Madhya Pradesh HC Clarifies Limitation Period For Referring Disputes To Arbitrator Under NH Act

The Madhya Pradesh High Court has clarified that the cause of action to refer a dispute to an arbitrator under Section 3G(5) of the National Highways Act, 1956 arises on the date when the competent authority determines the amount of compensation under Section 3G(1) of the Act. While there is no specific limitation period provided in the said section, it falls under the residuary clause of Article 137 of the Limitation Act, which stipulates a period of 3 years.

In the present case, the petitioner’s land was acquired in 2012 and compensation was awarded, but it was later discovered in 2018 that the land was wrongly categorized. The petitioner filed a reference before the arbitrator in 2021, challenging the amount of compensation. However, the arbitrator dismissed the reference as time-barred.

The High Court analyzed the facts and contentions of the parties. It concluded that the cause of action for referring the dispute to the arbitrator arose in 2012 when the compensation award was passed. Since the petitioner filed the reference in 2021, which was beyond the limitation period, the arbitrator’s dismissal was justified.

The Court emphasized that even though Section 3G does not provide a specific limitation period, it is subject to the 3-year limitation period under Article 137 of the Limitation Act. As the petitioner failed to provide a reasonable explanation for the 9-year delay, the reference was rightly dismissed.