P. RADHA BAI AND ORS. versus P. ASHOK KUMAR AND ANR.

[2018] 12 S.C.R. 143

P. RADHA BAI AND ORS.

P. ASHOK KUMAR AND ANR.

(Civil Appeal Nos. 7710-7713 of 2013)

SEPTEMBER 26, 2018

[N. V. RAMANA AND S. ABDUL NAZEER, JJ.]

Limitation Act, 1963– s.17– Application of– If excluded whiledetermining the limitation period u/s.34(3) of the 1996 Act – Disputesbetween the appellants and respondents over division of propertiesleft behind by their predecessor-in-interest – Arbitration – Arbitralaward – Thereafter, the appellants, allegedly in bad faith, enteredinto Memorandum of Understanding (MoU) with the respondentsagreeing to give certain additional properties to respondent no.1 –MoU contemplated for execution of Gift Deeds and Release Deedsby appellants in favour of respondent no.1 – However, the appellantsdelayed the execution of the Deeds and in the meanwhile, the three-month period and the extended period of 30 days for challengingthe Award u/s.34(3) of the 1996 Act expired – Respondents filedapplication u/s.34(3) of the 1996 Act for setting aside the Awardalongwith application seeking condonation of delay caused onaccount of alleged fraud played on them – Application forcondonation of delay dismissed– In revision petitions filed by therespondents, High Court remanded the matter to the trial courtconcerning the applicability of s.17, Limitation Act in an applicationu/s.34 of the 1996 Act – Held: Once the party has received theAward, the limitation period u/s.34(3), 1996 Act commences – s.17of the Limitation Act would not come to the rescue of such objectingparty – In the present case, the respondents had right to challengethe Award u/s. 34 the moment they received it – Respondents receivedthe Award on 21.02.2010 – Once the respondents received the Award,the time u/s.34(3) commenced – Merely because the appellants hadcommitted some fraud, it would not affect the respondents right tochallenge the Award if the facts entitling the filing of s.34 Applicationwas within their knowledge – It was incumbent on the respondentsto have instituted an application u/s.34 challenging an award –Judgment of the High Court set aside – Order condoning the delay

DEF

Ain filing the objections set aside – Arbitration and Conciliation Act,1996 – ss.29, 33, 34(3) and 36.Arbitration and Conciliation Act, 1996 – s.29 – Purport of –Discussed.

Words & Phrases – “the period of limitation shall not beginBto run”, “may not be made”, “express exclusion” in context ofs.17, Limitation Act and ss.34(3) and 29(2) of the 1996 Act –Meaning of – Limitation Act, 1963 – s.17 – Arbitration andConciliation Act, 1996 – s.34(3) & 29(2).

Allowing the appeals, the CourtCHELD: 1.1 Section 29(2), Arbitration and Conciliation Act,1996 is divided into 2 limbs. This is evident from the conjunctive“and” in the said provision. The first part stipulates that thelimitation period prescribed by the special law or local law willprevail over the limitation period prescribed in the Schedule tothe Limitation Act. In this case, the Arbitration Act is “specialDlaw” which prescribes specific period of limitation in Section34(3) for filing objections to an arbitral award passed under the1996 Act and consequently the provisions of 1996 Act would apply.There is no provision under the Limitation Act, 1963 dealingwith challenging an Award passed under the Arbitration Act. The

Esecond part mandates that Sections 4 to 24 of the Limitation Actwill apply for determining the period of limitation “only in so faras, and to the extent to which, they are not expressly excludedby such special orlocal law.” Thus the extent of the applicationof Sections 4 to 24 of Limitation Act will apply for determining

the limitation period under the Arbitration Act only if they areFnot expressly excluded by Arbitration Act. [Paras 20, 21 and 22][157-A-D]

1.2 Section 17, Limitation Act, 1963 does not extend orbreak the limitation period. It only postpones or defers thecommencement of the limitation period. This is evident from theGphrase “the period of limitation shall not begin to run”.[Para 32] [160-G]

1.3 Characteristics of Section 34(3) are:

(a) Section 34 is the only remedy for challenging an award passedunder Part I of the Arbitration Act. Section 34(3) is aH

limitation provision, which is inbuilt into the remedyprovision. One does not have to look at the Limitation Actor any other provision for identifying the limitation periodfor challenging an Award passed under Part I of theArbitration Act.

(b) The time limit for commencement of limitation period isalso provided in Section 34(3) i.e. the time from which aparty making an application “had received the ArbitralAward” or disposal of request under Section 33 forcorrections and interpretation of the Award.

(c) Section 34(3) prohibits the filing of an application for settingaside of an Award after three months have elapsed fromthe date of receipt of Award or disposal of request underSection 33. Section 34(3) uses the phrase “an applicationfor setting aside may not be made after three months haveelapsed”. The phrase “may not be made” is from theUNCITRAL Model Law and has been understood to mean“cannot be made”.

