2018 (4) TMI 2000 - HC - Indian Laws

Limitation Act Article 137 doesn't apply to statutory arbitration under National Highways Act Section 3-G(5)

The Madras HC held that the Limitation Act, 1963, particularly Article 137, does not apply to statutory arbitration applications under Section 3-G(5) of ... Applicability of the provisions of the Limitation Act, 1963, and more particularly Article 137 to the statutory arbitration under Section 3G(5) of the National Highways Act, 1956 - initiation of Arbitration proceedings u/s 3-G(5) of the National Highways Act for determination of the value of the lands belonging to the landowners whose lands were acquired for the purpose of construction of National Highways - Whether the provisions of the Limitation Act, 1963, particularly Article 137 would apply to an application seeking Arbitration under Section 3-G(5) of the National Highways Act, 1956? HELD THAT:- In Momin Construction Company [1995 (1) TMI 423 - SUPREME COURT], the Hon'ble Supreme Court had considered an application under Section 20 of the Arbitration Act, 1940. Section 20 of the Arbitration Act, 1940 provides for an application to file an arbitration agreement in Court. Here again the Hon'ble Supreme Court was not called upon to decide as to whether the provisions of the Limitation Act, 1963 would apply to a statutory arbitration. Similarly the Division Bench of this Court in O. Ramakrishna Reddy [1995 (8) TMI 353 - MADRAS HIGH COURT] had also held that the provisions of Article 137 of the Limitation Act, 1963 would apply to a suit under Section 20 of the Arbitration Act, 1940 for reference of the dispute to an Arbitrator. Here again the Division Bench was not called upon to decide whether the provisions of Limitation Act, 1963 would apply to statutory arbitrations. In T.P. Kunhaliumma [1976 (10) TMI 150 - SUPREME COURT], the Hon'ble Supreme Court had considered the applicability of the Limitation Act, 1963 to an application under Section 16(3) of the Indian Telegraph Act, 1885 where again the applicability of the provisions of the Limitation Act to a statutory arbitration was not an issue. The Hon'ble Supreme Court had also held that the words “any other application” under Article 137 cannot be said to be an application under the Code of Civil Procedure alone. A similar question arose in Tamil Nadu Generation and Distribution Corporation Limited Vs. PPN Power Generating Company Private Limited [2015 (11) TMI 1287 - SUPREME COURT], wherein, the Hon'ble Supreme Court while considering the applicability of Limitation Act, 1963 to a statutory arbitration under the Electricity Act, 2003 had concluded that in view of Section 2(4) of Arbitration and Conciliation Act, 1996, the provisions of Section 43 will not apply to a statutory arbitration. The lands belonging to the land owners who are the respondents in the Writ Appeals and petitioners in the Writ Petitions were acquired for the purpose of widening the National Highways under the National Highways Act, 1956. The competent Authority passed orders under Section 3-G(1) of the said Act. The landowners had filed applications though belatedly seeking re-determination of the compensation by referring the matter to an arbitrator appointed by the Central Government in terms of Section 3-G(5) of the Act. The applications were dismissed by the Arbitrator on the ground that they have been filed beyond 3 years. The provisions of the Limitation Act and more particularly Article 137 would not apply to an application for reference to arbitration under Section 3G() of the National Highway Act, 1956 - the orders of the learned Single Judge in the Writ Petitions directing initiation of arbitration proceedings are confirmed. The order passed by the 1st respondent in the Writ Petitions dated 27.10.2015 and 31.12.2015 are quashed. The Writ Petitions are allowed. Issues Involved:1. Applicability of the Limitation Act, 1963, specifically Article 137, to statutory arbitration under Section 3G(5) of the National Highways Act, 1956.2. Interpretation of statutory provisions in relation to arbitration under the National Highways Act.3. The constitutional right to receive compensation and its relation to statutory limitations.Issue-wise Detailed Analysis:1. Applicability of the Limitation Act, 1963:The central question addressed in the judgment was whether the provisions of the Limitation Act, 1963, particularly Article 137, apply to applications seeking arbitration under Section 3-G(5) of the National Highways Act, 1956. The appellants argued that arbitration proceedings must be initiated within three years, as prescribed by Article 137 of the Limitation Act, 1963, due to Section 43 of the Arbitration and Conciliation Act, 1996, which applies the Limitation Act to arbitration proceedings. However, the respondents contended that the National Highways Act is a self-contained code that does not specify a limitation period for filing applications under Section 3-G(5), and thus, the Limitation Act does not apply.The judgment concluded that the provisions of the Limitation Act, 1963, do not apply to statutory arbitration under Section 3-G(5) of the National Highways Act, 1956. This conclusion was based on Section 2(4) of the Arbitration and Conciliation Act, 1996, which excludes the applicability of Section 43 to statutory arbitrations, thereby rendering the Limitation Act inapplicable to such proceedings.2. Interpretation of Statutory Provisions:The court examined the statutory framework of the National Highways Act, 1956, particularly Sections 3-G(1), 3-G(5), and 3-G(6), alongside relevant sections of the Arbitration and Conciliation Act, 1996, and the Limitation Act, 1963. The court noted that Section 3-G(5) allows for arbitration if the compensation determined by the competent authority is not acceptable, and Section 3-G(6) subjects such arbitration to the provisions of the Arbitration and Conciliation Act, 1996. However, Section 2(4) of the Arbitration and Conciliation Act, 1996, specifically excludes Section 43, which applies the Limitation Act, from statutory arbitrations.The court referred to several precedents, including judgments from the Supreme Court and various High Courts, to support its interpretation that statutory arbitrations under the National Highways Act are not bound by the Limitation Act.3. Constitutional Right to Compensation:The respondents argued that the right to receive reasonable compensation is a constitutional right under Article 300A of the Constitution of India and cannot be curtailed by the Limitation Act. The court acknowledged this argument, emphasizing that statutory provisions should not infringe upon constitutional rights unless explicitly stated.Conclusion:The judgment upheld the orders of the learned Single Judge, directing the initiation of arbitration proceedings under Section 3-G(5) of the National Highways Act, 1956, and quashing the orders of the District Collector/Arbitrator that rejected the applications as time-barred. The court clarified that the Limitation Act, 1963, does not apply to statutory arbitrations under the National Highways Act, thereby allowing the landowners' claims for arbitration to proceed. The intra-court appeals were dismissed, and the writ petitions were allowed, with no order as to costs.