Section 14 Of Limitation Act Applicable To Proceedings Under Section 34 Of Arbitration Act: Bombay High Court Reiterates

The bench of Justice R.I. Chagla excluded 272 days spent in prosecuting a recall application of the arbitral award before the MSME Council. The court observed that a party prosecuting its case in good faith and due diligence, and the prior proceedings were riddled with defect of jurisdiction would get the benefit of Section 14 of the Limitation Act and the time consumed in such proceedings would stand excluded from the purview of limitation.

Facts:

The MSME Council passed the impugned award on 14 July 2023 and was received by the applicant on 2 August 2023. On the advice of a former advocate for the applicant, an application dated 31 August 2023 was filed before the MSME Council to recall the impugned award. The advocate emphasized that this was the most appropriate cause of action to challenge the award, which was an ex-parte award. The applicant believed that the recall application was filed within the limitation period of Section 34(3), and the MSME Council would decide the application. In March 2024, the MSME Council failed to consider the recall application and served the applicant with the execution application. The former advocate again advised the applicant to approach the court by filing a writ petition. The same has been filed, and directions have been sought to the MSME Council to hear and dispose of the recall application. In the meantime, the applicant's advocate advised them to file the present Section 34 petition, which was filed on 18 July 2024. The applicant stated the delay in filing the Section 34 petition was unintentional and resulted from inadequate legal advice.

Submissions by the Parties:

The petitioner made the following submissions:

• The consistent view taken by the Supreme Court is that there is no provision in the Arbitration Act which excludes the applicability of Section 14 of the Limitation Act to an application made under Section 34 of the Arbitration Act.
• The petitioner had been subjected to wrong legal advice by the former advocate to file a recall application and then the writ petition instead of a Section 34 petition. Section 14 of the Limitation Act is applicable to proceedings which are prosecuted in good faith in a court but suffer from a defect of jurisdiction. Therefore, the term "Court" in Section 14 should be construed liberally to include quasi-judicial tribunals.
• The recall application was filed within the limitation period of Section 34(3) before the Arbitral Tribunal. Earlier proceedings pertained to the same subject matter as these proceedings and were prosecuted by the same parties. All conditions of Section 14 of the Limitation Act have been satisfied, and the same should be applied in the present case. The time spent prosecuting the earlier proceedings is to be excluded when computing the period of filing the Section 34 petition.

Analysis of the Court:

The court analyzed the case from the perspective of the relevant Supreme Court judgments in State of Goa v. Western Builders, Gulbarga University v. Mallikarjun S. Kodagali; Consolidated Engineering Enterprises v. Irrigation Department, and Simplex Infrastructure Limited v. Union of India. The applicability of Section 14 of the Limitation Act is not excluded from the language of Section 34 of the Arbitration Act. Section 14 simply excludes a certain period when calculating the limitation period. While Section 5 of the Limitation Act is not applicable and cannot condone a delay in filing a Section 34 petition after the prescribed period, there is no such exclusion on the applicability of Section 14.

The recall application filed before the MSME council, on the advice of the previous advocate, must be considered. The application was filed within the limitation period of Section 34 and is still pending. All the conditions precedent of Section 14 of the Limitation Act being satisfied, the same can be pressed into service as held by the Supreme Court in Consolidated Engineering Enterprises. In light of the Supreme Court judgment in M.P. Steel Corporation v. Commissioner of Central Excise, the term "court" must be construed liberally to include a quasi-judicial tribunal.

Therefore, the court found no delay in filing the Section 34 petition, as the time taken to pursue the proceedings before the MSME Council has to be excluded. Accordingly, the court granted the relief sought in the interim application and directed the registry to accept the Section 34 petition.

Case Title: Kisan Moulding Limited v. Micro and Small Enterprises Facilitation Council (MSEFC) Konkan Thane & Anr.

Case Number: INTERIM APPLICATION (L) NO.28278 OF 2024 IN COMMERCIAL ARBITRATION PETITION (L) NO.25371 OF 2024

Counsel for the Petitioner: Mr. Naushad Engineer, Senior Counsel a/w Mr. Rashmin Khandekar, Mr. Yohaann Limathwalla, Mr. Pranav Nair, Mr. Ranjeev Carvalho, Ms. Mehak Shah i/b Mr. Amit Tungare, Ms. Jill Rodricks, Ms. Prisca Fernandes and Mr. Prathamesh Nirkhe for the Applicant/Petitioner.

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