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IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL  NO.11866 OF 2018  (@ SPECIAL LEAVE PETITION (C) NO 17521 OF 2017)

M/S SIMPLEX INFRASTRUCTURE LTD ..APPELLANT  

VERSUS

UNION OF INDIA      ..RESPONDENT  

J U D G M E N T

Dr Dhananjaya Y Chandrachud, J

1. The present appeal arises from the judgment of a learned Single Judge

of  the  High  Court  of  Calcutta  by  which  the  respondent’s  application  for

condoning a delay of 514 days in filing an application under Section 34 of the

Arbitration and Conciliation Act, 1996 (‘the 1996 Act’) was allowed.1  

2. The appellant, who is a contractor, entered into an agreement for the

construction of 821 units of permanent shelters in the tsunami-hit Andaman

and Nicobar Islands with the Union of  India,  represented by the Executive

Engineer, Andaman Central Division, Central PWD, Port Blair.2 The scope of

1 The High Court delivered judgment on 27 April 2016. 2 The date of the agreement is 5 January 2006

REPORTABLE

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work involved the construction of single storied permanent shelters, including

internal water supply, sanitary installation and internal electrification. Due to

differences  with  regard  to  the  performance  of  the  construction  work,  the

parties were referred to arbitration. On 27 October 2014, the arbitrator made

an award in favour of the appellant and directed the respondent to pay a sum

of ₹9,96,98,355/- with simple interest @ 10% per annum from 1 January 2009

till  actual  payment.  The respondent  received the copy of  the award on 31

October 2014.  

3. Aggrieved  by  the  award,  the  respondent  filed  an  application3 under

Section 34 of the 1996 Act on 30 January 2015 before the District Judge, Port

Blair for setting aside the arbitral award. During the pendency of the arbitration

proceedings, the appellant had filed an application4 under Section 9 of  the

1996  Act  before  the  High  Court  of  Calcutta  praying  for  an  injunction  on

encashment  of  bank guarantee against  the respondent  and the application

was duly contested by the respondent.

4. On 12 February 2016,  the District  Judge dismissed the respondent’s

application  under  Section  34  of  the  1996 Act  for  want  of  jurisdiction.  The

District Judge observed:  

“…According to the provision of Section 42 of the Arbitration and  Conciliation  Act,  when  an  application  has  been  made regarding an arbitration agreement  before  any  Court  under the same part; that Court shall only have jurisdiction over the arbitration proceedings and all subsequent application arising

3 O.A No.2/2015 4 AP No 91 of 2008

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out of that agreement and the arbitral proceedings shall  be made in that court and in no other court.

In this case the parties have preferred an application under Section 9 of  the Arbitration and Conciliation Act  before the Hon’ble High Court of Kolkata… Thus, it is clear to me that this Appellant Court has no jurisdiction to entertain this appeal according  to  Section  42  of  the  Arbitration  and  Conciliation Act.”

5. On 28 March 2016, the respondent filed an application5 under Section

34 before the High Court of Calcutta for challenging the arbitral award dated

27 October 2014, along with an application6 for condonation of a delay of 514

days. The respondent justified the delay on ground of there being a bona fide

mistake in filing the application before the wrong forum and the respondent’s

counsel causing delay due to which necessary formalities were not complied

with within the prescribed time.   

6. On 27 April 2016, the learned Single Judge of the High Court allowed

the respondent’s application and condoned the delay of 514 days.  The High

Court held:

“After  considering  the  submissions  made  by  the  learned advocate for  the applicant/petitioner and upon perusing the application for condonation of delay, it appears that sufficient cause  has  been  shown  to  explain  the  delay  in  filing  the application, being AP No. 224 of 2016 and as such the delay is condoned…”  

7. The  issue  which  has  been  raised  before  this  Court  is  whether  the

learned Single Judge was justified in condoning a delay of 514 days by the

5 A.P. No. 224/2016 6 G.A. No. 958/2016 in A.P. No. 224/2016

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respondent  in  filing  the  application  under  Section 34.   In  dealing with  this

issue,  this  Court  needs  to  assess  whether  the  benefit  of  Sections  5  and

Section 14 of the Limitation Act can be extended to the respondent, and if so,

whether  a  delay  beyond  the  specific  statutory  limitation  prescribed  under

Section 34(3) of the 1996 Act could be condoned.  

8. Section 34 of the Arbitration and Conciliation Act, 1996 provides thus:  

“34. Application for setting aside arbitral award.—

(1)  Recourse  to  a Court  against  an  arbitral  award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3)…

(3)  An application for  setting aside may not  be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which  that  request  had  been  disposed  of  by  the  arbitral tribunal:

Provided that if  the Court is satisfied that the applicant was prevented  by  sufficient  cause  from  making  the  application within  the said period of  three months it  may entertain  the application  within  a  further  period  of  thirty  days,  but  not thereafter.”

