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– Applicablity of Section 5 of the Limitation Act for the condonation of delay in filing an application to set aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996
Date: August 16, 2023 | Author: AA & Co. Advocates
The issue before the Apex Court in Union of India vs. Popular Construction Co. (2001) 8 SCC 470 was 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.
Answering in negative, the Apex Court, held that section 5 of the Limitation Act, 1963 is not applicable to proceedings under section 34 of the Arbitration and Conciliation Act, 1996 (1996 Act) for setting aside arbitral award because the words “but not thereafter” in proviso to sub-section (3) amounts to an express exclusion within the meaning of s.29(2) of the Limitation Act, 1963. On an analysis of section 29(2), it is clear that provisions of Sections 4 to 24 of the Limitation Act, 1963 will apply when:
- there is a special or local law which prescribes a different period of limitation for any suit, appeal or application; and
- the special or local law does not expressly exclude those sections.
Further, Section 34(3) of the Arbitration & Conciliation Act, 1996 states as follows:
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.
There is no dispute that the 1996 Act is a “special law” and that Section 34 provides for a period of limitation different from that prescribed under the Limitation Act, 1963. The question then is – is such exclusion expressed in Section 34 of the 1996 Act? Had the proviso to Section 34 merely provided for a period within which the court could exercise its discretion, that would not have been sufficient to exclude Section 4 to 24 of the Limitation Act, 1963 because “mere provision of a period of limitation in howsoever preemptory or imperative language is not sufficient to displace the applicability of Section 5. " As far as the language of Section 34 of the 1996 At is concerned, the crucial words are “but not thereafter” used in the proviso to sub-section (3). In the opinion of the Apex Court, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act,1963 and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the court could entertain an application to set aside the award beyond the extended period under the proviso, would render the phrase “but not thereafter” wholly otiose. No principle of interpretation would justify such a result. Furthermore, Section 34(1) itself provides that recourse to a court against an arbitral award may be made only by an application for setting aside such award “in accordance with” sub-section (2) and sub-section (3). But an application filed beyond the period mentioned in Section 34, sub-section (3) would not be an application “in accordance with” that sub-section.
Lastly, the importance of the period fixed under Section 34 is emphasized by the provisions of Section 36 which provide that
“where the time for making an application to set aside the arbitral award under Section 34 has expired…the award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the court.”
Hence, invoking Section 5 of the Limitation Act for the condonation of delay in filing an application to set aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 is not permissible under law.