Section 29A Arbitration Act Inapplicable to NH Act Arbitrations | Bombay HC Upholds Validity of Delayed Awards Under Statutory Arbitration

The Bombay High Court has clarified that the time-bound arbitration framework under Section 29A of the Arbitration and Conciliation Act, 1996, does not apply to arbitrations conducted under Section 3G(5) of the National Highways Act, 1956. This ruling resolves a critical conflict between general arbitration law and a specialized statutory regime governing land acquisition for national highways, affirming that the NH Act operates as a self-contained code.

Background & Facts

The Dispute

The National Highway Authority of India (NHAI) challenged arbitral awards passed under Section 3G(5) of the National Highways Act, 1956, which enhanced compensation for land acquired for the expansion of National Highway No. 211 in village Gandheli, Aurangabad. The awards, issued by arbitrators appointed by the Central Government, increased compensation from rates determined by the Competent Authority for Land Acquisition (CALA) to a uniform rate of Rs. 1,742 per square meter. NHAI contended that these awards were invalid due to procedural delays and failure to apply statutory valuation parameters.

Key Facts

• The Central Government issued a notification under Section 3A of the NH Act on 18.09.2015 declaring intent to acquire land.
• Final declaration under Section 3D was published on 16.09.2016.
• CALA issued awards determining compensation between Rs. 486 and Rs. 1,500 per square meter, based on land classification (bayagat/jirayat/hangami-bagayat).
• Claimants invoked Section 3G(5) of the NH Act to refer disputes to arbitration.
• Arbitrators appointed by the Central Government (typically the District Collector of Aurangabad) passed awards on 12.01.2024, enhancing compensation to Rs. 1,742 per square meter uniformly.
• The arbitration proceedings commenced in 2018, with the final award issued nearly six years after the reference.
• The Arbitrator considered 171 certified sale deeds from village Gandheli, rejecting those deemed non-comparable, and applied the principles of Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act).
• The Arbitrator applied a multiplier of 2.00, based on the 24.04.2017 Central Government notification, and found the land to be rural.
• NHAI filed applications under Section 34 of the Arbitration Act before the Principal District Judge, Aurangabad, which were dismissed on 16.10.2025.
• NHAI filed 17 Arbitration Appeals (Nos. 10 to 32 of 2026) before the Bombay High Court, Aurangabad Bench, challenging the awards.

Procedural History

• 18.09.2015: Notification under Section 3A of NH Act issued.
• 16.09.2016: Final declaration under Section 3D published.
• 2018: Applications under Section 3G(5) of NH Act filed by landowners.
• 12.01.2024: Arbitral awards passed by the Arbitrator.
• 27.06.2024: NHAI filed Section 34 applications before the Principal District Judge, Aurangabad.
• 16.10.2025: District Judge dismissed Section 34 applications, upholding the arbitral awards.
• 2026: NHAI filed Arbitration Appeals Nos. 10 to 32 of 2026 before the Bombay High Court, Aurangabad Bench.
• 18.03.2026: Judgment delivered by Justice Arun R. Pedneker.

The Parties' Positions

Appellant (NHAI): Argued that the arbitral awards were invalid because:

• The Arbitrator exceeded the statutory time limit under Section 29A of the Arbitration Act.
• The mandate of the Arbitrator had terminated automatically under Section 29A(4) due to non-extension.
• The award suffered from patent illegality by ignoring the classification of land under Section 26 of the RFCTLARR Act.
• The Arbitrator erroneously applied a multiplier of 2.00 despite the land being near an airport.
• The District Judge failed to exercise jurisdiction under Section 34.

Respondents (Landowners): Contended that:

• Section 29A does not apply to arbitrations under the NH Act, which is a special statute with its own complete code.
• The Arbitrator was appointed by the Central Government under Section 3G(5), and the statutory framework contemplates institutional continuity, not individual arbitrator mandates.
• The Arbitrator correctly applied Section 26 of the RFCTLARR Act by considering all relevant sale deeds and rejecting arbitrary exclusions by CALA.
• The award was not perverse or patently illegal.
• Objections to delay were raised only after the award, not during proceedings.

Relief Sought

NHAI sought:

• Setting aside of the arbitral awards dated 12.01.2024.
• Restoration of the original CALA compensation rates.
• Declaration that the awards were null and void due to expiry of the Arbitrator’s mandate under Section 29A.
• Costs.

The Legal Issue

Does Section 29A of the Arbitration and Conciliation Act, 1996, which prescribes time limits for arbitral awards and mechanisms for extension or substitution of arbitrators, apply to arbitrations conducted under Section 3G(5) of the National Highways Act, 1956, where the arbitrator is appointed by the Central Government as an institutional officer and not as an individual?

Arguments Presented

For the Appellant

NHAI relied on the plain language of Section 3G(6) of the NH Act, which states that the Arbitration Act applies "subject to the provisions of this Act." It argued that Section 29A, as a procedural mandate for expeditious resolution, is not inconsistent with the NH Act and should apply. It cited Mahaveer Realities v. Shirish Shah, Rattan Chand v. NHAI, and Hari Singh v. NHAI to support the view that awards beyond the statutory period are nullities. It further contended that the Arbitrator’s mandate terminated automatically under Section 29A(4) due to the absence of any court order extending it, rendering the award coram non judice. It also argued that the Arbitrator’s failure to classify land under Section 26 of the RFCTLARR Act and his application of a 2.00 multiplier were patent illegality.

