it is argued that the AT

had awarded compensation @ Rs. 11,000/- per sq. mtr., whereas

as per AT only, the appellants are entitled to compensation @ Rs.

13,000/- per sq. mtr., as held under issue no. 3 by the AT.

Therefore, it is argued that the appellants should have been

granted compensation @ Rs. 13,000/- per sq. mtr.

10. It is a question of modification of the Award. Is it

permissible? The appellant no. 1 Gurbachan Singh very fairly

admits that post the judgment of the Hon’ble Supreme Court in the

case of Project Director, National Highway No. 45 E and 220

National Highways Authority of India v. M. Hakeem and another,

(2021) 9 SCC 1, which has been reiterated in the case of Gayatri

Balasamy v. ISG Novasoft Technologies Limited, (2025) 7 SCC 1,

since award cannot be modified, it cannot be interfered with by this

Court. This is the argument, which has been made by the

appellants in AO No. 224 of 2023.

11. Before proceeding further, it may be seen as to what

has been held in the case of M. Hakeem (supra ) by the Hon’ble

Supreme Court. In the case of M. Hakeem (supra ), the Hon’ble

Supreme Court discussed the jurisdiction of the courts under

7

Sections 34 and 37 of the AC Act, 1996 to modify an award and

held that an award cannot be modified. In para 41, the Hon’ble

Supreme Court observed as follows:-

“41. As has been pointed out by us

hereinabove, McDermott [McDermott International

Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181] has

been followed by this Court in Kinnari Mullick [Kinnari

Mullick v. Ghanshyam Das Damani , (2018) 11 SCC 328 :

(2018) 5 SCC (Civ) 106] . Also, in Dakshin Haryana Bijli

Vitran Nigam Ltd. v. Navigant Technologies (P) Ltd. [Dakshin

Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies (P)

Ltd., (2021) 7 SCC 657] , a recent judgment of this Court

also followed McDermott [McDermott International

Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181] stating

that there is no power to modify an arbitral award under

Section 34 as follows : (Dakshin Haryana Bijli Vitran Nigam

case [Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant

Technologies (P) Ltd., (2021) 7 SCC 657] , SCC p. 676, para

44)

“44. In law, where the court sets aside the

award passed by the majority members of the

Tribunal, the underlying disputes would require to

be decided afresh in an appropriate pro ceeding.

Under Section 34 of the Arbitration Act, the court

may either dismiss the objections filed, and uphold

the award, or set aside the award if the grounds

contained in sub-sections (2) and (2-A) are made

out. There is no power to modify an arbitral award.”

12. When the issue was subsequently referred to the Larger

Bench, in the case of Gayatri Balasamy (supra ), the Hon’ble

Supreme Court discussed this provision. In fact, one of the arguments that was made was that modification of arbitral awards may be permitted under the NH Act, 1956. But, this was also not

accepted by the Hon’ble Supreme Court. In para 71 of its judgment

in the case of Gayatri Balasamy (supra), the Hon’ble Supreme Court

observed as follows:-

8

“71. It has been argued that Section 34 should be

expansively interpreted to permit modification of awards

under the NHAI Act. In particular, it is suggested that

courts should be allowed to modify the quantum of

compensation awarded, as the Act involves statutory

arbitration. This argument is, however, untenable. The

jurisdiction conferred under Section 34 does not

distinguish between statutory and non -statutory

arbitration in terms of the scope of courts' power of review.

Hence, this argument stands rejected.”

13. The conclusions have been recorded by the Hon’ble

Supreme Court in para 87 of the judgment in the case of Gayatri

Balasamy (supra ), which is as follows:-

“Conclusions

87. Accordingly, the questions of law referred to by Gayatri

Balasamy [Gayatri Balasamy v. ISG Novasoft Technologies

Ltd., 2024 SCC OnLine SC 1681] are answered by stating

that the Court has a limited power under Sections 34 and

37 of the 1996 Act to modify the arbitral award. This

limited power may be exercised under the following

circumstances:

87.1. When the award is severable, by severing the “invalid”

portion from the “valid” portion of the award, as held

in Part II of our Analysis;

87.2. By correcting any clerical, computational or typographical

errors which appear erroneous on the face of the record, as

held in Parts IV and V of our Analysis;

87.3. Post-award interest may be modified in some

circumstances as held in Part IX of our Analysis; and/or

87.4. Article 142 of the Constitution applies, albeit, the power

must be exercised with great care and caution and within

the limits of the constitutional power as outlined in Part

XII of our Analysis.”

14. It is true that the AT has recorded the entitlement for

the compensation of the appellants at different rates. As stated, on issue No. 1, it was Rs. 12,000/- per sq. mtr., on issue no. 2, it was

Rs. 11,000/- per sq. mtr. and on issue no. 3, it was Rs. 13,000/-

per sq. mtr. The AT has held that the appellants are entitled to

9

compensation at these rates. But, how the highest rate is not

given? There is nothing recorded in the award of the AT.

