Starting Point Of Limitation U/Section 34(3) Arbitration Act In Cases Of Suo Motu Correction Of Award : Supreme Court Explains

The Supreme Court observed that the starting point for the limitation under Section 34(3) Arbitration and Concliation Act, in case of suo moto correction of the award, would be the date on which the correction was made and the corrected award is received by the party.

Once the arbitral award has been amended or corrected, it is the corrected award which has to be challenged and not the original award, the bench of Justices Sanjiv Khanna and M M Sundresh observed. 

In this case, the arbitration award was on 18.04.2018. The Arbitrators thereafter corrected the award through order dated 05.05.2018.  The application under Section 34 challenging the corrected award was filed on 03.08.2018. The opposite party contended that an application under Section 34 had to be filed within a period of three months from the date of award. According to them, as the award itself being dated 18.04.2018 and the application under Section 34 having been filed on 03.08.2018 and there being no application for condonation of delay filed by the respondents in order to explain the delay beyond three months, the application under Section 34 has to be dismissed. This contention was rejected by the Allahabad High Court.

Upholding the High Court view, the Apex Court bench noted that the objections were filed within the limitation period.

The court noted that, in Ved Prakash Mithal and Sons vs. Union of India (2018) SCC Online 3181, it was held that the period mentioned in Section 34(3) would start running from the day Section 33 application is disposed of and application of Section 34 within the said limit could be said to be within time, and further that disposal of the application can be either by allowing it or dismissing it. Referring to this judgment, the bench said:

"In our opinion, looking at the purpose and object behind Section 34 (3) of the Act, which is to enable the parties to study, examine and understand the award, thereupon, if the party chooses and is advised, draft and file objections within the time specified, the starting point for the limitation in case of suomoto correction of the award, would be the date on which the correction was made and the corrected award is received by the party. Once the arbitral award has been amended or corrected, it is the corrected award which has to be challenged and not the original award. The original award stands modified, and the corrected award must be challenged by filing objections."

The bench noted that, even otherwise, the Court has the power to condone the delay for further period of thirty days. "Application for condonation of delay can be filed at anytime till the proceedings are pending. Of course, exercise of discretion and whether or not the delay should be condoned is a different matter", it said.

Case details

USS Alliance vs State of Uttar Pradesh | 2023 LiveLaw (SC) 20 | SLP(C) 23676/2022 | 6 January 2023 | Justices Sanjiv Khanna and MM Sundresh

For Petitioner(s) Mr. Anurag Kishore, AOR Mr. Manish Mani Sharma, Adv. Ms. Namni Bhutoria, Adv.

Headnotes

Arbitration and Conciliation Act, 1996 ; Section 33(3) and 34(3) - The starting point for the limitation in case of suomoto correction of the award, would be the date on which the correction was made and the corrected award is received by the party - Once the arbitral award has been amended or corrected, it is the corrected award which has to be challenged and not the original award. The original award stands modified, and the corrected award must be challenged by filing objections.

Arbitration and Conciliation Act, 1996 ; Section 34(3) - Purpose and Object - To enable the parties to study, examine and understand the award, thereupon, if the party chooses and is advised, draft and file objections within the time specified.

Arbitration and Conciliation Act, 1996 ; Section 34(3) Proviso - Court has the power to condone the delay for further period of thirty days. - Application for condonation of delay can be filed at anytime till the proceedings are pending. Of course, exercise of discretion and whether or not the delay should be condoned is a different matter. 

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