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A party can seek condonation of delay as per S 17 of LA if arbitration award is received by him with

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SUPREME COURT OF INDIA

 
P. RADHA BAI AND ORS.                                                                             …APPELLANT(S)
 
VERSUS
P. ASHOK KUMAR AND ANR.                                                                 …RESPONDENT(S)

 J U D G M E N T   N.V. RAMANA, J. 

1. These   appeals   are   filed,   aggrieved   by   the   judgment   and order dated  18.06.2012 in the Civil Revision Petition Nos. 2151,   2246,   2383   and   2458   of   2012   passed   by   the   High Court of Judicature at Andhra Pradesh at Hyderabad. 

2. An   interesting   question   of   law   arises   in   this   batch   of petitions, concerning the applicability of Section 17 of the Limitation Act, 1963 [‘Limitation Act’] for condonation of a delay caused on the account of alleged fraud played on the Signature Not Verified Digitally signed by VISHAL ANAND Date: 2018.09.26 14:57:29 IST objector   (party   challenging   the   award)   beyond   the   period Reason:


 prescribed   under   Section   34   (3)   of   the   Arbitration   and Conciliation Act of 1996 [‘Arbitration Act’].

3. The facts which give rise to this question fall into a narrow compass.   Originally   one   Mr.   P.   Kishan   Lal   carried   on business   and   acquired   several   properties.     On   his   death, Mr.   P.   Kishan   Lal   was   survived   by   eight   (8)   legal   heirs (Appellant Nos. 1 to 6 and Respondent Nos. 1 and 2).  

4. After   the   death   of   Mr.   Kishan   Lal,   several   disputes   have cropped up on the division of properties.   Having failed to resolve the dispute, the parties turned towards arbitration to resolve the dispute.   Five Arbitrators were appointed to adjudicate   and   distribute   eleven   properties   belonging   to them.  

5. On 18.02.2010, the arbitrators passed a unanimous Award providing for the division of properties and businesses. The parties   received   the   Award   on   21.02.2010.     There   is   no dispute on the receipt of the Award by the parties. 

6. The Respondents allege that after the pronouncement of the award,   the   Appellants   in   bad   faith   entered   into   a Memorandum   of   Understanding   (MoU)   with   the 
 Respondents. According to the Respondents, the Appellants agreed   to  give   certain  additional  properties to  Respondent No.   1,   which   were   more   than   what   were   provided   in   the Award. The Respondents alleged that after entering into the MoU,   the   Appellants   were   required   to   execute   Gift   and Release   Deeds   to   give   effect   to   the   MoU.   However,   the Appellants   delayed   the   execution   of   the   Gift   and   Release Deeds as contemplated by the MoU.

7. In the meanwhile, the three­month period and the extended period of 30 days for challenging an Award under Section 34(3) of the Arbitration Act had expired. After the time limit expired, the Appellants filed an Execution Petition (EP) for execution of the Award.   The trial court held that EP was not maintainable. On appeal, the High Court set aside the order of the trial court and held that the Execution Petition was maintainable and directed the trial court to decide it on merits. 

8. When   the   Respondents   realized   that   the   Appellants   were delaying the execution of the Gift Deed contemplated by the MoU,   the   Respondents on 08.02.2011 filed an  application under Section 34(3) of the Arbitration Act for setting aside
the  Award.  This filing was 236 days after the receipt of the Award   by   the   Respondents.     The   application   was accompanied by another application under Section 5 of the Limitation Act seeking condonation of the delay of 236 days. In the application for condonation of delay, the Respondents alleged that:

a. Award was served on the Respondents on 21.02.2010; b. They were laypersons and were not aware of the legal requirement   of   filing   objections   within   the   period prescribed under the Arbitration Act. c. Since they were dissatisfied with the Award, they raised objections   before   the   learned   Arbitrators.     The Arbitrators   called   upon   all   the   parties   and   conducted conciliation.     Accordingly,   the   parties   entered   into   a MoU.  The MoU contemplated for execution of Gift Deed and   Release   Deed   in   favour   of   Respondent   No.1. However, the Appellants failed to execute the required documents as per the MoU with an intent to defeat their rights. 


 d. One   of  the  Respondents was physically indisposed for one month. 

9. During   the   pendency   of   the   aforesaid   interim   application, seeking   condonation   of   the   delay,   the   Respondents   filed another application being I.A. No. 1977 of 2011 in I.A. No. 598 of 2011, seeking an order of the trial court to summon the   Sub­registrar,   Charminar   to   prove   the   veracity   of   the Memorandum   of   Understanding   and   to   counter   the allegations   raised   by   the   Appellants   herein,   as   to   the falsification   and   fabrication   of   the   Memorandum   dated 09.04.2010. For completeness of narration, it may be stated that additional I.A.s, being I.A. No. 210 and 211 of 2012, were sought by the Respondent seeking certain documents to be brought on record. 