15. In fact, what is required to be seen now is as to

whether the compensation that has been awarded by AT is in

accordance with law or as to whether the court below has rightly

rejected the applications under Section 34 of the AC Act, 1996 filed

by the appellants and the respondent. In essence, it has to be seen

as to whether in a proceeding under Section 37 of the AC Act,

1996, any interference is warranted? As stated, it is argued by the

appellant No. 1 Gurbachan Singh in AO No. 224 of 2023 that if the

award cannot be modified, it may not be touched upon.

16. Learned counsel for the NHAI very strenuously argued

that the award is not in accordance with law; it is bad and the

application filed by the respondent under Section 34 of the AC Act,

1996 has been wrongly dismissed, hence an interference is required

to set it aside.

17. How to determine the compensation under the NH Act,

1956? The Right to Fair Compensation and Transparency in Land

Acquisition, Rehabilitation and Resettlement Act, 2013 (“the 2013

Act”) makes provisions for compensation, etc. when a land is

acquired. Admittedly, Section 26 & Section 28 of the 2013 Act are

applicable while determining compensation under the NH Act,

1956, as held in the case of National Highways Authority of India v.

P. Nagaraju alias Cheluvaiah and another, (2022) 15 SCC 1.

10

18. Section 26 (1) and Section 28 of the 2013 Act read as

under:-

“26. Determination of market value of land by

Collector. –(1) The Collector shall adopt the following criteria in

assessing and determining the market value of the land, namely:—

(a) the market value, if any, specified in the Indian

Stamp Act, 1899 (2 of 1899) for the registration of

sale deeds or agreements to sell, as the case may

be, in the area, where the land is situated; or

(b) the average sale price for similar type of land

situated in the nearest village or nearest vicinity

area; or

(c) consented amount of compensation as agreed upon

under sub-section (2) of section 2 in case of

acquisition of lands for private companies or for

public private partnership projects,

whichever is higher:

Provided that the date for determination of market

value shall be the date on which the notification has been

issued under section 11.

Explanation 1.—The average sale price referred to in

clause (b) shall be determined taking into account the sale

deeds or the agreements to sell registered for similar type

of area in the near village or near vicinity area during

immediately preceding three years of the year in which

such acquisition of land is proposed to be made.

Explanation 2.—For determining the average sale

price referred to in Explanation 1, one -half of the total

number of sale deeds or the agreements to sell in which

the highest sale price has been mentioned shall be taken

into account.

Explanation 3.—While determining the market value

under this section and the average sale price referred to in

Explanation 1 or Explanation 2, any price paid as

compensation for land acquired under the provisions of

this Act on an earlier occasion in the district shall not be

taken into consideration.

Explanation 4.—While determining the market value

under this section and the average sale price referred to in

Explanation 1 or Explanation 2, any price paid, which in

the opinion of the Collector is not indicative of actual

prevailing market value may be discounted for the

purposes of calculating market value.

11

28. Parameters to be considered by Collector in

determination of award. –In determining the amount of

compensation to be awarded for land acquired under this

Act, the Collector shall take into consideration—

firstly, the market value as determined under

section 26 and the award amount in accordance with the

First and Second Schedules;

secondly, the damage sustained b y the person

interested, by reason of the taking of any standing crops

and trees which may be on the land at the time of the

Collector's taking possession thereof;

thirdly, the damage (if any) sustained by the person

interested, at the time of the Collector's taking possession

of the land, by reason of severing such land from his other

land;

fourthly, the damage (if any) sustained by the

person interested, at the time of the Collector's taking

possession of the land, by reason of the acquisition

injuriously affecting his other property, movable or

immovable, in any other manner, or his earnings;

fifthly, in consequence of the acquisition of the land

by the Collector, the person interested is compelled to

change his residence or place of business, the reasonable

expenses (if any) incidental to such change;

sixthly, the damage (if any) bona fide resulting from

diminution of the profits of the land between the time of

the publication of the declaration under section 19 and the

time of the Collector's taking possession of the land; and

seventhly, any other ground which may be in the

interest of equity, justice and beneficial to the affected

families.”

19. Learned counsel for the NHAI submits that in the

instant matter, the compensation has not been determined in

accordance with Section 26 and 28 of the 2013 Act, which is patent

illegality, which is the basis for setting aside the award. In support

of his contention, learned counsel has placed reliance on the

principle of law as laid down by this Court in AO No. 253 of 2022,

National Highway Authority of India v. Balkar Singh and others.

