- 1 - HC-KAR NC: 2026:KHC:3626 MFA No. 2460 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. 2460 OF 2022 (AA) BETWEEN: NATIONAL HIGHWAYS AUTHORITY OF INDIA PROJECT IMPLEMENTATION UNIT, MANGALORE DOOR NO.3-29, BETHEL, THARETHOTA, NEAR PUMPWELL (NH-66), MANGALORE - 575002. REPRESENTED BY ITS THE PROJECT DIRECTOR SHISHU MOHAN …APPELLANT (BY SMT. SHALINI, ADVOCATE FOR SRI. PRAKASHA ANGADI B.V., ADVOCATE) AND: 1. SRI M.CHANDRA SHETTY S/O PANDU SHETTY AGE ABOUT 45 YEARS R/AT NO.A- 2, SIERA VISTA APARTMENT, BHAGHAVATHI ROAD, BALLALBAGH MANGALORE - 575003 2. THE ARBITRATOR AND DEPUTY COMMISSIONER D.K. DISTRICT, MANGALORE …RESPONDENTS (BY SMT. GLANCIA S.D., ADVOCATE FOR SRI. CHIDANANDA KEDILAYA M., ADVOCATE FOR R1; SRI. MANJUNATHA RAYAPPA, AGA FOR R2) Digitally signed by PREMCHANDRA M R Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:3626 MFA No. 2460 of 2022 THIS MISCELLANEOUS FIRST APPEAL IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIANTION ACT, 1996. THIS MISCELLANEOUS FIRST APPEAL IS LISTED FOR HEARING, THIS DAY, THE JUDGMENT IS DELIVERED AS UNDER: ORAL JUDGMENT Smt.Shalini., counsel on behalf of Sri.Prakasha Angadi.B.V., for the appellant and Sri.Manjunath Rayappa., AGA for respondent No.2 have appeared in person. Smt.Glancia.S.D., counsel on behalf of Sri.Chidananda Kedilaya.M., for respondent No.1 appeared through video conferencing. 2. The Government of India, for development, maintenance, management, upgradation and the widening of National Highway No.75 (Old No. 48) amongst other lands, acquired the lands bearing Survey No.300/2A2 measuring 91 square metres belonging to the first respondent situated at Balthila Village, Bantwal Taluk. The land was acquired under the provisions of the NH Act, and the same was published in the Popular Daily newspaper. - 3 - HC-KAR NC: 2026:KHC:3626 MFA No. 2460 of 2022 The SLAO and CA passed the award on 22.09.2015, and the compensation was determined at Rs.34,989/-. Not satisfied with the compensation awarded by the competent authority, the first respondent preferred an application for enhancement of compensation before the Arbitrator, and the Arbitrator enhanced the compensation. Aggrieved by the arbitral award, the National Highways Authority of India filed a suit. The Court dismissed the suit. Under these circumstances, the appellant has filed the appeal on several grounds as set out in the memorandum of appeal. 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 in 2015 and fixed the land - 4 - HC-KAR NC: 2026:KHC:3626 MFA No. 2460 of 2022 compensation. 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 2015, yet arbitration was not invoked until 2017, representing an inordinate, unexplained delay of two years. The Arbitrator failed to appreciate that the claim was barred by laches and inordinate delay, as there was a two-year hiatus between the compensation determination in 2015 and the initiation of arbitration in 2017. Apart from the issue of delay, the learned Arbitrator erred in enhancing the compensation solely on the speculative grounds that Mangalore is a densely populated and fast-growing district. This finding is arbitrary, speculative, and constitutes an error of law apparent on the face of the record, as the valuation was not based on cogent evidence of market value at the time of the preliminary notification. In my view, the Arbitrator erred in law by assuming that because the district is growing, the specific land in question must be deemed 'scarce' and highly developable. I have no hesitation in concluding that the Arbitrator departed from the statutory mandate by adopting a 'guesswork' - 5 - HC-KAR NC: 2026:KHC:3626 MFA No. 2460 of 2022 approach to enhancement, rather than determining the objective 'market value' at the date of notification. The Arbitrator committed a jurisdictional error by enhancing compensation based on vague, subjective assertions regarding the development of Mangalore, rather than relying on comparable sale instances or concrete evidence of market value, making the award against the public policy of India. 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 30.11.2020, passed by the I Additional District and Sessions Judge Dakshina Kannada, Mangalore, in A.P.No.58/2019 and the Award dated 25.06.2019 passed by the second respondent are set aside. The compensation awarded by the competent authority is confirmed. - 6 - HC-KAR NC: 2026:KHC:3626 MFA No. 2460 of 2022 8. Resultantly, the Miscellaneous First Appeal is allowed. 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 PSJ List No.: 1 Sl No.: 67