Bombay High Court
Balu Lingappa ChandanshiveversusTHE PROJECT DIRECTOR NH AUTHORITY OF INDIA AND OTHERS
- Disposal
- DISPOSED OFF
- Bench
- ARUN R PEDNEKER
Holding
The arbitrator committed patent illegality and perversity by granting different compensation to similarly placed lands, and the awards are set aside.
Summary
The appellants, owners of land acquired for the widening of National Highway No. 361, challenged the arbitral awards that granted compensation of Rs 399 per square metre for lands away from the highway, while lands abutting the highway received Rs 680 per square metre. They argued that under Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, all similarly situated lands should receive uniform compensation based on the highest sale deed. The respondents contended that the arbitrator correctly differentiated the lands and that the court’s power under Section 34 of the Arbitration and Conciliation Act, 1996, is limited to patent illegality. Relying on Supreme Court precedents, the High Court held that the arbitrator’s bifurcation was a patent illegality and perverse, violating the principle of equal compensation. Consequently, the awards granting Rs 399 per square metre were set aside and the matters were remitted to a newly appointed arbitrator under the National Highways Act.
Issues considered
- The applicability of Section 26 of the 2013 Act to compensation determinations under the National Highways Act
- Whether the arbitrator’s differentiation of compensation for similarly placed lands constitutes patent illegality or perversity under Section 34 of the Arbitration and Conciliation Act, 1996
- The scope of judicial interference with arbitral awards in land‑acquisition disputes
Legislation cited
- Arbitration and Conciliation Act, 1996 — s. 18, 34, 34(2)(a)(iii), 37
- National Highways Act, 1956 — s. 3A, 3D(1), 3G(5)
- Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 — s. 105, 26, 30
Subjects
- Arbitration
- Compensation
- Land Acquisition
- National Highways Act
- Section 34
- Patent Illegality
- Perversity
- Right to Fair Compensation Act
- Equal Compensation
- Public Policy
Judgment
2026:BHC-AUG:13643
922 to 938.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
922 ARBITRATION APPEAL NO. 38 OF 2025
Balu Lingappa Chandanshive
VERSUS
The Project Director Nh Authority Of India And Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondents
AND
923 ARBITRATION APPEAL NO. 47 OF 2025
Bhaskar Gajendra Sarak
VERSUS
The Project Director, National Highway Authorrity Of India And Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No.1
Mr. R. D. Sanap, Advocate for Respondent No. 2
Mr. B. V. Virdhe, AGP for Respondent/State
AND
924 ARBITRATION APPEAL NO. 48 OF 2025
Subhabai Navnath Sarak Died Lrs. Vaishali Sanjub Mane And Another
VERSUS
The Project Director, National Highway Authorrity Of India And Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No.1
Mr. R. R. Bangar, Advocate for Respondent No. 2
Mr. P. M. Kulkarni, AGP for Respondent/State
AND
925 ARBITRATION APPEAL NO. 49 OF 2025
Sudhakar Gajendra Sarak
VERSUS
The Project Director, National Highway Authorrity Of India And Others
...
PAGE 1 OF 14
922 to 938.odt
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No.1
Mr. R. R. Bangar, Advocate for Respondent No. 2
Mr. V. M. Lomte, AGP for Respondent/State
AND
926 ARBITRATION APPEAL NO. 50 OF 2025
Sudhakar Gajendra Sarak
VERSUS
The Project Director, National Highway Authorrity Of India And Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No.1
Mr. N. S. Salunke, Advocate for Respondent No. 2
Ms. J. P. Reddy, AGP for Respondent/State
AND
927 ARBITRATION APPEAL NO. 51 OF 2025
Vithal Ramchandra Bele Died Lrs. Kusum Vithal Bele And Other
VERSUS
The Project Director, National Highway Authorrity Of India And Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No.1
Ms. K. S. Salunke, Advocate for Respondent No. 2
Mr. V. M. Lomate, AGP for Respondent/State
AND
928 ARBITRATION APPEAL NO. 52 OF 2025
Balaji Vinayak Bele And Others
VERSUS
The Project Director, National Highway Authorrity Of India And Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No.1
Mr. R. H. Mewara, Advocate for Respondent No. 2
Ms. J. P. Reddy, AGP for Respondent/State
AND
929 ARBITRATION APPEAL NO. 53 OF 2025
PAGE 2 OF 14
922 to 938.odt
Bharat Jyoti Gund Died Through Lrs. Mainabai Bharat Gund And
Others
VERSUS
The Project Director, National Highway Authorrity Of India And Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No.1
Mr. N. S. Salunke, Advocate for Respondent No. 2
