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Mic Electronics Limited And Others v. Union Of India And Others
Factual and Procedural Background
The petitioners entered into a contract with the Department of Tele Communications, Government of India dated 28-12-1995 for manufacture and supply of Multi Access Rural Radio (MARR) Systems. Disputes arose between the parties concerning payments for supplies effected beyond 17-3-1997. The petitioners alleged the Government unilaterally paid a price lower than the contract price for supplies after 17-3-1997 and effected recoveries.
The petitioners challenged departmental decisions of 6-6-1997 and 23-6-1997 by filing writ petitions in the High Court. The High Court directed the parties to refer their disputes to arbitration and appointed a sole Arbitrator (a retired judge). The Arbitrator passed an award dated 10-7-2000.
The respondents filed Original Petitions under Section 34 of the Arbitration and Conciliation Act, 1996 seeking to set aside the award, but these petitions were filed with an 80-day delay. The respondents also filed applications under Section 5 of the Limitation Act, 1963 read with Section 43 of the Arbitration Act, 1996 to condone that delay. The learned Chief Judge, City Civil Courts, Hyderabad allowed the condonation applications and admitted the belated Section 34 petitions. The petitioners challenged the Chief Judge's orders by filing these Civil Revision Petitions under Article 227 of the Constitution of India.
Legal Issues Presented
- Whether the provisions of Section 5 of the Limitation Act, 1963 are applicable to an application under Section 34 of the Arbitration and Conciliation Act, 1996 (i.e., whether a court may condone delay beyond the thirty-day extension provided in the proviso to Section 34).
- Whether the learned Chief Judge had jurisdiction to condone an 80-day delay in filing Original Petitions under Section 34 of the Arbitration Act, 1996.
Arguments of the Parties
Petitioners' Arguments (as advanced by Sri Nooty Rama Mohan Rao)
- The orders of the Chief Judge allowing condonation under Section 5 of the Limitation Act read with Section 43 of the Arbitration Act, 1996 suffer from legal infirmities.
- The Chief Judge lacked jurisdiction to condone delay in excess of thirty days for filing petitions under Section 34 of the Arbitration Act, 1996.
- Section 5 of the Limitation Act has no application to proceedings under Section 34 of the Arbitration Act, 1996 because Section 34 provides a self-contained limitation code and thereby expressly implies exclusion of Section 5.
- Section 34 permits the court to extend the three-month period by thirty days only, and "but not thereafter" makes any further extension impermissible.
Respondents' Arguments (as advanced by Sri C.V. Ramulu)
- The impugned orders of the Chief Judge do not suffer from legal infirmity warranting interference by the High Court under Article 227.
- The orders have not resulted in injustice to any party.
- By implication, the respondents relied on precedent(s) holding that Section 5 of the Limitation Act may be invoked to condone delay in certain arbitration-related proceedings (the learned Chief Judge relied on such authorities in allowing the applications).
