Bombay High Court

NATIONAL HIGHWAYS AUTHORITY OF INDIA, THRU. ITS PROJECT DIRECTOR SHREE SWAPNIL KASARversusTHE COMPETENT AUTHORIT, DY. COLLECTOR AND ANR.

Disposal: DISMISSED
Bench: ARUN R PEDNEKER

Holding

The Court held that the arbitrator correctly applied the relevant statutory provisions and there is no patent illegality, so the arbitral awards stand.

Summary

The National Highways Authority of India (NHAI) appealed the arbitral awards that enhanced compensation for land acquired for the expansion of National Highway 361 in Chakur, Latur. The dispute centered on whether the arbitrator correctly applied the market‑value determination provisions of the 2013 Land Acquisition Act and the appropriate multiplication factor under the 1965 Municipal Councils Act, given the area's classification as a transitional Nagar Panchayat. NHAI argued that the arbitrator relied on inappropriate sale deeds and applied an unjustified factor of 1.5, while the respondents contended that the arbitrator followed the statutory method of using the highest 50 % of sale transactions and correctly applied the factor. The High Court examined the statutory provisions, the notifications defining the area, and the arbitrator’s methodology, finding no patent illegality. Consequently, the Court upheld the arbitral awards and dismissed the appeals under Section 37 of the Arbitration Act.

Issues considered

Whether the arbitrator erred in determining market value by not following Section 26 of the 2013 Land Acquisition Act (use of highest 50 % of sale transactions).
Whether the multiplication factor of 1.5 was correctly applied to the compensation, considering the area's classification under the 1965 Municipal Councils Act and the 26/05/2015 notification.
Whether there are grounds for interference with the arbitral award under Section 37 of the Arbitration and Conciliation Act, 1996.

Legislation cited

Arbitration and Conciliation Act, 1996 — s. 34, 37
Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965 — s. 341A
National Highways Act, 1956 — s. 3-A, 3G(1), 3G(5)
Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 — s. 26

Subjects

land acquisition
compensation
arbitration
Section 37
National Highway
multiplication factor
market value
Nagar Panchayat
transitional area

Judgment

2026:BHC-AUG:19749

IN THE JUDICATURE OF HIGH COURT AT BOMBAY
BENCH AT AURANGABAD

ARBITRATION APPEAL NO. 32 OF 2025

National Highways Authority Of India Thru.
Its Project Director Shree Swapnil Kasar
VERSUS
The Competent Authority, Dy.collector And Anr.
…
Advocate for Appellant : Mr. Nilkanth Pandurang Bangar
Advocate for Respondent No.1: Mr. S. S. Deve
Advocate for Respondent No.2 : Mr. P. R. Katneshwarkar i/b Mr. R. P.
Adgaonkar and Irfan Dange
...
WITH
CIVIL APPLICATION NO. 10423 OF 2024
IN ARBA/32/2025

WITH
CIVIL APPLICATION NO. 7720 OF 2024
IN ARBA/32/2025
...

WITH
ARBITRATION APPEAL NO. 30 OF 2025

National Highway Authority Of India Thru.
Its Project Director Shree Swapnil Kasar
VERSUS
The Competent Authority, Dy,collector And Anr.
...
Advocate for Appellant : Mr. Nilkanth Pandurang Bangar
Advocate for Respondent No.1: Mr. S. S. Deve
Advocate for Respondent No.2 : Mr. P. R. Katneshwarkar i/b Mr. R. P.
Adgaonkar and Irfan Dange
…
WITH
CIVIL APPLICATION NO. 7716 OF 2024
IN ARBA/30/2025

WITH
CIVIL APPLICATION NO. 10420 OF 2024
IN ARBA/30/2025
...

WITH
ARBITRATION APPEAL NO. 31 OF 2025

National Highways Authority Of India, Thru.
Its Project Director Shree Swapnil Kasar

Page 1 of 11
“This is the corrected order in view of the “Speaking to the Minutes” taken on 30/04/2026.”
Arb Appeal 32-2025 + 2 (corrected)

VERSUS
The Competent Authority, Dy. Collector And Anr.
…
Advocate for Appellant : Mr. Nilkanth Pandurang Bangar
Advocate for Respondent No.1: Mr. S. S. Deve
Advocate for Respondent No.2 : Mr. P. R. Katneshwarkar i/b Mr. R. P.
Adgaonkar and Irfan Dange
…

WITH
CIVIL APPLICATION NO. 10421 OF 2024
IN ARBA/31/2025

WITH
CIVIL APPLICATION NO. 7714 OF 2024
IN ARBA/31/2025
...

CORAM : ARUN R. PEDNEKER, J.
Dated : April 28, 2026

JUDGMENT :

1. The present Arbitration Appeals are filed under Section 37 of the

Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the

Arbitration Act”) by the appellant – National Highways Authority of India,

challenging the Judgment and Order dated 27/11/2023 passed by the

learned Principal District Judge, Latur, in proceedings under Section 34 of

the Arbitration Act, 1996. By the said judgment, the learned Principal

District Judge dismissed the applications filed under Section 34 of the

Arbitration Act and upheld the arbitral award dated 31/08/2019 passed by

the learned Arbitrator.

