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Karnataka High Court
National Highways Authority Of India vs Sri M Chandra Shetty on 21 January, 2026
-1-
NC: 2026:KHC:3626
MFA No. 2460 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. 2460 OF 2022 (AA)
BETWEEN:
NATIONAL HIGHWAYS AUTHORITY OF INDIA
PROJECT IMPLEMENTATION UNIT, MANGALORE
DOOR NO.3-29, BETHEL,
THARETHOTA, NEAR PUMPWELL (NH-66),
MANGALORE - 575002.
REPRESENTED BY ITS THE PROJECT DIRECTOR
SHISHU MOHAN
...APPELLANT
(BY SMT. SHALINI, ADVOCATE FOR
SRI. PRAKASHA ANGADI B.V., ADVOCATE)
AND:
1. SRI M.CHANDRA SHETTY
S/O PANDU SHETTY
Digitally signed by AGE ABOUT 45 YEARS
PREMCHANDRA M R R/AT NO.A- 2, SIERA VISTA APARTMENT,
Location: HIGH BHAGHAVATHI ROAD, BALLALBAGH
COURT OF
KARNATAKA MANGALORE - 575003
2. THE ARBITRATOR AND DEPUTY COMMISSIONER
D.K. DISTRICT, MANGALORE
...RESPONDENTS
(BY SMT. GLANCIA S.D., ADVOCATE FOR
SRI. CHIDANANDA KEDILAYA M., ADVOCATE FOR R1;
SRI. MANJUNATHA RAYAPPA, AGA FOR R2)
-2-
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MFA No. 2460 of 2022
HC-KAR
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
HEARING, THIS DAY, THE JUDGMENT IS DELIVERED AS
UNDER:
ORAL JUDGMENT
Smt.Shalini., counsel on behalf of Sri.Prakasha
Angadi.B.V., for the appellant and Sri.Manjunath Rayappa., AGA
for respondent No.2 have appeared in person.
Smt.Glancia.S.D., counsel on behalf of Sri.Chidananda
Kedilaya.M., for respondent No.1 appeared through video
conferencing.
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.300/2A2 measuring 91
square metres belonging to the first respondent situated at
Balthila Village, Bantwal Taluk. The land was acquired under the
provisions of the NH Act, and the same was published in the
Popular Daily newspaper.
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HC-KAR
The SLAO and CA passed the award on 22.09.2015, and
the compensation was determined at Rs.34,989/-. 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 2015 and fixed the land
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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 2015, yet arbitration was not invoked
until 2017, 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 2015 and
the initiation of arbitration in 2017. 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'
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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 30.11.2020,
passed by the I Additional District and Sessions Judge Dakshina
Kannada, Mangalore, in A.P.No.58/2019 and the Award dated
25.06.2019 passed by the second respondent are set aside.
The compensation awarded by the competent authority is
confirmed.
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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
PSJ
List No.: 1 Sl No.: 67
