While allowing an appeal of the National Highways Authority of India, the Supreme Court has held that the methodology for working out the ‘average sale price’ of dissimilar land under Section 26(1)(b) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, as set out in Explanations 1 to 4 does not permit placing reliance on a single sale deed. The Apex Court reiterated that there should be multiple deeds for reference.

The matter before the Apex Court related to the acquisition of land for the four-laning of National Highway No. 547-E and the consequent payment of compensation. The National Highways Authority of India (NHAI) was aggrieved by the enhancement of the compensation payable to a landowner.

The Division Bench of Justice Sanjay Kumar and Justice K. Vinod Chandran held, “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. Further, the methodology for working out the ‘average sale price’ under Section 26(1)(b), as set out in Explanations 1 to 4 thereunder, does not permit placing reliance on a single sale deed for that purpose.”

Senior Advocate Preetesh Kapur represented the Appellant while Senior Advocate Dhruv Mehta represented the Respondent.

Factual Background

The first respondent, Alfa Remidis Ltd., claimed ownership over an extent of 1,394 square meters of land in Tahsil-Saoner, Nagpur District. A Notification dated May 9, 2017, was issued under Section 3A(1) of the National Highways Act, 1956, for the acquisition of this extent of land along with other lands for widening NH No. 547-E. The Deputy Collector, Land Acquisition (General), Nagpur, being the competent authority, determined the compensation and classified the land as fallow (agricultural category) or dry crop land. Compensation @ ₹161.63 per square meter was awarded, based on three sale deeds relating to agricultural land in Mouza Pardi (Rithi).

Aggrieved thereby, the first respondent filed an application under Section 3G(5) of the NH Act before the Arbitrator. The first Respondent asserted that its land had wrongly been treated as agricultural land, as it was being used for an industrial purpose. The Arbitrator accepted that the subject land was in non-agricultural use and, applying the rate quoted in the sale deed, directed payment of compensation to the respondent at ₹3,588 per square meter. Aggrieved by this enhancement, NHAI and the Government of India filed an application, and the District Judge held in their favour, agreeing that the Arbitrator had acted in contravention of Section 26 of the 2013 LA Act, and set aside the Award. The High Court, considering the respondent’s appeal, restored the award. It was in such circumstances that NHAI approached the Apex Court.

Reasoning

The Bench, at the outset, explained that the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Removal of Difficulties) Order, 2015, was notified by the Government of India, with effect from September 1, 2015, clarifying that the provisions of the 2013 LA Act relating to determination of compensation in accordance with the First Schedule would apply to all cases of land acquisition under the enactments specified in the Fourth Schedule thereto.

Coming to the facts of the case, the Bench noted that the arbitrator chose to adopt the sale price relating to a small residential plot of land in an adjoining village, though it was the specific case of the respondent that its land was used for an industrial purpose. “Applying the rigours of Section 26(1) of the 2013 LA Act to the case on hand, we find that the Arbitrator demonstrably erred in relying upon the sale deed dated 29.03.2017 relating to residential land in an adjoining village to determine the market value of respondent No. 1’s land, which was being used for an industrial purpose”, it added.

The Bench also clarified that the methodology for working out the ‘average sale price’ under Section 26(1)(b), as set out in Explanations 1 to 4, does not permit placing reliance on a single sale deed for that purpose. Reference was also made to the judgment in Madhya Pradesh Road Development Corporation vs. Vincent Daniel and others (2025), wherein it was observed that there should be multiple deeds available for reference, as singular deals may not supply adequate and reliable data.

The Bench further stated, “Section 34(2A) of the Arbitration Act provides for setting aside an arbitral award if it is found to be vitiated by patent illegality appearing on the face of it. Though the proviso thereto stipulates that an arbitral award should not be set aside merely on the ground of erroneous application of law or by reappreciation of evidence, we are of the opinion that the cloak of protection afforded by the proviso cannot be extended to the present arbitral award.”

As per the Bench, 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. Clarifying that Section 26(1)(a) of the 2013 LA Act should have been applied for determination of the market value of the respondent’s land, the Bench held that the respondent would be entitled to compensation for its acquired extent of 1394 square meters @ ₹2,020/- per square meter and not @ ₹3,588/- per square meter, as decided by the Arbitrator and confirmed by the High Court.

Cause Title: Project Director, National Highways Authority of India v. Alfa Remidis Ltd. and others (Neutral Citation: 2026 INSC 480)

Appearance

Appellant: Senior Advocate Preetesh Kapur, Advocate Sumit Gupta, AOR Jaikriti S. Jadeja, Advocates Akshay Kumar Tiwari, Tanya Shrotriya

Respondent: Senior Advocate Dhruv Mehta, AOR Rajat Joseph, Advocates Yashraj Kinkhede, Shrirang B. Varma, Siddharth Dharmadhikari, AOR Aaditya Aniruddha Pande

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