Supreme Court Clarifies Limitation for Challenging Arbitral Awards: My Preferred Transformation vs. Faridabad Implements (2025)

Introduction

Date of the Judgment: January 10, 2025

Citation: 2025 INSC 56

Judges: Pamidighantam Sri Narasimha, J., Pankaj Mithal, J. (Concurring)

Can a delay in filing an application to set aside an arbitral award be excused if the condonable period expires during court holidays? The Supreme Court of India recently addressed this crucial question concerning the interplay between the Arbitration and Conciliation Act, 1996 (ACA) and the Limitation Act, 1963. This judgment clarifies the extent to which the Limitation Act applies to challenges against arbitral awards, specifically focusing on whether the benefit of Section 4 of the Limitation Act extends to the 30-day condonable period under Section 34(3) of the ACA. The judgment was delivered by a two-judge bench consisting of Justice Pamidighantam Sri Narasimha, who authored the main opinion, and Justice Pankaj Mithal, who provided a concurring opinion.

Case Background

The appellants and the respondent had entered into lease agreements, which led to disputes. Consequently, the respondent invoked arbitration, which resulted in an arbitral award dated February 4, 2022, in favor of the respondent. The appellants received a scanned copy of the award via email on the same day. A signed hard copy was received on February 14, 2022. The three-month limitation period for filing an application under Section 34(3) of the ACA, as extended due to a Supreme Court order related to the COVID-19 pandemic, expired on May 29, 2022. The additional 30-day condonable period expired on June 28, 2022, during the High Court’s summer vacation from June 4, 2022, to July 3, 2022. The appellants filed their Section 34 petition, along with a delay condonation application, on July 4, 2022, the day the court reopened. The respondent, meanwhile, initiated the execution of the award.

Timeline

Course of Proceedings

The single judge of the High Court dismissed the Section 34 application on February 7, 2023, holding it to be time-barred. The High Court noted that the limitation period commenced on February 14, 2022, when the appellants received the signed copy of the award. The three-month period, extended due to the COVID-19 pandemic, expired on May 29, 2022. The additional 30-day condonable period expired on June 28, 2022, during the summer vacation. The High Court relied on the Supreme Court’s decision in Assam Urban Water Supply & Sewerage Board v. Subhash Projects & Marketing Limited [(2012) 2 SCC 624], which stated that Section 4 of the Limitation Act applies only when the “prescribed period” expires on a court holiday, not the condonable period. The High Court also held that a notification allowing filings between June 27, 2022, and July 2, 2022, did not affect the applicability of Section 10 of the General Clauses Act, 1897 (GCA). Finally, the High Court cited Bhimashankar Sahakari Sakkare Karkhane Niyamita v. Walchandnagar Industries Limited [(2023) 8 SCC 453], which held that Section 10 of the GCA does not apply to the condonable period under Section 34(3) of the ACA. Consequently, the High Court dismissed the appeal under Section 37 of the ACA on April 3, 2024, stating it lacked the power to condone the delay.

Legal Framework

The core legal framework of this case involves the interplay between the Arbitration and Conciliation Act, 1996 (ACA), and the Limitation Act, 1963. Section 34(3) of the ACA stipulates a three-month limitation period for challenging an arbitral award, with a discretionary extension of 30 days if sufficient cause is shown. The proviso to Section 34(3) states that the court may entertain the application within a further period of thirty days, but not thereafter. Section 43(1) of the ACA states that the Limitation Act applies to arbitrations as it applies to court proceedings. Section 29(2) of the Limitation Act states that where any special or local law prescribes a different limitation period, Section 3 of the Limitation Act shall apply as if such period were prescribed in the schedule, and Sections 4 to 24 shall apply insofar as they are not expressly excluded. Section 4 of the Limitation Act states that if the prescribed period expires on a day when the court is closed, the application may be made on the day the court reopens. Section 10 of the General Clauses Act, 1897, states that if any act is directed to be done within a prescribed period and the court is closed on the last day, the act shall be considered done in due time if done on the next working day, provided that the section does not apply to acts or proceedings to which the Limitation Act applies.

