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2018 (11) TMI 1529
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....['Arbitration Act']. 3. The facts which give rise to this question fall into a narrow compass. Originally one Mr. P. Kishan Lal carried on business and acquired several properties. On his death, Mr. P. Kishan Lal was survived by eight (8) legal heirs (Appellant Nos. 1 to 6 and Respondent Nos. 1 and 2). 4. After the death of Mr. Kishan Lal, several disputes have cropped up on the division of properties. Having failed to resolve the dispute, the parties turned towards arbitration to resolve the dispute. Five Arbitrators were appointed to adjudicate and distribute eleven properties belonging to them. 5. On 18.02.2010, the arbitrators passed a unanimous Award providing for the division of properties and businesses. The parties received the Award on 21.02.2010. There is no dispute on the receipt of the Award by the parties. 6. The Respondents allege that after the pronouncement of the award, the Appellants in bad faith entered into a Memorandum of Understanding (MoU) with the Respondents. According to the Respondents, the Appellants agreed to give certain additional properties to Respondent No. 1, which were more than what were provided in the Award. The Respondents alleged ....
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....ation and fabrication of the Memorandum dated 09.04.2010. For completeness of narration, it may be stated that additional I.A.s, being I.A. No. 210 and 211 of 2012, were sought by the Respondent seeking certain documents to be brought on record. 10. By order dated 21.02.2012, the trial court dismissed the IA. No. 598 of 2011, pertaining to the condonation of delay in filing the Section 34 application. The Trial Court while dismissing the aforesaid application as indicated above, reasoned as under5 i. That the Court is not empowered to stretch the limitation period beyond the requisite period given under Section 34 of the Arbitration Act. ii. Placing reliance on Union of India vs. Popular Construction Co., (2001) 8 SCC 470 and Consolidated Engineering Enterprises vs. Principal Secretary, Irrigation Department, (2008) 7 SCC 169, held that the language of Section 34 of the Arbitration Act mandated a strict adherence to the time period provided thereunder and the extension beyond the same was not possible under any circumstances. Therefore, Section 5 of the Limitation Act was not applicable to an application filed under Section 34 of the Arbitration Act. i....
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....for considering the abovementioned pleadings of the petitioners and pronouncing upon the same with reference to the applicability or otherwise of the provision of Section 17 of the Act. Therefore, without expressing any opinion on these aspects, the learned Chief Judge is directed to reconsider the case only to this limited extent and pass a fresh order after hearing both parties, within a period of two months from the date of receipt of this order. It is made clear that the orders of the lower Court in respect of the other aspects stand confirmed". (emphasis supplied) 12. Aggrieved by the remand order passed by the High Court on the applicability of Section 17 of the Limitation Act to the proceedings, the Appellants have approached this Court in these appeals. 13. Before we delve into any other aspect of this case, it may be important to note that we would have agreed with the High Court wherein a remand may have been required in usual course for considering the applicability of Section 17 of the Limitation Act as there is an apparent insufficiency of reasons in the trial court order. But, in this case there has been a considerable delay in resolving the dispute. Th....
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.... is applicable to all proceedings before the court. iii. It is evident that the Arbitration Act under Section 34 (3) provides for a different time period than the one present under Article 137 of the Limitation Act, accordingly, the special law would therefore, prevail in so far as the issue of period of limitation is concerned. However, for 'computation of the period of limitation' or arriving at the 'prescribed period' the provisions of Section 4 to 24 of the Limitation Act would automatically apply unless they are expressly excluded by the special law. iv. That it has been highly inequitable for the respondents, who were victims of bad faith negotiation undertaken by the Appellants to derail the respondents from pursuing this case for enforcement of their rights. 17. We have heard the counsels for both the parties at length, and also perused the material available on record. 18. We are now to examine whether Section 17 of the Limitation Act is applicable while determining the limitation period under Section 34(3) of the Arbitration Act? 19. This analysis has to necessarily begin from Section 29(2) of the Limitation Act, which states 29 (2) Where ....
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....oard v. Mohanlal & Co., (2016) 14 SCC 199 at para 13). Similarly, this Court also extended Section 12 of the Limitation Act to the Arbitration Act and excluded the day on which the Award was received from computing the starting period under Section 34(3). We note that none of these cases dealt with the question whether the scheme of Section 17 of the Limitation Act is consistent with Section 34 of the Arbitration Act. 24. Relying on these pronouncements, the Respondents' counsel asserted that there is no express exclusion of Section 17 in the Arbitration Act and therefore the benefit of Section 17 of Limitation Act should be extended while determining the period of limitation under Section 34(3). 25. This requires us to consider the phrase "express exclusion" in Section 29(2) of the Limitation Act. This Court in a series of cases held that the express exclusion can be inferred either from the language of the special law or it can be necessarily implied from the scheme and object of the special law. 26. A Bench of five Judges in Vidyacharan Shukla v. Khubchand Baghel, AIR 1964 SC 1099, interpreting the phrase "express exclusion" observed: "The contention is that su....
