IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S). 7710­7713 OF 2013    

P. RADHA BAI AND ORS. …APPELLANT(S)

VERSUS

P. ASHOK KUMAR AND ANR.               …RESPONDENT(S)

J U D G M E N T    

N.V. RAMANA, J.    

1. These appeals are filed, aggrieved by the judgment and

order dated 18.06.2012 in the Civil Revision Petition Nos.

2151, 2246, 2383 and 2458 of  2012 passed by the High

Court of Judicature at Andhra Pradesh at Hyderabad.  

2. An interesting question of law arises in this batch of

petitions, concerning the applicability of Section 17 of the

Limitation Act, 1963 [‘Limitation Act’] for condonation of a

delay caused on the account of alleged fraud played on the

objector (party challenging the  award) beyond the  period

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Reportable

prescribed under Section 34 (3) of the Arbitration and

Conciliation Act of 1996 [‘Arbitration Act’].

3. The facts which give rise to this question fall into a narrow

compass. Originally one Mr. P. Kishan Lal carried on

business  and acquired several  properties.  On his  death,

Mr. P. Kishan Lal  was survived by eight (8) legal heirs

(Appellant Nos. 1 to 6 and Respondent Nos. 1 and 2).   

4. After the  death of  Mr.  Kishan Lal, several  disputes  have

cropped up on the division of properties.   Having failed to

resolve the dispute, the parties turned towards arbitration

to resolve the dispute.   Five Arbitrators were appointed to

adjudicate and distribute eleven properties belonging to

them.   

5. On 18.02.2010, the arbitrators passed a unanimous Award

providing for the division of properties and businesses. The

parties received the  Award on  21.02.2010.   There is no

dispute on the receipt of the Award by the parties.  6. The Respondents allege that after the pronouncement of the

award, the Appellants in bad faith entered into a

Memorandum of Understanding (MoU) with the

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Respondents. According to the Respondents, the Appellants

agreed to give certain additional properties to Respondent

No.  1,  which were  more than what  were  provided  in  the

Award. The Respondents alleged that after entering into the

MoU, the Appellants were required to execute Gift and

Release Deeds to give effect to the  MoU. However, the

Appellants  delayed the  execution  of the  Gift  and Release

Deeds as contemplated by the MoU.

7. In the meanwhile, the three­month period and the extended

period of 30 days for challenging an Award under Section

34(3) of the Arbitration Act had expired. After the time limit

expired, the Appellants filed an Execution Petition (EP) for

execution of the Award.   The trial court held that EP was

not maintainable. On appeal, the High Court set aside the

order of the trial court and held that the Execution Petition

was maintainable and directed the trial court to decide it on

merits.  8. When  the  Respondents realized that the  Appellants  were

delaying the execution of the Gift Deed contemplated by the

MoU, the Respondents on 08.02.2011 filed an application

under Section 34(3) of the Arbitration Act for setting aside

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the  Award.  This filing was 236 days after the receipt of the

Award by the Respondents.   The application was

accompanied by another application under Section 5 of the

Limitation Act seeking condonation of the delay of 236 days.

In the application for condonation of delay, the Respondents

alleged that:

a. Award was served on the Respondents on 21.02.2010;

b. They were laypersons and were not aware of the legal

requirement of filing objections within the period

prescribed under the Arbitration Act.

c. Since they were dissatisfied with the Award, they raised

objections before the learned Arbitrators.   The

Arbitrators called upon all the parties  and conducted

conciliation.   Accordingly, the parties entered into a

MoU.  The MoU contemplated for execution of Gift Deed

and Release Deed in favour of Respondent No.1.

However, the Appellants failed to execute the required

documents as per the MoU with an intent to defeat their

rights.  

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d. One of the Respondents was physically indisposed for

one month.  

9. During the pendency of the aforesaid  interim application,

seeking condonation of the delay, the Respondents filed

another application being I.A. No. 1977 of 2011 in I.A. No.