Arguments

Appellants’ Submissions:

• The appellants, represented by Mr. Neeraj Kishan Kaul, argued that the Limitation Act, including Section 4, does not apply to Section 34(3) of the ACA, citing Union of India v. Popular Construction [(2001) 8 SCC 470]. They contended that the court in Assam Urban (supra) should not have interpreted Section 4 of the Limitation Act.
• Since the Limitation Act is excluded, Section 10 of the GCA should apply, extending the benefit to the appellants when the condonable period expires on a holiday. They relied on Sridevi Datla v. Union of India [(2021) 5 SCC 321], where the benefit of Section 10 of the GCA was extended when the condonable period under Section 16 of the NGT Act expired on a holiday.
• The appellants questioned the correctness of Bhimashankar (supra), highlighting contradictions in its reasoning regarding the applicability of the Limitation Act and the rejection of Section 10 of the GCA. They argued that the court did not sufficiently address the reasoning in Sridevi Datla (supra).
• In their written submissions, the appellants argued that Section 4 of the Limitation Act does not apply to the proviso of Section 34(3) as it is not the “prescribed period.” They contended that Section 10 of the GCA, being a beneficial legislation, should apply to the proviso, as its inapplicability would be oppressive.

Respondent’s Submissions:

• The respondent, represented by Mr. Syed Ahmed Naqvi, referred to State of West Bengal v. Rajpath Contractors and Engineers Ltd [(2024) 7 SCC 257], arguing that the court followed Assam Urban (supra) in similar facts, holding that Section 4 of the Limitation Act only applies to the three-month limitation period and not the 30-day condonable period.
• The respondent submitted that Sections 4 to 24 of the Limitation Act are not entirely excluded from applying to Section 34 proceedings, citing Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department [(2008) 7 SCC 169] to show that Section 14 of the Limitation Act was held to be applicable.
• The respondent argued that Sagufa Ahmed v. Upper Assam Polywood Products Pvt Ltd [(2021) 2 SCC 317] clearly distinguishes between the prescribed period and the condonable period, making Section 4 applicable only to the three-month period.
• The respondent contended that Section 10 of the GCA does not apply to Section 34(3) as the Limitation Act applies, and the words “certain day” in Section 10 apply when a statute fixes a particular day, which is not the case here.
• In their written submissions, the respondent argued that once Section 4 of the Limitation Act applies to Section 34(3), it cannot be further split to make Section 10 of the GCA applicable to the condonable period.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following issues:

1. Do the provisions of the Limitation Act apply to Section 34 proceedings, and to what extent?
2. Does Section 4 of the Limitation Act apply to Section 34(3) as per an analysis of the statutory scheme as well as precedents of this Court on the issue? If Section 4 applies, does it apply only to the 3-month limitation period or also the 30-day condonable period?
3. In light of the answer in (ii), will Section 10 of the GCA apply to Section 34(3), and if so, in what manner?

Treatment of the Issue by the Court

Authorities

Applicability of Limitation Act to Arbitration Proceedings:

• Mukri Gopalan v. Cheppilat Puthanpurayil [(1995) 5 SCC 5]: The Supreme Court held that Section 29(2) of the Limitation Act applies to special laws that prescribe a different period of limitation, unless there is an express exclusion.
• Bhakra Beas Management Board v. Excise & Taxation Officer [(2020) 17 SCC 692]: Affirmed the principles laid down in Mukri Gopalan (supra).
• Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department [(2008) 7 SCC 169]: The Supreme Court clarified that Section 43(1) of the ACA extends the applicability of the Limitation Act to arbitrations, as these are private tribunals and not courts.