Ms. J. P. Reddy, AGP for Respondent/State
AND
930 ARBITRATION APPEAL NO. 54 OF 2025
Anant Alias Anand Eknath Bele
VERSUS
The Project Director, National Highway Authorrity Of India And Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No. 1
Mr. Rohit Sarvadnya, Advocate for Respondent No.2
Mr. P. M. Kulkarni, AGP for Respondent No. 3/State
AND
931 ARBITRATION APPEAL NO. 55 OF 2025
Rama Masa Maske
VERSUS
The Project Director, National Highway Authorrity Of India And Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No. 1
Mr. U. B. Bondar, Advocate for Respondent No.2
Mr. V. M. Lomte, AGP for Respondent No. 3/State
AND
932 ARBITRATION APPEAL NO. 56 OF 2025
Sidram Vithoba Maske And Others
VERSUS
The Project Director, National Highway Authorrity Of India And Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
PAGE 3 OF 14
922 to 938.odt
Mr. S. P. Urgunde, Advocate for Respondent No. 1
Mr. R. D. Sanap, Advocate for Respondent No.2
Mrs. J. P. Reddy, AGP for Respondent No. 3/State
AND
933 ARBITRATION APPEAL NO. 66 OF 2025
Bhaskar Gajendra Sarak
VERSUS
The Project Direction, National Highway Authorrity Of India, And
Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No. 1
Mr. R. R. Bangar, Advocate for Respondent No.2
AND
934 ARBITRATION APPEAL NO. 67 OF 2025
Ambadas Jyoti Gund
VERSUS
The Project Direction, National Highway Authorrity Of India, And
Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No. 1
Mr. R. R. Bangar, Advocate for Respondent No.2
AND
935 ARBITRATION APPEAL NO. 68 OF 2025
Laxmi Babruvan Rochkari
VERSUS
The Project Direction, National Highway Authorrity Of India, And
Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No. 1
Mr. R. R. Bangar, Advocate for Respondent No.2
AND
936 ARBITRATION APPEAL NO. 69 OF 2025
Shankar Ravsaheb Gund
PAGE 4 OF 14
922 to 938.odt
VERSUS
The Project Direction, National Highway Authorrity Of India, And
Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No. 1
Mr. R. R. Bangar, Advocate for Respondent No.2
AND
937 ARBITRATION APPEAL NO. 70 OF 2025
Sandip Subhash Kadam
VERSUS
The Project Direction, National Highway Authorrity Of India, And
Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No. 1
Mr. R. R. Bangar, Advocate for Respondent No.2
AND
938 ARBITRATION APPEAL NO. 71 OF 2025
Balu Lingappa Chandnshiv
VERSUS
The Project Direction, National Highway Authorrity Of India, And
Others
...
Mr. S. N. Patil a/w Mr. N. S. Birajdar, Advocate for Appellant
Mr. S. P. Urgunde, Advocate for Respondent No. 1
Mr. R. R. Bangar, Advocate for Respondent No.2
***
CORAM : ARUN R. PEDNEKER, J
DATE : MARCH 24, 2026
PC :
1. Heard.
2. The appellants challenge the impugned Awards passed by
PAGE 5 OF 14
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the Arbitrator, so also, the impugned Orders passed by the Principal
District Judge, Osmanabad dismissing the Applications under Section
34 of the Arbitration and Conciliation Act, 1996.
3. Brief facts giving rise to the present appeals are that the
appellants are the owners of the acquired lands for extension of the
National Highway No.361. Notification dated 26.10.2015 was issued for
acquisition of the lands abutting the National Highway No.361 by the
Ministry of Road Transport and Highways under Section 3A of the
National Highways Act, 1956. Final notification under Section 3D(1) of
the National Highways Act, 1956 was published on 18.11.2015,
acquiring various lands of the different appellants herein situated at
village Tadavala, Taluka Tuljapur, District Osmanabad for widening of
National Highway No.361.
4. The above noted facts are not disputed before this court. It
appears that the Competent Authority for Land Acquisition (CALA)
awarded compensation in three categories determining the
compensation in Group 1 category at the rate of Rs.40 per Sq. Mtr., in
Group 2 category there are further three subcategories in which there is
compensation granted at the rate of Rs.680/-, Rs.40 and Rs.79 per Sq.
Mtr. and, in Group 3 category at the rate of Rs.44 per Sq. Mtr.
Thereafter, the appellants filed the Applications under
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Section 3G(5) for referring the matters to the Arbitrator. The Arbitrator
maintained the compensation at the rate of Rs.680/- per Sq.Mtr. for the
lands abutting the highway and in respect of all other lands granted
compensation at the rate of Rs.399/- per Sq. Mtr.
The appellants, who are granted compensation at the rate
of Rs.399/- per Sq. Mtr. challenged the Awards under Section 34 of the
Arbitration and Conciliation Act, 1996. The proceedings are dismissed.
