- 1 - HC-KAR NC: 2026:KHC:3343 MFA No. 6758 of 2021 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. 6758 OF 2021 (AA) BETWEEN: NATIONAL HIGHWAYS AUTHORITY OF INDIA PROJECT IMPLEMENTATION UNIT, DOOR NO.3-29, BETHEL, THARETHOTA, NEAR PUMPWELL (NH-66), MANGALORE - 575005, REPRESENTED BY ITS PROJECT DIRECTOR …APPELLANT (BY SRI. TATTI SHASHIDHAR CHANDRASHEKHAR, ADVOCATE) AND: 1. SMT NAFISHA BANU, MAJOR, W/O UDYAVAR MOIDEEN KUNHI, WHITE HOUSE, K.C. ROAD, TALAPADY POST AND VILLAGE, MANGALORE - 575023 2. THE ARBITRATOR AND DEPUTY COMMISSIONER, D.K. DISTRICT, MANGALORE - 575001. …RESPONDENTS (BY SRI. MANJUNATHA RAYAPPA, AGA FOR R2; R1 SERVED AND UNREPRESENTED) THIS MISCELLANEOUS FIRST APPEAL IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT, 1996. Digitally signed by PREMCHANDRA M R Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:3343 MFA No. 6758 of 2021 THIS MISCELLANEOUS FIRST APPEAL IS LISTED FOR ADMISSION, THIS DAY, THE JUDGMENT IS DELIVERED AS UNDER: ORAL JUDGMENT Sri.Vasant Koppar., counsel on behalf of Sri.Tatti Shashidhar Chandrashekhar., for the appellant and Sri.Manjunath Rayappa., Additional Government Advocate for respondent No.2 have appeared in person. 2. The National Highway Authority of India was established for the implementation of projects undertaken by it, entrusted or vested in it under Section 11 of the National Highway Authority of India Act. The National Authority undertook the widening of National Highway No. 66 from kilometer 375/300 to kilometer 376/600 (Panaji - Mangalore Section) and kilometer 3/600 to kilometer 17/200 (Mangalore - Cochin Section) in Dakshina Kannada in the State of Karnataka. For the widening of NH 66, the Central Government acquired the lands of the first respondent. Pursuant to the acquisition of the land for the widening of NH 66 lands in Talapady Village, Mangaluru Taluk, Dakshina - 3 - HC-KAR NC: 2026:KHC:3343 MFA No. 6758 of 2021 Kannada District, belonging to the first respondent, was acquired, and the competent authority passed the award on 20.08.2011, awarding compensation to the land losers, including the first respondent, for the lands acquired. A parcel of the land of the first respondent measuring 162 square meters in Survey No.1/2A7 situated in Thalapady Village, Mangaluru Taluk, was acquired. The competent authority for the Land Acquisition under the Act awarded compensation to the tune of Rs.3,60,267/- for the acquired land of the first respondent in Thalapady Village, and compensation was paid. 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 on 25.10.2017. The Arbitrator enhanced the compensation at the rate of Rs.1,12,000/- with 9% interest. Aggrieved by the arbitral award, the NHA preferred an arbitration petition before the First Additional District and Sessions Judge, Dakshina Kannada Mangaluru, for setting aside - 4 - HC-KAR NC: 2026:KHC:3343 MFA No. 6758 of 2021 the arbitral award. 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 20.08.2011 and fixed the land compensation at Rs.3,60,267/-. 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 - 5 - HC-KAR NC: 2026:KHC:3343 MFA No. 6758 of 2021 to 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 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. 6. 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 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:3343 MFA No. 6758 of 2021 7. 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. 8. The judgment and decree dated 04.08.2021, passed by the I Additional District and Sessions Judge, Dakshina Kannada, Mangaluru, in A.P.No.05/2020 and the Award dated 26.11.2019, passed by the second respondent, are set aside, and the compensation awarded by the Special Land Acquisition Officer is confirmed. 9. Resultantly, the Miscellaneous First Appeal is allowed. 10. 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.: 28