Section 34 provides that recourse to a court against an arbitral award may be

made only by an application for setting aside such award “in accordance with”

sub-section (2) and sub-section (3). Sub-section (2) relates to the grounds for

setting aside an award. An application filed beyond the period mentioned in

sub-section 3 of Section 34, would not be an application “in accordance with”

that sub-section. By virtue of Section 34(3), recourse to the court against an

arbitral  award  cannot  be  beyond the  period  prescribed.  Sub-section  (3)  of

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Section  34,  read  with  the  proviso,  makes  it  abundantly  clear  that  the

application for setting aside the award on one of the grounds mentioned in

sub-section (2) will have to be made within a period of three months from the

date on which the  party making that application receives the arbitral award.

The proviso allows this period to be further extended by another period of

thirty  days  on  sufficient  cause  being  shown  by  the  party  for  filing  an

application. The intent of the legislature is evinced by the use of the words “but

not thereafter” in the proviso. These words make it abundantly clear that as far

as the limitation for filing an application for setting aside an arbitral award is

concerned,  the  statutory  period  prescribed  is  three  months  which  is

extendable by another period of upto thirty days (and no more) subject to the

satisfaction of the court that sufficient reasons were provided for the delay.  

9. Section 5 of the Limitation Act, 1963 provides thus:

“5.  Extension  of  prescribed  period  in  certain  cases.  —Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908,  may  be  admitted  after  the  prescribed  period  if  the appellant  or  the  applicant  satisfies  the  court  that  he  had sufficient  cause for  not preferring the appeal  or making the application within such period.

Explanation. —The fact that the appellant or the applicant was misled by any order, practice or judgment of the High Court in ascertaining  or  computing  the  prescribed  period  may  be sufficient cause within the meaning of this section.”

Section 5 of the Limitation Act, 1963 deals with the extension of the prescribed

period for any appeal or application subject to the satisfaction of the court that

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the appellant or applicant had sufficient cause for not preferring the appeal or

making the application within the prescribed period. Section 5 of the Limitation

Act, 1963 has no application to an application challenging an arbitral award

under Section 34 of the 1996 Act. This has been settled by this Court in its

decision in Union of India v Popular Construction Company7, where it held

as follows –  

“As  far  as  the  language  of  Section  34  of  the  1996  Act  is concerned, the crucial words are “but not thereafter” used in the  proviso  to  sub-section  (3).  In  our  opinion,  this  phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of  Section 5 of  that  Act.  Parliament  did  not need to go further. To hold that the court could entertain an application to set aside the award beyond the extended period under  the  proviso,  would  render  the  phrase  “but  not thereafter” wholly otiose. No principle of interpretation would justify such a result.

…Here the history and scheme of the 1996 Act support the conclusion that the time-limit prescribed under Section 34 to challenge  an  award  is  absolute  and  unextendible  by  court under Section 5 of the Limitation Act… ”

10 Section 14 of the Limitation Act, 1963 provides thus:

“14. Exclusion of time of proceeding bona fide in court without jurisdiction. —

(1) In computing the period of limitation for any suit the time during  which  the  plaintiff  has  been  prosecuting  with  due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.

(2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of

7 (2001) 8 SCC 470 at para 12 and 14

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first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction  or  other  cause  of  a  like  nature,  is  unable  to entertain it.

(3)  Notwithstanding  anything  contained  in  Rule  2  of  Order XXIII  of the Code of Civil  Procedure, 1908 (5 of 1908), the provisions of sub-section (1) shall apply in relation to a fresh suit instituted on permission granted by the court under Rule 1 of that Order, where such permission is granted on the ground that  the  first  suit  must  fail  by  reason  of  a  defect  in  the jurisdiction of the court or other cause of a like nature.

Explanation. —For the purposes of this section,—

(a)  in  excluding  the  time  during  which  a  former  civil proceeding was pending, the day on which that proceeding was instituted and the day on which it  ended shall  both be counted;

(b)  a  plaintiff  or  an  applicant  resisting  an  appeal  shall  be deemed to be prosecuting a proceeding;

(c)  misjoinder  of  parties  or  of  causes  of  action  shall  be deemed  to  be  a  cause  of  a  like  nature  with  defect  of jurisdiction.”

