Sunday, 7 October 2018

Whether a party can seek condonation of delay as per S 17 of limitation Act if arbitration award is received by him within limitation?

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 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. 

Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 7710-7713
OF 2013
P. RADHA BAI AND ORS. Vs P. ASHOK KUMAR

Dated:September 26, 2018
N.V. RAMANA, J.

1. These appeals are filed, aggrieved by the judgment and
order dated 18.06.2012 in the Civil Revision Petition Nos.
2151, 2246, 2383 and 2458 of 2012 passed by the High
Court of Judicature at Andhra Pradesh at Hyderabad.
2. An interesting question of law arises in this batch of
petitions, concerning the applicability of Section 17 of the
Limitation Act, 1963 [‘Limitation Act’] for condonation of a
delay caused on the account of alleged fraud played on the
objector (party challenging the award) beyond the period

prescribed under Section 34 (3) of the Arbitration and
Conciliation Act of 1996 [‘Arbitration Act’].
3. The facts which give rise to this question fall into a narrow
compass. Originally one Mr. P. Kishan Lal carried on
business and acquired several properties. On his death,
Mr. P. Kishan Lal was survived by eight (8) legal heirs
(Appellant Nos. 1 to 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
2
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
period and the extended
period of 30 days for challenging an Award under Section
34(3) of the Arbitration Act had expired. After the time limit
expired, the Appellants filed an Execution Petition (EP) for
execution of the Award. The trial court held that EP was
not maintainable. On appeal, the High Court set aside the
order of the trial court and held that the Execution Petition
was maintainable and directed the trial court to decide it on
merits.
8. When the Respondents realized that the Appellants were
delaying the execution of the Gift Deed contemplated by the
MoU, the Respondents on 08.02.2011 filed an application
under Section 34(3) of the Arbitration Act for setting aside
3
the Award. This filing was 236 days after the receipt of the
Award by the Respondents. The application was
accompanied by another application under Section 5 of the
Limitation Act seeking condonation of the delay of 236 days.
In the application for condonation of delay, the Respondents
alleged that:
a. Award was served on the Respondents on 21.02.2010;
b. They were laypersons and were not aware of the legal
requirement of filing objections within the period
prescribed under the Arbitration Act.
c. Since they were dissatisfied with the Award, they raised
objections before the learned Arbitrators. The
Arbitrators called upon all the parties and conducted
conciliation. Accordingly, the parties entered into a
MoU. The MoU contemplated for execution of Gift Deed
and Release Deed in favour of Respondent No.1.
However, the Appellants failed to execute the required
documents as per the MoU with an intent to defeat their
rights.
4
d. One of the Respondents was physically indisposed for
one month.
9. During the pendency of the aforesaid interim application,
seeking condonation of the delay, the Respondents filed
another application being I.A. No. 1977 of 2011 in I.A. No.
598 of 2011, seeking an order of the trial court to summon
the Subregistrar,
Charminar to prove the veracity of the
Memorandum of Understanding and to counter the
allegations raised by the Appellants herein, as to the
falsification and fabrication of the Memorandum dated
09.04.2010. For completeness of narration, it may be stated
that additional I.A.s, being I.A. No. 210 and 211 of 2012,
were sought by the Respondent seeking certain documents
to be brought on record.
10. By order dated 21.02.2012, the 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. On
6
this ground alone, the objections filed under Section
34 were liable to be dismissed.
iv. That the trial court rejected the contention that the
Respondent (objector) was unable to file the
objections within the period of limitation on the
ground of illness and no medical certificate was
provided to substantiate such claim.
v. That ignorance of law on behalf of the Respondents,
to be not aware of the technicalities provided under
Section 34 of the Arbitration Act was not excusable.
vi. Moreover, the trial court came to a conclusion that
equitable grounds cannot be utilized to create
exceptions not mandated under the statutory law.
We may note that the trial court although discussed about
the existence of the Memorandum of Understanding dated
09.04.2010 and its impact on the Respondent’s delay in
filing the Section 34 application, there is no specific
discussion concerning the applicability of Section 17 of the
Limitation Act in the trial court order. Moreover, other
interim applications filed by the respondents were also
dismissed consequentially.
7
11. Being aggrieved by the dismissal, respondents preferred
four Civil Revision petitions, before the High Court of