598 of 2011, seeking an order of the trial court to summon

the Sub­registrar,  Charminar  to  prove  the veracity  of the

Memorandum of Understanding and to counter the

allegations raised by the Appellants herein, as to the

falsification and fabrication of the Memorandum dated

09.04.2010. For completeness of narration, it may be stated

that additional I.A.s, being I.A. No. 210 and 211 of 2012,

were sought by the Respondent seeking certain documents

to be brought on record.  

10. By order dated 21.02.2012, the trial court dismissed the IA.

No. 598 of 2011, pertaining to the condonation of delay in

filing the Section 34 application. The Trial Court while

dismissing the aforesaid application as indicated above,

reasoned as under­

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i. That the  Court is not empowered to stretch the

limitation period beyond the requisite period given

under Section 34 of the Arbitration Act. ii. Placing reliance on  Union  of India vs.  Popular

Construction Co., (2001) 8 SCC 470 and

Consolidated Engineering Enterprises vs.

Principal Secretary, Irrigation Department,

(2008) 7 SCC 169, held that the language of Section

34 of the Arbitration Act mandated a strict

adherence to the time period provided thereunder

and the extension beyond the same was not

possible under any circumstances. Therefore,

Section 5 of the Limitation Act was not applicable to

an application filed under Section 34 of the

Arbitration Act. iii. Based on the aforesaid  judgments of this Hon’ble

Court, and the provisions of Section 34 (3) of the

Arbitration Act, the City Civil Court held that

Section 5 of the Limitation Act, 1963, has no

application, as the Court has no power to condone

the delay beyond three months and thirty days. On

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this ground alone, the objections filed under Section

34 were liable to be dismissed.  iv. That the trial court rejected the contention that the

Respondent (objector) was unable to file the

objections  within the period of limitation on the

ground of illness and no  medical certificate  was

provided to substantiate such claim. v. That ignorance of law on behalf of the Respondents,

to be not aware of the technicalities provided under

Section 34 of the Arbitration Act was not excusable. vi. Moreover, the trial court came to a conclusion that

equitable grounds cannot be utilized to create

exceptions not mandated under the statutory law.  

We may note that the trial court although discussed about

the existence of the Memorandum of Understanding dated

09.04.2010 and its impact  on the  Respondent’s  delay in

filing the Section 34 application, there is no specific

discussion concerning the applicability of Section 17 of the

Limitation Act in the trial court order. Moreover, other

interim applications filed by the respondents were also

dismissed consequentially.

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11. Being aggrieved by the dismissal, respondents preferred

four Civil Revision petitions, before the High Court of

Andhra Pradesh under  Article  227 of the  Constitution of

India, being C.R.P. No. 2151, 2246, 2383 and 2458 of 2012.

By the impugned order dated 18.06.2012, the High Court

remanded the matter to the trial court concerning the

applicability of Section 17 of the Limitation Act in an

application  under  Section  34  of the  Arbitration  Act. The

High Court observed

“Even though Mr. K. Prabhakar, learned counsel for the respondents sought to argue that when Section 5 of the Act  is excluded, automatically Section 17 of the Act also gets excluded, I refrain from expressing any opinion on this aspect, because this is required to be considered by the lower court at the first instance before this Court examines the same at an appropriate stage. On this short ground,  I feel that it is just and appropriate to remand the matter back to the learned Chief Judge, City Civil Court, Hyderabad for considering the above­ mentioned  pleadings  of the  petitioners and pronouncing upon the same with reference to the applicability or otherwise of the provision of  Section 17 of the  Act.  Therefore,  without expressing any opinion on these aspects, the learned Chief Judge is directed to reconsider the case only to this limited extent and pass a fresh order after hearing both parties, within a period of  two months  from the date of  receipt of  this order. It is  made  clear that the  orders  of the

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lower Court in respect of the other aspects stand confirmed”.

(emphasis supplied)

12. Aggrieved by the remand order passed by the High Court on

the applicability of Section 17 of the Limitation Act to the

proceedings, the Appellants have approached this Court in

these appeals.

