# BHIMASHANKAR SAHAKARI SAKKARE KARKHANE NIYAMITA v. WALCHANDNAGAR INDUSTRIES LTD. (WIL)

- **Citation:** [2023] 4 S.C.R. 361
- **Court:** Supreme Court of India
- **Decided:** 2023-04-10
- **Case number:** Civil Appeal No. 6810 of 2022
- **Bench:** M. R. Shah, Krishna Murari
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/bhimashankar-sahakari-sakkare-karkhane-niyamita-v-walchandnagar-industries-ltd-37044
- **Pages:** 21

## Headnote

Arbitration and Conciliation Act, 1996 - s.34(3) - Limitation
Act, 1963 - s.2(j) r/w s.4 - "period of limitation" - General Clauses
Act, 1897 - s.10 - Application u/s.34(3) - Filing of, after the expiry
of 120 days but filed on the first day of reopening after the winter/
Christmas vacation - Last day of the condonable period of 30 days
u/s.34(3) had fallen during the said vacation - Benefit of s.4,
Limitation Act, if available - Held: No - Issue is not res integra - In
Assam Urban Water Supply and Sewerage Board vs. Subash Projects
and Marketing Limited reported as [2012] 1 SCR 403 it has been held
that the benefit of exclusion of period during which Court is closed
is available only when the application for setting aside the award is
filed within 'prescribed period of limitation' and it is not available
in respect of period extendable by the Court in exercise of its
discretion - Further, the contention of the appellant on the
applicability of s.10 of the General Clauses Act is also untenable in
the light of proviso to s.10 of the General Clauses Act - No error
committed by the High Court and Trial court in refusing to condone
the delay caused in preferring application u/s.34 which was beyond
the period prescribed u/s.34(3).
Arbitration and Conciliation Act, 1996 - s.43(1) - Plea of
the appellant that Limitation Act shall not be applicable to the
proceedings under the Arbitration Act - Held: Has no substance -
s.43(1) specifically provides that Limitation Act, 1963 shall apply
to arbitrations as it applies to proceeding in Court - Limitation Act,
1963.
Dismissing the appeal, the Court
HELD: 1.1 Section 34(3) of the Arbitration Act and Sections
2(j) and 4 of the Limitation Act, 1963 fell for consideration before
[2023] 4 S.C.R. 361
361
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this Court in the case of Assam Urban. Even the very issue raised
in the present appeal fell for consideration before this Court in
the case of Assam Urban. In the aforesaid decision, this Court
interpreted the aforesaid provisions and has specifically observed
and held that the benefit of exclusion of period during which Court
is closed is available only when application for setting aside the
award is filed within 'prescribed period of limitation' and it is not
available in respect of period extendable by the Court in exercise
of its discretion. Therefore, as such the question involved in the
present appeal is squarely answered against the appellant and
the said issue is as such not res integra. [Para 7.1][377-B-D;
380-A]
Assam Urban Water Supply and Sewerage Board v.
Subash Projects and Marketing Limited (2012) 2 SCC
624 : [2012] 1 SCR 403 - relied on.
1.2 Now, so far as the submission on behalf of the appellant
that the Limitation Act shall not be applicable to the proceedings
under the Arbitration Act is concerned, the aforesaid has no
substance. Section 43(1) of the Arbitration Act specifically
provides that Limitation Act, 1963 shall apply to arbitrations as it
applies to proceeding in Court. However, as observed and held
by this Court in the case of Assam Urban, Limitation Act, 1963
shall be applicable to the matters of arbitration covered by 1996
Act save and except to the extent its applicability has been
excluded by virtue of express provision contained in Section 34(3)
of the Arbitration Act. [Para 8][380-D-E]
1.3 Now, so far as reliance placed upon Section 10 of the
General Clauses Act, 1897 on behalf of the appellant is concerned,
at the outset it is required to be noted that such a contention is
untenable in light of the proviso to Section 10 of the General
Clauses Act, 1897, which specifically excludes the application of
Section 10 of the General Clauses Act, 1897 to any act or
proceeding to which the Indian Limitation Act, 1877 applies.
Reference to 1877 Act will now have to be read as reference to
Limitation Act, 1963 in view of Section 8 of the General Clauses
Act, 1897. Therefore, in light of the application of Limitat

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BHIMASHANKAR SAHAKARI SAKKARE KARKHANE
NIYAMITA
v.
WALCHANDNAGAR INDUSTRIES LTD. (WIL)
(Civil Appeal No. 6810 of 2022)
APRIL 10, 2023
[M. R. SHAH AND KRISHNA MURARI, JJ.]
