Himachal Pradesh High Court Rejects NHAI's Selective Delay Plea in Arbitration Extension Under Section 29A

Introduction

In a significant ruling for arbitration proceedings in land acquisition disputes, the Himachal Pradesh High Court has held that the National Highways Authority of India (NHAI) cannot selectively invoke pleas of delay and laches under Section 29A of the Arbitration and Conciliation Act, 1996 (A&C Act), to thwart the continuation of arbitral proceedings when extensions have been granted in similar cases for other landowners. The decision, delivered by Hon’ble Mr. Justice Ranjan Sharma on November 26, 2025, in Arbitration Case No. 351 of 2025 titled Sandesh Kumar Deceased through his LRs vs. National Highway Authority of India and another , extends the mandate of the Arbitrator-cum-Divisional Commissioner, Shimla, for six months to conclude the pending reference. This ruling underscores the court's commitment to ensuring procedural fairness and the logical culmination of arbitration, particularly in cases marred by administrative errors and external disruptions like the COVID-19 pandemic. The petitioners, legal heirs of the late Sandesh Kumar, sought regularization of the proceedings and extension of the arbitrator's mandate after years of delays, including a clerical error in naming the predecessor-in-interest.

The bench, comprising a single judge, emphasized that after nearly nine years of active participation by all parties since 2016, NHAI's attempt to raise delay as a bar now would undermine the intent of the A&C Act. This decision has broader implications for public infrastructure projects involving land acquisition, where arbitration is a common dispute resolution mechanism, and highlights the judiciary's role in balancing expeditious resolution with equity.

Case Background

The dispute originates from a land acquisition notification issued under Section 3(A) of the National Highways Act, 1956, by the Central Government. This notification targeted a stretch of land from kilometer 106.000 to 155.800 (Solan-Shimla section) for four-laning in Himachal Pradesh. The acquisition process affected lands in 22 villages of Tehsil Shimla (Rural), including those belonging to the predecessor of the petitioners, Sandesh Kumar.

On May 25, 2015, the Competent Authority/Land Acquisition (CALA) passed Award No. 4, determining compensation for the acquired land. Dissatisfied with the award, Sandesh Kumar filed a reference petition before the Arbitrator-cum-Divisional Commissioner, Shimla, which was registered as Reference Petition No. 49/2016. Arbitral proceedings commenced promptly in 2016, but faced protracted delays due to procedural, administrative, and external factors, including the COVID-19 pandemic.

A critical setback occurred on March 13, 2023, when the Arbitrator issued a common order closing proceedings in 157 connected cases, citing termination of the mandate under Sections 29A(1) and 29A(3) of the A&C Act for failure to conclude within the prescribed timelines (12 months from completion of pleadings, extendable by six months with consent). However, due to a clerical error, the petitioner's case was erroneously listed under the name "Sandeep Kumar" instead of "Sandesh Kumar" at Serial No. 148. By this time, Sandesh Kumar had passed away on April 27, 2021, and his legal heirs—Rajiv Salwan and three others—had been brought on record.

Aggrieved by the closure, the petitioners approached the High Court under Sections 29A(4) and 29A(5) in Arbitration Case No. 3/2016, securing an extension of the arbitrator's mandate on August 24, 2023. The petitioners presented this order to the Arbitrator on September 12, 2023, and inquired about progress on March 1, 2024. Shockingly, they learned that while other similar cases had been decided by then, their case was stalled because the extension order copy had been misplaced, and they were directed to seek correction of the clerical error.

On May 14, 2025, the Arbitrator again closed the proceedings, citing the unresolved typographical error. This prompted the current petition under Section 29A, filed in 2025, seeking regularization of the pendency since 2016 and further extension. The timeline reveals a case pending for nearly a decade, with proceedings active but hindered by administrative lapses rather than party default.

The parties involved include the petitioners as claimants challenging the compensation award, NHAI as the acquiring body responsible for infrastructure development, and the State of Himachal Pradesh as a nominal respondent. The legal questions at the core are: Whether "sufficient cause" exists under Section 29A(5) to extend the arbitrator's mandate despite delays? And can NHAI raise laches to oppose extension when it participated for nine years and benefited from extensions in parallel cases?

