Section 5 Limitation Act Application Not Required If Application Under Section 34 Of A&C Act Is Within Statutory Period: Orissa High Court
The Orissa High Court has ruled that there is no requirement under Section 34(3) of the Arbitration and Conciliation Act, 1996 (A&C Act) to file a separate application for condonation of delay in filing an application to set aside an arbitral award under Section 34 of the A&C Act, since the prescribed and the extended periods are both provided under Section 34 of the...
The Orissa High Court has ruled that there is no requirement under Section 34(3) of the Arbitration and Conciliation Act, 1996 (A&C Act) to file a separate application for condonation of delay in filing an application to set aside an arbitral award under Section 34 of the A&C Act, since the prescribed and the extended periods are both provided under Section 34 of the A&C Act.
The Single Bench of Justice Arindam Sinha held that the Supreme Court in the case of State of Bihar versus Bihar Rajya Bhumi Vikas Bank Samiti (2018) has declared the law and has interpreted the provisions of Section 34 (5) of the A&C Act, which requires a party to issue a prior notice to the opposite party before filing an application to set aside an arbitral award, as being directory in nature and not mandatory.
Therefore, the High Court ruled that the law thus stated by the Supreme Court applies retrospectively since it is a declaration on the discovery of the correct principle.
An arbitral award was passed against the respondent Orissa Mining Corporation Ltd., who challenged the award by filing an application under Section 34 of the A&C Act before the District Judge. The petitioner/ award holder Faridabad Gurgaon Minerals filed a writ petition before the Orissa High Court challenging the entertainment of the application filed by the respondent under Section 34 of the A&C Act by the District Court.
The petitioner Faridabad Gurgaon Minerals submitted before the High Court that the arbitral award was published on 7th December, 2015 and was obtained by petitioner on 9th December, 2015. The petitioner added that the respondent filed an application to set aside the arbitral award under Section 34 of the A&C Act on 8th April, 2016 and that no application was filed by the respondent/award debtor under Section 5 of the Limitation Act, 1963 seeking condonation of the delay in filing the application under Section 34 of the A&C Act beyond three months.
The petitioner added that since the respondent had filed an application to set aside the arbitral award without complying with requirement under Section 34 (5) of the A&C Act of issuing a prior notice to the petitioner/award holder, the respondent had withdrawn the application originally filed by it and had filed a fresh application under Section 34 to set aside the arbitral award.
The petitioner submitted that since the delay in filing the fresh application under Section 34 to set aside the arbitral award was beyond the time period as specified under Section 34(3) of the A&C Act, hence, the application filed by the respondent was not maintainable. Thus, the petitioner contended that the lower Court had acted illegally by entertaining the said application filed afresh by the respondent.
Section 34 (3) of the A&C Act provides that an application for setting an arbitral 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.
The Proviso to Section 34(3) provides 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.
Section 34 (5) of the A&C Act provides that an application to set aside an arbitral award shall be filed by a party only after issuing a prior notice to the other party and such an application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.
Section 14 of the Limitation Act, 1963 provides for exclusion of the time spent in the proceedings initiated by the plaintiff bona fide in a court without jurisdiction, for the purpose of computing the period of limitation for any suit.
The respondent Orissa Mining Corporation Ltd. submitted before the High Court that Section 34(3) of the A&C Act does not require an applicant to make a separate application for availing the extended period of thirty days, as provided in the proviso to Section 34(3). The respondent added that since the prescribed and extended periods are both provided under Section 34(3), no separate application under Section 5 of the Limitation Act, 1963 is required to be made.
Thus, the respondent averred that it had filed the original application under Section 34 of the A&C Act within the extended time period, as provided under the proviso to Section 34(3), and that it had specified the reasons for the delay in filing the application beyond the prescribed period of three months.
The respondent relied on the judgment of the Supreme Court in the case of Northern Railway versus Pioneer Publicity Corporation Pvt. Ltd. (2016) to contend that Section 34 (3) of the A&C Act is not applicable on re-filing of the application under Section 34 to set aside an award. The respondent further averred that Section 34 (5) is a procedural requirement and is not mandatory in nature.
The Court observed that as per the law laid down by the Supreme Court in State of Bihar versus Bihar Rajya Bhumi Vikas Bank Samiti (2018), the provisions of Section 34 (5) of the A&C Act are directory in nature and not mandatory. The Court noted that the Apex Court had ruled that Section 34(5) is a procedural provision, the infraction of which leads to no consequence. The Supreme Court had added that if Section 34(5) is construed as a mandatory provision it would defeat the advancement of justice.
Holding that the original application was filed by the respondent under Section 34 of the A&C Act beyond three months but before the expiry of thirty days, as provided under the Proviso to Section 34(3), the Court ruled that there is no requirement under Section 34(3) of the A&C Act to file a separate application for condonation of delay since the prescribed and the extended periods are both provided under Section 34 of the A&C Act.
"Mr. Tripathy's submission on there being no requirement under section 34(3) in the 1996 Act, to file separate application for condonation of delay is accepted since, the prescribed and extended periods are both provided thereunder. Section 5 or for that matter any other provision of Limitation Act, 1963 does not apply to the periods prescribed in applying for setting aside award and the outer limit of the extension period is saved by section 29 in the 1963 Act, made applicable to rest of the 1996 Act by section 43 therein.", the Court said.
The Court added that the application filed by the respondent afresh under Section 34 of the A&C Act to set aside the arbitral award has to be dealt with by applying the prescribed period and the extension period as provided under Section 34 (3) of the A&C Act, and that Section 14 of the Limitation Act, 1963 will have no application to the periods prescribed and extended by Section 34(3) of the A&C Act.
The Bench further noted that the respondent had withdrawn the application originally filed by it for non-compliance with the provisions of Section 34 (5) of the A&C Act, with a liberty to file a fresh application, since the judgment of the Supreme Court in State of Bihar versus Bihar Rajya Bhumi Vikas Bank Samiti (2018) was delivered on 30th July, 2018, i.e., after the respondent had withdrawn the application originally filed by it.
The Court ruled that the Supreme Court in the case of State of Bihar versus Bihar Rajya Bhumi Vikas Bank Samiti (2018) has declared the law and has interpreted the provisions of Section 34 (5) of the A&C Act as being directory; therefore, the law thus stated by the Supreme Court applies retrospectively since it is a declaration on the discovery of the correct principle.
Thus, the Court held that in view of the retrospective application of the law declared by the Apex Court in the State of Bihar versus Bihar Rajya Bhumi Vikas Bank Samiti (2018), the challenge raised by the petitioner towards the maintainability of the application filed by the respondent under Section 34 of the A&C Act was unlikely to succeed and hence, there was no necessity for the respondent to have withdrawn the application originally filed by it under Section 34.
The Court, thus restored the application originally filed by the respondent under Section 34 of the A&C Act and condoned the delay in filing the said application beyond three months.
Case Title: Faridabad Gurgaon Minerals versus Orissa Mining Corporation Ltd.
Citation : 2022 LiveLaw (Ori) 122
Dated: 03.08.2022 (Orissa High Court)
Counsel for the Petitioner: Mr. Satyasmruti Mohanty, Advocate
Counsel for the Respondent: Mr. B. S. Tripathy-1, Advocate