Before the further period of 30 days for limitation under Section 34(3) of the Arbitration and Conciliation Act, 1996, is triggered, the condition precedent is that the court must be satisfied that the applicant was prevented by sufficient cause from making the application within the prescribed period of three months. This was held by a division bench of the Delhi high court, comprising of Justice Badar Durrez Ahmed and Justice Ashutosh Kumar, in the case of Steel Authority Of India Limited v. M/s Everest Rolling Industries Private Limited [FAO (OS) 231/2016; decided on 01.12.2016].
It is pertinent to point out that Section 34 of the Arbitration and Conciliation Act, 1996, provides for making an application for setting aside of an arbitral award. However, sub-section (3) of this section provides that such an application can be filed only within a period of 3 months. But, if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the 3 months, it may entertain the application within a further maximum period of 30 days. Sub-section 34(3) of the said Act is reproduced 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 in this context that in the above case, Delhi high court has now held as under:
“Upon a plain reading of the provisions of Section 34(3) and, in particular, the proviso thereto, it is evident that before the further period of 30 days is triggered, the condition precedent is that the court must be satisfied that the applicant was prevented by sufficient cause from making the application within the prescribed period of three months. … … As long as there is no satisfaction of the court that the applicant was prevented by sufficient cause from making the application within the period of three months, there is no question of the applicant seeking to avail the further period of 30 days under the proviso.”
In the present case, the arbitral award was made on 20.10.2014 and was received by the appellant on 03.11.2014. Initially, the appellant filed OMP No.198/2015 under Section 34 of the said Act, which was filed on the 89th day from the receipt of the award by the appellant. But, this petition was withdrawn by the appellant on 17.03.2016 since there was an objection that it was filed before a wrong forum. Then, the appellant filed a subsequent petition being OMP (COMM.) 241/2016 on 18.04.2015, however, this petition was also withdrawn by the appellant on 09.05.2016 with liberty to file a fresh petition in accordance with law. This was done because it transpired that the value of the present matter being less than “Specified Value”, as defined under Section 2(i) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts, Ordinance 2015, the petition could not be entertained by the High Court as a Commercial Court under the abovesaid Ordinance 2015, but it could be entertained under its ordinary jurisdiction. On the next day, that is, on 10.05.2016, the petition OMP 20/2016 under Section 34 of the said Act was filed in the high court (being the third such petition). However, this petition was dismissed by order dated 23.05.2016 of a single Judge of the high court, being beyond limitation period under Section 34(3) of the said Act.
The present case before the division bench of the high court was an appeal against the said dismissal by a single judge of the high court.
The appellant sought the benefit of Section 14 of the Limitation Act, 1963 for the period 31.01.2015 to 17.03.2016 during which OMP 198/2015 was pending and also for the period commencing on 18.04.2016 and ending on 09.05.2016 during which OMP (COMM.) 241/2016 was pending before the single judge.
It is pertinent to note that Section 14(2) of the Limitation Act, 1963, provides as under:
“(2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding 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.”
Thus, Section 14 of the Limitation Act provides for exclusion of time of proceeding bona fide in court without jurisdiction (i.e., in a wrong court), for the purposes of counting the limitation.
In these circumstances, the division bench of the Delhi high court held that when OMP 198/2015 was withdrawn on 17.03.2016, there was only one day left out of the initial period of three months for making the application. But, the petition was filed only 29 days later (giving the benefit of 3 days when the courts were closed between 15th to 17th of April 2016). There was no reason given as to why the petition could not have been filed on the very next day. The high court further observed that even if the greatest of the latitude is given to the appellant, first, by allowing him to retract from his concessions, second, by giving him the benefit of section 14 of the Limitation Act in respect of both the OMPs 198/2015 and OMP (COMM.) 241/2016, as also the fact that the withdrawal of OMP 198/2015 was unconditional, yet the petition remains barred by time. Finding no merit in the appeal, the same was dismissed.
Read full order of the court:
Both proceeding are pending i.e 138 NI act and execution of arbitration award of same amount ,it is legal