No Explanation Of 'Sufficient Cause', No Special Concessions To Govt Body For Limitation Vis-A-Vis Commercial Courts Act: Allahabad High Court

The Allahabad High Court has held that no special concession can be granted to government bodies for condoning delay under Commercial Courts Act, 2015 if sufficient cause is not shown in application for delay condonation.

Following the judgement of the Supreme Court in Government of Maharashtra vs. M/s Borse Brothers Engineers and Contractors, Justice Om Prakash Shukla held that appeal under Section 37 of the Arbitration and Conciliation Act, 1996 should be filed within 60 days from date of order under Section 13(1A) of the Commercial Courts Act, 2015. The Court held that in rare cases, where the specified value is less than Rs. 3 lakhs, the limitation period under Articles 116 and 117 of the Limitation Act would be applicable to the appeals, as the case may be.

The Court further held that Section 5 of the Limitation Act would apply to arbitration appeals under Section 37 of the Act of 1996. However, even 'sufficient cause' made out under Section 5 of the Limitation Act is “not elastic enough to cover long delays” as there is no right to have delays condoned. The Court held that only short delays by way of exception can be condoned, and that too when the party has acted in a bona fide manner and not negligently.

Factual Background

Notification under Section 3A of the Act, 1956 was issued in 2004. Thereafter, the Prescribed Authority proceeded to determine compensation under Section 3(g)(7), and passed compensation order under Section 3D of the Act, 1996. All owners including the respondents had accepted the award without protest and enjoyed compensation for 5 years without any objection.

However, in 2010, respondents filed an arbitration application under Section 3(g)(5) of the Act, 1956 on grounds that land was of commercial use and consequently, enhancement of compensation was sought. The learned Arbitrator decided against NHAI, directing calculation of land value at non-agricultural rate of Rs. 490/- per square meter, and interest @ 9% from the date of acquisition to the date of award.

In the appeal under Section 34 filed by NHAI, the Additional District Judge, Barabanki noticed a specific finding of fact by the Arbitrator – that the land in question was adjacent to the highway, and therefore payments should have been made at the rate fixed for commercial or industrial and not agricultural land. It was also observed that various factors such as acquired land being within a 100 metre radius of the highway were considered by the Arbitrator before concluding that land should have been valued at non-agricultural rates. Contentions pertaining to limitation by NHAI were negated, and ultimately the appeal under Section 34 was dismissed.

NHAI filed a Section 37 appeal before the High Court.

High Court Verdict

The Court found that facts surrounding the issue of limitation were not disputed. There was inordinate delay on part of the appellant-NHAI in filing the appeals. The Court noted that under Section 43 of the Act of 1996, the Limitation Act, 1963 applies to arbitration proceedings. Consequently, appellant had 90 days to file appeals under Article 116 of the Limitation Act.

Citing the Commercial Courts Act, 2015, the Court noted that all commercial disputes of more than Rs. 3,00,000 are to be adjudicated upon under the aforesaid Act. Accordingly, the Court noted that under Section 13(1A), an appeal under Section 37 must be filed in 60 days.

The Court observed that the Supreme Court, not taking into account the Commercial Courts Act, 2015 judicially engrafted a limitation period of 120 days from the date of passing of the order in Union of India vs. Virendera Constructions Ltd. This position was reiterated in M/s N.V. International vs. the State of Assam and Ors. The Court observed that a 3-judge bench of the Supreme Court in Government of Maharashtra vs. M/s Borse Brothers Engineers & Contractors Pvt. Ltd. clarified the issue.

Further, the Court noted that the Supreme Court in Consolidated Engineering Enterprises vs. Irrigation Department held that an appeal under Section 37 must be filed within 60 days as per Section 13(1A) of the Commercial Courts Act, 2015. Only in those cases where the specified value is less than Rs. 3,00,000 would the appeal under Section 37 be governed by Articles 116 and 117 of the Limitation Act. It was further held that Section 5 of the Limitation Act will apply to Section 37 appeals, but the same has to be considered with the main objective of the Act, i.e., speedy disposal. The Apex Court opined that delay could not be condoned merely because sufficient cause is made out. Only a short delay, and that too when the party acted in a bona fide manner, by way of exception, could be condoned.

Accordingly, Justice Shukla held that same yardstick shall be applicable to public and private sector companies, and no special treatment can be accorded merely because the government is involved:

“The Apex Court has not only provided the much-needed clarification on an important point of law but has also reemphasized the main objective of speedy disposal of disputes under the Arbitration & Conciliation Act, 1996. In the said facts of a connected case arose from the High Court of Madhya Pradesh, the Apex Court also refused to condone the delay of 75 days beyond the period of 60 days provided by the Commercial Courts Act. Further, the Apex Court went a step ahead and also observed that be it a private party or a public Sector company, the same yardstick will be applicable for condonation of delay, and no special treatment can be afforded merely because the government is involved.”

The Court observed that no sufficient cause was made out to condone delay in the application and its supporting affidavit. The Regional Officer, NHAI had accorded his concurrence/approval for filing the Section 37 appeal in January, 2023, but appeals were filed 6 months later, in July, 2023. The Court observed that though it was contended that counsel for appellant was down with serious ailments during the intervening 6-month period, however, there were no averments or records to that effect, with only a cryptic application being filed.

Relying on the decision of the Apex Court in Ramlal vs. Rewa Coalfields Ltd., the Court observed that even if sufficient cause was made out, there is no right to have the delay condoned.

NHAI further contended that it is a public body, and as there had been no deliberate delay in filing the appeal. In the interest of justice, technical objections of delay should be ignored. However, Relying on M/s Borse Brothers Engineers & Contractors., the Court held that “there are no special concessions in the context of limitation to a Government body as far as the Commercial Courts Act is concerned.”

Accordingly, the Court rejected applications for condonation of delay as “time-barred” and consequently dismissed appeals filed under Section 37 of the Arbitration and Conciliation Act, 1996 by the NHAI on grounds of limitation.

Case Title: National Highway Authority Of India, Through Its Project Director vs. Smt. Sampata Devi And 2 Others 2023 LiveLaw (AB) 419 [Appeal Under Section 37 Of Arbitration And Conciliation Act 1996 Defective No. - 53 of 2023]

Case Citation: 2023 LiveLaw (AB) 419

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