In a recent order passed in the matter of Union of India v. M/s Associated Construction Co.1, the Hon'ble Supreme Court highlighted the uncertainty surrounding the period of limitation applicable on appeals filed under Section 37 of the Arbitration and Conciliation Act, 1996 (Arbitration Act).
In the instant case, an arbitral award was challenged by the Union of India (Petitioner) under Section 34 of the Arbitration Act. The High Court dismissed the objections of the Petitioner in the application filed under Section 34 of the Arbitration Act. The Petitioner then filed an appeal under Section 13 of the Commercial Courts Act, 2015 (Commercial Courts Act) read with Section 37 of the Arbitration Act before the High Court's division bench. The appeal filed under Section 37 of the Arbitration Act was dismissed on the ground of delay. In order to arrive at this conclusion, the High Court relied upon the decision of the Hon'ble Supreme Court in Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department2. In Consolidated Engineering, the Hon'ble Supreme Court held that the period of limitation for appeals under Section 37 of the Arbitration Act was governed by Article 116 of the Limitation Act, 1963 which prescribed a 90-day limitation period for appeals to High Court under the Code of Civil Procedure, 1908.
The Hon'ble Supreme Court referred to its decision in Union of India v. Varindera Constructions Ltd.3 wherein reliance was placed upon the law laid in Lachmeshwar Prasad Shukul and Ors. v. Keshwar Lal Chaudhuri.4 In Lachmeshwar, it was held that an appellate proceeding is a continuation of the original proceeding. Applying the same ratio, the Hon'ble Supreme Court in Union of India v. Varindera Constructions held that since a Section 34 application under Arbitration Act has to be filed within a maximum period of 120 days inclusive of the 30 day grace period, an appeal filed under Section 37 of the Arbitration Act would be covered by the same drill. The position in Union of India v. Varindera Constructions was further reiterated in the case of N.V. International v. State of Assam & Ors.5, to hold that period of limitation for filing an appeal under Section 37 should be the same as that under Section 34, which is a maximum of 120 days.
The Hon'ble Supreme Court then referred to Section 10 of the Commercial Courts Act. Section 10 of the Commercial Courts Act states that where the subject matter of arbitration is a commercial dispute of a specified value and where such arbitration is not an international commercial arbitration, all applications and appeals arising out of such arbitral proceedings would which ordinarily lie before any principal civil court of original jurisdiction in a district (not being a High Court) shall be decided by the Commercial Court. Further, it was also noted that the Commercial Court Act in Section 13(1A) states that an appeal against a judgment or order of a Commercial Court at the level of a District Judge or the Commercial Division of a High Court may be filed within a period of 60 days from the date of the judgment or order. The Apex Court, in the instant matter, observed that the proviso to sub-section (1A) clarifies that an appeal under Section 37 of the Arbitration Act would lie before the Commercial Court.
Having noted the confusion in relation to the period of limitation applicable to appeals filed under Section 37 of the Arbitration Act, the Hon'ble Supreme Court has listed the matter before a bench presided by Hon'ble Justice R.F. Nariman. It would be interesting to see how the Hon'ble Supreme Court settles this question of limitation period, given the multitude of ways in which the limitation period has been perceived by courts so far. The decision in the matter is keenly awaited as it is likely to settle the question once for all and provide much needed clarity to the litigants approaching courts under Section 37 of the Arbitration Act.
1 Special Leave Petition (Diary) No. 18079/2020.
2 Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department (2008) 7 SCC 169.
3 Union of India v. Varindera Constructions Ltd. (2020) 2 SCC 111.
4 Lachmeshwar Prasad Shukul and Ors. v. Keshwar Lal Chaudhuri AIR 1941 FC 5.
5 N.V. International v. State of Assam & Ors. (2020) 2 SCC 109.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.