Fair compensation under land acquisition law applies to National Highways claims, and unreasoned valuation awards are vulnerable to remand.

Compensation for land acquired under the National Highways Act must reflect the fair-compensation principles in Sections 26 and 28 of the 2013 Act, because a restrictive reading of Section 3J would create unequal treatment and defeat the beneficial scheme extended by the 2015 removal of difficulties order. An arbitral award fixing land value must also rest on pleadings, evidence and reasoned comparison; using guideline values or comparable layouts without a proper factual basis and reasons amounts to patent illegality and breach of the duty to give reasons. Where the court cannot modify compensation under Section 34, the proper course is remand for reconsideration.

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Issues: (i) Whether, in determining compensation for land acquired under the National Highways Act, the compensation framework in Sections 26 and 28 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 applies, notwithstanding Sections 3G(7)(a) and 3J of the National Highways Act, 1956. (ii) Whether the arbitral awards suffered from patent illegality, lack of reasons, and denial of opportunity by adopting guideline values and comparable layouts without adequate pleading, evidence, or justification, warranting interference under the Arbitration and Conciliation Act, 1996.

Issue (i): Whether, in determining compensation for land acquired under the National Highways Act, the compensation framework in Sections 26 and 28 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 applies, notwithstanding Sections 3G(7)(a) and 3J of the National Highways Act, 1956.

Analysis: The statutory scheme requires market value to be determined with reference to the acquisition notification, but compensation must still be just and fair. The land acquisition regime in the National Highways Act is not insulated from the beneficial compensation principles introduced by the 2013 Act, particularly after the 2015 removal of difficulties order extending the compensation provisions of the 2013 Act to enactments in the Fourth Schedule. A restrictive reading of Section 3J so as to exclude the broader compensation factors would create unequal treatment between similarly placed landowners and would offend Article 14. The framework in Sections 26 and 28 of the 2013 Act therefore informs the determination of compensation under the National Highways Act.

Conclusion: The broader compensation principles under the 2013 Act apply, and the challenge based on exclusion of those principles was rejected.

Issue (ii): Whether the arbitral awards suffered from patent illegality, lack of reasons, and denial of opportunity by adopting guideline values and comparable layouts without adequate pleading, evidence, or justification, warranting interference under the Arbitration and Conciliation Act, 1996.

Analysis: Although a guideline notification subsequent to the preliminary acquisition notification was not, by itself, fatal where the escalation process had already commenced and the notification was in force before the award, the arbitrator's actual valuation exercise had to be supported by pleadings, evidence, and a reasoned comparison. In the lead matters, the award did not adequately explain why the value notified for distinct layouts was adopted in place of the values fixed for the very survey numbers concerned, nor did it disclose a proper evidentiary basis or an opportunity to rebut the comparison. That deficiency amounted to patent illegality and contravention of the requirement of reasons under Section 31(3). Since the court under Section 34 cannot modify compensation, the proper course was remand for reconsideration under Section 34(4). In the industrial-land matter, the award impermissibly mixed two different guideline notifications to derive the rate, which also amounted to material irregularity and patent illegality.

Conclusion: The awards were liable to be set aside and remanded for fresh consideration by the arbitrator.

Final Conclusion: The compensation determination under the National Highways acquisition regime must conform to the beneficial principles of the 2013 Act, but the specific awards could not stand because the valuation process was inadequately reasoned and procedurally unfair. The matters were therefore remitted for reconsideration.

Ratio Decidendi: In land acquisition arbitrations under the National Highways Act, compensation must be determined by applying the fair-compensation principles of the 2013 Act, and an award that adopts comparable values or guideline notifications without a proper evidentiary foundation and reasons is vulnerable to challenge as patent illegality, warranting remand rather than judicial modification.

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