1. Challenge to the condonation of delay in filing an application to set aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996. (Para 1 , 2 , 3 , 4 , 5 , 6 )
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2018 Supreme(SC) 1218
SUPREME COURT OF INDIA
D.Y. Chandrachud, Vineet Saran, JJ.
M/S SIMPLEX INFRASTRUCTURE LTD – APPELLANT
VERSUS
UNION OF INDIA – RESPONDENT
CIVIL APPEAL NO.11866 OF 2018 (@ SPECIAL LEAVE PETITION (C) NO 17521 OF 2017)
Decided On : 05-12-2018
Important Points
IMPORTANT POINT
Section 14 of the Limitation Act, 1963 applies to an application u/s 34 of Arbitration and Conciliation Act, 1996.
Section 14 of the Limitation Act, 1963 applies to an application u/s 34 of Arbitration and Conciliation Act, 1996.
Subject
Arbitration Law - Limitation for Challenging Arbitral Award
Act Referred
Headnote
Arbitration and Conciliation Act, 1996 – Section 34 – Condonation of delay – Application against an award can be made only for setting it aside – Within a period of three months from date of receiving the award – Extendable by 30 days – “But not thereafter” – Section 5 of Limitation Act, 1963 not applicable to section 34 – Section 14 of Limitation Act, 1963 – “Exclusion of time of proceeding bona fide” – Applies to section 34 – Respondent receiving arbitral award on 31 October 2014, filing application under Section 34 on 30 January 2015 exactly ninety days after receipt of the award – District judge dismissing application for want of jurisdiction on 12 February 2016 – 44 days thereafter, respondent filing application u/s 34 before High Court on 28 March 2016 – Application u/s 34 held time barred even after applying section 14, Limitation Act. (Para 8, 9, 10, 15, 16)
(2001) 8 SCC 470; (2008) 7 SCC 169 – Relied upon
(2005) 4 SCC 239 – Distinguished
Facts of the case:
The appellant, a contractor, entered into an agreement for the construction of 821 units of permanent shelters with the Union of India, [The date of the agreement is 5 January 2006]. Due to differences with regard to the performance of the construction work, the parties were referred to arbitration. On 27 October 2014, the arbitrator made an award in favour of the appellant and directed the respondent to pay a sum of Rs. 9,96,98,355/- with simple interest @ 10% per annum from 1 January 2009 till actual payment. The respondent received the copy of the award on 31 October 2014.
The respondent filed an application under Section 34 of the 1996 Act on 30 January 2015 before the District Judge, Port Blair for setting aside the arbitral award. During the pendency of the arbitration proceedings, the appellant had filed an application, AP No 91 of 2008 under Section 9 of the 1996 Act before the High Court of Calcutta praying for an injunction on encashment of bank guarantee against the respondent and the application was duly contested by the respondent.
On 12 February 2016, the District Judge dismissed the respondent’s application under Section 34 of the 1996 Act for want of jurisdiction.
On 28 March 2016, the respondent filed an application [A.P. No. 224/2016] under Section 34 before the High Court of Calcutta for challenging the arbitral award dated 27 October 2014, along with an application [G.A. No. 958/2016 in A.P. No. 224/2016] for condonation of a delay of 514 days.
On 27 April 2016, the Single Judge of the High Court allowed the respondent’s application.
Finding of the Court:
Application u/s 34 is time barred.
Result: Appeal allowed.
Legal Category Hierarchy
Advocates:
Counsel for Appearing Parties
For the Appellant :Ms. Soumya Dutta, Advocate.,
For the Respondent:Mrs. Anil Katiyar, Advocate
Counsel for Appearing Parties
For the Appellant :Ms. Soumya Dutta, Advocate.,
For the Respondent:Mrs. Anil Katiyar, Advocate
Table of Contents
2. Whether delay in filing a Section 34 application can be condoned under Section 5 or Section 14 of the Limitation Act despite strict statutory limits. (Para 7 , 12 , 15 )
3. Section 34(3) prescribes a strict timeline; Section 5 of the Limitation Act is excluded, while Section 14 allows exclusion of time spent in wrong forums. (Para 8 , 9 , 10 , 13 , 14 , 15 )
4. The limitation period under Section 34(3) of the 1996 Act is absolute and unextendible beyond the proviso's thirty days, notwithstanding Section 5 of the Limitation Act. (Para 8 , 9 , 13 )
5. Appeal allowed; High Court order condoning delay set aside; application for setting aside the arbitral award dismissed as barred by limitation. (Para 16 )
6. Does Section 5 of the Limitation Act apply to applications for setting aside an arbitral award under Section 34 of the 1996 Act?
