Introduction
On 10 January 2025, the Supreme Court of India delivered a landmark judgment in My Preferred Transformation & Hospital1., addressing the issue of limitation for filing applications to set aside arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act). The Court examined the interplay between the Limitation Act, 1963 (Limitation Act) and Section 34(3) of the Arbitration Act, with a particular focus on whether the additional 30-day condonable period provided under Section 34(3) can be extended if it expires during court vacations. This decision has significant implications for arbitration in India, clarifying the scope of judicial discretion in condoning delays under the Arbitration Act.
Facts and Background
The dispute arose from lease agreements between the appellants (My Preferred Transformation & Hospitality Pvt. Ltd.) and the respondent (M/s Faridabad Implements Pvt. Ltd.). Following such dispute, the respondent invoked arbitration, resulting in an arbitral award dated 4 February 2022 in its favour.
Under Section 34(3) of the Arbitration Act, the appellants were required to challenge the arbitral award before the High Court within three months (by 14 May 2022), with a possible condonable extension of 30 days. However, pursuant to the Supreme Court's earlier COVID-19 orders, the limitation period was automatically extended to 29 May 2022. The additional 30-day condonable period expired on 28 June 2022 i.e. during the High Court's summer vacation. The appellants filed their application on 4 July 2022 i.e. the first day after the High Court reopened. The High Court dismissed the challenge to the award being barred by limitation, which the Division Bench affirmed. In view thereof, the appellants then approached the Supreme Court.
Brief contentions of the parties
The appellants contended that Section 4 of the Limitation Act, which allows filing on the next working day if the limitation period expires on a court holiday, should apply to the aforesaid 30 days condonable period. Alternatively, they argued that Section 10 of the General Clauses Act, 1897 (General Clauses Act), which similarly addresses the expiration of statutory periods on court holidays, should apply to the proceedings under Section 34(3) of the Arbitration Act. The respondent on the other hand, relied on Union of India vs. Popular Construction Co.2 and Assam Urban Water Supply and Sewerage Board v. Subhash Projects3, to contend that the aforesaid provisions do not apply to the 30 days condonable period under Section 34(3) of the Arbitration Act.
Findings of the Court
The Supreme Court analysed the provisions of Section 34(3) of the Arbitration Act alongside the Limitation Act and the General Clauses Act, focusing on the applicability of Sections 4 and 10 of the respective statutes, to arrive at the following findings.
- Applicability of Section 4 of the Limitation Act: By relying on the language of Section 4 of the Limitation Act, which uses the words "prescribed period", as well as upon the decisions of the Supreme Court in Assam Urban Water Supply (supra) and Bhimashankar Sahakari Sakkare Karkhane Niyamita vs. Walchandnagar Industries Limited4, it was held that Section 4 of the Limitation Act applies only to the "prescribed period" under Section 34(3) of the Arbitration Act i.e. the initial three-month limitation period. The additional 30-day condonable period under the proviso to Section 34(3) of the Arbitration Act is not the "prescribed period" but a discretionary period, and hence, Section 4 of the Limitation Act does not apply to it.
- Applicability of other provisions of the Limitation Act: The Court also analysed the applicability of other provisions of the Limitation Act to the Arbitration Act, based on past judgments. Section 12 of the Limitation Act, permitting exclusion of time spent obtaining certified copies, was held to be applicable to proceedings under Section 34 of the Arbitration Act5. The Court clarified that such time can be excluded from the three-month limitation period under Section 34. It was also held that Section 14 of the Limitation Act, which excludes time spent in pursuing remedies before the wrong forum in good faith, also applies to Section 346. Section 17 of the Limitation Act, which delays the start of limitation in cases of fraud or mistake, does not apply to Section 34. The Court held that the limitation under the Arbitration Act begins strictly on the date of receiving the arbitral award, cannot be extended by alleging fraud or mistake.7
- Express and Implied Exclusion of Provisions: The Court emphasized that the specific timelines for challenging arbitral awards under the Arbitration Act reflects the legislature's intention to ensure the finality of awards and restrict judicial interference. In this regard, the Court reaffirmed the decisions in Bhimashankar (supra) and Assam Urban Water Supply (supra) to hold that while the provisions of the Limitation Act generally apply to arbitrations vide Section 43(1) of the Arbitration Act, the stringent language of Section 34(3) ("but not thereafter") impliedly excludes application of Section 4 of the Limitation Act to the 30 days condonable period under Section 34(3).
- Applicability of Section 10 of the General Clauses Act: Section 10 of the General Clauses Act would not apply to the Arbitration Act as the proviso to Section 10 explicitly excludes the application of the same to acts or proceedings governed by the Limitation Act, including Section 34(3) proceedings under the Arbitration Act.
Concerns expressed with the current legal framework
The Court addressed the restrictive interpretation of limitation provisions under Section 34(3) of the Arbitration Act, which significantly curtails the ability of parties to challenge arbitral awards. It reaffirmed that Section 29(2) of the Limitation Act incorporates Sections 4 to 24 unless expressly excluded and noted that Section 34(3) of the Arbitration Act does not explicitly exclude Section 4 of the Limitation Act. However, the judicial precedent set by earlier decisions, such as Popular Construction Co. and Assam Urban Water Supply, equated the "prescribed period" to only the three-month limitation, thereby impliedly excluding the additional 30-day condonable period from the ambit of Section 4. This interpretation has created a rigid framework, leaving limited scope for equitable relief. The court acknowledged the inconsistency between the legislative intent and the current legal position, suggesting that these precedents effectively deny remedies on procedural grounds. It urged legislative reform to address this imbalance and ensure a fairer application of limitation laws, balancing procedural rules with the need to preserve substantive rights.
With the above concerns, the Supreme Court, being bound by its earlier decisions, dismissed the appeal, affirming that the petition filed under Section 34 was filed beyond the permissible limitation period.
Conclusion
The Court rightly expressed anguish at the restrictive interpretation adopted by previous judgments and the implied exclusion of Section 4 of the Limitation Act in the context of Section 34(3) of the Arbitration Act. It emphasized that the Limitation Act and its provisions should not be left to judicial interpretation alone, but should be clear and objective enough to be understood and applied by litigants themselves. Legislative intervention is essential to address the ambiguities in the interplay between these statutes, ensuring that procedural rules do not disproportionately hinder substantive justice. Such clarity will foster greater confidence in arbitration as an effective and equitable dispute resolution mechanism.
Footnotes
1 Civil Appeal No. 336 of 2025 (Arising out of SLP (C) No. 9996 of 2024)
2 (2001) Supp. (3) S.C.R. 619
3 Civil Appeal No. 2014 Of 2006
4 (2023) 8 SCC 453
5 State of Himachal Pradesh v. Himachal Techno Engineers, (2010) 12 SCC 210
6 Coal India Limited v. Ujjal Transport Agency, (2011) 1 SCC 117; Commissioner, Madhya Pradesh Housing
Board v. Mohanlal and Company, (2016) 14 SCC 199
7 P. Radha Bai v. P. Ashok Kumar, (2019) 13 SCC 445
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