Skip to main content
Browse Law School Education ADR: Arbitration Important Arbitration Cases

READ FULL CASE

Now let’s discuss another case which is Simplex Infrastructure Ltd. v. Union of India.

BRIEF FACTS:

The appellant, who is a contractor, entered into an agreement for the construction of 821 units of permanent shelters in the tsunami-hit Andaman and Nicobar Islands with the Union of India. The date of the agreement was 5 January 2006. Work involved the construction of single storied permanent shelters, including internal water supply, sanitary installation and internal electrification. Due to differences with regard to the performance of the construction work, the parties were referred to arbitration. On 27 October 2014, the arbitrator made an award in favour of the appellant and directed the respondent to pay a sum of approximately Rs 10 crore (Rs 9,96,98,355) with simple interest at the rate of 10 percent per annum from 1 January 2009 till actual payment. The respondent received the copy of the award on 31 October 2014.

Aggrieved by the award, the respondent filed an application under Section 34 of the 1996 Act on 30 January 2015 before the District Judge, Port Blair for setting aside the arbitral award. During the pendency of the arbitration proceedings, the appellant had filed an application under Section 9 of the 1996 Act before the High Court of Calcutta praying for an injunction on encashment of bank guarantee. On 12 February 2016, the District Judge dismissed the respondent’s application under Section 34 of the 1996 Act for want of jurisdiction. 

On 28 March 2016, the respondent filed an application under Section 34 before the High Court of Calcutta for challenging the arbitral award dated 27 October 2014, along with an application for condonation of a delay of 514 days. The respondent justified the delay on ground that there was a bona fide mistake in filing the application before the wrong forum and the respondent’s counsel causing delay due to which necessary formalities were not complied with, within the prescribed time.

On 27 April 2016, the learned Single Judge of the High Court allowed the respondent’s application and condoned the delay of 514 days. Hence, this appeal was filed.

ISSUES:

Now the issues were:

  1. Whether the benefit of Sections 5 and Section 14 of the Limitation Act can be extended to the respondent?
  2. If so, whether a delay beyond the specific statutory limitation prescribed under Section 34(3) of the Arbitration & Conciliation (1996) Act could be condoned?

HELD: 

The Hon’ble Supreme Court held that Section 5 of the Limitation Act, 1963 does not apply to an application challenging an arbitral award under Section 34 of the 1996 Act. This has been settled by this Court in its decision in Union of India v. Popular Construction Company, wherein, the SC held that—“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)… 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.”

A plain reading of sub-section (3) along with the proviso to Section 34 of the 1996 Act, shows that the application for setting aside the award on the grounds mentioned in sub-section (2) of Section 34 could be made within three months and the period can only be extended for a further period of thirty days on showing sufficient grounds and not thereafter. The use of the words “but not thereafter” in the proviso makes it clear that the extension cannot be beyond the thirty days period. Even if the benefit of Section 14 of the Limitation Act is given to the respondent, there will still be a delay of 131 days in filing the application. That is, beyond the strict timelines prescribed in sub-section (3) read along with the proviso to Section 34 of the 1996 Act. The delay of 131 days cannot be condoned. To do so, as the High Court did, is to breach a clear statutory mandate.

The Court further held that administrative difficulties would not be a valid reason to condone a delay above and beyond the statutory prescribed period under Section 34 of the 1996 Act.

RATIO:

Now, what was the ratio in this case?

Section 5 of the Limitation Act, 1963 has no application to an application challenging an arbitral award under Section 34 of the Arbitration & Conciliation (1996) Act. Further, a plain reading of sub-section (3) along with the proviso to Section 34 shows that the application for setting aside the award on the grounds mentioned in sub-section (2) of Section 34 could be made within three months and the period can only be extended for a further period of thirty days on showing sufficient cause or grounds and not thereafter. Further, the use of the words “but not thereafter” in the proviso makes it clear that the extension cannot be beyond thirty days period.

Raw HTML