Andhra Pradesh under Article 227 of the Constitution of
India, being C.R.P. No. 2151, 2246, 2383 and 2458 of 2012.
By the impugned order dated 18.06.2012, the High Court
remanded the matter to the trial court concerning the
applicability of Section 17 of the Limitation Act in an
application under Section 34 of the Arbitration Act. The
High Court observed
“Even though Mr. K. Prabhakar, learned counsel
for the respondents sought to argue that when
Section 5 of the Act is excluded, automatically
Section 17 of the Act also gets excluded, I refrain
from expressing any opinion on this aspect,
because this is required to be considered by the
lower court at the first instance before this Court
examines the same at an appropriate stage. On
this short ground, I feel that it is just and
appropriate to remand the matter back to the
learned Chief Judge, City Civil Court,
Hyderabad for considering the abovementioned
pleadings of the petitioners and
pronouncing upon the same with reference to
the applicability or otherwise of the provision
of Section 17 of the Act. Therefore, without
expressing any opinion on these aspects, the
learned Chief Judge is directed to reconsider the
case only to 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
8
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 parties to mediation and avoid decades of litigation.
9
But, our efforts were not met with much success in any
event.
14. The High Court could have examined the legal issue of
applicability of Section 17 of the Limitation Act to an
application filed under Section 34 of the Arbitration Act.
This is a pure question of law. Only if Section 17 of
Limitation Act was applicable to a Section 34 application,
the question of factual satisfaction of the ingredients of
Section 17 to the present case and a consequent remand to
the trial court would arise.
15. The learned counsel for the appellants, Mr. Devansh A.
Mohta, argued thati.
Limitation period provided under Section 34 (3) of the
Arbitration Act begins ‘only’ upon the receipt of the
award by the parties and the same cannot be diluted
by a different starting point provided under the
Limitation Act, in light of Section 29 (2) of the
Limitation Act.
10
ii. The period of limitation under Section 34(3) of the
Arbitration Act is ‘unbreakable’ and is meant to run
continuously.
iii. Definitive time limit is necessary to ensure expeditious
and effective resolution of disputes between the
parties.
iv. The mandate of Popular Construction Case (supra)
and Consolidated Engineering Case (supra) wherein
the emphasis on ‘fixed period’ needs to be given effect
to.
v. The expression ‘had received the arbitral award’ found
in Section 34 (3) of the Arbitration Act expressly
excludes applicability of Section 17 of the Limitation
Act.
vi. This Court should appreciate the difference between
concealment of right to action being different from
preventing a person from taking action.
16. On the contrary, the learned counsel for the respondents,
Mr. Yashraj Singh Deora, had contended thati.
The reasoning provided under Popular Construction
Case (supra) and Consolidated Engineering Case
(supra) clearly indicates to the applicability of Section
11
17 of the Limitation Act, similar to the applicability of
Section 14 of the Limitation Act.
ii. Limitation Act is applicable to all proceedings before
the court.
iii. It is evident that the Arbitration Act under Section 34
(3) provides for a different time period than the one
present under Article 137 of the Limitation Act,
accordingly, the special law would therefore, prevail in
so far as the issue of period of limitation is concerned.
However, 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.
12
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 application by any special
or local law, the provisions contained in Sections
4 to 24 (inclusive) shall apply only in so far as,
and to the extent to which, they are not expressly
excluded by such special or local law.
(emphasis added)
20. Section 29(2) is divided into 2 limbs. This is evident from the
conjunctive “and” in the said provision. The interrelation
between these two limbs was considered by a Bench of five
Judges of this Court in Vidyacharan Shukla v.
Khubchand Baghel, [1964] 6 SCR 129.
21. The first part stipulates that the limitation period prescribed
by the special law or local law will prevail over the limitation
period prescribed in the Schedule to the Limitation Act. In
13
this case, the Arbitration Act is a “special law” which
prescribes a specific period of limitation in Section 34(3) for
filing objections to an arbitral award passed under the 1996
Act and consequently the provisions of Arbitration Act
would apply. We also note that there is no provision under
the Limitation Act dealing with challenging an Award passed
under the Arbitration Act.
22. The second part mandates that Sections 4 to 24 of the
Limitation Act will apply for determining the period of
limitation “only in so far as, and to the extent to which, they
