Post-Notification Sale Instances Permissible; Section 37 Interference Limited: Bombay HC

The Bombay High Court has held that post-notification sale instances can be considered for determining market value in land acquisition cases, provided they satisfy established legal conditions, while reiterating that limited interference is permissible under Section 37 of the Arbitration and Conciliation Act once the arbitrator has applied reasonable deductions and arrived at a justified compensation.

Justice Arun R. Pedneker, sitting at the Aurangabad Bench, dismissed a batch of arbitration appeals filed by the National Highways Authority of India (NHAI), upholding the arbitral awards and the District Court’s orders under Section 34.

The Court held that no case for interference was made out as the arbitrator had undertaken adequate deductions for distance and size of land and awarded reasonable compensation, thereby affirming the awards in favour of landowners.

The appeals arose out of land acquisition proceedings undertaken for the widening of National Highway-6, pursuant to a notification issued under Section 3A(1) of the National Highways Act, 1956.

The arbitrator had determined compensation payable to the landowners, which was subsequently upheld by the Principal District Judge under Section 34 of the Arbitration and Conciliation Act, 1996.

Challenging these findings, the NHAI contended that the arbitrator had erred in relying upon sale instances subsequent to the issuance of the Section 3A notification, placing reliance on judicial precedents that emphasise a strict cut-off date for determining market value.

It was argued that consideration of post-notification transactions would inflate compensation and distort valuation.

The High Court, however, rejected this contention, noting that the issue had already been considered in an earlier judgment involving the same project and notification.

The Court reiterated that while determining market value, post-notification sale instances may be relied upon if they are proximate in time, represent genuine transactions, and are not influenced by the acquisition itself or any anticipated development arising from it.

Applying these principles, the Court observed that the arbitrator had justifiably relied on a sale deed dated February 13, 2012, as it satisfied the conditions required for consideration of post-notification transactions.

The Court further noted that other sale instances placed on record, when adjusted for annual escalation, broadly corresponded with the value reflected in the said transaction.

On the question of quantum of compensation, the Court examined the deductions applied by the arbitrator in determining the final rate.

It was noted that the arbitrator had reduced the base rate by 20 percent to account for distance and by 15 percent for size of the land, ultimately awarding compensation at Rs. 2,600 per square metre.

The Court found that these deductions were reasonable, particularly in view of the fact that the acquired lands were situated approximately 8 to 10 kilometres away from lands considered in earlier comparable cases.

It also noted that the arbitrator had taken into account the non-agricultural potential of the land while determining compensation.

Emphasising the limited scope of interference under Section 37 of the Arbitration and Conciliation Act, the Court held that once the arbitrator has undertaken a plausible assessment based on evidence and applied appropriate deductions, appellate courts ought not to substitute their own views merely because another interpretation is possible.

The Court observed that the arbitral award, having already survived scrutiny under Section 34, could not be interfered with in the absence of any patent illegality or perversity. It reiterated that re-appreciation of evidence or re-evaluation of compensation is not permissible within the narrow confines of Section 37 jurisdiction.

Finding no infirmity in the approach adopted by the arbitrator or the District Court, the High Court dismissed all the arbitration appeals. Consequently, the connected civil applications were also disposed of.

Case Title: National Highways Authority of India v. Jankiram Fatru Dhayde & Ors. (and connected matters)

Bench: Justice Arun R. Pedneker

Date of Judgment: 09.04.2026