2001 (10) TMI 1044 - SC - Companies Law

Arbitration Challenge Time Limit Clarified: Section 34 Excludes Limitation Act

Union of India Versus Popular Construction Co.

The court dismissed the application challenging an arbitral award under section 34 of the Arbitration and Conciliation Act, 1996, as time-barred under the ... Whether the provisions of section 5 of the Limitation Act, 1963 are applicable to an application challenging an award, under section 34 of the Arbitration and Conciliation Act, 1996? Held that:- Appeal dismissed. The time expiring under section 34 is that the award becomes immediately enforceable without any further act of the Court. If there were any residual doubt on the interpretation of the language used in section 34, the scheme of the 1996 Act would resolve the issue in favour of curtailment of the Court’s powers by the exclusion of the operation of section 5 of the Limitation Act. Issues:1. Applicability of section 5 of the Limitation Act, 1963 to an application challenging an award under section 34 of the Arbitration and Conciliation Act, 1996.Analysis:1. The case involved a challenge to an award made by an Arbitrator under the Arbitration Act, 1940, which was later amended to refer to the Arbitration and Conciliation Act, 1996. The application challenging the award was dismissed on the grounds of being barred by limitation under section 34 of the 1996 Act. The main contention was whether section 5 of the Limitation Act applied to section 34 of the 1996 Act.2. The crux of the issue lay in interpreting section 29(2) of the Limitation Act, which deals with the applicability of the provisions of sections 4 to 24 to special or local laws. The argument revolved around whether the language of section 34 of the 1996 Act expressly excluded the operation of section 5 of the Limitation Act. The proviso to section 34 was crucial in determining the exclusion of section 5, as it limited the time for making an application to set aside an arbitral award.3. The judgment highlighted previous legal interpretations to support the conclusion that express exclusion of the provisions of the Limitation Act was not always necessary. The intention to exclude could be implied from the language and scheme of the special law. The specific wording of section 34, particularly the phrase 'but not thereafter,' was deemed to constitute an express exclusion within the meaning of section 29(2) of the Limitation Act.4. The analysis delved into the legislative history and objective of the 1996 Act, emphasizing the aim to minimize judicial intervention in arbitration proceedings. Section 5 of the 1996 Act restricted judicial intervention, and section 34 set a strict time limit for challenging an award, indicating an absolute and unextendable period for such applications.5. The judgment clarified a previous decision's apparent error regarding the application of section 5 of the Limitation Act to objections under the 1996 Act. The final conclusion was that the question of applying section 5 to challenges under section 34 of the 1996 Act was answered in the negative, leading to the dismissal of the appeal without costs.