are not expressly excluded by such special or local law.”
Thus the extent of the application of Sections 4 to 24 of
Limitation Act will apply for determining the limitation
period under the Arbitration Act only if they are not
expressly excluded by Arbitration Act.
23. We are conscious 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. (State of Goa v. Western
14
Builders (2006) 6 SCC 239 at para 25; Consolidated
Engineering Enterprises v. Principal Secretary,
Irrigation Department, (2008) 7 SCC 169 at para 27
and 29; Coal India Ltd. v. Ujjal Transport Agency,
(2011) 1 SCC 117 at para 6; M.P. Housing Board v.
Mohanlal & Co., (2016) 14 SCC 199 at para 13).
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). We note that none of
these cases dealt with the question whether the scheme of
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
15
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 Limitation Act speaks of express
exclusion but there is no express exclusion
in subsection
(3) of Section 116A
of the
Act; secondly, the proviso from which an
implied exclusion is sought to be drawn
does not lead to any such necessary
implication”.
27. This principle was further crystallised in Hukumdev
Narain Yadav v. Lalit Narain Mishra, (1974) 2 SCC 133
wherein a Bench of three Judges held that:
"It is contended before us that the words
"expressly excluded" would mean that there
16
must be an express reference made in the
special or local law to the specific provisions of
the Limitation Act of which the operation is to
be excluded. As usual the meaning given in the
Dictionary has been relied upon, but what we
have to see is whether the scheme of the
special law, that is, in this case the Act, and
the nature of the remedy provided therein are
such that the Legislature intended it to be a
complete code by itself which alone should
govern the several matters provided by it. If on
an examination of the relevant provisions it is
clear that the provisions of the Limitation Act
are necessarily excluded, then the benefits
conferred therein cannot be called in aid to
supplement the provisions of the Act. In our
view, even in a case where the special taw 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”. (emphasis added)
28. A Bench of three Judges in Commissioner of Customs
and Central Excise v. Hongo India (P) Ltd., (2009) 5
SCC 791 reiterated this principle when it held:
“It was contended before us that the words
“expressly excluded” would mean that there
must be an express reference made in the
special or local law to the specific provisions
of the Limitation Act of which the operation is
to be excluded. In this regard, we have to see
the scheme of the special law which here in
this case is the Central Excise Act. The nature
17
of the remedy provided therein is such that
the legislature intended it to be a complete
code by itself which alone should govern the
several matters provided by it. If, on an
examination of the relevant provisions, it is
clear that the provisions of the Limitation 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.
18
30. Thus, the inquiry is whether
the text or the scheme and
object of the Arbitration Act excludes the application of
Section 17 of Limitation Act while determining the limitation
period?
31. We therefore have to contrast Section 17 of the Limitation
Act with Section 34(3) of the Arbitration Act. The relevant
part of Section 17 states
17. Effect of fraud or mistake.—
(1) Where, in the case of any suit or application
for which a period of limitation is prescribed by
this Act,—
(a) the suit or application is based upon the
fraud
of the defendant or respondent or his agent; or
(b) the knowledge of the right or title on which a
suit or application is founded is concealed by the
fraud of any such person as aforesaid; or
(c) the suit or application is for relief from the
consequences of a mistake; or
(d) where any document necessary to establish
the right of the plaintiff or applicant has been
fraudulently concealed from him,
the period of limitation shall not begin to run
until plaintiff or applicant has discovered the
19
fraud or the mistake or could, with reasonable
diligence, have discovered it; or in the case of a
concealed document, until the plaintiff or the
applicant first had the means of producing the
concealed document or compelling its
production:
32. Section 17 does not extend or break the limitation period. It
only postpones or defers the commencement of the
limitation period. This is evident from the phrase “the period
of limitation shall not begin to run”.
33. In contrast, Section 34(3) of the Arbitration Act states
34. Application for setting aside arbitral award……
(3) 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 arbitral award or, if a request
had been made under section 33, from the date
on which that request had been disposed of by
the arbitral tribunal.
Provided that if the Court is satisfied that the
applicant was prevented by sufficient cause from
making the application within the said period of
