National Highways Acquisition | P&H High Court Grants Higher Interest On Enhanced Compensation, Modifies Arbitral Award

The Punjab & Haryana High Court has held that landowners whose land is acquired under the National Highways Act are entitled to interest in terms of the more beneficial provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, and not merely under the limited framework of the 1956 Act.Allowing a plea filed by landowners, Justice Harkesh Manuja, "modified an arbitral award to grant interest at the rate of 9% per annum for the first year and 15% per annum thereafter on the enhanced compensation from the date of possession, in accordance with Section 72 of the 2013 Act. The Court also held that interest under Section 80 of the 2013 Act would be payable on the original compensation amount determined by the competent authority.""The scope of interference under the writ jurisdiction against arbitral awards rendered under the Arbitration and Conciliation Act, 1996 is undoubtedly limited, the same principle cannot be applied with equal rigidity to arbitration proceedings conducted under the National Highways Act, 1956. The latter contemplates a form of statutory arbitration, wherein the Arbitrator is appointed by the Central Government, unlike consensual arbitration contemplated under section 10 and 11 of 1996 Act where the appointment of the arbitrator is primarily founded upon the party autonomy of the disputants. Also, given that such arbitrators are appointed by the Central authority itself, the possibility of perceived institutional bias or lack of complete neutrality cannot be altogether ruled out," it added.In such circumstances the Court clarified, "a writ court exercising jurisdiction under Articles 226/227 of the Constitution of India may be justified in exercising a broader supervisory scrutiny to ensure justice, fairness, parity to the aggrieved landowner,"The petitioners had challenged the arbitral award dated October 27, 2025, to the limited extent that it granted interest at 9% only from the date of filing of the application till deposit, instead of applying the statutory scheme under the 2013 Act. Their land in Village Tibber, Gurdaspur, had been acquired for the Delhi-Amritsar-Katra National Highway project, and while compensation was enhanced by the Arbitrator, the benefit of higher interest was denied.The Court found merit in the petitioners' contention, observing that interest is an integral component of “just compensation” and cannot be curtailed by applying a narrower provision under the National Highways Act. Relying on the Supreme Court's ruling in Union of India v. Tarsem Singh, the Court reiterated that landowners under different acquisition statutes cannot be treated unequally in matters of compensation, including solatium and interest.It further held that the Arbitrator committed a “manifest error of law” by deviating from earlier awards concerning similarly situated landowners from the same village, where higher rates of interest had been granted. Denial of parity, the Court noted, resulted in an arbitrary and discriminatory outcome, offending Article 14 of the Constitution.Rejecting the objection regarding maintainability of the writ petition, the Court observed that the alternative remedy under Section 34 of the Arbitration and Conciliation Act would be inefficacious, as it permits only setting aside of an award and not its modification. In the present case, remanding the matter would only prolong litigation without serving any useful purpose.The Court also emphasized that arbitration under the National Highways Act is a form of statutory arbitration, where the arbitrator is appointed by the State, thereby justifying a broader scope of judicial review to ensure fairness and parity.Accordingly, the Court modified the arbitral award and directed the authorities to grant interest in terms of Sections 72 and 80 of the 2013 Act, holding that the petitioners are entitled to the same benefits as other similarly placed landowners.Hence, the plea was disposed of with these directions.Mr. Manoj Pundir, Advocate with Mr. Dilpreet, Advocate for the petitioners.Ms. Komal Bishnoi, Advocate for Mr. Rishi Kaushal, Advocate for the respondents-NHAI.Mr. Karunesh Kaushal, Asstt.A.G. Punjab.Click here to read order

National Highways Acquisition | P&H High Court Grants Higher Interest On Enhanced Compensation, Modifies Arbitral Award

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