- 1 - HC-KAR NC: 2026:KHC:3338 MFA No. 2638 of 2020 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. 2638 OF 2020 (AA) BETWEEN: 1. NATIONAL HIGHWAYS AUTHORITY OF INDIA (MINISTRY OF ROAD TRANSPORT AND HIGHWAYS) PROJECT IMPLEMENTATION UNIT SY.NO.13, 14TH KM, BENGALURU - TUMKUR ROAD NAGASANDRA, BENGALURU-560 073 REPRESENTED BY SRI S.P.SOMASHEKAR PROJECT DIRECTOR 2. SPECIAL LAND ACQUISITION OFFICER AND COMPETENT AUTHORITY NATIONAL HIGHWAYS AUTHORITY OF INDIA NH-7, NO.678/3, NEERUBHAVI KEMPANNA LAYOUT, HEBBAL, BENGALURU-560 024. REPRESENTED BY SMT HARISHILPA MANAGER TECHNICAL. …APPELLANTS (BY SRI. CHANDAN K., ADVOCATE) AND: 1. SRI H.C.RAMACHANDRAIAH, S/O CHANNATHIMMAIAH, HOTEPPANAPALYA, LAKSHMI PURA (POST), DASANAPURA HOBLI, BENGALURU NORTH TALUK, BENGALURU - 562123. Digitally signed by PREMCHANDRA M R Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:3338 MFA No. 2638 of 2020 2. THE ARBITRATOR AND SPECIAL DEPUTY COMMISSIONER, BENGALURU URBAN DISTRICT, D.C.OFFICE BUILDING, REVENUE COMPLEX, K.G.ROAD, BENGALURU-560 009 …RESPONDENTS (BY SRI. KHADRI S.A., ADVOCATE FOR R1[ABSENT]; SRI. MANJUNATHA RAYAPPA, AGA FOR R2) 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.Chandan.K., counsel for the appellants and Sri.Manjunath Rayappa., Additional Government Advocate for respondent No.2 have appeared in person. 2. The matter was listed on 14.01.2026, on that day, there was no representation on behalf of respondent No.1. Hence, for appearance of counsel for respondent No.1, it was ordered to be listed on 21.01.2026 and it was also made clear that if none appears for respondent No.1 - 3 - HC-KAR NC: 2026:KHC:3338 MFA No. 2638 of 2020 on the next date of hearing, the Court will proceed to pass orders on the merits of the case. The petition is listed today, there is no representation on behalf of respondent No.1, either personally or through video conferencing. Hence, this Court proceed to pass orders on the merits of the case. 3. The appeal is filed to set aside the judgment and decree dated 12.11.2019, passed by the XIX Additional City Civil and Sessions Judge Bengaluru (CCH- 18) in A.S.No.67/2018 and the Award dated 07.12.2017, passed by the second respondent and to confirm the compensation awarded by the Special Land Acquisition Officer on 10.04.2008. 4. The Government of India, through the National Highway Authority of India, acquired several pieces of land for the widening of the Bengaluru-Nelamangala Road under the preliminary notification dated 22.11.2006 and subsequently through a final notification dated - 4 - HC-KAR NC: 2026:KHC:3338 MFA No. 2638 of 2020 13.11.2007. The Acquisition proceedings were carried out under the Provisions of the National Highways Act, 1956. In pursuance of the notifications, the second appellant, the Special Land Acquisition Officer, acquired several lands in Madavara Village, Yeshwanthpura Hobli, Bengaluru North Taluk, Bengaluru under Section 3A(1) and 3D(1) of the National Highways Act, 1956. Appellant No.2, after hearing objections filed by the first respondent, determined the compensation on 10.04.2008 and fixed the land compensation at Rs.50,00,000/- (Fifty Lakhs only) per acre for dry/wet/ Garden Lands, Rs.250/- per square feet for converted land and Rs.300/- per square feet from Grama Tanna land. In accordance with the above, the appellant No.2 paid the compensation to the first respondent. 5. The first respondent, not satisfied with the compensation, approached the second respondent as provided under Section 3G (5) of the National Highways Act. The first respondent initiated arbitration proceedings - 5 - HC-KAR NC: 2026:KHC:3338 MFA No. 2638 of 2020 seeking enhancement of the compensation awarded by the second respondent on the ground that the subject lands are near Bengaluru City and have both commercial and industrial value. The first respondent also alleged that the compensation determined by the second appellant was very meager and hence sought enhancement of compensation. Upon receipt of the notice, the appellants appeared and filed their objections and objected to any enhancement in compensation on the ground that the compensation was fixed taking into consideration the sale statistics of the office of the relevant Sub Registrar and also guidance value of the registration department for the year 2006-2007 and hence there was no requirement to enhance the compensation as claimed by the first respondent. 