NATIONAL HIGHWAY AUTHORITY OF INDIA v. VISHASHWAR

2024:HHC:16990

IN THE HIGH COURT OF HIMACHAL PRADESHAT

SHIMLA

Arbitration Appeal No.30 of 2024 Decided on: 21^st November, 2024

__________________________________________________________ National Highway Authority of India ...Appellant

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Versus Vishashwar [since deceased through legal heirs] …Respondents

Coram Hon'ble Mr. Justice Ranjan Sharma, Judge

Whether approved for reporting? Yes For the appellant: Ms. Shreya Chauhan, Advocate. For the respondents: Mr. Varun Rana. Advocate.

Ranjan Sharma, Judge

Appellant-NHAI, has come up before this Court, under Section 37 of the Arbitration and Conciliation Act 1996, [as Annexed], seeking the following relief(s) :-

"(i) That the impugned order dated 19-04-2023 passed by the Learned District Judge, Distt. Mandi in Arbitration Case No.80 of 2023 titled as, 'NHAI Versus Vishashwar may be quashed and set aside and the present appeal may kindly be accepted in the interest of justice.

(ii) That the impugned award dated 09.02.2022 passed by the Ld. Arbitrator/ Divisional Commissioner, Mandi may be quashed and set aside and the award passed by the Competent Authority may be upheld in the interest of justice."

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FACTUAL MATRIX:

2. Precisely, the case is, that the Central Government issued a Notification under Section 3(A) of National Highways Act, for constructing a four lane road, in Nerchowk-Manali Section of NH-21, in Revenue Estate Thala, Tehsil Sundernagar, District Mandi, from KM 126.500 to KM 188.917 on Bilaspur-Nerchowk Section. After publication of aforesaid notification, objections were invited and the same were decided. Thereafter, the final notification for acquiring the land situated comprising 2 Bigha 9 Biswa 16 Biswansee of the petitioner in Village Thala was issued. Resultantly, the Competent Authority for Land Acquisition [CALA], started the proceedings for determining compensation and passed an Award on

02.05.2016.

2(i). Feeling aggrieved, the respondent-land owner herein, filed a Reference Petition, under Section 3G(5) of National Highways Act, before Arbitrator, passed the Award on 09.02.2022, enhancing the compensation determined by Competent Authority [CALA], payable to respondent-land owner(s) herein.

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2(ii). The Award dated 09.02.2022, passed by Arbitrator was assailed in a petition, under Section 34 of the Act along with an application under Section 5 of the Limitation Act for seeking condonation of delay in filing before Learned District Judge, Mandi, but the said application for delay was dismissed on 19.04.2023, in following terms :-

"11. In the present case, the award was received on 08-09-2022. The period of three months expired on 07-12-2022 and 30 days expired on 06-01-2023. The present application was filed on 19-01- 2023 beyond the period of thirty days.

12. It is not permissible to condone a delay beyond 30 days after 3 months in the exercise of the power conferred under Section 34(3) of the Arbitration and Conciliation Act. Hence, the application fails and the same is dismissed. The present application stands disposed of, which after needful be tagged with the main case file for records. Announced

19-04-2023 Sd/-

District Judge Mandi, H.P."

2(iii). Perusal of Impugned Order dated 19.04.2023 reveal that the application under Section 5 of Limitation Act filed with Section 34 petition, was

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dismissed on the ground that Arbitrator passed the Award on 09.02.2022 and copy of the Award was received by NHAI-appellant on 08.09.2022. The three months period as contemplated under Section 34(3) for assailing Award expired on 07.12.2022. Even the further extendable period of 30 days, in terms of proviso to Section 34(3) expired on 06.01.2023. However, the petition under Section 34 of the Act was instituted only on 19.01.2023 i.e. beyond the total permissible period of 120 days [including enlarged period of 30 days, beyond 3 months]. In these circumstances, the Learned District Judge dismissed the application for condonation of delay under Section 5 of Limitation Act in filing the petition under Section 34 of the Act. Consequently, the Award dated 09.02.2022, passed by Arbitrator was upheld.

GROUNDS TAKEN IN INSTANT APPEAL:

3. Appellant-NHAI, has assailed the Impugned Order on the ground that the appellant-NHAI has been rendered remediless; and the Impugned Order is against public policy; and Impugned Order could

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not have been passed only on the ground of limitation by taking a hyper-technical approach, when, after the receipt of the copy of Award dated 09.04.2022, on 08.09.2022 the matter had to be taken up at departmental level and upon receipt of approval, the petition-objection(s) were filed and this process led to delay, which was bonafide and these aspects were ignored by Learned District Judge, while passing the impugned order.

