Introduction
The Arbitration Act has revolutionized the landscape of dispute resolution and has emerged as a preferred mode for resolving disputes compared to other systems. However, it has also created significant confusion, particularly regarding the interpretation of certain phrases used in its provisions. One aspect that has eluded the courts is the application of the Limitation Act to proceedings under the Arbitration Act. While some provisions of the Arbitration Act specify time periods for taking actions under the Arbitration Act, others are notably silent, requiring the courts to interpret them in light of the overall scheme of the Act. In this discussion, we will explore the interplay between the Limitation Act and the Arbitration Act.
Whether Limitation Act Applies To Arbitration Act
Section 29(2) of the Limitation Act states that if a different period of limitation is provided under any special or local law, as opposed to the schedule of the Limitation Act, such a period of limitation shall be considered as if it were provided in the schedule to the Limitation Act. Consequently, provisions of the Limitation Act from sections 4 to 24 would be applicable unless they are expressly excluded by such special or local law. This provision imports the provisions of the Limitation Act to the special or local law.
The Supreme Court considered the essentials of this provision in Mukri Gopalan v. Cheppilat Puthanpurayil1 where it was held that section 29(2) is attracted when two conditions are satisfied-
Firstly, there must be a period of limitation prescribed under any special or local law. Secondly, this period of limitation must differ from the limitation period prescribed under the schedule of the Limitation Act. If these two conditions are met, the period of limitation will be treated as if it were provided under the schedule, and the provisions of the Limitation Act, from Sections 4 to 24, will apply, unless expressly excluded. Additionally, Section 43 of the Arbitration Act further stipulates that the Limitation Act applies to arbitration proceedings as if it were applicable to court proceedings.
The Supreme Court while considering the necessity of a provision in the nature of Section 43(1), when Section 29(2) of the Limitation Act already makes Sections 4 to 24 of the Limitation Act applicable to special statutes, including the Arbitration Act in Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department2 held that the Arbitration Act does not prescribe the period of limitation for various proceedings under the Act, and deviates from the Limitation Act in specific instances like Section 34(3) and Section 43(2) to (4). By virtue of Section 29(2), the Limitation Act applies to court proceedings under the Arbitration Act. The purpose of Section 43(1) of the Arbitration Act is to extend the applicability of the Limitation Act to arbitrations also, as these are private tribunals and not courts. Since the Limitation Act is only applicable to court proceedings, Section 43(1) is necessary to make it applicable to arbitrations in the same manner as it applies to court proceedings.
It is clear from the above discussion that the Limitation Act applies to both court proceedings and arbitration proceedings. Now it is important for us to consider its applicability to proceedings under section 34(3) and condonable period under its proviso.
Whether Limitation Act Applicable To Proceedings Under Section 34(3) Of the Arbitration Act
It is clear that an application to set aside an arbitral award under Section 34 must be within 3 months from the receipt of the award or the date of disposal of a request under Section. This is the period of limitation. Further, the court may exercise discretion to entertain the application, within a further period of 30 days, if sufficient cause is shown, but not thereafter. As per Section 29(2) of the Limitation Act, the effect of there being a different limitation period under Section 34(3) is that: Section 3 of the Limitation Act applies to proceedings under Section 34 of the Arbitration Act as if the 3-month limitation period is the period prescribed in the Schedule to the Limitation Act. Further, Sections 4 to 24 of the Limitation Act apply to determine whether the application is within the period of limitation, “insofar as, and to the extent to which, they are not expressly excluded.”
It is well settled law that mere prescription of a limitation period which is different from the period of limitation provided under the schedule does not mean that the provisions of the Limitation Act will not be applicable. However, whether application of the Limitation Act is excluded or not can be culled out from scheme of the statute or specific provisions provided in this behalf.
An express reference to an exclusion is not essential and the court can examine the language of the special law and its scheme to arrive at a conclusion that certain provisions of the Limitation Act are impliedly excluded.
