Can delay be condoned for setting aside arbitration award under S. 5...

Can delay be condoned for setting aside arbitration award under S. 5 of Limitation Act?

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Question: I want to file an application under Section 34 of the Arbitration and Conciliation Act, for setting aside an arbitration award. However, there is a delay of about 6 months beyond the 3 months’ period of limitation allowed for challenging such award under Section 34 of the Act. Is it possible to get this delay condoned under Section 5 of the Limitation Act?

Answer: It is not possible to get the delay condoned under Section 5 of the Limitation Act, 1963, which has occurred in filing an application under Section 34 of the Arbitration and Conciliation Act, 1996, beyond the 3+1 months [actually, 3 months + 30 days] allowed under Section 34. The basic reasoning is as under.

Sub-section (3) of Section 34 of the Arbitration and Conciliation Act is as under:

“(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.”

It is seen from the above legal provision that an application for setting aside the arbitration award can be made within 3 months from the date of receiving the arbitral award. The Proviso lays down that a maximum delay of 30 days can be condoned for sufficient cause being shown, but not thereafter. This means that the said Act clearly lays down that delay more than 30 days cannot be condoned.

It is thus clear that the fetter imposed by legislation through the Proviso is quite significant. Though an application could be entertained by the Court in its discretionary powers within a period of 30 days from the expiry of the limitation period, it cannot be entertained thereafter. The expression prohibiting an application after three months + 30 days (i.e., about 120 days) is “but not thereafter”.

Let me now refer to Section 5 of the Limitation Act, which provides as under:

5. Extension of prescribed period in certain cases.—Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.

Explanation.—The fact that the appellant or the applicant was misled by any order, practice or judgment of the High Court in ascertaining or computing the prescribed period may be sufficient cause within the meaning of this section.”

However, Section 29(2) of the Limitation Act lays down as under:

“(2) Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provision of Section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 (inclusive) shall apply only insofar as, and to the extent to which, they are not expressly excluded by such special or local law.”

In the case of Consolidated Engg. Enterprises v. Irrigation Deptt., (2008) 7 SCC 169 : AIR 2009 SC (Suppl.) 396, on a combined reading of the aforesaid provisions, a 3-judge bench of the Supreme Court held that:

19. A bare reading of sub-section (3) of Section 34 read with the proviso makes it abundantly clear that the application for setting aside the award on the grounds mentioned in sub-section (2) of Section 34 will have to be made within three months. The period can further be extended, on sufficient cause being shown, by another period of 30 days but not thereafter. It means that as far as application for setting aside the award is concerned, the period of limitation prescribed is three months which can be extended by another period of 30 days, on sufficient cause being shown to the satisfaction of the court.”

20. Section 29(2) of the Limitation Act inter alia provides that where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period of limitation prescribed by the Schedule, the provisions of Section 3 shall apply as if such period was the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 shall apply only insofar as, and to the extent, they are not expressly excluded by such special or local law. When any special statute prescribes certain period of limitation as well as provision for extension up to specified time-limit, on sufficient cause being shown, then the period of limitation prescribed under the special law shall prevail and to that extent the provisions of the Limitation Act shall stand excluded. As the intention of the legislature in enacting sub-section (3) of Section 34 of the Act is that the application for setting aside the award should be made within three months and the period can be further extended on sufficient cause being shown by another period of 30 days but not thereafter, this Court is of the opinion that the provisions of Section 5 of the Limitation Act would not be applicable because the applicability of Section 5 of the Limitation Act stands excluded because of the provisions of Section 29(2) of the Limitation Act.”

In view of the above, it should be clear that no further delay can be condoned under Section 5 of the Limitation Act beyond the period permissible under Section 34(3) of the Arbitration and Conciliation Act, for filing an application to set aside an arbitral award.

However, in the aforesaid case, the Supreme Court further observed that merely because it is held that Section 5 of the Limitation Act is not applicable to an application filed under Section 34 of the Act for setting aside an award, one need not conclude that provisions of Section 14 of the Limitation Act would also not be applicable to an application submitted under Section 34 of the Arbitration and Conciliation Act. It is noteworthy that Section 14 of the Limitation Act relates to “Exclusion of time of proceeding bona fide in court without jurisdiction” and lays down that in computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.

But, in so far as Section 5 of the Limitation Act is concerned, it is not applicable for condonation of delay in respect of an application filed under Section 34 of the Arbitration and Conciliation Act.

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