The Supreme Court of India has ruled that an arbitral award for land compensation is vitiated by “patent illegality” if it relies on a single sale exemplar of a dissimilar land type. The Court held that such an approach directly contravenes the statutory mandate of Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (2013 LA Act).
Legal Issue
The Court was tasked with deciding whether an Arbitrator could enhance land compensation by adopting the rate from a single registered sale deed of a small residential plot when the acquired land was used for industrial purposes. The Court concluded that Section 26(1)(b) of the 2013 LA Act requires the use of multiple sale deeds of “similar type” and that the Arbitrator’s failure to follow these directives warranted the setting aside of the enhancement.
Background of the Case
The National Highways Authority of India (NHAI) acquired 1,394 square meters of land in Survey No. 66 of Mouza Pardi (Rithi), Nagpur District, for the widening of NH No. 547-E. The Competent Authority initially awarded compensation at ₹161.63 per square meter, classifying the land as agricultural.
The landowner, Alfa Remidis Ltd. (Respondent No. 1), sought an enhancement under Section 3G(5) of the National Highways Act. It argued the land was industrial, as it housed a paracetamol production unit, and cited a 2017 sale deed for a residential plot in a nearby village priced at ₹3,588 per square meter. The Arbitrator accepted this rate, but the District Judge later set it aside. However, the Nagpur Bench of the Bombay High Court restored the enhanced award, prompting NHAI’s appeal to the Supreme Court.
Arguments of the Parties
NHAI contended that the enhancement was contrary to Section 26(1) of the 2013 LA Act. They argued that residential land in an adjoining village cannot serve as a valid exemplar for industrial land and that a single transaction does not satisfy the requirement for determining an “average sale price.”
Respondent No. 1 maintained that since its land was non-agricultural and industrial, the Arbitrator correctly adopted the rate from a nearby non-agricultural sale transaction. They argued the rate was appropriate as there were no objections to the genuineness of the cited sale deed.
Court’s Analysis
A Bench of Justice Sanjay Kumar and Justice K. Vinod Chandran observed that all aspects of Sections 26 to 28 of the 2013 LA Act apply to compensation fixed under the National Highways Act. The Court found the Arbitrator’s methodology fundamentally flawed on two counts:
1. Dissimilarity of Land Type: The Court noted that the Arbitrator relied on a residential plot to value industrial land.
“Clearly, the two lands were not of a ‘similar type’ for the purposes of Section 26(1)(b) of the 2013 LA Act and the price in the said sale deed could not have been adopted.”
2. Reliance on a Single Exemplar: The Court emphasized that Section 26(1)(b) and its Explanations require an “average” to be calculated, which necessitates multiple data points. Referring to Madhya Pradesh Road Development Corporation vs. Vincent Daniel and others (2025), the Bench stated:
“…the language used therein implied that there should be multiple deeds available for reference, as singular deals may not supply adequate and reliable data.”
The Court further held that the Arbitrator ignored the landowner’s own evidence regarding the Government “Ready Reckoner” rate of ₹2,020 per square meter, which should have been the basis for determination under Section 26(1)(a).
Decision of the Court
The Supreme Court held that the Arbitrator’s award was vitiated by patent illegality under Section 34(2A) of the Arbitration Act.
“The Arbitrator completely ignored the directives of Section 26(1)(b) of the 2013 LA Act and the Explanations thereunder, by adopting a sale exemplar of a totally dissimilar type of land and, at that, a single sale exemplar, which was contrary to the statutory mandate.”
The Court set aside the High Court’s judgment and determined that Respondent No. 1 is entitled to compensation at the Ready Reckoner rate of ₹2,020 per square meter instead of ₹3,588. The landowner will also receive all consequential statutory benefits under the 2013 LA Act, with previous payments to be adjusted.
Case Details
- Case Title: Project Director, National Highways Authority of India vs. Alfa Remidis Ltd. and others
- Case No.: Civil Appeal No. ___ of 2026 (Arising out of SLP (C) No. 33773 of 2025)
- Bench: Justice Sanjay Kumar, Justice K. Vinod Chandran
- Date: May 12, 2026