Arbitration and Conciliation Act, 1996 - s.34(3) - Limitation
Act, 1963 - s.2(j) r/w s.4 - "period of limitation" - General Clauses
Act, 1897 - s.10 - Application u/s.34(3) - Filing of, after the expiry
of 120 days but filed on the first day of reopening after the winter/
Christmas vacation - Last day of the condonable period of 30 days
u/s.34(3) had fallen during the said vacation - Benefit of s.4,
Limitation Act, if available - Held: No - Issue is not res integra - In
Assam Urban Water Supply and Sewerage Board vs. Subash Projects
and Marketing Limited reported as [2012] 1 SCR 403 it has been held
that the benefit of exclusion of period during which Court is closed
is available only when the application for setting aside the award is
filed within 'prescribed period of limitation' and it is not available
in respect of period extendable by the Court in exercise of its
discretion - Further, the contention of the appellant on the
applicability of s.10 of the General Clauses Act is also untenable in
the light of proviso to s.10 of the General Clauses Act - No error
committed by the High Court and Trial court in refusing to condone
the delay caused in preferring application u/s.34 which was beyond
the period prescribed u/s.34(3).
Arbitration and Conciliation Act, 1996 - s.43(1) - Plea of
the appellant that Limitation Act shall not be applicable to the
proceedings under the Arbitration Act - Held: Has no substance -
s.43(1) specifically provides that Limitation Act, 1963 shall apply
to arbitrations as it applies to proceeding in Court - Limitation Act,
1963.
Dismissing the appeal, the Court
HELD: 1.1 Section 34(3) of the Arbitration Act and Sections
2(j) and 4 of the Limitation Act, 1963 fell for consideration before
[2023] 4 S.C.R. 361
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this Court in the case of Assam Urban. Even the very issue raised
in the present appeal fell for consideration before this Court in
the case of Assam Urban. In the aforesaid decision, this Court
interpreted the aforesaid provisions and has specifically observed
and held that the benefit of exclusion of period during which Court
is closed is available only when application for setting aside the
award is filed within 'prescribed period of limitation' and it is not
available in respect of period extendable by the Court in exercise
of its discretion. Therefore, as such the question involved in the
present appeal is squarely answered against the appellant and
the said issue is as such not res integra. [Para 7.1][377-B-D;
380-A]
Assam Urban Water Supply and Sewerage Board v.
Subash Projects and Marketing Limited (2012) 2 SCC
624 : [2012] 1 SCR 403 - relied on.
1.2 Now, so far as the submission on behalf of the appellant
that the Limitation Act shall not be applicable to the proceedings
under the Arbitration Act is concerned, the aforesaid has no
substance. Section 43(1) of the Arbitration Act specifically
provides that Limitation Act, 1963 shall apply to arbitrations as it
applies to proceeding in Court. However, as observed and held
by this Court in the case of Assam Urban, Limitation Act, 1963
shall be applicable to the matters of arbitration covered by 1996
Act save and except to the extent its applicability has been
excluded by virtue of express provision contained in Section 34(3)
of the Arbitration Act. [Para 8][380-D-E]
1.3 Now, so far as reliance placed upon Section 10 of the
General Clauses Act, 1897 on behalf of the appellant is concerned,
at the outset it is required to be noted that such a contention is
untenable in light of the proviso to Section 10 of the General
Clauses Act, 1897, which specifically excludes the application of
Section 10 of the General Clauses Act, 1897 to any act or
proceeding to which the Indian Limitation Act, 1877 applies.
Reference to 1877 Act will now have to be read as reference to
Limitation Act, 1963 in view of Section 8 of the General Clauses
Act, 1897. Therefore, in light of the application of Limitation Act,
1963 to the proceedings under the Arbitration Act and when
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Section 10 of the General Clauses Act, 1897 specifically excludes
the applicability of Section 10 to any act or proceeding to which
Indian Limitation Act, 1963 applies and in light of the definition
of "period of limitation" as defined under Section 2(j) read with
Section 4 of the Limitation Act and as observed and held by this
Court in the case of Assam Urban, benefit of exclusion of period
during which the Court is closed shall be available when the
application for setting aside award is filed within "prescribed
period of limitation" and shall not be available in respect of period
extendable by Court in exercise of its discretion. [Para 9][380G-H; 381-A-C]
HUDA & Anr. v. Dr. Babeswar Kanhar & Anr. (2005) 1
SCC 191 : [2004] 6 Suppl. SCR 282; Manohar Joshi
v. Nitin Bhaurao Patil and Ors. (1996) 1 SCC 169 :
[1995] 6 Suppl. SCR 421; Sagufa Ahmed & Ors. v.
Upper Assam Polywood Products Private Limited and
Others (2021) 2 SCC 317; Union of India v. Popular
Construction Co. (2001) 8 SCC 470 : [2001] 3 Suppl.