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

(e) Once the time limit or extended time limit for challengingthe arbitral award expires, the period for enforcing theaward under Section 36 of the Arbitration Act commences.This is evident from the phrase “where the time for makingan application to set aside the arbitral award under Section34 has expired”. There is an integral nexus between theperiod prescribed under Section 34(3) to challenge theAward and the commencement of the enforcement periodunder Section 36 to execute the Award. [Para 34][161-C-G; 162-A-G]

1.4 If Section 17 of the Limitation Act were to be appliedfor determining the limitation period under Section 34(3), it wouldhave the following consequences-

146SUPREME COURT REPORTS

A(a) In Section 34(3), the commencement period forcomputing limitation is the date of receipt of award or thedate of disposal of request under Section 33 (i.ecorrection/additional award). If Section 17 were to beapplied for computing the limitation period under Section34(3), the starting period of limitation would be the date ofBdiscovery of the alleged fraud or mistake. The starting pointfor limitation under Section 34(3) would be different fromthe Limitation Act.

(b) The proviso to Section 34(3) enables Court toentertain an application to challenge an Award after theCthree months period is expired, but only within anadditional period of thirty dates, “but not thereafter”. Theuse of the phrase “but not thereafter” shows that the 120days period is the outer boundary for challenging an Award.If Section 17 were to be applied, the outer boundary forDchallenging an Award could go beyond 120 days. The phrase“but not thereafter” would be rendered redundant and oti-ose. This Court has consistently taken this view that thewords “but not thereafter” in the proviso of Section 34 (3)of the Arbitration Act are of mandatory nature, and couchedin negative terms, which leaves no room for doubt.E[Para 35] [162-F-G; 163-A-D]

1.5 The express exclusion can be inferred either from thelanguage of the special law or it can be necessarily impliedfrom the scheme and object of the special law. The aforesaidinconsistencies with the language of Section 34(3) ofFArbitration Act tantamount to an “express exclusion” ofSection 17 of Limitation Act. Further, the exclusion ofSection 17 is also necessarily implied when one looks atthe scheme and object of the Arbitration Act.[Paras 25, 36 and 38] [158-B-C; 163-E; 164-B]

G1.6 First, the purpose of Arbitration Act was to provide for aspeedy dispute resolution process. The Statement ofObjects and Reasons reveal that the legislative intent ofenacting the Arbitration Act was to provide parties with anefficient alternative dispute resolution system which gives

litigants an expedited resolution of disputes while reducingthe burden on the courts. Article 34(3) reflects this intentwhen it defines the commencement and concluding periodfor challenging an Award. Finality is fundamental principleenshrined under the Arbitration Act and definitive timelimit for challenging an Award is necessary for ensuringfinality. If Section 17 were to be applied, an Award can bechallenged even after 120 days. This would defeat theArbitration Act’s objective of speedy resolution of disputes.The finality of award would also be in limbo as party canchallenge an Award even after the 120 day period. Second,extending Section 17 of Limitation Act to Section 34 woulddo violence to the scheme of the Arbitration Act. Section36 enables party to apply for enforcement of Award whenthe 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 setaside the arbitral award” in Section 36 will become uncertainand create confusion in the enforcement of Award. This runscounter to the scheme and object of the Arbitration Act.Third, Section 34(3) reflects the principle of unbreakability.Extending Section 17 of the Limitation Act would gocontrary to the principle of ‘unbreakability’ enshrined underSection 34(3) of the Arbitration Act. [Paras 39-42][164-B-H; 165-A-C]

International Commercial Arbitration and Conciliationin UNCITRAL Model Law Jurisdictions, 2[nd ]Ed. byDr. Peter Binder - referred to.

1.7 Section 17 does not defer the starting point of thelimitation period merely because the Appellants has committedfraud. Section 17 does not encompass all kinds of frauds andmistakes. Section 17(1)(b) and (d) encompasses only thosefraudulent conduct or act of concealment of documents which havethe effect of suppressing the knowledge entitling party to pursueits legal remedy. Once party becomes aware of the antecedentfacts necessary to pursue legal proceeding, the limitation periodcommences. In the context of Section 34, party can challengean award as soon as it receives the award. Once an award is

Areceived, party has knowledge of the award and the limitationperiod commences. The objecting party is therefore precludedfrom invoking Section 17(1)(b) & (d) once it has knowledge ofthe Award. Section 17(1)(a) and (c) of Limitation Act may not evenapply, if they are extended to Section 34, since they deal with ascenario where the application is “based upon” the fraud of theBrespondent or if the application is for “relief from theconsequences of mistake”. Section 34 application is based onthe award and not on the fraud of the respondent and does notseek the relief of consequence of mistake. [Paras 44, 47][165-E-G; 166-E-F]

1.8 The fraudulent conduct where Section 17 of theLimitation Act would have helped the objecting party is wherethere was fraud in the delivery of the award. However, in sucha scenario, resort to section 17 is not necessary. If there is anyfraud in the delivery of Award, the requirement of receipt of Award

