Summary
An arbitral award of about Rs.51.33 crore was signed and received by the award-debtor on 09.04.2022 and its application under Section 34 of the Arbitration and Conciliation Act, 1996 was filed on 11.07.2022. The Supreme Court held that the three-month limitation under Section 34(3) is three calendar months, not 90 days; that Section 12(1) of the Limitation Act applies so the date of receipt of the award is excluded; and that the period therefore ended on 09.07.2022, a second Saturday when the court was closed, so under Section 4 of the Limitation Act the application filed on the next working day was within time and no condonation was needed. The High Court's order so holding, and its interim stay of execution, were upheld.
Issues
- Whether the three-month period under Section 34(3) of the Arbitration and Conciliation Act, 1996 is to be read as 90 days.
- Whether Section 12(1) of the Limitation Act, 1963 applies to an application under Section 34 so that the day on which the award was received is excluded in computing limitation.
- Whether, when the three-month period so computed expired on a day the court was closed, Section 4 of the Limitation Act saved an application filed on the next working day.
- Whether the High Court's interim direction staying execution pending decision of the Section 34 application, after the award-debtor had deposited 50% of the award, called for interference.
Provisions considered
- Section 34(3), Arbitration and Conciliation Act, 1996The provision bars an application to set aside an award after 'three months' from receipt of the award, with a further condonable period of 'thirty days' on sufficient cause. The contrast in statutory language shows the limitation period is three calendar months, not 90 days, so the appellant's contrary argument was rejected. (¶ 8)
- Section 37, Arbitration and Conciliation Act, 1996The award-debtor's appeal under Section 37 against the trial court's order holding its Section 34 application time-barred was allowed by the High Court, and the Supreme Court held that the High Court rightly did so. (¶¶ 3, 5, 14)
- Section 12(1), Limitation Act, 1963Following Himachal Techno Engineers and State of West Bengal v. Rajpath Contractors, and the case-by-case approach summarised in My Preferred Transformation & Hospitality, the Court held that Section 12(1) applies to Section 34(3): the day from which the period is reckoned (the date of receipt of the award, 09.04.2022) is excluded, so the three months ran from 10.04.2022 and expired on 09.07.2022. (¶¶ 9, 10, 11, 12, 13)
- Section 4, Limitation Act, 1963Since the prescribed three-month period expired on 09.07.2022, a second Saturday when the court was closed, Section 4 permitted the application to be made on the day the court reopened; the application filed on 11.07.2022, the next working day, was therefore within limitation and no sufficient cause for condonation had to be shown. (¶¶ 13, 14)
Held
- The limitation period under Section 34(3) of the Arbitration and Conciliation Act is three calendar months, as the statute uses 'three months' for the limitation period and 'thirty days' for the condonable period; it cannot be read as 90 days. (¶ 8)
- There is no wholesale exclusion of the Limitation Act from the computation of limitation under Section 34(3); the applicability of each provision is tested individually against its language and purpose and the scheme of the Arbitration Act. Nothing in Section 34(3) contraindicates the application of Section 12(1), and so the day from which the period is reckoned, namely the date of receipt of the award, must be excluded. (¶¶ 9, 11, 12, 13)
- Section 4 of the Limitation Act applies to Section 34(3), but benefits a party only when the three-month prescribed period itself expires on a court holiday, in which case an application filed on the next working day is within time; it does not help where the three months expired on a working day and only the 30-day condonable period ran into court holidays. Because Section 4 applies, Section 10 of the General Clauses Act is excluded by its proviso. (¶ 13)
- On the facts, the award was received on 09.04.2022, the three months reckoned from 10.04.2022 expired on 09.07.2022 (a second Saturday on which the court was closed), and the Section 34 application filed on 11.07.2022, the next working day, was within limitation; no condonation of delay was required and the High Court rightly allowed the Section 37 appeal. (¶¶ 13, 14)
- The High Court's direction continuing the stay of execution until the Section 34 application is decided was interim in nature and, the award-holder having already withdrawn the 50% of the award deposited by the award-debtor, did not warrant interference. (¶ 15)
Result
Appeal dismissed; the Chhattisgarh High Court's order dated 27.09.2024 holding the Section 34 application to be within limitation and remitting it for decision on merits, with the interim stay of execution to continue, upheld. No order as to costs; pending applications disposed of.