Objections to Award & Limitation : The Law

Justice RM Lodha
Supreme Court of India

The Supreme Court in Assam Urban Water Supply & Sew. Board Vs. Subash Projects & Marketing Ltd. was faced with the question whether the appellants were entitled to extension of time under Section 4 of the Limitation Act Act. While answering the question in negative, the Supreme Court has recapitulated the law relating to limitation for filing objections to an award under Section 34 of the Arbitration and Conciliation Act, 1996. We have dealt with a similar post earlier where Justice Aftab Alam has dealt with the law relating to limitation in filing objections under Section 34 of the Act.

7. Section 34(3) of the 1996 Act provides that an application for setting aside an award may be made within three months of the receipt of the arbitral award. The proviso that follows sub- section (3) of Section 34 provides that on sufficient cause being shown, the court may entertain the application for setting aside the award after the period of three months and within a further period of 30 days but not thereafter. 

8. In Popular Construction Co. (supra), this Court has held that an application for setting aside an award filed beyond the period mentioned in Section 34(3) would not be an application "in accordance with sub-section (3) as required under Section 34(1) of the 1996 Act" and Section 5 of the 1963 Act has no application to such application. In para 12 of the report, it was held in Popular Construction Co. (supra) thus:- 

"12. As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are "but not thereafter" used in the proviso to sub-section (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of the Act. Parliament did not need to go further. To hold that the court could entertain an application to set aside the award beyond the extended period under the proviso, would render the phrase "but not thereafter" wholly otiose. No principle of interpretation would justify such a result". 

9. Recently, in the State of Maharashtra Vs. Hindustan Construction Company Limited, (2010) 4 SCC 518, a two Judge Bench of this Court speaking through one of us (R.M. Lodha, J.) emphasised the mandatory nature of the limit to the extension of the period provided in proviso to Section 34(3) and held that an application for setting aside arbitral award under Section 34 of the 1996 Act has to be made within the time prescribed under sub-section (3) of Section 34, i.e., within three months and a further period of 30 days on sufficient cause being shown and not thereafter. 

10. Section 43(1) of the 1996 Act provides that the 1963 Act shall apply to arbitrations as it applies to proceedings in court. The 1963 Act is thus applicable to the matters of arbitration covered by the 1996 Act save and except to the extent its applicability has been excluded by virtue of the express provision contained in Section 34(3) of the 1996 Act. 

11. The facts in the present case are peculiar. The arbitral awards were received by the appellants on August 26, 2003. No application for setting aside the arbitral awards was made by the appellants before elapse of three months from the receipt thereof. As a matter of fact, three months from the date of the receipt of the arbitral award by the appellants expired on November 26, 2003. The District Court had Christmas vacation for the period from December 25, 2003 to January 1, 2004. On reopening of the court, i.e., on January 2, 2004, admittedly, the appellants made applications for setting aside those awards under Section 34 of the 1996 Act. If the period during which the District Court, Kamrup, Guwahati, remained closed during Christmas vacation, 2003 is extended and the appellants get benefit of that period over and above the cap of thirty days as provided in Section 34(3), then the view of the High Court and the District Judge cannot be sustained. But this would depend on the applicability of Section 4 of the 1963 Act. The question, therefore, that falls for our determination is - whether the appellants are entitled to extension of time under Section 4 of the 1963 Act in the above facts. 

12. Section 4 of the 1963 Act reads as under :- 

"4. Expiry of prescribed period when court is closed.-Where the prescribed period for any suit, appeal or application expires on a day when the court is closed, the suit, appeal or application may be instituted, preferred or made on the day when the court reopens. Explanation.-A court shall be deemed to be closed on any day within the meaning of this section if during any part of its normal working hours it remains closed on that day." 

13. The above Section enables a party to institute a suit, prefer an appeal or make an application on the day court reopens where the prescribed period for any suit, appeal or application expires on the day when the court is closed. The crucial words in Section 4 of the 1963 Act are 'prescribed period'. What is the meaning of these words? Section 2(j) of the 1963 Act defines 'period of limitation' which means the period of limitation prescribed for any suit, appeal or application by the Schedule, and 'prescribed period' means the period of limitation computed in accordance with the provisions of this Act. Section 2(j) of the 1963 Act when read in the context of Section 34(3) of the 1996 Act, it becomes amply clear that the prescribed period for making an application for setting aside arbitral award is three months. The period of 30 days mentioned in proviso that follows sub-section (3) of Section 34 of the 1996 Act is not the 'period of limitation' and, therefore, not 'prescribed period' for the purposes of making the application for setting aside the arbitral award. The period of 30 days beyond three months which the court may extend on sufficient cause being shown under the proviso appended to sub-section (3) of Section 34 of the 1996 Act being not the 'period of limitation' or, in other words, 'prescribed period', in our opinion, Section 4 of the 1963 Act is not, at all, attracted to the facts of the present case. 

14. Seen thus, the applications made by the appellants on January 2, 2004, for setting aside the arbitral award dated August 26, 2003 were liable to be dismissed and have rightly been dismissed by the District Judge, Kamrup, Guwahati, as time barred.