SCR 619; State of Maharashtra v. Borse Brothers
Engineers and Contractors Pvt. Ltd. (2021) 6 SCC 460;
Consolidated Engineering Enterprises v. Principal
Secretary, Irrigation Department and Ors. (2008) 7
SCC 169 : [2008] 5 SCR 1108; State of Maharashtra
v. Hindustan Construction Co. Ltd. (2010) 4 SCC 518
: [2010] 4 SCR 46; Sridevi Datla v. Union of India
(2021) 5 SCC 321 - referred to.
Case Law Reference
[2012] 1 SCR 403
relied on
Para 4.4
[2004] 6 Suppl. SCR 282
referred to
Para 4.11
[1995] 6 Suppl. SCR 421
referred to
Para 4.11
[2001] 3 Suppl. SCR 619
referred to
Para 5.2
[2008] 5 SCR 1108
referred to
Para 5.11
[2010] 4 SCR 46
referred to
Para 7.1
BHIMASHANKAR SAHAKARI SAKKARE KARKHANE NIYAMITA v.
WALCHANDNAGAR INDUSTRIES LTD. (WIL)
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6810
of 2022.
From the Judgment and Order dated 23.02.2022 of the High Court
of Karnataka at Kalaburagi in MFA No. 201018 of 2018.
Shyam Divan, Ms. Anitha Shenoy, Sr. Advs., Ms. Srishti Agnihotri,
Ms. Sugandha Yadav, Ms. Sanjana Grace Thomas, Ms. Aarti Krupa
Kumar, Ms. Ayushma Awasthi, Ms. Namrata Caleb, Ms. Mantika Vohra,
Advs. for the Appellant.
Dhruv Mehta, Sr. Adv., Pradeep Naytak, Ms. Pritha Srikumar,
Sankeerth Vittal, Keith Verghese, Ms. Mansi Binjrajka, Advs. for the
Respondent.
The Judgment of the Court was delivered by
M. R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment
and order dated 23.02.2022 passed by the High Court of Karnataka, at
Kalaburagi in Misc. First Appeal No.201018/2018 by which the High
Court has dismissed the said appeal and has confirmed the order dated
02.04.2018 passed by the learned III Additional District & Sessions Judge,
Vijayapur (hereinafter referred to as "trial Court") in rejecting the
application for condonation of delay caused in preferring the application
under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter
referred to as "Arbitration Act") , the original applicant has preferred
the present appeal.
2. The brief facts leading to filing of the present appeal in nutshell are as under:
2.1 That, an arbitral award was passed against the appellant under
the provisions of the Arbitration Act on 24.08.2016. As per Section 34(3)
of the Arbitration Act, 90 days are prescribed for preferring an application
under Section 34 of the Arbitration Act against the arbitral award.
However, the said period was extendable by a further period of 30 days
in terms of the proviso to Section 34(3) of the Act, 2016. In the present
case, the period of 90 days prescribed under Section 34(3) of the
Arbitration Act expired on 24.11.2016. The appellant was entitled to a
further extended period of 30 days from 23.11.2016 onwards in terms of
the proviso to Section 34(3) which was upto 24.12.2016.
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2.2 The trial Courts were closed on account of winter / Christmas
vacations from 19.12.2016 to 01.01.2017. However, it so happened that
extendable / condonable period of 30 days as contemplated in the proviso
to Section 34(3) expired on 24.12.2016 on which day the trial Court was
closed on account of winter / Christmas vacation. The appellant herein
filed the application under Section 34 of the Arbitration Act, challenging
the award passed by the Arbitral Tribunal. The appellant also filed IA
No.1 for condonation of delay. Both, Section 34 application as well as
the application for condonation of delay were filed on the reopening day
i.e. on 02.01.2017. As the application under Section 34 of the Arbitration
Act was beyond the prescribed period of provided under Section 34 of
the Arbitration Act as well as beyond the condonable period of 30 days,
the learned trial Court dismissed the IA No.1 and refused to condone
the delay by observing that the period beyond 120 days is not condonable
as under the Arbitration Act, maximum period provided for preferring an
application under Section 34 is 120 days. At this stage it is required to be
noted that in the affidavit filed by the appellant before the High Court,
filed in support of IA No.1, the appellant as such admitted that it received
the copy of the award on 24.08.2016. However, according to the appellant,
the said award was misplaced and thereafter obtained a fresh copy on
29.12.2016. The learned trial Court observed that in that view of the
matter, the period of limitation would commence from 24.08.2016 and
120 days are to be counted from 24.08.2016.
2.3 Feeling aggrieved and dissatisfied with the order passed by
the learned trial Court refusing to condone the delay in preferring
application under Section 34 of the Arbitration Act, the appellant herein
preferred an appeal before the High Court.
2.4 Before the High Court, Section 4 of the Limitation Act, 1963
and Section 10 of the General Clauses Act, 1897 were pressed into
service. By the impugned judgment and order the High Court has
dismissed the said appeal by observing that the expression "prescribed
period" appearing in Section 4 of the Limitation Act cannot be construed
to mean anything other than the period of limitation and therefore, any
period beyond the prescribed period, during which the Court or Tribunal
has the discretion to allow a person to institute the proceeding, cannot be
taken to be "prescribed period".