Arguments Presented

The petitioners, represented by Advocate Ashir Kaith, argued that the delays were not attributable to them but stemmed from procedural and administrative issues within the arbitral tribunal. They highlighted the clerical error in the March 13, 2023, order—misnaming the predecessor as "Sandeep Kumar"—which the Arbitrator should rectify under inherent powers, rather than penalizing the petitioners. The earlier extension granted by the High Court on August 24, 2023, demonstrated prior recognition of sufficient cause, and the misplaced copy of that order further evidenced tribunal fault.

Emphasizing the nine-year participation without objection, the petitioners contended that closing the proceedings now would cause irreparable hardship, especially since 157 similar references from the same acquisition notification had been resolved post-extension. They invoked the COVID-19 disruptions, which halted progress, and argued that Section 29A aims to facilitate dispute resolution, not defeat it through technicalities. The prayer was for extension to allow logical conclusion, aligning with the A&C Act's objective of efficient alternative dispute resolution.

In opposition, NHAI, through Advocate Karan Sharma, did not dispute the factual matrix of proceedings continuing until May 14, 2025, but shifted blame to the Arbitrator's failure to decide within timelines. Crucially, NHAI admitted the clerical error in the 2023 order but argued that the petitioner's application in 2025 came after an unexplained delay of over two years from the initial closure. They claimed granting extension would impose heavy financial losses on the public exchequer, as prolonged proceedings inflate compensation claims in land acquisition cases.

NHAI contended that under Section 29A(4), the mandate terminates automatically post the extended period unless court-intervened timely, and laches barred revival. They asserted no sufficient cause was shown, as the petitioners could have pursued correction or fresh extension earlier, and selective treatment was justified by the unique error in this case versus others. The State, represented by Deputy Advocate General Ayushi Negi, largely aligned with NHAI, focusing on expeditious public project completion without delving into specifics.

Both sides raised factual points: Petitioners on active engagement and tribunal errors; NHAI on fiscal implications and untimely action. Legally, the debate centered on interpreting "sufficient cause" under Section 29A(5), balancing party autonomy with judicial oversight.

Legal Analysis

The Himachal Pradesh High Court meticulously analyzed Section 29A of the A&C Act, which mandates arbitral awards within 12 months from pleading completion (extendable by six months with consent), with court extension possible for sufficient cause even post-termination. Justice Sharma recapped the provision's structure: subsections (1)-(3) set timelines, (4) triggers mandate termination absent extension, and (5) empowers courts to grant relief on terms, potentially reducing arbitrator fees for delays.

The court drew extensively from Supreme Court precedents to interpret "sufficient cause" pragmatically, prioritizing dispute resolution over rigid timelines. In TATA Sons Pvt. Ltd. v. Siva Industries and Holdings Ltd. (2023 (1) SCALE 793), the Apex Court clarified that extensions under Sections 29A(4)-(5) apply to domestic arbitrations, emphasizing the provision's mandatory yet qualified nature—12 months baseline, consensual six-month extension, followed by judicial intervention to prevent automatic termination from derailing proceedings.

Similarly, Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd. (2024 SCC OnLine SC 2494) reiterated that applications can be filed post-expiry if sufficient cause exists, rejecting narrow views that encourage abuse. The court may substitute arbitrators (Section 29A(6)), impose costs (29A(8)), and ensure continuity, underscoring legislative intent for efficiency without unworkable outcomes. Justice Sharma quoted: "An interpretation which produces an unreasonable result is not to be imputed to a statute if there is some other equally possible construction which is acceptable, practical and pragmatic."

In M/s Ajay Protech Pvt. Ltd. v. General Manager (2024 SCC OnLine SC 3381), the Supreme Court factored external events like COVID-19 into sufficient cause assessments, excluding pandemic periods from limitation computations and extending timelines where proceedings neared completion. The ruling stressed: "Efficiency in the conduct of arbitral proceedings is integral... 'sufficient cause' should be interpreted in the context of facilitating effective dispute resolution."

Applying these, the High Court distinguished the instant case: Delays arose from tribunal errors (clerical misnaming, misplaced order) and COVID impacts, not petitioner fault. NHAI's nine-year participation waived laches, and selective plea—successful in other similar cases—violated equity. The court rejected public exchequer loss as overriding, noting Section 29A's focus on resolution. This aligns precedents by viewing arbitration as a continuum, where administrative lapses justify extension to avoid multiplicity of litigation.