three months it may entertain the application
within a further period of thirty days, but not
thereafter. (emphasis added)
34. Section 34(3) deserves careful scrutiny and its
characteristics must be highlighted:
20
(a) Section 34 is the only remedy for challenging an award
passed under Part I of the Arbitration Act. Section 34(3)
is a limitation provision, which is an 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 Law1 and has been
1 “ 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”.
21
understood to mean “cannot be made”. The High Court
of Singapore in ABC Co. Ltd v. XYZ Co. Ltd, [2003] SGHC
107)
“The starting point of this discussion must be
the Model Law itself. On the aspect of time,
Article 34(3) is brief. All it says is that the
application may not be made after the lapse of
three months from a specified date. Although
the words used are ‘may not’ these must be
interpreted as ‘cannot’ as it is clear that the
intention is to limit the time during which an
award may be challenged. This interpretation
is supported by material relating to the
discussions amongst the drafters of the Model
Law. It appears to me that the court would not
be able to entertain any application lodged
after the expiry of the three months period as
Article 34 has been drafted as the allencompassing,
and only, basis for challenging
an award in court. It does not provide for any
extension of the time period and, as the court
derives its jurisdiction to hear the application
from the Article alone, the absence of such a
provision means the court has not been
conferred with the power to extend time".
(d) The limitation provision in Section 34(3) also provides
for condonation of delay. Unlike Section 5 of Limitation
Act, the delay can only be condoned for 30 days on
showing sufficient cause. The crucial phrase “but not
22
thereafter” reveals the legislative intent to fix an outer
boundary period for challenging an Award.
(e) Once the time limit or extended time limit for
challenging the arbitral award expires, the period for
enforcing the award under Section 36 of the Arbitration
Act commences. This is evident from the phrase “where
the time for making an application to set aside the
arbitral award under Section 34 has expired”.2 There is
an integral nexus between the period prescribed under
Section 34(3) to challenge the Award and the
commencement of the enforcement period under Section
36 to execute the Award.
35. If Section 17 of the Limitation Act were to be applied to
determining the limitation period under Section 34(3), it
would have the following consequences
(a) In Section 34(3), the commencement period for
computing limitation is the date of receipt of award or
2 36. Enforcement.—Where the time for making an application to set aside
the arbitral award under section 34 has expired, or such application having
been made, it has been refused, the award shall be enforced under the Code
of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree
of the Court.
23
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
24
couched in negative terms, which leaves no room for
doubt. (State of Himachal Pradesh v. Himachal
Techno Engineers & Anr., (2010) 12 SCC 210,
Assam Urban Water Supply & Sewerage Board v.
Subash Projects & Marketing Ltd., (2012) 2 SCC
624 and Anilkumar Jinabhai Patel (D) through LRs
v. Pravinchandra Jinabhai Patel & Ors., (2018) SCC
Online SC 276)
36. In our view, the aforesaid inconsistencies with the language
of Section 34(3) of Arbitration Act tantamount to an “express
exclusion” of Section 17 of Limitation Act.
37. This Court in Popular Construction Case (supra) at page
474 followed the same approach when it relied on the
phrase “but not thereafter” to hold that Section 5 of
Limitation Act was expressly excluded.
12. As far as the language of Section 34 of the
1996 Act is concerned, the crucial words are “but
not thereafter” used in the proviso to subsection
(3). In our opinion, this phrase would amount to
an express exclusion within the meaning of
Section 29(2) of the Limitation Act, and would
therefore bar the application of Section 5 of that
Act. Parliament did not need to go further. To
hold that the court could entertain an
25
application to set aside the award beyond the
extended period under the proviso, would render
the phrase “but not thereafter” wholly otiose. No
principle of interpretation would justify such a
result.
(emphasis added)
38. Further, the exclusion of Section 17 is also necessarily
implied when one looks at the scheme and object of the
Arbitration Act.
39. First, the purpose of Arbitration Act was to provide for a
speedy dispute resolution process. The Statement of Objects
and Reasons reveal that the legislative intent of enacting
the Arbitration Act was to provide parties with an efficient
alternative dispute resolution system which gives litigants
an expedited resolution of disputes while reducing the
burden on the courts. Article 34(3) reflects this intent when
it defines the commencement and concluding period for