BHIMASHANKAR SAHAKARI SAKKARE KARKHANE NIYAMITA v.
WALCHANDNAGAR INDUSTRIES LTD. (WIL) [M. R. SHAH, J.]
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2.5 Feeling aggrieved and dissatisfied with the impugned judgment
and order passed by the High Court, the original applicant has preferred
the present appeal.
3. Shri Shyam Diwan, learned Senior Advocate has appeared on
behalf of the appellant and Shri Dhruv Mehta, learned Senior Advocate
has appeared on behalf of the contesting respondent.
4. Shri Shyam Diwan, learned Counsel has submitted that Section
34(3) of the Arbitration Act specifies that the limitation period for filing
an application for setting aside the arbitral award under Section 34 is
three months from the date on which the party making application has
received the award. However, if the Court is satisfied that the applicant
was prevented by sufficient cause from making the application within
the said period of three months, the proviso to the Section specifies a
further period of 30 days within which the application under Section
34 may be filed/entertained.
4.1 It is submitted that the central question in the present petition
is whether when the last day of condonable period of 30 days falls on a
holiday or during a court vacation, would the benefit of Section 10 of the
General Clauses Act, 1897 would be available to the appellant?
4.2 It is submitted that in other words, can the petitioner - appellant
file the application on the next date when the Court reopens, in line with
the settled principle that the law does not compel a person to do an
impossible act. It is submitted that in the present case the petitioner -
appellant had filed the application under Section 34 on the very day
when the Court reopened.
4.3 It is submitted by Shri Shyam Diwan, learned Senior Counsel
that not extending the benefit of Section 10 of the General Clauses Act
to the appellant in such circumstances leads to an anomalous situation
wherein the benefit of statutorily prescribed condonable period is cut
short for some persons due to intervention of a holiday or a court vacation,
while being fully available to other persons due to the fortuitous
circumstance of no court vacation intervening. It is submitted that this
creates uncertainty and unpredictability in the application of provision in
question.
4.4 It is submitted that the present case reflects an anomalous
situation where Section 4 of the Limitation Act, which only deals with
the period of limitation prescribed under the Limitation Act, leaves a
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vacuum as far as statutory condonable period is concerned. It is submitted
that the judgment in the case of Assam Urban Water Supply and
Sewerage Board vs. Subash Projects and Marketing Limited
reported in (2012) 2 SCC 624 failed to take into account that in the
case of such statutory condonable periods, Section 10 of the General
Clauses Act, 1897, which is much wider in its import and applicability,
and embodies the same legal principle, must necessarily step in to fill the
vacuum.
4.5 It is submitted that while passing the impugned judgment and
order, the High Court has heavily relied upon the decision of this Court in
the case of Assam Urban (Supra) while holding that the term "prescribed
period" referred to in Section 4 of the Limitation Act, 1963 only includes
the limitation period and not the 30-day condonable / grace period. It is
submitted that however the case of Assam Urban (Supra) does not
notice or deal with Section 10 of the General Clauses Act, 1897. It only
notices and deals with Section 4 of the Limitation Act, 1963 and holds
that the term "prescribed period" mentioned in Section 4 means the
period of limitation. It is submitted that the judgment in the case of Assam
Urban (Supra) fails to notice that Section 4 of the Limitation Act, 1963
which deals with the period of limitation prescribed under the Limitation
Act, 1963, leaves a vacuum as far as the statutory condonable period is
concerned.
4.6 It is submitted that in failing to notice Section 10 of the General
Clauses Act, 1897, the judgment in the case of Assam Urban (Supra)
disregards the principle embodied in the General Clauses Act which is
much wider in its import and applicability and must necessarily step in to
fill the vacuum left by Section 4 of the Limitation Act.
4.7 It is further submitted by Shri Diwan, learned Senior Counsel
appearing for the appellant that although the same general principle of
"elementary justice" is embodied in both Sections of the two Acts, there
is a crucial distinction between the Limitation Act, 1963 and the General
Clauses Act, 1897.
4.8 It is submitted that Section 2(j) of the Limitation Act defines
"period of limitation". It is submitted that thus, while the term "prescribed
period" has a narrower meaning in the context of Limitation Act, there
is no such restrictive definition clause in the General Clauses Act. It is
submitted that in fact, the scheme of Section 10 of the General Clauses
BHIMASHANKAR SAHAKARI SAKKARE KARKHANE NIYAMITA v.
WALCHANDNAGAR INDUSTRIES LTD. (WIL) [M. R. SHAH, J.]