Whether Application of section 5 of Limitation Act to section 34(3) Is Excluded
This issue was considered by the Supreme Court in Union of India v. Popular Construction3, where the primary question was whether the time period beyond the condonable period of 30 days, as prescribed under the proviso to Section 34(3) of the Arbitration Act, can be extended under Section 5 of the Limitation Act. The court observed that Section 29(2) of the Limitation Act, read with Section 34(3) of the Arbitration Act, specifically excludes the application of Section 5 of the Limitation Act to proceedings under Section 34 as different period of limitation has been prescribed within which an application has to be filed. The use of the phrase “and not thereafter” clearly indicates that beyond this period, an application for setting aside an award under Section 34 cannot be entertained.
The court also observed that having gone through the scheme of the Arbitration Act, it is clear that recourse to a court for setting aside an award under section 34 cannot be taken beyond 3 months and 30 days as prescribed under section 34(3) of the Arbitration Act thereby expressly excluding the application of section 5 of the Limitation Act.
Whether Application of Section 12 Of Limitation Is Excluded Under Section 34(3)
This question also came up for consideration before the Supreme Court in State of Himachal Pradesh v. Himachal Techno Engineers4 where the court held that this section would be applicable to the proceedings under the Arbitration Act. Consequently the day from which the limitation period is to be reckoned shall stand excluded as per section 12 of the Limitation Act.
Whether Application of Section 14 Of Limitation Is Excluded Under Section 34(3)
This issue was also addressed by the Supreme Court in State of Goa v. Western Builders5, where it held that Section 14 of the Limitation Act, which provides for the exclusion of the time period during which the applicant was prosecuting in good faith in a court lacking jurisdiction, applies when calculating the limitation period. The Court further observed that the application of this provision is not expressly excluded by Section 34 of the Arbitration Act, and Section 43 extends the applicability of the Limitation Act to arbitration proceedings. Consequently, the benefit of Section 14 cannot be denied. The Court stated that “when the special law is silent and there is no specific prohibition, it must be interpreted in a manner that advances justice.”
The Court also clarified that the applicability of the Limitation Act is excluded only to the extent specifically covered by the Arbitration Act. For example, the proviso to Section 34(3) of the Arbitration Act excludes the operation of Section 5 of the Limitation Act by virtue of the stipulation of the mandatory 30-day condonable period under Section 34(3).
While elaborating further in Consolidated Engineering Enterprises (supra), the Supreme Court similarly held that the operation of Section 14 of the Limitation Act cannot be excluded in proceedings under Section 34 of the Arbitration Act. The Court, while distinguishing the case of Popular Construction, held that the exclusion of Section 5 of the Limitation Act does not imply that all other provisions of the Limitation Act are also excluded from arbitration proceedings.
The Court noted the distinction between Sections 5 and 14 of the Limitation Act. Section 5 grants discretionary power to the court to condone delays, whereas Section 14 is mandatory in nature and applies only when specific conditions enumerated under the section are satisfied. The Court concluded that “the decision in Popular Construction (supra) does not mean that Section 14 of the Limitation Act is also inapplicable to Section 34(3) of the Arbitration Act.”
Whether Application of Section 17 Of Limitation Is Excluded Under Section 34(3)
This question was considered by the Supreme Court in P. Radha Bai v. P. Ashok Kumar6, where it was held that Section 17 of the Limitation Act, which provides for the limitation period to begin when the alleged fraud or mistake is discovered by the other party, would result in an extension of the time period provided under Section 34 of the Arbitration Act beyond three months and 30 days. Therefore, there is an inconsistency between the two provisions, leading to the inference that the application of Section 17 of the Limitation Act is expressly excluded.
From the above discussion, it is clear that the court has not excluded the provisions of the Limitation Act wholesale from the Arbitration Act. Instead, the applicability of the provisions of the Limitation Act has been evaluated individually, based on the specific language used and the scheme of the Arbitration Act.
Whether Application of Section 4 Of Limitation Is Excluded Under Section 34(3)
Section 4 of the Limitation Act states that where the prescribed period for any suit, appeal or application expires on a day when the court is closed, the suit, appeal or application may be instituted, preferred or made on the day when the court re-opens. The prescribed period is determined after applying Sections 4 to 24 of the Limitation Act.
