Uttarakhand HC Upholds Rs 11,000 Per Sq Mtr Award for NH Land, Rejects NHAI's Patent Illegality Challenge
The High Court of Uttarakhand found the arbitral tribunal's circle-rate-based compensation lawful under Section 26 of the 2013 Act, while holding that findings on two other issues were not in accordance with law.
The High Court of Uttarakhand at Nainital has dismissed cross-appeals filed by landowners Gurbachan Singh and Harjinder Kaur, and by the National Highways Authority of India, against a common order of the District Judge, Udham Singh Nagar, which had declined to interfere with an arbitral award fixing compensation at Rs 11,000 per sq mtr for land acquired for NH 125 and a truck parking facility in Sitarganj, District Udham Singh Nagar. Justice Ravindra Maithani, sitting singly, decided both appeals by a common judgment delivered on 19 June 2026. The court found that the arbitral tribunal's reliance on the circle rate notified by the Collector on 31 March 2012 was in accordance with Section 26(1)(a) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, and that no patent illegality warranting interference under Section 37 of the Arbitration and Conciliation Act, 1996 was made out.
The Acquisition and the Arbitral Award
Gurbachan Singh and Harjinder Kaur owned land at Khasra Nos. 43, 44, 49 and 50, totalling 0.4929 hectares, situated on the Sitarganj-Khatima road near Sitarganj town. The NHAI acquired this land under notifications issued under Section 3-A and Section 3-D of the National Highways Act, 1956, dated 19 March 2014, for the construction of NH 125 and a truck by-lane/truck parking facility.
The Special Land Acquisition Officer fixed compensation at Rs 38,00,000 per hectare by its Award dated 26 August 2015, treating the land as agricultural and relying on a Tehsildar's report. The landowners challenged this under Section 3-G(5) of the NH Act, 1956. The Arbitrator, in Application No. 51-72 of 2016-17, enhanced the compensation to Rs 11,000 per sq mtr by Award dated 17 March 2017.
The arbitral tribunal had framed four issues. On issue no. 1, it applied the rate from a 2008 Power Grid Corporation acquisition in the same village, escalated at 10-15% per year, and arrived at Rs 12,000 per sq mtr. On issue no. 2, it applied the circle rate notified on 31 March 2012 and arrived at Rs 11,000 per sq mtr. On issue no. 3, it noted sale deeds executed in 2013 at Rs 12,000 to Rs 14,000 per sq mtr and held the landowners entitled to Rs 13,000 per sq mtr. On issue no. 4, the tribunal awarded compensation at Rs 11,000 per sq mtr without recording any reason for preferring that figure over the higher rates found under issues 1 and 3.
Both the landowners and NHAI filed applications under Section 34 of the Arbitration and Conciliation Act, 1996, before the District Judge, Udham Singh Nagar. The landowners' application was registered as Arbitration Suit No. 28 of 2017 and NHAI's as Arbitration Suit No. 46 of 2017. Both were dismissed on 30 May 2023. The landowners then filed AO No. 224 of 2023 and NHAI filed AO No. 307 of 2023 before the High Court under Section 37(1)(c) of the AC Act, 1996.
The Competing Arguments
Gurbachan Singh appeared in person. He argued that the tribunal had itself found the landowners entitled to Rs 13,000 per sq mtr under issue no. 3, yet awarded only Rs 11,000 per sq mtr. He sought the higher rate. However, he candidly acknowledged that in light of the Supreme Court's judgment in Project Director, National Highway No. 45E and 220 NHAI v. M. Hakeem and another, (2021) 9 SCC 1, reiterated by the Constitution Bench in Gayatri Balasamy v. ISG Novasoft Technologies Limited, (2025) 7 SCC 1, an arbitral award cannot be modified. He therefore accepted that the court could not increase the compensation and confined his argument to resisting NHAI's challenge.
NHAI's counsel argued strenuously that the award was vitiated by patent illegality. The specific contentions were: the tribunal had not determined compensation in accordance with Sections 26 and 28 of the 2013 Act; it had impermissibly relied on a 2008 acquisition rate; it had considered the commercial potentiality of the land, which is not a permissible factor under Section 26; it had not examined average sale prices of similar land in the nearest vicinity for the immediately preceding three years as required by Explanation 1 to Section 26(1)(b); and the land being agricultural, compensation at commercial rates was impermissible.
How the Court Reasoned on Each Issue
Justice Maithani examined the tribunal's findings on each issue against the statutory framework. He noted that Section 26 of the 2013 Act prescribes three methods for determining market value: the circle rate under the Indian Stamp Act, 1899; the average sale price for similar land in the nearest village or vicinity; and the consented amount in specified cases. The court confirmed, following National Highways Authority of India v. P. Nagaraju alias Cheluvaiah and another, (2022) 15 SCC 1, that Sections 26 and 28 of the 2013 Act apply to compensation determinations under the NH Act, 1956.
