Delay in challenging arbitral awards under the Arbitration Act cannot exceed three months plus a permissible thirty days, reinforcing strict adherence to statutory timelines.

JUDGMENT :

SOMASEKHAR SUNDARESAN, J.

Context and Factual Background :

1. This an Appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), challenging an order dated March 30, 2021 (“Impugned Order”) passed by the Learned District Court, Sindhudurg, setting aside an arbitral award dated March 20, 2018 (“Arbitral Award”) passed pursuant to arbitral proceedings conducted under Section 3G(5) of the NATIONAL HIGHWAYS ACT , 1956 (“Highways Act”).

2. The Petitioner’s land admeasuring 0.020 Ares had been acquired by the National Highways Authority of India (“NHAI”) for the Mumbai-Goa Highway. The Learned District Court entertained a challenge under Section 34 of the Arbitration Act filed by NHAI, filed over two years after the passing of the Arbitral Award. The delay in filing the challenge was condoned on the premise that NHAI was a third party and unaware of the Arbitral Award. This Court had stayed the Impugned Order in these proceedings under Section 37 of the Arbitration Act, and that stay has continued till date.

3. This Petition has been lying on the docket of this court for nearly four years. On March 13, 2025, taking note of the fact that NHAI had not entered appearance despite repeated opportunities, it was made clear that on the next date, if NHAI fails to appear, the matter would be proceeded with ex parte. Yet, today too, none has appeared on behalf of NHAI. Therefore, this Appeal has been taken up in the absence of NHAI.

4. The core issue that falls for consideration at the threshold is whether the Learned District Court was right in condoning the delay of nearly two years in entertaining NHAI’s Appeal. The treatment of NHAI as a third party to the arbitration proceedings (and by implication, to the acquisition proceedings) would also lie at the heart of the matter.

5. The Learned Arbitral Tribunal, essentially a government officer designated for the purpose, conducts the statutory arbitration under Section 3G(5) of the Highways Act. The Learned Arbitral Tribunal reviewed the original compensation awarded by the “Competent Authority” under the Highways Act and effected corrections to the assessment of compensation. This led to some increase in the compensation as originally computed.

6. NHAI’s challenge under Section 34 of the Arbitration Act before the District Court, Sindhudurg was admittedly filed on February 4, 2020. The Arbitral Award was passed nearly two years before that on March 20, 2018.

Analysis and Findings:

7. Whether such a delay could have been condoned is to be seen. It would be useful to reproduce Section 34 (3) of the Arbitration Act:

(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:

Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter [Emphasis Supplied]

8. A plain reading of the foregoing would indicate that the challenge under Section 34 of the Arbitration Act must be filed within three months of receipt of the arbitral award. For any delay thereafter, if a Court is satisfied that the delay was due to sufficient cause, the Court may entertain the challenge if the application is filed within a further period of 30 days. After such 30-day period,