The first case where the issue of the applicability of Section 4 came up for consideration was Assam Urban Water Supply & Sewerage Board v. Subhash Projects & Marketing Limited7 where the court, after interpreting the language used in the provisions, held that Section 4 would not apply to condone the delay beyond 30 days as prescribed under the proviso to Section 34(3) of the Arbitration Act. This is because the additional 30-day period is not a “period of limitation” as defined under Section 2(j) of the Limitation Act; rather, the period of limitation is only three months, as prescribed under Section 34(3) of the Arbitration Act.
This judgment was taken note of by the Supreme Court in My Preferred Transformation & Hospitality Pvt. Ltd. & Anr. v. M/S Faridabad Implements Pvt. Ltd8. where the court noted that “the wording of para 9 of the judgment makes it clear that the Limitation Act does not apply only to the extent that its applicability is excluded by an express provision in Section 34(3). While the Court did not explicitly deal with whether Section 4 of the Limitation Act was excluded, a reading of the entire judgment makes it clear that the Court proceeded on the basis that Section 4 applies.”
It was argued in the above case that, since the court held Section 4 to be inapplicable, the Limitation Act would not apply, and therefore Section 10 of the General Clauses Act should be applicable. However, the court, while rejecting this submission, observed that the legal position emerging from the Assam Urban case is that the applicability of Section 4 is excluded in relation to 30-day condonable period under the proviso to Section 34(3) of the Arbitration Act, but its applicability is not excluded in relation to three-month period prescribed under Section 34(3).
Similarly, the Supreme Court in Bhimashankar Sahakari Sakkare Karkhane Niyamita v. Walchandnagar Industries Limited9 held that the applicability of Section 4 of the Limitation Act, which excludes the time period when the court is closed, is limited to the prescribed period of three months and does not extend beyond that. This means that the benefit of this provision cannot be extended to the 30-day condonable period under Section 34(3) of the Arbitration Act, even if the court was closed during this period and the time period expired.
While Section 4 of the Limitation Act applies to the prescribed period of limitation under Section 34(3) of the Arbitration Act, its applicability is excluded concerning the further extendable period of 30 days as provided under the proviso to this section. However, it cannot be said that Section 10 of the General Clauses Act (GCA) should apply, since the benefit of Section 4 is not available for the extendable period of 30 days. This is because the proviso to Section 10 of the GCA explicitly provides that where the provisions of “any act or proceeding” act are applicable, the GCA will not apply. As discussed above, since Section 4 of the Limitation Act applies to proceedings under Section 34, it excludes the applicability of the General Clauses Act (GCA).
The upshot of the above discussion is that when the prescribed period of 3 months expires on a day when the court is closed, the benefit of Section 4 of the Limitation Act can be claimed by the party. However, this benefit will not apply when the prescribed period of 3 months has already expired while the court was working, but the court was closed when the extendable 30-day period expired. Additionally, since the Limitation Act applies to Section 34, the proviso of Section 10 of the General Clauses Act (GCA) excludes the applicability of Section 10 for the extendable period as well.
Application of Limitation Act To Appeal Under Section 37 Of Arbitration Act
Section 37 of the Arbitration Act does not specify a time period within which an appeal must be filed. The Supreme Court in Union Of India vs. M/S Virendra Constructions10 held that an appeal under Section 37 is governed by the same framework that applies to an application under Section 34. This means that an appeal under this section cannot be filed after the prescribed period of three months and 30 days. The Court reasoned that an appeal is a continuation of the proceedings; therefore, the same statutory framework governing an application under Section 34 should also govern an appeal under Section 37.
