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TMI Blog2018 (11) TMI 1529X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 and Respondent Nos. 1 and 2). 4. After the death of Mr. Kishan Lal, several disputes have cropped up on the division of properties. Having failed to resolve the dispute, the parties turned towards arbitration to resolve the dispute. Five Arbitrators were appointed to adjudicate and distribute eleven properties belonging to them. 5. On 18.02.2010, the arbitrators passed a unanimous Award providing for the division of properties and businesses. The parties received the Award on 21.02.2010. There is no dispute on the receipt of the Award by the parties. 6. The Respondents allege that after the pronouncement of the award, the Appellants in bad faith entered into a Memorandum of Understanding (MoU) with the Respondents. According to the Respondents, the Appellants agreed to give certain additional properties to Respondent No. 1, which were more than what were provided in the Award. The Respondents alleged that after entering into the MoU, the Appellants were required to execute Gift and Release Deeds to give effect to the MoU. However, the Appellants delayed the execution of the Gift and Release Deeds as contemplated by the MoU. 7. In the meanwhile, the threemonth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial court dismissed the IA. No. 598 of 2011, pertaining to the condonation of delay in filing the Section 34 application. The Trial Court while dismissing the aforesaid application as indicated above, reasoned as under5 i. That the Court is not empowered to stretch the limitation period beyond the requisite period given under Section 34 of the Arbitration Act. ii. Placing reliance on Union of India vs. Popular Construction Co. , (2001) 8 SCC 470 and Consolidated Engineering Enterprises vs. Principal Secretary, Irrigation Department , (2008) 7 SCC 169, held that the language of Section 34 of the Arbitration Act mandated a strict adherence to the time period provided thereunder and the extension beyond the same was not possible under any circumstances. Therefore, Section 5 of the Limitation Act was not applicable to an application filed under Section 34 of the Arbitration Act. iii. Based on the aforesaid judgments of this Hon ble Court, and the provisions of Section 34 (3) of the Arbitration Act, the City Civil Court held that Section 5 of the Limitation Act, 1963, has no application, as the Court has no power to condone the delay beyond three months and thirty days. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o this limited extent and pass a fresh order after hearing both parties, within a period of two months from the date of receipt of this order. It is made clear that the orders of the lower Court in respect of the other aspects stand confirmed . ( emphasis supplied ) 12. Aggrieved by the remand order passed by the High Court on the applicability of Section 17 of the Limitation Act to the proceedings, the Appellants have approached this Court in these appeals. 13. Before we delve into any other aspect of this case, it may be important to note that we would have agreed with the High Court wherein a remand may have been required in usual course for considering the applicability of Section 17 of the Limitation Act as there is an apparent insufficiency of reasons in the trial court order. But, in this case there has been a considerable delay in resolving the dispute. The very purpose of speedy justice delivery mechanism would be frustrated by such delays if the matter is allowed to linger before the courts. We had positively persuaded the parties several times to come to an amicable settlement and asked the advocates representing them to use their good offices to refer par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , for computation of the period of limitation or arriving at the prescribed period the provisions of Section 4 to 24 of the Limitation Act would automatically apply unless they are expressly excluded by the special law. iv. That it has been highly inequitable for the respondents, who were victims of bad faith negotiation undertaken by the Appellants to derail the respondents from pursuing this case for enforcement of their rights. 17. We have heard the counsels for both the parties at length, and also perused the material available on record. 18. We are now to examine whether Section 17 of the Limitation Act is applicable while determining the limitation period under Section 34(3) of the Arbitration Act? 19. This analysis has to necessarily begin from Section 29(2) of the Limitation Act, which states 29 (2) Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of Section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 17 of the Limitation Act is consistent with Section 34 of the Arbitration Act. 24. Relying on these pronouncements, the Respondents counsel asserted that there is no express exclusion of Section 17 in the Arbitration Act and therefore the benefit of Section 17 of Limitation Act should be extended while determining the period of limitation under Section 34(3). 25. This requires us to consider the phrase express exclusion in Section 29(2) of the Limitation Act. This Court in a series of cases held that the express exclusion can be inferred either from the language of the special law or it can be necessarily implied from the scheme and object of the special law. 26. A Bench of five Judges in Vidyacharan Shukla v. Khubchand Baghel, AIR 1964 SC 1099, interpreting the phrase express exclusion observed: The contention is that subsection (3) of Section 116A of the Act not only provides a period of limitation for such an appeal, but also the circumstances under which the delay can be excused, indicating thereby that the general provisions of the Limitation Act are excluded. There are two answers to this argument. Firstly, Section 29(2)(a) of the Limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Act are necessarily excluded, then the benefits conferred therein cannot be called in aid to supplement the provisions of the Act. In our considered view, that even in a case where the special law does not exclude the provisions of Sections 4 to 24 of the Limitation Act by an express reference, it would nonetheless be open to the court to examine whether and to what extent, the nature of those provisions or the nature of the subjectmatter and scheme of the special law exclude their operation. In other words, the applicability of the provisions of the Limitation Act, therefore, is to be judged not from the terms of the Limitation Act but by the provisions of the Central Excise Act relating to filing of reference application to the High Court . 