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Karnataka High Court
National Highways Authority Of India vs Smt Nafisha Banu on 21 January, 2026
-1-
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MFA No. 6758 of 2021
HC-KAR
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,
Digitally signed by TALAPADY POST AND VILLAGE,
PREMCHANDRA M R
MANGALORE - 575023
Location: HIGH
COURT OF
KARNATAKA 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.
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MFA No. 6758 of 2021
HC-KAR
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
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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
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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
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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.
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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