10. By order dated 21.02.2012, the trial court dismissed the IA.

No. 598 of 2011, pertaining to the condonation of delay in filing   the   Section   34   application.   The   Trial   Court   while dismissing   the   aforesaid   application   as   indicated   above, reasoned as under­ 
i. That   the   Court   is   not   empowered   to   stretch   the limitation period beyond the requisite period given under Section 34 of the Arbitration Act. ii. Placing   reliance   on  Union   of   India   vs.  Popular Construction   Co.,   (2001)   8   SCC   470   andConsolidated   Engineering   Enterprises   vs. Principal   Secretary,   Irrigation   Department, (2008) 7 SCC 169, held that the language of Section 34   of   the   Arbitration   Act   mandated   a   strict adherence   to   the   time   period   provided   thereunder and   the   extension   beyond   the   same   was   not possible   under   any   circumstances.   Therefore, Section 5 of the Limitation Act was not applicable to an   application   filed   under   Section   34   of   the Arbitration Act.

iii. Based   on   the   aforesaid   judgments   of   this   Hon’ble Court,   and   the provisions  of Section  34 (3) of  the Arbitration   Act,   the   City   Civil   Court   held   that Section   5   of   the   Limitation   Act,   1963,   has   no application, as the Court has no power to condone the delay beyond three months and thirty days. On 
 this ground alone, the objections filed under Section 34 were liable to be dismissed. 

iv. That the trial court rejected the contention that the Respondent   (objector)   was   unable   to   file   the objections   within   the   period   of   limitation   on   the ground   of   illness   and   no   medical   certificate   was provided to substantiate such claim. v. That ignorance of law on behalf of the Respondents, to be not aware of the technicalities provided under Section 34 of the Arbitration Act was not excusable. vi. Moreover, the trial court came to a conclusion that equitable   grounds   cannot   be   utilized   to   create exceptions not mandated under the statutory law.  We may note that the trial court although discussed about the existence of the Memorandum of Understanding dated 09.04.2010   and   its   impact   on   the   Respondent’s   delay   in filing   the   Section   34   application,   there   is   no   specific discussion concerning the applicability of Section 17 of the Limitation   Act   in   the   trial   court   order.   Moreover,   other interim   applications   filed   by   the   respondents   were   also dismissed consequentially.


11. Being   aggrieved   by   the   dismissal,   respondents   preferred four   Civil   Revision   petitions,   before   the   High   Court   of Andhra   Pradesh   under   Article   227   of   the   Constitution   of India, being C.R.P. No. 2151, 2246, 2383 and 2458 of 2012. By the  impugned order dated 18.06.2012, the High Court remanded   the   matter   to   the   trial   court   concerning   the applicability   of   Section   17   of   the   Limitation   Act   in   an application   under   Section   34   of   the   Arbitration   Act.   The High Court observed “Even though Mr. K. Prabhakar, learned counsel for the respondents sought to argue that when Section  5   of   the Act  is excluded,  automatically Section 17 of the Act also gets excluded, I refrain from   expressing   any   opinion   on   this   aspect, because this is required to be considered by the lower court at the first instance before this Court examines the same at an appropriate stage. On this   short   ground,  I   feel   that   it   is   just   and appropriate to remand the matter back to the learned   Chief   Judge,   City   Civil   Court, Hyderabad   for   considering   the   above­ mentioned   pleadings   of   the   petitioners   and pronouncing upon the same with reference to the applicability or otherwise of the provision of   Section   17   of   the   Act.  Therefore,   without expressing   any   opinion   on   these   aspects,   the learned Chief Judge is directed to reconsider the case only to this limited extent and pass a fresh order after hearing both parties, within a period of   two   months   from   the   date   of   receipt   of   this order.   It   is   made   clear   that   the   orders   of   the
 lower Court in respect of the other aspects stand confirmed”.

(emphasis supplied)

12. Aggrieved by the remand order passed by the High Court on the applicability of Section 17 of the Limitation Act to the proceedings, the Appellants have approached this Court in these appeals.

13. Before we delve into any other aspect of this case, it may be important to note that we would have agreed with the High Court wherein a remand may have been required in usual course for considering the applicability of Section 17 of the Limitation   Act   as   there   is   an   apparent   insufficiency   of reasons in the trial court order. But, in this case there has been a considerable delay in resolving the dispute. The very purpose   of   speedy   justice   delivery   mechanism   would   be frustrated by such delays if the matter is allowed to linger before the courts. We had positively persuaded the parties several times to come to an amicable settlement and asked the advocates representing them to use their good offices to refer   parties   to   mediation   and   avoid   decades   of   litigation. 
 But,   our   efforts   were   not   met   with   much   success   in   any event. 

