Section 34 (3) Of The Arbitration Act And Its Prescribed Limitation Period

Posted On - 25 April, 2025 • By - King Stubb & Kasiva

Summary:

[1]The Civil Appeal before the Apex Court addresses the issue of limitation in filing an application to set aside an Arbitral Award under Section 34 of the Arbitration and Conciliation Act, 1996. The Court upheld the Chhattisgarh High Court’s decision, stating that the Application was filed within the limitation period as the initial period of limitation expired on a court holiday, and the Application was filed on the next working day. The Court clarified the applicability of Section 12(1) and Section 4 of the Limitation Act, 1963 to proceedings under Section 34 of the Arbitration and Conciliation Act, 1996.

Facts:

  • The parties, M/S R. K. Transport Company (hereinafter ‘Appellant’) and M/S Bharat Aluminum Company Ltd. (BALCO) (hereinafter ‘Respondent’), entered a contract on April 1, 2002, for bauxite mining and delivery.
  • Disputes arose regarding payments, leading to arbitration.
  • An arbitral award of ₹51,33,40,100 was passed in favor of the Appellant on April 9, 2022, and was received by the Respondent on the same day.
  • The Respondent filed an application under Section 34 of the Arbitration and Conciliation Act, 1996, to set aside the award on July 11, 2022, along with an application for a stay.
  • The Trial Court initially held the Section 34 application to be within limitation, noting that the three-month period expired on July 9, 2022, which was a Saturday followed by a Sunday which are the court holidays.
  • The Trial Court later recalled its order and held the application to be barred by limitation, stating that the limitation period expired on July 8, 2022, a working day.
  • The Respondent appealed this Decision under Section 37 of the Arbitration and Conciliation Act, 1996, to the Chhattisgarh High Court.
  • The High Court allowed the appeal, relying on Section 12 of the Limitation Act, 1963, and the Supreme Court’s decision in State of Himachal Pradesh v. Himachal Techno Engineers 2010 (12) SCC 210. It held that the limitation period expired on July 9, 2022 (a court holiday), and since the application was filed on the next working day (July 11, 2022), it was within limitation under Section 4 of the Limitation Act.
  • The case then came before the Apex court challenging the decision of the Chhattisgarh High Court.

Issues:

  1. Whether Section 12(1) of the Limitation Act, 1963, applies to the calculation of the limitation period under Section 34(3) of the Arbitration and Conciliation Act, 1996, such that the date of receipt of the arbitral award is to be excluded?
  2. Whether Section 4 of the Limitation Act, 1963, applies to proceedings under Section 34(3) of the Arbitration and Conciliation Act, 1996, so as to extend the limitation period when it expires on a court holiday?

Held:

The Supreme Court held that Section 12(1) of the Limitation Act, 1963, applies to the calculation of the limitation period under Section 34(3) of the Arbitration and Conciliation Act, 1996. Therefore, the date on which the party received the arbitral award must be excluded when computing the three-month limitation period. Moreover, it was also held that Section 4 of the Limitation Act, 1963, applies to proceedings under Section 34(3) of the Arbitration and Conciliation Act, 1996. Consequently, if the three-month limitation period expires on a court holiday, the application under Section 34 can be filed on the next working day and will be considered within the limitation period.  

Analysis:

The Supreme Court upheld the High Court’s decision, reaffirming that the Limitation Act’s provisions, specifically Sections 12(1) and 4, are applicable to proceedings under Section 34 of the Arbitration and Conciliation Act, 1996. Citing previous judgments, the Court clarified that the date of receiving the award must be excluded for limitation calculation. In this case, the three-month period ended on a court holiday, thus allowing the application to be filed on the next working day. The Court also confirmed that the limitation period is three calendar months, not 90 days.

[1] BEFORE THE HON’BLE SUPREME COURT OF INDIA

M/S R. K. TRANSPORT COMPANY V. M/S BHARAT ALUMINUM COMPANY LTD. (BALCO)  

CIVIL APPELLATE JURISDICTION

C.A. NO. 4763 OF 2025, (2025 INSC 438)    

 Judgment dated: April 3, 2025

https://api.sci.gov.in/supremecourt/2024/48408/48408_2024_11_1501_60626_Judgement_03-Apr-2025.pdf