Dunder Section 34(3) itself is not satisfied. Any receipt of Awardmust be effective receipt. [Para 48] [166-G]

1.9 Once the party has received the Award, the limitationperiod under Section 34(3) of the Arbitration Act commences.Section 17 of the Limitation Act would not come to the rescue ofEsuch objecting party. In the present case, the Respondents had aright to challenge the Award under Section 34 the moment theyreceived it. In this case, Respondents received the Award on21.02.2010. The alleged MoU was executed on 09.04.2010. Oncethe Respondents received the Award, the time under Section34(3) commenced and any subsequent disability even as perFSection 17 or Section 9 of Limitation Act is immaterial. Merelybecause the Appellant had committed some fraud, it would notaffect the Respondents right to challenge the Award if the factsentitling the filing of Section 34 Application was within theirknowledge. The moment the Respondents have received theGAward, the three months period prescribed under Section 34(3)begins to commence. It was incumbent on the Respondents tohave instituted an application under Section 34 challenging anaward. Therefore, there would not have been any point formeaningful remand as the question of law is answered against

the Respondents herein. The judgment and order of the HighCourt and also the order condoning the delay of 236 days in filingthe objections are set aside. [Paras 50, 51] [167-F-H; 168-A-C]

Vidyacharan Shukla v. Khubchand Baghel AIR 1964SC 1099 : [1964] 6 SCR 129 - followed.

Union of India v. Popular Construction Co.(2001) 8 SCC 470 : [2001] 3 Suppl. SCR 619 ;Hukumdev Narain Yadav v. Lalit Narain Mishra(1974) 2 SCC 133 : [1974] 3 SCR 31 ;Commissionerof Customs and Central Excise v. Hongo India (P) Ltd.(2009) 5 SCC 791 ;State of Himachal Pradesh v.Himachal Techno Engineers & Anr.(2010) 12 SCC210 : [2010] 8 SCR 1025 ; Assam Urban Water Supply& Sewerage Board v. Subash Projects & Marketing Ltd.(2012) 2 SCC 624 : [2012] 1 SCR 403 ;Anil kumarJinabhai Patel (D) through LRs v. PravinchandraJinabhai Patel & Ors. (2018) SCC Online SC 276 ;Yeswant Deorao Deshmukh v. Walchand RamchandKothari[1950] SCR 852 ; Pallav Sheth v. Custodian,(2001) 7 SCC 549 : [2001] 1 Suppl. SCR 387 – reliedon.Consolidated Engineering Enterprises v. PrincipalSecretary, Irrigation Department(2008) 7 SCC 169:[2008] 5 SCR 1108 ;State of Goa v. Western Builders(2006) 6 SCC 239 : [2006] 3 Suppl. SCR 288 ;CoalIndia Ltd. v. Ujjal Transport Agency(2011) 1 SCC117 ;M.P. Housing Board v. Mohanlal& Co.(2016) 14SCC 199 ;Chhattisgarh State Electricity Board v.Central Electricity Regulatory Commission(2010) 5SCC 23 : [2010] 4 SCR 680 ; Gopal Sardar v. KarunaSardar (2004) 4 SCC 252 : [2004] 2 SCR 826 ; Unionof India v. Tecco Trichy Engineers & Contractors(2005)4 SCC 239 : [2005] 2 SCR 983 – referred to.

ABC Co. Ltd. v. XYZ Co. Ltd. [2003] SGHC 107(High Court of Singapore) – referred to.

Case Law Reference

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 7710-7713 of 2013.F

From the Judgment and Order dated 18.06.2012 of the High Courtof Judicature at Andhra Pradesh, Hyderabad in Civil Revision PetitionNos. 2151, 2246, 2383 and 2458 of 2012.

Devansh A. Mohta, Kumar Parimal, Nilakanta Nayak, AniruddhaGP. Mayee, Advs. for the Appellants.

Yashraj Singh Deora, Ms. Asmita Singh (for M/s Mitter & MitterCo.,) Advs. for the Respondents.

The Judgment of the Court was delivered by

N. V. RAMANA, J. 1.These appeals are filed, aggrieved by thejudgment and order dated 18.06.2012 in the Civil Revision PetitionNos. 2151, 2246, 2383 and 2458 of 2012 passed by the High Court ofJudicature 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 delay caused on the account ofalleged fraud played on the objector (party challenging the award)beyond the period prescribed under Section 34 (3) of the Arbitration andConciliation Act of 1996 [‘Arbitration Act’].

3.The facts which give rise to this question fall into narrowcompass. Originally one Mr. P. Kishan Lal carried on business andacquired several properties. On his death, Mr. P. Kishan Lal wassurvived by eight (8) legal heirs (Appellant Nos. 1 to 6 and RespondentNos. 1 and 2).

