CIVIL APPEAL NO(s). 2014 OF 2006

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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s). 2014 OF 2006

ASSAM URBAN WATER SUPPLY & SEW. BOARD         Appellant (s)

                VERSUS

M/S. SUBASH PROJECTS & MARKETING LTD.         Respondent(s)

J  U  D  G  M  E  N  T

R.M. Lodha, J.

Two contracts were entered into between the  

appellants and the respondents - (i) for construction of  

Tezpur Town Water Supply Scheme and (ii) for construction of  

Tinsukia Town Water Supply Scheme.   Certain disputes arose  

between  the  parties  concerning  these  contracts  and  to  

resolve such disputes, sole arbitrator was appointed by the  

Chief Justice of Gauhati High Court on March 26, 2002 under  

Section 11 of the Arbitration and Conciliation Act, 1996  

(for short, '1996 Act').   On May 10, 2002 the appellants  

filed  application  under  Section  16  of  the  1996  Act  

questioning  the  jurisdiction  of  the  sole  arbitrator  as  

according to the appellants there was no arbitration clause  

in the agreement.  This application came to be rejected by  

the sole arbitrator.

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2. Thereafter,  the  sole  arbitrator  proceeded  

with the arbitration and passed two awards in relation to  

the above contracts in favour of the respondents on August  

22, 2003.  The awards were received by the appellants on  

August 26, 2003. On January 2, 2004, the appellants made two  

applications for setting aside the awards dated August 22,  

2003 under Section 34 of the 1996 Act. These applications  

were accompanied by two separate applications for extension  

of time under Section 34(3) of the 1996 Act.

3. The  District  Judge,  Kamrup,  Guwahati,  

dismissed the appellants' applications under Section 34 of  

the 1996 Act on June 1, 2004 and June 5, 2004 on the ground  

of limitation.

4 The appellants challenged the above orders of  

the Districted Judge, Kamrup, Guwahati, in the Gauhati High  

Court in two separate Arbitration Appeals, being Arbitration  

Appeal Nos. 6 of 2004 and 7 of 2004.  The Division Bench of  

that Court upheld the view of the District Judge, Kamrup,  

Guwahati and dismissed the above Arbitration Appeals.

5. Mr. Bijender Singh, learned counsel for the  

appellants, submitted that the Division Bench gravely erred  

in applying the decision of this Court in  Union of India

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Vs.   Popular Construction Co.1  to the facts of the present  

case.  He submitted that the judgment of this Court in  

Popular  Construction  Co. (supra)  was  rendered  on  the  

question of applicability of Section 5 of the Limitation  

Act, 1963 (for short, '1963 Act') and has no application to  

the peculiar facts of the present case where extension was  

sought by the appellants under Section 4 of the 1963 Act.  

In  support  of  his  argument,  Mr.  Bijender  Singh,  learned  

counsel,  referred  to  Section  2(j)  of  the  1963  Act  that  

defines 'period of limitation' and Section 43 of the 1996  

Act  that  makes  the  1963  Act  applicable  to  arbitration  

matters.  

6.  Mr. Shyam Divan, learned senior counsel for  

the respondents, on the other hand, submitted that the High  

Court did not commit any error in upholding the view of the  

District Judge, Kamarup, Guwahati. According to the learned  

senior counsel, the High Court's view is consistent with  

Section  34(3)  of  the  1996  Act,  particularly  proviso  (3)  

thereof.

7. Section 34(3) of the 1996 Act provides that  

an application for setting aside an award may be made within  

three months of the receipt of the arbitral award.  The  

proviso that follows sub-section (3) of Section 34 provides  

that  on  sufficient  cause  being  shown,  the  court  may  

1    (2001) 8 SCC 470

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entertain the application for setting aside the award after  

the period of three months and within a further period of 30  

days but not thereafter.

8. In  Popular  Construction  Co. (supra),  this  

Court has held that an application for setting aside an  

award filed beyond the period mentioned in Section 34(3)  

would not be an application “in accordance with sub-section  

(3) as required under Section 34(1) of the 1996 Act” and  

Section  5  of  the  1963  Act  has  no  application  to  such  

application.  In para 12 of the report, it was held in  

Popular Construction Co. (supra) thus:-

“12. 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  the  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”.

9.  Recently, in the  State of Maharashtra  Vs.  

Hindustan Construction Company Limited2, a two Judge Bench  

of this Court speaking through one of us (R.M. Lodha, J.)  

