2018 (12) TMI 388 - SC - Indian Laws

Condonation of delay in delay of 514 days in filing an application under Section 34 of the Arbitration and Conciliation Act 1996 -benefit of Sections 5 and Section 14 of the Limitation Act - Differences with regard to the performance of the construction work - reference to Arbitration - prayer for setting aside the arbitral award. Whether the learned Single Judge was justified in condoning a delay of 514 days by the respondent in filing the application under Section 34? Held that - The position of law is well settled with respect to the applicability of Section14 of the Limitation Act to an application filed under Section 34 of the 1996 Act. A plain reading of sub-section (3) along with the proviso to Section 34 of the 1996 Act shows that the application for setting aside the award on the grounds mentioned in sub-section (2) of Section 34 could be made within three months and the period can only be extended for a further period of thirty days on showing sufficient cause and not thereafter. The use of the words but not thereafter in the proviso makes it clear that the extension cannot be beyond thirty days. Even if the benefit of Section 14 of the Limitation Act is given to the respondent there will still be a delay of 131 days in filing the application. That is beyond the strict timelines prescribed in sub-section (3) read along with the proviso to Section 34 of the 1996 Act. The delay of 131 days cannot be condoned. To do so as the High Court did is to breach a clear statutory mandate. The respondent received the arbitral award on 31 October 2014. Exactly ninety days after the receipt of the award the respondent filed an application under Section 34 of the 1996 Act before the District Judge Port Blair on 30 January 2015. On 12 February 2016 the District Judge dismissed the application for want of jurisdiction and on 28 March 2016 the respondent filed an application before the High Court under Section 34 of the 1996 Act for setting aside the arbitral award. After the order of dismissal of the application by the District Judge the respondent took almost 44 days - Hence even if the respondent is given the benefit of the provision of Section 14 of the Limitation Act in respect of the period spent in pursuing the proceedings before the District Judge Port Blair the petition under Section 34 was filed much beyond the outer period of ninety days. In view of the period of limitation prescribed in Section 34(3) the learned Single Judge of the High Court was not justified in condoning the respondent s delay of 514 days in filing the application - The petition under Section 34 stands dismissed on the ground that it is barred by limitation.

Issues Involved:
1. Jurisdiction of the District Judge, Port Blair under Section 34 of the Arbitration and Conciliation Act, 1996.
2. Applicability of Sections 5 and 14 of the Limitation Act, 1963 to an application under Section 34 of the Arbitration and Conciliation Act, 1996.
3. Justification for condoning a delay of 514 days in filing an application under Section 34 of the Arbitration and Conciliation Act, 1996.

Detailed Analysis:

1. Jurisdiction of the District Judge, Port Blair under Section 34 of the Arbitration and Conciliation Act, 1996:
The appellant, a contractor, entered into an agreement with the Union of India for the construction of permanent shelters in the Andaman and Nicobar Islands. Due to differences in the performance of the contract, the matter was referred to arbitration. The arbitrator made an award in favor of the appellant on 27 October 2014, which the respondent received on 31 October 2014. Aggrieved by the award, the respondent filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 on 30 January 2015 before the District Judge, Port Blair. The District Judge dismissed the application on 12 February 2016 for want of jurisdiction, citing Section 42 of the Arbitration and Conciliation Act, which mandates that all subsequent applications arising out of an arbitration agreement should be made in the court where the first application was filed, in this case, the High Court of Calcutta.

2. Applicability of Sections 5 and 14 of the Limitation Act, 1963 to an application under Section 34 of the Arbitration and Conciliation Act, 1996:
The respondent subsequently filed an application under Section 34 before the High Court of Calcutta on 28 March 2016, along with an application for condonation of a delay of 514 days. The High Court condoned the delay, stating that sufficient cause had been shown. The Supreme Court needed to assess whether the benefit of Sections 5 and 14 of the Limitation Act could be extended to the respondent.

Section 5 of the Limitation Act, 1963:
Section 5 deals with the extension of the prescribed period for any appeal or application if the applicant satisfies the court that there was sufficient cause for the delay. However, this section does not apply to applications challenging an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996. This position was affirmed by the Supreme Court in Union of India v Popular Construction Company, where it was held that the time-limit prescribed under Section 34 is absolute and unextendible by court under Section 5 of the Limitation Act.

Section 14 of the Limitation Act, 1963:
Section 14 deals with the exclusion of time spent in bona fide proceedings in a court without jurisdiction. The Supreme Court in Consolidated Engineering Enterprises v Principal Secretary, Irrigation Department held that there is no provision in the Arbitration and Conciliation Act, 1996 that excludes the applicability of Section 14 of the Limitation Act to an application under Section 34. Therefore, the time spent in prosecuting the application before the District Judge, Port Blair, could be excluded.

3. Justification for condoning a delay of 514 days in filing an application under Section 34 of the Arbitration and Conciliation Act, 1996:
The Supreme Court considered whether the delay of 514 days could be condoned. Even after excluding the period spent in the wrong forum under Section 14 of the Limitation Act, there was still a delay of 131 days. Section 34(3) of the Arbitration and Conciliation Act, 1996, prescribes a strict timeline for filing an application to set aside an arbitral award, which is three months, extendable by another thirty days but not thereafter. The Supreme Court held that the delay of 131 days could not be condoned as it was beyond the statutory period prescribed by Section 34(3).

Conclusion:
The Supreme Court set aside the judgment of the learned Single Judge of the High Court of Calcutta, holding that the application under Section 34 was barred by limitation. The appeal was allowed, and the petition under Section 34 was dismissed on the ground of being time-barred. There was no order as to costs.

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