Dismissed¶7

National Highways Authority of India v. Mr M R Mohammed Ashraf

Arbitration and Conciliation Act, 1996 – S.37(1)(c) appeal against dismissal of S.34 challenge

Karnataka HC27 Jul 2026MFA/4684/2026

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Case brief

AI extract

What is this about?

Keywords: NHAI land acquisition compensation; commercial conversion versus actual commercial user; Section 37(1)(c) and Section 34(2)/(2-A) Arbitration and Conciliation Act 1996; Section 3A(1) and 3G(5) National Highways Act 1956; patent illegality; perversity; plausible view; limited scope of judicial review of arbitral awards; High Court of Karnataka Division Bench (Vibhu Bakhru, CJ and K.S. Hemalekha, J); MFA No. 4684 of 2026; decided 27.07.2026; arbitral award dated 21.01.2025; A.P.No.55/2025 and A.P.No.60/2025; IV Additional District Judge and Commercial Court, Mangaluru; appeal dismissed.

What did the court decide?

None; the appeal was dismissed as unmerited and the pending application stands disposed of. ¶7

National Highways Authority of India Vs Mr M R Mohammed Ashraf — Arbitration | Karnataka HC (2026)

What the court decided

AI extract

Outcome

None; the appeal was dismissed as unmerited and the pending application stands disposed of.

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Issue for consideration

Whether the arbitral award, which determined compensation for the acquired land on the footing that it had been converted to commercial use (though not actually used for commercial purposes), is vitiated by patent illegality under Section 34(2-A) of the A&C Act.

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Court's answer

Courts exercising jurisdiction under Sections 34 and 37 of the A&C Act do not sit in appeal over an arbitral award; they cannot re-adjudicate the disputes or substitute their own view for that of the Arbitrator, and the scope of interference is limited to examining whether the award is liable to be set aside on grounds specified under Section 34.

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Ratio / Principle

The Arbitral Tribunal's view is a plausible view; there is no perversity in the view that once land has been converted for commercial purposes, its value must be determined on that basis and not as agricultural land; accordingly there is no patent illegality under Section 34(2-A).

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Detailed headnote1 paragraphs

Arbitration and Conciliation Act, 1996 — S.37(1)(c) appeal against dismissal of S.34 challenge — NHAI acquired 1558 sq.m. in Sy.No.14/10, Adduru Village (preliminary notification dt. 09.01.2020 u/s 3A(1) National Highway Act, 1956) — land converted to commercial use by Deputy Commissioner's order dt. 23.09.2019 though never actually used commercially — Arbitral Tribunal valued compensation on the basis of converted commercial land (Rs. 1,630/sqm; total Rs. 1,05,49,292/-) — HELD: scope of interference under Ss.34/37 is narrow; courts do not sit in appeal nor substitute their view; valuation of converted land on a commercial basis notwithstanding non-user is a plausible view, free of perversity or patent illegality under S.34(2-A); Commercial Court rightly declined interference — Appeal dismissed; pending application disposed of. (Per Vibhu Bakhru, C.J.; K.S. Hemalekha, J.)

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HC-KAR

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NC: 2026:KHC:38792-DB MFA No. 4684 of 2026

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CNR: KAHC010425692026

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 27^TH DAY OF JULY, 2026

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PRESENT

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THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE

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AND

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THE HON'BLE MRS. JUSTICE K.S. HEMALEKHA MISCELLANEOUS FIRST APPEAL NO.4684 OF 2026 (AA)

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BETWEEN:

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NATIONAL HIGHWAYS AUTHORITY OF INDIA, PROJECT IMPLEMENTATION UNIT, DOOR NO.3-29, BETHEL, THARETHOTA, NEAR PUMPWELL (NH-169), MANGALURU - 575 005, REPRESENTED BY ITS GM (TECH) & PROJECT DIRECTOR SRI. ABDULLA JAVED AZMI.

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…APPELLANT

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(BY SRI. PRASAD K.R. RAO, ADVOCATE FOR SRI. PADMANABHA HOLLA S., ADVOCATE)

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Digitally signed by MAHALAKSHMI B M Location: High Court of Karnataka

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AND:

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MR. M.R. MOHAMMED ASHRAF S/O. LATE ABDUL RAHIMAN,

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MAJOR, RESIDING AT NO.5-128, MUNDAKODI HOUSE, SAJIPA MUNNURU POST AND VILLAGE, PANEMANGALORE, BANTWAL - 574 231.