12

Learned counsel has also relied on the principles of law as laid

down by the Hon’ble Supreme Court in the cases of P. Nagaraju

(supra), Associate Builders v. Delhi Development Authority, (2015)

3 SCC 49, State of Chhattisgarh v. Sal Udyog (P) Ltd., (2022) 2 SCC

275, Delhi Airport Metro Express Private Limited v. Delhi Metro Rail

Corporation Limited, (2022) 1 SCC 131 and Delhi Airport Metro

Express Private Limited v. Delhi Metro Rail Corporation (2022) 9

SCC 286.

20. In the case of Balkar Singh (supra ), a Coordinate Bench

of this Court has held that the Arbitrator has to take into

consideration the provisions of Section 26 and 28 of the 2013 Act

while determining the compensation and if it is not done, the award

becomes unsustainable. In this case only, this Court has held that

it also amounts to patent illegality.

21. In the case of P. Nagaraju (supra ), the Hon’ble Supreme

Court discussed the aspect of patent illegality and permissibility of

interferences. In paras 39 and 40 of the judgment, the Hon’ble

Supreme Court observed as follows:-

“39. Permissibility of interference is on specific grounds of,

(i) arbitrator not adopting judicial approach, ( ii) breach of

principles of natural justice, ( iii) contravention of statute not

linked to public policy or public interest, as being patent illegality

under Section 34(2-A) and (iv) most basic notions of justice.

40. The decision in Delhi Airport Metro Express (P)

Ltd. v. DMRC [Delhi Airport Metro Express (P) Ltd. v. DMRC, (2022)

1 SCC 131 : (2022) 1 SCC (Civ) 330] is relied upon to indicate that

there should be minimal interference in arbitral awards, save, it

suffers from patent illegality. What is patent illegality is delineated

in para 29 which is as hereunder : (SCC p. 150)

13

“29. Patent illegality should be illegality which goes

to the root of the matter. In other words, every error of law

committed by the Arbitral Tribunal would not fall within

the expression “patent illegality”. Likewise, erroneous

application of law cannot be categorised as patent illegality.

In addition, contravention of law not linked to public policy

or public interest is beyond the scope of the expression

“patent illegality”. What is prohibited is for courts to

reappreciate evidence to conclude that the award suffers

from patent illegality appearing on the face of the award, as

courts do not sit in appeal against the arbitral award. The

permissible grounds for interference with a domestic award

under Section 34(2-A) on the ground of patent illegality is

when the arbitrator takes a view which is not even a

possible one, or interprets a clause in the contract in such

a manner which no fair -minded or reasonable person

would, or if the arbitrator commits an error of jurisdiction

by wandering outside the contract and dealing with

matters not allotted to them. An arbitral award stating no

reasons for its findings would make itself susceptible to

challenge on this account. The conclusions of the

arbitrator which are based on no evidence or have been

arrived at by ignoring vital evidence are perverse and can

be set aside on the ground of patent illegality. Also,

consideration of documents which are not supplied to the

other party is a facet of perversity falling within the

expression “patent illegality”.”

22. In the case of Associate Builders (supra ) also, the

question of patent illegality and the ground for making an

interference was discussed by the Hon’ble Supreme Court and in

para 40 of the judgment, the Hon’ble Supreme Court while

discussing the English law held that if an award is induced by

fraud or corruption, such award is in conflict with the public policy

of India, which was the earliest ground on which the Courts of

England set aside the awards. Thereafter, the Hon’ble Supreme

Court observed that “Added to this ground (in 1802) is the

ground that an arbitral award would be set aside if there were

14

an error of law by the arbitrator.” In para 42 of the judgment in

the case of Associate Builders (supra ), the Hon’ble Supreme Court

categorically put them under three sub-heads as below:-

“42. In the 1996 Act, this principle is substituted by the

“patent illegality” principle which, in turn, contains three

subheads:

42.1. (a) A contravention of the substantive law of

India would result in the death knell of an arbitral award.

This must be understood in the sense that such illegality

must go to the root of the matter and cannot be of a trivial

nature. This again is really a contravention of Section

28(1)(a) of the Act, which reads as under:

“28.Rules applicable to substance of dispute .—

(1) Where the place of arbitration is situated in India—

(a) in an arbitration other than an

international commercial arbitration, the Arbitral

Tribunal shall decide the dispute submitted t o

arbitration in accordance with the substantive law

for the time being in force in India;”

42.2. (b) A contravention of the Arbitration Act itself

would be regarded as a patent illegality — for example if an

arbitrator gives no reasons for an award in contravention of

Section 31(3) of the Act, such award will be liable to be set

aside.

42.3. (c) Equally, the third subhead of patent

illegality is really a contravention of Section 28(3) of the

Arbitration Act, which reads as under:

“28.Rules applicable to s ubstance of

dispute.—(1)-(2)***

(3) In all cases, the Arbitral Tribunal shall

decide in accordance with the terms of the contract

and shall take into account the usages of the trade

applicable to the transaction.”