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

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

6. The Respondents allege that after the pronouncement of theaward, the Appellants in bad faith entered into Memorandum ofUnderstanding (MoU) with the Respondents. According to theRespondents, the Appellants agreed to give certain additional propertiesto Respondent No. 1, which were more than what were provided in theAward. The Respondents alleged that after entering into the MoU, theAppellantswere required to execute Gift and Release Deeds to giveeffect to the MoU. However, the Appellants delayed the execution ofthe Gift and Release Deeds as contemplated by the MoU.

A7.In the meanwhile, the three-month period and the extendedperiod of 30 days for challenging an Award under Section 34(3) of theArbitration Act had expired. After the time limit expired, the Appellantsfiled an Execution Petition (EP) for execution of the Award. The trialcourt held that EP was not maintainable. On appeal, the High Court setaside the order of the trial court and held that the Execution Petition wasBmaintainable and directed the trial court to decide it on merits.

8.When the Respondents realized that the Appellants weredelaying the execution of the Gift Deed contemplated by the MoU, theRespondents on 08.02.2011 filed an application under Section 34(3) ofthe Arbitration Act for setting aside the Award. This filing was 236Cdays after the receipt of the Award by the Respondents. Theapplication was accompanied by another application under Section 5 ofthe Limitation Act seeking condonation of the delay of 236 days. In theapplication 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 legalrequirement of filing objections within the period prescribed underthe Arbitration Act.

c. Since they were dissatisfied with the Award, they raised objectionsEbefore the learned Arbitrators. The Arbitrators called upon all theparties and conducted conciliation. Accordingly, the partiesentered into MoU. The MoU contemplated for execution of GiftDeed and Release Deed in favour of Respondent No.1. However,the Appellants failed to execute the required documents as per theMoU with an intent to defeat their rights.F

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 anotherapplication being I.A. No. 1977 of 2011 in I.A. No. 598 of 2011, seekingan order of the trial court to summon the Sub-registrar, Charminar toGprove the veracity of the Memorandum of Understanding and to counterthe allegations raised by the Appellants herein, as to the falsification andfabrication of the Memorandum dated 09.04.2010. For completeness ofnarration, it may be stated that additional I.A.s, being I.A. No. 210 and211 of 2012, were sought by the Respondent seeking certain documentsHto 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 theSection 34 application. The Trial Court while dismissing the aforesaidapplication as indicated above, reasoned as under-

i. That the Court is not empowered to stretch the limitation periodbeyond the requisite period given under Section 34 of theArbitration Act.

ii. Placing reliance on Union of India vs.Popular Construction Co.,(2001) 8 SCC 470 and Consolidated Engineering Enterprisesvs. Principal Secretary, Irrigation Department, (2008) 7 SCC169,held that the language of Section 34 of the Arbitration Actmandated strict adherence to the time period providedthereunder and the extension beyond the same was not possibleunder any circumstances. Therefore, Section 5 of the LimitationAct was not applicable to an application filed under Section 34 ofthe Arbitration Act.

iii. Based on the aforesaid judgments of this Hon’ble Court, and theprovisions of Section 34(3) of the Arbitration Act, the City CivilCourt held that Section 5 of the Limitation Act, 1963, has noapplication, as the Court has no power to condone the delaybeyond three months and thirty days. On this ground alone, theobjections 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 oflimitation on the ground of illness and no medical certificate wasprovided to substantiate such claim.

v. That ignorance of law on behalf of the Respondents, to be notaware of the technicalities provided under Section 34 of theArbitration Act was not excusable.

vi. Moreover, the trial court came to conclusion that equitable groundscannot be utilized to create exceptions not mandated under thestatutory law.

We may note that the trial court although discussed about theexistence of the Memorandum of Understanding dated 09.04.2010 andits impact on the Respondent’s delay in filing the Section 34 application,there is no specific discussion concerning the applicability of Section 17

Aof the Limitation Act in the trial court order. Moreover, other interimapplications filed by the respondents were also dismissedconsequentially.

11.Being aggrieved by the dismissal, respondents preferred fourCivil Revision petitions, before the High Court of Andhra Pradesh underArticle 227 of the Constitution of India, being C.R.P. No. 2151, 2246,B2383 and 2458 of 2012. By the impugned order dated 18.06.2012, theHigh Court remanded the matter to the trial court concerning theapplicability of Section 17 of the Limitation Act in an application underSection 34 of the Arbitration Act. The High Court observed

“Even though Mr. K. Prabhakar, learned counsel for theCrespondents sought to argue that when Section 5 of the Act isexcluded, automatically Section 17 of the Act also gets excluded,I refrain from expressing any opinion on this aspect, because thisis required to be considered by the lower court at the firstinstance before this Court examines the same at an appropriatestage. On this short ground, I feel that it is just andDappropriate to remand the matter back to the learned ChiefJudge, City Civil Court, Hyderabad for considering theabove-mentioned pleadings of the petitioners andpronouncing upon the same with reference to theapplicability or otherwise of the provision of Section 17 ofEthe Act. Therefore, without expressing any opinion on theseaspects, the learned Chief Judge is directed to reconsider the caseonly to this limited extent and pass fresh order after hearingboth parties, within period of two months from the date ofreceipt of this order. It is made clear that the orders of the lowerCourt in respect of the other aspects stand confirmed”.