Related Post :

Challenge to Arbitration Award & Limitation : The Law

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Appointment of Arbitrator under Section 11 (6) of the Arbitration & Conciliation Act, 1996 - Failure to appoint within 30 days - Effect

Justice S. Muralidhar

The Delhi High Court in Intuitive Tech Solutions Pvt. Ltd. v. DLF Ltd. has recapitulated the legal position in cases where a party fails to appoint an arbitrator despite a request to do so by the other party, within the statutory period as prescribed in the Arbitration & Conciliation Act, 1996. While following the dicta laid down by the Hon'ble Supreme Court in Datar Switchgears Limited v. Tata Finance Limited, the Delhi High Court held as under;

11. The question whether the Respondent has forfeited its right to appoint an Arbitrator can be answered on an analysis of the facts of the present case. The documents placed on record show that the Petitioner's legal notice dated 14th September 2011 invoking the arbitration clause was received by the Respondent on 16th September 2011. However, the said notice was not in conformity with the arbitration clause since the Petitioner proposed that the appointment of an Arbitrator be done by the Respondent 'in consultation' with the Petitioner. This was contrary to the express wording of Clause 32 (b) of the Agreement. Even assuming that the notice invoking the arbitration clause was received by the Respondent on 16th September 2011, the date of appointment of the Arbitrator by the Respondent is significant. Although the letter of counsel for the Respondent informing the Petitioner of the Arbitrator is dated 17th October 2011, and dispatched on 20th October 2011, the actual decision to appoint the Arbitrator must have been taken some time prior to the said letter dated 17th October 2011.

12. In Datar Switchgears Limited v. Tata Finance Limited in para 19 it was observed as under:

"19. So far as cases falling under Section 11(6) are conceded such as the one before us no time limit has been prescribed under the Act, whereas a period of 30 days has been prescribed Under Section 11(4) and Section11(5) of the Act. In our view, therefore, so far as Section 11(6) is concerned, if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand, but before the first party has moved the Court under Section 11, that would be sufficient. In other words, in cases arising under Section 11(6), if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 seeking appointment of an arbitrator. Only then the right of the opposite party ceases. We do not, therefore, agree with the observation in the above judgments that if the appointment is not made within 30 days of demand, the right to appoint an arbitrator under Section 11(6) is forfeited." (emphasis supplied)

13. The above decision was reiterated in Punj Lloyd Limited v. Petronet MHB Limited and in a recent decision dated 9th January 2012 of the Supreme Court in Arbitration Petition No. 11 of 2011 [Denel (Proprietary Limited) v. Government of India, Ministry of Defence]. Consequently, for the purposes of Section 11, it requires to be seen is whether the appointment of the Arbitrator by the Respondent has taken place prior to the filing of the present petition on 19th October 2011.

14. It was contended by learned counsel for the Petitioner that since the notice dated 17th October 2011 was dispatched only on 20th October 2011 the appointment of the Arbitrator took place after the filing of the present petition on 19th October 2011. The above submission fails to appreciate that the actual date of appointment of the Arbitrator by the Respondent had to be prior to the notice dated 17th October 2011. The date of dispatch of the letter intimating the appointment cannot `postpone' the date of appointment. It is not possible, on the basis of the documents placed on record, to hold that the appointment of the Arbitrator by the Respondent took place after the filing of the present petition. In accordance with the law explained by the Supreme Court in Datar Switchgears Limited v. Tata Finance Limited, it is held that the Respondent did not forfeit its right to appoint an Arbitrator in terms of Clause 32 (b) of the Agreement.

Call for Papers : School of Law, Christ University Inaugural Law Journal

Image Courtesy : Christ University

Call for Papers : School of Law, Christ University Inaugural Law Journal

With great pleasure, the Journals and Publications Society, School of Law, Christ University, invites contributions on current or contemporary issues of law for the inaugural peer-reviewed edition of its Law Journal to be published in March, 2012. The Journal is an effort by the Journals and Publications Society to promote and encourage legal research and writing in the legal community. The School of law, Christ University welcomes original and well researched submissions from legal professionals, activists, academics and students. We hope this maiden attempt on our part will effectively contribute in enriching legal literature. 

Submission Guidelines

1. Submissions entertained would be under the following heads:

i. Articles: 4000-8000 words;

ii. Comments and Book Reviews: 1500-4000 words;

iii. Notes: 2500-5000 words.

2. Method of submission: Submission to the Journal can be made by e-mailing a copy of the manuscript or by posting the hard copy of the same. All submissions should be double-spaced in font size 12 following the Times New Roman format. One-inch margins should be left on both sides of the text and at the top and bottom. We encourage authors to submit their manuscripts in Microsoft Word Format and to use gender neutral language. The manuscript must not bear identification of any kind. 

3. References and Citation: We prefer the use of footnotes rather than endnotes, in size 10 following a line spacing of 1.5. The style of citation should conform to the 19th edition of The Bluebook.

4. Abstract: The manuscript must be accompanied by an abstract, not exceeding 300 words.

5. Book Review: All Book Reviews must embody all relevant information pertaining to the book being reviewed. The Review must include: title of the book; name(s) of editor(s), author(s); place of publication; name of the publisher; year of publication; number of pages of the book; and price of the book.

Procedure for submission

The submissions to the Journal can be made through e-mail or sending by post. In case of post or courier, all manuscripts must be addressed to:

Journals and Publications Society,

School of Law Christ University,

Hosur Road,

Bangalore – 560029,

Karnataka, India.

In case of submission through e-mail, a copy of the manuscript should be mailed to journals@law.christuniversity.in

Covering Letter: All submissions, both hard and electronic copies, must be attached with a covering letter mentioning the name of the author, occupation, title of the manuscript and contact address, for future reference.

Date of Submission: The last date for submission is 20th February, 2012.

For further details please contact:

Chahat Chawla: +91 8105003327

Sarah M. Mattew: +91 9008960788

Rohan Virdi: +91 8951461334

Abhishek Sharma: +91 8147387119