Applicability of Specific Provisions of Limitation Act to Section 34(3) of ACA:

• Union of India v. Popular Construction [(2001) 8 SCC 470]: The Supreme Court held that Section 5 of the Limitation Act does not apply to Section 34(3) of the ACA, as the phrase “but not thereafter” in the proviso to Section 34(3) amounts to an express exclusion.
• State of Himachal Pradesh v. Himachal Techno Engineers [(2010) 12 SCC 210]: The Supreme Court held that Section 12 of the Limitation Act applies for calculating limitation under Section 34(3), and the day from which the 3-month limitation period is to be reckoned must be excluded.
• State of Goa v. Western Builders [(2006) 6 SCC 239]: The Supreme Court held that Section 14 of the Limitation Act applies to Section 34(3), allowing the exclusion of time spent prosecuting a remedy before a court without jurisdiction.
• Gulbarga University v. Mallikarjun S. Kodagali [(2008) 13 SCC 539]: Followed the principles laid down in State of Goa v. Western Builders (supra).
• P. Radha Bai v. P. Ashok Kumar [(2019) 13 SCC 445]: The Supreme Court held that Section 17 of the Limitation Act does not apply to Section 34(3) of the ACA, as it would extend the limitation period beyond the mandatory 3 months plus 30 days.
• Assam Urban Water Supply & Sewerage Board v. Subhash Projects & Marketing Limited [(2012) 2 SCC 624]: The Supreme Court held that Section 4 of the Limitation Act applies only to the 3-month limitation period and not to the 30-day condonable period under Section 34(3).
• Bhimashankar Sahakari Sakkare Karkhane Niyamita v. Walchandnagar Industries Limited [(2023) 8 SCC 453]: The Supreme Court held that Section 10 of the GCA does not apply to the condonable period stipulated in the proviso to Section 34(3) of the ACA.
• State of West Bengal v. Rajpath Contractors and Engineers Ltd [(2024) 7 SCC 257]: The Supreme Court reiterated the position that Section 4 of the Limitation Act applies only to the 3-month limitation period and not to the 30-day condonable period.

Other Authorities:

