2006 (7) TMI 581 - SC - Companies Law

Whether Section 14 of the Limitation Act, 1963 is applicable to the Arbitration Act, 1996 or not? Held that - There is no two opinion in the matter that the Arbitration and Conciliation Act, 1996 do not expressly excluded the applicability of Section 14 of the Limitation Act. The view taken by the court below excluding the applicability of Section 14 in this proceeding is not correct. We hold that section 14 of the Limitation Act, 1963 is applicable in the Arbitration and Conciliation Act, 1996. We set aside all the judgments/Order and remand all these cases back to the Trial Court/District Court for deciding the application under Section 14 of Limitation Act on merit after hearing both the parties and in case the delay is condoned then the case should be decided on merits after hearing all the concerned parties. All the appeals are allowed.

Issues Involved:

1. Applicability of Section 14 of the Limitation Act, 1963 to the Arbitration and Conciliation Act, 1996.
2. Jurisdiction of Civil Court under the Arbitration Act, 1940 versus the Arbitration and Conciliation Act, 1996.
3. Condonation of delay under Section 14 read with Section 5 of the Limitation Act, 1963.

Detailed Analysis:

1. Applicability of Section 14 of the Limitation Act, 1963 to the Arbitration and Conciliation Act, 1996:

The primary issue in these appeals is whether Section 14 of the Limitation Act, 1963 applies to the Arbitration and Conciliation Act, 1996. The court noted that Section 43 of the Arbitration and Conciliation Act, 1996 explicitly states that the Limitation Act, 1963 shall apply to arbitrations as it applies to proceedings in court. This means that, generally, the Limitation Act is applicable to arbitration proceedings. However, the question was whether the specific provisions of the Arbitration Act, 1996, particularly Section 34(3), exclude the applicability of Section 14 of the Limitation Act.

Section 34(3) of the Arbitration Act, 1996 prescribes a period of three months for setting aside an arbitral award, extendable by a further 30 days but not thereafter. The court interpreted that this provision excludes the application of Section 5 of the Limitation Act, which allows for the extension of the prescribed period for sufficient cause. However, the court found no express exclusion of Section 14 of the Limitation Act, which deals with the exclusion of time spent in bona fide prosecution of a remedy before a court without jurisdiction. Therefore, the court concluded that Section 14 of the Limitation Act is applicable to the Arbitration and Conciliation Act, 1996.

2. Jurisdiction of Civil Court under the Arbitration Act, 1940 versus the Arbitration and Conciliation Act, 1996:

The dispute arose under the Arbitration Act, 1940, but the proceedings were conducted under the Arbitration and Conciliation Act, 1996. The Civil Judge, Senior Division, held that under the 1996 Act, there is no provision for making the award a rule of the court, and the award can be executed as a decree. Consequently, the proceedings were deemed to be governed by the 1996 Act. The court affirmed that the 1996 Act is a complete code in itself and that the 1940 Act is not applicable once the 1996 Act is in force.

3. Condonation of delay under Section 14 read with Section 5 of the Limitation Act, 1963:

The State of Goa sought condonation of delay under Section 14 read with Section 5 of the Limitation Act, 1963, arguing that the time spent in proceedings before the Civil Judge, Senior Division, should be excluded. The IInd Additional District Judge, South Goa, rejected this application, stating that there is no provision for extension of time under the 1996 Act and that Section 14 of the Limitation Act is not applicable.

The Supreme Court analyzed the provisions and concluded that while Section 5 of the Limitation Act is excluded by Section 34(3) of the Arbitration Act, 1996, there is no express provision excluding Section 14. The court emphasized that the legislative intent, as reflected in Section 43 of the Arbitration Act, 1996, is to apply the Limitation Act to arbitration proceedings unless expressly excluded. The court held that Section 14 of the Limitation Act, which allows for the exclusion of time spent in bona fide prosecution of a remedy before a court without jurisdiction, is applicable to the Arbitration and Conciliation Act, 1996.

Conclusion:

The Supreme Court set aside the judgments/orders of the lower courts and remanded the cases back to the Trial Court/District Court to decide the application under Section 14 of the Limitation Act on merit. The court directed that if the delay is condoned, the cases should be decided on merits after hearing all concerned parties. The appeals were allowed with no order as to costs.

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