(emphasis supplied)

12.Aggrieved by the remand order passed by the High Court onthe applicability of Section 17 of the Limitation Act to the proceedings,the Appellants have approached this Court in these appeals.G13.Before we delve into any other aspect of this case, it may be

G13.Before we delve into any other aspect of this case, it may beimportant to note that we would have agreed with the High Court whereina remand may have been required in usual course for considering theapplicability of Section 17 of the Limitation Act as there is an apparentinsufficiency of reasons in the trial court order. But, in this case therehas been considerable delay in resolving the dispute. The very purposeH

of speedy justice delivery mechanism would be frustrated by suchdelays if the matter is allowed to linger before the courts. We hadpositively persuaded the parties several times to come to an amicablesettlement and asked the advocates representing them to use their goodoffices 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 ofapplicability of Section 17 of the Limitation Act to an application filedunder Section 34 of the Arbitration Act. This is pure question of law.Only if Section 17 of Limitation Act was applicable to Section 34application, the question of factual satisfaction of the ingredients ofSection 17 to the present case and consequent remand to the trialcourt 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 ArbitrationAct begins ‘only’ upon the receipt of the award by the parties andthe same cannot be diluted by different starting pointprovided under the Limitation Act, in light of Section 29 (2) of theLimitation Act.

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

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

iv. The mandate of Popular Construction Case(supra) andConsolidated Engineering Case (supra) wherein the emphasison ‘fixed period’ needs to be given effect to.

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

vi. This Court should appreciate the difference betweenconcealment of right to action being different from preventing aperson from taking action.

16.On the contrary, the learned counsel for the respondents,Mr. Yashraj Singh Deora, had contended that-

Ai. The reasoning provided under Popular Construction Case(supra)and Consolidated Engineering Case(supra) clearly indicates tothe applicability of Section 17 of the Limitation Act, similar to theapplicability of Section 14 of the Limitation Act.

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

Biii. It is evident that the Arbitration Act under Section 34 (3) providesfor different time period than the one present under Article 137of the Limitation Act, accordingly, the special law wouldtherefore, prevail in so far as the issue of period of limitation isconcerned. However, for ‘computation of the period of limitation’Cor arriving at the ‘prescribed period’ the provisions of Section 4 to24 of the Limitation Act would automatically apply unless theyare expressly excluded by the special law.

iv. That it has been highly inequitable for the respondents, who werevictims of bad faith negotiation undertaken by the Appellants toDderail the respondents from pursuing this case for enforcement oftheir rights.

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

18.We are now to examine whether Section 17 of the LimitationEAct is applicable while determining the limitation period under Section34(3) of the Arbitration Act?

19.This analysis has to necessarily begin from Section 29(2) ofthe Limitation Act, which states

29 (2) Where any special or local law prescribes for any suit,Fappeal or application period of limitation different from theperiod prescribed by the Schedule, the provisions of Section 3shall apply as if such period were the period prescribed by theSchedule and for the purpose of determining any period oflimitation prescribed for any suit, appeal or application by anyGspecial 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 theconjunctive “and” in the said provision. The inter-relation between thesetwo limbs was considered by Bench of five Judges of this Court inVidyacharan Shukla v. KhubchandBaghel, [1964] 6 SCR 129.

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

22.The second part mandatesthat Sections 4 to 24 of theLimitation Act will apply for determining the period of limitation “only inso far as, and to the extent to which, they are not expressly excluded bysuch special or local law.”Thus the extent of the application of Sections4 to 24 of Limitation Act will apply for determining the limitation periodunder the Arbitration Act only if they are not expressly excluded byArbitration Act.

23.We are conscious that this Court in several pronouncementshas extended Section 14 of Limitation Act to Section 34 of ArbitrationAct and thereby excluded the time spent inbonafide pursuingproceedings in Court which lacks jurisdiction. (State of Goa v.Western Builders (2006) 6 SCC 239 at para 25; ConsolidatedEngineering Enterprises v. Principal Secretary, IrrigationDepartment, (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 para13). Similarly, this Court also extended Section 12 of the Limitation Actto the Arbitration Act and excluded the day on which the Award wasreceived from computing the starting period under Section 34(3).We note that none of these cases dealt with the question whether thescheme of Section 17 of the Limitation Act is consistent with Section 34of the Arbitration Act.

A24.Relying on these pronouncements, the Respondents’ counselasserted that there is no express exclusion of Section 17 in theArbitration Act and therefore the benefit of Section 17 of Limitation Actshould be extended while determining the period of limitation underSection 34(3).