13. Before we delve into any other aspect of this case, it may be

important to note that we would have agreed with the High

Court wherein a remand may have been required in usual

course for considering the applicability of Section 17 of the

Limitation Act as there is an apparent insufficiency of

reasons in the trial court order. But, in this case there has

been a considerable delay in resolving the dispute. The very

purpose of speedy justice delivery  mechanism  would be

frustrated by such delays if the matter is allowed to linger

before the courts. We had positively persuaded the parties

several times to come to an amicable settlement and asked

the advocates representing them to use their good offices to

refer  parties to mediation and avoid decades of litigation.

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But,  our efforts  were not  met with much success  in  any

event.  

14. The  High  Court could have examined the legal issue of

applicability of Section 17 of the Limitation Act to an

application  filed  under  Section 34  of the  Arbitration Act.

This is a pure question of law. Only if Section 17 of

Limitation Act was applicable to a Section 34 application,

the question of factual satisfaction of the ingredients of

Section 17 to the present case and a consequent remand to

the trial court would arise.  

15. The learned counsel for the appellants,  Mr.  Devansh  A.

Mohta, argued that­ i. Limitation period provided under Section 34 (3) of the

Arbitration Act  begins ‘only’  upon  the receipt  of the

award by the parties and the same cannot be diluted

by a different starting point provided under the

Limitation Act, in light of Section 29 (2) of the

Limitation Act.

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ii. The period of limitation  under Section 34(3) of the

Arbitration Act  is  ‘unbreakable’  and is meant to run

continuously. iii. Definitive time limit is necessary to ensure expeditious

and effective resolution of disputes between the

parties. iv. The mandate of  Popular Construction Case  (supra)

and Consolidated Engineering Case (supra) wherein

the emphasis on ‘fixed period’ needs to be given effect

to. v. The expression ‘had received the arbitral award’ found

in Section 34 (3) of the Arbitration Act expressly

excludes applicability of  Section 17 of the Limitation

Act. vi. This  Court  should  appreciate the  difference  between

concealment of right to action being different from

preventing a person from taking action.

16. On the contrary, the learned counsel for the respondents,

Mr. Yashraj Singh Deora, had contended that­

i. The reasoning provided under  Popular Construction

Case  (supra) and  Consolidated Engineering Case

(supra) clearly indicates to the applicability of Section

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17 of the Limitation Act, similar to the applicability of

Section 14 of the Limitation Act. ii. Limitation Act  is applicable to all  proceedings before

the court. iii. It is evident that the Arbitration Act under Section 34

(3)  provides  for  a different  time period than the one

present under Article 137 of the Limitation Act,

accordingly, the special law would therefore, prevail in

so far as the issue of period of limitation is concerned.

However, for ‘computation of the period of limitation’ or

arriving at the ‘prescribed period’ the provisions of

Section 4 to 24 of the Limitation Act would

automatically apply unless they are expressly excluded

by the special law. iv. That it has been highly inequitable for the

respondents, who were victims of bad faith negotiation

undertaken by the Appellants to derail the

respondents from pursuing this case for enforcement

of their rights.

17. We have heard the counsels for both the parties at length,

and also perused the material available on record.

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18. We are now to examine whether Section 17 of the Limitation

Act is applicable  while determining the limitation period

under Section 34(3) of the Arbitration Act?  

19. This analysis has to necessarily begin from Section 29(2) of

the Limitation Act, which  states  

29 (2) Where any special or local law prescribes for  any  suit, appeal  or  application  a  period  of limitation different from the period prescribed by the Schedule, the provisions of  Section 3 shall apply as if such period were the period prescribed by the Schedule  and  for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 (inclusive) shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law.

(emphasis added)

20. Section 29(2) is divided into 2 limbs. This is evident from the

conjunctive “and”  in the said provision.  The  inter­relation

between these two limbs was considered by a Bench of five

Judges of this Court in  Vidyacharan Shukla v.

Khubchand Baghel, [1964] 6 SCR 129.

21. The first part stipulates that the limitation period prescribed

by the special law or local law will prevail over the limitation

period prescribed in the Schedule to the Limitation Act. In

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this case, the Arbitration Act is a “special law” which

prescribes a specific period of limitation in Section 34(3) for

filing objections to an arbitral award passed under the 1996

Act and consequently the provisions of Arbitration Act

would apply. We also note that there is no provision under

the Limitation Act dealing with challenging an Award passed

under the Arbitration Act.  