This last contravention must be understood with a caveat.

An Arbitral Tribunal must decide in accordance with the

terms of the contract, but if an arbitrator construes a term

of the contract in a reasonable manner, it will not mean

that the award can be set aside on this ground.

Construction of the terms of a contract is primarily for an

arbitrator to decide unless the arbitrator construes the

contract in such a way that it could be said to be

something that no fair-minded or reasonable person could

do.”

15

23. In the case of Sal Udyog Private Limited (supra ), the

Hon’ble Supreme Court, inter alia, observed that “failure on the

part of the learned sole arbitrator to decide in accordance with

the terms of the contract governing the parties, would

certainly attract the “patent illegality ground” (para 26).”

24. In the case of Delhi Airport Metro Express Private

Limited (supra ), the Hon’ble Supreme Court, inter alia, observed as

hereunder:-

“29. Patent illegality should be illegality which goes

to the root of the matter. In other words, every error of law

committed by the Arbitral Tribunal would not fall within

the expression “patent illegality”. Likewise, erroneous

application of law cannot be categorised as patent illegality.

In addition, contravention of law not linked to public policy

or public interest is beyond the scope of the expression

“patent illegality”. What is prohibited is for Courts to

reappreciate evidence to conclude that the award suffers

from patent illegality appearing on the face of the award, as

Courts do not sit in appeal against the arbitral award. The

permissible grounds for interference with a domestic award

under Section 34(2- A) on the ground of patent illegality is

when the arbitrator takes a view which is not even a

possible one, or interprets a clause in the contract in such

a manner which no fair -minded or reasonable person

would, or if the arbitrator commits an error of jurisdiction

by wandering outside the contract and dealing with

matters not allotted to them. An arbitral award stating no

reasons for its findings would make itself susceptible to

challenge on this account. The conclusions of the

arbitrator which are based on no evidence or have been

arrived at by ignoring vital evidence are perverse and can

be set aside on the ground of patent illegality. Also,

consideration of documents which are not supplied to the

other party is a facet of perversity falling within the

expression “patent illegality”.”.

16

25. In the case of Delhi Airport Metro Express Private

Limited (supra), the Hon’ble Supreme Court in para 49 further

observed as follows:-

“49. Even assuming the view taken by the High

Court is not incorrect, we are afraid that a possible

view expressed by the Tribunal on construction of

the terms of the Concession Agreement cannot be

substituted by the High Court. This view is in line

with the understanding of Section 28(3) of the 1996

Act as a ground for setting aside the arbitral award,

as held in Associate Builders [Associate

Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC

(Civ) 204] and thereafter upheld

in Ssangyong [Ssangyong Engg. & Construction Co.

Ltd. v. NHAI, (2019) 15 SCC 131 : (2020) 2 SCC

(Civ) 213] . No case has been made out by the High

Court to establish violation of Section 28(3). Having

carefully examined the Concession Agreement, the

findings recorded by the Tribunal and the findings

recorded by the Division Bench, we are not in a

position to hold that the opinion of the Tribunal on

inclusion of Rs 611.95 crores under “equity” is a

perverse view. It cannot be said that the Tribunal

did not consider the evidence on record, especially

the resolution dated 16-3-2011 passed by D AMEPL's

Board of Directors. We also do not find fault with

the approach of the Tribunal that the

understanding of the term equity as per the

Companies Act, 2013 is not relevant for the

purposes of determining “adjusted equity” in light of

the express definition of the term in the Concession

Agreement. As has been held

in Ssangyong [Ssangyong Engg. & Construction Co.

Ltd. v. NHAI, (2019) 15 SCC 131 : (2020) 2 SCC

(Civ) 213] , mere contravention of substantive law

as elucidated in Associate Builders [Associate

Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC

(Civ) 204] is no longer a ground available to set

aside an arbitral award. The support placed by the

Division Bench on the interpretation of Section

28(1)(a) of the 1996 Act as adopted in Associate

Builders [Associate Builders v. DDA, (2015) 3 SCC

49 : (2015) 2 SCC (Civ) 204] is, therefore, no longer

17

good law. In view of the foregoing, we set aside the

findings of the High Court and uphold the award

passed by the Tribunal in respect of the

computation of termination payment under Clause

29.5.2.”

26. In the case of Delhi Metro Rail Corporation (supra ), the

Hon’ble Supreme Court referred to the judgment in the case of

Hardeep Singh v. State of Punjab, (2014) 3 SCC 92 and observed in

para 25 that “No word in a statute has to be construed as

surplusage. No word can be rendered ineffective or purposeless.

