- 1 - HC-KAR NC: 2026:KHC:4307 MFA No. 3522 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF JANUARY, 2026 BEFORE THE HON'BLE MS. JUSTICE JYOTI M MISCELLANEOUS FIRST APPEAL NO. 3522 OF 2024 (AA) BETWEEN: NATIONAL HIGHWAYS AUTHORITY OF INDIA (MINISTRY OF ROAD TRANSPORT AND HIGHWAYS), PROJECT IMPLEMENT UNIT MANGALORE, NH-75 ADDAHOLE-BANTWAL CROSS SECTION OFFICE AT DOOR NO.3-29 BETHEL, THARETHOTA NEAR PUMPWELL MANGALORE-575 002 REPRESENTED BY AUTHORIZED OFFICER ABDULLA JAVED AZMI WORKING AS THE DEPUTY GENERAL MANAGER (TECH.,) AND PROJECT DIRECTOR …APPELLANT (BY SRI. NITHYANANDA M.K, ADVOCATE) AND: 1. SMT. ATHEEJAMMA W/O ISUBU AGED ABOUT 45 YERAS RESIDING AT NEKKILADI VILLAGE AND POST, PUTTUR TALUK-574 325 DKASHINA KANNADA DISTRICT 2. THE ARBITRATOR AND DEPUTY COMMISSIONER Digitally signed by PREMCHANDRA M R Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:4307 MFA No. 3522 of 2024 DAKSHINA KANNADA DISTRICT MANGALORE-575 001 …RESPONDENTS (BY SMT. RASHMI RAO, HCGP FOR R2; R1 SERVED AND UNREPRESENTED) THIS MFA IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT, 1996. THIS MISCELLANEOUS FIRST APPEAL IS LISTED FOR FINAL HEARING , THIS DAY, THE JUDGMENT IS DELIVERED AS UNDER: ORAL ORDER Sri.Nithyananda.M.K., counsel for the appellant and Smt.Rashmi Rao., High Court Government Pleader for respondent No.2 have appeared in person. 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.59/3D2B measuring 122 square metres belonging to the first respondent situated at Nekkiladi Village, Puttur 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:4307 MFA No. 3522 of 2024 The SLAO and CA passed the award on 21.10.2020, and the reasonable compensation was determined. 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 2020 and fixed the land - 4 - HC-KAR NC: 2026:KHC:4307 MFA No. 3522 of 2024 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 2020, yet arbitration was not invoked until 2022, 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 2020 and the initiation of arbitration in 2022. 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:4307 MFA No. 3522 of 2024 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 02.03.2024, passed by the IV Additional District Judge and Commercial Court Dakshina Kannada, Mangalore, in A.P.No.306/2023 and the Award dated 13.06.2023 passed by the second respondent are set aside. The compensation awarded by the competent authority is confirmed. - 6 - HC-KAR NC: 2026:KHC:4307 MFA No. 3522 of 2024 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 CH List No.: 1 Sl No.: 62