The Apex court reiterated that benefit of Section 5 of the Limitation Act is not applicable to a proceeding under Section 34 of the Arbitration and Conciliation Act, 1996 and the time period of thirty days is sacrosanct. However, the benefit of Section 14 of Limitation Act is available to a Petitioner under Section 34.
The said judgement was passed by the Apex Court in the matter of M/s Simplex Infrastructure Ltd. Vs. Union of India, Civil Appeal No. 11866 of 2018 decided on 05.12.2018.
On 27.10.2014 the arbitrator made an award in favour of the appellant. The respondent received the copy of the award on 31.10.2014. Aggrieved by the award, the respondent filed an application under Section 34 of the 1996 Act on 30.01.2015 before the District Judge, Port Blair for setting aside the arbitral award. On 12.02.2016, the District Judge dismissed the respondent’s application under Section 34 of the 1996 Act for want of jurisdiction.
On 28.03.2016, the respondent filed an application under Section 34 before the High Court of Calcutta for challenging the arbitral award along with an application for condonation of a delay of 514 days. The respondent justified the delay on ground of there being a bona fide mistake in filing the application before the wrong forum and the respondent’s counsel causing delay due to which necessary formalities were not complied with within the prescribed time. On 27.04.2016, the learned Single Judge of the High Court allowed the respondent’s application and condoned the delay of 514 days.
The issue which fell for the consideration of the Apex Court was whether the benefit of Sections 5 and Section 14 of the Limitation Act can be extended to the respondent, and if so, whether a delay of as much as 514 days, much beyond the specific statutory limitation prescribed under Section 34(3) of the 1996 Act, could be condoned.
The Apex Court first dealt with the scheme of Section 34 of the Arbitration Act. The Court observed that sub-section (3) of Section 34, read with the proviso, makes it abundantly clear that the application for setting aside the award on one of the grounds mentioned in sub-section (2) will have to be made within a period of three months from the date on which the party making that application receives the arbitral award. The proviso allows this period to be further extended by another period of thirty days on sufficient cause being shown by the party for filing an application. The Apex Court further observed that the intent of the legislature is evinced by the use of the words “but not thereafter” in the proviso.
With regard to the applicability of Section 5 of the Limitation Act, the Court recapitulated the ratio of Union of India vs. Popular Construction Company (2001) 8 SCC 470 where it was held that the words “but not thereafter” used in the proviso to sub-section (3) would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of that Act. In the said judgment the Court further went on to hold that the scheme of the 1996 Act supported the conclusion that the time-limit prescribed under Section 34 to challenge an award is absolute and unextendible by court under Section 5 of the Limitation Act.
As regards the applicability of Section 14 of Limitation Act on a proceeding under Section 34 of the Arbitration Act, the Apex Court reiterated the law settled in the judgement of Consolidated Engineering Enterprises vs. Principal Secretary, Irrigation Department (2008) 7 SCC 169. In the said judgment, the Court came to the conclusion that there was no provision of the Arbitration Act of 1996 which excludes the applicability of the provisions of Section 14 of the Limitation Act to an application submitted under Section 34 of the said Act. The Court also noted that in fact to the contrary, Section 43 makes the provisions of the Limitation Act, 1963 applicable to arbitration proceedings. The court further held that sub-section (4) of Section 43, inter alia, provides that where the court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the court shall be excluded in computing the time prescribed by the Limitation Act, 1963, for the commencement of the proceedings with respect to the dispute so submitted. The Court thus, held that if the period between the commencement of the arbitration proceedings till the award is set aside by the court, has to be excluded in computing the period of limitation provided for any proceedings with respect to the dispute, there was no reason as to why provisions of Section 14 of the Limitation Act would not be applicable to an application submitted under Section 34 of the Act of 1996.
The Apex Court therefore concluded that the benefit under Section 14 is available to an petitioner under Section 34 of Arbitration Act, 1996 however, subject to the period of three months which is sacrosanct.