6. The second respondent, after appreciating the material provided by the applicants, categorically recorded in the award that respondent No.1 had failed to produce - 6 - HC-KAR NC: 2026:KHC:3338 MFA No. 2638 of 2020 any relevant documents in support of their claim; however, proceeded to enhance the compensation amount three times of the amount determined by the second appellant without providing any reasons for such enhancement on 07.12.2017. Appellants preferred an appeal under Section 34 of the Arbitration and Conciliation Act, 1996, before the City Civil and Session Judge, Bengaluru. The Court, after hearing both parties, dismissed the suit. Under these circumstances the appellants have filed the appeal on several grounds as set out in the memorandum of appeal. 7. Counsel appearing for the respective parties presented several contentions. Heard the arguments and pursued the papers with care. 8. The core issue requiring consideration is whether the Arbitrator was justified in increasing the compensation amount. To be precise, the central point for - 7 - HC-KAR NC: 2026:KHC:3338 MFA No. 2638 of 2020 consideration is whether the Arbitrator had cause to enhance the compensation amount. 9. Suffice it to note that the SLAO determined the compensation on 10.04.2008 and fixed the land compensation at Rs.50,00,000/- (Fifty Lakhs only) per acre for dry/wet/ Garden Lands, Rs.250/- per square feet for converted land and Rs.300/- per square feet from Grama Tana land. The compensation was fixed taking into consideration the sale statistics of the office of the relevant Sub Registrar and also the guidance value of the registration department for the year 2006-2007. The Special Land Acquisition Officer (SLAO), placing proper reliance on the material on record, rightly determined the compensation. Consequently, there existed no sufficient cause for the Arbitrator to enhance the awarded amount. 10. The order of the arbitrator is furnished and perused meticulously. Notwithstanding the finding that the claimant did not submit the necessary documents, the - 8 - HC-KAR NC: 2026:KHC:3338 MFA No. 2638 of 2020 Arbitrator erroneously enhanced the award amount. In other words, the Arbitrator erroneously enhanced the compensation amount despite finding that the claimant failed to furnish the relevant documents. The arbitral award, in enhancing the quantum, is in contravention of the fundamental policy of Indian law, as it relies on an inference that is demonstrably untenable and goes against well-settled principles of quantum assessment, thereby violating Section 34(2)(b)(ii) of the Arbitration and Conciliation Act, 1996. Furthermore, the finding that the lands in question can be commercially exploited and possess a good commercial value is erroneous in law and fact, and thus, liable to be set aside. The SLAO's compensation was correctly determined from the record; the Arbitrator's enhancement lacked justification. Consequently, the dismissal of the suit is also incorrect. 11. 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. - 9 - HC-KAR NC: 2026:KHC:3338 MFA No. 2638 of 2020 12. The judgment and decree dated 12.11.2019, passed by the XIX Additional City Civil and Sessions Judge Bengaluru in A.S.No.67/2018 and the Award dated 07.12.2017, passed by the second respondent, are set aside, and the compensation awarded by the Special Land Acquisition Officer on 10.04.2008 is confirmed. 13. Resultantly, the Miscellaneous First Appeal is allowed. 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.: 26