An Analysis of How Provisions and Principles of the Limitation Act, 1963 Inhibit the Right to Proceedings under the Arbitration & Conciliation Act, 1996
I. Introduction
India's arbitration framework has undergone a remarkable transformation in recent years, propelled by the judiciary's increasingly supportive stance and the Government's vision to develop India as a significant hub for commercial arbitration in the international arbitration landscape. This categorical shift of stance emphasizes on a conscious effort to foster an arbitration-friendly environment that gives party autonomy, minimal judicial interference, and the binding effect of arbitral awards a paramount consideration.
In this pro-arbitration backdrop, reinforcing the fundamental objective of the arbitration as an alternative dispute resolution, including minimal judicial interference, speedy justice and finality of awards, the Arbitration and Conciliation Act, 1996 (“Act”) offers a limited recourse to the parties seeking to set aside an arbitral award. Central to this, is the factor contained in Sub-Section (3) of Section 34 of the Act, which prescribes a strict timeline, 3 (three) months from the date of receipt of the award, extendable by an additional 30 (thirty) days upon sufficient cause, beyond which Courts have no jurisdiction to entertain any challenge to an arbitral award.
However, the interplay between this stringent limitation framework and other provisions of the Act, particularly Section 34(3) and 33 (pertaining to correction and interpretation of awards), when read with the applicable provisions of the Limitation Act, 1963 (“Limitation Act”) frequently gives rise to complicated procedural questions and issues. Such situations demand a fine-grained judicial analysis to harmonize the objectives of efficacy and substantial justice in arbitration with the rigour of limitation law. This article delves into the nuanced intersection of the Act and the Limitation Act, with a focused exploration of how Courts navigate challenges under Section 34(3) amidst overlapping post-award timelines amongst other provisions. With a peculiar emphasis on how the Courts have addressed challenges under Section 34(3) among conflicting post-award timelines and other provisions, this article explores the intricate link between the Act and the Limitation Act.
II. Convergence of The Arbitration & Conciliation Act, 1996 and The Limitation Act, 1963
While the Act, prescribes specified time limits for initiating proceedings under certain provisions, there exist several situations wherein the statute remains silent on the period of limitation. The judiciary has interpreted that the provisions of the Limitation Act will be applicable in these circumstances. In United India Insurance Co. Ltd. v. J.A. Infra Structure (P) Ltd., (2006) 8 SCC 21, it was held that the law of limitation applies to arbitration as it applies to the proceedings in Court. Notably, it has also been constantly held by the Indian Judiciary that specific provisions of the Limitation Act, such as Section 12 (exclusion of time in computing limitation) and Section 14 (exclusion of time spent in bona fide proceedings before a Court without jurisdiction), are equally applicable to proceedings under the Act. This ensures that procedural fairness is maintained and that claimants are not penalised for delays attributable to jurisdictional defects or bona fide prosecutorial lapses.
Section 11 of the Act
The Supreme Court, in the authoritative pronouncement in Arif Azim Co. Ltd. v. Aptech Ltd., (2024) 5 SCC 313, critically assessed the intersection of the Act with the Limitation Act. It was reaffirmed that applications under the Act, including those under Section 11, are governed by the Limitation Act by virtue of Section 43 of the Act, and that the residual period of 3 (three) years under Article 137 of the Limitation Act applies in such cases. Furthermore, the Court reiterated the application of the “eye of the needle” test, emphasising that while Courts at the referral stage may summarily reject claims that are ex-facie barred by limitation, the determination of substantive and contested issues of limitation come under the jurisdiction and purview of the arbitral tribunal.
Section 33 of the Act
There are certain situations where an application under Section 33 of the Act is filed after the pronouncement of the arbitral award, and in such circumstances, it has be repeatedly held that Section 33 of the Act permits limited post-award recourse for correction or interpretation of the award, specifically for clerical, typographical, or computational errors, or for interpretation of specific parts of the award if agreed by the parties. The filing of an application under Section 33 of the Act, if maintainable within its limited scope, can extend the limitation period for filing an application under Section 34 to set aside the award, as provided under Section 34(3), as the time would then commence from the date of disposal of such application. The benefit reaped on this account and applicability of Section 33 of the Act, is not owing to the extension of the principles of the Limitation Act but the inherent provisions of the Act itself.
Pertinently, it has been categorically held in State of Arunachal Pradesh v. Damani Construction Co., (2007) 10 SCC 742 where an application under Section 33 is not maintainable, because it seeks substantive review or requests beyond the scope of permissible corrections or interpretations, it does not trigger any extension or deferment of the limitation period under Section 34(3). It has been settled by the Supreme Court that the time limit for initiating proceedings under Section 34(3) begins upon receipt of the arbitral award, irrespective of any subsequent decision or communication pertaining to an ill-conceived and erroneously instituted application under Section 33 of the Act.