22. The second  part  mandates that  Sections 4 to 24 of the

Limitation Act will apply for determining the period of

limitation “only in so far as, and to the extent to which, they

are  not  expressly  excluded by such special  or local law.”

Thus the extent of the application of  Sections 4  to 24 of

Limitation Act will apply for determining the limitation

period under the Arbitration Act only if they are not

expressly excluded by Arbitration Act.    

23. We are conscious that this   Court in several

pronouncements has extended Section 14 of Limitation Act

to Section 34 of Arbitration Act and thereby excluded the

time spent in bonafide pursuing  proceedings in a  Court

which lacks jurisdiction. (State of Goa v. Western

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Builders  (2006)  6  SCC 239  at para  25;  Consolidated

Engineering Enterprises v. Principal Secretary,

Irrigation Department,  (2008)  7 SCC 169   at  para 27

and 29;  Coal India Ltd. v. Ujjal Transport Agency,

(2011) 1 SCC  117 at para 6;  M.P.  Housing  Board v.

Mohanlal & Co., (2016) 14 SCC 199   at para 13).

Similarly, this Court also extended Section 12 of the

Limitation Act to the Arbitration Act and excluded  the day

on which the Award was received from computing the

starting period under Section 34(3). We note that none of

these cases dealt with the question whether the scheme of

Section 17 of the Limitation Act is consistent with Section

34 of the Arbitration Act.  24. Relying on these pronouncements, the Respondents’

counsel asserted that there is no express exclusion of

Section 17 in the Arbitration Act and therefore the benefit of

Section 17 of Limitation Act should be extended while

determining the period of limitation under Section 34(3).  

25. This requires us to consider the phrase “express exclusion”

in Section 29(2) of the Limitation Act. This Court in a series

of cases  held that the express exclusion  can  be inferred

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either from  the language  of the special law or it can  be

necessarily implied from the scheme and object of the

special law.  

26. A Bench of five Judges in  Vidyacharan

Shukla v. Khubchand Baghel,  AIR 1964 SC 1099,

interpreting the phrase “express exclusion” observed:  

“The contention is that sub­section (3) of Section 116­A of the Act not only provides a period of limitation for such an appeal, but also the circumstances under which the delay can be excused, indicating thereby that the general provisions of the Limitation Act are excluded. There are two answers to this argument. Firstly, Section 29(2)(a) of the Limitation Act speaks of express exclusion but there is no express exclusion in  sub­section  (3)  of  Section 116­A of the Act;  secondly, the proviso from  which an implied exclusion is sought to be drawn does not lead to any such necessary implication”.

27. This principle was further crystallised in  Hukumdev

Narain Yadav v. Lalit Narain Mishra, (1974) 2 SCC 133

wherein a Bench of three Judges held that:

"It is contended before us that the words "expressly excluded" would  mean that there

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must be an express reference  made in the special or local law to the specific provisions of the Limitation Act of which the operation is to be excluded. As usual the meaning given in the Dictionary has been relied upon, but what we have to see is whether the scheme of the special law, that is, in this case the Act, and the nature of the remedy provided therein are such that the Legislature  intended it  to be a complete code by itself which alone should govern the several matters provided by it. If on an examination of the relevant provisions it is clear that the provisions of the Limitation Act are necessarily excluded, then the benefits conferred therein cannot be called in aid to supplement  the  provisions of the Act.  In our view, even in a case where the special taw does not exclude the provisions of Sections 4 to 24 of the Limitation Act by an express reference, it would nonetheless be open to the Court to examine whether and to what extent the nature of those provisions or the nature of the subject­matter and scheme of the special  law exclude their operation”. (emphasis added)

28. A Bench of three Judges in Commissioner of Customs

and Central Excise v. Hongo India (P) Ltd., (2009) 5

SCC 791 reiterated this principle when it held:  “It  was  contended  before  us that the  words “expressly  excluded”  would  mean  that there must be an express reference  made in the special or local law to the specific provisions of the Limitation Act of which the operation is to be excluded. In this regard, we have to see the scheme of the special law which here in this case is the Central Excise Act. The nature