4. Heard Ms. Shreya Chauhan, Advocate, for the appellant and Mr. Varun Rana, Advocate, for the respondents.

STATUTORY PROVISIONS OF SECTION 34 OF

ARBITRATION AND CONCILIATION ACT:

5. Before dealing with the instant appeal, it is necessary to have a recap of the statutory provisions of Section 34 of the Arbitration and Conciliation Act, which read as under :-

"34. Application for setting aside arbitral award.—

(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).

(2) An arbitral award may be set aside by the Court only if—

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(a) the party making the application establishes on the basis of the record of the arbitral tribunal that —

(i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

(b) the Court finds that—

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

(ii) the arbitral award is in conflict with the public policy of India.

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(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:

Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.

(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 applicant 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.

(4) On receipt of an application under sub- section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.

(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.

(6) An application under this section shall be disposed of expeditiously, and in any

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event, within a period of one year from the date on which the notice referred to in sub- section (5) is served upon the other party."

ANALYSIS:

6. Taking into account the facts and circumstances and material on record, this Court does not finds any infirmity with the Impugned Order dated 19.04.2023, passed by the Learned District Judge, in [CMA No.41 of 2023] in Registration No.80 of 2023, Arbitration Case No.80 of 2023 whereby, the application filed under Section 5 of Limitation Act in Section 34 proceedings was dismissed; and to upholding the Award dated 09.02.2023, passed by Learned Arbitrator, for the following reasons:-

6(i). Pursuant to acquisition notifications, the Competent Authority for Land Acquisition [CALA] passed an Award on 02.05.2016, acquiring the land of respondent herein. Feeling aggrieved against the determination of compensation by the Competent Authority for Land Acquisition [CALA], the respondent filed a Reference Petition under Section 3G(5) of National Highways Act before the Arbitrator, who passed an Award dated 09.02.2022, enhancing

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compensation. The NHAI received the copy of this Award on 08.09.2022; and upon receipt of Award, the NHAI were bound to assail the Award, in proceedings under Section 34 before Learned District Judge, within the maximum permissible period of 120 days [i.e. three months period from the date of receipt of award and 30 days thereafter]. Material on record and even a perusal of Impugned Order indisputably indicates that the Appellant-NHAI filed a petition under Section 34 of the Act, assailing the Award dated 09.02.2022 [received on 08.09.2022] on 19.01.2023, which was beyond the permissible period of 120 days under Section 34(3) and proviso thereto. Thus, in these circumstances, once the petition under Section 34 of the Act was not entertainable beyond the maximum period of 120 days and the delay, if any, beyond 120 days was not condonable, therefore, the Impugned Order passed by Learned District Judge, dismissing application under Section 5 of Limitation Act along with Section 34 petition filed by appellant-NHAI, was in accordance with law and the same did not suffer from any

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infirmity.

6(ii). Issue as to whether the period for filing petition assailing the award beyond three months and 30 days thereafter, i.e. beyond the maximum period of 120 days could be entertained and adjudicated has been answered by the Hon'ble Supreme Court in Union of India Versus Popular Construction Co. (2001) 8 SCC 470, mandating that an application beyond 120 days as prescribed under Section 34(3) and proviso thereto, under the Act, was not to be entertainable, in the following terms:-

"10. This decision recognises that it is not essential for the special or local law to, in terms, exclude the provisions of the Limitation Act. It is sufficient if on a consideration of the language of its provisions relating to limitation, the intention to exclude can be necessarily implied. As has been said in Hukum Narain Yadav v. Lalit Narain Mishra.

"If on an examination of the relevant provisions it is clear that the provisions of the Limitation Act are necessarily excluded, then the benefits conferred therein cannot be called in aid to supplement the provisions of the Act"

11. Thus, where the legislature prescribed a special limitation for the purpose of the appeal and the period of limitation of 60

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days was to be computed after taking the aid of Sections 4, 5 and 12 of the Limitation Act, the specific inclusion of these sections meant that to that extent only the provisions of the Limitation Act stood extended and the applicability of the other provisions, by necessary implication stood excluded.

12. As for 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). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and

would therefore bar the application of Section 5 of that 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.

13. Apart from the language, 'express exclusion' may follow from the scheme and object of the special or local law:

"Even in a case where the special law does not exclude the provisions of Sections 4 to 24 of the Limitation Act by an express reference, it would nonetheless be open to the Court to examine whether and to what extent the nature of those provisions or the nature of the subject-matter and scheme of the special law exclude their operation"

14. Here 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 unextendable by Court under Section 5 of the Limitation Act. The Arbitration and Conciliation Bill, 1995 which preceded the 1996 Act stated as one of its main

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objectives the need "to minimise the supervisory role of courts in the arbitral process". This objective has found expression in Section 5 of the Act which prescribes the extent of judicial intervention in no uncertain terms :

"5. Extent of judicial intervention.- Notwithstanding anything contained in any other law for the time being in force, in matter governed by this Part, no judicial authority shall intervene except where so provided in this Part."

