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Project Director, National Highways Authority of India v. Alfa Remidis Ltd. and Others

Civil Appeal · 2026 INSC 480Decided 12 May 2026
C.A. No.-007847-007847 - 2026 (@ SLP(C) No. 33773 of 2025)
Justice Sanjay Kumar · Justice K. Vinod Chandran

Background

Land belonging to Alfa Remidis Ltd. was acquired for widening a national highway near Nagpur. The Land Acquisition Collector initially valued the land as agricultural land and awarded lower compensation, but an Arbitrator later found the land was actually being used industrially (for paracetamol production) and enhanced the compensation based on a single 2017 sale deed of nearby residential land. A District Judge set aside this enhancement for violating Section 26 of the 2013 Land Acquisition Act, but the Bombay High Court (Nagpur Bench) restored the Arbitrator's enhanced award, prompting NHAI's appeal to the Supreme Court.

Decision Breakdown

The Supreme Court held that the Arbitrator erred by relying on a single sale deed of dissimilar (residential) land in an adjoining village to value industrial land, which does not satisfy Section 26(1)(b) of the 2013 LA Act: that provision requires an "average sale price" derived from multiple comparable sale deeds, not a solitary exemplar. It held that the correct valuation should instead have used the Government Ready Reckoner rate under Section 26(1)(a), since the land fell within the officially notified highway zone rate. While an arbitral award ordinarily cannot be set aside for mere erroneous application of law, the Court held this case involved "patent illegality" because the Arbitrator ignored the express statutory mandate altogether. The appeal was allowed, and compensation was reduced from ₹3,588 to ₹2,020 per square meter, with the amount already withdrawn by the landowner to be adjusted against the final payment.

Lesson Learnt

In land acquisition compensation disputes, valuation must follow the statutory method under Section 26 of the 2013 LA Act (using multiple comparable sale instances or the notified Ready Reckoner rate) rather than a single cherry-picked sale deed; ignoring this statutory formula amounts to a "patent illegality" that courts can correct even in arbitration appeals.

Official source (sci.gov.in)View Judgment (PDF)

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