B25.This requires us to consider the phrase “express exclusion” inSection 29(2) of the Limitation Act. This Court in series of cases heldthat the express exclusion can be inferred either from the language ofthe special law or it can be necessarily implied from the scheme andobject of the special law.

C26.A Bench of five Judges in Vidyacharan Shukla v. KhubchandBaghel, AIR 1964 SC 1099, interpreting the phrase “expressexclusion” observed:

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

27.This principle was further crystallised in Hukumdev NarainYadav v. Lalit Narain Mishra,(1974) 2 SCC 133 wherein Benchof three Judges held that:F

“It is contended before us that the words “expressly excluded”would mean that there must be an express reference made in thespecial or local law to the specific provisions of the Limitation Actof which the operation is to be excluded. As usual the meaninggiven in the Dictionary has been relied upon, but what we have toGsee is whether the scheme of the special law, that is, in this casethe Act, and the nature of the remedy provided therein are suchthat the Legislature intended it to be complete code by itselfwhich alone should govern the several matters provided by it. Ifon an examination of the relevant provisions it is clear that theprovisions of the Limitation Act are necessarily excluded, then

the benefits conferred therein cannot be called in aid tosupplement the provisions of theAct.In our view, even in casewhere the special taw does not exclude the provisions of Sections4 to 24 of the LimitationAct by an express reference, it wouldnonetheless be open to the Court to examine whether and to whatextent the nature of those provisions or the nature of thesubject-matter and scheme of the special law exclude theiroperation”.(emphasis added)

28.A Bench of three Judges in Commissioner of Customs andCentral Excise v. Hongo India (P) Ltd., (2009) 5 SCC 791reiterated 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 thespecial or local law to the specific provisions of the Limitation Actof which the operation is to be excluded. In this regard, we haveto see the scheme of the special law which here in this case is theCentral ExciseAct.The nature of the remedy provided therein issuch that the legislature intended it to be complete code by itselfwhich alone should govern the several matters provided by it. If,on an examination of the relevant provisions, it is clear that theprovisions of the Limitation Act are necessarily excluded, thenthe benefits conferred therein cannot be called in aid tosupplement the provisions of theAct. In our considered view, thateven in case where the special law does not exclude theprovisions of Sections 4 to 24 of the LimitationAct by an expressreference, it would nonetheless be open to the court to examinewhether and to what extent, the nature of those provisions or thenature of the subject-matter and scheme of the special lawexclude their operation. In other words, the applicability of theprovisions of the Limitation Act, therefore, is to be judged notfrom the terms of the Limitation Act but by the provisions of theCentral Excise Act relating to filing of reference application tothe High Court”.

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

A30.Thus, the inquiry is - whether the text or the scheme andobject of the Arbitration Act excludes the application of Section 17 ofLimitation Act while determining the limitation period?

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

17. Effect of fraud or mistake.—

(1) Where, in the case of any suit or application for which aperiod of limitation is prescribed by thisAct,—

(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 suit orapplication is founded is concealed by the fraud of any suchperson as aforesaid; or

D(c) the suit or application is for relief from the consequences of amistake; or

(d) where any document necessary to establish the right of theplaintiff or applicant has been fraudulently concealed from him,

Ethe period of limitation shall not begin to run until plaintiff orapplicant has discovered the fraud or the mistake or could, withreasonable diligence, have discovered it; or in the case of aconcealed document, until the plaintiff or the applicant first hadthe means of producing the concealed document or compellingits production:F

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

G33.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 threemonths have elapsed from the date on which the party making

that application had received the arbitral award or, if requesthad been made under section 33, from the date on which thatrequest had been disposed of by the arbitral tribunal.

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

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

(a) Section 34 is the only remedy for challenging an award passedunder Part I of the Arbitration Act. Section 34(3) is limitationprovision, which is an inbuilt into the remedy provision. One doesnot have to look at the Limitation Act or any other provision foridentifying the limitation period for challenging an Award passedunder Part I of the Arbitration Act.

(b) The time limit for commencement of limitation period is alsoprovided in Section 34(3) i.e. the time from which party makingan application “had received the Arbitral Award” or disposal ofa request under Section 33 for corrections and interpretation ofthe Award.

(c) Section 34(3) prohibits the filing of an application for setting asideof an Award after three months have elapsed from the date ofreceipt of Award or disposal of request under Section 33. Section34(3) uses the phrase “an application for setting aside maynot be made after three months have elapsed”. The phrase“may not be made” is from the UNCITRAL Model Law[1] and hasbeen understood to mean “cannot be made”. The High Court ofSingapore in ABC Co. Ltd v. XYZ Co. Ltd,[2003] SGHC 107)

“The starting point of this discussion must be the ModelLaw itself. On the aspect of time, Article 34(3) is brief. Allit says is that the application may not be made after the

1" An application for setting aside may not be made after three months have elapsedfrom the date on which the party making that application had received the award or, ifa request had been made under article 33, from the date on which that request had beendisposed of by the arbitral tribunal”.