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....his case is the Central Excise Act. The nature of the remedy provided therein is such that the legislature intended it to be a complete code by itself which alone should govern the several matters provided by it. If, on an examination of the relevant provisions, it is clear that the provisions of the Limitation Act are necessarily excluded, then the benefits conferred therein cannot be called in aid to supplement the provisions of the Act. In our considered view, that even in a case where the special law does not exclude the provisions of Sections 4 to 24 of the Limitation Act by an express reference, it would nonetheless be open to the court to examine whether and to what extent, the nature of those provisions or the nature of the subjectmatter and scheme of the special law exclude their operation. In other words, the applicability of the provisions of the Limitation Act, therefore, is to be judged not from the terms of the Limitation Act but by the provisions of the Central Excise Act relating to filing of reference application to the High Court". 29. These principles were reiterated by this Court in Union of India v. Popular Construction Co., (2001) 8 SCC 470 at page 474; Chh....
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.... period of thirty days, but not thereafter. (emphasis added) 34. Section 34(3) deserves careful scrutiny and its characteristics must be highlighted: (a) Section 34 is the only remedy for challenging an award passed under Part I of the Arbitration Act. Section 34(3) is a limitation provision, which is an inbuilt into the remedy provision. One does not have to look at the Limitation Act or any other provision for identifying the limitation period for challenging an Award passed under Part I of the Arbitration Act. (b) The time limit for commencement of limitation period is also provided in Section 34(3) i.e. the time from which a party making an application "had received the Arbitral Award" or disposal of a request under Section 33 for corrections and interpretation of the Award. (c) Section 34(3) prohibits the filing of an application for setting aside of an Award after three months have elapsed from the date of receipt of Award or disposal of a request under Section 33. Section 34(3) uses the phrase "an application for setting aside may not be made after three months have elapsed". The phrase "may not be made" is from the UNCITRAL Model Law " An appli....
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....gral nexus between the period prescribed under Section 34(3) to challenge the Award and the commencement of the enforcement period under Section 36 to execute the Award. 35. If Section 17 of the Limitation Act were to be applied to determining the limitation period under Section 34(3), it would have the following consequences (a) In Section 34(3), the commencement period for computing limitation is the date of receipt of award or the date of disposal of request under Section 33 (i.e correction/additional award). If Section 17 were to be applied for computing the limitation period under Section 34(3), the starting period of limitation would be the date of discovery of the alleged fraud or mistake. The starting point for limitation under Section 34(3) would be different from the Limitation Act. (b) The proviso to Section 34(3) enables a Court to entertain an application to challenge an Award after the three months period is expired, but only within an additional period of thirty dates, "but not thereafter". The use of the phrase "but not thereafter" shows that the 120 days period is the outer boundary for challenging an Award. If Section 17 were to be ap....
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....ed the importance of the fixed periods under the Arbitration Act. We may also add that the finality is a fundamental principle enshrined under the Arbitration Act and a definitive time limit for challenging an Award is necessary for ensuring finality. If Section 17 were to be applied, an Award can be challenged even after 120 days. This would defeat the Arbitration Act's objective of speedy resolution of disputes. The finality of award would also be in a limbo as a party can challenge an Award even after the 120 day period. 40. Second, extending Section 17 of Limitation Act to Section 34 would do violence to the scheme of the Arbitration Act. As discussed above, Section 36 enables a party to apply for enforcement of Award when the period for challenging an Award under S.34 has expired. However, if Section 17 were to be extended to Section 34, the determination of "time for making an application to set aside the arbitral award" in Section 36 will become uncertain and create confusion in the enforcement of Award. This runs counter to the scheme and object of the Arbitration Act. 41. Third, Section 34(3) reflects the principle of unbreakability. Dr. Peter Binder in International....
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....ustrated by a ruling of this Court in Yeswant Deorao Deshmukh v. Walchand Ramchand Kothari, 1950 SCR 852. The facts of this case are broadly similar. A decree holder files an execution petition after the expiry of limitation period (12 years of the passing of decree). To overcome the limitation bar, the decreeholder alleged that the judgement debtor prevented the execution of a decree by suppressing the ownership of certain assets (ownership of newspaper in those facts) and in support placed reliance on Section 18 of Limitation Act, 1908 (equivalent of Section 17) Although there is a slight difference in the text of S.18 of Limitation Act, 1908 and S.17 of Limitation Act, 1963, the relevant provision for the present case remains the same. Rejecting this contention, this Court observed: 19. In our opinion, the facts necessary to establish fraud under Section 18 of the Limitation Act are neither admitted nor proved in the present case. Concealing from a person the knowledge of his right to apply for execution of a decree is undoubtedly different from preventing him from exercising his right, of which he has knowledge. Section 18 of the Limitation Act postulates the former al....
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....n for setting aside an award under Section 34(3) and so on. As this delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry of the prescribed period of limitation which would be calculated from that date, the delivery of the copy of award by the Tribunal and the receipt thereof by each party constitutes an important stage in the arbitral proceedings. 9. In the context of a huge organisation like the Railways, the copy of the award has to be received by the person who has knowledge of the proceedings and who would be the best person to understand and appreciate the arbitral award and also to take a decision in the matter of moving an application under subsection (1) or (5) of Section 33 or under subsection (1) of Section 34". 49. In view of the above, we hold that once the party has received the Award, the limitation period under Section 34(3) of the Arbitration Act commences. Section 17 of the Limitation Act would not come to the rescue of such objecting party. 50. In the present case, the Respondents had a right to challenge the Award under Section 34 the moment th....