This judgment was followed by the Supreme Court in M/S N.V. International vs The State Of Assam11. However, a dispute arose when the Madhya Pradesh High Court refused to follow the decision in NV International (supra), arguing that it conflicted with a larger bench decision in Consolidated Engineering12. Ultimately, the matter reached the Supreme Court in Government of Maharashtra v. Borse Bros Engineers & Contractors (P) Ltd13 where the Court found fault with the reasoning of the Madhya Pradesh High Court that declined to follow NV International (supra). However, the Supreme Court effectively overruled NV International (supra) by holding that appeals under Section 37 cannot be governed by the same rigid legal framework as Section 34 applications. The Court reasoned that appeals under Section 37 arise from various orders passed under Sections 9, 16, 17 and 34 of the Arbitration Act therefore it would be inappropriate to apply the same yardstick.The court also held that since appeals under Section 37 are not governed by the framework of Section 34, as a necessary corollary, delays can be condoned under Section 5 of the Limitation Act.
The current legal framework governing the limitation period for appeals under Section 37 is as follows: If an appeal is to be filed before the High Court, the limitation period is 90 days, as per Article 116 of the Limitation Act. For appeals to any other courts, the limitation period is 30 days. Additionally, for appeals arising from arbitration matters under the Commercial Courts Act, the limitation period is 60 days, as specified under Section 13(1A) of the Commercial Courts Act.
Whether Limitation Act Is Applicable To Application Under Section 11(6) of the Arbitration Act
Section 11(6) of the Arbitration Act, which deals with the appointment of an arbitrator by the Supreme Court, High Court, or an institution designated by them, does not specify a period of limitation within which an application under this section must be filed. Therefore, as per Section 43 of the Arbitration Act, the provisions of the Limitation Act would apply, and the applicable limitation period must be determined based on its provisions.
This issue was addressed by the Supreme Court in Bharat Sanchar Nigam Limited vs M/S Nortel Networks India Pvt. Ltd14, where it was held that since no specific period for filing an application is provided within the Arbitration Act, the residuary provision in the form of Article 137 of the Limitation Act would apply. As per Article 137, the period for filing an application is three years.
It is well settled that the period of limitation for filing an application under Section 11(6) of the Arbitration Act begins from the expiry of 30 days after the notice is served on the other party to appoint an arbitrator or when the other party refuses to appoint an arbitrator whichever is earlier. The court further clarified that there is a distinction between the limitation period for seeking a remedy in relation to breach of substantive claims and the limitation period for filing an application under Section 11(6) of the Arbitration Act. These two periods should not be confused or conflated with each other.
The court after adverting to the scheme of the Arbitration Act which provides for the expeditious disposal of the commercial disputes held that “it would be necessary for Parliament to effect an amendment to Section 11, prescribing a specific period of limitation within which a party may move the court for making an application for appointment of the arbitration under Section 11 of the 1996 Act.”
Conclusion
It can be concluded that Section 29(2) of the Limitation Act, read with Section 43 of the Arbitration Act, establishes that the Limitation Act applies to arbitration and court proceedings unless specifically excluded. The Supreme Court has assessed the applicability of individual provisions of the Limitation Act to the Arbitration Act on a case-by-case basis. While interpreting Section 34(3) of the Arbitration Act, the Court excluded the applicability of Sections 5 and 17 of the Limitation Act but upheld the applicability of Sections 12 and 14. Additionally, it clarified that Section 4 of the Limitation Act applies only when the court was closed during the prescribed 3-month period, and time expired, but not when it was closed during the 30-day extendable period. Furthermore, the Court held that, since no specific time period is prescribed for filing an application for the appointment of an arbitrator, the residuary provision under Article 137 of the Limitation Act applies. Lastly, appeals under Section 37 are governed by Articles 116 and 117 of the Limitation Act, while appeals arising under Section 37 from the Commercial Courts Act are governed by Section 13(1A) of the Commercial Courts Act.
1(1995) 5 SCC 5 2(2006) 6 SCC 239 3(2001) 8 SCC 470 47 (2010) 12 SCC 210 5(2006) 6 SCC 239 67 (2019) 13 SCC 445 76 (2012) 2 SCC 624 82025 INSC 56 9(2023) 8 SCC 453 10Special Leave to Appeal (C) No(s). 23155/2013 11CIVIL APPEAL NO. 9244 OF 2019 12Appeal (civil) 2461 of 2008 13CIVIL APPEAL NO. 995 OF 2021 14CIVIL APPEAL Nos. 843-844 OF 2021
