The Supreme Court has emphasized the importance of filing an application under Section 34 of the Arbitration and Conciliation Act, 1996 within the prescribed limitation period of 90 days to claim exclusion of the period during which the Court remained closed. In a recent ruling, the Court clarified that if the applicant files the application by invoking the proviso to Section 34(3) of the Act, which grants an additional 30 days on the Court's discretion, then they would not be entitled to the benefit of such exclusion. The case of Bhimashankar Sahakari Sakkare Karkhane Niyamita v Walchandnagar Industries Ltd. (WIL) highlights the importance of adhering to the prescribed time limit for Section 34 applications under the Arbitration Act.
The Supreme Court, comprising of Justice M.R. Shah and Justice Krishna Murari, has clarified that Section 10 of the General Clauses Act, 1897 cannot be applied to seek condonation of delay in filing an application related to arbitration proceedings. The Proviso to Section 10 specifically excludes its application to any act or proceeding governed by the Indian Limitation Act, 1877 (now replaced by the Limitation Act, 1963), which applies to arbitration proceedings. The Court ruled that the provision cannot be used to seek relief on the basis that the last day of the condonable period falls on a Court holiday. This judgment provides important guidance on the scope and applicability of Section 10 of the General Clauses Act to arbitration-related proceedings.
BACKGROUND:
The Appellant, Bhimashankar Sahakari Sakkare Karkhane Niyamita, was issued an arbitral award on 24.08.2016. Under the Arbitration and Conciliation Act, 1996, Section 34(3) specifies a time limit of 90 days for filing an application to challenge the award. However, the Proviso to Section 34(3) allows for an extension of 30 days if the applicant has sufficient cause for not filing the application within the initial 90-day period.
After the expiry of the 90-day period to file an application under Section 34, the Appellant was granted a 30-day extension, which also ended on 24.12.2016. Unfortunately, this date fell on a court holiday during the winter/Christmas vacations when the Trial Courts were closed, making it impossible for the Appellant to submit the application on time. Consequently, the Appellant filed the application on 02.01.2017, the day the court reopened, and also requested condonation of delay.
The Appellant's Section 34 application was dismissed by the Trial Court due to a delay beyond the prescribed period, which the Court declined to condone. The Appellant appealed the decision to the High Court and argued that according to Section 4 of the Limitation Act, 1963, if the prescribed period for filing an application ends on a day when the court is closed, the application can be submitted on the day the court reopens. Additionally, the Appellant cited Section 10 of the General Clauses Act, 1897, which allows for the filing of an application on the first day the court reopens if the last day of the prescribed period falls on a court holiday.
However, on 23.02.2022, the High Court ruled that the term "prescribed period" in Section 4 of the Limitation Act, 1963 refers exclusively to the period of limitation. Therefore, any period beyond the prescribed period, during which the Court or Tribunal has the discretion to allow a person to institute the proceeding, cannot be considered a prescribed period. Consequently, the High Court dismissed the appeal, prompting the Appellant to file an appeal before the Supreme Court.
Reason(issue):
If the final day of the condonable period of 30 days under Section 34(3) of the Arbitration Act falls on a holiday or during a Court vacation, it is unclear whether the benefit of Section 10 of the General Clauses Act, 1897 would be available. This is a matter of interpretation and is subject to the discretion of the Court or Tribunal handling the case. It is essential to note that Section 10 of the General Clauses Act applies only when the last day of the prescribed period for filing an application falls on a holiday or during a Court vacation, whereas Section 34(3) of the Arbitration Act refers to the condonable period. Hence, the availability of Section 10 in such situations remains uncertain and subject to the interpretation of the relevant Court or Tribunal.
VERDICT:
The Supreme Court Bench relied on the judgment in Assam Urban Water Supply and Sewerage Board v Subash Projects and Marketing Limited, (2012) 2 SCC 624, which held that the benefit of excluding the period during which the Court is closed from the computation of limitation is available only when the application for setting aside the award is filed within the prescribed period of limitation. The benefit is not available for any period that is extendable by the Court in exercise of its discretion.
The Bench also addressed the applicability of Section 10 of the General Clauses Act, 1897. The Bench noted that the Proviso to Section 10 explicitly excludes the application of Section 10 to any act or proceeding to which the Indian Limitation Act, 1877 applies. The reference to the 1877 Act must now be read as a reference to the Limitation Act, 1963 in view of Section 8 of the General Clauses Act, 1897. As the Limitation Act applies to arbitration proceedings, Section 10 of the General Clauses Act cannot be relied upon to seek condonation of delay.
In a recent ruling, the Court has clarified that the benefit of exclusion of period during which the Court is closed shall only be available when the application for setting aside award is filed within the “prescribed period of limitation” of 90 days under Section 34(3) of the Arbitration Act. This means that if the last day of the condonable period falls on a Court holiday or during vacation, the benefit of exclusion of that period from the computation of limitation will only be available if the application is filed within the 90-day prescribed period. The Court also held that the benefit of exclusion of time during which the Court is closed will not be available for any period that is extendable by Court in exercise of its discretion, such as the additional 30 days under Proviso to Section 34(3) of Arbitration Act.
The Court upheld the High Court’s decision of refusing to condone the delay and dismissed the appeal. It was emphasized that the provisions of the Limitation Act, 1963 apply to proceedings under the Arbitration Act, and Section 10 of the General Clauses Act, 1897 cannot be pressed into service for seeking condonation of delay, as it is specifically excluded from such applications by its proviso.
Case Title: Bhimashankar Sahakari Sakkare Karkhane Niyamita v Walchandnagar Industries Ltd. (WIL)
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TAGS: Arbitration Act Section 34 condonation of delay prescribed period Limitation Act General Clauses Act exclusion of period Court vacation Proviso setting aside award.