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Kaushalya Rani v. Gopal Singh | The Limitation Act is a general law; Section 29(2) of the Limitation Act is supplemental in character and makes provisions of Sections 4 to 24 applicable to special laws unless expressly excluded by such special law. | The court used this principle to frame the threshold question whether the Arbitration Act, 1996 expressly excludes the applicability of Sections of the Limitation Act (including Section 5) to proceedings under Section 34. |
| Bharat Coking Coal Ltd. v. L.K. Ahuja & Co. | Holds that an application for condonation of delay is permissible for filing objections under Section 30 of the Arbitration Act (1940) by resorting to Section 5 of the Limitation Act; Section 5 applies to applications under the Arbitration Act, 1940 (other than those under Order XXI CPC). | The decision was referred to as an example of Section 5's applicability to proceedings under the earlier arbitration statute (1940 Act); the court distinguished applicability to the 1996 Act's Section 34. |
| Union of India v. Hanuman Prasad & Brothers, 2000 (7) Supreme 69 | The decision held that Section 5 of the Limitation Act could be applied to condone delay in filing objections under the arbitration provisions then under consideration (the case was understood to concern objections under the earlier regime); the Court in that decision set aside orders that had held Section 5 inapplicable to certain proceedings. | The learned Chief Judge relied upon this decision in allowing condonation. The present court noted the decision but treated it as not authority for applying Section 5 to Section 34 of the 1996 Act when read together with later authority. |
| Union of India v. M/s. Popular Construction Co., 2001 (7) Supreme 354 | Distinguished Hanuman Prasad and held that Section 5 of the Limitation Act does not apply to Section 34 of the Arbitration and Conciliation Act, 1996. The language of Section 34 (notably the words "but not thereafter") constitutes an express exclusion within Section 29(2) of the Limitation Act; the time limit under Section 34 is absolute and not extendable under Section 5. | The court treated this decision as authoritative: it formed the central legal basis for concluding that Section 5 cannot be invoked to condone delay beyond the thirty-day proviso in Section 34, and thus the learned Chief Judge erred in admitting the belated Section 34 petitions. |
Court's Reasoning and Analysis
The court proceeded in a step-by-step legal analysis strictly grounded in the text of Section 34 of the Arbitration and Conciliation Act, 1996 and the interplay between that provision and the Limitation Act:
- Identification of the legal provision: The court set out Section 34(3) which prescribes that an application to set aside an arbitral award must be made within three months of receipt of the award and that the court may entertain the application within a further period of thirty days if satisfied there was sufficient cause, "but not thereafter."
- Plain-text interpretation: The court observed that the plain reading of Section 34(3) makes the three-month period with the thirty-day extension mandatory and that the competent court has no jurisdiction to condone delay beyond the thirty-day window.
- Statutory framework and supplemental operation of Limitation Act: The court noted Section 29(2) of the Limitation Act, 1963, which makes Sections 4 to 24 of the Limitation Act applicable to special laws (such as the Arbitration Act) only to the extent they are not expressly excluded. The court treated that provision as supplementary in character (citing Kaushalya Rani).
- Examination of precedent: The court reviewed prior authorities. It acknowledged decisions (such as Hanuman Prasad and Bharat Coking Coal Ltd.) holding that Section 5 could be invoked in relation to proceedings under the earlier arbitration regime (or in relation to making an award rule of the court), noting that the learned Chief Judge relied on such decisions to condone delay.
- Application of controlling authority: The court focused on the Supreme Court's later and controlling decision in Union of India v. M/s. Popular Construction Co., which distinguished earlier decisions and held that Section 5 does not apply to Section 34 of the 1996 Act because the express words "but not thereafter" in Section 34 amount to an express exclusion of the Limitation Act's condonation mechanism under Section 29(2).
- Conclusion from statutory text and precedent: Applying Popular Construction Co., the court concluded Section 34's time-limits are absolute and unextendable by Section 5; therefore, the Chief Judge erred in condoning the 80-day delay and admitting the belated Section 34 petitions.
Holding and Implications
IMPUGNED ORDERS SET ASIDE; CIVIL REVISION PETITIONS ALLOWED
Holding (direct effect on the parties):
- The orders of the learned Chief Judge that condoned the 80-day delay in filing Original Petitions under Section 34 of the Arbitration and Conciliation Act, 1996 are set aside.
- Accordingly, the Original Petitions filed by the Union of India and others under Section 34 stand dismissed for being beyond the permissible limitation.
- The Civil Revision Petitions filed by the petitioners are allowed. Each party shall bear their own costs.
Implications (broader legal consequence drawn by the court):
- The court applied and followed the Supreme Court's authoritative pronouncement (Union of India v. M/s. Popular Construction Co.) that Section 5 of the Limitation Act, 1963 is not applicable to proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 because Section 34 expressly excludes such extension by the phrase "but not thereafter."
- The decision does not purport to create a new rule of law but enforces the existing Supreme Court authority that the time-limit in Section 34 is absolute and not extendable by Section 5; the immediate consequence is the dismissal of the belated Section 34 petitions in these cases.
1. This batch of Civil Revision Petitions filed under Article 227 of the Constitution of India challenging the orders passed by the learned Chief Judge, City Civil Courts, Hyderabad may be disposed of by a common order, since a common question of law arises for consideration of this court.