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Act is clear from a bare perusal of the provision and indicates that there
are two prescribed periods in this Section viz. (1) the prescribed period
within which something is directed to be done, or (2) the prescribed
period within which something is allowed to be done.
4.9 It is submitted that therefore, reading of Section 10 of the
General Clauses Act, 1897 makes it clear that the period in which
something is allowed to be done, such as 30 days condonable period
provided by proviso to Section 34(3) of the Arbitration Act is also a
prescribed period within the meaning of the General Clauses Act, 1897.
4.10 It is further submitted by Shri Shyam Diwan, learned Senior
Counsel appearing on behalf of the appellant that the principle embodied
in Section 10 of the General Clauses Act, 1897 is an elementary piece of
justice. It is submitted that the 60th Law Commission Report on the
General Clauses Act reiterated the parliamentary intention behind the
Act and the provision, which is to deliver elementary justice.
4.11 It is submitted that in the case of HUDA & Anr. vs. Dr.
Babeswar Kanhar & Anr. reported in (2005) 1 SCC 191, this Court
has observed and held that every consideration of justice and expediency
would require that the accepted principle which underlines Section 10 of
the General Clauses Act, 1897 should be applied in cases where it does
not otherwise in terms apply. It is observed that the principles underlying
are lex non cogit ad impossibilia (law does not compel a man to do the
impossible) and actus curiae neminem gravabit (the act of court shall
prejudice no man). It is submitted that in the case of Manohar Joshi
vs. Nitin Bhaurao Patil and Ors. reported in (1996) 1 SCC 169, it is
observed and held by this Court that the litigant has a right to avail
limitation up to the last day and his only obligation is to explain his inability
to present the suit / petition on the last day of limitation and each day
thereafter till it is actually presented.
4.12 It is further submitted that if as held in the case of Assam
Urban (Supra), the benefit of Section 4 of the Limitation Act is only
available for the period of limitation and is not available for the statutorily
granted condonable period. Section 10 of the General Clauses Act, 1897
must step in to fill the vacuum. It is submitted that any contrary view
would deny individuals the full play of the statutory period of 30 days for
condonation of delay.
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4.13 Now, so far as the contention on behalf of the respondent
that present proceeding is "any Act or proceeding to which the Limitation
Act applies" is a misconceived argument is concerned, it is submitted
that the respondents have sought to rely on proviso to Section 10 of the
General Clauses Act, 1897. Relying upon Section 43(1) of the Arbitration
Act to contend that the Limitation Act applies to the present proceedings,
it is submitted that Section 43(1) of the Arbitration Act merely states
that "the Limitation Act, 1963 shall apply to arbitrations as it applies to
proceedings in Court". It is submitted that this cannot be interpreted to
mean that the Limitation Act, in its entirety applies to proceeding under
Section 34 of the Arbitration Act and that the present proceedings are
an act or proceeding to which the Limitation Act applies. It is submitted
that in fact, in matters of limitation, Section 34 of the Arbitration Act is a
complete code. It is submitted that the respondent's entire case, on one
hand, is that the benefit of Limitation Act, particularly Section 4 of the
Limitation Act, cannot be given to the condonable period in the instant
case. It is submitted that therefore on one hand, the respondent is arguing
that the benefit of Section 4 of the Limitation Act, as well as Section 5 of
the Limitation Act has no application to the condonable period under
Section 34 of the Arbitration Act, i.e. the Limitation Act has no application
in the present proceedings, at the same time, the respondent is contending
that the benefit of Section 10 of the General Clauses Act, 1897 cannot
be given to the appellant, as the present proceeding falls within the ambit
of the phrase "any act or proceeding to which the Indian Limitation Act,
1877, applies".
4.14 It is further submitted by Shri Diwan, learned Senior Counsel
that the reliance placed on the case of Sagufa Ahmed & Ors. vs.
Upper Assam Polywood Products Private Limited and Others
reported in (2021) 2 SCC 317 is misconceived for the following two
reasons:
(1)
The reference to Section 10 of the General Clauses Act,
1897 in the case of Sagufa Ahmed (Supra) is tangential at
best;
(2)
The facts of Sagufa Ahmed (Supra) are clearly
distinguishable from the case at hand. In that case, the
appellants had waited 5 months after the discretionary period
had expired to file an appeal against the order of the Ld.
NCLT. In the present case, there was no undue delay on
BHIMASHANKAR SAHAKARI SAKKARE KARKHANE NIYAMITA v.
WALCHANDNAGAR INDUSTRIES LTD. (WIL) [M. R. SHAH, J.]
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the part of the Petitioner - appellant herein. The petitioner -
appellant filed the petition under Section 34 of the very day
of the reopening of the Ld. Court.
4.15 It is submitted that this Court in its order dated 08.03.2021 in
suo moto Writ Petition (Civil) No.3/2020, has put a quietus to the artificial
distinction between the 'limitation period' and 'grace period', wherein it
extended the benefit of exemption due to COVID 19 to the limitation
period as well as the condonable period.