challenging an Award. This Court in Popular Construction
Case (supra) highlighted the importance of the fixed periods
under the Arbitration Act. We may also add that the finality
is a fundamental principle enshrined under the Arbitration
Act and a definitive time limit for challenging an Award is
necessary for ensuring finality. If Section 17 were to be
26
applied, an Award can be challenged 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
27
a party has made a request for correction or
interpretation of the award under Art. 33 does
the time limit of three months begin after the
tribunal has disposed of the request. This
exception from the threemonth
time limit was
subject to criticism in the Working group due
to fears that it could be used as a delaying
tactics. However, although “an unbreakable
time limit for applications for setting aside”
was sought as being desirable for the sake of
“certainty and expediency” the prevailing view
was that the words ought to be retained “since
they presented the reasonable consequence of
article 33”. According to this “unbreakability”
of time limit and true to the “certainty and
expediency” of the arbitral awards, any
grounds for setting aside the award that
emerge after the threemonth
time limit has
expired cannot be raised.
42. Extending Section 17 of the Limitation Act would go
contrary to the principle of ‘unbreakability’ enshrined under
Section 34(3) of the Arbitration Act.
43. The Respondents have argued that if Section 17 is not
extended to Section 34, it would cause enormous injustice
and provide scope for parties to play mischief. The
Respondents have cited several illustrations where on
account of fraud of the party, an objecting party can be
precluded from challenging an Award and extending Section
17 would come to the rescue of such a party.
28
44. The Respondent’s contention proceeds on a misconceived
notion of Section 17. Even if Section 17 were to be extended
to Section 34, it would not address the Respondent’s
grievance. 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.
45. This principle is illustrated by a ruling of this Court in
Yeswant Deorao Deshmukh v. Walchand Ramchand
Kothari, 1950 SCR 852. The facts of this case are broadly
similar. A decree holder files an execution petition after the
expiry of limitation period (12 years of the passing of
decree). To overcome the limitation bar, the decreeholder
alleged that the judgement debtor prevented the execution
29
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)3 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 a
party for “failing to adopt legal proceedings when the facts or
material necessary for him to do so have been willfully
concealed from him "
3 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.
30
47. 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.
48. The fraudulent conduct where Section 17 of the Limitation
Act would have helped the objecting party is where there
was a fraud in the delivery of the award. However, in such a
scenario, resort to section 17 is not necessary. If there is
any fraud in the delivery of Award, the requirement of
receipt of Award under Section 34(3) itself is not satisfied.
Any receipt of Award must be effective receipt. This Court in
31
Union of India v. Tecco Trichy Engineers &
Contractors, (2005) 4 SCC 239 held that:
“8. The delivery of an arbitral award under
subsection
(5) of Section 31 is not a matter
of mere formality. It is a matter of substance.
It is only after the stage under Section 31
has passed that the stage of termination of
arbitral proceedings within the meaning of
Section 32 of the Act arises. The delivery of
arbitral award to the party, to be effective,
has to be “received” by the party. This
delivery by the Arbitral Tribunal and receipt
by the party of the award sets in motion
several periods of limitation such as an
application for correction and interpretation
of an award within 30 days under Section
33(1), an application for making an
additional award under Section 33(4) and an
application for setting aside an award under
Section 34(3) and so on. As this delivery of
the copy of award has the effect of conferring
certain rights on the party as also bringing to
an end the right to exercise those rights on
expiry of the prescribed period of limitation
which would be calculated 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
32
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 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.
51. In light of the aforesaid legal position, the judgment and
order of the High court dated 18.06.2012, in Civil Revision
Petition Nos. 2151, 2246, 2383 and 2458 of 2012 are setaside,
and also the order allowing I.A. No. 598 of 2011
condoning the delay of 236 days in filing the objections is
set aside, accordingly these appeals are allowed with no
order as to costs.
………………………J.
(N. V. Ramana)
………………………J.
(S. Abdul Nazeer)
New Delhi,
September 26, 2018

Print Page

No comments:

Post a comment