Section 29A Cannot Reach Into a Special Statutory Code: Bombay High Court Rules Time Limit Provisions of Arbitration Act Inapplicable to Highway Land Acquisition Arbitrations

"The Application of Section 29A to Arbitrations Under the National Highways Act Would Render the Statutory Mechanism Unworkable", In a significant ruling at the intersection of arbitration law and land acquisition jurisprudence, the Bombay High Court has held that Section 29A of the Arbitration and Conciliation Act, 1996 — which prescribes time limits for completion of arbitral proceedings, extension of mandate, and substitution of arbitrators — does not apply to arbitrations conducted under Section 3G(5) of the National Highways Act, 1956. The Court dismissed all twenty-three arbitration appeals filed by the National Highways Authority of India, upheld the enhanced compensation awards, and authoritatively settled a contested question of law that had produced conflicting outcomes across High Courts.

Justice Arun R. Pedneker, delivering the common judgment on March 18, 2026, held that the National Highways Act is a special self-contained code, that the exclusive power of the Central Government to appoint arbitrators under Section 3G(5) is fundamentally inconsistent with the court-substitution mechanism in Section 29A(6), and that applying Section 29A to statutory highway arbitrations would render the entire appointment and continuation framework under the NH Act unworkable. The delay of nearly six years in passing the award, the Court held, did not render it a nullity — though unreasonable delay could be addressed through Article 226 of the Constitution.

Background of the Case

The Central Government issued a notification under Section 3A of the National Highways Act on 18.09.2015 declaring its intention to acquire lands in Village Gandheli for widening National Highway No. 211, followed by a final declaration under Section 3D on 16.09.2016. The Competent Authority for Land Acquisition (CALA) awarded compensation at varying rates ranging from Rs. 486 to Rs. 1,500 per square metre, classifying lands into different categories based on area, yield and nature. Dissatisfied, the landowners invoked Section 3G(5) of the NH Act seeking arbitration. The Arbitrator, after proceedings spanning nearly six years, enhanced compensation to a uniform rate of Rs. 1,742 per square metre. NHAI challenged the award under Section 34, which the Principal District Judge, Aurangabad dismissed on 16.10.2025. The present twenty-three appeals under Section 37 followed.

The Central Question: Does Section 29A Apply to Statutory Highway Arbitrations?

Section 3G(6) of the National Highways Act provides that the provisions of the Arbitration and Conciliation Act, 1996 shall apply to every arbitration under the NH Act — but subject to an express limitation: only to the extent not inconsistent with the provisions of the NH Act itself. NHAI contended that since the award was passed nearly five years and nine months after commencement of proceedings — well beyond the twelve-month period prescribed by Section 29A — the Arbitrator's mandate had automatically terminated, making the award a nullity, coram non judice, and patently illegal.

The Court began its analysis with the Constitution Bench judgment of the Supreme Court in Girnar Traders v. State of Maharashtra, (2011) 3 SCC 1, which laid down that where legislation adopts provisions of another statute by reference, subsequent amendments to the earlier statute are not automatically incorporated if such incorporation would disturb the scheme of the principal enactment. The Constitution Bench prescribed two tests — the test of intention and the test of unworkability — and carved out exceptions to the doctrine of legislation by reference where amendments would create irresolvable conflict or destroy the essence of the principal Act.

Applying these tests, the Court identified a structural incompatibility that was, in its assessment, decisive. Under Section 3G(5) of the NH Act, the power to appoint an Arbitrator is vested exclusively in the Central Government. The Government appoints not a named individual but a designated office — typically the Collector or an equivalent officer — for a particular region. The arbitration is therefore attached to the office, not to the individual. When an incumbent officer is transferred, the successor automatically assumes the role without any fresh appointment proceedings. During the present arbitrations, two or three arbitrators had changed on account of transfers — all handled under the NH Act's own internal mechanism, without reference to the Arbitration Act.

Section 29A, by contrast, contemplates termination of the mandate of a specific arbitrator upon expiry of the prescribed period and empowers the Court — defined in Jagdeep Chowgule v. Sheela Chowgule, MANU/SC/0093/2026 as the principal civil court of original jurisdiction in the district — to extend the mandate, reduce the arbitrator's fees, and substitute the arbitrator. The Court held that this court-substitution power under Section 29A(6) directly conflicts with the NH Act's scheme, wherein appointment is the exclusive prerogative of the Central Government. "This provision directly conflicts with the scheme of the National Highways Act, wherein the power to appoint an arbitrator is vested exclusively in the Central Government under Section 3G(5)."

