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2023 DIGILAW 894 (RAJ)

Jiauddin Ansari S/o Zaheeruddin Ansari v. Matsya Fincap Pvt. Ltd.

2023-04-21

MANINDRA MOHAN SHRIVASTAVA, SAMEER JAIN

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JUDGMENT : 1. Heard. 2. This appeal arises out of order dated 08.07.2022 passed by the Court of Commercial Judge, Alwar whereby, the application under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act of 1996’) has been dismissed as barred by limitation. 3. Learned counsel for the appellant would argue that even though sufficient cause was shown, the learned Commercial Court has dismissed the application as barred by limitation ignoring the cause shown by the appellant. 4. The Commercial Court holding that the appeal being barred by limitation and was filed beyond the maximum period, which could not be condoned under the provisions of Section 34 (3) of the Act of 1996, has dismissed the appeal. 5. The Hon’ble Supreme Court in the case of Chintels India Limited Versus Bhayana Builders Private Limited, (2021) 4 Supreme Court Cases 602 held as below:- “11. A reading of section 34(1) would make it clear that an application made to set aside an award has to be in accordance with both sub-sections (2) and (3). This would mean that such application would not only have to be within the limitation period prescribed by sub-section (3), but would then have to set out grounds under sub-sections (2) and/or (2-A) for setting aside such award. What follows from this is that the application itself must be within time, and if not within a period of three months, must be accompanied with an application for condonation of delay, provided it is within a further period of 30 days, this Court having made it clear that Section 5 of the Limitation Act, 1963 does not apply and that any delay beyond 120 days cannot be condoned – see State of H.P. v. Himachal Techno Engineers (2010) 12 SCC 210 at para 5.” 6. In a subsequent decision in the case of Mahindra and Mahindra Financial Services Limited Versus Maheshbhai Tinabhai Rathod and Others, (2022) 4 Supreme Court Cases 162 also similar view was taken by the Hon’ble Supreme Court and it was held as below:- “9. The scope available for condonation of delay being self-contained in the proviso to Section 34(3) and Section 5 of Limitation Act not being applicable has been taken note by this Court in its earlier decisions, which we may note. The scope available for condonation of delay being self-contained in the proviso to Section 34(3) and Section 5 of Limitation Act not being applicable has been taken note by this Court in its earlier decisions, which we may note. In Union of India vs. Popular Construction Co., (2001) 8 SCC 470 it has been held as hereunder: (SSC pp.474-76, paras 12, 14 & 16) “12. As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are “but not thereafter” used in the proviso to sub-section (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the court could entertain an application to set aside the award beyond the extended period under the proviso, would render the phrase “but not thereafter” wholly otiose. No principle of interpretation would justify such a result. 14. Here the history and scheme of the 1996 Act support the conclusion that the time-limit prescribed under Section 34 to challenge an award is absolute and unextendible by court under Section 5 of the Limitation Act. The Arbitration and Conciliation Bill, 1995 which preceded the 1996 Act stated as one of its main objectives the need “to minimise the supervisory role of courts in the arbitral process”. This objective has found expression in Section 5 of the Act which prescribes the extent of judicial intervention in no uncertain terms: ‘5. Extent of judicial intervention.— Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.’ 16. Furthermore, Section 34(1) itself provides that recourse to a court against an arbitral award may be made only by an application for setting aside such award “in accordance with” sub-section (2) and sub-section (3). Sub-section (2) relates to grounds for setting aside an award and is not relevant for our purposes. But an application filed beyond the period mentioned in Section 34, sub-section (3) would not be an application “in accordance with” that sub-section. Consequently by virtue of Section 34(1), recourse to the court against an arbitral award cannot be made beyond the period prescribed. But an application filed beyond the period mentioned in Section 34, sub-section (3) would not be an application “in accordance with” that sub-section. Consequently by virtue of Section 34(1), recourse to the court against an arbitral award cannot be made beyond the period prescribed. The importance of the period fixed under Section 34 is emphasised by the provisions of Section 36 which provide that ‘36 Enforcement.- where the time for making an application to set aside the arbitral award under Section 34 has expired … the award shall be enforced under the Civil Procedure Code, 1908 (5 of 1908) in the same manner as if it were a decree of the court’. This is a significant departure from the provisions of the Arbitration Act, 1940. Under the 1940 Act, after the time to set aside the award expired, the court was required to “proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow” (Section 17). Now the consequence of the time expiring under Section 34 of the 1996 Act is that the award becomes immediately enforceable without any further act of the court. If there were any residual doubt on the interpretation of the language used in Section 34, the scheme of the 1996 Act would resolve the issue in favour of curtailment of the court's powers by the exclusion of the operation of Section 5 of the Limitation Act”. 9.1. Further, in State of H.P. v. Himachal Techno Engineers (2010) 12 SCC 210 it was noted and held as hereunder: (SCC pp.211-12, paras 2 & 5) “2. A petition under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”, for short) was filed by the appellant on 11-3-2008, challenging the arbitral award. The petition was accompanied by an application under sub-section (3) of Section 34 of the Act, for condonation of delay of 28 days in filing the petition. The respondent resisted the application contending that the petition under Section 34 was filed beyond the period of 3 months plus 30 days and therefore, was liable to be rejected. * * * * 5. Having regard to the proviso to Section 34(3) of the Act, the provisions of Section 5 of the Limitation Act, 1963 will not apply in regard to petitions under Section 34 of the Act. * * * * 5. Having regard to the proviso to Section 34(3) of the Act, the provisions of Section 5 of the Limitation Act, 1963 will not apply in regard to petitions under Section 34 of the Act. While Section 5 of the Limitation Act does not place any outer limit in regard to the period of delay that could be condoned, the proviso to sub-section (3) of Section 34 of the Act places a limit on the period of condonable delay by using the words ‘may entertain the application within a further period of thirty days, but not thereafter’. Therefore, if a petition is filed beyond the prescribed period of three months, the court has the discretion to condone the delay only to an extent of thirty days, provided sufficient cause is shown. Where a petition is filed beyond three months plus thirty days, even if sufficient cause is made out, the delay cannot be condoned.” 9.2. The same view was taken by this Court in P. Radha Bai vs. P. Ashok Kumar (2019) 13 SCC 445 wherein this Court held as follows: (SCC pp.457-58. Para 33) “33.2. 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 couched in negative terms, which leaves no room for doubt. [State of H.P. v. Himachal Techno Engineers (2010) 12 SCC 210 , Assam Urban Water Supply & Sewerage Board v. Subash Projects & Mktg. Ltd. (2012) 2 SCC 624 and Anil Kumar Jinabhai Patel v. Pravinchandra Jinabhai Patel (2018) 15 SCC 178 ]” 9.3. [State of H.P. v. Himachal Techno Engineers (2010) 12 SCC 210 , Assam Urban Water Supply & Sewerage Board v. Subash Projects & Mktg. Ltd. (2012) 2 SCC 624 and Anil Kumar Jinabhai Patel v. Pravinchandra Jinabhai Patel (2018) 15 SCC 178 ]” 9.3. The observations of this Court in different decisions relating to non-applicability of Section 5 of the Limitation Act in condoning the delay and extending the limitation prescribed under Section 34 (3) of the 1996 Act was taken note of by a bench of three Hon’ble Judges of this Court with approval, in Chintels (India) Ltd. v. Bhayana Builders (P) Ltd. (2021) 4 SCC 602 .” 7. In view of the above, it is quite clear that the application having been filed beyond the maximum period which could be condoned under Section 34(3) of the Act of 1996, delay could not be condoned. The present appeal does not have any merit. 8. The appeal is, accordingly, dismissed.