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of the remedy provided therein  is  such that the legislature intended  it to  be  a  complete code by itself which alone should govern the several matters provided by it. If, on an examination of the relevant  provisions, it is clear that the provisions of the Limitation Act are necessarily excluded, then the benefits conferred therein cannot be called  in  aid  to supplement the provisions of the Act. In our considered view, that even in a case where the special law does not exclude the provisions of Sections 4 to 24 of the Limitation Act by an express reference, it would nonetheless be open to the court to examine whether and to what extent, the nature of those provisions or the nature of the subject­matter and scheme of the special law exclude their operation.  In other words, the applicability of the provisions of the Limitation Act, therefore, is to be judged not from the terms of the Limitation Act but by the  provisions of the  Central  Excise  Act relating to filing of reference application to the High Court”.

29. These principles were reiterated by this Court in  Union of

India v. Popular Construction Co., (2001) 8 SCC 470 at

page 474;  Chhattisgarh State Electricity Board v.

Central Electricity Regulatory Commission, (2010) 5

SCC 23 at  para 32;  Gopal  Sardar v.  Karuna Sardar,

(2004) 4 SCC 252 at para 13.

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30. Thus, the inquiry is ­ whether the text or the scheme and

object of the Arbitration Act excludes the application of

Section 17 of Limitation Act while determining the limitation

period?  

31. We therefore have to contrast Section 17 of the Limitation

Act with Section 34(3) of the Arbitration Act. The relevant

part of Section 17 states 17. Effect of fraud or mistake.—

(1) Where, in the case of any suit or application for which a period of limitation is prescribed by this Act,—

(a) the suit or application is based upon the fraud  of the defendant or respondent or his agent; or

(b) the knowledge of the right or title on which a suit or application is founded is concealed by the fraud of any such person as aforesaid; or

(c) the suit or application is for relief from the consequences of a mistake; or

(d) where any document necessary to establish the right of  the plaintiff  or applicant has been fraudulently concealed from him,  

the  period of limitation shall  not  begin  to  run until plaintiff or applicant has discovered the

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fraud or the mistake or could, with reasonable diligence, have discovered it; or in the case of a concealed  document, until the plaintiff or the applicant first had the means of producing the concealed document or compelling its production:  

32. Section 17 does not extend or break the limitation period. It

only postpones or defers the commencement of the

limitation period. This is evident from the phrase “the period

of limitation shall not begin to run”.  

33. In contrast, Section 34(3) of the Arbitration Act states  34. Application for setting aside arbitral award­ … … (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. (emphasis added)

34. Section 34(3) deserves careful scrutiny and its

characteristics must be highlighted:

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(a) Section 34 is the only remedy for challenging an award

passed under Part I of the Arbitration Act. Section 34(3)

is  a limitation provision,  which  is  an  inbuilt into the

remedy provision.  One does not have to look at the

Limitation Act or any other provision for identifying the

limitation period for challenging an Award passed under

Part I of the Arbitration Act.    

(b) The time limit for commencement of limitation period is

also provided in Section 34(3) i.e. the time from which a

party making an application "had received the Arbitral

Award”  or  disposal  of  a  request  under Section 33  for

corrections and interpretation of the Award.

(c) Section 34(3)  prohibits the filing  of  an application  for

setting aside of an Award after three months have

elapsed from the date of receipt of Award or disposal of a

request under Section 33. Section 34(3) uses the phrase

“an application for setting aside may not be made after

three months have elapsed”.  The phrase “may not be

made” is from the UNCITRAL Model Law1 and has been

1 “ 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 award or, if a request had been made under article 33, from the date on which that request had been disposed of by the arbitral tribunal”.  

