The Supreme Court has shed light on the application of the Indian Limitation Act, 1963, and the General Clauses Act, 1897, in arbitration awards.
The court addressed the crucial question about the effect of court holidays and vacations on prescribed periods for filing applications. Are the act’s benefits applicable?
In this case, an application was filed under section 34(3) of the Arbitration Act, seeking to set aside an arbitral award. The core issue was whether to condone a delay in filing the application, which exceeded the prescribed period of three months and an extendable period of 30 additional days.
The filing delay occurred during a court’s winter/Christmas vacation, raising questions about the applicability of section 4 of the Limitation Act and section 10 of the General Clauses Act.
A district court had declined to condone the delay as the filing occurred more than 120 days after the arbitral award. This decision was subsequently affirmed by the High Court. Consequently, the applicant decided to challenge these rulings by filing a civil appeal before the Supreme Court.
The Supreme Court referred to section 34(3) of the Arbitration Act, which allows for an application to be made within three months of the date of receiving an arbitral award. A proviso to this section permits a further extension of 30 days if sufficient cause is shown.
The court also examined section 4 of the Limitation Act, which enables the filing of a suit, appeal or application on the day the court reopens if the prescribed period expires during a court closure.
Additionally, section 10 of the General Clauses Act was analysed, which deals with time calculations when an act or proceeding is directed or allowed to be completed within a specific day or prescribed period. According to this provision, if a court or office remains closed on the designated day, the act or proceeding can be considered valid when performed on the next working day.
The Supreme Court relied on the previous decision in Assam Urban Water Supply and Sewerage Board v Subash Projects and Marketing Limited (2012), which clarified that the benefit of excluding court holidays or vacations is applicable only when the application is filed within the prescribed period of limitation, and not for the period extendable at the court’s discretion. It noted that section 10 of the General Clauses Act does not apply to acts or proceedings governed by the Limitation Act, as explicitly excluded by the proviso to section 10.
Based on these interpretations, the Supreme Court concluded that the delay in filing the application under section 34 of the Arbitration Act beyond the prescribed period could not be condoned. Building on the Assam Urban case, the Supreme Court held that the benefit of excluding court holidays or vacations applied only when an application is filed within the prescribed period of limitation. The court emphasised that the additional 30-day extension, granted at the court’s discretion under the proviso of section 34(3), operated separately from the prescribed period of limitation.
The dispute digest is compiled by Numen Law Offices, a multidisciplinary law firm based in New Delhi & Mumbai. The authors can be contacted at email@example.com. Readers should not act on the basis of this information without seeking professional legal advice.