Benefit Of Section 4 Of Limitation Cannot Be Extended To Thirty Days Provided By Proviso To Section 34(3): Himachal Pradesh High Court

While hearing a petition under Section 37 of the Arbitration Act, the Himachal Pradesh High Court bench of Justice Bipin Chander Negi upheld the order passed by the district court, dismissing a Section 34 petition as barred by limitation. The court held that the benefit of Section 4 of the Limitation Act could only be extended to the prescribed period of limitation, which in the case of Section 34 is three months.

Section 34 of the Arbitration pertains to filing an application for setting aside the award passed by the tribunal. The prescribed period of limitation of Section 34 is three months from the date the petitioner receives the award.

Section 4 of the Limitation Act contemplates a situation where the prescribed period of an appeal expires on a day when the courts are closed; the appeal can be filed when the court re-opens next.

Facts:

On 13th October 2022, the appellant received a certified copy of an award, dated 03rd February 2022, passed by the Divisional Commissioner, exercising powers of an Arbitrator under the National Highways Act, 1956—the time limit of three months to challenge the award under Section 34(3) of the Arbitration Act lapsed on 12th January 2023. The Courts were closed for winter vacation from 23rd January 2023 to 19^th February 2023, and the application under Section 34 was filed on 20^th February 2023. The district court dismissed the application as being barred by limitation. Aggrieved by the judgement of the district court, dated 02nd May 2023, the appellant approached the High Court.

Analysis by the Court:

The Bench upheld the district court's order in holding that the benefit of Section 4 of the Limitation Act can be taken only when the Section 34 petition is filed within the statutory period of three months. The Supreme Court in Bhimashankar Shakari Sakkare Karkhane Niyamita has held that the exclusion of the period during which the courts are closed is available only when Section 34 is filed within the prescribed period of limitation. The exclusion benefit is not available for thirty days period after the expiry of three months, where the Courts have the discretion under the proviso to Section 34(3).

The Bench noted the Supreme Court's judgement in The State of West Bengal represented through the Secretary & Ors. v. Rajpath Contractors and Engineers Ltd., where the applicability of Section 5 of the Limitation Act to the Section 34 petitions have been excluded. It was also held that the applicability of Section 4 of the Limitation Act to the Section 34 petition when the prescribed period ends on the day when the Courts are closed, the petition can be accepted when the Court re-opens next. The period of thirty days in the proviso to Section 34(3) cannot be said to be the prescribed period to make an application for challenging the award.

The Bench further observed that the appellant could not take the benefit of Section 4 as the prescribed period of limitation under Section 34 expired on 12^th January 2023, and the petition was filed on 20^th February. Therefore, the Bench upheld the order of the district court.

Case Title: National Highway Authority of India v. Narayan Das

Case Number: Arb. Appeal No. 36 of 2023

Counsel for the Petitioner: Mr. K.D. Shreedhar, Senior Advocate, along with Ms. Sneh Bhimta, Advocate.

Counsel for the Respondent: Mr. Varun Rana, Advocate.

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