INTRODUCTION & BACKGROUND
Very recently as far as in March 2021, a Full Bench of the Supreme Court of India headed by Hon’ble Mr. Justice Rohinton F Nariman in Government of Maharashtra v. M/s Borse Brothers Engineers & Contractors Pvt. Ltd.,2021 SCC OnLine SC 233[“Borse Brothers case”] clarified the law on the applicability and scope of condonation of delays in filing of appeals under section 37 of the Arbitration and Conciliation Act, 1996["A&C Act"], and overruled its own earlier Division Bench decision in NV International v. State of Assam,(2020) 2 SCC 109[“NV International case”].The Supreme Court held that a delay in filing appeals under Section 37 of the A&C Act can be condoned by the Appellate court. However, such condonation must be granted only by way of exception and not as a matter of rule considering the object behind enacting the law.
A BRIEF FACTUAL BACKGROUND
In the Borse Brothers case, appeals were filed against decisions of three different High Courts. In two appeals before the Supreme Court, the High Courts of Bombay and Delhi had refused to condone delay in filing appeals under Section 37 of the A&C Act beyond 120 days. In another appeal, the High Court of Madhya Pradesh held that it was open for a High Court to condone the delay in filing an appeal under Section 37 by virtue of Section 5 of the Limitation Act, 1963 [“Limitation Act"].
ISSUES INVOLVED
In light of absence of a provision in the A&C Act regarding time limit for filing an appeal under Section 37, the issues before the Court were as follows:
Whether the judgment in NV International case lays down the law correctly, in as much as it held that the limitation period for filing a petition to challenge an award under Section 34(3) of the A&C Act can be construed to be the limitation period for filing an appeal against the order, under Section 37 of the A&C Act?
Whether an Appellate court can condone delay in filing the appeal under Section 37 of the A&C Act?
JUDGEMENT IN REM
At the outset, the Supreme Court stated that Section 37 of the A&C Act read with Section 43 of the A&C Act made it clear that provisions of the Limitation Act will apply to appeals that are filed under Section 37 of the A&C Act. This attracts Articles 116 and 117 of the Limitation Act, which provide for a limitation period of 90 days and 30 days, depending upon whether the appeal is from any other court to a High Court or an intra-High Court appeal. Resultantly, Section 5 of the Limitation Act will apply to the appeals, both by virtue of Section 43 of the A&C Act and by virtue of Section 29(2) of the Limitation Act.
However, the Court analyzed the application of the Limitation Act alongside the Commercial Courts Act [“the CC Act”] for appeals under Section 37 where the value of the subject-matter of the commercial dispute met the definition of ‘Specified Value’ under the CC Act. Accordingly, the Supreme Court held the following:
If an appeal under Section 37 is preferred against an arbitral award in an arbitration less than the Specified Value less than three lakhs, the same would be governed by Article 116 / Article 117 of the Limitation Act.
Sub-section(1A) of section 13 of CC Act provides the forum for appeals as well as the limitation period to be followed. Section 13 of the CC Act being a special law as compared with the Limitation Act which is a general law, which follows from a reading of section 29(2) of the Limitation Act. Section 13(1A) of theCC Act lays down a period of limitation of 60 days uniformly for all, this would therefore be the limitation period for filing an appeal under Section 37 of the A&C Act.
Whether a delay in filing an appeal under Section 37 of the A&C Act can be condoned under Section 5 of the Limitation Act?
The Supreme Court noted that Section 13 of the CC Act is distinct from Section 34(3) of the A&C Act. Where Section 34(3) provides a hard stop of the time period within which the Section 34 application can be filed, there is no such provision under Section 13 of the CC Act.
The Supreme Court also drew a comparison with Order VIII Rule 1 of the CPC, which provides a hard stop to the defendant of 120 days from the date of service of summons for filing a written statement, failing which the defendant’s right to file the written statement is forfeited. The Court held that there is no such provision under Section 13 of the CC Act. Further, the Supreme Court held that the non-obstante clause contained in Section 21 of the CC Act cannot override the Limitation Act to exclude the applicability of Section 5 of the Limitation Act.
As a result, the Supreme Court held that application of Section 13 of the CC Act did not exclude the applicability of Section 5 of the Limitation Act.
However, the Supreme Court noted that a condonation of delay under Section 5 of the Limitation Act must be granted only upon a ‘sufficient cause’, and considering the object of speedy resolution of disputes under the A&C Act and the CC Act. Given the object sought to be achieved under both the statutes, the scope of ‘sufficient cause’ under Section 5 of the Limitation Act cannot be expanded to cover long delays beyond the period provided under the provision.
Accordingly, the Supreme Court emphasized that any delay must be condoned by the appellate court by way of exception and not that of a rule and only in cases:
where a party has otherwise acted bona fide and not in a negligent manner,
there is a short delay beyond the statutory period, and
where the opposite party is not prejudiced of his rights in equity and justice arising out of the erring party’s inaction and negligence.
DIFFERNTIATING WITH NV INTERNATIONAL CASE
In NV International case, the Supreme Court had held that in absence of a limitation period to prefer an appeal under Section 37 of the A&C Act, the limitation period for an appeal against an order under Section 34 would be governed by the period stipulated under Section 34 of the A&C Act, i.e., a period of three months, extendable by further thirty days. The Supreme Court premised its inference on the ground that an appeal is a continuation of the original proceedings. Hence, the thresholds for limitation period which apply to proceedings under Section 34 would also apply to an appeal under Section 37.
Whereas in the Borse Brothers case, the Supreme Court held that N.V. International did not consider the provisions of the CC Act for determination of the limitation period for an appeal under Section 37. It was therefore per incuriam in this respect. Further, the hard stop provided in Section 34 vis-a-vis absence thereof in Section 13 of the CC Act did not allow for a ‘bodily lifting’ of limitation period under Section 34 of the A&C Act into Section 37 of the A&C Act.
CONCLUSION
Having provided a clarity on limitation period for filing of appeals under Section 37 of the A&C Act, the Court went on to dismiss the appeals emanating from the High Court of Delhi and Bombay and whereas allowed the appeal from the High Court of Madhya Pradesh. In all the three appeals, considering factually the number of days delay and also considering the parameters laid down in the Borse Brothers case, the court refused to condone any delay.