• H.H. Raja Harinder Singh v. S. Karnail Singh [1956 SCC OnLine SC 111]: Relied on by the appellants to argue that Section 10 of the GCA is a beneficial legislation.
• Manohar Joshi v. Nitin Bhaurao Patil [(1996) 1 SCC 169]: Relied on by the appellants to argue that Section 10 of the GCA is a beneficial legislation.
• Sridevi Datla v. Union of India [(2021) 5 SCC 321]: Relied on by the appellants to argue that the benefit of Section 10 of the GCA should be extended when the condonable period under Section 16 of the NGT Act expired on a holiday.
• Sagufa Ahmed v. Upper Assam Polywood Products Pvt Ltd [(2021) 2 SCC 317]: Cited by the respondent to distinguish between the prescribed period and condonable period.
• Mangu Ram v. Municipal Corporation of Delhi [(1976) 1 SCC 392]: Cited to highlight that a mere prescription of a different limitation period is not sufficient to displace the applicability of the Limitation Act.
• Hukumdev Narain Yadav v. Lalit Narain Mishra [(1974) 2 SCC 133]: Cited to highlight that exclusion of the Limitation Act’s provisions can be inferred from the scheme of the special law.
• Commissioner of Customs and Central Excise v. Hongo India Pvt Ltd [(2009) 5 SCC 791]: Cited to highlight that exclusion of the Limitation Act’s provisions can be inferred from the scheme of the special law.
• State of Maharashtra v. Hindustan Construction Co. Ltd. [(2010) 4 SCC 518]: Cited to explain that the court may exercise discretion to entertain the application within a further period of 30 days, if sufficient cause is shown, but not thereafter.
• Coal India Limited v. Ujjal Transport Agency [(2011) 1 SCC 117]: Followed the principles laid down in Consolidated Engineering Enterprises (supra).
• Commissioner, Madhya Pradesh Housing Board v. Mohanlal and Company [(2016) 14 SCC 199]: Followed the principles laid down in Consolidated Engineering Enterprises (supra).
• Kirpal Singh v. Government of India, 2024 SCC OnLine SC 3814: Cited to highlight that the remedy under Section 34 is precious and courts will keep in mind the need to secure and protect such remedy while applying limitation provisions.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Union of India v. Popular Construction [(2001) 8 SCC 470]*: The Court cited this case to highlight that the phrase “but not thereafter” in Section 34(3) excludes the application of Section 5 of the Limitation Act.
• State of Himachal Pradesh v. Himachal Techno Engineers [(2010) 12 SCC 210]*: The Court cited this case to show that Section 12 of the Limitation Act applies for calculating limitation under Section 34(3).
• State of Goa v. Western Builders [(2006) 6 SCC 239]*: The Court cited this case to support the applicability of Section 14 of the Limitation Act to Section 34(3).
• Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department [(2008) 7 SCC 169]*: The Court cited this case to show that Section 14 of the Limitation Act applies to Section 34(3) and that the Limitation Act applies to arbitrations.
• P. Radha Bai v. P. Ashok Kumar [(2019) 13 SCC 445]*: The Court cited this case to hold that Section 17 of the Limitation Act does not apply to Section 34(3).
• Assam Urban Water Supply & Sewerage Board v. Subhash Projects & Marketing Limited [(2012) 2 SCC 624]*: The Court relied on this case to hold that Section 4 of the Limitation Act applies only to the 3-month limitation period and not to the 30-day condonable period.
• Bhimashankar Sahakari Sakkare Karkhane Niyamita v. Walchandnagar Industries Limited [(2023) 8 SCC 453]*: The Court relied on this case to hold that Section 10 of the GCA does not apply to the condonable period under Section 34(3).
• State of West Bengal v. Rajpath Contractors and Engineers Ltd [(2024) 7 SCC 257]*: The Court cited this case to reiterate that Section 4 of the Limitation Act applies only to the 3-month period.
• Sridevi Datla v. Union of India [(2021) 5 SCC 321]*: The Court distinguished this case, stating that it was decided in the context of Section 16 of the NGT Act and did not consider the distinction between the prescribed and condonable periods.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by a strict interpretation of the statutory provisions and a consistent application of established precedents. The Court emphasized the importance of adhering to the prescribed limitation periods under Section 34(3) of the ACA, noting that the 30-day condonable period is not part of the “prescribed period” under Section 4 of the Limitation Act. The Court also highlighted the proviso to Section 10 of the GCA, which excludes its applicability when the Limitation Act applies. The Court acknowledged the concerns regarding the curtailment of a remedy to challenge arbitral awards but maintained that the current legal position, as established by precedents, must be upheld. The Court’s reasoning reflects a balance between ensuring expeditious dispute resolution through arbitration and providing a fair opportunity to challenge awards, within the limits set by the statute.

Fact:Law Ratio

The Court’s reasoning was heavily weighted towards legal considerations and statutory interpretation, with less emphasis on the specific facts of the case. The legal precedents and the strict interpretation of the statutes played a major role in the final decision.

Logical Reasoning

Judgment

The Supreme Court upheld the High Court’s decision, dismissingthe appeal. The Court held that while the Limitation Act applies to Section 34 proceedings, Section 4 of the Limitation Act only extends the benefit of filing on the next working day when the three-month limitation period expires on a court holiday. It does not apply to the 30-day condonable period. The Court further held that Section 10 of the General Clauses Act, 1897, does not apply to the condonable period because the proviso to Section 10 of the GCA excludes its application when the Limitation Act applies. The Court noted that the phrase “but not thereafter” in Section 34(3) of the ACA indicates a strict time limit, and the 30-day condonable period cannot be extended by applying Section 10 of the GCA. The Court reaffirmed the position taken in Assam Urban (supra) and Bhimashankar (supra), emphasizing that the condonable period is not part of the “prescribed period” under Section 4 of the Limitation Act. The Court rejected the appellants’ arguments that Section 10 of the GCA should apply as a beneficial legislation, stating that the proviso to Section 10 of the GCA explicitly excludes its application to proceedings where the Limitation Act applies. The Court also distinguished the case of Sridevi Datla (supra), stating that it was decided in the context of Section 16 of the NGT Act and did not consider the distinction between the prescribed and condonable periods. The Court emphasized that the intention of the legislature in enacting Section 34(3) of the ACA was to ensure that challenges to arbitral awards are made within a strict time frame to facilitate speedy resolution of disputes. The Court concluded that the appellants’ Section 34 petition was filed beyond the prescribed and condonable periods and was, therefore, rightly dismissed by the High Court.