The Court drew further support from the Supreme Court's ruling in National Highways Authority of India v. Sayedabad Tea Company Ltd., (2020) 15 SCC 161, which had already held — in the context of Section 11 of the Arbitration Act — that since the NH Act is a special legislation providing a self-contained code for land acquisition and dispute resolution, the court's power to appoint arbitrators under Section 11 has no application where appointment is exclusively vested in the Central Government. The Court extended that reasoning to Section 29A: if the Central Government's exclusive appointment power excludes Section 11, the same logic excludes Section 29A's court-substitution machinery with equal force.

On the question of delay, the Court held clearly that an award passed beyond the Section 29A timeline does not become void in a statutory arbitration under the NH Act. "If the arbitrator does not decide within a reasonable period, the power of this Court under Article 226 of the Constitution of India can be invoked" — but the remedy is a constitutional one directed at compelling timely action, not the invalidation of an award already passed.

The Himachal Pradesh View Distinguished

The Court noted that the Himachal Pradesh High Court, in Rattan Chand v. NHAI (Arbitration Appeal No. 9 of 2023) and Hari Singh v. NHAI (Arbitration Appeal No. 39 of 2024), had taken the contrary view and held Section 29A applicable to NH Act arbitrations. The Bombay High Court expressly declined to follow those decisions, observing that the Himachal Pradesh High Court had not considered the Supreme Court's ruling in Sayedabad, which clearly recognised the NH Act as a special enactment providing a complete statutory mechanism for arbitrator appointment — a recognition that should have led to the exclusion of Section 29A.

The Court also noted that in SLP (Civil) No. 17737 of 2025, the Supreme Court had expressly kept open the questions of law arising from a Bombay High Court order substituting an arbitrator under Section 15 of the Arbitration Act in an NH Act arbitration, declining to finally decide them on the peculiar facts of that case. The present judgment therefore fills that open question with a reasoned holding.

No Patent Illegality in Compensation Determination

On the merits of the awards, NHAI contended that the Arbitrator had violated Section 26 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 — made applicable to NH Act acquisitions by a Central Government notification of 24.04.2017 — by abandoning the CALA's category-wise classification and awarding uniform compensation.

The Court found no merit in this challenge. The landowners had produced 193 certified sale deeds from Village Gandheli itself. The CALA, despite referring to 228 sale instances, had arbitrarily discarded 199 of them and confined its determination to an average of only 15 low-value transactions without assigning any reasons for the exclusions — a course of action the Court held to be contrary to the mandate of Section 26 and the Supreme Court's guidance in Madhya Pradesh Road Development Corporation v. Vincent Daniel (Civil Appeal No. 3998 of 2024). The Arbitrator, after excluding transactions relating to lands in different Guts, had relied on 171 sale transactions, computed an average of approximately Rs. 2,183 per square metre from the higher-value transactions, and moderated the operative rate to Rs. 1,742 per square metre to maintain parity with earlier awards for similarly situated landowners in the same village. The Court found this approach consistent with Section 26 and fully justified.

On the multiplication factor, the Arbitrator had applied a factor of 2 based on the relevant notification dated 18.09.2015 classifying the acquired lands as rural and the amendment dated 24.04.2017 making the higher factor applicable. The Court found no error in this determination. NHAI's contention that the lands could not be treated as rural given their proximity to the city airport was rejected, the Court treating this as a factual question on which the Arbitrator's finding was neither perverse nor unsupported by evidence.

On the scope of interference under Sections 34 and 37, the Court restated the settled position drawn from PSA Sical Terminals Pvt. Ltd. v. Board of Trustees of V.O. Chidambaranar Port Trust, (2023) 15 SCC 781 and MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163: interference is permissible only on grounds of patent illegality going to the root of the matter, conflict with the fundamental policy of Indian law, or perversity in the sense of findings based on no evidence or ignoring vital evidence. Re-appreciation of evidence is not permissible under either provision. Concurrent findings of the Arbitrator and the District Court were entitled to a high degree of deference at the Section 37 stage. No ground for interference was found.

Dismissing all twenty-three arbitration appeals, the Bombay High Court has authoritatively held that Section 29A of the Arbitration Act — with its time-limit mandate, court-extension mechanism, fee-reduction power, and arbitrator-substitution machinery — is wholly inapplicable to statutory arbitrations conducted under Section 3G(5) of the National Highways Act, 1956. The NH Act's self-contained code and the Central Government's exclusive appointment power are structurally incompatible with Section 29A's scheme. Delay in such statutory arbitrations cannot be remedied by treating the award as void; the appropriate remedy is a writ under Article 226. The arbitral awards enhancing compensation to Rs. 1,742 per square metre were upheld in their entirety.

Date of Decision: March 18, 2026