Supreme Court clarifies limitation for arbitration appeals u/s 37

The Supreme Court in a recent decision on March 19, 2021, rendered in Govt. of Maharashtra v. Borse Brothers Engineers and Contractors Pvt Ltd, clarified certain aspects of the application of Limitation Act to appeals under section 37 of the Arbitration and Conciliation Act. Section 37 of the AC Act provides for appeals from certain orders passed by courts and arbitrator under certain sections thereof. The question arose before the Apex Court in light of a previous order passed in NV International case wherein the Court imported time limit of section 34 into section 37 stating that holding otherwise would militate against the object of the AC Act which is time bound disposal of disputes.

The Court corrected the error in NV International and overruled the same. The Court held that an arbitration appeal arising out in section 37 could be pertaining to a commercial or a non-commercial matter in terms of the minimum threshold of Rs. 3 Lacs prescribed in the Commercial Courts Act.

If it is a non-commercial appeal, then Limitation Act is applicable in terms of section 43 of the AC Act. Therefore, the period of limitation will be either 30 or 90 days depending on whether the appeal is to High Court from District Court or an intra-High Court appeal.

However, if it is a commercial dispute, limitation is provided for in section 13 of the CC Act which is 60 days. Section 13 of CC Act governs appeals u/s section 37 of AC Act. As held in Kandala Exports, section 37 of AC Act provides for substantive right of appeal whereas section 13 of CC Act provides for forum and procedure. The next question arose whether a delay in filing such an appeal can be condoned. The Court held that there is no embargo in entertaining appeals beyond 60 days as is the case with time limit for filing written statement in a commercial suit by virtue of amendment in CPC in order VIII Rule 1 brought about by the CC Act. The court referred to some judgments to observe that exclusion of Limitation Act in terms of section 29 (2) thereof would occur if it is so prescribed by the special statute in question. Examples cited were of section 34 AC Act and time limits for filing written statement in commercial suits as stated above in order VIII rule 1 CPC which are not extendable by virtue of the very language used by the legislature.

The Court held that if the time period was not capped and if it was not made clear in the special statute that time could not be extended in any circumstances, only then the Limitation Act will not apply. In other words, matters of limitations are governed by Limitation Act unless expressly excluded by the special statute and they are not so excluded by section 13 (1A) and 14 of CC Act.

Therefore, section 5 of Limitation Act can be pressed into service for condoning delay in filing appeals u/s section 13, CC Act if sufficient cause is shown. However, the Court cautioned against liberal approach in condoning delay (which is the case with benevolent legislations such as the Motor Vehicles Act) as that would frustrate the object of timely disposal inherent in AC Act. The Court then held that condonation of delay ought to be an exception and only for sufficient cause. What is sufficient cause is also dealt with by the judgment at length to mean that the delay must not be attributable to the lack of diligence or negligence of the appellant and must be bona fide. Additionally, courts are cautioned not to condone long and inordinate delays as rights accrued to respondents by lapse of time may be upset which will not hold good in equity.

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