Both Parties Are Entitled To Get The Benefit Of The Latter Part Of Section 34(3) While Computing The Period Of Limitation: Delhi High Court

Section 33 of the Arbitration Act provides for the correction and interpretation of the award and the rendering of an additional award.

Section 34(3) of the Act prescribes the limitation period in which the application for setting aside an arbitral award has to be filed. Such application shall be made within three months from the date of service of the award or, if an application is made under Section 33, from the date of disposal of the application.

Facts:

An arbitral award was passed on 11th March 2023 and was received by the petitioner on the same day. On 28th March 2023, the respondent moved an application under Section 33(4), seeking an additional award, as one of the claims was not decided in the award. Agreeing with the respondent's submission, the tribunal passed an additional award on 24th April 2023. The petitioner moved an application on 19th May 2023, under 33(1), seeking a correction in the additional award; the tribunal dismissed the application on 24th May 2023. The present Section 34 petition was filed in the High Court on 22nd August 2023.

Submissions by the Parties:

The respondent made the following submission:

1. Only the party that moves an application under Section 33 can reckon the limitation period of the petition under Section 34 from the date when the arbitral tribunal has disposed of the said application.

2. The original and additional awards rendered under Section 33(4) are independent. Both awards could be challenged independently, and there was no valid reason for the petitioner to wait for the additional award to be rendered before filing the Section 34 petition. The counsel also relied on a coordinate bench judgment in NHAI v. Trichy Thanjavur Expressway Ltd.

3. The application filed by the respondent before the Arbitral Tribunal was for rendering additional award under Section 33(4) and not for correcting error under Section 34.

The petitioner made the following submissions:

1. If the date of filing of the petition was to be counted from 24th 2023, i.e., when the tribunal dismissed the Section 33(1) application, then Section 34 is well within the 90-day time period as mentioned in Section 34(3) if the date of filing is to be calculated from the date of disposal of Section 33(4) application even then the petition fall within the 120 days time period from the date of receipt of the additional award.

Analysis of the Court:

The Bench observed that the benefit of calculating the limitation period for filing a Section 34 petition from the date of disposal of the Section 33 application is not specific to the party that had filed the said application. From that perspective, section 34(3) could also be said to fall into two distinct parts. The first part of Section 34(3) simply means that if a party wants to challenge an arbitral award, it has to file the Section 34 petition within three months from the date they received the award. The second part of Section 34(3) contemplates that an application under Section 33 has been moved. It does not say who should file the application. Thus, the filing of the application under Section 33, Section 34(3) permits the filing of the petition under Section 34 within a period of three months from the date of disposal of the said application.

The Bench further observed that when calculating the period of limitation under Section 34(3), whether the awards can be independently challenged or not is immaterial.It is not permissible for the Court to degrade the beneficial statutory dispensation under Section 34(3) by adopting artificial consideration of whether both awards could be independently challenged.

The Bench also observed that the computation of the limitation period from the date of disposal of the Section 33 application does not depend on the sub-section or clause of the said section. Therefore, it is not relevant whether the application was filed under a sub-section of Section 33; a Section 34 petition can be filed three months from the date the application is disposed of.

Case Title: Prime Interglobe Private Limited v. Super Milk Products Private Limited

Citation: 2024 LiveLaw (Del) 1032

Case Number: O.M.P. (COMM) 368/2023

Counsel for the Petitioner: Mr. Karan Luthra, Mr. Nikhil Kohli, Mr. Kushank Garg and Ms. Saumya Tiwari, Advocates.

Counsel for the Respondent: Mr. Shashank Garg, Mr. Aseem Chaturvedi, Mr. Shivank Diddi and Ms. Phalguni Nigam, Advocates.

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