Key distinctions: Unlike compounding in criminal law, here quashing/closure via delay is not absolute; societal impact in public projects is weighed against individual rights under Article 300A (property deprivation). Specifics included invocation of National Highways Act sections for acquisition and A&C Act for reference, with no direct IPC-like charges but compensation disputes.

Key Observations

The judgment features several pivotal excerpts underscoring the court's equitable approach:

1. "Respondents-NHAI cannot be permitted to take the plea of delay and laches when, in cases of other similarly placed landowners extension was given by this Court and proceedings were concluded except in case of the petitioner where matter was delayed as the copy of the extension order was misplaced by the arbitrator concerned and the incorrect description of name of the predecessor of petitioner which was recorded by the arbitrator."

This highlights the inequity of selective enforcement, integrating the other source's emphasis on non-selective application in land acquisition arbitrations.

1. "Further, once the parties to arbitral proceedings, including the Respondents-NHAI had participated in arbitral proceedings for last about 09 years [since 2016 till 2025] therefore, the Statute, i.e. Arbitration and Conciliation Act was to be given a meaningful life so as to make it workable and practicable."

Emphasizing purposive interpretation to avoid defeating arbitration's goals.

1. "Even COVID and other relatable issues arising due to administrative reasons, as the Arbitrator happens to be the Divisional Commissioner is good enough for carve out 'sufficient cause', for enlargement of time, which are at a final stage [when other cases stand decided] so as to ensure that these proceedings are taken to the logical end, expeditiously."

Directly attributing delays to external and institutional factors, echoing Supreme Court views on pandemics.

1. "The description of incorrect name of the predecessor-in-interest of the petitioner in the common order dated 13.03.2023 [Annexure P-3 at Serial No. 148 at page 17 of paper book] cannot be invoked as a ground, when, the predecessor-in-interest [namely Sandesh Kumar] had died on 27.04.2021 [Annexure P-1 herein] and thereafter the present petitioners being legal heirs were brought on record till the passing of an order giving erroneous details on 13.03.2023 [Annexure P-3] which was attributable to Learned Arbitrator."

Attributing fault to the tribunal, justifying revival.

1. "Efforts should be to take the arbitral proceedings to its logical end in it practical and pragmatic manner, so as to enable the parties to settle their disputes by alternative resolution, in an effective, efficient and expedient manner by arbitration."

A broader principle for future extensions.

These quotes, drawn verbatim from the judgment, illuminate the reasoning and integrate seamlessly with external reports on NHAI's inconsistent delay tactics.

Court's Decision

The High Court allowed the petition, declaring the closure orders inoperative qua the petitioners and extending the Arbitrator's mandate for six months from receipt of the judgment. Specifically: "(i) Mandate of Learned Arbitrator-cum-Divisional Commissioner, Shimla is extended and the adversial orders, if any, closing the proceedings or keeping the proceedings in abeyance are rendered inoperative, qua the petitioner(s); (ii) Arbitrator-cum-Divisional Commissioner, Shimla is directed to conclude the arbitral proceedings and decide the case no. 49 of 2016 In re: Sandesh Kumar [now deceased] and others vs NHAI and Others, by passing the Award in accordance with law; within six months from the date of receipt of copy of this judgment; and (iii) Parties to bear respective costs."

This decision mandates prompt conclusion of Reference Petition No. 49/2016, ensuring the petitioners' compensation claim is adjudicated on merits. Practically, it reinstates proceedings from the stage reached, leveraging existing evidence to avoid restarts, thus minimizing further delays.

Implications are profound for land acquisition arbitrations under the National Highways Act. It deters public authorities like NHAI from leveraging procedural technicalities selectively, promoting uniformity in treating similarly situated claimants. By validating COVID and administrative delays as "sufficient cause," the ruling eases extensions in bulk acquisition cases, potentially reducing litigation influx to higher courts. For legal practitioners, it reinforces purposive reading of Section 29A, encouraging applications post-termination if equity demands, while cautioning arbitrators on error rectification.

Broader effects include bolstering trust in arbitration as an efficient ADR mechanism for infrastructure disputes, where public interest must not eclipse constitutional property protections. Future cases may cite this to argue against laches in long-pending references, impacting thousands of highway projects nationwide. However, courts may impose stricter fee reductions or costs for tribunal-attributable delays, as per Section 29A(4) proviso, to maintain accountability.

In essence, the verdict advances pragmatic justice, ensuring that nine years of effort do not culminate in procedural nullity, and sets a precedent for balanced application of time-bound arbitration laws.