Alapse of three months from specified date. Although thewords used are ‘may not’these must be interpreted as‘cannot’ as it is clear that the intention is to limit the timeduring which an award may be challenged. Thisinterpretation is supported by material relating to thediscussions amongst the drafters of the Model Law. ItBappears to me that the court would not be able to entertainany application lodged after the expiry of the three monthsperiod as Article 34 has been drafted as theall-encompassing, and only, basis for challenging anaward in court. It does not provide for any extension ofCthe time period and, as the court derives its jurisdiction tohear the application from the Article alone, the absence ofsuch provision means the court has not been conferredwith the power to extend time”.

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

(e) Once the time limit or extended time limit for challenging theEarbitral award expires, the period for enforcing the award underSection 36 of the Arbitration Act commences. This is evident fromthe phrase “where the time for making an application to setaside the arbitral award under Section 34 has expired”.[2 ]Thereis an integral nexus between the period prescribed under Section34(3) to challenge the Award and the commencement of theFenforcement period under Section 36 to execute the Award.

35.If Section 17 of the Limitation Actwere to be applied todetermining the limitation period under Section 34(3), it would have thefollowing consequences

(a) In Section 34(3), the commencement period for computinglimitation is the date of receipt of award or the date of disposal ofrequest under Section 33 (i.e correction/additional award).

2 36. Enforcement.—Where the time for making an application to set aside the arbitralaward under section 34 has expired, or such application having been made, it has beenrefused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 ofH1908) in the same manner as if it were decree of the Court.

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

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

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

37.This Court in Popular Construction Case (supra) at page474 followed the same approach when it relied on the phrase “but notthereafter” to hold that Section 5 of Limitation Act was expresslyexcluded.

12. As far as the language of Section 34 of the 1996 Act isconcerned, the crucial words are “but not thereafter” used in theproviso to sub-section (3). In our opinion, this phrase would amountto an express exclusion within the meaning of Section 29(2) ofthe Limitation Act, and would therefore bar the application ofSection 5 of thatAct. Parliament did not need to go further.Tohold that the court could entertain an application to set aside theaward beyond the extended period under the proviso, would render

Athe phrase “but not thereafter” wholly otiose. No principle ofinterpretation would justify such result.

(emphasis added)

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

39.First, the purpose of Arbitration Act was to provide for aspeedy dispute resolution process. The Statement of Objects andReasons reveal that the legislative intent of enacting the Arbitration Actwas to provide parties with an efficient alternative dispute resolutionsystem which gives litigants an expedited resolution of disputes whileCreducing the burden on the courts.Article 34(3) reflects this intent whenit defines the commencement and concluding period for challenging anAward. This Court in Popular Construction Case (supra) highlightedthe importance of the fixed periods under the Arbitration Act.We mayalso add that the finality is fundamental principle enshrined under theDArbitration Act and definitive time limit for challenging an Awardisnecessary for ensuring finality. If Section 17 were to be applied, anAward can be challenged even after 120 days. This would defeat theArbitration Act’s objective of speedy resolution of disputes. The finalityof award would also be in limbo as party can challenge an Awardeven after the 120 day period.

40.Second, extending Section 17 of Limitation Act to Section 34would do violence to the scheme of the Arbitration Act. As discussedabove, Section 36 enables party to apply for enforcement of Awardwhen the period for challenging an Award under S.34 has expired.However, if Section 17 were to be extended to Section 34, theFdetermination of “time for making an application to set aside the arbitralaward” in Section 36 will become uncertain and create confusion intheenforcement of Award. This runs counter to the scheme and objectof the Arbitration Act.

41.Third, Section 34(3) reflects the principle of unbreakability.GDr. Peter Binder in International Commercial Arbitration andConciliation in UNCITRAL Model Law Jurisdictions, 2[nd ]Ed., observed:

“An application for setting aside an award can only be madeduring the three months following the date on which the partymaking the application has received the award. Only if partyHhas made request for correction or interpretation of the award

under Art. 33 does the time limit of three months begin after thetribunal has disposed of the request. This exception from the three-month time limit was subject to criticism in the Working group dueto fears that it could be used as delaying tactics. However,although “an unbreakable time limit for applications for settingaside” was sought as being desirable for the sake of “certaintyand expediency” the prevailing view was that the words ought tobe retained “since they presented the reasonable consequence ofarticle 33”. According to this “unbreakability” of time limit andtrueto the “certainty and expediency” of the arbitral awards, anygrounds for setting aside the award that emerge after the three-month time limit has expired cannot be raised.

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

43.The Respondents have argued that if Section 17 is notextended to Section 34, it would cause enormous injustice and providescope for parties to play mischief. The Respondents have cited severalillustrations where on account of fraud of the party, an objecting partycan be precluded from challenging an Award and extending Section 17would come to the rescue of such party.