For the Respondent

The landowners argued that the NH Act is a complete, self-contained code under which the Central Government appoints an office (not an individual) as the arbitrator. They relied on Sayedabad Tea Co. v. NHAI and Girnar Traders v. State of Maharashtra to assert that subsequent amendments to the Arbitration Act, including Section 29A, cannot be read into the NH Act without disrupting its statutory scheme. They emphasized that arbitrators change due to transfers, and the proceedings continue with the successor officer - making Section 29A’s individual-centric provisions unworkable. They further argued that the Arbitrator correctly applied Section 26 by considering all relevant sale deeds and that the District Judge’s findings were entitled to deference under Section 37.

The Court's Analysis

The Court undertook a detailed analysis of the interplay between the Arbitration and Conciliation Act, 1996, and the National Highways Act, 1956. It began by examining Section 3G(6) of the NH Act, which provides that the Arbitration Act applies "subject to the provisions of this Act." The Court held that this phrase creates a limitation: the Arbitration Act applies only to the extent it is not inconsistent with the NH Act.

The Court then turned to the landmark judgment in Girnar Traders v. State of Maharashtra, which established that when a statute adopts provisions of another by reference, subsequent amendments to the referenced statute are not automatically incorporated if they would defeat the object or render the principal statute unworkable. The Court found that Section 29A, as amended in 2015 and 2019, is fundamentally incompatible with the NH Act’s structure.

"The concept of substitution of an arbitrator under Section 29A(6) and termination of mandate based on individual tenure is inconsistent with the statutory scheme under Section 3G(5), where the office, not the person, is the arbitrator."

The Court emphasized that under Section 3G(5), the Central Government appoints an office (e.g., the District Collector of Aurangabad) as the arbitrator. When the incumbent officer is transferred, the successor assumes the role automatically. This institutional continuity renders Section 29A’s provisions for extension, fee reduction, and substitution of a named arbitrator impracticable. The Court noted that the Arbitration Act’s "Court" under Section 29A refers to the principal civil court, which has no authority under the NH Act to appoint or substitute arbitrators.

The Court further relied on Sayedabad Tea Co. v. NHAI, where the Supreme Court held that the NH Act is a complete code and Section 11 of the Arbitration Act (for appointment of arbitrators) does not apply. The Court reasoned that if Section 11 is excluded, then Section 29A - being a procedural corollary to appointment and mandate - must also be excluded. The Court rejected the argument that the parties’ acquiescence implied consent to extend the mandate, noting that consent under Section 29A(3) requires express agreement and cannot be inferred.

On the merits of the award, the Court examined whether the Arbitrator violated Section 26 of the RFCTLARR Act. It found that the Arbitrator had correctly applied the law by considering 171 sale deeds from the vicinity, rejecting only those excluded by CALA without justification. The Court noted that CALA had arbitrarily discarded 199 out of 228 sale deeds without reasons, contrary to Vincent Daniel v. MP Road Development Corporation. The Arbitrator’s decision to apply a uniform rate to ensure parity and his application of a 2.00 multiplier based on the 2017 notification were found to be within his discretion.

The Court reiterated the limited scope of judicial review under Sections 34 and 37 of the Arbitration Act, citing PSA Sical Terminals v. V.O. Chidambaranar Port Trust. It held that re-appreciation of evidence or disagreement with the Arbitrator’s valuation does not constitute patent illegality. Only awards based on no evidence, ignoring vital evidence, or perverse findings can be set aside. The Court found no such illegality.

The Verdict

The appeals were dismissed. The Court held that Section 29A of the Arbitration and Conciliation Act, 1996, does not apply to arbitrations under Section 3G(5) of the National Highways Act, 1956. The arbitral awards dated 12.01.2024, fixing compensation at Rs. 1,742 per square meter, were upheld. The Court affirmed the District Judge’s order dated 16.10.2025 and directed that the compensation amounts be paid to the claimants without further delay.

What This Means For Similar Cases

Statutory Arbitration Overrides General Arbitration Law

• Practitioners must now treat arbitrations under special statutes like the NH Act, Railways Act, or State Land Acquisition Acts as governed by their own statutory codes.
• Section 29A deadlines and substitution mechanisms under the Arbitration Act are inapplicable unless the special statute expressly incorporates them.
• Challenges based on delay in arbitration under such statutes must be raised via writ petitions under Article 226, not Section 34 applications.

Institutional Continuity Trumps Individual Mandate

• Where an arbitrator is appointed by designation (e.g., Collector, Commissioner), the proceedings continue with the successor officer.
• Any argument that the mandate expired due to transfer or delay is legally untenable.
• Parties cannot remain silent during proceedings and later challenge the award on procedural grounds under Section 29A.

Valuation Under RFCTLARR Act Must Be Contextual

• Arbitrators and Collectors must consider all relevant sale deeds and cannot arbitrarily exclude higher-value transactions without reasons.

• The highest value under Section 26(1)(a), (b), or (c) must be adopted - not averaged.

• Multipliers must be applied based on official notifications and land classification as per the relevant date of notification, not post-acquisition urbanization claims.

• When challenging arbitral awards under Section 37, courts must not re-appreciate evidence or substitute their own valuation.

• Patent illegality requires a finding that the award is based on no evidence or ignores vital evidence - mere error in judgment is insufficient.