Madhya Pradesh HC Reiterates Three-Year Limitation Law Cannot Bar Landowner's Claim Under NH Act

The Madhya Pradesh High Court on 10 August set aside an order upholding an arbitral award that had rejected a landowner's claim for enhancement of compensation for land acquired for widening National Highway No. 12.

Justice Deepak Khot reiterated that the three-year limitation period under Article 137 of the Limitation Act, 1963 does not apply to statutory arbitration proceedings under Section 3G(5) of the National Highways Act, 1956, and that the Arbitrator must adopt a justice-oriented approach while considering claims for enhancement of compensation. The Bench observed:

“In view of the aforesaid legal position, in the considered opinion of this Court, the Arbitrator was not justified in applying Article 137 of the Act of 1963 and dismissing the appellant's application solely on the ground of delay and laches without examining the claim for enhancement of compensation on its merits. The learned Civil/Commercial Court has also failed to consider the aforesaid legal position while affirming the order of the Arbitrator.”

The dispute arose after land belonging to Shri Jankiraman Maharaj was acquired pursuant to a Gazette notification for widening National Highway No. 12. The competent authority determined compensation at Rs. 4,89,188, which was notified on 1 September 2013.

Seeking enhancement, Maharaj approached the statutory Arbitrator under Section 3G(5) of the National Highways Act on 24 June 2019, nearly five years and nine months after the compensation was determined.

The Arbitrator dismissed the application on 6 November 2019 on the ground of delay and laches. The tribunal noted that the National Highways Act did not prescribe a specific limitation period for such an application, but applied the three-year limitation period under Article 137 of the Limitation Act. It also noted that Maharaj had not filed an application under Section 5 of the Limitation Act seeking condonation of the delay.

Maharaj challenged the order under Section 34 of the Arbitration and Conciliation Act, 1996 before the District Judge, Jabalpur. On 22 November 2021, the District Court rejected the challenge and affirmed the Arbitrator's view, including its reliance on Article 137 of the Limitation Act. Maharaj thereafter approached the High Court under Section 37 of the Arbitration and Conciliation Act.

He argued that Section 3G(5) of the National Highways Act did not prescribe any limitation period and that Article 137 could not be imported into the statutory arbitration mechanism. He submitted that the Arbitrator and the District Court had rejected his claim without examining his entitlement to enhanced compensation on merits.

The National Highways Authority of India (NHAI), on the other hand, argued that the absence of an express limitation period did not permit a landowner to raise a compensation claim at any point of time. It contended that Article 137 supplied the applicable three-year period and that the claim had rightly been rejected after an unexplained delay of five years and nine months.

The High Court relied on Smt. Summi Bai v. State of Madhya Pradesh and Others and The Project Director v. K. Periyasamy, which held that statutory authorities exercising powers under Section 3G(5) of the National Highways Act should adopt a justice-oriented approach and should not ordinarily reject claims for enhancement of compensation on technical grounds of limitation or want of prosecution.

Further, the Bench relied on the legal position that Article 137 of the Limitation Act does not apply to statutory arbitration proceedings under Section 3G(5) of the National Highways Act.

Accordingly, the High Court allowed the appeal, set aside the Arbitrator's order dated 6 November 2019 and the District Court's order dated 22 November 2021, and remanded the compensation claim to the Arbitrator for fresh consideration on merits after giving the parties an opportunity of hearing. It also directed the Registrar (Judicial) to circulate the order to all Principal District Judges, Divisional Commissioners and District Collectors for necessary compliance.

Appearances for petitioner (Shri Jankiraman Maharaj): Advocate Jitendra Kumar Jain.

Appearances for respondent (National Highway Authority of India): Advocate Dheerendra Mishra.