4.16 It is further submitted by Shri Diwan, learned Senior Counsel
that the aim and object of the limitation period and statutory grace period
/ condonable period provided in the Arbitration Act is to ensure that
parties who sleep over their rights and come to the court belatedly are
not allowed to upset the apple cart. It is submitted that in the present
instance, the appellant has been nothing but diligent and approached the
learned trial Court on the very day of reopening. It is submitted that
Section 10 of the General Clauses Act, 1897 has been enacted to address
precisely this kind of a situation and merely because the benefit of Section
4 of the Limitation Act, 1963 is unavailable in a case, should not ipso
facto exclude the application of the General Clauses Act, 1897.
4.17 It is submitted that the appellant is an agriculturists' society,
and despite having suffered losses due to non-fulfillment of their obligations
by the respondent, the appellant's case has never been heard on merits.
It is submitted that therefore non-suiting the appellant in the present
instance and denying the benefit of Section 10 of the General Clauses
Act, 1897 (with the elementary rule of justice captured in it) will cause a
grave miscarriage of justice.
Making above submissions, it is prayed to set aside the order passed
by the learned trial Court as well as the High Court and to condone the
delay caused in preferring application under Section 34 of the Arbitration
Act and to direct the learned trial Court to hear the application under
Section 34 of the Arbitration Act on merits by giving the appellant an
opportunity to put forth its case on merits.
5. Present appeal is vehemently opposed by Shri Dhruv Mehta,
learned Senior Counsel appearing on behalf of the respondent.
5.1 It is submitted that in the present case the appellant admittedly
received the award on 24.08.2016. As per Section 34 of the Arbitration
Act, "the prescribed period" of 3 months to challenge the award expired
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on 24.11.2016 and further period of 30 days under the proviso to Section
34(3) of the Arbitration Act expired on 24.12.2016. That, the learned
trial Court was on winter vacation between 19.12.2016 to 01.01.2017.
The appellant preferred its Section 34 of the Arbitration Act before the
learned trial Court on 02.01.2017 i.e. on the day of reopening,
accompanied by an application seeking condonation of delay. It is
submitted that the learned trial Court after considering both, the
maintainability and merits of the appellant's application for condonation,
has found that the application was not maintainable and also that no
sufficient cause had been shown by the appellant. It is submitted that
the High Court has upheld the order of trial Court that the petition under
Section 34 of the Arbitration Act was not maintainable for being beyond
the "prescribed period" under Section 34(3) of the Arbitration Act. It is
submitted that therefore the following questions arise for consideration
in the present case.
(1)
Whether the benefit of Section 4 of the Limitation Act, 1963
is available to a party when the "prescribed period" of 3
months for filing a petition under Section 34(3) of the
Arbitration Act has already expired and the discretionary
period of 30 days under the proviso to Section 34(3) falls
on a day when the Court is closed?
(2)
Whether the benefit of Section 10 of the General Clauses
Act,1897 is separately available to a party in such
circumstances?
5.2 Now, so far as the applicability of Section 4 of the Limitation
Act is concerned, it is vehemently submitted by Shri Dhruv Mehta, learned
Senior Counsel that Section 4 of the Limitation Act shall not be applicable
to the 30 days' discretionary condonable period contemplated under
proviso to Section 34(3) of the Arbitration Act. It is submitted that Section
34(3) of the Arbitration Act stipulates that an application under Section
34(1) of the Arbitration Act challenging an arbitral award may not be
made after a period of three months from the date on which the party
making the application had received the arbitral award. The proviso to
Section 34(3) gives limited powers to the Court, on sufficient cause being
shown, to condone delay in filing the application under Section 34(1)
only for a maximum period of 30 days, but not thereafter. It is submitted
that in the case of Union of India v. Popular Construction Co.
reported in (2001) 8 SCC 470 (Paras 10, 12, 14 and 16), this Court
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has observed that usage of words "but not thereafter" in the proviso to
Section 34(3) amounts to an express exclusion within the meaning of
Section 29(2) of the Limitation Act. Therefore, the Court would have no
discretion to condone the delay in excess of 30 days. Section 5 of the
Limitation Act was, therefore, held to be inapplicable to Section 34(1) of
the Arbitration Act.
5.3 It is submitted that Section 4 of the Limitation Act is only
applicable when the last date of the "prescribed period" falls on a day on
which the Court is closed. It is submitted that the term, "prescribed
period" is defined in Section 2(j) of the Limitation Act as being the period
of limitation computed in accordance with the provisions of the Limitation
Act.
