[Cites 2, Cited by 0]
Karnataka High Court
National Highway Authority Of India vs Smt Prema R Shetty on 21 January, 2026
-1-
NC: 2026:KHC:3332
MFA No. 346 of 2022
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. 346 OF 2022 (AA)
BETWEEN:
NATIONAL HIGHWAY AUTHORITY OF INDIA
PIU - MANGALORE
DOOR NO 3-29, BETHEL,
THARETHOTA NEAR PUMPWELL (NH-66),
MANGALORE-575005
REPRESENTED BY MANAGER TECH.
...APPELLANT
(BY SRI. SHOBHITH N SHETTY, ADVOCATE)
AND:
1. SMT. PREMA R. SHETTY,
D/O. SARASU SHETTY,
KOLNAD HOSA MANE,
BELLAIRU VILLAGE, POST MULKI,
MANGALURU - 574154.
Digitally signed by
PREMCHANDRA M R
Location: HIGH 2. THE COMPETENT AUTHORITY AND
COURT OF
KARNATAKA SPECIAL LAND ACQUISITION OFFICER,
NATIONAL HIGHWAY 66
NGO BUILDING, NEAR CLOCK TOWER,
MANGALURU, D.K.DISTRICT-575001
3. THE DEPUTY COMMISSIONER AND ARBITRATOR
DAKSHINA KANNADA DISTRICT,
MANGALURU - 575008.
...RESPONDENTS
(BY SRI. MANJUNATHA RAYAPPA, AGA FOR R2 AND R3;
R1 SERVED AND UNREPRESENTED)
-2-
NC: 2026:KHC:3332
MFA No. 346 of 2022
HC-KAR
THIS MISCELLANEOUS FIRST APPEAL IS FILED UNDER
SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION
ACT, 1996.
THIS MISCELLANEOUS FIRST APPEAL IS LISTED FOR
ADMISSION, THIS DAY, THE JUDGMENT IS DELIVERED AS
UNDER:
ORAL JUDGMENT
Sri.Shobhith N.Shetty., counsel for the appellant and
Sri.Manjunath Rayappa,. Additional Government Advocate
for respondents 2 and 3 have appeared in person.
2. The Central Government acquired certain lands
of several villages, including Bellairu Village of Mangaluru
Taluk, for widening the formation of National Highway 66
(old NH-17) from kilometers 348/500 to kilometers
358/000, in Dakshina Kannada District, and accordingly,
lands were acquired as per the provisions of the National
Highways Act, 1956, in 2008-09. The land in Survey
No.30/1B2 measuring 405 square meters, Survey No.30/
4BP4 measuring 106 square meters, Survey No.30/5B
measuring 405 square meters, and Survey No.73/1B
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measuring 627 square meters, totaling 1543 square
meters of Bellairu Village belonging to the first respondent,
were acquired. The competent authority fixed the land
value at the rate of Rs.8,000/- per Cent.
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 in 2016. The Arbitrator enhanced the
compensation. In opposition to the enhancement of the
compensation, the arbitrator passed the award and
against the award, the National Highway preferred a suit
before the First Additional District Judge, Dakshina
Kannada Mangaluru. The suit came to be dismissed. Under
the circumstances, the appellant has filed the appeal on
several grounds as set out in the memorandum of appeal.
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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 22.09.2011 and fixed the
land compensation at Rs.8,000/- per Cent. 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 to
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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 law by enhancing the compensation
based solely on the commercial guidance value of the
lands in Chitrapu village, which was Rs.77 lakhs per acre,
ignoring that such rates are often artificial, speculative,
and not reflective of the actual market value as of the date
of notification. The reliance on a presumptive guidance
value, rather than concrete evidence of sales in the
immediate vicinity during the relevant period, makes the
enhancement speculative, capricious, and unsustainable.
The Arbitrator acted in a patent illegality by ignoring
crucial evidence of local market rates and relying on
irrelevant, higher guidance values from a neighbouring
village. I have no hesitation in concluding that the
arbitrator departed from the statutory mandate by
adopting a 'guesswork' approach to enhancement, rather
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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. 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 01.10.2021,
passed by the I Additional District and Sessions Judge
Dakshina Kannada, Mangalore, in A.P.No.26/2021 and the
Award dated 15.12.2020, 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.
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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
MRP
List No.: 1 Sl No.: 31
