Benefit of excluding the period during which the court is closed, as provided under Section 4 of the Limitation Act, available only if the application for setting aside an award under Section 34 of the Arbitration and Conciliation Act, 1996, is filed within the “prescribed period of limitation.

Legal Brief: Benefit of excluding the period during which the court is closed, as provided under Section 4 of the Limitation Act, available only if the application for setting aside an award under Section 34 of the Arbitration and Conciliation Act, 1996, is filed within the “prescribed period of limitation.”

Case Name: National Highway Authority of India v. Muni Lal & Ors.
Court Name: Himachal Pradesh High Court

Date of judgment: 06.09.2024

By- Aakanksha Bhatia

Facts

The Divisional Commissioner, acting as Arbitrator under the National Highways Act of 1956, passed the arbitration award on 17.01.2022. The appellant, National Highway Authority of India, received a certified copy of the award on 13.10.2022. The three-month time limit for the appellant to challenge the award under Section 34(3) of the Arbitration and Conciliation Act, 1996 expired on 12.01.2023. The appellant did not challenge the award within this initial three-month period.

On 20.02.2023, the appellant filed an application under Section 34 of the Act to challenge the award. This was beyond both the initial three-month period and the additional thirty-day period allowed under the proviso to Section 34. The appellant argued that the delay should be excused due to the District Court’s winter vacation from 23.01.2023 to 19.02.2023, and that the application was filed immediately upon the court’s reopening.

 Issues

Whether the appellant is entitled to an extension of time to challenge the arbitral award under Section 4 of the Limitation Act after the three months’ time period has been passed?

Whether the lower court erred in dismissing the appellant’s application as time-barred.

 Judgment

The High Court of Himachal Pradesh upheld the District Judge’s decision and dismissed the appeal. The court held that the appellant’s application was time-barred.

Legal Analysis

  • The Court relied on the Supreme Court’s rulings in “Bhimashankar Shakari Sakkare Karkhane Niyamita Vs. Walchandnagar Industries Limited” and “The State of West Bengal represented through the Secretary & Ors. Vs. Rajpath Contractors and Engineers Ltd”.
  • The court clarified that under Section 4 of the Limitation Act, the exclusion of time due to court closure is only applicable within the initial “prescribed period” for challenging the award, which is three months under Section 34(3) of the Act. This exclusion does not apply to any extension granted by the Court under the proviso to Section 34(3).
  • The court determined that the “prescribed period” of three months expired on 12.01.2023, before the start of the winter vacation. Therefore, Section 4 of the Limitation Act could not be invoked to extend the time limit due to the subsequent court closure.
  • The court further emphasized, citing “Assam Urban Water Supply & Sewerage Board v. Subash Projects & Mktg. Ltd.”, that the additional thirty-day extension available under the proviso to Section 34(3) is not part of the “prescribed period.” Therefore, Section 4 of the Limitation Act cannot be applied to this extended period.

 Conclusion

The High Court held that the appellant’s application to challenge the arbitral award was time-barred. The court found that the three-month statutory time limit for challenging the award had expired before the court’s winter vacation. Consequently, the court determined that the appellant could not benefit from the exclusion of time provision under Section 4 of the Limitation Act. The court dismissed the appeal, upholding the lower court’s decision.

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