The Supreme Court, in a recent case of State of West Bengal v Rajpath Contractors & Engineers Ltd., has held that the limitation period of three months prescribed under Section 34(3) of the Arbitration & Conciliation Act, 1996 (“Act”) to challenge an arbitral award cannot be extended beyond the period of thirty days even on account of court closure or vacation.

Brief Facts:

The arbitral award in the present case (“Award”) was passed and served on 30 June 2022. The Calcutta High Court was closed for pooja vacation from 1 October 2022 to 30 October 2022 (both days inclusive). On 31 October 2022, the Appellants filed a petition under Section 34 of the Act challenging the Award. The Calcutta High Court dismissed the Section 34 petition on the grounds of limitation. It was held that the period of limitation expired on 30 September 2022. Therefore, the appellants are not entitled to the benefit of Section 4 of the Limitation Act, 1963 ("Limitation Act”). Section 4 of the Limitation Act provides that when the prescribed period for an appeal expires on a day when the court is closed, the same can be instituted on the day when the court reopens.

Contention of the Parties:

The Appellants contended that period of limitation for filing Section 34 petition ought to have been calculated from 1 July 2022 i.e. a day after the Award was received on 30 June 2022, the prescribed period of limitation ended on 1 October 2022, which was the first day of the pooja vacation. Therefore, the petition filed immediately after re-opening of the court on 31 October 2022 must be held to be within limitation. It was also submitted by the Appellants that the petition could not have been e-filed during pooja vacation as the relevant notification allowed e-filing only in urgent matters.

The Respondent submitted that the benefit of Section 4 of the Limitation Act is available only if the proceedings are filed within the prescribed period of limitation, which is three months in the present case in terms of Section 34(3) of the Act.

Held:

After considering rival submissions, the Apex Court held that the Award was served upon the Appellants on 30 June 2022. According to section 12(1) of the Limitation Act, the day from which limitation period is reckoned must be excluded. Therefore, the limitation period of three months will span from 1 July 2022 to 30 September 2022. The pooja vacation started from 1 October 2022 to 30 October, 2022. Thus, the prescribed period in the present case expired a day before commencement of the pooja vacation. Further, the extendable period of 30 days was expended as the Appellants filed the petition on 31 October 2022. Therefore, the Appellants are not entitled to take benefit of the court closure.

MHCO Comment: The view taken by the Supreme Court will ensure that the periods of limitations prescribed under the Act are strictly adhered to. This decision virtually places limitations under the Act at par with the Commercial Courts Act, 2015 which is a welcome development. At the same time, it increases responsibility of the parties and their advocates to ensure that Section 34 petitions are filed in a timely manner.

This update was released on 11 Jul 2024.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.com for any assistance.

Legal Update Team
MANSUKHLAL HIRALAL & COMPANY
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