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THE ARBITRATOR AND DEPUTY COMMISSIONER, DAKSHINA KANNADA DISTRICT, MANGALURU - 575 001.

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HC-KAR

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NC: 2026:KHC:38792-DB MFA No. 4684 of 2026

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CNR: KAHC010425692026

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THE COMPETENT AUTHORITY &

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SPECIAL LAND ACQUISITION OFFICER MANGALURU, KARNATAKA STATE EMPLOYEE ASSOCIATION, CLOCK TOWER, HAMPANAKATTA MANGALURU,

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D. K. DISTRICT - 575 001.

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…RESPONDENTS

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THIS MFA IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT, 1996, AGAINST THE ORDER DATED 23.03.2026 PASSED IN A.P.NO.55/2025 ON THE FILE OF THE IV ADDITIONAL DISTRICT AND SESSIONS JUDGE, D.K. MANGALURU, DISMISSING THE PETITION FILED UNDER SECTION 34(2) OF THE ARBITRATION AND CONCILIATION ACT, 1996 R/W 3G(5) OF THE NATIONAL HIGHWAYS ACT, 1956.

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THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE and HON'BLE MRS. JUSTICE K.S. HEMALEKHA

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ORAL JUDGMENT

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(PER: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)

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The National Highway Authority of India [hereinafter, 'NHAI' ]

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has filed the present appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 [hereinafter, 'A&C Act' ], impugning the order dated 23.03.2026 passed by the Court of IV Additional District Judge and Commercial Court, D.K., Mangaluru [hereinafter, the 'Commercial Court' ] in A.P.Nos.55 and 60 of

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3 - NC: 2026:KHC:38792-DB MFA No. 4684 of 2026

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HC-KAR

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CNR: KAHC010425692026

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2025. The said petitions were cross-petitions filed under Section 34 of the A&C Act, challenging the arbitral award dated 21.01.2025 [hereafter, the 'impugned award' ] passed by respondent No.2 [hereinafter, 'Arbitral Tribunal' ], whereas, A.P.No.55/2025 was filed by the NHAI, A.P.No.60/2025 was filed by respondent No.1.

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The NHAI has acquired land measuring 1558 square meters falling in Sy.No.14/10 of Adduru Village, Mangaluru Taluk, Dakshin Kannada District, which belonged to respondent No.1. Respondent No.3 [Special Land Acquisition Officer] determined the compensation for the said land at 1,630 per square meter [which amounted to a total compensation of 1,05,49,292/-]. Respondent No.1 challenged the said determination on various grounds, including that the land in question was commercially converted land on the date of the preliminary notification dated 09.01.2020 issued under Section 3A(1) of the National Highway Act, 1956. 3. The learned Arbitral Tribunal accepted the said contention and found that the land in question had been converted by an order dated 23.09.2019 passed by the Deputy Commissioner. The learned Arbitral Tribunal held that in view of the said conversion, the compensation was required to be determined on the basis of

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HC-KAR

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NC: 2026:KHC:38792-DB MFA No. 4684 of 2026

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CNR: KAHC010425692026

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the value of the commercially converted land and passed the impugned award.

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The NHAI challenged the impugned award principally on the ground that although the land in question was commercially converted land, it had not been used for commercial purposes. Therefore, the compensation could not have been determined on the said basis.

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The learned Commercial Court found no grounds to interfere with the impugned award and accordingly dismissed the petition.

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It is well settled that the Courts, while exercising jurisdiction under Sections 34 and 37 of the A&C Act, do not sit in appeal over an arbitral award. They cannot re-adjudicate the disputes or substitute their own view for that of the Arbitrator. The scope of interference under Sections 34 and 37 of the A&C Act is limited to examining whether the arbitral award is liable to be set aside on any of the grounds specified under Section 34 of the A&C Act. In the present case, the NHAI contends that the impugned award is vitiated by patent illegality and is therefore liable to be set aside under Section 34 (2-A) of the A&C Act. We find no merit in the said contention as the learned Arbitral Tribunal's view is a plausible

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HC-KAR

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NC: 2026:KHC:38792-DB MFA No. 4684 of 2026

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CNR: KAHC010425692026

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view. We find no perversity in the view that once land in question

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has been converted for commercial purposes, its value must be

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