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understood to mean “cannot be made”. The High Court

of Singapore in ABC Co. Ltd v. XYZ Co. Ltd, [2003] SGHC

107)  “The starting point of this discussion must be the Model Law itself.   On the aspect of time, Article  34(3) is  brief.  All it says  is that the application may not be made after the lapse of three months from a specified date.   Although the words used are ‘may not’ these must be interpreted as  ‘cannot’  as  it is  clear that the intention is to  limit the time during which an award may be challenged.  This interpretation is supported by material relating to the discussions amongst the drafters of the Model Law.  It appears to me that the court would not be able to entertain any application lodged after the expiry of the three months period as Article 34 has been drafted as the all­ encompassing, and only, basis for challenging an award in court.  It does not provide for any extension of the time period and, as the court derives its jurisdiction to hear the application from the Article alone, the absence of such a provision means the court has not been conferred with the power to extend time".

(d) The  limitation provision  in Section 34(3)  also provides

for condonation of delay. Unlike Section 5 of Limitation

Act, the  delay can  only  be condoned for  30  days  on

showing sufficient  cause.  The crucial  phrase “but  not

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thereafter” reveals the legislative intent to fix an outer

boundary period for challenging an Award.  (e) Once the time limit or extended time limit for

challenging the  arbitral award expires, the  period for

enforcing the award under Section 36 of the Arbitration

Act commences. This is evident from the phrase “where

the time for making an application to set aside the

arbitral award under Section 34 has expired”.2  There is

an integral nexus between the period prescribed under

Section 34(3) to challenge the Award and the

commencement of the enforcement period under Section

36 to execute the Award.  

35. If  Section 17 of the Limitation Act  were to  be  applied to

determining the limitation  period  under  Section 34(3), it

would have the following consequences  

(a) In Section 34(3), the commencement period for

computing limitation is the date of receipt of award or

2 36. Enforcement.—Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court.

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the date of  disposal  of  request under Section 33  (i.e

correction/additional award).  If Section  17  were to be applied for computing the

limitation period under Section 34(3), the starting

period of limitation would be the date of discovery of

the  alleged fraud  or  mistake. The starting  point for

limitation under Section 34(3) would be different from

the Limitation Act.  

(b) The proviso to Section 34(3) enables a Court to

entertain an application to challenge an Award after

the three months period is expired, but only within an

additional period of thirty dates, “but not thereafter”.

The use of the phrase “but not thereafter” shows that

the 120 days period is the outer boundary for

challenging an Award. If Section 17 were to be applied,

the outer boundary for challenging an Award could go

beyond 120 days. The phrase “but not thereafter”

would be rendered redundant and otiose. This Court

has consistently taken this view that the words “but

not thereafter” in the proviso of Section 34 (3) of the

Arbitration Act are of a mandatory nature, and

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couched in negative terms, which leaves no room for

doubt. (State of Himachal Pradesh v. Himachal

Techno Engineers & Anr., (2010) 12 SCC 210,

Assam Urban Water Supply & Sewerage Board v.

Subash  Projects  & Marketing  Ltd., (2012)  2  SCC

624 and Anilkumar Jinabhai Patel (D) through LRs

v. Pravinchandra Jinabhai Patel & Ors., (2018) SCC

Online SC 276)

36. In our view, the aforesaid inconsistencies with the language

of Section 34(3) of Arbitration Act tantamount to an “express

exclusion” of Section 17 of Limitation Act.  

37. This Court in Popular Construction Case (supra) at page

474  followed the same approach when it relied on the

phrase “but not thereafter” to hold that Section 5 of

Limitation Act was expressly excluded.  

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 sub­section (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

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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.

    (emphasis added)

38. Further, the exclusion of Section 17 is also necessarily

implied  when one  looks at the  scheme and object  of the

Arbitration Act.

39. First,  the purpose of  Arbitration Act  was to provide  for  a

speedy dispute resolution process. The Statement of Objects

and Reasons reveal that the legislative intent  of  enacting

the Arbitration Act was to provide parties with an efficient

alternative dispute resolution system which gives  litigants

an expedited resolution of disputes while reducing the

burden on the courts. Article 34(3) reflects this intent when

it defines the commencement and concluding period for

challenging an Award. This Court in Popular Construction

Case (supra) highlighted the importance of the fixed periods

under the Arbitration Act. We may also add that the finality

is a fundamental principle enshrined under the Arbitration

Act and a definitive time limit for challenging an Award is

necessary for ensuring finality. If Section  17  were to be

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applied, an Award can be challenged even after 120 days.

