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Bombay High Court

Balu Lingappa ChandanshiveversusTHE PROJECT DIRECTOR NH AUTHORITY OF INDIA AND OTHERS

Disposal
DISPOSED OFF

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

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
                                                                    922 to 938.odt




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

                                 PAGE 6 OF 14
                                                               922 to 938.odt




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
                                                                       922 to 938.odt




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
                                                                    922 to 938.odt




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
                                                     922 to 938.odt




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
                                                                  922 to 938.odt




                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
                                                                  922 to 938.odt




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
                                                              922 to 938.odt




         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)

                              PAGE 13 OF 14
                                                              922 to 938.odt




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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