14. The   High   Court   could   have   examined   the   legal   issue   of applicability   of   Section   17   of   the   Limitation   Act   to   an application   filed   under   Section   34   of   the   Arbitration   Act. This   is   a   pure   question   of   law.   Only   if   Section   17   of Limitation  Act  was   applicable to a Section 34 application, the   question   of   factual   satisfaction   of   the   ingredients   of Section 17 to the present case and a consequent remand to the trial court would arise. 

15. The   learned   counsel   for   the   appellants,   Mr.   Devansh   A.

Mohta, argued that­ i. Limitation period provided under Section 34 (3) of the Arbitration   Act   begins   ‘only’   upon   the   receipt   of   the award by the parties and the same cannot be diluted by   a   different   starting   point   provided   under   the Limitation   Act,   in   light   of   Section   29   (2)   of   the Limitation Act.


 ii. The   period   of   limitation   under   Section   34(3)   of   the Arbitration   Act   is   ‘unbreakable’  and   is  meant  to   run continuously.

iii. Definitive time limit is necessary to ensure expeditious and   effective   resolution   of   disputes   between   the parties.

iv. The   mandate   of  Popular   Construction   Case  (supra) and  Consolidated Engineering Case (supra) wherein the emphasis on ‘fixed period’ needs to be given effect to.

v. The expression ‘had received the arbitral award’ found in   Section   34   (3)   of   the   Arbitration   Act   expressly excludes   applicability   of   Section   17  of   the  Limitation Act.

vi. This   Court   should   appreciate   the   difference   between concealment   of   right   to   action   being   different   from preventing a person from taking action.

16. On the contrary, the learned counsel for the respondents, Mr. Yashraj Singh Deora, had contended that­ i. The reasoning provided under  Popular Construction Case  (supra)   and  Consolidated   Engineering   Case (supra) clearly indicates to the applicability of Section 17 of the Limitation Act, similar to the applicability of Section 14 of the Limitation Act.

ii. Limitation   Act   is   applicable   to   all   proceedings   before the court.

iii. It is evident that the Arbitration Act under Section 34 (3)   provides   for   a   different   time   period   than   the   one present   under   Article   137   of   the   Limitation   Act, accordingly, the special law would therefore, prevail in so far as the issue of period of limitation is concerned. However, for ‘computation of the period of limitation’ or arriving   at   the   ‘prescribed   period’   the   provisions   of Section   4   to   24   of   the   Limitation   Act   would automatically apply unless they are expressly excluded by the special law.

iv. That   it   has   been   highly   inequitable   for   the respondents, who were victims of bad faith negotiation undertaken   by   the   Appellants   to   derail   the respondents from pursuing this case for enforcement of their rights.

17. We have heard the counsels for both the parties at length, and also perused the material available on record.


18. We are now to examine whether Section 17 of the Limitation Act   is   applicable   while   determining   the   limitation   period under Section 34(3) of the Arbitration Act? 

19. This analysis has to necessarily begin from Section 29(2) of the Limitation Act, which  states  29 (2)  Where any special or local law prescribes for   any   suit,   appeal   or   application   a   period   of limitation different from the period prescribed by the   Schedule,   the   provisions   of   Section   3   shall apply   as   if   such   period   were   the   period prescribed by the Schedule  and  for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 (inclusive) shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law.

(emphasis added)

20. Section 29(2) is divided into 2 limbs. This is evident from the conjunctive   “and”   in   the   said   provision.   The   inter­relation between these two limbs was considered by a Bench of five Judges   of   this   Court   in  Vidyacharan   Shukla   v. Khubchand Baghel, [1964] 6 SCR 129.

21. The first part stipulates that the limitation period prescribed by the special law or local law will prevail over the limitation period prescribed in the Schedule to the Limitation Act. In 
 this   case,   the   Arbitration   Act   is   a   “special   law”   which prescribes a specific period of limitation in Section 34(3) for filing objections to an arbitral award passed under the 1996 Act   and   consequently   the   provisions   of   Arbitration   Act would apply. We also note that there is no provision under the Limitation Act dealing with challenging an Award passed under the Arbitration Act. 