2. The learned Chief Judge allowed the applications filed by the Union of India and others under Section 5 of the Limitation Act, 1963 read with Section 43 of the Arbitration and Conciliation Act, 1996 (for short 'the Arbitration Act, 1996') to condone the delay in filing the original petitions (O.Ps.) under Section 34 of the Arbitration Act, 1996 to set aside the Awards dated 10-7-2000 in arbitration cases on the file of the Arbitrator and accordingly condoned the delay of 80 days in filing the original petitions.
3. It may be necessary to briefly notice the relevant facts leading to filing of the instant Civil Revision Petitions in this court.
4. The petitioners entered into a contract with the Department of Tele Communications, Government of India on 28-12-1995 for manufacture and supply of Multi Access Rural Radio (MARR) Systems in the Ultra High Frequency Range with accessories. The systems contracted have been manufactured and supplied. It appears that certain disputes have arisen between the contracting parties with regard to payments that are liable to be made for the supplies effected beyond 17th March, 1997. We are not concerned with the further details of the nature of the dispute. It is the case of the petitioners that the Government of India has unilaterally taken a decision to pay for the systems supplied after 17-3-1997 at a particular price than the contracted price and consequent to the said decision effected the recoveries from the petitioners. The petitioners challenged the said decision in a batch of writ petitions in this court impugning the legality and validity of the decision taken by the department on 6-6-1997 and 23-6-1997. This court disposed of the said writ petitions directing the parties to make an appropriate reference of their claims/disputes to be resolved through the medium of Arbitration and for the said purpose appointed Mr. Justice PA.Chowdary, a retired Judge of this court to act as sole Arbitrator. The said decision was challenged in a batch of writ appeals. A Division Bench of this court rejected the said Writ Appeals and accordingly confirmed the judgment rendered by the learned single Judge.
5. Thus the reference of the dispute between the parties came to be laid before the Arbitrator for resolution. The learned Arbitrator having entered upon the reference passed the Award on 10-7-2000. The details of the Award need not be noticed.
6. The Award of the Arbitrator was communicated to the parties. The respondents herein preferred O.Ps., under Section 34 of the Arbitration Act, 1996 along with the applications to condone the delay of 80 days in filing the said O.Ps.
7. The learned Chief Judge allowed the applications and condoned the delay in filing the O.Ps., filed by the respondents to set aside the Award dated 10-7-2000 passed by the Arbitrator. It is those orders which are impugned in these civil revision petitions.
8. Sri Nooty Rama Mohan Rao, learned counsel for the petitioners contends that the impugned orders passed by the learned Chief Judge in allowing the applications filed by the respondents herein under Section 5 of the Limitation Act, 1963 read with Section 43 of the Arbitration Act, 1996 suffer from incurable legal infirmities. The learned counsel contends that the learned Chief Judge has no jurisdiction to entertain and order the applications to condone the delay of more than thirty days in preferring the original petitions under Section 34 of the Arbitration Act, 1996. The learned counsel contended that the provisions contained in Section 5 of the Limitation Act, 1963 have no application to the proceedings under Section 34 of the Arbitration Act, 1996 as the same are liable to be treated to have been impliedly excluded, since Section 34 of the Arbitration Act, 1996 has provided for the period of limitation within which an application under Section 34 of the Arbitration Act, 1996 has to be taken out. It is contended that Section 34 of the Arbitration Act, 1996 itself is a self-contained code. Section 34 of the Arbitration Act, 1996 regulates the exercise of the discretion in the matter of condonation of delay by a competent court for a period of thirty days only "but not thereafter". In the circumstances, it is contended that the competent court of jurisdiction, for the good reasons, in an appropriate case may condone the delay of thirty days in filing the application under Section 34 of the Arbitration Act, 1996 and, under no circumstances, the court can condone the delay of more than thirty days in filing such petitions.
9. The learned Senior Central Government Standing Counsel, Sri C.V.Ramulu, contended that the impugned orders passed by the learned Chief Judge do not suffer from any legal infirmity requiring any interference of this court in exercise of its jurisdiction under Article 227 of the Constitution of India. It is submitted that the orders have not resulted in causing any injustice to any of the parties.
