Supreme Court: Application of Section 5 Limitation Act Not Excluded under Commercial Courts Act

Supreme Court: Application of Section 5 Limitation Act Not Excluded under Commercial Courts Act

The Supreme Court on 19 March 2021, in the case titled Government of Maharashtra (Appellant) v. Borse Brothers Engineers and Contractors Pvt. Ltd. (Respondent) held that under the scheme of the Commercial Courts Act, application of Section 5 of the Limitation Act is not excluded.

The SC bench comprising of Justices RF Nariman, BR Gavai, and Hrishikesh Roy clarified that delay for filing appeals under Section 13 of the Commercial Courts Act can be condoned by showing sufficient cause according to Section 5 of the Limitation Act.

The Top Court made the said observations while overruling the judgment passed in the case of M/s NV International v. State of Assam which had strictly held that a delay of more than 120 days in filing of appeals under Section 37 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) cannot be condoned.

The Apex Court was dealing with the issue of whether the application of Section 5 of the Limitation Act is excluded by the scheme of the Commercial Courts Act.

While answering to the said issue the Top Court noted that Section 13(1A) of the Commercial Courts Act does not contain any provision akin to Section 34(3) of the Arbitration Act.

The SC bench said the Commercial Courts Act, Section 13(1A) of the Commercial Courts Act provides for a limitation period of 60 days from the date of the judgment or order appealed against, without further going into whether delay beyond this period can or cannot be condoned.

Another contention was made by referring to Section 21 of the Commercial Courts Act. It was contended that the non-obstante clause contained would override the Acts, including the Limitation Act, as a result of which, the applicability of Section 5 thereof would be excluded.

The Top Court negated by referring to the judgment in the case titled B.K. Educational Services (P) Ltd. v. Parag Gupta & Associates, (2019) 11 SCC 633, wherein the Court held, "For all these reasons we reject the argument made by Shri George that the application of section 5 of the Limitation Act is excluded given the scheme of Commercial Courts Act."

It added, "Given the object sought to be achieved under both the Arbitration Act and the Commercial Courts Act, that is, the speedy resolution of disputes, the expression "sufficient cause" is not elastic enough to cover long delays beyond the period provided by the appeal provision itself. Besides, the expression "sufficient cause" is not itself a loose panacea for the ill of pressing negligent and stale claims."

The Court further held that the object of speedy disposal is sought to be achieved both under the Arbitration Act and the Commercial Courts Act. The Court further stated, "For appeals filed under Section 37 of the Arbitration Act that is governed by Articles 116 and 117 of the Limitation Act or section 13(1A) of the Commercial Courts Act, a delay beyond 90 days, 30 days or 60 days, respectively, is to be condoned by way of exception and not by way of rule."

The bench further stated that "In a fit case in which a party has otherwise acted bona fide and not in a negligent manner, a short delay beyond such period can, in the discretion of the Court, be condoned, always bearing in mind that the other side of the picture is that the opposite party may have acquired both in equity and justice, what may now be lost by the first party's inaction, negligence or laches."