22. The   second   part   mandates   that   Sections   4   to   24   of   the Limitation   Act   will   apply   for   determining   the   period   of limitation “only in so far as, and to the extent to which, they are   not   expressly   excluded   by   such   special   or   local   law.” Thus   the   extent   of   the   application   of   Sections   4   to   24   of Limitation   Act   will   apply   for   determining   the   limitation period   under   the   Arbitration   Act   only   if   they   are   not expressly excluded by Arbitration Act.   

23. We   are   conscious   that   this     Court   in   several pronouncements has extended Section 14 of Limitation Act to  Section  34   of   Arbitration Act and thereby  excluded the time   spent   in   bonafide   pursuing   proceedings   in   a   Court which   lacks   jurisdiction.   (State   of   Goa   v.   Western 
 Builders
  (2006)   6   SCC   239   at   para   25;  Consolidated Engineering   Enterprises   v.   Principal   Secretary, Irrigation   Department,  (2008)   7   SCC   169     at   para   27 and   29;  Coal   India   Ltd.   v.   Ujjal   Transport   Agency, (2011)   1   SCC   117   at   para   6;  M.P.   Housing   Board   v. Mohanlal   &   Co.,   (2016)   14   SCC   199   at   para   13). Similarly,   this   Court   also   extended   Section   12   of   the Limitation Act to the Arbitration Act and excluded  the day on   which   the   Award   was   received   from   computing   the starting  period   under Section 34(3). We note that none of these cases dealt with the question whether the scheme of Section 17 of the Limitation Act is consistent with Section 34 of the Arbitration Act. 

24. Relying   on   these   pronouncements,   the   Respondents’ counsel   asserted   that   there   is   no   express   exclusion   of Section 17 in the Arbitration Act and therefore the benefit of Section   17   of   Limitation   Act   should   be   extended   while determining the period of limitation under Section 34(3). 

25. This requires us to consider the phrase “express exclusion” in Section 29(2) of the Limitation Act. This Court in a series of   cases   held   that   the   express   exclusion   can   be   inferred 
 either   from   the   language   of   the   special   law   or   it   can   be necessarily   implied   from   the   scheme   and   object   of   the special law. 

26. A   Bench   of   five   Judges   in  Vidyacharan Shukla v. Khubchand   Baghel,  AIR   1964   SC   1099, interpreting the phrase “express exclusion” observed: 

“The   contention   is   that   sub­section   (3)   of Section 116­A of the Act not only provides a period of limitation for such an appeal, but also   the   circumstances   under   which   the delay   can   be   excused,   indicating   thereby that the general provisions of the Limitation Act are excluded. There are two answers to this   argument.   Firstly,   Section   29(2)(a)   of the   Limitation   Act   speaks   of   express exclusion but there is no express exclusion in   sub­section   (3)   of   Section   116­A   of   the Act;  secondly,   the   proviso   from   which   an implied   exclusion   is   sought   to   be   drawn does   not   lead   to   any   such   necessary implication”.

27. This   principle   was   further   crystallised   in  Hukumdev Narain Yadav v. Lalit Narain Mishra, (1974) 2 SCC 133 wherein a Bench of three Judges held that:

"It   is   contended   before   us   that   the   words "expressly   excluded"   would   mean   that   there 
 must   be   an   express   reference   made   in   the special or local law to the specific provisions of the Limitation Act of which the operation is to be excluded. As usual the meaning given in the Dictionary has been relied upon, but what we have   to   see   is   whether   the   scheme   of   the special law, that is, in this case the Act, and the nature of the remedy provided therein are such   that   the   Legislature   intended   it   to   be   a complete   code   by   itself   which   alone   should govern the several matters provided by it. If on an examination of the relevant provisions it is clear that the provisions of the Limitation Act are   necessarily   excluded,   then   the   benefits conferred   therein   cannot   be   called   in   aid   to supplement   the   provisions   of   the   Act.  In   our view, even in a case where the special taw does not exclude the provisions of Sections 4 to 24 of the Limitation Act by an express reference, it would   nonetheless   be   open   to   the   Court   to examine   whether   and   to   what   extent   the nature of those provisions or the nature of the subject­matter and scheme of the special law exclude their operation”. (emphasis added)

