Case Name: Project Director, National Highways Authority of India versus Alfa Remidis Ltd. and others 

Petition Number: Civil Appeal No. _ of 2026 (@Special Leave Petition (C) No. 33773 of 2025) 

Neutral Citation:  2026 INSC 480 

Date of Judgment: 12.05.2026

Coram: Justice Sanjay Kumar and Justice K Vinod Chandran 

INTRODUCTION

This case arises out of a land acquisition dispute concerning the compulsory acquisition of land belonging to Alfa Remidis Ltd. for the four-laning of National Highway No. 547-E. The core question before the Supreme Court was whether the compensation awarded to the landowner was correctly determined in accordance with the statutory framework under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“2013 LA Act”), specifically Section 26(1) thereof. The appeal was filed by the Project Director, National Highways Authority of India (NHAI), challenging the Bombay High Court’s decision to restore an arbitral award that had significantly enhanced the compensation payable to the landowner.

FACTS

Alfa Remidis Ltd. owned 1,394 square meters of land in Mouza Pardi (Rithi), Nagpur District, which was acquired for widening NH No. 547-E. The Deputy Collector classified it as agricultural land and awarded compensation at ₹161.63 per square meter. Aggrieved, Alfa Remidis approached the Arbitrator, asserting its land was in active industrial use for pharmaceutical manufacturing. It placed on record the Ready Reckoner rate of ₹2,020 per square meter and a sale deed for a nearby residential plot reflecting ₹3,588 per square meter. The Arbitrator accepted the industrial use claim and awarded compensation at ₹3,588 per square meter. NHAI challenged this before the District Judge, who set it aside for contravention of Section 26 of the 2013 LA Act. The High Court, however, restored the arbitral award, leading to the present appeal before the Supreme Court.

ISSUES

1. Whether the provisions of the 2013 LA Act, particularly Section 26, are applicable to the determination of compensation under Section 3G(1) of the National Highways Act, 1956.

2. Whether the Arbitrator erred in relying upon a single sale deed pertaining to a residential plot in a nearby village, rather than following the mandatory methodology prescribed under Section 26(1) of the 2013 LA Act, for determining market value.

3. Whether the arbitral award was vitiated by patent illegality so as to warrant interference under Section 34(2A) of the Arbitration Act.

4. What is the correct rate of compensation payable to Alfa Remidis Ltd. for its acquired land?

ARGUMENTS OF BOTH SIDES

APPELLANT(NHAI): contended that the arbitral award was vitiated by patent illegality under Section 34(2A) of the Arbitration Act, as the Arbitrator had disregarded the mandatory methodology under Section 26(1) of the 2013 LA Act. It argued that the sale deed relied upon related to a small residential plot in an adjoining village, which was entirely dissimilar to the industrial land of Alfa Remidis, and could not serve as a valid comparable under Section 26(1)(b). It further pointed out that the Explanations to Section 26(1) require the average sale price to be computed from multiple sale deeds over the preceding three years, making reliance on a single deed impermissible. NHAI also highlighted that the respondent itself had placed the Ready Reckoner rate of ₹2,020 per sq. mtr. on record the applicable government rate for highway-abutting lands in Zone 4, where Mouza Pardi (Rithi) falls and that this was the correct figure to apply under Section 26(1)(a). 

RESPONDENT(ALFA REMIDIS LTD.): argued that its land had been wrongly classified as agricultural when it was, in fact, in active industrial use for pharmaceutical manufacturing. It maintained that the comparable sale deed dated 29.03.2017 was a genuine, registered transaction for non-agricultural land from a nearby village and was the most appropriate benchmark available, particularly since no objections had been raised to its authenticity or relevance. It supported the High Court’s restoration of the arbitral award, urging that the Arbitrator had duly considered the available evidence and that the scope of interference with an arbitral award under Section 34 and Section 37 of the Arbitration Act is extremely narrow.

JUDGMENT AND REASONING

On Issue 1, the Court held that the provisions of the 2013 LA Act, particularly Sections 26 to 28, are fully applicable to compensation determination under Section 3G(1) of the NH Act, as settled in NHAI v. P. Nagaraju (2022) 15 SCC 1. On Issue 2, the Court further held that the Arbitrator committed a manifest error by relying on a single sale deed of a residential plot to determine the value of industrial land the two being clearly not of a “similar type” in direct contravention of Section 26(1)(b) of the 2013 LA Act, which mandates computation of average sale price from multiple sale deeds of similar type of land in the near vicinity during the preceding three years.

On Issue 3, the Court held that the award was vitiated by patent illegality on its face under Section 34(2A) of the Arbitration Act, since the Arbitrator completely ignored the directives of Section 26(1)(b) and the Explanations thereunder, and the protective proviso against interference for mere erroneous application of law could not be extended to such a fundamental statutory violation. Consequently, and on Issue 4, the Court determined that since Alfa Remidis had itself placed on record the Ready Reckoner rate of ₹2,020 per sq. mtr. applicable to highway-abutting lands in Zone 4 (which included Mouza Pardi Rithi), Section 26(1)(a) was the correct provision to apply, and compensation was accordingly fixed at ₹2,020 per sq. mtr. for the acquired 1,394 sq. mtrs., along with all consequential statutory benefits under the 2013 LA Act.

CONCLUSION

The Supreme Court’s decision underscores that compensation determination under the NH Act is a strictly regulated exercise, and that arbitrators are bound by the mandatory methodology set out in Section 26 of the 2013 LA Act. Reliance on a single, dissimilar sale deed is not merely an error of appreciation but a patent illegality that cannot be sustained. By directing compensation at the Ready Reckoner rate of ₹2,020 per square meter, a figure the landowner itself had placed on record, the Court achieved a result that is both legally sound and notably restrained. The ₹50,00,000 already withdrawn by Alfa Remidis was directed to be adjusted against the balance compensation due.