29. These principles were reiterated by this Court in Union of India v. Popular Construction Co. , (2001) 8 SCC 470 at page 474; Chhattisgarh State Electricity Board v. Central Electricity Regulatory Commission , (2010) 5 SCC 23 at para 32; Gopal Sardar v. Karuna Sardar, (2004) 4 SCC 252 at para 13. 30. Thus, the inquiry is whether the text or the scheme and object of the Arbitration Act excludes the application of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n inbuilt into the remedy provision. One does not have to look at the Limitation Act or any other provision for identifying the limitation period for challenging an Award passed under Part I of the Arbitration Act. (b) The time limit for commencement of limitation period is also provided in Section 34(3) i.e. the time from which a party making an application had received the Arbitral Award or disposal of a request under Section 33 for corrections and interpretation of the Award. (c) Section 34(3) prohibits the filing of an application for setting aside of an Award after three months have elapsed from the date of receipt of Award or disposal of a request under Section 33. Section 34(3) uses the phrase an application for setting aside may not be made after three months have elapsed . The phrase may not be made is from the UNCITRAL Model Law An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award or, if a request had been made under article 33, from the date on which that request had been disposed of by the arbitral tribunal . and has been understood to mean can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quences (a) In Section 34(3), the commencement period for computing limitation is the date of receipt of award or the date of disposal of request under Section 33 (i.e correction/additional award). If Section 17 were to be applied for computing the limitation period under Section 34(3), the starting period of limitation would be the date of discovery of the alleged fraud or mistake. The starting point for limitation under Section 34(3) would be different from the Limitation Act. (b) The proviso to Section 34(3) enables a Court to entertain an application to challenge an Award after the three months period is expired, but only within an additional period of thirty dates, but not thereafter . The use of the phrase but not thereafter shows that the 120 days period is the outer boundary for challenging an Award. If Section 17 were to be applied, the outer boundary for challenging an Award could go beyond 120 days. The phrase but not thereafter would be rendered redundant and otiose. This Court has consistently taken this view that the words but not thereafter in the proviso of Section 34 (3) of the Arbitration Act are of a mandatory nature, and couched in negative terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even after 120 days. This would defeat the Arbitration Act s objective of speedy resolution of disputes. The finality of award would also be in a limbo as a party can challenge an Award even after the 120 day period. 40. Second, extending Section 17 of Limitation Act to Section 34 would do violence to the scheme of the Arbitration Act. As discussed above, Section 36 enables a party to apply for enforcement of Award when the period for challenging an Award under S.34 has expired. However, if Section 17 were to be extended to Section 34, the determination of time for making an application to set aside the arbitral award in Section 36 will become uncertain and create confusion in the enforcement of Award. This runs counter to the scheme and object of the Arbitration Act. 41. Third , Section 34(3) reflects the principle of unbreakability. Dr. Peter Binder in International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions, 2nd Ed., observed: An application for setting aside an award can only be made during the three months following the date on which the party making the application has received the award. Only if a party has made a requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decreeholder alleged that the judgement debtor prevented the execution of a decree by suppressing the ownership of certain assets (ownership of newspaper in those facts) and in support placed reliance on Section 18 of Limitation Act, 1908 (equivalent of Section 17) Although there is a slight difference in the text of S.18 of Limitation Act, 1908 and S.17 of Limitation Act, 1963, the relevant provision for the present case remains the same. Rejecting this contention, this Court observed: 19. In our opinion, the facts necessary to establish fraud under Section 18 of the Limitation Act are neither admitted nor proved in the present case. Concealing from a person the knowledge of his right to apply for execution of a decree is undoubtedly different from preventing him from exercising his right, of which he has knowledge. Section 18 of the Limitation Act postulates the former alternative. The fraud pleaded, namely suppression of ownership of the Prabhat newspaper, did not conceal from him his right to make an application for execution of the decree. 46. Similarly in Pallav Sheth v. Custodian , (2001) 7 SCC 549, this Court observed that Section 17 comes to the rescue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from that date, the delivery of the copy of award by the Tribunal and the receipt thereof by each party constitutes an important stage in the arbitral proceedings. 9. In the context of a huge organisation like the Railways, the copy of the award has to be received by the person who has knowledge of the proceedings and who would be the best person to understand and appreciate the arbitral award and also to take a decision in the matter of moving an application under subsection (1) or (5) of Section 33 or under subsection (1) of Section 34 . 49. In view of the above, we hold that 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. 50. 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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