44.The Respondent’s contention proceeds on misconceivednotion of Section 17. Even if Section 17 were to be extended to Section34, it would not address the Respondent’s grievance. Section 17 doesnot defer the starting point of the limitation period merely because theAppellants has committed fraud. Section 17 does not encompass all kindsof frauds and mistakes. Section 17(1)(b) and (d) only encompasses onlythose fraudulent conduct or act of concealment of documentswhich havethe effect of suppressing the knowledge entitling party to pursue itslegal remedy. Once party becomes aware of the antecedent factsnecessary to pursue legal proceeding, the limitation period commences.

45.This principle is illustrated by ruling of this Court in YeswantDeorao Deshmukh v. Walchand Ramchand Kothari, 1950 SCR 852.

The facts of this case are broadly similar. decree holder files anexecution petition after the expiry of limitation period (12 years of thepassing of decree). To overcome the limitation bar, the decree-holderalleged that the judgement debtor prevented the execution of decreeby suppressing the ownership of certain assets (ownership of

Anewspaper in those facts) and in support placed reliance on Section 18of Limitation Act, 1908 (equivalent of Section 17)[3] Rejecting thiscontention, this Court observed:

19. In our opinion, the facts necessary to establish fraud underSection 18 of the Limitation Act are neither admitted nor provedBin the present case. Concealing from person the knowledge ofhis right to apply for execution of decree is undoubtedlydifferent from preventing him from exercising his right, of whichhe has knowledge. Section 18 of the Limitation Act postulates theformer alternative. …… The fraud pleaded, namelysuppressionofownershipof the Prabhat newspaper, did notCconceal from him his right to make an application for execution ofthe decree.

46.Similarly in PallavSheth v. Custodian, (2001) 7 SCC 549,this Court observed that Section 17 comes to the rescue of party for“failing to adopt legal proceedings when the facts or material

Dnecessary for him to do so have been willfully concealed from him”

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

48.The fraudulent conduct where Section 17 of the LimitationAct would have helped the objecting party is where there was fraud inthe delivery of the award. However, in such scenario, resort to section17 is not necessary. If there is any fraud in the delivery of Award, theGrequirement of receipt of Award under Section 34(3) itself is notsatisfied. Any receipt of Award must be effective receipt.This Court inUnion of India v. Tecco Trichy Engineers & Contractors, (2005) 4SCC 239 held that:

1Although there is slight difference in the text of S.18 of Limitation Act, 1908 andS.17 of Limitation Act, 1963, the relevant provision for the present case remains theHsame.

“8.The delivery of an arbitral award under sub-section (5) ofSection 31 is not matter of mere formality. It is matter ofsubstance. It is only after the stage under Section 31 has passedthat the stage of termination of arbitral proceedings within themeaning of Section 32 of the Act arises. The delivery of arbitralaward to the party, to be effective, has to be “received” by theparty. This delivery by the Arbitral Tribunal and receipt by theparty of the award sets in motion several periods of limitationsuch as an application for correction and interpretation of an awardwithin 30 days under Section 33(1), an application for making anadditional award under Section 33(4) and an application forsetting aside an award under Section 34(3) and so on. As thisdelivery of the copy of award has the effect of conferring certainrights on the party as also bringing to an end the right to exercisethose rights on expiry of the prescribed period of limitation whichwould be calculated from that date, the delivery of the copy ofaward by the Tribunal and the receipt thereof by each partyconstitutes an important stage in the arbitral proceedings.

9. In the context of huge organisation like the Railways, thecopy of the award has to be received by the person who hasknowledge of the proceedings and who would be the best personto understand and appreciate the arbitral award and also to take adecision in the matter of moving an application under sub-section(1) or (5) of Section 33 or under sub-section (1) of Section 34".

49.In view of the above, we hold that once the party hasreceived the Award, the limitation period under Section 34(3) of theArbitration Act commences. Section 17 of the Limitation Act would notcome to the rescue of such objecting party.

50. In the present case, the Respondents had right to challengethe Award under Section 34 the moment they received it. In this case,Respondents received the Award on 21.02.2010. The alleged MoU wasexecuted on 09.04.2010. Once the Respondents received the Award,the time under Section 34(3) commenced and any subsequent disabilityeven as per Section 17 or Section 9 of Limitation Act is immaterial.Merely because the Appellant had committed some fraud, it would notaffect the Respondents right to challenge the Award if the facts entitling

Athe filing of Section 34 Application was within their knowledge. Themoment the Respondents have received the Award, the three monthsperiod prescribed under Section 34(3) begins to commence. It wasincumbent on the Respondents to have instituted an application underSection 34 challenging an award. Therefore, in light of the discussionabove, there would not have been any point for meaningful remand asBthe question of law is answered against the Respondents herein.

51.In light of the aforesaid legal position, the judgment and orderof 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 allowingI.A. No. 598 of 2011 condoning the delay of 236 days in filing theCobjections is set aside, accordingly these appeals are allowed with noorder as to costs.

Divya Pandey

Appeals allowed.