Section 5 of the Limitation Act, 1963 cannot be invoked to condone delay beyond the period prescribed under Section 34(3) of the Arbitration and Conciliation Act, 1996.

In the matter of Mahindra and Mahindra Financial Services Ltd. v Maheshbhai Tinabhai Rathod & Ors. [Civil Appeal No. 11478 of 2014] decided by Hon’ble Supreme Court on 16.12.2021

Facts

Respondent (Maheshbhai Tinabhai Rathod) availed loan facility for purchase of tractors and an agreement dated 24.10.2005 was entered into between the parties in respect of the transaction. Due to non-adherence of the terms of the contract, dispute arose between the parties and the same was referred to Arbitration. The ld. Arbitrator passed an award and allowed the claim made by the Appellant (Mahindra and Mahindra Financial Services). The appellant thereafter filed an execution Petition on 27.06.2011 to execute the award. Therefore, notice of execution was issued to the Respondent.

The Respondent on 04.01.2012 challenged the Arbitral award dated 28.02.2011 by filing the Petition under Section 34 of the Arbitration and Conciliation Act, 1996. There was a delay of 185 days beyond the time allowed under Section 34(3) of the Arbitration and Conciliation Act, 1996. Therefore, the Respondent moved a notice of Motion under Section 5 of the Limitation Act seeking Condonation of Delay contending that Respondent was unaware about the proceedings until summons were received from the execution court on 15.11.2011.

The Single Judge while considering the Notice of motion noted that the Respondent refused to accept the registered post containing the award and therefore, the Single Judge declined to condone the delay. The Respondent therefore, filed an appeal before the Division Bench. The Division Bench condoned the delay against the statutory provision. Therefore, the Appellant filed an appeal before the Hon’ble Supreme Court challenging the said order of the Division Bench.

Issue

Is Section 5 of the Limitation Act applicable to Petitions filed under Section 34 of the Arbitration and Conciliation Act, 1996?

Observations

The Hon’ble Apex Court supporting its previous judgments in Union of India v Popular Construction [(2001) 8 SCC 470], Himachal Pradesh & Anr. vs. Himachal Techno Engineers & Anr. [(2010) 12 SCC 210 ], P. Radha Bai vs. P. Ashok Kumar [(2019) 13 SCC 44] and Chintels India Limited vs. Bhayana Builders Private Limited [(2021) 4 SCC 602] observed that the scope available for condonation of delay is self-contained in the proviso to Section 34(3) and Section 5 of the Limitation Act is not applicable to Petitions under Section 34 of the Arbitration Act, 1996.

The Bench further noted that no doubt the delay in the present case is not too inordinate. In appropriate cases the delay is to be condoned so as not to defeat the meritorious case. But that would only arise when the power under Section 5 of Limitation Act,1963 is available to be exercised. In the instant case the limitation is prescribed in the proviso to Section 34(3) of the Arbitration and Conciliation Act,1996 and it is well settled by Hon’ble Supreme Court that Section 5 of Limitation Act is not applicable to condone the delay beyond the period prescribed under Section 34(3) of the Arbitration and Conciliation Act,1996.

Therefore, the Division Bench of the High Court was not justified in condoning the delay. Hence, the order of the Division Bench dated 24.09.2012 is set aside and the order of the Learned Single Judge is restored.