28. A Bench of three Judges in  Commissioner of Customs and Central Excise v. Hongo India (P) Ltd., (2009) 5 SCC 791 reiterated this principle when it held:  “It   was   contended   before   us   that   the   words “expressly   excluded”   would   mean   that   there must   be   an   express   reference   made   in   the special or local law to the specific provisions of the Limitation Act of which the operation is to be excluded. In this regard, we have to see the scheme of the special law which here in this case is the Central Excise Act. The nature 
 of   the   remedy   provided   therein   is   such   that the   legislature   intended   it   to   be   a   complete code by itself which alone should govern the several   matters   provided   by   it.   If,   on   an examination   of   the   relevant   provisions,   it   is clear that the provisions of the Limitation Act are   necessarily   excluded,   then   the   benefits conferred   therein   cannot   be   called   in   aid   to supplement the provisions of the Act. In our considered view, that even in a case where the special law does not exclude the provisions of Sections 4 to 24 of the Limitation Act by an express   reference,   it   would   nonetheless   be open to the court to examine whether and to what extent, the nature of those provisions or the nature of the subject­matter and scheme of the special law exclude their operation.  In other words, the applicability of the provisions of the Limitation Act, therefore, is to be judged not from the terms of the Limitation Act but by   the   provisions   of   the   Central   Excise   Act relating to filing of reference application to the High Court”.

29. These principles were reiterated by this Court in  Union of India v. Popular Construction Co., (2001) 8 SCC 470 at page   474;  Chhattisgarh   State   Electricity   Board   v. Central   Electricity   Regulatory   Commission,   (2010)   5 SCC   23   at   para   32;  Gopal   Sardar   v.   Karuna   Sardar, (2004) 4 SCC 252 at para 13.


30. Thus, the inquiry is ­ whether the text or the scheme and object   of   the   Arbitration   Act   excludes   the   application   of Section 17 of Limitation Act while determining the limitation period? 

31. We therefore have to contrast Section 17 of the Limitation Act with Section 34(3) of the Arbitration Act. The relevant part of Section 17 states

17. Effect of fraud or mistake.— (1) Where, in the case of any suit or application for which a period of limitation  is prescribed by this Act,—

(a)   the   suit   or   application   is   based   upon   the fraud  of the defendant or respondent or his agent; or

(b) the knowledge of the right or title on which a suit or application is founded is concealed by the fraud of any such person as aforesaid; or

(c)  the   suit  or   application  is for  relief from  the consequences of a mistake; or

(d) where  any  document necessary to establish the   right   of   the  plaintiff   or  applicant   has   been fraudulently concealed from him,  the   period   of   limitation   shall   not   begin   to   run until   plaintiff   or   applicant   has   discovered   the 
 fraud or the mistake or could, with reasonable diligence, have discovered it; or in the case of a concealed   document,   until   the   plaintiff   or   the applicant first had the means of producing the concealed   document   or   compelling   its production: 

32. Section 17 does not extend or break the limitation period. It only   postpones   or   defers   the   commencement   of   the limitation period. This is evident from the phrase “the period of limitation shall not begin to run”. 

33. In contrast, Section 34(3) of the Arbitration Act states 

34. Application for setting aside arbitral award­ … … (3) An application for setting aside  may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal.

Provided   that   if   the   Court   is   satisfied   that   the applicant was prevented by sufficient cause from making the application within the said period of three   months   it   may   entertain   the   application within   a   further   period   of   thirty   days,  but   not thereafter. (emphasis added)

34. Section   34(3)   deserves   careful   scrutiny   and   its characteristics must be highlighted:


 (a) Section 34 is the only remedy for challenging an award passed under Part I of the Arbitration Act. Section 34(3) is   a   limitation   provision,   which   is   an   inbuilt   into   the remedy   provision.   One   does   not   have   to   look   at   the Limitation Act or any other provision for identifying the limitation period for challenging an Award passed under Part I of the Arbitration Act. 

 

(b) The time limit for commencement of limitation period is also provided in Section 34(3) i.e. the time from which a party   making   an  application "had  received   the  Arbitral Award”   or   disposal   of   a   request   under   Section   33   for corrections and interpretation of the Award.

(c) Section   34(3)   prohibits   the   filing   of   an   application   for setting   aside   of   an   Award   after   three   months   have elapsed from the date of receipt of Award or disposal of a request under Section 33. Section 34(3) uses the phrase “an application for setting aside may not be made after three   months   have   elapsed”.     The   phrase   “may   not   be made” is from the UNCITRAL Model Law1  and has been 1 “ An application for setting aside may not be made after three months have elapsed   from   the   date   on   which   the   party   making   that   application   had received the award or, if a request had been made under article 33, from the date on which that request had been disposed of by the arbitral tribunal”.  
 understood to mean “cannot be made”. The High Court of Singapore in ABC Co. Ltd v. XYZ Co. Ltd, [2003] SGHC

107)  “The starting point of this discussion must be the Model Law itself.   On the aspect of time,Article   34(3)   is   brief.     All   it   says   is   that   the application may not be made after the lapse of three months from a specified date.   Although the  words  used  are  ‘may not’ these  must  be interpreted   as   ‘cannot’   as   it   is   clear   that   the intention is to limit  the  time during which an award may be challenged.  This interpretation is   supported   by   material   relating   to   the discussions amongst the drafters of the Model Law.  It appears to me that the court would not be   able   to   entertain   any   application   lodged after the expiry of the three months period as Article   34   has   been   drafted   as   the   all­ encompassing, and only, basis for challenging an award in court.  It does not provide for any extension of the time period and, as the court derives its jurisdiction to hear the application from the Article alone, the absence of such a provision   means   the   court   has   not   been conferred with the power to extend time".

