Supreme Court: Limitation period for setting aside an arbitral award cannot be extended.

07 May 2024 8:19 AM

By: Admin

April 10, 2023: In a recent judgment, the Supreme Court of India has ruled that the period of limitation prescribed under the Arbitration and Conciliation Act, 1996 shall prevail over the period of limitation prescribed under the Limitation Act, 1963. The judgment was delivered by a bench comprising of Justices M. R. Shah and Krishna Murari on April 10, 2023.

The case pertained to a dispute between a contractor and the National Highways Authority of India (NHAI) over the construction of a highway. The contractor had challenged the arbitral award passed against it by filing an application under Section 34 of the Arbitration and Conciliation Act, 1996. However, the application was filed beyond the period of limitation prescribed under Section 34(3) of the Act, which is three months from the date of receipt of the award, or the time limit mutually agreed upon by the parties.

The contractor sought to condone the delay in filing the application by relying on Section 5 of the Limitation Act, which provides for the extension of the period of limitation in certain circumstances. However, the High Court and the lower court refused to condone the delay and dismissed the application as time-barred.

In its judgment, the Supreme Court observed that the Limitation Act, 1963 shall apply to arbitrations as it applies to proceedings in court, as provided under Section 43(1) of the Arbitration and Conciliation Act, 1996. However, the Court also held that the period of limitation prescribed under the Arbitration and Conciliation Act, 1996 shall prevail over the period of limitation prescribed under the Limitation Act, 1963, except to the extent its applicability has been excluded by virtue of an express provision contained in Section 34(3) of the Arbitration Act.

The Court further observed that an application challenging an arbitral award filed beyond the period mentioned in Section 34(3) of the Arbitration Act would not be an application “in accordance with” subsection (3) as required under Section 34(1) of the Arbitration Act. The Court also emphasized the mandatory nature of the limit to the extension of the period provided in the proviso to Section 34(3) and held that an application for setting aside an arbitral award under Section 34 of the Arbitration Act has to be made within the time prescribed under subsection (3) of Section 34 i.e. within three months and a further period of 30 days on sufficient cause being shown and not thereafter.

Supreme Court dismissed the contractor's appeal and held that the High Court and the lower court had not committed any error in refusing to condone the delay caused in preferring the application under Section 34 of the Arbitration and Conciliation Act, 1996, which was beyond the period prescribed under Section 34(3) of the Act. The Court also held that the present appeal deserved to be dismissed.

Bhimashankar Sahakari Vs Walchandnagar Industries