6(iii). While dealing with a matter under Section 34 of Arbitration and Conciliation Act, it has been mandated that Section 5 of Limitation Act has no application to a petition filed under Section 34 of the Act, in Simplex Infrastructure Limited Versus Union of India (2019) 2 SCC 455, in the following terms :-

"10. Section 5 of the Limitation Act, 1963 provides thus:

"5. Extension of prescribed period in certain cases.- Any appeal or any application, other than an application under any of the provisions of Order 21 of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.

18. 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

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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 and not thereafter. The use of the words "but not thereafter" in the proviso makes it clear that the extension cannot be beyond thirty days.

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.

21. Under the circumstances, we are of the considered opinion that in view of the period of limitation prescribed in Section 34(3), the learned Single Judge of the High Court was not justified in condoning the respondent's delay of 514 days in filing the application. The judgment rendered by the learned Single Judge of the High Court of Calcutta on 27-4-2016, in Union Of India v. M/S. Simplex Infrastructures Ltd. is set aside and the appeal is allowed.

The petition under Section 34 stands dismissed on the ground that it is barred by limitation. There shall be no order as to costs."

6(iv). While dealing with the proviso to Section 34(3) it has been mandated that the period of 120 days [i.e. 3 months period and additional period of 30 days], is the outer period, for laying a challenge to the Award in Section 34 proceedings. Beyond the outer limit of 120 days, the period is neither

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extendable nor condonable by invoking Section 5 of the Limitation Act. Entertaining and permitting challenge to Award, in Section 34 proceedings, on the strength of application under Section 5 of Limitation Act shall defeat the legislative intent and shall defeat the object of finality by expeditious alternative disputes resolute system and shall render the legislative intent otiose. Thus, the petition filed under Section 34, beyond the period of limitation is liable to be dismissed as per the mandate of law in P. Radha Bai & Others Versus P. Ashok Kumar & Another (2019) 13 SCC 445, in the following terms:-

"32. Section 34(3) deserves careful scrutiny and its characteristics must be highlighted:

32.1 Section 34 is the only remedy for challenging an award passed under Part I of the Arbitration Act. Section 34(3) is a limitation provision, which is an inbuilt into the remedy provision. One does not have to look at the Limitation Act or any other provision for identifying the limitation period for challenging an Award passed under Part I of the Arbitration Act.

32.2 The time limit for commencement of limitation period is also provided in Section 34(3) i.e. the time from which a party making an application "had received the Arbitral Award" or disposal of a request

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under Section 33 for corrections and interpretation of the Award.

32.3 Section 34(3) prohibits the filing of an application for setting aside of an Award after three months have elapsed from the date of receipt of Award or disposal of a request under Section 33. Section 34(3) uses the phrase "an application for setting aside may not be made after three months have elapsed". The phrase "may not be made" is from the UNCITRAL Model Law and has been understood to mean "cannot be made". The High Court of Singapore in ABC Co. Ltd v. XYZ Co. Ltd, held:

"The starting point of this discussion must be the Model Law itself. On the aspect of time, Article 34(3) is brief. All it says is that the application may not be made after the lapse of three months from a specified date. Although the words used are 'may not' these must be interpreted as 'cannot' as it is clear that the intention is to limit the time during which an award may be challenged. This interpretation is supported by material relating to the discussions amongst the drafters of the Model Law. It appears to me that the court would not be able to entertain any application lodged after the expiry of the three months period as Article 34 has been drafted as the all-encompassing, and only, basis for challenging an award in court. It does not provide for any extension of the time period and, as the court derives its jurisdiction to hear the application from the Article alone, the absence of such a provision means the court has not been conferred with the power to extend time"

32.4 The limitation provision in Section 34(3) also provides for condonation of delay. Unlike Section 5 of Limitation Act, the delay can only be condoned for 30 days on showing sufficient cause. The crucial phrase "but not thereafter" reveals the

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legislative intent to fix an outer boundary period for challenging an Award.

32.5 Once the time limit or extended time limit for challenging the arbitral award expires, the period for enforcing the award under Section 36 of the Arbitration Act commences. This is evident from the phrase "where the time for making an application to set aside the arbitral award under Section 34 has expired". There is an integral nexus between the period prescribed under Section 34(3) to challenge the Award and the commencement of the enforcement period under Section 36 to execute the Award.

