- 1 - HC-KAR NC: 2026:KHC:3332 MFA No. 346 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF JANUARY, 2026 BEFORE THE HON'BLE MS. JUSTICE JYOTI M MISCELLANEOUS FIRST APPEAL NO. 346 OF 2022 (AA) BETWEEN: NATIONAL HIGHWAY AUTHORITY OF INDIA PIU - MANGALORE DOOR NO 3-29, BETHEL, THARETHOTA NEAR PUMPWELL (NH-66), MANGALORE-575005 REPRESENTED BY MANAGER TECH. …APPELLANT (BY SRI. SHOBHITH N SHETTY, ADVOCATE) AND: 1. SMT. PREMA R. SHETTY, D/O. SARASU SHETTY, KOLNAD HOSA MANE, BELLAIRU VILLAGE, POST MULKI, MANGALURU - 574154. 2. THE COMPETENT AUTHORITY AND SPECIAL LAND ACQUISITION OFFICER, NATIONAL HIGHWAY 66 NGO BUILDING, NEAR CLOCK TOWER, MANGALURU, D.K.DISTRICT-575001 3. THE DEPUTY COMMISSIONER AND ARBITRATOR DAKSHINA KANNADA DISTRICT, MANGALURU - 575008. …RESPONDENTS (BY SRI. MANJUNATHA RAYAPPA, AGA FOR R2 AND R3; R1 SERVED AND UNREPRESENTED) Digitally signed by PREMCHANDRA M R Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:3332 MFA No. 346 of 2022 THIS MISCELLANEOUS FIRST APPEAL IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT, 1996. THIS MISCELLANEOUS FIRST APPEAL IS LISTED FOR ADMISSION, THIS DAY, THE JUDGMENT IS DELIVERED AS UNDER: ORAL JUDGMENT Sri.Shobhith N.Shetty., counsel for the appellant and Sri.Manjunath Rayappa,. Additional Government Advocate for respondents 2 and 3 have appeared in person. 2. The Central Government acquired certain lands of several villages, including Bellairu Village of Mangaluru Taluk, for widening the formation of National Highway 66 (old NH-17) from kilometers 348/500 to kilometers 358/000, in Dakshina Kannada District, and accordingly, lands were acquired as per the provisions of the National Highways Act, 1956, in 2008-09. The land in Survey No.30/1B2 measuring 405 square meters, Survey No.30/ 4BP4 measuring 106 square meters, Survey No.30/5B measuring 405 square meters, and Survey No.73/1B - 3 - HC-KAR NC: 2026:KHC:3332 MFA No. 346 of 2022 measuring 627 square meters, totaling 1543 square meters of Bellairu Village belonging to the first respondent, were acquired. The competent authority fixed the land value at the rate of Rs.8,000/- per Cent. Aggrieved by the compensation awarded, the first respondent preferred an arbitration application for enhancement of compensation under the Provisions of the Arbitration and Conciliation Act, 1996, before the Arbitrator and Deputy Commissioner, Dakshina Kannada District, Mangaluru in 2016. The Arbitrator enhanced the compensation. In opposition to the enhancement of the compensation, the arbitrator passed the award and against the award, the National Highway preferred a suit before the First Additional District Judge, Dakshina Kannada Mangaluru. The suit came to be dismissed. Under the circumstances, the appellant has filed the appeal on several grounds as set out in the memorandum of appeal. - 4 - HC-KAR NC: 2026:KHC:3332 MFA No. 346 of 2022 3. Counsel for the respective parties presented several contentions. Heard the arguments and perused the papers with care. 4. The core issue requiring consideration is whether the Arbitrator was justified in increasing the compensation amount. To be precise, the central point for consideration is whether the Arbitrator had cause to enhance the compensation amount. 5. Suffice it to note that the competent authority determined the compensation on 22.09.2011 and fixed the land compensation at Rs.8,000/- per Cent. The compensation was fixed, placing proper reliance on the material on record, and consequently, there existed no sufficient cause for the Arbitrator to enhance the awarded amount. The compensation was finalized by the Competent Authority in 2011, yet arbitration was not invoked until 2017, representing an inordinate, unexplained delay of six years. The Arbitrator failed to - 5 - HC-KAR NC: 2026:KHC:3332 MFA No. 346 of 2022 appreciate that the claim was barred by laches and inordinate delay, as there was a six-year hiatus between the compensation determination in 2011 and the initiation of arbitration in 2017. Apart from the issue of delay, the Arbitrator erred in law by enhancing the compensation based solely on the commercial guidance value of the lands in Chitrapu village, which was Rs.77 lakhs per acre, ignoring that such rates are often artificial, speculative, and not reflective of the actual market value as of the date of notification. The reliance on a presumptive guidance value, rather than concrete evidence of sales in the immediate vicinity during the relevant period, makes the enhancement speculative, capricious, and unsustainable. The Arbitrator acted in a patent illegality by ignoring crucial evidence of local market rates and relying on irrelevant, higher guidance values from a neighbouring village. I have no hesitation in concluding that the arbitrator departed from the statutory mandate by adopting a 'guesswork' approach to enhancement, rather - 6 - HC-KAR NC: 2026:KHC:3332 MFA No. 346 of 2022 than determining the objective 'market value' at the date of notification. The competent authority’s compensation was correctly determined from the record; the Arbitrator's enhancement lacked justification. Consequently, the dismissal of the suit is also incorrect. 6. For the foregoing reasons, the arbitral award and the judgment and decrees in the suit are liable to be set aside, and they are set aside. 7. The judgment and decree dated 01.10.2021, passed by the I Additional District and Sessions Judge Dakshina Kannada, Mangalore, in A.P.No.26/2021 and the Award dated 15.12.2020, passed by the second respondent, are set aside, and the compensation awarded by the Special Land Acquisition Officer is confirmed. 8. Resultantly, the Miscellaneous First Appeal is allowed. - 7 - HC-KAR NC: 2026:KHC:3332 MFA No. 346 of 2022 9. Because of disposal of the appeal, interim order granted if any stands discharged and pending interlocutory applications if any are disposed of. SD/- (JYOTI M) JUDGE MRP List No.: 1 Sl No.: 31