Courts are required to carry out the legislative intent fully and

completely. While construing a provision, full effect is to be

given to the language used therein, giving reference to the

context and other provisions of the statute”.

27. Learned counsel for the NHAI has also raised the

following points in his submissions:-

(i) Under Section 26(1)(b) of the Act of 2013,

average sale price for similar type of land

situated in the nearest village or nearest

vicinity was to be seen, which has not been

done. Therefore, the award is bad for the

reason of patent illegality.

(ii) The potentiality factor has nothing to do

for determining market value of a land

acquired under Section 26 of the 2013 Act,

but, the award takes into consideration of

the potentiality factor of the land; it vitiates

the award as it is a patent illegality.

18

(iii) Under Section 26 of the 2013 Act, under

sub-clauses 26(1)(a), (b) and (c), the value

was to be determined and thereafter

highest value was to be given to the

beneficiary. But, in the instant case, the

value that has been determined under

different heads i.e. 26(1) (a), (b) and (c) is

flawed. Hence, it is a patent illegality.

(iv) The land is agricultural land.

Compensation could have been given only,

which is fixed for the agricultural land and

not otherwise.

28. In support of his contentions, learned counsel for the

NHAI has placed reliance on the principles of law laid down in the

cases of M/s Sunti Bunti Automobiles (P) Ltd. v. State of U.P. and

others (Writ –C No. 53598 of 2009), Basti Ram v. Nagar Nigam,

Ghaziabad and another, 1999 SCC OnLine All 1850, Smt. Urmila

Devi v. Pooran Chand Dabar and others, 1998 SCC OnLIne All 659,

Smt. Rekha Chaturvedi and another v. Chief Controlling Revenue &

Another, (Writ –C No. 32962 of 2000), Hookiyar Singh and another

v. Special Land Acquisition Officer, Moradabad and another, (1996)

3 SCC 766 and State of Karnataka and others v. Shankara Textiles

Mills Ltd., (1995) 1 SCC 295.

29. In the case of M/s Sunti Bunti Automobiles (P) Ltd.

(supra), arguments were raised that the nature of agricultural land

cannot be changed unless and until there is a declaration under

19

Section 143 of the Uttar Pradesh Zamindari Abolition and Land

Reforms Act, 1950 (“UPZA & LR Act”). It was, in fact, a case of

registration of sale deed, where objections were raised with regard

to the deficiency in the court fees, when the Collector held that the

land was to be of urban potentiality and certain rate was notified.

In that case, the Hon’ble Allahabad High Court, inter alia, held that

“as the market value of the land under transfer is required to

be determined on the general principles, the nature of the land

as to whether it is agriculture or residential looses all

significance”.

30. In the case of Basti Ram (supra ), the Hon’ble Allahabad

High Court, in para 7, held that “Mere existence of certain

constructions over a Bhumidhari land would not take it out of

purview of the provisions of U.P. Zamindari Abolition and Land

Reforms Act unless a declaration is made under Section 143 of

the said Act”. In the case of Smt. Urmila Devi (supra ) and Smt.

Rekha Chaturvedi (supra ), similar principles have been reiterated.

31. In the case of Hookiyar Singh (supra ), the Hon’ble

Supreme Court considered the actual use of land for determining

compensation.

32. In the case of Shankara Textiles Mills Ltd. (supra ), the

question was as to whether the land can be deemed to have been

converted merely because it was used for non-agricultural purposes

and in para 9 of the judgment, the Hon’ble Supreme Court

answered this question and held that “The consistent stand taken

20

by the authorities is that the land was never converted for non-

agricultural use as required by the provisions of Section 95(2)

of the Revenue Act. The mere fact that at the relevant time,

the land was not used for agricultural purpose or purposes

subservient thereto as mentioned in Section 2(18) of the Act or

that it was used for non-agricultural purpose, assuming it to be

so, would not convert the agricultural land into a non -

agricultural land for the purposes either of the Revenue Act or

of the Act, viz. Karnataka Land Reforms Act”.

33. Replying to the arguments made by the learned counsel

for the respondent NHAI, the appellant Gurbachan Singh submitted

that there is no illegality in the award. He would submit that the

appellants are entitled to compensation at a higher rate, but since

the award cannot be modified, the appellants are not claiming

higher amount of compensation. He would submit that the scope of

Section 37 of the AC Act, 1996 is much restrictive; appreciation of

evidence cannot be done in the matter; there cannot be re-

appreciation; if there are two views possible, this Court cannot

substitute its own view to the view taken by the AT. He would also

submit that even if there is no reason given in the award, the Court

may read the reasons in the award as the Arbitrators are generally

not legally trained minds. He would also submit that the

respondent NHAI is trying to widen the scope of the appeal under

Section 37 of the AC Act, 1996, which is not permissible.