(d) The   limitation   provision   in   Section   34(3)   also   provides for condonation of delay. Unlike Section 5 of Limitation Act,   the   delay   can   only   be   condoned   for   30   days   on showing   sufficient   cause.   The   crucial   phrase   “but   not 
 thereafter”  reveals the legislative intent to  fix  an outer boundary period for challenging an Award. 

(e) Once   the   time   limit   or   extended   time   limit   for challenging   the   arbitral   award   expires,   the   period   for enforcing the award under Section 36 of the Arbitration Act commences. This is evident from the phrase “where the   time   for   making   an   application   to   set   aside   the arbitral award under Section 34 has expired”.2  There is an integral nexus between the period prescribed under Section   34(3)   to   challenge   the   Award   and   the commencement of the enforcement period under Section 36 to execute the Award. 

35. If   Section   17   of   the   Limitation   Act   were   to   be   applied   to determining   the   limitation   period   under   Section   34(3),   it would have the following consequences 

(a) In   Section   34(3),   the   commencement   period   for computing limitation is the date of receipt of award or 2 36. Enforcement.—Where  the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court.


 the   date   of   disposal   of   request   under   Section   33   (i.e correction/additional award). 

If   Section   17   were   to   be   applied   for   computing   the limitation   period   under   Section   34(3),   the   starting period of limitation would be the date of discovery of the   alleged   fraud   or   mistake.   The   starting   point   for limitation under Section 34(3) would be different from the Limitation Act. 

(b) The   proviso   to   Section   34(3)   enables   a   Court   to entertain   an   application   to   challenge   an   Award   after the three months period is expired, but only within an additional period of thirty dates, “but not thereafter”. The use of the phrase “but not thereafter” shows that the   120   days   period   is   the   outer   boundary   for challenging an Award. If Section 17 were to be applied, the outer boundary for challenging an Award could go beyond   120   days.   The   phrase   “but   not   thereafter” would   be   rendered redundant  and  otiose.  This Court has   consistently   taken   this  view   that   the   words   “but not thereafter” in the proviso of Section 34 (3) of the Arbitration   Act   are   of   a   mandatory   nature,   and 
 couched  in negative terms, which leaves no room for doubt.   (State   of   Himachal   Pradesh   v.   Himachal Techno   Engineers   &   Anr.,   (2010)   12   SCC   210,Assam Urban Water Supply & Sewerage Board v. Subash   Projects   &   Marketing   Ltd.,   (2012)   2   SCC 624 and Anilkumar Jinabhai Patel (D) through LRs v. Pravinchandra Jinabhai Patel & Ors., (2018) SCC Online SC 276)

36. In our view, the aforesaid inconsistencies with the language of Section 34(3) of Arbitration Act tantamount to an “express exclusion” of Section 17 of Limitation Act. 

37. This Court in  Popular Construction Case  (supra)  at page 474  followed   the   same   approach   when   it   relied   on   the phrase   “but   not   thereafter”   to   hold   that   Section   5   of Limitation Act was expressly excluded. 

12. As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are “but not thereafter” used in the proviso to sub­section (3). In our opinion, this phrase would amount to an   express   exclusion   within   the   meaning   of Section   29(2)   of   the   Limitation   Act,   and   would therefore bar the application of Section 5 of that Act.   Parliament   did   not   need   to   go   further.  To hold   that   the   court   could   entertain   an 
 application   to   set   aside   the   award   beyond   the extended period under the proviso, would render the phrase “but not thereafter” wholly otiose. No principle   of   interpretation   would   justify   such   a result.

     (emphasis added)

38. Further,   the   exclusion   of   Section   17   is   also   necessarily implied   when   one   looks   at   the   scheme   and   object   of   the Arbitration Act.