Section 34 of the Act
The Supreme Court, in My Preferred Transformation & Hospitality (P) Ltd. v. Faridabad Implements (P) Ltd., 2025 SCC OnLine SC 70, examined the rigour of the limitation period prescribed under Section 34 of the Act and its interaction with the provisions of the Limitation Act. The Court reaffirmed that once the outer limit of thirty days beyond the initial three-month period lapses, no further extension can be granted for filing a challenge to an arbitral award. The language of Section 34(3) of the Act, particularly the expression “but not thereafter”, was construed as a clear legislative bar to the application of Section 5 of the Limitation Act in such circumstances.
In this case, the Court considered a situation where the limitation period under Section 34(3) of the Act expired during the Court vacation. This gave rise to the issue of whether such expiry could entitle the party to file the application on the next working day. The Supreme Court held that Section 4 of the Limitation Act is applicable only when the originally prescribed period of 3 (three) months under Section 34(3) of the Act expires on a holiday. In such a case, the filing on the next working day is considered within time. However, if the additional thirty-day period ends on a Court holiday, Section 4 of the Limitation Act would not apply, and the benefit of filing on the next working day would not be available. Accordingly, the expiry of the grace period during vacations does not entitle a party to any further extension.
The Court further clarified the applicability of various provisions of the Limitation Act to proceedings under Section 34 of the Act. While Section 5 of the Limitation Act was held to be inapplicable due to the express restriction in Section 34(3) of the Act, the Court held that Sections 12 and 14 of the Limitation Act would be applicable to the proceedings under the Act. It was observed that Section 12 of the Limitation Act, which excludes the time taken for obtaining a certified copy of the award, is applicable to the computation of limitation under Section 34(3) of the Act. On a similar note, Section 14 of the Limitation Act, that permits exclusion of the period spent prosecuting a proceeding in good faith before a Court lacking jurisdiction, is also attracted in the case of objection petitions filed under Section 34 of the Act to challenge an arbitral award. The Court emphasised that unless a provision of the Limitation Act is expressly excluded, it continues to operate by virtue of Section 43 of the Act.
With regards to the application of Section 17 of the Limitation Act, the Supreme Court held that the applicability of the said provision would only defer the commencement of the limitation period in cases of fraud, but it does not extend or suspend the prescribed period under Section 34(3) of the Act. Therefore, even if a party alleges that fraud prevented timely filing, Section 17 of the Limitation Act would not permit filing beyond the maximum 120-day window. The provision only affects when the clock starts ticking, not the extent of the permissible delay.
Section 37 of the Act
The period of limitation for preferring an appeal under Section 37 of the Act, as per Section 13(1A) of the Commercial Courts Act, 2015 (“Commercial Courts Act”) is 60 (sixty) days. However, in Union of India v. Virendra Constructions Ltd.(2020) 2 SCC 111, the Supreme Court, without reference to the Commercial Courts Act or the judgment in Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department (2008) 7 SCC 169, judicially engrafted an outer limit of 120 days for such appeals. Relying on Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri AIR 1941 FC 5, the Court observed that as a petition under Section 34 of the Act is circumscribed by an outer limit of 120 days, factoring in the additional 30 days permissible under Section 5 of the Limitation Act, any appeal preferred under Section 37 of the Act, arising therefrom, ought to be governed by a corresponding limitation regime. Accordingly, the Supreme Court declined to excuse a delay of 142 days in Virendra Constructions Ltd.(Supra) and a delay of 189 days in N.V. International v. State of Assam, (2020) 2 SCC 109, reaffirming that any delay exceeding the statutory cap of one hundred and twenty days is impermissible and not open to condonation.
This judicially created 120-day limitation period, however, lacked statutory support either in the Act or the Commercial Courts Act. The approach was, therefore, revisited and clarified in Government of Maharashtra v. M/s Borse Brothers Engineers & Contractors Pvt. Ltd. 2021 SCC OnLine SC 233, wherein a larger bench of the Supreme Court overruled M/s N.V. International (Supra). Making a reference to Section 37 read with Section 43 of the Act and Section 29(2) of the Limitation Act, the Supreme Court held that Section 5 of the Limitation Act does apply to appeals under Section 37 of the Act. The said judgment also clarifies that, in the cases wherein the specified value is INR 3 Lakhs or more, the limitation of 60 (sixty) days under Section 13(1A) of the Commercial Courts Act would be applicable, and in other cases, the appeals under Section 37 would be governed by Articles 116 or 117 of the Schedule to the Limitation Act.