2       (2010) 4 SCC 518

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emphasised  the  mandatory  nature  of  the  limit  to  the  

extension of the period provided in proviso to Section 34(3)  

and  held  that  an  application  for  setting  aside  arbitral  

award under Section 34 of the 1996 Act has to be made within  

the time prescribed under sub-section (3) of Section 34,  

i.e., within three months and a further period of 30 days on  

sufficient cause being shown and not thereafter.

10. Section 43(1) of the 1996 Act  provides that the  

1963  Act  shall  apply  to  arbitrations  as  it  applies  to  

proceedings in court. The 1963 Act is thus applicable to the  

matters of arbitration covered by the 1996 Act save and  

except to the extent its applicability has been excluded by  

virtue of the express provision contained in Section 34(3)  

of the 1996 Act.

11. The  facts  in  the  present  case  are  peculiar.  The  

arbitral awards were received by the appellants on August  

26,  2003.  No  application  for  setting  aside  the  arbitral  

awards was made by the appellants before elapse of three  

months from the receipt thereof.  As a matter of fact, three  

months from the date of the receipt of the arbitral award by  

the appellants expired on November 26, 2003. The District  

Court had Christmas vacation for the period from December  

25, 2003 to January 1, 2004. On reopening of the court,  

i.e., on January 2, 2004, admittedly, the appellants made  

applications for setting aside those awards under Section 34

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of the 1996 Act.  If the period during which the District  

Court, Kamrup, Guwahati, remained closed during Christmas  

vacation, 2003 is extended and the appellants get benefit of  

that  period  over  and  above  the  cap  of  thirty  days  as  

provided in Section 34(3), then the view of the High Court  

and the District Judge cannot be sustained.  But this would  

depend on the applicability of Section 4 of the 1963 Act.  

The question, therefore, that falls for our determination is  

– whether the appellants are entitled to extension of time  

under Section 4 of the 1963 Act in the above facts.

12.  Section 4 of the 1963 Act reads as under :-

“4.  Expiry  of  prescribed  period  when  court  is  closed.-Where the prescribed period for any suit,  appeal or application expires on a day when the  court is closed, the suit, appeal or application  may be instituted, preferred or made on the day  when the court reopens.

Explanation.-A court shall be deemed to be  closed  on  any  day  within  the  meaning  of  this  section if during any part of its normal working  hours it remains closed on that day.”

13. The above Section enables a party to institute a  

suit, prefer an appeal or make an application on the day  

court  reopens  where  the  prescribed  period  for  any  suit,  

appeal or application expires on the day when the court is  

closed.  The crucial words in Section 4 of the 1963 Act are  

'prescribed period'. What is the meaning of these words?

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Section 2(j) of the 1963 Act defines 'period of limitation'  

which  means  the  period  of  limitation  prescribed  for  any  

suit, appeal or application by the Schedule, and 'prescribed  

period'  means  the  period  of  limitation  computed  in  

accordance with the provisions of this Act.  Section 2(j)  

of the 1963 Act when read in the context of Section 34(3) of  

the 1996 Act, it becomes amply clear that the prescribed  

period for making an application for setting aside arbitral  

award is three months.  The period of 30 days mentioned in  

proviso that follows sub-section (3) of Section 34 of the  

1996 Act is not the 'period of limitation' and, therefore,  

not  'prescribed  period'  for  the  purposes  of  making  the  

application  for  setting  aside  the  arbitral  award.   The  

period of 30 days beyond three months which the court may  

extend on sufficient cause being shown under the proviso  

appended to sub-section (3) of Section 34 of the 1996 Act  

being not the 'period of limitation' or, in other words,  

'prescribed period', in our opinion, Section 4 of the 1963  

Act is not, at all, attracted to the facts of the present  

case.

14.  Seen thus, the applications made by the appellants  

on January 2, 2004, for setting aside the arbitral award  

dated August 26, 2003 were liable to be dismissed and have  

rightly  been  dismissed  by  the  District  Judge,  Kamrup,  

Guwahati, as time barred.

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15. The dismissal of the Arbitration Appeals (6 of 2004  

and  7 of 2004) by the High Court, thus, cannot be legally  

flawed for the reasons we have indicated above.

16. The Appeal has no force and is dismissed with no  

order as to costs.

..........................J. (R.M. LODHA)

NEW DELHI; ..........................J. JANUARY 19, 2012. (H.L. GOKHALE)