Introduction
‘Vigilantibus non dormentibus subvenit lex’, the law supports the waking, not the sleeping. This legal maxim means that the law favours those who are vigilant about their rights and seek to enforce them in a time-bound manner. This may be seen as the idea behind suits being barred by limitation. A limitation period has been provided for every kind of suit expiring which the suit becomes barred by limitation and unmaintainable. However, Section 5 of the Limitation Act, 1963 (hereinafter referred to as “the Limitation Act”) condones the delay and allows the admission of an application or appeal if sufficient cause is shown for the delay. Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the A&C Act”) has provisions on application for setting aside an arbitral award. Sub-section 3 stipulates a 3-month limitation period for an application under Section 34. If the court is satisfied that the applicant was prevented by sufficient cause from making the application within those three months, it may entertain the application within a further period of thirty days, but not thereafter. Section 43 of the A&C Act states that the Limitation Act shall apply to arbitrations as it applies to proceedings in court.
The question that has vexed the courts is whether a delay of more than 120 days (3 months and thirty days) can be condoned. In other words, is Section 5 of the Limitation Act applicable to applications under Section 34 of the A&C Act?
What has been held?
The issue was first categorically dealt by the Supreme Court in the case of Union of India v. Popular Construction, where it held that Section 5 of the Limitation Act could not be applied to an application under Section 34 of the A&C Act. The Apex Court, in BPDP/REO v. Scoot Wilson Kirpatrick , stated: “There can be no quarrel with the proposition that Section 5 of the Limitation Act providing for condonation of delay is excluded by Section 34(3) of the A&C Act”. It has been further reiterated and endorsed in later cases. Most notable of them are Consolidated Engineering Department v. Principal Secretary Irrigation Department, State of H.P. v. Himachal Techno Engineers, and Chintels India Ltd. v. Bhayana Builders.
The strands of reasoning adopted by the court in the Popular Construction case have two key arguments. The first is based on the use of the words ‘but not thereafter’ in Section 34(3) of the A&C Act. The second is based on the requirement under Section 34(1).
‘But not thereafter’
Section 29 of the Limitation Act contemplates solutions for a situation where any special law or local law provides for a period of limitation different from what is provided in the Act. In such a scenario, the provisions of the said Act (sections 4 to 24) will apply to the extent to which they are not expressly excluded by such special or local law. Use of the word ‘but not thereafter’ in Section 34(3) of the A&C Act has been interpreted as an express exclusion within the meanings of Section 29(2) of the Limitation Act.
The court in Popular Construction stated that as far as the language of Section 34 of the Arbitration Act is concerned, the crucial words are “but not thereafter” used in the proviso to sub-section (3). This would prevent Section 5 of the Limitation Act from being applied since it would be considered an express exclusion under Section 29(2) of the Limitation Act. The statement “but not thereafter” would be completely meaningless if the court were to rule that it could consider an application to set aside the award after the proviso’s prolonged length of time. The court relied on its judgment in Hukumdev Narain Yadav v. Lalit Narain Mishra for exclusion by necessary implication where the court held that ‘If on an examination of the relevant provisions it is clear that the provisions of the Limitation Act are necessarily excluded, then the benefits conferred therein cannot be called in aid to supplement the provisions of the Act’.
This argument has been endorsed and reproduced in later cases to exclude the application of Section 5 of the Limitation Act. In State of Goa v. Western Builders, the court reiterated: ‘His Lordship [In Popular Construction case] while interpreting the provision of Sub-section (3) of Section 34 has clearly observed that the words “but not thereafter” clearly indicate prohibition of applicability of Section 5 of the Limitation Act to that extent.’ Again, the Supreme Court in the Consolidated Engineering Department case holding Section 5 of the Limitation Act inapplicable noted that ‘the use of the words “but not thereafter” in the proviso makes it clear that even if a sufficient cause is made out for a longer extension, the extension cannot be beyond thirty days.’ The stand adopted in Popular Construction is well-accepted and well-established.
‘In accordance with sub-section 2 and 3’
Sub-section 1 of section 34 of the A&C Act gives recourse to approach court against an arbitral award. This can only be done by making an application in accordance with Section 34(2) and 34(3). Where the delay is beyond that can be condoned under Section 34(3), the application does not fulfil the criteria under Sub-section 1.
Ruma Pal J in Popular Construction observed that Section 34(1) explicitly states that the only way to challenge an arbitral award in court is to apply to have the award set aside “in accordance with” Sub-sections (2) and (3). However, an application submitted beyond the deadline specified in Section 34(3), would not be considered to be submitted “in accordance with” that subsection. Consequently, by virtue of Section 34(1), recourse to the court against an arbitral award cannot be made beyond the period prescribed.” This point was also emphasized in Consolidated Engineering Department and Chintels India Ltd. The veracity of this argument may be called into question. The whole purpose of the condonation of delay is to condone the deviance from the stipulations of law. Denying an application to condone the delay on the ground that the delay is not in accordance with the law militates against its purpose.
Perhaps Ruma Pal J saw this too and strengthened his argument by emphasizing on Section 36 of the Arbitration Act. Section 36 of the Arbitration Act states: ‘where the time for making an application to set aside the arbitral award under Section 34 has expired, then, such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were a decree of the court.’ If after expiry of the period given in Section 34, the award is to be treated like a decree, it very much ends this discussion. Justice Ruma Pal’s comment in Popular Construction seems appropriate to reproduce now: “The award now becomes instantly enforceable without further judicial action as a result of the time limit expiring under Section 34 of the Arbitration Act. In the event that there remained any uncertainty over the meaning of the language employed in Section 34 the Arbitration Act’s design would settle the matter in favour of limiting the court’s authority by eliminating the application of Section 5 of the Limitation Act.”
Conclusion
The ambiguity which has arisen from reading various provisions of the Limitation Act and the AC Act with regard to the applicability of Section 5 of the Limitation Act to application under Section 34 of the Arbitration Act has been put to rest. In a 2021 case, the Supreme Court stated that it had made it clear that Section 5 of the Limitation Act does not apply and that any delay beyond 120 days cannot be condoned. It is evident from reading relevant cases that the interpretation in PopularConstruction has been accepted without any or much contention
Author(s)
Naman Pratap Singh
Student at Jamia Milia Islamia, New Delhi
Hammad Siddiqui
Student at Jamia Milia Islamia, New Delhi