III. Time as a Double-Edged Sword: Weighing the Clock Against the Scales of Justice in the Indian Arbitration Landscape
The Indian arbitration regime has steadily aligned itself with a “pro-arbitration and pro-enforcement” approach, focusing on the principle that excessive judicial interference and procedural indulgence undermine the purpose of increasing efficacy in the adjudication of the disputes. The time limits prescribed under Section 34(3) of the Act reflect this approach, imposing a clear outer boundary to judicial intervention. This furthers the sanctity of finality in arbitral awards, encouraging certainty and reliability. The judiciary has consistently interpreted this limitation stringently, holding that only specific provisions of the Limitation Act, like Sections 12 and 14, may be invoked, while provisions like Section 5 stand excluded. The legislative and judicial insistence on finality, minimal curial intervention, and expedition serves to ensure India's eminence as a commercial arbitration hub.
However, it cannot be denied that arbitration proceedings, particularly in the case of complex, high-value, and document-intensive matters, are inherently bulky and time-consuming. In those circumstances, rigid and unforgiving limitation timelines may incongruously subvert the very aim of delivering justice, eroding foundational principles of natural justice of audi alteram partem. The procedural rigour, while intended to promote efficiency, sometimes eclipses fairness, especially when delays emerge from bona fide prosecutorial effort or technical lapses.
This friction because of the aforesaid becomes clearly evident in the interplay between Section 33 and Section 34 of the Act. While Section 33 of the Act permits limited post-award recourse for correcting clerical or typographical errors, Courts have clarified that a misconceived or delayed application under Section 33 of the Act, filed after the tribunal has become functus officio, cannot reset or extend the limitation clock under Section 34 of the Act. Thus, even an honest mischaracterisation of the relief sought under Section 33 of the Act can foreclose substantive recourse, without a hearing on merits.
This creates a procedural obstruction where the form triumphs over the substance and ultimately substantial justice. The strict bar under Section 34(3) of the Act, while being given effect with the objective of bringing finality to arbitral awards, risks sacrificing substantive justice at the altar of procedural discipline, especially where parties have acted bona fide but find themselves procedurally barred. These procedural strictures, though designed to promote certainty, can at times operate harshly, curtailing the most basic principles of natural justice such as audi alteram partem. Such rigidity can, in effect in some cases, lead to a denial of and comes in the way of substantial justice and the right of a fair hearing, thereby eroding the foundational safeguards the arbitration regime aims to endorse and protect.
There is a critical need for jurisprudential balance, where procedural discipline does not transcend the core principles of justice. Arbitration laws must, therefore, be interpreted and applied in a manner that protects the interests in both ways, in terms of the expediency of the process and the parties' entitlement to a just and equitable opportunity to present their case before the Courts of law. In interpreting limitation rules, judicial reasoning must preserve the integrity of timelines without becoming oblivious to genuine procedural dilemmas.
IV. Conclusion
The intersection between the provisions of the Act and the Limitation Act in India's arbitration jurisprudence reflects an evolving effort to balance procedural efficiency with substantive justice. While legislative intent and judicial precedents interpreting the applicability of the said provisions have constantly focused on the finality and minimal curial intervention in the arbitral proceedings, the rigidity of statutory timelines, specifically those covering the challenges to awards, have at times operated to the detriment of equitable relief and substantial justice.
The Courts have affirmed the binding nature of these timelines, applying only limited exceptions under the Limitation Act, such as Sections 12 and 14, and expressly excluding Section 5. This rigid procedural regime, while enhancing predictability, also has the tendency to undermine fundamental legal principles, especially in cases where genuine delays occur due to complex factual matrices or good-faith prosecutorial conduct. This friction is symbolic of and demonstrates a broader concern: that procedural strictness should not foreclose the right to be heard, a significant tenet of natural justice. When the system values finality over fairness, it risks allowing technicalities to override the legitimate grievances of parties, particularly in arbitrations consisting of complex, intricate and voluminous records.
Therefore, while India must continue to uphold a disciplined arbitration process to attract commercial confidence, it is equally critical that judicial discretion develops to make a place to consider exceptional circumstances where stern adherence to these rigid timelines would subvert the ends of substantial justice. A nuanced, case-specific application of limitation norms, without undermining statutory structure, will ensure that arbitration remains both efficacious and equitable. Only by harmonizing procedural timelines with the most basic right of a party to be heard can Indian arbitration regime truly reflect the rule of law and the principles of natural justice.
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