India: Limitation Starts From The Receipt Of Arbitration Award

Last Updated: 11 October 2018
Article by AMLEGALS  

Limitation period prescribed under Section 34(3) of the Arbitration Act is to be computed from the time the party receives the copy of the award.

[ARISING OUT OF SLP(C) NO. 15668 OF 2018]


In the instant case the Petitioners and Respondents are brothers and they had started a business of chemicals, fertilizers and real estate in Jalgaon, Gujarat.

In the course of their business, they set up a number of companies and partnership concerns and acquired numerous immovable & movable properties.

Both the parties and their family members decided to divide all the assets of the family to avoid any future litigation or misunderstandings. They jointly appointed their sister, Latikaben and brother-in-law Bhikhalal Nathalal Patel, as the arbitrators for the division of the family assets, by virtue of a Memorandum of Understanding (MOU) dated 21.05.1996, which was jointly signed by all the members of the family.

An Interim Memorandum of Understanding (IMOU) dated 29.06.1996 was signed by the parties herein, on behalf of themselves and their respective family members. This was done during the absence of the appointed Arbitrators in the matters relating to bank accounts, withdrawal power, NPK allocations, etc.

On 07.07.1996 the Arbitrators passed an award, while mentioning the IMOU, whereby some properties were allotted to the Petitioner and the Respondent and some properties were left undivided, with equal rights of both the Parties and their respective family members.

Further, another award was passed on 03.11.1996 to finalise the issues between the parties which was duly acknowledged by them.

On 29.11.2005 an Arbitration Petition No. 202 of 2005 had been filed by the Appellant and his family members, under Section 34 of the Arbitration Act, before the District Judge, Jalgaon, challenging the arbitral award dated 07.07.1996 on the ground that they did not receive the copy of the award until 11.08.2005 and that their signature on the copy of the award was forged.

An amendment was also sought in the same petition to challenge the Arbitral Award dated 03.11.1996 as well. This Arbitration Petition was allowed on 14.02.2011.

An Appeal was filed by the Respondent herein, challenging the judgment dated 14.02.2011 which was set aside by the High Court of Judicature at Bombay Bench at Aurangabad in W.P. No. 4669 of 2011 on 27.03.2012, holding that the challenge to the arbitral award dated 07.07.1996 was time barred under the provisions of Section 34 of the Arbitration and Conciliation Act, 1996.

This Appeal has been filed to challenge the judgment of the High Court of Judicature of Bombay dated 27.03.2012.


The issues raised in this case were –

  1. Whether Anilkumar Patel represented his family in the arbitration proceedings and whether Respondents are right in contending that receipt of copy of award by Anilkumar Patel was for himself and on behalf of his family members.
  2. Whether the High Court was right in holding that the application under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the award was barred by limitation.


The Court observed that Section 34(3) provides that an application for setting aside an award shall not be entertained by the court if it is made after three months have elapsed from the date on which the applicant had received the arbitral award.

The proviso to Section 34 further provides that if the court is satisfied that the applicant was prevented by sufficient cause from making the application within the prescribed time, it may entertain the application within a further period of thirty days 'but not thereafter'.

Reference was made to the case of Union of India v. Tecco Trichy Engineers and Contractors (2005) 4 SCC 239, where a three Judge Bench of this Court, in respect to the issue of limitation for filing application under Section 34 of the Act for setting aside the arbitral award, held that the period of limitation would commence only after a valid delivery of an arbitral award takes place under Section 31(5) of the Act.

The award dated 07.07.1996 was signed by both the arbitrators. The award was also signed by Pravinchandra Patel and Anilkumar Patel. Both of them had undertaken to implement the award with their free will and pleasure, as seen from the following:-

"As per this Arbitration "Award", both the groups and their family members have to honestly, wholeheartedly and faithfully act in accordance with and implement the transaction of the property, the IMOU which is now considered as MOU and the accounting chart in respect of the companies and the firms. The aforesaid Arbitration Award I agreed to and approved of by and our descendant guardian and heirs. We undertake to implement the same with free-will and pleasure."

After their signature in the award for having received the copy of the award, Pravinchandra Patel and Anilkumar Patel had stated as under:-

"....For ourselves and on behalf of our family members."

It is pertinent to note that the award also referred to IMOU dated 29.06.1996 in and by which the members of the respective families have authorized Pravinchandra Patel and Anilkumar Patel to act on behalf of their family members.


The Bench comprising of Hon'ble Justice RK Aggarwal and Hon'ble Justice R. Banumathi held that the limitation period prescribed under section 34(3) of the Act is to be computed from the point of time when the party concerned received the copy of the arbitral award.

Receiving of the copy of the award by Anilkumar Patel on behalf of himself and Respondent Nos. 2 to 6, under an acknowledgment, is in terms of compliance of Section 31(5) of the Act and Section 34(3) thereof and that the application filed under Section 34 of the Act by Anilkumar Patel and Appellant Nos. 1(a) to 1(d) and Respondent No.10 was barred by limitation.

Hence, this Hon'ble Court dismissed the current appeal to hold that Anilkumar Patel, accepted the copy of the award on behalf of the entire family in his capacity as the Head of the family and hence the validity of such an award cannot be challenged by the family members on the ground of not having received a copy of the award.

The appeal was thus dismissed.


This decision has rightly established that the limitation period prescribed under Section 34(3) of the Arbitration and Conciliation Act, 1996, is to be computed from the time when the party received the copy of the award and this would indeed help prevent the misuse of time by the parties.

This content is purely an academic analysis under "Legal intelligence series".

© Copyright AMLEGALS.

Disclaimer: The information contained in this document is intended for informational purposes only and does not constitute legal opinion, advice or any advertisement. This document is not intended to address the circumstances of any particular individual or corporate body. Reade should not act on the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances of a particular situation. There can be no assurance that the judicial/quasi-judicial authorities may not take a position contrary to the views mentioned herein.

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