10. The short but an important question that arises for determination in these cases is whether the provisions of Section 5 of the Limitation Act, 1963 are applicable to an application challenging the Award under Section 34 of the Arbitration Act, 1996?
11. Section 34 of the Arbitration Act, 1996 provides for a period of limitation for filing a petition for setting aside the arbitral award. It reads thus:
34. Application for setting aside arbitral award :--
2) .....
3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the court is satisfied that the application was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.
12. A plain reading of the provision would make it clear that no application for setting aside the arbitral award can be made after three months from the date on which the party making the application had received the arbitral award or, if a request has been made under Section 33, from the date on which that request has been disposed of by the arbitral tribunal. However, the court in an appropriate case may extend the said period of three months for filing the application for a further period of thirty days "but not thereafter". The provision undoubtedly is mandatory in its nature. The competent court has no jurisdiction to extend or condone the delay in filing the application beyond the period of thirty days. The court in its discretion may extend or condone 30 days delay only in filing the application under Section 34 of the Arbitration Act, 1996.
13. But the question that falls for consideration is as to whether the Arbitration Act, 1996 expressly excludes the applicability of Section 5 of the Limitation Act, 1963 to a proceeding under Section 34 of the Arbitration Act, 1996?
14. It is required to notice that Section 29(2) of the Limitation Act, 1963 makes the provisions of Sections 4 to 24 applicable to special laws like the Arbitration Act, 1996. There cannot be any dispute that the Arbitration Act, 1996 is a special law. It may be relevant to notice the Section 29 (2) of the Limitation Act, 1996. It reads:
"Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of section 3 shall apply as if such period were the period prescribed by the schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in sections 4 to 24 (inclusive) shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law."
15. A fair reading of the section would make it clear that the provisions of Sections 4 (o 24 will apply when :
(i) There is a special or local law which prescribes a different period of limitation for any suit, appeal or application; and
(ii) The special or local law does not expressly exclude those sections.
16. In Kaushalya Rani v. Gopal Singh ., , the Supreme Court observed that "the Limitation Act is a general law laying down the general rules of limitation applicable to all cases dealt with by the Act; but there may be instances of a special law of limitation laid down in other statutes, though not dealing generally with the law of limitation." The Supreme Court characterised the Section 29(2) of the Limitation Act as "supplemental in its character". For the purpose of determining any period of limitation prescribed by any special law, it has made the provisions of the Limitation Act, referred in Clause (a) of Sub-section (2) of Section 29 applicable to such cases to the extent to which they are not expressly excluded by such special or local law, and Clause (b) of that subsection expressly lays it down that the remaining provisions of the limitation act shall not apply to cases governed by any special or local law.
17. In Bharat Coking Coal Ltd. v. L.K. Ahuja and Co., , the Supreme Court held that "an application for condonation of delay is permissible to file objections under Section 30 of the Arbitration Act by resorting to Section 5 of the Limitation Act." it is held by the Supreme Court that "Section 5 of the Limitation Act, 1963 is applicable to all applications under the provisions of the Arbitration Act, 1940 other than those under Order XXI of the Code of Civil Procedure."
18. In Union of India v. Hanuman Prasad and Brothers, 2000 (7) Supreme 69, the Supreme Court observed:
"In our view, on the facts and circumstances of the case it could not have been said that there was no sufficient cause for the appellant to get the delay of 2 months 22 days in filing objections under Section 30 of the Arbitration and Conciliation Act, 1996 condoned in the interest of justice. We also find that Section 5 of the Limitation Act was wrongly held inapplicable to the proceedings before Court regarding making the award a rule of the Court. Consequently, on these grounds, the impugned orders of the High Court as welt as of the trial Court are set aside. The trial Court is directed to take up objections under Section 30 of the Arbitration and Conciliation Act, 1996 on record and to decide the same in accordance with law on merits within a period of two months from the receipt of a copy of the order at its end. We make it clear that we make no observation on the merits of the objections under Section 30 of the Act which have to be decided by the trial Court on its own."