Issue no. 1 — 2008 acquisition rate with annual increment: The court held that Section 26 of the 2013 Act does not permit compensation to be determined on the basis of rates fixed in acquisition proceedings five years earlier. The notification under Section 3-A of the NH Act, 1956 was issued in 2013. Using a 2008 rate with escalation is not one of the three methods prescribed by Section 26. The tribunal's finding on issue no. 1, awarding Rs 12,000 per sq mtr, was therefore not in accordance with law. Since the tribunal had not actually awarded compensation at that rate, the court noted this had no practical effect on the final award.
Issue no. 3 — Sale deeds of 2013: The court found that the tribunal had not identified which sale deeds it relied upon, had not examined sale deeds from the immediately preceding three years as required by Explanation 1 to Section 26(1)(b), and had not followed the methodology of averaging the highest-priced half of the available deeds as required by Explanation 2. Relying on Project Director, NHAI v. Alfa Remidis Ltd. and others, 2026 SCC OnLine SC 845, the court observed that relying on a single or unspecified sale deed without following the statutory methodology is impermissible. The tribunal's finding on issue no. 3, awarding Rs 13,000 per sq mtr, was also not in accordance with law. Again, since the tribunal had not awarded compensation at that rate, the court held this caused no prejudice to the landowners.
Issue no. 2 — Circle rate: This was the operative finding. The tribunal had applied the circle rate of Rs 11,000 per sq mtr notified by the Collector, Udham Singh Nagar, on 31 March 2012 under the Uttar Pradesh Stamp (Valuation of Property) Rules, 1997, which the court noted appeared to be applicable in Uttarakhand. The court held that the authority determining compensation under Section 3-G of the NH Act, 1956 cannot go behind the circle rate fixed by the Collector under the Stamp Act, and the correctness of that rate cannot be questioned in Section 34 or Section 37 proceedings.
On NHAI's argument that the land was agricultural and therefore commercial rates were inapplicable, the court drew a distinction. Under Section 26(1)(b) of the 2013 Act, the nature of land — agricultural or non-agricultural — may be relevant when determining average sale price of similar land. But under Section 26(1)(a), the circle rate as notified is to be applied as it stands. The court held that the use of land is not a factor to be examined when applying the circle rate under Section 26(1)(a).
The court also addressed NHAI's contention that the SLAO had found the land to be 100 metres away from the national highway, which would have placed it outside the commercial rate zone. The court noted that in its own objections filed in the Section 34 proceedings, NHAI had admitted in paragraph 16 that the acquired land was adjacent to the national highway. The Collector's order dated 31 March 2012 recorded in note 20 that the commercial rate of Rs 11,000 per sq mtr would apply to land falling within 100 metres of the national highway on the Sitarganj-Khatima road. A pictorial map on record, not disputed by NHAI, showed the land to be adjacent to that road. The court held that the SLAO's finding that the land was 100 metres beyond the highway was factually incorrect.
On the absence of detailed reasoning in the award on issue no. 2, the court applied the settled position that arbitrators are not required to be legally trained minds and that reasons may be implicit. It found sufficient reasoning in the tribunal's discussion of the circle rate and the surrounding factors.
The Scope of Section 37 and the Modification Bar
The court reiterated that the scope of an appeal under Section 37 of the AC Act, 1996 is “quite restrictive” and that it is not a court of appeal. Re-appreciation of evidence is impermissible unless findings are perverse. Where two views are possible, the court cannot substitute its own view for that of the tribunal.
On the question of modification, the court applied M. Hakeem and Gayatri Balasamy to confirm that courts under Sections 34 and 37 have no general power to modify an arbitral award. The limited exceptions recognised in Gayatri Balasamy — severance of an invalid portion, correction of clerical or computational errors, modification of post-award interest, and exercise of power under Article 142 of the Constitution — did not apply here. The landowners' claim for enhancement to Rs 13,000 per sq mtr was therefore not maintainable.
On patent illegality, the court drew on Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49, Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation Limited, (2022) 1 SCC 131, and P. Nagaraju to hold that patent illegality must go to the root of the matter. Erroneous application of law or re-appreciation of evidence does not qualify. The tribunal's reliance on the circle rate under Section 26(1)(a) was a permissible approach, and the court found no illegality going to the root of the award on issue no. 2.
Outcome
Both appeals were dismissed. AO No. 224 of 2023, filed by Gurbachan Singh and Harjinder Kaur, was dismissed because the tribunal's findings on issues 1 and 3 were not in accordance with law and could not support enhanced compensation, while the operative finding on issue no. 2 at Rs 11,000 per sq mtr was lawful. The District Judge's order dated 30 May 2023 dismissing Arbitration Suit No. 28 of 2017 was upheld.
AO No. 307 of 2023, filed by NHAI, was dismissed because the tribunal's determination of compensation at Rs 11,000 per sq mtr on the basis of the circle rate under Section 26(1)(a) of the 2013 Act was in accordance with law and no patent illegality was established. The District Judge's order dated 30 May 2023 dismissing Arbitration Suit No. 46 of 2017 was upheld.