S. 34(3) Arbitration Act | Application Filed On Next Working Day After 90 Day Period Is Within Limitation : Supreme Court

The Supreme Court held that the three-month limitation period under Section 34(3) of the Arbitration & Conciliation Act, 1996 (“Arbitration Act”) for challenging an arbitral award should not be rigidly interpreted as exactly 90 days, rather it should be interpreted as three calendar months.

The Court upheld the filing of an application under Section 34 of the Arbitration Act on 11.07.2022 to set aside an arbitral award passed on 09.04.2022, despite it being beyond the 90-day period. It noted that the limitation period ended on 09.07.2022, which was a court holiday (second Saturday), followed by Sunday. Therefore, the application filed on the next working day, Monday (11.07.2022), was held to be within limitation.

Relying on State of Himachal Pradesh v. Himachal Techno Engineers, (2010) 12 SCC 210 and applying Section 12 of the Limitation Act, 1963, the Court reiterated that for calculating limitation under Section 34(3), the date on which the arbitral award is passed must be excluded. Accordingly, the limitation period begins from the day following the date of the award.

The Case

A bench of Justices PS Narasimha and Prashant Kumar Mishra heard an appeal against the Chhattisgarh High Court's decision holding that the respondent's Section 34 application to set aside an arbitral award was filed within the limitation period.

The arbitral award was passed and delivered on 09.04.2022. The respondent filed the Section 34 application on 11.07.2022. The trial court initially held it was within limitation, as the 3-month period expired on 09.07.2022 (a Saturday), followed by a Sunday, justifying filing on the next working day.

However, when the appellant sought recall, the trial court reversed its position, stating the limitation expired on 08.07.2022, a working day. On appeal, the High Court restored the original order, applying Sections 12 and 4 of the Limitation Act, leading to the present appeal before the Supreme Court.

Issue

Whether the 3-month limitation period under Section 34(3) of the Arbitration Act excludes the day of award receipt (per Article 12 of Limitation Act) and extends to the next working day if the deadline falls on a court holiday (per Section 4 of Limitation Act).

Decision

Affirming the High Court's decision, the judgment authored by Justice Narasimha rejected the Appellant's argument of interpreting three months under Section 34(3) of the Arbitration Act as 90 days, instead, it said that the period should be construed as 3 calendar months.

“At this stage, it is necessary to reiterate that the statutory language of Section 34(3) clearly stipulates the limitation period as “three months”, as opposed to the condonable period as “thirty days”. This difference in language unambiguously demonstrates the legislative intent that the limitation period is 3 calendar months as opposed to 90 days. Therefore, we reject the argument taken by the appellant in its written submissions that 3 months must be read as 90 days in the context of Section 34(3).”, the court said.

“In the present case, the respondent received a signed copy of the award on 09.04.2022. Since Section 12(1) applies, this date must be excluded and the 3-month limitation period must be reckoned from 10.04.2022. This expires on 09.07.2022, which happened to be a second Saturday when the court was not working. Hence, the benefit of Section 4 of the Limitation Act will inure to the benefit of the respondent.”, the Court observed.

“Therefore, the respondent's application under Section 34, which was filed on 11.07.2022, i.e., the next working day of the court, must be considered as being filed within the limitation period. Consequently, there was no delay in filing the application and sufficient cause need not be shown for condonation of delay. The High Court therefore rightly allowed the Section 37 appeal and held that the respondent's Section 34 application was filed within the limitation period.”, the court added.

In this context, the Court referred to State of West Bengal v. Rajpath Contractors and Engineers Ltd., where it upheld the application of Section 4 of the Limitation Act, allowing a party to file an application to set aside an arbitral award on the next working day if the initial three-month period expires on a court holiday.

In terms of the aforesaid, the Court dismissed the appeal.

Case Title: M/S R. K. TRANSPORT COMPANY VERSUS M/S BHARAT ALUMINUM COMPANY LTD. (BALCO)

Citation : 2025 LiveLaw (SC) 391

Click here to read/download the judgment

Appearances:

For Petitioner(s) :Mr. Mukul Rohatgi, Sr. Adv. Mr. Arshdeep Singh Khurana, Adv. Mr. Sanjay Abbot, Adv. Ms. Devanshi Singh, Adv. Mr. Manohar Pratap, AOR Mr. Peeyush Bhatia, Adv. Mr. Sulakshan V.s., Adv. Mr. Harsh Srivastava, Adv.

For Respondent(s) :Mr. Ranjit Kumar, Sr. Adv. Mr. Rishabh Garg, Adv. Mr. Ravi Raghunath, AOR