Three-Year Limitation Not Applicable to Landowner's Claim Under National Highways Act: Madhya Pradesh HC

In a significant ruling, the Madhya Pradesh High Court has held 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. The Court set aside an arbitral award and a district court order that had rejected a landowner's compensation claim solely on the ground of delay, directing that the claim be heard on its merits.

Justice Deepak Khot, presiding over a single-judge bench, emphasized that the statutory arbitrator must adopt a “justice-oriented approach” rather than dismissing claims for enhanced compensation on technical grounds of limitation.

Land Acquisition and Delayed Claim

The dispute arose after the land of Shri Jankiraman Maharaj was acquired for the widening of National Highway No. 12. The competent authority determined compensation at Rs. 4,89,188, 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 fixed.

The Arbitrator dismissed the application on 6 November 2019, observing that although the National Highways Act did not prescribe a specific limitation period, the three-year residuary period under Article 137 of the Limitation Act applied. The Arbitrator also noted that Maharaj had not filed an application under Section 5 of the Limitation Act seeking condonation of delay. Maharaj’s challenge under Section 34 of the Arbitration and Conciliation Act, 1996 before the District Judge, Jabalpur was rejected on 22 November 2021, affirming the Arbitrator’s view. He then filed the present appeal under Section 37 of the Arbitration Act.

Arguments of the Parties

Appellant’s Submissions: Advocates for Maharaj argued that Section 3G(5) does not prescribe any limitation period and that Article 137 cannot be imported into the statutory arbitration mechanism. They contended that the Arbitrator and the District Court had erred by dismissing the claim without examining its merits, relying on the "benevolent" nature of compensation legislation. They cited the Division Bench rulings in Smt. Summi Bai vs. State of Madhya Pradesh and the Madras High Court in The Project Director vs. K. Periyasamy , both holding that Article 137 does not apply to statutory arbitrations under the National Highways Act.

Respondent’s Submissions: The National Highways Authority of India (NHAI) countered that the absence of an express limitation period does not permit an open-ended claim. It argued that Article 137 supplies the applicable three-year period and that the claim had been rightly rejected after an unexplained delay of five years and nine months. NHAI placed reliance on the High Court’s own decision in Smt. Sarvesh Rajput vs. State of Madhya Pradesh (26 June 2026) to support the application of Article 137.

Legal Analysis by the High Court

Justice Deepak Khot examined the precedents cited by both sides and the legal framework governing statutory arbitrations.

The Court noted that the Division Bench in Smt. Summi Bai had held that authorities under Section 3G(5) “should adopt a justice oriented approach and try to dispose of the appeals on merit after considering various aspects of the matter” and should not dismiss appeals “on technical grounds of limitation or want of prosecution.”

Further, the Madras High Court in K. Periyasamy had categorically concluded, after considering Section 2(4) of the Arbitration and Conciliation Act, 1996, that “the provisions of the Limitation Act and more particularly Article 137 would not apply to an application for reference to arbitration under Section 3G(5) of the National Highway Act, 1956.”

The High Court also referred to the Supreme Court’s judgment in Kerala State Electricity Board vs. T.P. Kunhaliumma (1976), which clarified that Article 137 applies only to applications filed before a civil court, not to statutory arbitral tribunals.

Key Observations

Justice Khot 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 Court also quoted from Smt. Summi Bai :

“The statutory authority exercising powers under Section 3G(5) of the Act of 1956 should adopt a justice-oriented approach and should not ordinarily reject a claim for enhancement of compensation on technical grounds of limitation or want of prosecution.”

Court’s Decision

The High Court allowed the appeal, setting aside both the Arbitrator’s order dated 6 November 2019 and the District Court’s order dated 22 November 2021. It remanded the matter back to the Arbitrator to decide the compensation claim on its merits, after affording the parties a full opportunity of hearing.

“The matter is remanded to the Arbitrator to consider and decide the appellant’s claim for enhancement of compensation on its merits, in accordance with law, after affording due opportunity of hearing to the parties.”

Additionally, the Court directed the Registrar (Judicial) to circulate the order to all Principal District Judges, Divisional Commissioners, and District Collectors for necessary compliance, signaling the importance of the ruling for pending compensation claims under the National Highways Act.

This judgment reinforces the principle that land acquisition compensation legislation is benevolent in nature and that technical bars like limitation should not defeat the substantive right of landowners to fair compensation.