Limitation Period For Filing Petition For Enforcement Of Foreign Award Would Be Governed By Article 137 Of Limitation Act: SC [Read Judgment]

The Supreme Court has held that the period of limitation for filing a petition for enforcement of a foreign award under Sections 47 and 49 of the Arbitration and Conciliation Act, would be governed by Article 137 of the Limitation Act, 1963 which prescribes a period of three years from when the right to apply accrues.

The bench comprising Justices S. Abdul Nazeer, Indu Malhotra and Aniruddha Bose observed that a party may file an application under Section 5 for condonation of delay in filing the petition for enforcement of foreign award as the bar contained therein which excludes an application filed under any of the provisions of Order XXI of the Code of Civil Procedure, would not be applicable to a substantive petition filed under the Arbitration Act, 1996.

The court upheld a foreign arbitration award in favour of Vedanta and Videocon for the development of the Ravva oil and gas fields off the coast of Andhra Pradesh. While considering the appeal, the bench noticed that divergent views have been taken by some High Courts with respect to the period of limitation for filing a petition for enforcement of a foreign award under the 1996 Act.

The bench observed that since Article 136 of the Limitation Act is confined to the decrees of a civil court in India, application for execution of a foreign decree would be an application not covered under any other Article of the Limitation Act, and would thus be covered by Article 137.

"Foreign awards are not decrees of an Indian civil court. By a legal fiction, Section 49 provides that a foreign award, after it is granted recognition and enforcement under Section 48, would be deemed to be a decree of "that Court" for the limited purpose of enforcement. The phrase "that Court" refers to the Court which has adjudicated upon the petition filed under Sections 47 and 49 for enforcement of the foreign award. In our view, Article 136 of the Limitation Act would not be applicable for the enforcement / execution of a foreign award, since it is not a decree of a civil court in India..The enforcement of a foreign award as a deemed decree of the concerned High Court [as per the amended Explanation to Section 47 by Act 3 of 2016 confers exclusive jurisdiction on the High Court for execution of foreign awards] would be covered by the residuary provision i.e. Article 137 of the Limitation Act. "

The court added that Limitation Act, 1963 excludes any application filed under Order XXI from the purview of Section 5 of the Act, with the object that execution of decrees should be proceeded with as expeditiously as possible. On the applicability of the said bar on petition under Section 47 & 49, the bench observed:

"The application under Sections 47 and 49 for enforcement of the foreign award, is a substantive petition filed under the Arbitration Act, 1996. It is a well settled position that the Arbitration Act is a self-contained code..The application under Section 47 is not an application filed under any of the provisions of Order XXI of the CPC, 1908. The application is filed before the appropriate High Court for enforcement, which would take recourse to the provisions of Order XXI of the CPC only for the purposes of execution of the foreign award as a deemed decree. The bar contained in Section 5, which excludes an application filed under any of the provisions of Order XXI of the CPC, would not be applicable to a substantive petition filed under the Arbitration Act, 1996. Consequently, a party may file an application under Section 5 for condonation of delay, if required in the facts and circumstances of the case."

In the instant case, the court noticed that the enforcement petition was filed within 3 months from the date when the right to apply accrued and therefore the petition for enforcement of the foreign award was filed within the period of limitation prescribed by Article 137 of the Limitation Act, 1963. In any event, there are sufficient grounds to condone the delay, if any, in filing the enforcement / execution petition under Sections 47 and 49, on account of lack of clarity with respect to the period of limitation for enforcement of a foreign award, the bench added. 

Case name: GOVERNMENT OF INDIA vs. VEDANTA LIMITED

Case no.: CIVIL APPEAL NO. 3185 OF 2020

Coram: Justices S. Abdul Nazeer, Indu Malhotra and Aniruddha Bose

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