39. First,  the   purpose   of   Arbitration   Act   was   to   provide   for   a speedy dispute resolution process. The Statement of Objects and   Reasons   reveal   that   the   legislative   intent   of   enacting the Arbitration Act was to provide parties with an efficient alternative   dispute   resolution   system   which   gives   litigants an   expedited   resolution   of   disputes   while   reducing   the burden on the courts. Article 34(3) reflects this intent when it   defines   the   commencement   and   concluding   period   for challenging an Award. This Court in Popular Construction Case (supra) highlighted the importance of the fixed periods under the Arbitration Act. We may also add that the finality is a fundamental principle enshrined under the Arbitration Act and a definitive time limit for challenging an Award is necessary   for   ensuring   finality.   If   Section   17   were   to   be 
 applied, an Award can be challenged even after 120 days.

This would defeat the Arbitration Act’s objective of speedy resolution of disputes. The finality of award would also be in a limbo as a party can challenge an Award even after the 120 day period. 

40. Second, extending Section 17 of Limitation Act to Section 34 would do violence to the scheme of the Arbitration Act. As discussed   above,   Section   36   enables   a   party   to   apply   for enforcement   of   Award   when   the   period   for   challenging   an Award under S.34 has expired. However, if Section 17 were to be extended to Section 34, the determination of “time for making   an   application   to   set   aside   the   arbitral   award”   in Section   36   will  become uncertain  and  create  confusion in the  enforcement of Award. This runs counter to the scheme and object of the Arbitration Act. 

41. Third, Section 34(3) reflects the principle of unbreakability.

Dr.   Peter   Binder   in   International   Commercial   Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions, 2 nd Ed., observed:

 “An application for setting aside an award can only   be   made   during   the   three   months following the date on which the party making the application has received the award. Only if 
 a  party   has   made a request for   correction  or interpretation of the award under Art. 33 does the time limit of three months begin after the tribunal   has   disposed   of   the   request.   This exception from the three­month time limit was subject to criticism in the Working group due to   fears   that   it   could   be   used   as   a   delaying tactics.   However,   although   “an   unbreakable time   limit   for   applications   for   setting   aside” was sought as being desirable for the sake of “certainty and expediency” the prevailing view was that the words ought to be retained “since they presented the reasonable consequence of article   33”.  According  to  this  “unbreakability” of   time   limit   and   true   to   the   “certainty   and expediency”   of   the   arbitral   awards,   any grounds   for   setting   aside   the   award   that emerge   after   the   three­month   time   limit   has expired cannot be raised.

42. Extending   Section   17   of   the   Limitation   Act   would   go contrary to the principle of ‘unbreakability’ enshrined under Section 34(3) of the Arbitration Act.

43. The   Respondents   have   argued   that   if   Section   17   is   not extended to Section 34, it would cause enormous injustice and   provide   scope   for   parties   to   play   mischief.   The Respondents   have   cited   several   illustrations   where   on account   of   fraud   of   the   party,   an   objecting   party   can   be precluded from challenging an Award and extending Section 17 would come to the rescue of such a party.


44. The   Respondent’s   contention   proceeds   on   a   misconceived notion of Section 17. Even if Section 17 were to be extended to   Section   34,   it   would   not   address   the   Respondent’s grievance. Section 17 does not defer the starting point of the limitation   period   merely   because   the   Appellants   has committed fraud. Section 17 does not encompass all kinds of   frauds   and   mistakes.   Section   17(1)(b)   and   (d)   only encompasses   only   those   fraudulent   conduct   or   act   of concealment   of   documents  which   have   the   effect   of suppressing   the   knowledge   entitling   a   party   to   pursue   its legal remedy. Once a party becomes aware of the antecedent facts necessary to pursue a legal proceeding, the limitation period commences.

45. This   principle   is   illustrated   by   a   ruling   of   this   Court   in Yeswant   Deorao   Deshmukh   v.   Walchand   Ramchand Kothari, 1950 SCR 852. The facts of this case are broadly similar. A decree holder files an execution petition after the expiry   of   limitation   period   (12   years   of   the   passing   of decree).   To   overcome  the   limitation  bar,   the   decree­holder alleged that the judgement debtor prevented the execution 
 of a decree by suppressing the ownership of certain assets (ownership   of   newspaper   in   those   facts)   and   in   support placed   reliance   on   Section   18   of   Limitation   Act,   1908 (equivalent   of   Section   17)3  Rejecting   this   contention,   this Court observed:

19. In   our   opinion,   the   facts   necessary   to establish   fraud   under   Section   18   of   the Limitation   Act   are   neither   admitted   nor proved in the present case. Concealing from a person the knowledge of his right to apply for execution of a decree is undoubtedly different from preventing him from exercising his right, of which he has knowledge. Section 18 of the Limitation   Act   postulates   the   former alternative.   ……   The   fraud   pleaded,   namely suppression   of   ownership   of the Prabhat newspaper,  did   not   conceal  from him   his   right   to   make   an   application   for execution of the decree. 