Section 14 of the Limitation Act deals with the “exclusion of time of proceeding

bona  fide”  in  a  court  without  jurisdiction,  subject  to  satisfaction  of  certain

conditions. The question whether Section 14 of the Limitation Act would be

applicable to an application submitted under Section 34 of the 1996 Act has

been answered by this Court  in  Consolidated Engineering Enterprises  v

Principal Secretary, Irrigation Department8. This court observed thus:  

“At this stage it would be relevant to ascertain whether there is any express provision in the Act of 1996, which excludes the applicability of Section 14 of the Limitation Act. On review of the provisions of the Act of 1996 this Court finds that there is no provision in the said Act which excludes the applicability of  the  provisions  of  Section  14  of  the  Limitation  Act  to  an application submitted under Section 34 of the said Act. On the

8 (2008) 7 SCC 169 at para 23

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contrary, this Court finds that Section 43 makes the provisions of  the  Limitation  Act,  1963  applicable  to  arbitration proceedings. The proceedings under Section 34 are for the purpose  of  challenging  the  award  whereas  the  proceeding referred  to  under  Section  43  are  the  original  proceedings which can be equated with a suit in a court. Hence, Section 43  incorporating  the  Limitation  Act  will  apply  to  the proceedings in the arbitration as it applies to the proceedings of a suit in the court. Sub-section (4) of Section 43, inter alia, provides that where the court orders that an arbitral award be set  aside,  the  period  between  the  commencement  of  the arbitration  and  the  date  of  the  order  of  the  court  shall  be excluded in computing the time prescribed by the Limitation Act,  1963,  for  the  commencement  of  the  proceedings  with respect to the dispute so submitted. If the period between the commencement of the arbitration proceedings till the award is set aside by the court, has to be excluded in computing the period of limitation provided for any proceedings with respect to the dispute, there is no good reason as to why it should not be held that the provisions of Section 14 of the Limitation Act would be applicable to an application submitted under Section 34 of the Act of 1996, more particularly where no provision is to be found in the Act of 1996, which excludes the applicability of  Section 14 of  the Limitation Act,  to  an application made under Section 34 of the Act. It is to be noticed that the powers under Section 34 of the Act can be exercised by the court only if the aggrieved party makes an application. The jurisdiction under Section 34 of the Act, cannot be exercised suo motu. The total period of four months within which an application, for setting  aside  an  arbitral  award,  has  to  be  made  is  not unusually long. Section 34 of the Act of 1996 would be unduly oppressive, if it is held that the provisions of Section 14 of the Limitation Act are not applicable to it, because cases are no doubt conceivable where an aggrieved party, despite exercise of  due  diligence  and  good  faith,  is  unable  to  make  an application within a period of four months. From the scheme and language of Section 34 of the Act of 1996, the intention of the legislature to exclude the applicability of Section 14 of the Limitation  Act  is  not  manifest.  It  is  well  to  remember  that Section 14 of the Limitation Act does not provide for a fresh period of  limitation but  only  provides for  the exclusion of  a certain period. Having regard to the legislative intent,  it  will have  to  be  held  that  the  provisions  of  Section  14  of  the Limitation  Act,  1963  would  be  applicable  to  an  application submitted  under  Section  34  of  the  Act  of  1996  for  setting aside an arbitral award.”

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The position of law is well settled with respect to the applicability of Section14

of the Limitation Act to an application filed under Section 34 of the 1996 Act.

By applying the facts of the present case to the well settled position of law, we

need  to  assess  whether  the  learned  Single  Judge of  the  High  Court  was

justified in condoning the delay for filing an application under Section 34 of the

1996 Act.

11 The respondent submitted an application under Section 34 of the 1996

Act on 30 January 2015 before the District Judge, Port Blair for setting aside

the arbitral award dated 27 October 2014. On 12 February 2016, the District

Judge dismissed the respondent’s application for want of jurisdiction. It was

only on 28 March 2016, that the respondent filed an application under Section

34 of the 1996 Act before the High Court of Calcutta challenging the arbitral

award, along with an application for condonation of delay of 514 days.  

12 The contention of Mr Aryama Sundaram, learned senior counsel for the

appellant  is  that  even  if  the  benefit  of  Section  14  of  the  Limitation  Act  is

extended to the respondent in filing the application under Section 34 of the

1996  Act,  there  would  still  be  a  delay  of  131  days  which  could  not  be

condoned in view of the specific statutory limitation prescribed under Section

34(3) of the 1996 Act. The learned senior counsel has tendered the following

tabulated chart:

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DELAY CHART

Particulars No. of Days No. of Days A. Award received on 31 October 2014

Application  under  Section  34  filed  in the Calcutta High Court  on 28 March 2016 Total no. of days            514

B. Less: Period between the date of filing application under Section 34 in District Court,  Port  Blair  on 30 January 2015 and date of dismissal of the application on  12  February  2016  [Applying Section 14 of the Limitation Act]

      379

C. Less: Period between the application for certified copy of the order dated 12 February  2016  filed  on  29  February 2016  and  receipt  of  certified  copy  of the order on 3 March 2016 [Applying Section 12 of the Limitation Act]

        4

Total no. of days            383 D. TOTAL DELAY            131

The appellant  has, in this connection,  relied on  Union of India  v Popular

Construction  Company  (supra)  and  Consolidated  Engineering

Enterprises v Principal Secretary, Irrigation Department (supra) to support

its case. On the other hand, it is the respondent’s contention that there were

no  willful  latches  on  its  part  and  the  delay  was  caused  due  to  inevitable

administrative difficulties of obtaining directions from higher officials.

