2018 (11) TMI 1529 - SC - Indian Laws

Condonation of a delay caused on the account of alleged fraud played on the objector beyond the period prescribed under Section 34 (3) of the Arbitration and Conciliation Act of 1996 - applicability of Section 17 of the Limitation Act, 1963. Held that - This Court in several pronouncements has extended Section 14 of Limitation Act to Section 34 of Arbitration Act and thereby excluded the time spent in bonafide pursuing proceedings in a Court which lacks jurisdiction - Similarly, this Court also extended Section 12 of the Limitation Act to the Arbitration Act and excluded the day on which the Award was received from computing the starting period under Section 34(3). Extending Section 17 of the Limitation Act would go contrary to the principle of unbreakability enshrined under Section 34(3) of the Arbitration Act. Section 17 does not defer the starting point of the limitation period merely because the Appellants has committed fraud. Section 17 does not encompass all kinds of frauds and mistakes. Section 17(1)(b) and (d) only encompasses only those fraudulent conduct or act of concealment of documents which have the effect of suppressing the knowledge entitling a party to pursue its legal remedy. Once a party becomes aware of the antecedent facts necessary to pursue a legal proceeding, the limitation period commences. In the context of Section 34, a party can challenge an award as soon as it receives the award. Once an award is received, a party has knowledge of the award and the limitation period commences. The objecting party is therefore precluded from invoking Section 17(1)(b) (d) once it has knowledge of the Award. Section 17(1)(a) and (c) of Limitation Act may not even apply, if they are extended to Section 34, since they deal with a scenario where the application is based upon the fraud of the respondent or if the application is for relief from the consequences of a mistake . Section 34 application is based on the award and not on the fraud of the respondent and does not seek the relief of consequence of a mistake. Thus, Once the party has received the Award, the limitation period under Section 34(3) of the Arbitration Act commences. Section 17 of the Limitation Act would not come to the rescue of such objecting party. In the present case, the Respondents had a right to challenge the Award under Section 34 the moment they received it. In this case, Respondents received the Award on 21.02.2010. The alleged MoU was executed on 09.04.2010. Once the Respondents received the Award, the time under Section 34(3) commenced and any subsequent disability even as per Section 17 or Section 9 of Limitation Act is immaterial. Merely because the Appellant had committed some fraud, it would not affect the Respondents right to challenge the Award if the facts entitling the filing of a Section 34 Application was within their knowledge - The moment the Respondents have received the Award, the three months period prescribed under Section 34(3) begins to commence. It was incumbent on the Respondents to have instituted an application under Section 34 challenging an award. Therefore, in light of the discussion above, there would not have been any point for meaningful remand as the question of law is answered against the Respondents herein. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Applicability of Section 17 of the Limitation Act, 1963 for condoning delay in filing objections under Section 34(3) of the Arbitration and Conciliation Act, 1996.
2. Whether the High Court was correct in remanding the matter to the trial court for reconsideration of the applicability of Section 17 of the Limitation Act.

Detailed Analysis:

1. Applicability of Section 17 of the Limitation Act, 1963:

The central issue in these appeals was whether Section 17 of the Limitation Act, 1963, which deals with the effect of fraud or mistake on the limitation period, could be applied to extend the time for filing objections under Section 34(3) of the Arbitration and Conciliation Act, 1996. The court noted that Section 34(3) of the Arbitration Act is a special provision prescribing a specific limitation period for challenging an arbitral award, which starts from the date the award is received by the party. The court emphasized that Section 34(3) includes a proviso allowing a further period of thirty days for condonation of delay but explicitly states "but not thereafter," indicating a strict and unbreakable time limit.

The court examined Section 29(2) of the Limitation Act, which allows the application of Sections 4 to 24 of the Limitation Act to special or local laws unless expressly excluded. The court found that the language and scheme of Section 34(3) of the Arbitration Act, particularly the phrase "but not thereafter," constituted an express exclusion of Section 17 of the Limitation Act. The court underscored that extending Section 17 to Section 34(3) would contradict the legislative intent of providing a speedy dispute resolution mechanism under the Arbitration Act and would undermine the finality of arbitral awards.

2. High Court's Remand Order:

The High Court had remanded the matter to the trial court to reconsider the applicability of Section 17 of the Limitation Act in the context of Section 34 of the Arbitration Act. The Supreme Court found that the High Court could have directly addressed the legal issue of the applicability of Section 17, as it was a pure question of law. The Supreme Court held that remanding the matter would cause unnecessary delays and frustrate the objective of speedy dispute resolution. The court reiterated that once an arbitral award is received, the limitation period under Section 34(3) commences, and any subsequent fraud or mistake does not affect this period. The court concluded that the High Court's remand order was unnecessary and set it aside.

Conclusion:

The Supreme Court held that Section 17 of the Limitation Act does not apply to extend the time for filing objections under Section 34(3) of the Arbitration Act. The court set aside the High Court's remand order and the trial court's order condoning the delay in filing objections. The appeals were allowed, and no costs were awarded.