Facts: The National Highways Authority of India (NHAI) acquired lands in village Deolai, Aurangabad, for widening National Highway-211. The Competent Authority Land Acquisition (CALA) issued a first award on 15.07.2017, granting compensation at a base rate of Rs.7,966 per sq. mtr. based on 22 sale deeds. A subsequent second award by CALA was set aside by the High Court for lack of jurisdiction. NHAI then challenged the first award via arbitration under Section 3-G (5) of the National Highways Act, 1956, alleging that the market value was lower and the award was induced by fraud or corruption. The Arbitrator dismissed NHAI’s challenge, noting that NHAI failed to lead evidence despite multiple opportunities over two years and only attempted to submit documents via email after the matter was closed for orders.
Procedural Posture: NHAI challenged the Arbitrator's award under Section 34 of the Arbitration and Conciliation Act, 1996, before the Principal District Judge, Aurangabad. The District Court dismissed the application on 15.11.2025. NHAI subsequently filed the present appeals under Section 37 of the same Act before the High Court of Bombay at Aurangabad.
Issue: Whether the arbitral award and the subsequent District Court order upholding it suffered from patent illegality or violated public policy, warranting interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996.
Holding: No, the High Court found no grounds for interference and dismissed the appeals.
Reasoning: The Court reasoned that the scope of judicial interference under Section 34/37 is highly circumscribed and does not allow for a merit-based reappreciation of evidence. NHAI failed to lead any evidence during the two-year arbitration period despite being granted "last chances". The Court observed that NHAI was "blowing hot and cold" by alleging fraud in the current case while simultaneously accepting and settling much higher compensation awards (up to Rs.21,397 per sq. mtr.) for the adjacent village Satara. Given that the evidence produced by the claimants suggested the market value was actually higher than the award, and that NHAI was at fault for procedural delays, the award did not shock the conscience of the court or constitute patent illegality.