2023 (4) TMI 477 - SC - Indian Laws

Supreme Court Clarifies Limitation Period in Arbitration Appeals

Bhimashankar Sahakari Sakkare Karkhane Niyamita Versus Walchandnagar Industries Ltd. (WIL)

The Supreme Court held that Section 4 of the Limitation Act, 1963, does not apply to the 30-day condonable period under Section 34(3) of the Arbitration ... Rejection of application for condonation of delay caused in preferring the application under Section 34 of the Arbitration and Conciliation Act, 1996 - time limitation for preferring an application under Section 34 of the Arbitration Act against the arbitral award - whether when the last day of condonable period of 30 days (under Section 34(3) of the Arbitration Act) falls on holiday or during the Court vacation, would the benefit of Section 10 of the General Clauses Act, 1897 be available? HELD THAT:- Section 34(3) of the Arbitration Act and Sections 2(j) and 4 of the Limitation Act, 1963 fell for consideration before this Court in the case of ASSAM URBAN WATER SUPPLY AND SEW. BOARD VERSUS SUBASH PROJECTS AND MARKETING LTD. [2012 (1) TMI 412 - SUPREME COURT]. Even the very issue raised in the present appeal fell for consideration before this Court in the case of Assam Urban. In the aforesaid decision, this Court interpreted the aforesaid provisions and has specifically observed and held that the benefit of exclusion of period during which Court is closed is available only when application for setting aside the award is filed within ‘prescribed period of limitation’ and it is not available in respect of period extendable by the Court in exercise of its discretion. No application for setting aside the arbitral award was made before elapse of three months from the receipt thereof. Three months from the date of receipt of the award expired on 26.11.2003. The District Court had Christmas vacation for the period from 25.12.2003 to 01.01.2004. On reopening of the Court i.e. on 02.01.2004, the appellants made application for setting aside the award under Section 34 of the Arbitration Act. Now, so far as reliance placed upon Section 10 of the General Clauses Act, 1897 on behalf of the appellant is concerned, at the outset it is required to be noted that such a contention is untenable in light of the proviso to Section 10 of the General Clauses Act, 1897, which specifically excludes the application of Section 10 of the General Clauses Act, 1897 to any act or proceeding to which the Indian Limitation Act, 1877 applies. Reference to 1877 Act will now have to be read as reference to Limitation Act, 1963 in view of Section 8 of the General Clauses Act, 1897. Therefore, in light of the application of Limitation Act, 1963 to the proceedings under the Arbitration Act and when Section 10 of the General Clauses Act, 1897 specifically excludes the applicability of Section 10 to any act or proceeding to which Indian Limitation Act, 1963 applies and in light of the definition of “period of limitation” as defined under Section 2(j) read with Section 4 of the Limitation Act. Thus, it cannot be said that the High Court and the learned III Additional District & Sessions Judge, Vijaypur have committed any error in refusing to condone the delay caused in preferring application under Section 34 of the Arbitration and Conciliation Act, 1996 which was beyond the period prescribed under Section 34(3) of the Arbitration and Conciliation Act, 1996 - appeal dismissed. Issues involved:1. Applicability of Section 4 of the Limitation Act, 1963.2. Applicability of Section 10 of the General Clauses Act, 1897.Summary:Issue 1: Applicability of Section 4 of the Limitation Act, 1963The Supreme Court examined whether Section 4 of the Limitation Act, 1963, which allows for the extension of the prescribed period if it expires on a day when the court is closed, applies to the condonable period under Section 34(3) of the Arbitration and Conciliation Act, 1996. The Court referred to the case of Assam Urban Water Supply and Sewerage Board vs. Subash Projects and Marketing Limited, which held that the benefit of exclusion of the period during which the court is closed is available only when the application is filed within the 'prescribed period of limitation' and not for the extendable period. The Court observed that the 'prescribed period' under Section 34(3) is three months, and the additional 30-day period is not considered the 'prescribed period' for limitation purposes. Therefore, Section 4 of the Limitation Act does not apply to the 30-day condonable period.Issue 2: Applicability of Section 10 of the General Clauses Act, 1897The Court also addressed whether Section 10 of the General Clauses Act, 1897, which allows acts to be done on the next day if the prescribed period expires on a day when the court is closed, applies to the condonable period under Section 34(3) of the Arbitration Act. The Court noted that Section 10 specifically excludes its application to any act or proceeding to which the Limitation Act applies. Since the Limitation Act, 1963, applies to arbitration proceedings as per Section 43(1) of the Arbitration Act, Section 10 of the General Clauses Act cannot be invoked. The Court emphasized that the binding decision in Assam Urban (Supra) directly addressed this issue, concluding that the benefit of Section 10 of the General Clauses Act is not available for the 30-day condonable period.Conclusion:The Supreme Court upheld the decisions of the High Court and the trial court, which refused to condone the delay in filing the application under Section 34 of the Arbitration Act. The Court reiterated that the prescribed period under Section 34(3) is strictly three months, and any extension beyond the additional 30-day period is not permissible. Consequently, the appeal was dismissed.