19. The learned Chief Judge relied upon the said decision and accordingly allowed the applications.
20. In Union of India Vs. M/s. Popular Construction Co., 2001 (7) Supreme 354, the Supreme Court distinguished the decision in Hanuman Prasad and Brothers (supra) and held that the decision in M/s. Hanuman Prasad & Brothers is an authority for the proposition that Section 5 of the Limitation Act applies to the objections to an award under Section 30 of the Arbitration Act, 1940 and not to Section 34 of the Arbitration and Conciliation Act, 1996. The decision in M/s. Hanuman Prasad & Brothers (supra) is explained and distinguished in the following manner:
"The appellant then sought to rely on a decision of this court in Civil Appeal No. 1953 of 2000 Union of India v. Hanuman Prasad and Brothers (2000 (7) Supreme 69) to which one of us (Ruma Pal, J) was party. It is contended that the decision is an authority for the proposition that Section 5 of the Limitation Act applied to objections to an award under the 1996 Act. It is true that in the body of that judgment, there is a reference to the 1996 Act. But that is an apparent error as the reasoning clearly indicates that the provisions of Section 30 of the Arbitration Act, 1940 and not Section 34 of the 1996 Act were under consideration. In order to clarify the position, we have scrutinized the original record of Civil Appeal No. 1953 of 2000 decided on 6th March 2000. We have found that that was indeed a case which dealt with an award passed and challenged under the Arbitration Act, 1940. No question was raised with regard to the applicability of the Limitation Act to the 1940 Act. The only issue was whether the High Court should have refused to condone the delay of 2 months and 22 days in filing the objection to the Award. This Court found that sufficient cause had been shown to condone the delay and accordingly set aside the decision of the High Court. This decision is as such irrelevant."
21. The Supreme Court in M/s. Popular Construction Co. (supra) laid down that the language of Section 34 of the Arbitration Act, 1996 in clear terms excludes the application of Section 5 of the Limitation Act in a proceeding tinder Section 34 of the Arbitration Act, 1996. The Supreme Court observed that "the history and scheme of the 1996 Act support the conclusion that the time limit prescribed under Section 34 to challenge an Award is absolute and un-extendable by Court under Section 5 of the Limitation Act." it is explained that had the proviso to Section 34 merely provided for a period within which the Court could exercise its discretion, that would not have been sufficient to exclude Sections 4 to 24 of the Limitation Act because "mere provision of a period of limitation in howsoever peremptory or imperative language is not sufficient to displace the applicability of Section 5."
22. But adverting to the language of Section 34 of the Arbitration Act, 1996, the Supreme Court laid emphasis on the crucial words in Section 34 of the Arbitration Act, 1996 and the crucial words are "but not thereafter" are used in the proviso to Sub-section (3). In the circumstances, the Supreme Court concluded that this phrase "would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act," Parliament did not need to go further. 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. No principle of interpretation would justify such a result.
23. The Supreme Court authoritatively laid down the law in M/s. Popular Construction Co. (supra) and declared that the provisions of Section 5 of the Limitation Act, 1963 are not applicable to the application challenging the award under Section 34 of the Arbitration Act, 1996. The decision of the Supreme Court in M/s. Hanuman Prasad & Brothers (supra) is an authority for the proposition that Section 5 of the Limitation Act is applicable to the proceedings before the court regarding making the award a rule of the court under the Arbitration Act, 1940. The decision is not an authority for the proposition that Section 5 of the Limitation Act would be applicable to the proceedings under Section 34 of the Arbitration Act, 1996.
24. For the aforesaid reasons, the orders passed by the learned Chief Judge are vitiated by the errors apparent on the face of the record. The learned Judge committed an error in condoning the delay in filing the original petitions to set aside the Awards under Section 34 of the Arbitration Act, 1996. The impugned orders are accordingly set aside.
25. It is needless to observe that the original petitions filed by the Union of India and others shall accordingly stand dismissed.
26. The Civil Revision Petitions are allowed, but in the circumstances, each party to bear their own costs.
"Section 5 of the Limitation Act, 1963Alert