Application for setting aside arbitral award u/s 34 of the Arbitration and Conciliation Act, 1996 filed on the next working day of the court, was within limitation period – Supreme Court
In a recent judgment, Hon’ble Supreme Court has held that the application for setting aside arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 which was filed on the next working day of the court, must be considered as being filed within the limitation period.
ABCAUS Case Law Citation:
4493 (2025) (04) abcaus.in SC
In the instant case, the appellant had challenged the order passed by the Chhattisgarh High Court by which it allowed the respondent’s appeal under Section 37 of the Arbitration and Conciliation Act, 19961 (ACA) and held the respondent’s application under Section 34 as being filed within the limitation period.
The appellant and the respondent entered into a contract for mining. Pursuant to disputes arising on payments under the contract, the matter was referred to arbitration, resulting in an arbitral award in favour of the appellant.
The award was signed and delivered to the respondent on the very day. The respondent filed an application to set aside the award under Section 34 along with an application for stay of the award. The Trial Court, passed an ex-parte order that the Section 34 application was within limitation as the 3-month period expired on second Saturday and the following day was a Sunday. Since the court was closed on both these days, the respondent filed the application on the next working day.
However, The Trial Court allowed the recall application of the respondent and held that the Section 34 application was barred by limitation as the 3-month period expired one day before i.e. Friday on which day the court was working.
The respondent filed a Section 37 appeal against the Trial Court order, which was allowed by the High Court. The High Court relied on Section 12 of the Limitation Act, 1963 and Supreme Court Court’s decision to hold that the limitation period expired on second Saturday which was a court holiday.
Before the Hon’ble Supreme Court, the appellant contended that the limitation period must be calculated from the date on which the award was received by the respondent and therefore, the 3-month limitation period expired on Friday and not on second Saturday. He submitted that the Limitation Act, including Section 12, does not apply to proceedings under Section 34 of the ACA. Since the court was working on the date on which limitation expired, Section 4 of the Limitation Act will not apply to hold the application was being within the limitation period. There was a 3-day delay in filing the Section 34 application but the respondent did not file an application for condonation that showed sufficient cause to condone the delay.
On the other hand, the respondent submitted that the date on which the arbitral award was received, must be excluded while calculating the limitation period.
The Hon’ble Supreme Court observed that Section 34(3) of the ACA stipulates the limitation period for filing an application to set aside an arbitral award as 3 months from the date on which the party receives the arbitral award, which can be further extended by 30 days on sufficient cause being shown.
The Hon’ble Supreme Court clarified that the statutory language of Section 34(3) clearly stipulates the limitation period as “three months”, as opposed to the condonable period as “thirty days”. This difference in language unambiguously demonstrates the legislative intent that the limitation period is 3 calendar months as opposed to 90 days. Accordingly, the Hon’ble Supreme Court rejected the argument taken by the appellant that 3 months must be read as 90 days in the context of Section 34(3).
On the issue of how limitation must be calculated in the present case, the Hon’ble Supreme Court observed that in a recent case, it was held that there is no wholesale exclusion of the provisions of the Limitation Act in calculating the period of limitation under Section 34(3). Rather, each provision’s applicability/exclusion has to be individually tested, on a case-to-case basis, based on the language and purpose of the specific provision in the Limitation Act, the language of Section 34(3) of the ACA, and the scheme and object of the ACA.
With respect to the applicability of Section 12 of the Limitation Act, the Hon’ble Supreme Court noted that it had held that Section 12(1) of the Limitation Act applies while calculating the limitation period under Section 34(3) such that the day from which such period is to be reckoned must be excluded. In a recent decision it was also held that there is nothing in the statutory language or scheme of Section 34(3) that is contraindicative that Section 12(1) does not apply.
The Hon’ble Supreme Court opined that since Section 12(1) applies, the date respondent received a signed copy of the award must be excluded and the 3-month limitation period must be reckoned from next date which expired on a day which happened to be a second Saturday when the court was not working. Hence, the benefit of Section 4 of the Limitation Act will inure to the benefit of the respondent.
Accordingly, the Hon’ble Supreme Court held that the respondent’s application under Section 34, which was filed on the next working day of the court, must be considered as being filed within the limitation period. Consequently, there was no delay in filing the application and sufficient cause need not be shown for condonation of delay. The High Court therefore rightly allowed the Section 37 appeal and held that the respondent’s Section 34 application was filed within the limitation period.
As a result the appeal was dismissed.
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