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2. All these Arbitration Appeals involve common issues arising out of

the acquisition of lands for the expansion of National Highway No. 361

passing through Village Chakur, Taluka Chakur, District Latur. Hence, they

are heard together and are being decided by this common judgment.

3. Heard.

4. For the sake of convenience, the facts in Arbitration Appeal No. 32 of

2025 are referred to. The acquisition in question is for the purpose of

expansion of National Highway No. 361 by constructing a bypass road

through a greenfield area at Chakur, District Latur. The notification for

acquisition under Section 3-A of the National Highways Act, 1956

(hereinafter referred to as “the National Highways Act”) was issued on

09/06/2018. Lands from Gut No. 285 of Village Chakur were acquired.

5. The Competent Authority for Land Acquisition (CALA) determined

compensation under Section 3G(1) of the National Highways Act on

31/08/2019 at the rate of Rs.112/- per sq. mtr. The said determination was

challenged by the claimants by invoking Section 3G(5) of the National

Highways Act. Upon consideration of the material on record, the learned

Arbitrator enhanced the compensation. The details are as follows :

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Arbitration Gut No. Area under C.A.L.A. Per Arbitrator Per
Appeal No. acquisition Square Meter Square Meter
30 288 1662 sq.mtr. Rs.1502/- Rs.2112/-
31 288 6038 sq.mtr. Rs.1502/- Rs.2208/-
32 285 4200 sq.mtr. Rs.112/- Rs.2208/-

6. The learned counsel Mr. Nilkanth Pandurang Bangar for the

appellant contends that there was no sufficient evidence on record to

substantiate the claim of the respondents. It is submitted that the finding

regarding the non-agricultural nature of the acquired land is prima facie

perverse, as no such documents were furnished to the appellant. This

aspect was specifically raised before the Arbitrator in the reply as well as in

the rejoinder.

7. It is further submitted that the Arbitrator relied upon nine sale deeds

of Village Chakur pertaining to non-agricultural lands, whereas the acquired

lands are agricultural in nature. On the contrary, the CALA determined the

market value on the basis of 64 sale transactions that took place in the

preceding three years.

8. The learned counsel further submits that Section 26 of the Right to

Fair Compensation and Transparency in Land Acquisition, Rehabilitation and

Resettlement Act, 2013 (hereinafter referred to as “the 2013 Act”)

mandates that the market value should be determined based on the total

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number of sale transactions in the preceding three years. It is contended

that Explanation 1 to Section 26 has not been properly followed, which

requires that one-half of the highest sale transactions be considered.

9. It is also submitted that the Arbitrator erroneously applied a

multiplication factor of 1.5 despite recording that the acquired land is

situated within a Nagar Panchayat area. The CALA had correctly applied a

factor of 1.0. The application of factor 1.5 is stated to be contrary to the

First Schedule of the 2013 Act, which provides a factor of 1.0 for urban

areas and 2.0 for rural areas.

10. Per contra, the learned Senior Counsel Mr. P. R.

Katneshwarkar, instructed by Mr. R. P. Adgaonkar and Mr. Irfan

Dange for the respondents, submits that the Arbitrator has

considered relevant sale instances for the period 2015 to 2018 and

determined the average market value after considering the highest 50%

of the transactions, followed by a deduction towards development charges.

11. It is further submitted that the CALA relied upon sale instances

without proper scrutiny, whereas the Arbitrator correctly appreciated that

the acquired lands had already obtained non-agricultural permissions.

Page 5 of 11
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12. With regard to the multiplication factor, reliance is placed by learned

Counsel for the respondent on the notification issued under the

Maharashtra Municipal Councils, Nagar Panchayats and Industrial

Townships Act, 1965 (hereinafter referred to as “the 1965 Act”). It is

submitted that a proclamation dated 01/03/2014 was issued expressing the

intention to declare Village Chakur as a transitional area and to constitute a

Nagar Panchayat, which was finalized by notification dated 24/02/2015.

13. The learned Senior Counsel submits that the acquired lands do not

fall within the categories mentioned in Clause (a) to (d) of Entry No. 1 of

the Schedule of the Notification dated 26/05/2015. It is further submitted

that the area is covered under a Regional Plan and falls within a transitional

area declared under Section 341-A of the 1965 Act.

14. It is, therefore, contended that the lands fall within Entry No. 2 of the

Notification dated 26/05/2015, and accordingly, the multiplication factor

of 1.5 has been rightly applied by the Arbitrator.

15. Upon considering the rival submissions and perusing the record, it is

evident that the Arbitrator has taken into account relevant sale

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Arb Appeal 32-2025 + 2 (corrected)

transactions for the period 2015 to 2018 and has applied a correct method

by selecting the highest 50% of transactions and thereafter computing the

average, followed by deduction made towards development charges.

16. The contention regarding non-consideration of relevant sale

instances does not merit acceptance, as the Arbitrator has undertaken a

comprehensive analysis of the available material. The determination

cannot be said to be prima facie arbitrary or suffering from patent illegality.