5.4 It is submitted that this Court in the case of Assam Urban
(Supra) (Paras 10 to 14) has held that "prescribed period" under Section
34(3) of the Arbitration Act is three months. It is submitted that "further
period" of 30 days mentioned in the proviso to Section 34(3) of the
Arbitration Act cannot be said to be the "period of limitation" and
therefore, would not be the "prescribed period" for the purposes of
making an application for setting aside the arbitral award. It is submitted
that thus, in the said decision, this Court has categorically held that Section
4 of the Limitation Act which applies only to "prescribed period" is not
attracted when the last date of the "further period" of 30 days mentioned
in Section 34(3) of the Limitation Act falls on a day on which the Court
is closed. It is submitted that the facts of the case in Assam Urban
(Supra) are identical to the facts of the present case. It is submitted that
decision of this Court in the case of Assam Urban (Supra) has been
affirmed by Three Judges' Bench of this Court in the case of Sagufa
Ahmed (Supra) (Paras 20 - 22).
5.5 It is further submitted by Shri Dhruv Mehta, learned Senior
Counsel that the correct application of Section 4 of the Limitation Act
will result in a petition being entertained as a matter of right, without a
party having to seek condonation of delay, since it applies only to petitions
that would otherwise be within the "prescribed period" but its presentation
within this period has been prevented due to closure of the Court.
However, on the other hand, this cannot apply to a delayed petition where,
in any event, the right to present the petition is subject sufficient cause
being shown and condonation of delay being sought.
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5.6 Now, so far as the submission on behalf of the appellant that
the judgment in the case of Sagufa Ahmed (Supra) is not a good law or
is distinguishable is concerned, it is submitted that as such the decision in
the case of Sagufa Ahmed (Supra) lays down the correct law and shall
be applicable with full force on interpretation of "to condone delay within
further period".
5.7 It is submitted that the judgment in the case of Sagufa Ahmed
(Supra), in the context of Section 421(3) of the Companies Act, 2013,
which provides a prescribed period of 45 days for filing an appeal, and
empowers the appellate Tribunal to condone the delay within "further
period" not exceeding 45 days. A Three-Judges Bench of this Court
rejected the contention of the appellants therein that the benefit of order
of this Court dated 23.03.2020 in Cognizance for Extension of Limitation,
In re, (2020) 19 SCC 10, is extendable to them, by holding that under the
order dated 23.03.2020, which was extended was only "the period of
limitation" and not the period up to which delay can be condoned in
exercise of discretion conferred by statute.
5.8 It is submitted that thus, in the case of Sagufa Ahmed (Supra),
this Court while affirming Assam Urban (Supra) has held that the
expression "prescribed period" appearing in Section 4 of the Limitation
Act cannot be construed to mean anything other than the period of
limitation. Any period beyond the "prescribed period" during which the
Court or Tribunal has the discretion to allow a person to institute the
proceedings cannot be taken to be "prescribed period".
5.9 Now, so far as the submission on behalf of the appellant that
the judgment in the case of Assam Urban (Supra) has the effect of
denying the parties to right to file their application for condonation in
situation where the discretionary period expires during vacation and that
such interpretation was incorrect inasmuch as it leaves parties at the
mercy of "fortuitous circumstance", it is submitted that such a submission
is not tenable. It is submitted that the Court vacations are notified well in
advance and would not account to a fortuitous circumstance as alleged.
It is submitted that on the date of receipt of award, the party would be
well aware of the limitation period under Section 34(3) of the Arbitration
Act and ought to diligently secure its right. It is submitted that in the
present case, having received the award on 24.08.2016, the appellant
had a further period of 25 days after expiry of "prescribed period" and
before commencement of the winter vacation of the trial Court. However,
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the petitioner - appellant chose not to file its petition during this time and
therefore, as to suffer for the inevitable consequences.
5.10 It is further submitted that right under Section 34 of the
Arbitration Act is a restricted right to challenge an award on extremely
limited ground. The proviso to Section 34(3) of the Arbitration Act further
excludes the general power of the Court under Section 5 of the Limitation
Act and imposes a strict timeline for presentation of a petition under
Section 34. In such circumstances, acceptance of appellant's argument
will have the effect of providing an unduly enlarged time period (beyond
the statutory 30 day discretionary period) for delayed presentation of a
petition under Section 34, which would be contrary to the scheme and
intent of the Arbitration Act.
5.11 Now, so far as the applicability of Section 10 of the General
Clauses Act, 1897 as per the case of the appellant is concerned, it is
vehemently submitted that as such the contention is untenable in light of
the proviso to Section 10 of the General Clauses Act, 1897, which
specifically excludes the application of this section to any Act or
proceeding to which the Indian Limitation Act applies. It is submitted
that reference to 1877 Act will now have to be read as reference to
Limitation Act, 1963 in view of section 8 of the General Clauses Act,
1897. It is submitted that it is no longer res integra that the Limitation
Act, 1963 applies to arbitrations and court proceedings arising out of the
arbitrations in light of Section 41(3) of the Arbitration Act. Reliance is
placed upon the decision of this Court in the case of State of
Maharashtra v. Borse Brothers Engineers and Contractors Pvt.
