The Supreme Court observed that where such an application under Section 33 of the Arbitration and Conciliation, 1996 Act was filed the starting point for the period of limitation for challenging the same under Section 34 of the Act as per sub section (3) would be the date of disposal of such application under Section 33 by the arbitral tribunal, as long as the application under Section 33 of the Act had been filed within the prescribed period of limitation under sub-section (1).
The Bench of Justice J.B Pardiwala and Justice K.V. Viswanathan observed, “Where such an application under Section 33 of the 1996 Act is filed, irrespective of whether the arbitral tribunal upon considering such application, either makes or does not make any correction or modification or choose to render or to not render an additional award in terms of Section 33 of the Act, 1996, the starting point for the period of limitation for challenging the same under Section 34 as per sub section (3) would be the date of disposal of such application under Section 33 by the arbitral tribunal, as long as the application under Section 33 of the 1996 Act had been filed within the prescribed period of limitation under sub-section (1) thereto AND with notice to the other party. Any other interpretation to the contrary, would do violence to plain and unambiguous language used in Section 34 sub-section (3) of the Act, 1996.”
Advocate Sanjana Saddy representing Appellant.
Case Brief
An SLP was filed against the order of the High Court of Bombay by which the appeal filed by the appellant herein under Section 37 of the Arbitration and Conciliation Act, 1996 (for short the “1996 Act”) came to be dismissed on the ground that the appellant had not filed the arbitration petition under Section 34 of the 1996 Act within the period of limitation prescribed therein.
The Appellant submitted that the order is in direct conflict with the decision of the Supreme Court in the M/s. Ved Prakash Mithal and Sons v. Union of India (2018) as it was held that the period of limitation for challenging an award would, in terms of Section 34 sub-section (3) of the 1996 Act, commence only from the date on which an application filed under Section 33 of the Act 1996 is disposed of.
It was also contended by the Appellant that the High Court committed an error in holding that the limitation period of three-months would commence from the date of receipt of the arbitration award and not the date of the order dismissing or disposing the application under Section 33 sub-section (1) of the 1996 Act.
Court’s Analysis
The Supreme Court noted that the Section 34 sub-section (3) of the 1996 Act, prescribes the period of limitation within which an application for the setting aside of an arbitral award may be filed by a party aggrieved by the award so passed.
“The 1996 Act being a special law, in view of Section 29 sub-section (2) of the Limitation Act, 1963 the special period of limitation prescribed under Section 34 sub-section (3) for making an application for setting aside the arbitral award as well as for condonation of any delay therein as per the proviso thereto shall prevail”, the Court said.
The Court highlighted that computation of the period of limitation for filing an application under Section 34 of the Act was envisaged to operate in two distinct scenarios- the first part provides for an application for setting aside an award in terms of Section 34 of the 1996 Act, the period of limitation of three-months would be computed from the “date on which the party making that application had received the arbitral award”. Whereas, the second part of the provision stipulates that where a request was made to the arbitral tribunal under Section 33 of the 1996 Act, the limitation prescribed under the said provision would commence from the date on which such “request had been disposed of by the arbitral tribunal”.
While referring to Section 33 of the Act, the Bench opined that the arbitral tribunal has also been conferred suo motu powers for correcting errors of the type referred to in Section 33 sub section (1) clause (a) of the 1996 Act qua which as well, the timeframe fixed is thirty-days, commencing from the date when the arbitral award is rendered.
While referring to Ved Prakash case, the Court said, “This Court explained that the reason behind saying that the period of limitation for the purpose of Section 34 sub-section (3) of the 1996 Act commences from the date of disposal of the application under Section 33 is that once the arbitral award has been amended or corrected it is the corrected award which has to be challenged and not the original award as the original award stands modified, with only the corrected award being the binding award standing between the parties that must be challenged by filing objections.”
The Court opined that a conjoint reading of Section 33 and Section 34 sub-section (3) of the 1996 Act makes it clear that the limitation period for preferring an application for setting aside, where a request was made by either party under Section 33 of the 1996 Act, commences from the date when such request made under Section 33 was disposed of by the arbitral tribunal.
The Court observed that in case of the corrected award, the aggrieved party has to pray for setting aside the corrected award and not the original award, as the original award stands merged with the corrected award, and it was the latter which was binding on all parties. The original award ceases to be of any significance, either for enforcement or for the purpose of challenging it in appeal.
“Thus, what is material for the purpose of computation of limitation under Section 34 sub-section (3) of the 1996 Act, where a request was made in terms of Section 33, is not whether such request fell within the purview of the said provision or not, but only the factum that such request was made in the manner delineated under Section 33 i.e., it was made “within thirty days from the receipt of the arbitral award” and with notice to the other party”, the Court held.
The Court was of the opinion that it would be the corrected award, and not the original award passed prior to the request under Section 33 of the 1996 Act, which has to be challenged.
The Court summarised as follows, among others:
Where an application under Section 33 of the 1996 Act has not been filed, the legislature was conscious enough to state that it would be the date of the receipt of the award which would earmark the commencement of limitation for an application for setting aside of an award in terms of Section 34 of the 1996 Act. Whereas, in the case where an application under Section 33 of the 1996 Act has been filed, the legislature was conscious enough to lay down that it would be the date of disposal of such request or application, that would be the starting point for calculation of limitation.
In the aforesaid scenario, neither the date of passing of the original award or date of receipt of the same by the party nor the date of receipt of the corrected award or date of receipt of the decision of the arbitrator disposing the application under Section 33 of the 1996 Act is of any significance. What is of significance, under Section 34 sub-section (3) of the Act, 1996 is the date on which the application or request under Section 33 came to be disposed by the arbitral tribunal.
Accordingly, the Appeal was allowed.
Cause Title: Geojit Financial Services Ltd. V. Sandeep Gaurav