Writ Petitions Challenging NHAI Compensation Not Maintainable, Rules Allahabad High Court
The Allahabad High Court has held that compensation determined under Section 3G of the National Highways Act, 1956 must be challenged only through the mechanism provided under the Arbitration and Conciliation Act, 1996, and not by filing a writ petition under Article 226 of the Constitution.
A Division Bench of Justice Mahesh Chandra Tripathi and Justice Anish Kumar Gupta made this observation while dismissing a writ petition that sought to challenge the compensation awarded for land acquisition carried out under the National Highways Act.
“Section 3G(6) of the Act, 1956 expressly provides that the provisions of the Arbitration Act, 1996 shall apply to proceedings under Section 3G. This creates a complete statutory scheme where disputes regarding compensation are to be resolved through arbitration,” the Bench observed.
“Allowing landowners to bypass this mechanism and directly approach the High Court under Article 226 would render the Arbitration Act redundant and defeat the legislative intent,” it added.
Statutory Framework: Section 3G of the National Highways Act
Under Section 3G of the National Highways Act, 1956, the amount of compensation for land acquired by the government is determined by the Competent Authority.
- Section 3G(5) provides that if any party is dissatisfied with the compensation determined, it may approach the Central Government, which then appoints an arbitrator to adjudicate the dispute.
- Section 3G(6) mandates that every arbitration under this provision shall be governed by the Arbitration and Conciliation Act, 1996.
Accordingly, the High Court emphasized that Section 34 of the Arbitration Act is the appropriate statutory remedy to challenge arbitral awards concerning compensation.
Background: Landowners Sought Reclassification and Higher Compensation
The petitioners, after purchasing the land in question, obtained approval to convert it from agricultural to non-agricultural use. In 2018, the National Highways Authority of India (NHAI) initiated acquisition proceedings under Section 3A of the Act.
Dissatisfied with the compensation determined by the Competent Authority (Additional District Magistrate, Finance & Revenue) — which treated their land as agricultural — the petitioners approached the Arbitrator seeking redetermination.
However, the Arbitrator upheld the Authority’s decision, prompting further challenges. After several rounds of redetermination and appellate intervention under Section 34 of the Arbitration Act, the Special Judge (SC/ST Act), Hathras, enhanced the compensation to ₹4,000 per sq. meter, classifying the land as abadi (residential).
The petitioners, still dissatisfied, approached the High Court through a writ petition, seeking further revision of compensation.
Court: Arbitral Awards Must Be Challenged Under Section 34
The Bench noted that the core issue was whether a writ petition is maintainable against an arbitral award when an alternative statutory remedy exists under Section 34 of the Arbitration and Conciliation Act, 1996.
Relying on the Supreme Court’s ruling in Commissioner of Income Tax v. Chhabil Dass Agarwal, the Court reiterated that High Courts should not entertain writ petitions when a statutory appellate mechanism exists—except in rare cases where the order is passed without jurisdiction, in complete defiance of law, or in violation of natural justice.
“Disputes regarding the correctness of rates or the adequacy of compensation involve factual examination and evidence appreciation,” the Court observed. “These issues fall squarely within the domain of arbitral proceedings and cannot be re-litigated through writ jurisdiction.”
Judicial Warning Against Flooding Courts with Writs
The Bench cautioned that entertaining writ petitions in every compensation dispute would open floodgates of litigation and undermine the arbitration framework set up by Parliament.
“If every dissatisfied landowner is permitted to challenge arbitral awards directly through writ petitions on grounds of inadequate compensation, it would flood the High Courts with matters meant for the arbitration machinery,” the judgment reads. “This would clog judicial administration and defeat the statutory purpose.”
Accordingly, the Court dismissed the writ petition, while granting liberty to the petitioners to avail of the statutory remedy available under Section 34 of the Arbitration and Conciliation Act, 1996.
Case Details
- Case Title: Ramashankar Yadav and Another v. Union of India and Others
- Case No.: WRIT – C No. 26529 of 2025
- Bench: Justice Mahesh Chandra Tripathi and Justice Anish Kumar Gupta
- Court: Allahabad High Court
- Counsel for Petitioners: Mrs. Vatsala
Counsel for Respondents: Pranjal Mehrotra (for NHAI), Fuzail Ahmad Ansari (Standing Counsel for State)
