Supreme Court's Orders On Extension Of Limitation

"III. The period from 15.03.2020 till 14.03.2021 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings."

Background:

Last year, in 2020, while exercising its powers under Articles 141 and 142 of the Indian Constitution, the Supreme Court issued a Suo Motu order in the case of "IN RE COGNIZANCE FOR EXTENSION OF LIMITATION^[2]" in the midst of the ongoing Covid-19 pandemic. The Supreme Court, vide its order dated, 23^rd March 2020 effectively extended the limitation period for all judicial or quasi-judicial proceedings under the general law or special laws, whether condonable or not, from 15^th March 2020 till further order.

On 8^th March 2021, the Supreme in the case of "IN RE COGNIZANCE FOR EXTENSION OF LIMITATION^[3]" issued another order and held that the purpose of the order dated 23^rd March 2020 has been served. Furthermore, the Supreme Court held that the period from 15^th March 2020 to 14^th March 2021 would be excluded from the computation of the limitations for any suit, appeal, application, or proceeding. Hence, the remaining period of limitation from 15^th March 2020 would become available from 14^th March 2021.

Vide another order dated 27^th April 2021 "IN RE COGNIZANCE FOR EXTENSION OF LIMITATION^[4]", the Supreme Court restored the order of 23^rd March 2020, and stated that the limitation period for all judicial and non-judicial proceedings under general and special laws, whether condonable or not, would be extended until further order.

The Calcutta High Court discussed the applicability of the orders passed by the Supreme Court (till 27.04.2021) regarding the limitation period in proceedings while passing an Interlocutory Order in the case of SREI Equipment Finance Limited vs. Marg Limited^[5] EC/74/2021. In that case, an application was filed by the applicant/award-debtor for the dismissal of an execution appeal filed by the award-holder under Section 36 of the Arbitration and Conciliation Act, 1996^[6]. The subject matter of the execution application, i.e., the award, was dated 31^st August 2020. The maintainability of the application was challenged on two grounds, out of which only one was discussed in the order, which is, whether the time to execute the award had commenced or not. It was argued from the applicant's side that, vide an order passed by the Supreme Court, the limitation period for all proceedings under the general laws and special laws were extended given the ongoing pandemic. From the respondent's side, it was argued that, as per the 2015 amendment to the Arbitration and Conciliation Act, the stay of an arbitration award is not automatic. In fact, the award debtor has to file a separate application for a grant of stay of the award. Furthermore, it was argued that since the statutory limitation period had expired, the award holder was right to fling the execution of the award.

Under Section 36(1) of the Arbitration and Conciliation Act 1996, an arbitral award would be enforced in the same way as a decree passed under the Code of Civil Procedure, 1908, provided that the time period for filing an application to set aside the arbitral has passed. SREI Equipment Finance Limited vs. Marg Limited^[7] :

"If Section 36 is read as a whole the intention of the framers of the Act becomes evident; namely that an award-holder shall proceed, unhindered, to enforce the award without being fettered by the filing of an application under Section 34 of the Act. The uninterrupted march towards enforcement is, however, subject only to one condition; the time to file for setting aside of the award under Section 34 must first expire. This is the only speed-breaker, so to speak, which the winning party is subjected to in the momentum of Section 36(1) read with 36(2) for enforcing the Award. Although the enforcement of an award is to be treated as a decree of the Court by reason of the deeming provision in 36(1), the mandate on the award-holder to wait until the period for setting aside expires, makes Section 36 of the 1996 Act different from Order XXI and the Rules thereunder of The Code of Civil Procedure, 1908. The roadblock of the Award being stayed comes later in the enforcement provisions and is in any event subject to the discretion of the Court and the ability of the award-debtor to put in security for stay of the award."

Under Section 34(3) of the Arbitration and Conciliation Act 1996, the award-debtor has 3 months to file an application to set aside the award from the date it was received. As per the proviso of Section 34(3), an additional period of 30 days is available to the award-debtor if the court is satisfied that the award-debtor was prevented by sufficient cause from making the application within the prescribed period mentioned under Section 34(3) of the Arbitration and Conciliation Act 1996.

The award was dated 31^st August 2020, the applicant/award-debtor received the said award on 7^th September 2020. Hence, the period of 3 months under Section 34 of the Arbitration and Conciliation Act 1996 for filing the application for setting aside the award had expired on 7^th December 2020.

Now, the question in the case was whether the period to file the application under Section 34 of the Act by award-debtor has elapsed or not?

On this the Calcutta High Court relied on the relevant part of the order passed by the Supreme Court on 27^th April 2021:

"6. We also take judicial notice of the fact that the steep rise in covid-19 virus cases is not limited to Delhi alone but it has engulfed the entire nation. The extraordinary situation caused by the sudden and second outburst of covid-19 virus, thus, requires extraordinary measures to minimize the hardship of the litigant-public in all the States. We, therefore, restore the order dated March 23^rd, 2020 and in continuation of the order dated March 8^th, 2021 direct that the period(s) of limitation, as prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings, whether condonable or not, shall stand extended till further orders.

8. We have passed this order in exercise of our powers Under Article 142 read with Article 141 of the Constitution of India. Hence it shall be a binding order within the meaning of Article 141 on all courts/Tribunal and Authorities.

9. This order may be brought to the notice of all High Courts for being communicated to all subordinate courts/Tribunals within their respective jurisdiction."

It is clear from the reading of the order dated 27^th April 2021 passed by the Supreme Court that the earlier order dated 23^rd March 2020 has been restored. The order  passed by the Supreme Court clarifies that the limitation period for all the judicial and quasi-judicial proceedings under general or special laws is extended till further orders. Therefore, it was held by the Calcutta High Court that the applicant/award-debtor's time for filing the application under Section 34 of the Arbitration and Conciliation Act 1996 has not expired, and the applicant is in the ambit of benefit given by the Supreme Court by its orders.

The order passed by the Calcutta High Court in SREI Equipment Finance Limited vs. Marg Limited^[8] aims to ease the difficulties that litigants are experiencing as a result of the Covid-19 pandemic, stating that any other interpretation would defeat the purpose of the Supreme Court behind passing such orders. Hence, the limitation orders passed by the Supreme Court must be applied rationally and depending upon the facts and circumstances of each case. If the interpretation of the orders adopted is unreasonable, it may end up being misused by the defaulters in some cases to delay the execution of arbitral awards on frivolous grounds or by anyone for that matter.

The author is an Advocate practicing at Delhi High Court. Views are personal.