THE APPLICATION OF LIMITATION FOR ARBITRATION UNDER THE NATIONAL HIGHWAY ACT

[Mr. M. GOVINDARAJAN]

National Highway Act

The National Highway Act (‘Act’ for short) was enacted during the yea 1956  to provide for the declaration of certain highways to be national highways and for matters connected therewith.  The Act provides to the acquisition of land for the High ways and the payment of compensation.

Compensation

Section 3G of the Act provides for the determination of amount payable as compensation.  Section 3G(1) provides that where any land is acquired under this Act, there shall be paid an amount which shall be determined by an order of the competent authority.  Section 3G(2) provides that where the right of user or any right in the nature of an easement on, any land is acquired under this Act, there shall be paid an amount to the owner and any other person whose right of enjoyment in that land has been affected in any manner whatsoever by reason of such acquisition an amount calculated at 10% of the amount determined under sub-section (1), for that land.

Arbitration

Section 3G(5) of the Act provides that if the amount determined by the competent authority under sub-section (1) or sub-section (2) is not acceptable to either of the parties, the amount shall, on an application by either of the parties, be determined by the arbitrator to be appointed by the Central Government.

Section 3G(6) provides that the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to every arbitration under this Act.  The arbitrator while determining the amount under sub-section (1) or sub-section (5), as the case may be, shall take into consideration-

• the market value of the land on the date of publication of the notification under section 3A;
• the damage, if any, sustained by the person interested at the time of taking possession of the land, by reason of the severing of such land from other land;
• the damage, if any, sustained by the person interested at the time of taking possession of the land, by reason of the acquisition injuriously affecting his other immovable property in any manner, or his earnings;
• if, in consequences of the acquisition of the land, the person interested is compelled to change his residence or place of business, the reasonable expenses, if any, incidental to such change.

Limitation

Section 43(1) of the Arbitration and Conciliation Act, 1996 provides that the Limitation Act, 1963 shall apply to arbitrations as it applies to proceedings in court.

Issue

The issue to be discussed in this article as to whether the limitation will be applicable to the arbitrations conducted under the National Highway Act, 1956 with reference to decided case law.

Case law

In NATIONAL HIGHWAYS AUTHORITY OF INDIA VERSUS P.V. GEORGE AND OTHERS - 2024 (8) TMI 251 - KERALA HIGH COURT, the District Collector was appointed as arbitrator, to decide the quantum of compensation payable to the owners of the land which was in dispute, by the Central Government.  The Arbitrator rejected the application on the ground of delay on 06.09.2012.  The land owners again filed an application for arbitration in the year 2022. 

The land owners filed a writ petition before the High Court challenging the order of the District Collector and arbitrator dated 06.09.2012.  The High Court allowed the writ petition that the delay in this case could be condoned.  The High Court directed the arbitrator to consider the request for arbitration.

An appeal was filed before the High Court against the order of Single Judge.  The High Court considered the following issues to be decided in this case-

• the application of limitation for arbitration under the National Highway Act; and
• whether the writ petition is maintainable, challenging a decision of the Arbitrator under the National Highway Act, 1956.

The High Court analyzed the facts and circumstances of the case.  It analyzed the provisions of the Act in regard to arbitration.  The High Court observed that there is no prescription of limitation for referring the matter to arbitration under the National Highway Act.  Section 43(1) of the Arbitration and Conciliation Act provides that the Limitation Act, 1963 (36 of 1963), shall apply to arbitrations as it applies to proceedings in court.  The High Court further analyzed Section 2(4) of the Arbitration and Conciliation Act, 1996 this Part except sub-section (1) of section 40, sections 41 and 43 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except insofar as the provisions of this Part are inconsistent with that other enactment or with any rules made thereunder.

It is clear from Section 2(4) of the Arbitration and Conciliation Act that Section 43 will not apply to every arbitration under any other enactment.  It means that if no limitation is prescribed under any other enactment, provisions of the Limitation Act would not apply to such arbitration under such enactment. The High Court, therefore, held that the Limitation Act will not apply for arbitration under the National Highway Act.

For the second issue the Division Bench held that the remedy to challenge the decision of the Arbitrator, who is the District Collector, is by invoking the provisions under Section 34 of the Arbitration and Conciliation Act.  it is clear that the writ petition is not maintainable against the decision of the Arbitrator, who happens to be a District Collector. Thus, holding that the writ petition is not maintainable, the Division Bench set

aside the impugned judgment and allow this writ appeal.