34. This is admitted that in the instant case, compensation

was to be determined in accordance with Sections 26 to 28 of the

21

2013 Act. Section 26 of the 2013 Act gives specific method to

determine the market value.

35. It is also not in dispute that the scope in appeal under

Section 37 of the AC Act, 1996 is quite restrictive. It is not a Court

of Appeal. If there are two views possible, this Court should not

substitute its own views to the views adopted by the AT. Re -

appreciation of evidence cannot be done, unless the findings are

perverse. Within those limited parameters, the matter is to be

examined.

36. First and foremost, this Court proceeds to examine the

findings of the AT on each issue, by which the compensation was

determined. As noted hereinbefore, under three issues, the AT has

given findings and held the appellants entitled for compensation at

different rates.

37. Issue no. 1 is as follows:-

“(i) Whether the applicants are entitled to get

the market value of the land acquired in

the year 2013 on the basis of the rates for

acquisition of adjoining land in the year

2008 with 10% -15% annual increment?

38. The issue itself is not in accordance with Section 26 of

the 2013 Act. Section 26 of the 2013 Act, as stated, give only three

methods, which are as follows:-

(i) the market value as per the Indian Stamp

Act, 1899 (2 of 1899) for the registration of

sale deeds.

22

(ii) the average sale price for similar type of

land situated in the nearest village or

nearest vicinity area; and

(iii) agreed rate.

39. The market value under Section 26 of the 2013 Act

cannot be determined in a case based on the acquisition, which

was done in the year 2008. In the instant case, the notification

under Section 3-A of the NH Act, 1956 was made in the year 2013.

Section 26 of the 2013 Act does not stipulate taking into

consideration 5 years old rate determined in some acquisition

proceedings. In fact, the rate determined in other acquisition

proceedings is not a factor for determining the compensation under

Section 26 of the 2013 Act. The AT on issue no. 1 held that the

appellants are entitled to compensation @ Rs. 12,000/- per sq.mtr.

This is not in accordance with the scheme of determining

compensation under the NH Act, 1956, which is done in

accordance with Sections 26 to 28 of the 2013 Act. Therefore, the

appellants may not be entitled to compensation at the rate, which

is determined by the AT under issue no. 1.

40. Issue No. 2 will be discussed after issue no. 3 is

examined. Issue no. 3 is as follows:-

“(iii) Whether the applicants are entitled to get the

market value of the land acquired in the year 2013

as per the sale deed executed in the year 2013?”

41. According to the AT, as to whether the appellants are

entitled to compensation based on sale deeds executed in the year

2013. I t appears to have been framed as per the scheme of

23

determining the compensation under Section 26 of the 2013 Act.

Under Section 26(1)(b) of the Act, one of the criteria for assessing

and determining the market value of the land is the average sale

price for similar type of land situated in the nearest village or

nearest vicinity area. This is further explained in Explanation 1 to

Section 26 of the 2013 Act. At the cost of repetition, it is

reproduced as below:-

“26. Determination of market value of land by

Collector. –(1) ........................................................ .....................

......................................................................................................

Explanation 1.—The average sale price referred to in

clause (b) shall be determined taking into account the sale

deeds or the agreements to sell registered for similar type

of area in the near village or near vicinity area during

immediately preceding three years of the year in which

such acquisition of land is proposed to be made.”

42. A bare reading of Explanation-1, makes it abundantly

clear that when average sale price is taken, it should be taken of

sale deeds executed immediately preceding three years of the year

in which such acquisition of land is proposed to be made.

43. In the case of Project Director, National Highways

Authorities of India v. Alfa Remidis Ltd. and others, 2026 SCC

OnLine SC 845, the AT had determined compensation based on the

sole sale deed of a different type of land, which was held to be

impermissible and compensation at circle rate was awarded. In

paras 11 and 12, the Hon’ble Supreme Court observed as follows:-

“11. Applying the rigours of Section 26(1) of the 2013 LA

Act to the case on hand, we find that the Arbitrator

demonstrably erred in relying upon the sale deed dated

29.03.2017 relating to residential land in an adjoining

village to determine the market value of respondent No. 1's

24

land, which was being used for an industrial purpose.

Clearly, the two lands were not of a ‘similar type’ for the

purposes of Section 26(1)(b) of the 2013 LA Act and the

price in the said sale deed could not have been adopted.

Further, the methodology for working out the ‘average

sale price’ under Section 26(1)(b), as set out

in Explanations 1 to 4 thereunder, does not permit

placing reliance on a single sale deed for that purpose.

Reference may be made to Madhya Pradesh Road

Development Corporation v. Vincent Daniel, (2025) 7 SCC

798, wherein this Court considered the scheme of Section

26(1) of the 2013 LA Act and observed that the language

used therein implied that there should be multiple deeds

available for reference, as singular deals may not supply

adequate and reliable data.

