- 1 - HC-KAR NC: 2026:KHC:3630 MFA No. 3910 of 2024 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. 3910 OF 2024 (AA) BETWEEN: NATIONAL HIGHWAYS AUTHORITY OF INDIA (MINISTRY OF ROAD TRANSPORT AND HIGHWAYS) PROJECT IMPLEMENTATION UNIT - MANGALORE NH-169 (NH-13) SANOOR BIKARNAKATTE SECTION, OFFICE AT DOOR NO 3-29 BETHEL, THARETHOTA NEAR PUMPWELL, MANGALURU-575002 REPRESENTED BY ITS AUTHORIZED OFFICER, ABDULLA JAVED AZMI WORKING AS THE DEPUTY GENERAL MANAGER (TECH) AND PROJECT DIRECTOR …APPELLANT (BY SRI. SANDEEP KATTI, ADVOCATE FOR SRI. NITHYANANDA M.K., ADVOCATE) AND: 1. MR. M.A.MOHAMMED SHARIEF S/O ABDULLA AGED ABOUT 56 YEARS RESIDING AT NO 1-26, HOSA MANE, TENKAMIJAR VILLAGE, MOODABIDRE TALUK 574225 DAKSHINA KANNADA DISTRICT 2. THE ARBITRATOR AND DEPUTY COMMISSIONER D.K.DISTRICT, MANGALORE - 575001 …RESPONDENTS (BY SRI. MANJUNATHA RAYAPPA, AGA FOR R2; R1 SERVED AND UNREPRESENTED) Digitally signed by PREMCHANDRA M R Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:3630 MFA No. 3910 of 2024 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 ADMISSION, THIS DAY, THE JUDGMENT IS DELIVERED AS UNDER: ORAL JUDGMENT Sri.Sandeep Katti., counsel on behalf of Sri.Nithyananda.M.K., for the appellant and Sri.Manjunatha Rayappa., Additional Government Advocate for respondent No.2 have appeared in person. 2. The National Highway Authority of India undertook the construction work in respect of widening of National Highway No.169 (Old NH 13), from K.M. 698.850 to K.M. 744.190 in Tenkamijaru Village, Moodabidare Taluk, Dakshina Kannada District, in the State of Karnataka. For the said purpose, the Central Government had acquired the lands in these stretches, which include the land of the first respondent. The Central Government issued a preliminary notification and a final notification. The competent authority, after considering all aspects in accordance with the provisions of the statute, - 3 - HC-KAR NC: 2026:KHC:3630 MFA No. 3910 of 2024 determined the market value of the acquired land in accordance with the law. The competent authority relied upon the sale transaction details provided by the Sub Registrar of Moodabidre. It took into consideration the highest price for which dry lands were sold in Tenkamijaru Village during the relevant period, and based on the said sale statistics, the average sale price was arrived at Rs.15,904/- per Cent or Rs.393/- per square meter. The competent authority relied upon the guidance value fixed by the Government of Karnataka. Similarly, for arriving at the market value of the dry land, sale statistics were considered, and the market value was fixed at Rs.393/- per square meter. Award was passed by the competent authority as per the provisions of 3G(1) of the National Highway Act. 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 Deputy Commissioner, Dakshina Kannada Mangaluru. The Arbitrator enhanced the compensation. Aggrieved by the arbitral award, the National Highways - 4 - HC-KAR NC: 2026:KHC:3630 MFA No. 3910 of 2024 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 on 10.02.2021 and fixed the land 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 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 - 5 - HC-KAR NC: 2026:KHC:3630 MFA No. 3910 of 2024 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' 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 - HC-KAR NC: 2026:KHC:3630 MFA No. 3910 of 2024 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 06.03.2024, passed by the IV Additional District Judge and Commercial Court, Dakshina Kannada, Mangalore, in A.P.No.348/2023 and the Award dated 13.06.2023, 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. 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.: 42