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13 A plain reading of sub-section (3) along with the proviso to Section 34 of

the 1996 Act, shows that the application for setting aside the award on the

grounds mentioned in  sub-section (2)  of  Section 34 could  be made within

three months and the period can only be extended for a further period of thirty

days on showing sufficient cause and not thereafter. The use of the words “but

not  thereafter”  in  the  proviso  makes  it  clear  that  the  extension  cannot  be

beyond thirty days. Even if the benefit of Section 14 of the Limitation Act is

given to the respondent, there will  still  be a delay of 131 days in filing the

application. That is beyond the strict timelines prescribed in sub-section (3)

read along with the proviso to Section 34 of the 1996 Act. The delay of 131

days cannot be condoned. To do so, as the High Court did, is to breach a clear

statutory mandate.

 14 The respondent received the arbitral award on 31 October 2014. Exactly

ninety days after the receipt of the award, the respondent filed an application

under Section 34 of the 1996 Act before the District Judge, Port Blair on 30

January  2015.  On  12  February  2016,  the  District  Judge  dismissed  the

application for want of jurisdiction and on 28 March 2016, the respondent filed

an application before the High Court  under Section 34 of  the 1996 Act for

setting aside the arbitral award. After the order of dismissal of the application

by the District Judge, the respondent took almost 44 days (excluding the date

of dismissal of the application by the District Judge and the date of filing of

application before the  High  Court)  in  filing  the application before  the High

Court. Hence, even if the respondent is given the benefit of the provision of

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Section 14 of the Limitation Act in respect of the period spent in pursuing the

proceedings before the District Judge, Port Blair, the petition under Section 34

was filed much beyond the outer period of ninety days.

 15 The respondent has relied on the decision of  this Court  in  Union of

India  v Tecco Trichy Engineers & Contractors9,  where this Court  had to

decide the effective date from which the limitation within the meaning of sub-

section (3)  of  Section 34 of  the Act  shall  be calculated.  The Chief  Project

Manager on behalf of the Southern Railway had entered into a contract with a

contractor for construction of a railway bridge. Disputes between the parties

were referred to arbitration and an award was delivered in the office of the

General  Manager,  Southern  Railway.  The  Chief  Engineer  preferred  an

application against the award under Section 34 of the 1996 Act before the

High Court.  The learned Single Judge and the Division Bench of  the High

Court  rejected the application holding it  as barred by limitation.  This  Court

reversed the order of the High Court and condoned the application for delay.

This  Court  observed  that  in  huge  organisations  like  the  Railways  having

different divisional heads and various departments within the division, the copy

of the award had to be received by the person who had knowledge of the

proceedings and who would be the best person to understand and appreciate

the  award  and  grounds  for  challenge.  This  Court  found  that  all  arbitral

proceedings for the Railways were being represented by the Chief Engineer

9 (2005) 4 SCC 239

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and the General  Manager had simply referred the matter  for  arbitration as

required under the contract. While condoning the delay of three months and

27 days, this Court found that the service of the arbitral award on the General

Manager could not be taken to be sufficient notice to constitute the starting

point  of  limitation  for  the  purpose  of  Section  34(3)  of  the  1996  Act.  The

decision in this case has no applicability to the facts of the present case as

there is no dispute with respect to the party who received the arbitral award. It

is an admitted position that on 27 October 2014, the arbitrator made an award

in favour of the appellant and on 31 October 2014, the Union of India received

a copy of the award. One of the reasons stated by the respondent for delay in

filing  an  application  under  Section  34  of  the  1996  Act  was  that  the

departmental  office was located at  Port  Blair,  Andaman and it  was a time-

consuming process for obtaining permission from the circle office at Chennai.

Administrative  difficulties  would  not  be  a valid  reason to  condone a  delay

above and beyond the statutory prescribed period under Section 34 of  the

1996 Act.

16 Under the circumstances, we are of the considered opinion that in view

of the period of limitation prescribed in Section 34(3), the learned Single Judge

of the High Court was not justified in condoning the respondent’s delay of 514

days in filing the application. The judgment rendered by the learned Single

Judge of the High Court of Calcutta on 27 April 2016, in GA No. 958 of 2016 is

set  aside and the appeal  is allowed.  The petition under Section 34 stands

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dismissed on the ground that it is barred by limitation. There shall be no order

as to costs.

                                            .....................................................J               [Dr Dhananjaya Y Chandrachud]

.....................................................J       [Vineet Saran]

New Delhi; December 05, 2018