17. As regards the multiplication factor applicable to the present case,

the relevant Notification dated 24/02/2016 issued under the Maharashtra

Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965

(hereinafter referred to as “the 1965 Act”) is reproduced below:

“NOTIFICATION :

Maharashtra Municipal Councils, Nagar Panchayats and industrial
townships act, 1965.

………

…...whereas, having regards to the factors mention in clause (2) of
article 243-Q of the Constitution of India, the Government of
Maharashtra considers it expedient to specify the said local area,
more particularly described in Schedule “A” appended hereto, to be a
transitional area;

Now, therefore, in exercise of the powers conferred by sub-
sections (1), (1A) and (2) of section 341A of the said Act and of all

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Arb Appeal 32-2025 + 2 (corrected)

other powers enabling it in that behalf, the Government of
Maharashtra hereby specifies the said local area to be a transitional
area for which there shall be constituted a Nagar Panchayat as
provided in sub-sections (1), (1A) and (2) of section 341A of the said
Act, by the name of the Chakur Nagar Panchayat. The boundaries of
the said transitional area shall be such as ares specified in Schedule
“B” appended hereto.

Schedule “A”

*Description of the Local Area to be specified as a
transitional area:

The whole area of the Village Panchayat of Chakur

Schedule “B”

*Boundaries of the Local area to be specified as a
transitional area:

Boundaries of the area of the Village Panchayat of Chakur
constituted under the Maharashtra Village Panchayat Act (III of
1959).”

18. So also, the relevant Schedule of the Notification dated 26/05/2015

issued by the Revenue and Forest Department, which is applicable for

determining the multiplication factor, is reproduced below:

Sr.No. Area Factor
1. (a) Areas of Municipal Corporations established in accordance
with the Mumbai Municipal Corporation Act (III of 1888) or the
Maharashtra Municipal Corporation Act (LIX of 1949).
1.00
(b) Areas of Class “A” and “C” Municipal Councils established as
per Section 4 of the Maharashtra Municipal Councils, Nagar
Panchayats and Industrial Township Act, 1965 (Mah.XLI of 1965).

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Maharashtra Municipal Councils, Nagar Panchayats and
Industrial Township Act, 1965 (Mah.XLI of 1965).

(d) Special Planning Authorities, Area Development Authorities,
New Town Development Authorities, such as City Industrial
Development Corporation (CIDCO), Mumbai Metropolitan Region
Development Authority (MMRDA), Pune Metropolitan Region
Development Authority (PMRDA), Pimpari-Chinchwad New Town
Development Authority (PCNDTA), Nagpur Improvement Trust
(NIT), as Pandharpur, Shirdi etc., for which Development plans
are prepared in accordance with the provisions of the
Maharashtra Regional and Town Planning Act, 1966.

2. Areas covered by Regional Plans for Districts, as well as 1.50
Development Plan prepared in accordance with the provisions of
the Maharashtra Regional and Town Planning Act, 1966 for non-
Municipal Council areas, excluding the areas mentioned in
clauses (a) to (d) above.
3. Rural area, excluding the areas mentioned in entries 1 and 2 2.00

19. As regards the application of the multiplication factor, it is required

to be noted that the area in question does not fall within the categories

specified under Clause (a) to (d) of Item I of the schedule of 26/05/2015

notification and item (1) of Clause (a) to (d) pertain to municipal

corporations, municipal councils, industrial townships, or special planning

authorities. The material on record, including the notification issued under

Section 341-A of the 1965 Act, indicates that the area is a transitional area

constituted as Nagar Panchayat and covered under a regional plan, in Item

2 of Notification dated 26/05/2015.

20. Thus, the application of the multiplication factor of 1.5 by the

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Arb Appeal 32-2025 + 2 (corrected)

Arbitrator is justified and in consonance with the statutory provisions.

21. In view of the above, this Court does not find any patent illegality in

the arbitral awards. The Arbitrator has considered the relevant statutory

provisions and the evidence on record while determining the

compensation.

22. Accordingly, no ground is made out for interference under Section 37

of the Arbitration Act. All the Arbitration Appeals stand dismissed, and the

arbitral awards are maintained.

23. In view of the dismissal of the appeals, all civil applications seeking

withdrawal of amounts are allowed. However, the applicants shall furnish

an undertaking before the Principal District Judge, Latur that in the event

any order is passed in favour of the appellant in further proceedings, they

shall redeposit the withdrawn amount within a period of four weeks.

24. All other pending applications, if any, stand disposed of.

( ARUN R. PEDNEKER, J. )

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25. After pronouncement of the judgment, the learned counsel for the

appellants submits that interim reliefs are operating in the present matters

and prays for continuation of the same for a period of four weeks.

26. The appellant’s challenge to the arbitral award has failed upon

dismissal of the application under Section 34 of the Arbitration and

Conciliation Act, 1996. The appeal filed under Section 37 of the Arbitration

Act is also dismissed.

27. In view of the same, no case is made out for continuation of the

interim relief granted earlier by this Court. Accordingly, the request for

continuation of interim relief stands rejected.

( ARUN R. PEDNEKER, J. )

vj gawade/-.

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