Supreme Court: If An Arbitral Award Is Challenged Beyond The Three-Month Time Limit, Section 4 Of The Limitation Act Cannot Be Invoked

Supreme Court: If An Arbitral Award Is Challenged Beyond The Three-Month Time Limit, Section 4 Of The Limitation Act Cannot Be Invoked

A bench comprising Justice Abhay Oka and Justice Pankaj Mithal of the Supreme Court reaffirmed that if an arbitral award is challenged beyond the three-month time limit, Section 4 of the Limitation Act cannot be invoked. The Court clarified that the additional 30-day period mentioned in Section 34(3) of the Arbitration and Conciliation Act, 1996 does not extend the "prescribed period" as defined in Section 4 of the Limitation Act, 1963.

Section 4 of the Limitation Act provides relief in cases where courts are closed on the last day of the prescribed period for filing suits, appeals, or applications.

The Apex Court dismissed the appeal of the State of West Bengal against the Calcutta High Court's decision, which had rejected their petition under Section 34 of the Arbitration and Conciliation Act, 1996.

The Calcutta High Court had deemed the petition time-barred in relation to an arbitral award favouring Rajpath Contractors and Engineers Ltd., a decision upheld by the Supreme Court.

The State of West Bengal had engaged Rajpath Contractors and Engineers Ltd. for a bridge construction project. There were subsequent disputes which resulted in arbitration. On June 30, 2022, the Arbitral Tribunal awarded Rs. 2,11,67,054 to the contractor along with interest, while dismissing the State's counterclaim. The State received a copy of the award on the same day.

The Calcutta High Court was closed from October 1, 2022, to October 30, 2022, for a vacation period. The State filed a petition under Section 34 of the Arbitration Act on October 31, 2022, challenging the arbitral award. On May 4, 2023, the High Court dismissed the petition, citing that the limitation period had expired on September 30, 2022. The High Court ruled that the State was not entitled to the benefit of Section 4 of the Limitation Act, 1963. Dissatisfied, the State appealed to the Supreme Court.

The State argued that the limitation period should have commenced from July 1, 2022, which would make October 1, 2022, the last day. Since October 1, 2022, fell within the vacation period, the petition filed on October 31, 2022, should be considered timely.

The State also pointed out that e-filing during the vacation was restricted to urgent matters, making it impractical to file earlier.

The contractor countered that Section 4 of the Limitation Act applies only if the petition is filed within the three-month period stipulated in Section 34(3) of the Arbitration Act.

Section 34(3) of the Arbitration Act specifies a three-month limitation period from the receipt of the arbitral award, excluding the day of receipt itself. Thus, the limitation period began on July 1, 2022, and ended on September 30, 2022.

Citing the precedent of Assam Urban Water Supply & Sewerage Board v. Subash Projects & Mktg. Ltd., the Supreme Court clarified that the "prescribed period" under Section 34(3) does not include the 30-day extension provided in its proviso.

Since the maximum 30-day extension period ended on October 30, 2022, the petition filed on October 31, 2022, was deemed out of time, and therefore, Section 4 of the Limitation Act did not apply.

Thus, the Supreme Court upheld the decision that the State of West Bengal's appeal was time-barred and dismissed it accordingly.