12. Though the High Court laboured over various decisions

of this Court, the position obtaining under the statutory

provision and the legal principles laid down in the above

referred judgments were neither noted nor given effect to.

Section 34(2A) of the Arbitration Act provides for setting

aside an arbitral award if it is found to be vitiated by

patent illegality appearing on the face of it. Though

the proviso thereto stipulates that an arbitral award

should not be set aside merely on the ground of

erroneous application of law or by reappreciation of

evidence, we are of the opinion that the cloak of

protection afforded by the proviso cannot be extended

to the present arbitral award. The Arbitrator

completely ignored the directives of Section 26(1)(b) of

the 2013 LA Act and the Explanations thereunder, by

adopting a sale exemplar of a totally dissimilar type of land

and, at that, a single sale exemplar, which was contrary to

the statutory mandate. Respondent No. 1 had itself cited

the Government rate available in the Ready Reckoner, i.e.,

Rs. 2,020/- per square meter, being the rate applicable for

lands on the highway in Zone 4. Mauza Pardi (Rithi) finds

mention amongst the villages named in Zone 4. That being

so, the statutory provision that should have been applied

for determination of the market value of respondent No. 1's

land was Section 26(1)(a) of the 2013 LA Act.”

(emphasis supplied)

25

44. Under issue no. 3, the AT had noted that in the year

2008 for acquisition of land adjacent to the national highway, sale

deeds were executed @ Rs. 7,200/- per sq. mtr. and in the year

2013, sale deeds were executed between Rs. 12,000/- to Rs.

14,000/- per sq. mtr. But, as such exemplar sale deed has not been

taken note of. This Court is cautious of the fact that it cannot re-

appreciate the evidence and cannot sit as a court of appeal on the

arbitral award. But, the Court is just examining as to how the AT

reached to its conclusion? Is it as per the scheme of Section 26 of

the 2013 Act?

45. It is evident that under issue no. 3, the AT did not

follow the scheme of Section 26(1)(b) of the 2013 Act. Which sale

deeds were considered? It is nowhere specified by the AT. What

were the rates in those sale deeds? Sale deeds of preceding three

years were to be taken into consideration, which has not been

done. Therefore, the findings recorded by the AT on issue no. 3 are

also not permissible. The fact remains that the appellants were not

awarded compensation based on finding recorded by the AT on

issue no. 3. Therefore, it has no effect.

46. The grave question is on issue no. 2. Issue no. 2 is with

regard to determining the market value at circle rate. Here, multiple

arguments were made on behalf of the respondent NHAI to argue

that the findings of the AT on the issue no. 2 are not lawful. The

first and foremost argument was that the land in question was

agricultural land; it cannot be awarded compensation at

26

commercial rate; it is bad and it is a patent illegality. Arguments

made on that aspect have already been noted hereinbefore.

47. There is another argument, which was made on behalf

of the respondent NHAI questioning the determination of circle rate

by the Collector. Learned counsel for the respondent NHAI has

raised the following points on this aspect:-

(i) No proper finding/reasoning was noted in

the award as to why the circle rate dated

31.03.2012 was made applicable?

(ii) Section 26(1)(a) of the 2013 Act cannot be

read in isolation.

(iii) It is argued that under the Indian Stamp

Act, 1899 (“the Stamp Act”), the Collector

determines market value of the land, which

is relatable to the agricultural and non-

agricultural land. Therefore, there is no

scope for making valuation of land on the

basis of commercial potentiality of land.

(iv) Circle rate will not be applicable in the

case and the provisions of the Stamp Act

and its Rules shall prevail.

(v) The SLAO in its order dated 26.08.2015

has noted that the land is in the rural area

and accordingly the compensation was

determined. But, the Arbitrator has not

distinguished it as to why compensation at

circle rate is given?

27

48. The AT has taken note of many other acquired lands

for discussion on the issue no. 2. The potentiality of land was also

considered, but finally, the AT took note of the Order dated

31.03.2012 by which the circle rates of the land were notified and

based on the circle rate, compensation was determined @

Rs. 11,000/- per sq. mtr.

49. Essentially two arguments have been made, namely- (i)

that the land is agricultural land and for it commercial land

compensation may not be awarded and (ii) circle rate for

agricultural land should be fixed as such without considering the

potentiality factor of the land for commercial purposes.

50. Section 26 of the 2013 Act fixes criteria in assessing

and determining the market value of the land and as per sub-

section (1)(a) of Section 26, the assessment and determination shall

be made on the basis of market value, if any, specified in the Stamp

Act for registration of sale deeds or agreements to sell, as the case

may be, in the area, where the land is situated.