This would defeat the Arbitration Act’s objective of speedy

resolution of disputes. The finality of award would also be in

a limbo as a party can challenge an Award even after the

120 day period.  

40. Second, extending Section 17 of Limitation Act to Section 34

would do violence to the scheme of the Arbitration Act. As

discussed above,  Section 36 enables a party to  apply for

enforcement of Award when the period for challenging an

Award under S.34 has expired. However, if Section 17 were

to be extended to Section 34, the determination of “time for

making an application to set  aside the arbitral  award”  in

Section 36 will  become uncertain and create confusion in

the enforcement of Award. This runs counter to the scheme

and object of the Arbitration Act.  

41. Third, Section 34(3) reflects the principle of unbreakability.

Dr. Peter  Binder in International  Commercial Arbitration

and Conciliation in UNCITRAL Model Law Jurisdictions, 2nd

Ed., observed:  “An application for setting aside an award can only be made during the three months following the date on which the party making the application has received the award. Only if

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a party has made a request for correction or interpretation of the award under Art. 33 does the time limit of three months begin after the tribunal has disposed of the request. This exception from the three­month time limit was subject to criticism in the Working group due to fears that it could  be  used as  a  delaying tactics. However, although “an unbreakable time limit for applications for setting aside” was sought as being desirable for the sake of “certainty and expediency” the prevailing view was that the words ought to be retained “since they presented the reasonable consequence of article 33”.  According to this “unbreakability” of time limit and true to the “certainty and expediency” of the arbitral awards, any grounds for setting aside the award that emerge  after the three­month time limit  has expired cannot be raised.

42. Extending Section 17 of the Limitation Act would go

contrary to the principle of ‘unbreakability’ enshrined under

Section 34(3) of the Arbitration Act.

43. The Respondents have argued that if Section 17 is not

extended to Section 34, it would cause enormous injustice

and provide scope for parties to play mischief. The

Respondents have cited several illustrations where on

account  of fraud of the  party,  an objecting  party  can be

precluded from challenging an Award and extending Section

17 would come to the rescue of such a party.

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44. The  Respondent’s contention  proceeds  on a  misconceived

notion of Section 17. Even if Section 17 were to be extended

to Section 34, it would not address the Respondent’s

grievance. Section 17 does not defer the starting point of the

limitation period merely because the Appellants has

committed fraud. Section 17 does not encompass all kinds

of frauds and mistakes. Section 17(1)(b) and (d) only

encompasses only those fraudulent conduct or act of

concealment of documents  which have the effect of

suppressing the knowledge entitling a party to pursue  its

legal remedy. Once a party becomes aware of the antecedent

facts necessary to pursue a legal proceeding, the limitation

period commences.

45. This principle is illustrated  by a ruling of this  Court in

Yeswant Deorao Deshmukh v. Walchand Ramchand

Kothari, 1950 SCR 852. The facts of this case are broadly

similar. A decree holder files an execution petition after the

expiry of limitation period (12 years of the passing of

decree).  To overcome the limitation bar, the decree­holder

alleged that the judgement debtor prevented the execution

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of a decree by suppressing the ownership of certain assets

(ownership of newspaper in those facts) and in support

placed reliance on Section 18 of Limitation Act, 1908

(equivalent of  Section  17)3  Rejecting this contention, this

Court observed:

19. In our opinion, the facts necessary to establish fraud under Section 18 of the Limitation Act are neither admitted nor proved in the present case. Concealing from a person the knowledge of his right to apply for execution of a decree is undoubtedly different from preventing him from exercising his right, of which he has knowledge. Section 18 of the Limitation Act postulates the former alternative.  …… The fraud  pleaded, namely suppression of ownership of the Prabhat newspaper,  did not conceal  from him his right to make an application for execution of the decree.  