46. Similarly  in  Pallav  Sheth v. Custodian, (2001) 7 SCC  549, this Court observed that Section 17 comes to the rescue of a party for “failing to adopt legal proceedings when the facts or material   necessary   for   him   to   do   so   have   been   willfully  concealed from him "

3 Although there is a slight difference in the text of S.18 of Limitation Act, 1908 and S.17 of Limitation Act, 1963, the relevant provision for the present case remains the same.


47. In the context of Section 34, a party can challenge an award as soon as it receives the award. Once an award is received, a   party   has   knowledge   of   the   award   and   the   limitation period   commences.   The   objecting   party   is   therefore precluded from invoking Section 17(1)(b) & (d) once it has knowledge   of   the   Award.   Section   17(1)(a)   and   (c)   of Limitation Act may not even apply, if they are extended to Section   34,   since   they   deal   with   a   scenario   where   the application is “based upon” the fraud of the respondent or if the   application   is   for   “relief   from   the   consequences   of   a mistake”. Section 34 application is based on the award and not on the fraud of the respondent and does not seek the relief of consequence of a mistake.

48. The fraudulent conduct where Section 17 of the Limitation Act   would   have   helped   the   objecting   party   is   where   there was a fraud in the delivery of the award. However, in such a scenario,   resort  to  section  17 is not  necessary. If there is any   fraud   in   the   delivery   of   Award,   the   requirement   of receipt of Award under Section 34(3) itself is not satisfied. Any receipt of Award must be effective receipt. This Court in Union   of   India   v.   Tecco   Trichy   Engineers   & Contractors, (2005) 4 SCC 239 held that:

“8.  The delivery of an arbitral award under sub­section (5) of Section 31 is not a matter of mere formality. It is a matter of substance. It   is   only   after   the   stage   under   Section   31 has passed that the stage of termination of arbitral   proceedings   within   the   meaning   of Section 32 of the Act arises.  The delivery of arbitral   award   to   the   party,   to   be   effective, has   to   be   “received”   by   the   party.  This delivery by the Arbitral Tribunal and receipt by   the   party   of   the   award   sets   in   motion several   periods   of   limitation   such   as   an application for correction and interpretation of   an   award   within   30   days   under   Section 33(1),   an   application   for   making   an additional award under Section 33(4) and an application for setting aside an award under Section 34(3) and so on. As this delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry  of  the  prescribed period of limitation which   would   be   calculated   from   that   date, the   delivery   of   the   copy   of   award   by   the Tribunal   and   the   receipt   thereof   by   each party   constitutes an important stage in the arbitral proceedings.

9. In the context of a huge organisation like the Railways, the copy of the award has to be   received   by   the   person   who   has knowledge   of   the   proceedings   and   who would be the best person to understand and appreciate   the   arbitral   award   and   also   to take a decision in the matter of moving an application   under   sub­section   (1)   or   (5)   of 
 Section   33   or   under   sub­section   (1)   of Section 34”.

49. In   view   of   the   above,   we   hold   that   once   the   party   has received   the   Award,   the   limitation   period   under   Section 34(3) of the  Arbitration Act commences. Section 17 of the Limitation   Act   would   not   come   to   the   rescue   of   such objecting party.

50. In   the   present   case,   the   Respondents   had   a   right   to challenge   the   Award   under   Section   34   the   moment   they received it. In this case, Respondents received the Award on 21.02.2010. The alleged MoU was executed on  09.04.2010. Once the Respondents received the Award, the time under Section   34(3)   commenced   and   any   subsequent   disability even   as   per   Section   17   or   Section   9   of   Limitation   Act   is immaterial.   Merely   because   the   Appellant   had   committed some   fraud,   it   would   not   affect   the   Respondents   right   to challenge   the   Award   if   the   facts   entitling   the   filing   of   a Section   34   Application   was   within   their   knowledge.     The moment   the   Respondents   have   received   the   Award,   the three months period prescribed under Section 34(3) begins to   commence.     It   was   incumbent   on   the   Respondents   to 
 have instituted an application under Section 34 challenging an award.  Therefore, in light of the discussion above, there would  not have  been any point for meaningful remand as the   question   of   law   is   answered   against   the   Respondents herein.

51. In   light   of   the   aforesaid   legal   position,   the   judgment   and order of the High court dated 18.06.2012, in Civil Revision Petition Nos. 2151, 2246, 2383 and 2458 of 2012 are set­ aside,   and   also   the   order   allowing   I.A.   No.   598   of   2011 condoning the delay of 236 days in filing the objections is set   aside,   accordingly   these   appeals   are   allowed   with   no order as to costs. 

 

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