Post-Notification Sale Instances Can Be Relied Upon In Land Acquisition Matters If Proximate, Genuine And Uninfluenced: Bombay High Court

The Court was hearing a batch of arbitration appeals filed by the National Highways Authority of India challenging an arbitral award enhancing compensation for acquired lands and its confirmation under Section 34 of the Arbitration and Conciliation Act, 1996.

A Bench of Justice Arun R. Pednekar, while relying on the Apex Court's decision in Chimanlal Hargovinddas v. Special Land Acquisition Officer, observed: “while determining market value, various factors are required to be taken into consideration and one of such factors is that even post-notification sale instances can be taken into account if (i) they are very proximate in point of time, (ii) they are genuine transactions, and (iii) the acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects”.

“… There is no absolute bar in taking into consideration a post-notification sale deed; however, the market value is required to be determined with reference to the date of the notification”, the Bench added.

Advocate D. S. Manorkar appeared for the appellant Authority, while Advocate A. P. Bhandari and R. R. Bangar appeared for the respondents.

Background

The dispute arose out of acquisition proceedings initiated for the widening of National Highway No. 6. A notification under Section 3A of the National Highways Act, 1956, was issued in November 2011, followed by a declaration under Section 3D.

The Competent Authority for Land Acquisition determined compensation at ₹340 per square meter. Dissatisfied, the landowners invoked arbitration under Section 3G(5) of the Act, seeking enhancement of compensation.

Before the Arbitrator, the claimants relied upon several sale deeds, including a sale deed dated 13.02.2012, executed shortly after the issuance of the Section 3A notification. The Arbitrator treated this sale instance as the most proximate and relied upon it to determine enhanced compensation at ₹2800 per square meter.

The award was challenged under Section 34 of the Arbitration Act, but the challenge was rejected. The Authority thereafter preferred appeals under Section 37, contending inter alia that reliance on a post-notification sale deed was legally impermissible.

Court’s Observation

The Court framed the principal issue as whether reliance on a post-notification sale deed was legally barred. It examined the law laid down by the Supreme Court in Chimanlal Hargovinddas v. Special Land Acquisition Officer (1988) and subsequent precedents.

The Court reiterated that while market value is to be determined with reference to the date of notification, there is no absolute prohibition on considering post-notification sale instances.

Applying the principles laid down in Chimanlal Hargovinddas, the Court held that post-notification sale instances can be relied upon only if they satisfy three conditions: proximity in time, genuineness of the transaction, and absence of price inflation due to acquisition.

On the facts, the Court found that the sale deed relied upon by the Arbitrator was executed merely about three weeks after the notification, thereby satisfying the requirement of temporal proximity. It further noted that there was no evidence on record to indicate that the transaction was inflated or not genuine, nor had the Authority challenged the bona fide nature of the sale deed.

“Applying the principles laid down in Chimanlal Hargovinddas (supra), it can be seen that the sale deed relied upon by the Arbitrator is executed merely about three weeks after the notification”, the Bench remarked.

The Court also observed that even if earlier sale instances were adjusted for escalation, the resultant value broadly corresponded with the value reflected in the post-notification sale deed, thereby lending further support to its reliability.

The Court then examined the scope of interference with arbitral awards under Sections 34 and 37 of the Arbitration Act. It reiterated that courts cannot reappreciate evidence or act as appellate forums over arbitral findings. Relying on PSA Sical Terminals Pvt. Ltd. v. Board of Trustees (2023) and MMTC Ltd. v. Vedanta Ltd. (2019), the Court held that interference is warranted only where the award suffers from patent illegality or is in conflict with a fundamental policy of Indian law.

It emphasised that where the Arbitrator has assessed market value based on relevant material and the same has been confirmed by the Court under Section 34, the appellate court under Section 37 must be “extremely cautious and slow to disturb such concurrent findings.”

The Court also addressed objections to compensation awarded for severance and easementary rights. It noted that the acquisition involved only partial taking of land, resulting in an adverse impact on the remaining property.

It observed that the claimants had made specific statements regarding such losses, which were not controverted by the Authority, and that compensation for such heads was consistent with statutory provisions and judicial precedents.

Conclusion

The Bombay High Court held that reliance on the post-notification sale deed by the Arbitrator was legally permissible and did not suffer from any infirmity.

It further held that no ground was made out for interference with the arbitral award, particularly in view of the limited scope of jurisdiction under Sections 34 and 37 of the Arbitration Act.

Accordingly, the appeals were dismissed, and the arbitral award enhancing compensation was upheld.

Cause Title: National Highways Authority of India v. Bhaskar Ninu Zambare & Ors. (Neutral Citation: 2026:BHC-AUG:13742)

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