Case Title: Government of Maharashtra v. Borse Brothers Engineers and Contractors Pvt Ltd.
The Supreme Court overruled its 2019 judgement pronounced in the case, M/s NV International v. State of Assam, which had firmly ruled that a delay of more than 120 days in submitting appeals under Section 37 of the Arbitration and Conciliation Act 1996 cannot be tolerated.
The Supreme Court has recently ruled that filing appeals under Section 37 after 90, 60, or 30 days, depending on the forum, is permissible. However, the Court added a caveat that such delay should be the exception rather than the rule, given the Arbitration Act's goal of fast claim settlement.
Section 37 of the Arbitration Act allows for appeals against orders issued under Sections 9, 34, 16, and 17 of the Act. Section 37, unlike Section 34, does not provide a time limit for filing an appeal.
In the NV International case, a two-judge bench comprised of Justices RF Nariman and S Ravindra Bhat transferred the time limit for filing an appeal from Section 34 (which deals with appeals against arbitration awards) to Section 37. The appeal against the arbitration award must be filed within three months of the date of the award, according to Section 34(3); the section also provides a thirty-day grace period, up to which delay might be excused if the adequate cause is shown. In other words, the appeal must be lodged within 120 days (90+30).
In the NV International Case, the 120-day time limit for appealing an arbitration ruling was applied to appeals against orders under Section 37.
However, a three-judge panel consisting of Justices RF Nariman, BR Gavai, and Hrishikesh Roy has now rejected NV International's decision in the present matter and related cases.
The three-judge panel considered the interplay of the Commercial Courts Act and the Arbitration Act. Section 13(1) of the Commercial Courts Act states that appeals must be filed within 60 days, with no time restriction for condonation of delay (unlike Section 34[3]). This term will apply to arbitration cases with a monetary worth of more than the stated commercial value (above Rupees 3 Lakhs).
Justice Nariman while overruling NV International listed the following reasons:
First, NV International did not notice the provisions of the Commercial Courts Act and hence is per incuriam on that count.
Second, as the limitation period for filing of appeals under the Commercial Courts Act is 60 days and not 90 days, the formula of 90 days plus 30 days and not thereafter mentioned in section34(3) of the Arbitration Act cannot now apply.
Third, since Section 13 of the Commercial Court has no provision curtailing the condonation of a period of delay beyond a certain point, the "bodily lifting" of Section 34(3) to Section 37 is unwarranted.