Final Order

The Supreme Court dismissed the appeal, upholding the High Court’s decision that the Section 34 petition was time-barred. The Court clarified that the benefit of Section 4 of the Limitation Act does not extend to the 30-day condonable period under Section 34(3) of the Arbitration and Conciliation Act, 1996. The Court also held that Section 10 of the General Clauses Act, 1897, does not apply to the condonable period. The Court’s decision reinforces the strict time limits for challenging arbitral awards and emphasizes the importance of adhering to the prescribed procedures and timelines under the Arbitration and Conciliation Act, 1996.

Key Takeaways

• Limited Applicability of Section 4 of the Limitation Act: The benefit of Section 4 of the Limitation Act, which allows filing on the next working day if the limitation period expires on a court holiday, only applies to the initial three-month limitation period for challenging an arbitral award under Section 34(3) of the ACA. It does not extend to the additional 30-day condonable period.
• Inapplicability of Section 10 of the General Clauses Act: Section 10 of the GCA, which provides for an extension of time when the last day for an act falls on a holiday, does not apply to the 30-day condonable period under Section 34(3) of the ACA. This is because the proviso to Section 10 of the GCA excludes its application to proceedings where the Limitation Act applies, and Section 4 of the Limitation Act applies to Section 34 proceedings.
• Strict Adherence to Time Limits: The Supreme Court has reinforced the strict time limits for challenging arbitral awards. The phrase “but not thereafter” in Section 34(3) of the ACA indicates a mandatory time limit, which must be strictly adhered to. The 30-day condonable period is not an extension of the prescribed period, and it cannot be extended further by applying Section 10 of the GCA.
• Importance of Legal Precedents: The Court relied heavily on previous judgments, particularly Assam Urban (supra) and Bhimashankar (supra), to arrive at its decision. This highlights the importance of adhering to established legal precedents in interpreting statutory provisions.
• Expeditious Dispute Resolution: The judgment emphasizes the legislative intent behind Section 34(3) of the ACA, which is to ensure that challenges to arbitral awards are made within a strict time frame to facilitate speedy resolution of disputes.

Conclusion

The Supreme Court’s judgment in My Preferred Transformation & Hospitality Pvt. Ltd. & Anr. vs. M/s Faridabad Implements Pvt. Ltd. provides a clear interpretation of the interplay between the Arbitration and Conciliation Act, 1996, and the Limitation Act, 1963, specifically concerning the time limits for challenging arbitral awards. The Court has clarified that while the Limitation Act applies to Section 34 proceedings, the benefit of Section 4 of the Limitation Act does not extend to the 30-day condonable period. Additionally, Section 10 of the General Clauses Act, 1897, does not apply to the condonable period. This judgment reinforces the strict time limits for challenging arbitral awards and emphasizes the importance of adhering to the prescribed procedures and timelines under the Arbitration and Conciliation Act, 1996. The decision is significant for all parties involved in arbitration proceedings, as it underscores the need for diligence and prompt action when challenging arbitral awards. It also highlights the importance of legal precedents in interpreting statutory provisions and provides clarity on the extent to which the Limitation Act and the General Clauses Act apply to arbitration proceedings. This judgment will likely serve as a guiding precedent for future arbitration cases, ensuring that challenges to arbitral awards are made within the strict time limits prescribed by law.