Challenging the Awards of the Arbitrator and the order of
the learned Principal District Judge, Osmanabad dismissing the Section
34 applications in the present appeals, the learned counsel for the
appellants relies upon the Judgment of the Madhya Pradesh Road
Development Corporation Vs. Vincent Daniel and others, (2025) 7 SCC
798. He submits that Section 26 of the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and Resettlement Act,
2013 (for brevity “2013 Act”) is made applicable for determination of the
compensation under the National Highways Act. He further submits
that Section 105 of the 2013 Act, notifications are be issued by the
Central Government applying Sections 26 to 30 of the 2013 Act for
determination of the compensation for the lands acquired under the
National Highways Act.
5. The learned counsel for the appellants submits that, while
PAGE 7 OF 14
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applying Section 26 of the 2013 Act the highest sale deed has to be
taken into consideration. He also submits that the similarly placed
lands has to be granted similar compensation. He relies upon
paragraphs no.24 and 42 of the above referred Judgment and submits
that while passing the awards the arbitrator has not applied the
principles while determining the compensation and, thus, the Awards
are patently illegal and perverse have to be set aside.
6. Per contra, the learned counsel appearing for the
Respondents / National Highway Authority submits that the arbitrator
has rightly determined the compensation for 2 different categories,
some lands which are abutting highway are granted Rs.680/- per Sq.
Mtr., whereas the lands little away from the highway are granted
compensation at the rate of Rs.399/- per Sq. Mtr. He submits that under
Section 34 of the Arbitration and Conciliation Act, 1996, the power of
the court is extremely restricted and only in cases of patent illegality
the award can be interfered. He also submits that the arbitrator was
justified in bifurcating the lands in 2 different categories and he has has
also taken into consideration NA potential of the lands and has allowed
enhancement of compensation which is granted by CALA at the rate of
Rs.40, 79 and 44 to uniformly Rs.399/- per Sq. Mtr. and the same is
rightly not interfered with by the District Court under Section 34 of the
PAGE 8 OF 14
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Arbitration and Conciliation Act, 1996.
7. Considered rival submissions.
8. In the case of the Madhya Pradesh Road Development
Corporation Vs. Vincent Daniel and others (supra), the Hon’ble
Supreme Court has observed that the courts also needs to apply the
general parameters under Land Acquisition Act as laid down by the
Hon’ble Supreme Court and the High Court, while determining the
compensation under Section 26 of the 2013 Act. One of the principal
contention is that all acquired lands have NA potential lands and are
abutting the highway and they cannot be granted separate
compensation. It is thus submitted that the arbitrator has committed
patent illegality and perversity in differentiating the similarly placed
lands and, thus, the Awards need to be interfered with.
9. This Court by order dated 18.03.2026 in Arbitration Appeal
No.10 of 2026 with connected appeals, at paragraphs no.60, 61 and 62,
considered the Judgments of the Hon’ble Supreme Court dealing with
the power of the court under Section 34 and 37 of the Arbitration and
Conciliation Act to interfere with the arbitral Award as under:
“60. ...The Supreme Court in the case of PSA Sical
Terminals Private Limited Vs. Board of Trustees of V.O.
Chidambaranar Port Trust Tuticorn and Anr. reported in
(2023) 15 SCC 781 has observed that it is a settled legal
PAGE 9 OF 14
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position, that in an application under Section 34, the court
is not expected to act as an appellate court and reappreciate
the evidence. The scope of interference would be limited to
grounds provided under Section 34 of the Arbitration Act.
The interference would be so warranted when the award is
in violation of "public policy of India", which has been held
to mean "the fundamental policy of Indian law". A judicial
intervention on account of interfering on the merits of the
award would not be permissible. However, the principles of
natural justice as contained in Section 18 and 34(2)(a)(iii) of
the Arbitration Act would continue to be the grounds of
challenge of an award. The ground for interference on the
basis that the award is in conflict with justice or morality is
now to be understood as a conflict with the "most basic
notions of morality or justice". It is only such arbitral
awards that shock the conscience of the court, that can be
set aside on the said ground. An award would be set aside on
the ground of patent illegality appearing on the face of the
award and as such, which goes to the roots of the matter.
However, an illegality with regard to a mere erroneous
application of law would not be a ground for interference.
Equally, reappreciation of evidence would not be permissible
on the ground of patent illegality appearing on the face of
the award.
61. The Hon’ble Supreme Court in PSA Sical Terminals
Private Limited (supra) has further observed that a decision
which is perverse, though would not be a ground for
challenge under "public policy of India", would certainly
amount to a patent illegality appearing on the face of the
award. However, a finding based on no evidence at all or an
award which ignores vital evidence in arriving at its
decision would be perverse and liable to be set aside on the
ground of patent illegality.
