Case at a Glance
NHAI acquired 1,394 sq m of a pharmaceutical company’s land near Nagpur to widen NH-547E. The competent authority paid ₹161.63 per sq m treating it as agricultural land; the arbitrator under the National Highways Act awarded ₹3,588 per sq m on the strength of a single residential sale deed from an adjoining village, and the Bombay High Court restored that award. The Supreme Court held that Section 26 of the 2013 Land Acquisition Act applies to NH Act acquisitions, that market value cannot be fixed on one sale deed of dissimilar land, and that the award suffered from patent illegality. Applying the Ready Reckoner rate under Section 26(1)(a), it fixed compensation at ₹2,020 per sq m with statutory benefits.
A notification under Section 3A(1) of the National Highways Act, 1956 issued on 9 May 2017 for widening NH-547E. The respondent, Alfa Remidis Ltd., owned 1,394 sq m in Survey No. 66, Mouza Pardi (Rithi), Tahsil Saoner, Nagpur district. On 27 March 2018 the competent authority awarded ₹161.63 per sq m, treating the land as fallow agricultural land on the basis of three agricultural sale deeds.
The respondent argued before the arbitrator under Section 3G(5) that the land was industrial and cited the Ready Reckoner rate of ₹2,020 per sq m. On 22 November 2021 the arbitrator held the land non-agricultural and awarded ₹3,588 per sq m based on a 29 March 2017 sale deed for a 195.09 sq m residential plot in Mouza Saoner. The District Judge set aside the award under Section 34 of the Arbitration Act, but on 5 June 2025 the Bombay High Court (Nagpur Bench) restored it under Section 37. The Supreme Court stayed that judgment and directed NHAI to deposit ₹50 lakh, which the respondent withdrew.
The Key Question Before the Court
Can compensation for land acquired for a national highway be fixed on the basis of a single sale deed of a residential plot in another village, and is such an arbitral award open to interference for patent illegality?
Section 26 Requires Similar Land and Multiple Sale Deeds — or the Ready Reckoner
The Court held, following National Highways Authority of India v. P. Nagaraju, (2022) 07 SC CK 0013 and the Removal of Difficulties Order, 2015, that Sections 26 to 28 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 apply to compensation under the NH Act. Section 26(1) requires the Collector to adopt the highest of the stamp-duty market value, the average sale price of similar land in the nearest village or vicinity (computed under Explanations 1 to 4 using the higher-priced half of the sale deeds), and agreed compensation where relevant.
The arbitrator “demonstrably erred” in relying on a single residential sale deed from an adjoining village: the lands were not of a ‘similar type’ under Section 26(1)(b), and the statute does not permit reliance on one deed. Citing Madhya Pradesh Road Development Corporation v. Vincent Daniel, (2025) 03 SC CK 0255, the Court noted that single transactions may not give adequate data. Because the arbitrator “completely ignored” Section 26(1)(b) and its Explanations, the proviso to Section 34(2A) — which bars setting aside an award merely for erroneous application of law — did not protect the award. Since Mouza Pardi (Rithi) is listed in Zone 4 of the Ready Reckoner, Section 26(1)(a) applied, and the respondent had itself cited the ₹2,020 rate.
What the Court Actually Held
- Sections 26 to 28 of the 2013 Land Acquisition Act govern compensation for acquisitions under the National Highways Act.
- Market value cannot be fixed on a single sale deed of dissimilar (residential) land from another village; the arbitrator’s award ignored Section 26(1)(b) and its Explanations.
- Such an award suffers from patent illegality and is not saved by the proviso to Section 34(2A) of the Arbitration Act.
- The appeal was allowed: the respondent gets ₹2,020 per sq m for 1,394 sq m with all consequential statutory benefits, the ₹50 lakh withdrawn is to be adjusted, and parties bear their own costs.
Why This Judgment Matters
- Highway projects involve thousands of compensation arbitrations; the ruling sets a clear method for valuing land under Section 26.
- It shows when an arbitral award on compensation can be set aside despite the limits of Section 34.
- Landowners and NHAI alike get guidance that the Ready Reckoner can be the right benchmark where the land is listed in it.
What Should Advocates Take Away From the Judgment?
For Landowners
- Support enhancement claims with several sale deeds of similar land, not one favourable transaction.
- Check the Ready Reckoner zone of your land; it may decide the benchmark under Section 26(1)(a).
- You remain entitled to solatium and other statutory benefits under the 2013 Act.
For Counsel
- Arbitral awards that ignore Section 26 and its Explanations can be attacked for patent illegality.
- Rely on P. Nagaraju for application of the 2013 Act to NH Act acquisitions.
- Distinguish land use (industrial, residential, agricultural) when choosing comparable sale deeds.
Key Takeaways
- 2013 Act compensation rules apply to NH Act acquisitions.
- One residential sale deed cannot fix industrial land value.
- Award ignoring Section 26 is patently illegal.
- Compensation fixed at ₹2,020 per sq m.
Frequently Asked Questions
Does the 2013 Land Acquisition Act apply to national highway acquisitions?
Yes. The Court held, relying on P. Nagaraju and the 2015 Removal of Difficulties Order, that its compensation provisions in Sections 26 to 28 apply to acquisitions under the National Highways Act.
Can a single high-value sale deed be used to fix compensation?
No. The Court held that Section 26(1)(b) requires the average of sale deeds of similar land and does not permit reliance on a single sale deed.
What compensation did the landowner finally get?
₹2,020 per sq m for 1,394 sq m, being the Ready Reckoner rate, with all consequential statutory benefits, after adjusting the ₹50 lakh already withdrawn.
Conclusion
Alfa Remidis, (2026) 05 SC CK 0435 insists that compensation follow the statutory method in Section 26, not a single favourable transaction. Where the arbitrator skipped that method, the Court was willing to step in despite the narrow scope of Section 34.
Practical takeaway: In highway land arbitrations, build the valuation case on multiple comparable sale deeds and the Ready Reckoner — an award resting on one dissimilar deed is vulnerable.
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