The Allahabad High Court, in a significant ruling on the scope of its writ jurisdiction, has dismissed a petition filed by landowners challenging the quantum of compensation awarded by an arbitrator for land acquired by the National Highways Authority of India (NHAI). A division bench of Justice Mahesh Chandra Tripathi and Justice Anish Kumar Gupta held that disputes regarding the adequacy of compensation under the National Highways Act, 1956, must be challenged through the statutory mechanism provided under Section 34 of the Arbitration and Conciliation Act, 1996, and not directly through a writ petition under Article 226 of the Constitution.
Background of the Case
The case was brought by petitioners Ramashankar Yadav and another, whose land in Village Gausganj, District Hathras, was acquired in 2018 for the expansion of National Highway No. 91. The petitioners had purchased the land in 2007-2008 and had it converted from agricultural to non-agricultural (abadi) use under Section 143 of the U.P. Zamindari Abolition and Land Reforms Act, 1950, a fact officially recorded on January 31, 2008.
Despite this conversion, the Competent Authority for Land Acquisition initially determined compensation by treating the land as agricultural. This led to a prolonged legal battle. An initial arbitration petition under Section 3G(5) of the National Highways Act, 1956, was rejected. However, the petitioners successfully challenged this arbitral award before the Special Judge, SC/ST Act, Hathras, under Section 34 of the Arbitration Act, 1996. The appellate court, on May 13, 2022, set aside the award and remanded the matter for a fresh decision.
In the second round, the Arbitrator (District Magistrate, Hathras) on July 21, 2022, accepted that the land was non-agricultural. This order was then challenged by the NHAI. The District Judge, Hathras, on September 10, 2024, partially set aside the order and remanded the case back to the Arbitrator with a specific direction to “reassess the claim of the petitioners as per the circle rate applicable to abadi land, and not the agricultural land.”
Following this, the Arbitrator passed the now-impugned order on July 3, 2025, fixing the compensation at Rs. 4,000 per square meter. Aggrieved by this amount, the petitioners filed the present writ petition, seeking to quash the order and demanding compensation based on a circle rate of Rs. 14,500 and Rs. 12,000 per square meter.
Arguments of the Parties
Petitioners’ Submissions: Mrs. Vatsala, counsel for the petitioners, argued that the Arbitrator acted with “judicial indiscipline” by disregarding the District Judge’s directions. She contended that an official letter from the Deputy Registrar (Stamp) dated June 26, 2025, confirmed higher circle rates, which the Arbitrator arbitrarily ignored. She asserted that the writ petition was maintainable as an exception to the rule of alternative remedy, citing the High Court’s judgment in Dr. Rajeev Sinha v. Union of India, where the court had intervened in a similar matter.
Respondents’ Submissions: Sri Fuzail Ahmad Ansari, Standing Counsel for the State, raised a preliminary objection to the maintainability of the writ petition. He argued that the petitioners were circumventing the statutory appellate mechanism under Section 34 of the Arbitration Act. He submitted that the writ court cannot act as an appellate forum to re-determine compensation. He distinguished the Dr. Rajeev Sinha case, stating that in that instance, the Arbitrator had acted “in complete defiance of binding directions,” whereas in the present case, the Arbitrator had substantially complied by treating the land as ‘abadi’ and reassessing the compensation. Sri Pranjal Mehrotra, counsel for NHAI, adopted these submissions.
Court’s Analysis and Findings
The High Court framed the primary question as whether the writ petition was maintainable in view of the statutory remedy available under Section 34 of the Arbitration Act, 1996.
The bench observed that the National Highways Act, 1956, read with the Arbitration Act, 1996, creates a “comprehensive statutory framework” for resolving compensation disputes. The court stated, “This legislative scheme leaves no room for bypassing the statutory arbitration mechanism and directly invoking writ jurisdiction for matters that are specifically entrusted to the arbitral process.”
Distinguishing the facts from the Dr. Rajeev Sinha case, the Court noted that the Arbitrator in the present case had not defied the remand order. The judgment reads: “On the contrary, the Arbitrator has faithfully complied with the primary direction by acknowledging that the petitioners’ land should be treated as abadi (non-agricultural) land and not as agricultural land… The grievance of the petitioners is not about non-compliance with judicial directions, but about the quantum of compensation awarded.”
The Court emphasized that disputes about valuation, adequacy of compensation, and applicability of circle rates are “matters of fact and evidence which fall within the exclusive domain of the Arbitrator and are subject to scrutiny in proceedings under Section 34 of the Arbitration Act, 1996, not in writ jurisdiction.”
Relying on its own precedent in Sri Navin Tyagi v. Union of India and Supreme Court judgments in Commissioner of Income Tax v. Chhabil Dass Agarwal and National Highways Authority of India v. Sayedabad Tea Company Limited, the Court concluded that the case did not fall into the “rarest of rare cases” that would justify bypassing the statutory remedy.
Final Decision
The High Court dismissed the writ petition as not maintainable, concluding that the petitioners’ grievance regarding the quantum of compensation must be addressed through the appropriate forum under Section 34 of the Arbitration Act. The bench clarified that it had not expressed any opinion on the merits of the petitioners’ claim for higher compensation, leaving the issue open for determination in the appropriate proceedings. Liberty was granted to the petitioners to pursue their statutory remedy within the prescribed limitation period.
