No Wholesale Exclusion Of Sections 4-24 Of Limitation Act When Calculating Limitation Period U/S 34(3) Of A&C Act: SC
The Supreme Court held that there is no wholesale exclusion of Sections 4 to 24 of the Limitation Act, 1963 when calculating the limitation period under Section 34(3) of the Arbitration and Conciliation Act, 1996 (A&C Act).
The Court held thus in a Civil Appeal against the Judgment of the High Court by which it dismissed a Petition as barred by limitation.
The two-Judge Bench comprising Justice P.S. Narasimha and Justice Pankaj Mithal observed, “There is no wholesale exclusion of Sections 4 to 24 of the Limitation Act when calculating the limitation period under Section 34(3) of the ACA. … Section 4 of the Limitation Act applies to Section 34(3) of the ACA only to the extent when the 3-month period expires on a court holiday. It does not aid the applicant when the 30-day condonable period expires on a court holiday. … In view of the applicability of Section 4 of the Limitation Act to Section 34 proceedings, Section 10 of the GCA does not apply and will not benefit the applicant when the 30- day condonable period expires on a court holiday.”
The Bench said that Section 29(2) of the Limitation Act stipulates that where any special or local law prescribes a period of limitation that is different from the Schedule, Section 3 of the Limitation Act shall apply as if such period is the one prescribed in the Schedule.
Senior Advocate Neeraj Kishan Kaul appeared on behalf of the Appellants while Advocate Syed Ahmed Naqvi appeared on behalf of the Respondent.
Brief Facts -
The Appellants entered into lease agreements with the Respondent who was the owner of a property. Pursuant to certain disputes, the Respondent invoked arbitration and an Arbitral Award was made in its favour. The Appellants received a scanned copy of the award by email on February 4, 2022 itself, and later received a signed hard copy of the award on February 14, 2022, from which day limitation must be calculated. The 3-month limitation period under Section 34(3), after considering the extension of limitation by operation of the Supreme Court’s Order on account of the COVID-19 pandemic, expired on May 29, 2022.
The further 30-day condonable period expired on June 28, 2022. This fell during the High Court’s summer vacation between June 4, 2022 and July 3, 2022. The Appellants filed the Section 34 Petition along with an Application for condonation of delay on the date when the Court reopened, i.e., July 4, 2022. In the meanwhile, the Respondent filed for execution of the award. The Section 34 Petition was dismissed by the Single Judge as being barred by limitation and the Division Bench upheld the same. Being aggrieved, the Appellants approached the Apex Court.
The Supreme Court in view of the above facts, noted, “Once it is clear that the Limitation Act generally applies to arbitrations and court proceedings under the ACA, it is necessary to consider its applicability to Section 34 proceedings.”
The Court explained that an Application to set aside an arbitral award under Section 34 must be within 3 months from the receipt of the award or the date of disposal of a request under Section 33 and the Court may exercise discretion to entertain the Application, within a further period of 30 days, if sufficient cause is shown, but not thereafter.
“The mere prescription of a period of limitation that is different from the Limitation Act, even if mandatory and compulsory, is not sufficient to displace the applicability of the Limitation Act’s provisions.20 However, an exclusion of the Limitation Act’s provisions can be inferred if the nature and language of the provisions, and the scheme of the special law necessarily exclude the applicability of one or more of the provisions contained in ections 4 to 24 of the Limitation Act”, it remarked.
The Court reiterated that an express reference to an exclusion is not essential and the Court can examine the language of the special law and its scheme to arrive at a conclusion that certain provisions of the Limitation Act are impliedly excluded.
The Court further summarised the following important points –
• Section 4 of the Limitation Act applies to Section 34(3) of the A&C.
• Section 4 of the Limitation Act benefits a party only when the “prescribed period’’, i.e. the 3-month limitation period under Section 34(3) expires on a court holiday. In such a situation, the application under Section 34 will be considered as having been filed within the limitation period if it is filed on the next working day of the Court.
• Section 4 of the Limitation Act does not come to the aid of the party when the 3-month limitation period expires on a day when the court was working. The 30-day condonable period expiring during the Court holidays will not survive and neither Section 4, nor any other provision of the Limitation Act, will inure to the benefit of the party to enable filing of the Section 34 application immediately after reopening.