51. Under the Stamp Act, the Uttar Pradesh Stamp

(Valuation of Property) Rules, 1997 were framed, which appears to

be applicable in the State of Uttarakhand and by order dated

31.03.2012, the Collector, Udham Singh Nagar determined the

circle rate.

28

52. This Court is of the view that the officer or the

authority determining the compensation under Section 3-G of the

NH Act, 1956 cannot go beyond the fixation of circle rate by the

Collector under the Stamp Act. The correctness of the rates fixed or

determined by the Collector under the Stamp Act may not be

questioned in a proceeding under Section 3-G of the NH Act, 1956

for determination of the compensation or in any further

proceedings, including Section 34 or/and under Section 37 of the

AC Act, 1996. Therefore, the arguments made on the validity and

correctness of the circle rate fixed by the Collector have less merit

for acceptance.

53. Arguments have also been made with regard to the

nature of the land. Under UPZA & LR Act, the nature of land and

its ramifications are different aspects and computation of

compensation is something different. As stated, the determination

of compensation is to be done under Sections 26 to 28 of the 2013

Act. Under Section 26(1)(a) of the 2013 Act, the circle rate is to be

seen and under Section 26(1)(b) of the 2013 Act, the average sale

price of similar type of land is to be seen. Therefore, under Section

26(1)(b) of the 2013 Act, agricultural use and non-agricultural use

may be a criteria, but while determining compensation under

Section 26(1)(a) of the 2013 Act, it cannot be said that the use of

land is to be seen. Under sub-section 1(a) of Section 26 of the 2013

Act, the circle rate has to be seen. Whatever is determined, that has

to be paid.

54. This Court may just examine as to whether circle rate

has correctly been examined or not because some arguments have

29

been made on this aspect also on behalf of the respondent NHAI. It

is argued that the SLAO in its award dated 26.08.2015 has noted

the Tehsildar’s report and found that the acquired land is 100

meters away from the national highway and accordingly determined

the compensation based on the circle rate. This is not accepted by

the AT. The AT has taken commercial rate in consideration.

55. As such the findings of the SLAO have not been set

aside or discussed. But, then the law is well settled that the Arbitrators

are not considered to be the legally trained minds. The reasonings may

be implicit. Under issue no. 2, the AT has discussed various factors

and finally took into consideration the circle rate determined by the

Collector on 31.03.2012. Admittedly, the circle rates were part of the

record in the AT. A pictorial map of the land acquired has also been

filed in this appeal by the appellants, which is not denied by the

respondent NHAI. It is admitted to the parties that the pictorial map

was also part of the proceedings before the AT. This Court is further

making it clear that this Court is not appreciating any evidence. The

pictorial map shows that the land is adjacent to Sitarganj-Khatima

road. The SLAO has recorded that the land is 100 meters beyond

the national highway. This is, in fact, factually wrong

because in Appeal No. 307 of 2023, the respondent NHAI

has placed on record, as Annexure 6, the objections,

which they filed in the application under Section 34 of the AC Act,

1996 and in para 16 of it, they have admitted that the land acquired

was adjacent to the national highway. Admittedly, on Sitarganj-

Khatima road, where the land of the appellants falls,

the rate or commercial rate is Rs. 11,000/- per sq. mts. by the order

30

dated 31.03.2012 of the Collector and note 20 of it records that the

commercial rate will be applicable to such land, which falls within 100

meters from the national highway.

56. That is how the AT has decided compensation. This

Court does not see any reason to interfere. There is no patent

illegality. The compensation has been determined in accordance

with law settled on this aspect.

57. On issue nos. 1 and 3, the findings of the AT are not in

accordance with law. Compensation according to findings on these

issues have not been awarded. Since the computation of

compensation on issue nos. 1 & 3 by the AT is not in accordance

with the law, the appellants are not entitled to enhanced

compensation. In the impugned judgment dated 30.05.2023 passed

in Arbitration Suit No. 28 of 2017, Gurbachan Singh and another v.

Union of India and others, under Section 34 of the AC Act, 1996

rightly interference has not been made. Accordingly, Appeal from

Order No. 224 of 2023 deserves to be dismissed.

58. On issue no. 2, as decided by the AT, the findings are

in accordance with law. In the impugned judgment dated

30.05.2023 passed in Arbitration Suit No. 46 of 2017, Union of

India v. Gurbachan Singh and others, under Section 34 of the AC

Act, 1996 rightly interference has not been made. Accordingly, the

Appeal from Order No. 307 of 2023 also deserves to be dismissed.

31

59. The Appeal from Order No. 224 of 2023 is dismissed.

60. The Appeal from Order No. 307 of 2023 is also

dismissed.

(R avindra Maithani, J)

19.06.2026

Avneet/