46. Similarly in  Pallav Sheth v. Custodian,  (2001) 7 SCC 549,

this Court observed that Section 17 comes to the rescue of a

party for “failing to adopt legal proceedings when the facts or

material necessary for him to do so have been  willfully

concealed from him   "

3 Although there is a slight difference in the text of S.18 of Limitation Act, 1908 and S.17  of Limitation Act, 1963, the relevant provision for the present case remains the same.

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47. In the context of Section 34, a party can challenge an award

as soon as it receives the award. Once an award is received,

a party has knowledge of the award and the limitation

period commences. The objecting party is therefore

precluded from invoking Section 17(1)(b) & (d) once it has

knowledge of the Award. Section 17(1)(a) and (c) of

Limitation Act may not even apply, if they are extended to

Section 34, since they deal with a scenario where the

application is “based upon” the fraud of the respondent or if

the application is for “relief from the consequences of a

mistake”. Section 34 application is based on the award and

not on the fraud of the respondent and does not seek the

relief of consequence of a mistake.

48. The fraudulent conduct where Section 17 of the Limitation

Act would have helped the objecting party  is  where there

was a fraud in the delivery of the award. However, in such a

scenario, resort to section 17 is not necessary. If  there is

any fraud in the delivery of Award, the requirement of

receipt of Award under Section 34(3) itself is not satisfied.

Any receipt of Award must be effective receipt. This Court in

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Union of India v. Tecco Trichy Engineers &

Contractors, (2005) 4 SCC 239 held that: “8.  The delivery of an arbitral award under sub­section (5) of Section 31 is not a matter of mere formality. It is a matter of substance. It is  only  after the  stage under  Section 31 has passed that the stage of termination of arbitral proceedings  within the  meaning of Section 32 of the Act arises.  The delivery of arbitral  award to  the party, to  be effective, has to be “received” by the party.  This delivery by the Arbitral Tribunal and receipt by the party of the award sets in  motion several periods of limitation such as an application for correction and interpretation of  an award within 30 days  under  Section 33(1), an application for making an additional award under Section 33(4) and an application for setting aside an award under Section 34(3) and so on. As this delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry of the prescribed period of limitation which  would  be  calculated from  that  date, the delivery of the copy of award by the Tribunal and the receipt thereof by each party constitutes an important stage in the arbitral proceedings.

9. In the context of a huge organisation like the Railways, the copy of the award has to be received by the person who has knowledge of the proceedings and who would be the best person to understand and appreciate the  arbitral award  and  also to take a decision in the matter of moving an application under  sub­section  (1)  or (5)  of

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Section 33 or under sub­section (1) of Section 34”.

49. In view of the above, we hold that once the party has

received the Award, the limitation period under Section

34(3) of the Arbitration Act commences. Section 17 of the

Limitation Act would not come to the rescue of such

objecting party.

50. In the present case, the Respondents had a right to

challenge the  Award  under  Section  34 the  moment they

received it. In this case, Respondents received the Award on

21.02.2010. The alleged MoU was executed on 09.04.2010.

Once the Respondents received the Award, the time under

Section 34(3) commenced and any subsequent disability

even as  per  Section 17  or  Section 9  of  Limitation Act is

immaterial.  Merely  because the  Appellant  had  committed

some  fraud, it  would not  affect the  Respondents right to

challenge the  Award if the facts entitling the filing of a

Section  34  Application  was  within their  knowledge.  The

moment the Respondents have received the Award, the

three months period prescribed under Section 34(3) begins

to commence.   It  was incumbent  on the  Respondents to

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have instituted an application under Section 34 challenging

an award. Therefore, in light of the discussion above, there

would not have been any point for meaningful remand as

the question of law  is  answered against  the Respondents

herein.

51. In  light  of the  aforesaid  legal  position, the judgment and

order of the High court dated 18.06.2012, in Civil Revision

Petition Nos. 2151, 2246, 2383 and 2458 of 2012 are set­

aside, and  also the order allowing I.A.  No. 598 of 2011

condoning the delay of 236 days in filing the objections is

set  aside, accordingly these  appeals are allowed  with  no

order as to costs.  

………………………J. (N. V. Ramana)

………………………J. (S. Abdul Nazeer)

New Delhi, September 26, 2018

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