No. The phrase but not thereafter in the proviso to Section 34(3) of the 1996 Act constitutes an express exclusion of the Limitation Act, making the prescribed time-limit absolute and unextendible by the court under Section 5. (Para 8 , 9 )
7. Can the benefit of Section 14 of the Limitation Act be extended to Section 34 applications under the 1996 Act?
Yes. There is no provision in the 1996 Act that excludes the applicability of Section 14 of the Limitation Act. Therefore, time spent bona fide in prosecuting a proceeding in a court without jurisdiction can be excluded. (Para 10 )
8. Can administrative difficulties in a large organization justify condoning delay beyond the statutory period under Section 34(3)?
No. Administrative difficulties, such as the time-consuming process of obtaining permissions from higher officials, are not valid reasons to condone delay beyond the strict statutory period prescribed under Section 34(3) of the 1996 Act. (Para 15 )
JUDGMENT
Dr. Dhananjaya Y. Chandrachud, J
1. The present appeal arises from the judgment of a learned Single Judge of the High Court of Calcutta by which the respondent’s application for condoning a delay of 514 days in filing an application under Section 34 of the Arbitration and Conciliation Act, 1996 (‘the 1996 Act’) was allowed [The High Court delivered judgment on 27 April 2016].
2. The appellant, who is a contractor, entered into an agreement for the construction of 821 units of permanent shelters in the tsunami-hit Andaman and Nicobar Islands with the Union of India, represented by the Executive Engineer, Andaman Central Division, Central PWD, Port Blair [The date of the agreement is 5 January 2006]. The scope of work involved the construction of single storied permanent shelters, including internal water supply, sanitary installation and internal electrification. Due to differences with regard to the performance of the construction work, the parties were referred to arbitration. On 27 October 2014, the arbitrator made an award in favour of the appellant and directed the respondent to pay a sum of Rs. 9,96,98,355/- with simple interest @ 10% per annum from 1 January 2009 till actual payment. The respondent received the copy of the award on 31 October 2014.
3. Aggrieved by the award, the respondent filed an application, O.A No.2/2015 under Section 34 of the 1996 Act on 30 January 2015 before the District Judge, Port Blair for setting aside the arbitral award. During the pendency of the arbitration proceedings, the appellant had filed an application, AP No 91 of 2008 under Section 9 of the 1996 Act before the High Court of Calcutta praying for an injunction on encashment of bank guarantee against the respondent and the application was duly contested by the respondent.
4. On 12 February 2016, the District Judge dismissed the respondent’s application under Section 34 of the 1996 Act for want of jurisdiction. The District Judge observed:
“…According to the provision of Section 42 of the Arbitration and Conciliation Act, when an application has been made regarding an arbitration agreement before any Court under the same part; that Court shall only have jurisdiction over the arbitration proceedings and all subsequent application arising out of that agreement and the arbitral proceedings shall be made in that court and in no other court.
In this case the parties have preferred an application under Section 9 of the Arbitration and Conciliation Act before the Hon’ble High Court of Kolkata… Thus, it is clear to me that this Appellant Court has no jurisdiction to entertain this appeal according to Section 42 of the Arbitration and Conciliation Act.”
5. On 28 March 2016, the respondent filed an application [A.P. No. 224/2016] under Section 34 before the High Court of Calcutta for challenging the arbitral award dated 27 October 2014, along with an application [G.A. No. 958/2016 in A.P. No. 224/2016] 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.
6. On 27 April 2016, the learned Single Judge of the High Court allowed the respondent’s application and condoned the delay of 514 days. The High Court held:
“After considering the submissions made by the learned advocate for the applicant/petitioner and upon perusing the application for condonation of delay, it appears that sufficient cause has been shown to explain the delay in filing the application, being AP No. 224 of 2016 and as such the delay is condoned…”
7. The issue which has been raised before this Court is whether the learned Single Judge was justified in condoning a delay of 514 days by the respondent in filing the application under Section 34. In dealing with this issue, this Court needs to assess whether the benefit of Sections 5 a