Ltd. reported in (2021) 6 SCC 460 and Consolidated Engineering
Enterprises vs. Principal Secretary, Irrigation Department and
Ors. reported in (2008) 7 SCC 169. It is submitted that therefore in
light of the application of the Limitation Act, 1963 applicable to the
proceedings under the Arbitration Act (both in Court and in arbitration),
Section 10 of the General Clauses Act, 1897 is specifically excluded,
and therefore, cannot be relied upon by the appellant.
5.12 It is submitted that even otherwise this Court in the Sagufa
Ahmed (Supra) has held that the principle forming the basis of Section
10(1) of the General Clauses Act, 1897 also finds a place in Section 4 of
the Limitation Act. Therefore, when the benefit of Section 4 of the
Arbitration Act is not available, the appellant cannot seek to take recourse
to Section 10 of the General Clauses Act, 1897 which embodies the
same principle.
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5.13 It is further submitted that just like Section 4 of the Limitation
Act, Section 10 of the General Clauses Act, 1897 also uses the term
"prescribed period". Section 10 of the General Clauses Act, 1897 provides
that where any act is directed to be done on a certain day, or any
proceeding is allowed to be done in any Court or office within prescribed
period, if the Court or office is closed on that certain day, or the last day
of the prescribed period, it may be done or taken on the next working
day. Accordingly, if Section 10 of the General Clauses Act, 1897 was to
be applicable, the term "prescribed period" must be given the same
meaning as that in the Limitation Act. Thus, Section 10 of the General
Clauses Act, 1897 will also only then apply for the prescribed period of
three months under Section 34(3) of the Arbitration Act and not to the
discretionary period of 30 days under the proviso to Section 34(3) of the
Arbitration Act.
Making above submissions and relying upon the decision of this
Court in the case of Assam Urban (Supra) and Sagufa Ahmed (Supra),
it is prayed to dismiss the present appeal.
6. Having heard learned Counsel appearing for the respective
parties, a short question which is posed for consideration of this Court is
whether in the facts and circumstances of the case, the learned trial
Court was justified in not condoning the delay in preferring the application
under Section 34(3) of the Arbitration Act, which was filed after the
expiry of 120 days but filed on the first day of reopening after the winter
/ Christmas vacation and in a case where the condonable period of 30
days under Section 34(3) of the Arbitration Act had fallen during the
winter / Christmas vacation ? The question is with respect to applicability
of Section 4 of the Limitation and Section 10 of the General Clauses
Act, 1897 in the facts and circumstances of the case.
Therefore, the central question in the present appeal is whether
when the last day of condonable period of 30 days (under Section 34(3)
of the Arbitration Act) falls on holiday or during the Court vacation,
would the benefit of Section 10 of the General Clauses Act, 1897 be
available?
7. While considering the aforesaid issues/ questions, Section 34
of the Arbitration Act is required to be referred to, which reads as under:
"34. Application for setting aside arbitral award.- (3) An
application for setting aside may not be made after three
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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."
The relevant provisions of the Indian Limitation Act and the General
Clauses Act, 1897 are also required to be referred to which are as under:
"2.(j) '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;"
"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."
"Section 10 of the General Clauses Act, 1897
10. Computation of time.- (1) Where, by any 47 (Central Act)
or Regulation made after the commencement of this Act, any
act or proceeding is directed or allowed to be done or taken
in any Court or office on a certain day or within a prescribed
period, then, if the Court or office is closed on that day or
the last day of the prescribed period, the act or proceeding
shall be considered as done or taken in due time if it is done
or taken on the next day afterwards on which the Court or
office is open:
Provided that nothing in this section shall apply to any
act or proceeding to which the Indian Limitation Act, 1877,
48 applies.
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(2) This section applies also to all 49 (Central Acts) and
Regulations made on or after the fourteenth day of January,
1887."
(emphasis supplied)"
7.1 Section 34(3) of the Arbitration Act and Sections 2(j) and
4 of the Limitation Act, 1963 fell for consideration before this Court
in the case of Assam Urban (Supra). Even the very issue raised in the
present appeal fell for consideration before this Court in the case of
Assam Urban (Supra). In the aforesaid decision, this Court interpreted
the aforesaid provisions and has specifically observed and held that the
benefit of exclusion of period during which Court is closed is available
only when application for setting aside the award is filed within 'prescribed
period of limitation' and it is not available in respect of period extendable
by the Court in exercise of its discretion. By holding so, this Court
considered the earlier decisions in the case of Popular Construction
Co. (Supra) and State of Maharashtra vs. Hindustan Construction
Co. Ltd. reported in (2010) 4 SCC 518 and has observed and held in
paragraphs 6 to 9 as under:
"6. 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.