The Court elucidated that since Section 4 of the Limitation Act applies to proceedings under Section 34 of the A&C Act, the applicability of Section 10 of the General Clauses Act (GCA), 1897 stands excluded in view of the express wording of its proviso that excludes the applicability of the provision when the Limitation Act applies.
“The purpose of reading the Limitation Act alongside the ACA is not to restrict the special remedy under the ACA, but to enable exercise of such remedy in circumstances as contemplated under the Limitation Act. In this context, Section 29(2) of the Limitation Act becomes relevant as it incorporates Sections 4 to 24 of the Limitation Act in special statutes, including the ACA, to the extent that its provisions are not expressly excluded”, it also emphasised.
The Court added that the language of Section 34(3) read with its proviso does not expressly or impliedly exclude Section 4 of the Limitation Act and this interpretation is in consonance with the important principle contemplated under Section 29(2) to protect rights and remedies.
“The substantive remedies available under Sections 34 and 37 of the ACA are, by their very nature, limited in their scope due to statutory prescription. It is therefore necessary to interpret the limitation provisions liberally, or else even the limited window available to parties to challenge an arbitral award will be lost. … If this limited remedy is denied on stringent principles of limitation, it will cause great prejudice and has the effect of (a) denying the remedy, and (b) in the long run, it will have the effect of dissuading contracting parties from seeking resolution of disputes through arbitration. This is against public policy”, it further said.
The Court held that the additional period of 30 days specifically provided under the A&C Act loses its efficacy and purpose, and becomes untenable due to the current position of law. It concluded that once the Court commenced disapplying provisions of the Limitation Act to the A&C Act on the ground of implied exclusions, it is only a matter of interpretation to include or exclude provisions from Sections 4 to 24 of the Limitation Act on a case-to-case basis.
In his concurrent opinion, Justice Pankaj Mithal said, “The appellants are not entitled even to any benefit as per Section 10 of the General Clauses Act2, 1897 which also permits the filing of a petition on the re-opening of the court where the last day of prescribed period for filing it falls or expires on the day on which the court is closed. … Therefore, by proviso to Section 10 of GC Act, Section 10 of the GC Act stands excluded and would not be attracted to accord any benefit to the appellants.”
He observed that the period of limitation prescribed for instituting a suit or filing an Appeal or making an Application has to be distinguished from a condonable period which cannot be made part of the period of limitation prescribed.
“… all new/recent enactments are deviating from the prescribed period of limitation as per the Schedule of the Limitation Act and are generally prescribing its own period of limitation as under the A & C Act itself. At the same time, statutes further provide that the delay beyond a certain period cannot be condoned by the court. This is obviously in deviation to what is prescribed by Section 5 of the Limitation Act”, he also remarked.
He further emphasised that the statutes ought not to provide different period of limitation for instituting suit, preferring Appeal, and making an Application, rather all statutes should stick to a uniform period of limitation say 90 days for preferring Special Leave Petition/Appeal to the Supreme Court. It added that the Courts should be empowered to condone the delay if sufficient cause is shown for not filing it within the time prescribed rather than restricting the condonable period to a fix period of 15 days or 30 days as provided in some of the statutes.
“… the legislature ought not to confine condoning the delay only for a prescribed period and not beyond it. Rather it should follow the principle of condoning the delay as enshrined under Section 5 of the Limitation Act. This would not only avoid a good case to be thrown out on the ground of limitation but at the same time would bring about uniformity in law”, he concluded.
Accordingly, the Apex Court dismissed the Appeal.
Cause Title- My Preferred Transformation & Hospitality Pvt. Ltd. & Anr. v. M/s Faridabad Implements Pvt. Ltd. (Neutral Citation: 2025 INSC 56)
Appearance:
Appellants: Senior Advocate Neeraj Kishan Kaul, AOR Harsh Kaushik, and Advocate Adrija Mishra.
Respondent: AOR Aruna Gupta, Advocates Syed Ahmed Naqvi, Simran Mehta, Ramesh Allanki, and Amit Kumar.