62. To appreciate the test of perversity, the Hon’ble
Supreme Court in PSA Sical Terminals Private Limited
(supra) in para 42 has further held as under :-
“42. To understand the test of perversity, it will also be
appropriate to refer to paragraph 31 and 32 from
the judgment of this Court in Associate Builders
(supra), which read thus:
31. The third juristic principle is that a decision which
PAGE 10 OF 14
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is perverse or so irrational that no reasonable person
would have arrived at the same is important and
requires some degree of explanation. It is settled law
that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account
something irrelevant to the decision which it
arrives at; or
(iii) ignores vital evidence in arriving at its
decision,
such decision would necessarily be perverse.
32. A good working test of perversity is contained in
two judgments. In Excise and Taxation Officer-cum-
Assessing Authority v. Gopi Nath & Sons [1992 Supp
(2) SCC 312], it was held:
"7. ... It is, no doubt, true that if a finding of fact
is arrived at by ignoring or excluding relevant
material or by taking into consideration
irrelevant material or if the finding so
outrageously defies logic as to suffer from the
vice of irrationality incurring the blame of being
perverse, then, the finding is rendered infirm in
law."
In Kuldeep Singh v. Commr. of Police (1999) 2 SCC 10, it
was held:
"10. A broad distinction has, therefore, to be maintained
between the decisions which are perverse and those which
are not. If a decision is arrived at on no evidence or evidence
which is thoroughly unreliable and no reasonable person
would act upon it, the order would be
perverse. But if there is some evidence on record which is
acceptable and which could be relied upon, howsoever
compendious it may be, the conclusions would not be treated
as perverse and the findings would not be interfered with.”
10. In the instant case, the Arbitrator having bifurcated the
lands in different categories has committed patent illegality and
perversity and uniformity ought to have been maintained. The
PAGE 11 OF 14
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arbitrator ought not to have differentiated the lands. The little distance
of few feet makes no difference as all the acquired lands have NA
potentiality and are near the highway. Section 26 of the 2013 Act also
provides for determination of the compensation based on average of
highest sale deed, as such, the compensation granted to the land
considering highest sale deed of Rs.680/- per Sq. Mtr. ought to have been
applied to the present lands.
11. The Supreme Court in case of The Project Director, National
Highways Nos.45E and 220, National Highways Authority of India Vs.
M. Hakeem and Ors, AIR 2021 SC 3471 has taken view that similar
lands under different acquisition purpose cannot yield different
compensation and has observed thus:
53. It can be seen from the aforesaid provisions that the
speeding up of acquisition of land needed for national
highways has been achieved. The challenge process to
an award passed will, of necessity, take its own time,
both Under Section 3G of this Act as well as under the
provisions of the Land Acquisition Act. This being the
case, it is a little difficult to appreciate as to why the
wholesome regime of appeals under the Land
Acquisition Act has been replaced by a regime in which
an award passed by an Arbitrator, who is not
consensually appointed but appointed by the Central
Government, can only be challenged not on merits, but
on the limited grounds contained in Section 34 of the
Arbitration Act, 1996.
54. There can be no doubt that differential
PAGE 12 OF 14
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compensation cannot be awarded on the ground that a
different public purpose is sought to be achieved. Also,
the legislature cannot say that, however laudable the
public purpose and however important it is to expedite
the process of land acquisition, differential
compensation is to be paid depending upon the public
purpose involved or the statute involved.
55. Take the case of a single owner of land who has two
parcels of land adjacent to each other. One parcel of
land abuts the national highway, whereas the other
parcel of land is at some distance from the national
highway. Can it be said that the land which abuts the
national highway, and which is acquired under the
National Highways Act, will yield a compensation much
lesser than the adjacent land which is acquired under
the Land Acquisition Act only because in the former
case, an award is by a government servant which
cannot be challenged on merits, as opposed to an award
made under Part III of the Land Acquisition Act by the
reference Court with two appeals in which the merits of
the award can be gone into? There can be no doubt that
discrimination would be writ large in such cases.
12. Considering the above judgment of the Supreme Court, this
Court finds that the Arbitrator has committed patent illegality in
granting different compensation to similarly placed lands. In this view
of the matter, the impugned Awards to the extent of the present
appellants, wherein compensation is granted at the rate of Rs.399/- per
Sq. Mtr. are quashed and set aside.
13. Appointment of arbitrator under the National Highways Act
is exclusive jurisdiction of the Central Government under Section 3G(5)
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of the National Highways Act. The impugned Arbitral Awards being set
aside, have to be again referred to the arbitrator appointed by the
Central Government under Section 3G(5) of the National Highways Act.
Considering this, I deem it appropriate to directly refer the matters
before arbitrator appointed by the Central Government. The matters
are remitted back to the Arbitrator to be determined within four (04)
months. All contentions are left open.
14. The Arbitration Appeals stand disposed of accordingly.
(ARUN R. PEDNEKER, J.)
usm
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