33.2 The proviso to Section 34(3) enables a Court to entertain an application to challenge an Award after the three months period is expired, but only within an additional period of thirty dates, "but not thereafter". The use of the phrase "but not thereafter" shows that the 120 days period is the outer boundary for challenging an Award. If Section 17 were to be applied, the outer boundary for challenging an Award could go beyond 120 days. The phrase "but not thereafter" would be rendered redundant and otiose. This Court has consistently taken this view that the words "but not thereafter" in the proviso of Section 34 (3) of the Arbitration Act are of a mandatory nature, and couched in negative terms, which leaves no room for doubt. (State of Himachal Pradesh v. Himachal Techno Engineers & Anr., Assam Urban Water Supply & Sewerage Board v. Subash Projects & Marketing Ltd. and Anil kumar Jinabhai Patel (D) through LRs v. Pravinchandra Jinabhai Patel & Ors.

36.1 First, the purpose of Arbitration Act was to provide for a speedy dispute resolution process. The Statement of Objects and Reasons reveal that the legislative intent of enacting the Arbitration Act was to provide parties with an efficient

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alternative dispute resolution system which gives litigants an expedited resolution of disputes while reducing the burden on the courts. Article 34(3) reflects this intent when it defines the commencement and concluding period for challenging an Award. This Court in Popular Construction Case highlighted the importance of the fixed periods under the Arbitration Act. We may also add that the finality is a fundamental principle enshrined under the Arbitration Act and a definitive time limit for challenging an Award is necessary for ensuring finality. If Section 17 were to be applied, an Award can be challenged even after 120 days. This would defeat the Arbitration Act's objective of speedy resolution of disputes. The finality of award would also be in a limbo as a party can challenge an Award even after the 120 day period.

36.2 Second, extending Section 17 of Limitation Act to Section 34 would do violence to the scheme of the Arbitration Act. As discussed above, Section 36 enables a party to apply for enforcement of Award when the period for challenging an Award under S.34 has expired. However, if Section 17 were to be extended to Section 34, the determination of "time for making an application to set aside the arbitral award" in Section 36 will become uncertain and create confusion in the enforcement of Award. This runs counter to the scheme and object of the Arbitration Act.

36.3 Third, Section 34(3) reflects the principle of unbreakability. Dr. Peter Binder in International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions, 2^ndEdn., observed:

"An application for setting aside an award can only be made during the three months following the date on which the party making the application has received the award. Only if a party

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has made a request for correction or interpretation of the award under Art. 33 does the time limit of three months begin after the tribunal has disposed of the request. This exception from the three month time limit was subject to criticism in the Working group due to fears that it could be used as a delaying tactics. However, although "an unbreakable time limit for applications for setting aside" was sought as being desirable for the sake of "certainty and expediency" the prevailing view was that the words ought to be retained

"since they presented the reasonable consequence of article 33". According to this "unbreakability" of time limit and true to the "certainty and expediency" of the arbitral awards, any grounds for setting aside the award that emerge after the three month time limit has expired cannot be raised."

42. In the context of Section 34, a party can challenge an award as soon as it receives the award. Once an award is received, a party has knowledge of the award and the limitation period commences. The objecting party is therefore precluded from invoking Section 17(1)(b) and (d) once it has knowledge of the Award. Section 17(1)(a) and (c) of Limitation Act may not even apply, if they are extended to Section 34, since they deal with a scenario where the application is "based upon" the fraud of the respondent or if the application is for "relief from the consequences of a mistake".

Section 34 application is based on the award and not on the fraud of the respondent and does not seek the relief of consequence of a mistake.

44. In view of the above, we hold that once the party has received the Award, the limitation period under Section 34(3) of the Arbitration Act commences. Section 17 of the Limitation Act would not come to

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the rescue of such objecting party."

6(v). In Chintels India Limited Versus Bhayana Builders Private Limited (2021) 4 SCC 602, the Three Judges of the Hon'ble Supreme Court has reiterated that the timeline of three months, which is condonable for 30 days thereafter, cannot be extended beyond 120 days by invoking Section 5 of Limitation Act. Special provisions contained in Section 34 override the general provisions of Section 5 of Limitation Act. The provisions of Section 5 of Limitation Act stands excluded by Section 34(3) of Act, in the following terms :-

"11. A reading of section 34(1) would make it clear that an application made to set aside an award has to be in accordance with both sub-sections (2) and (3). This would mean that such application would not only have to be within the limitation period prescribed by sub-section (3), but would then have to set out grounds under sub- sections (2) and/or (2-A) for setting aside such award. What follows from this is that the application itself must be within time, and if not within a period of three months, must be accompanied with an application for condonation of delay, provided it is within a further period of 30 days, this Court having made it clear that Section 5 of the Limitation Act, 1963 does not apply and that any delay beyond 120 days cannot be condoned - see State of Himachal Pradesh v. Himachal Techno Engineers at para 5.

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18. Having so held, this Court then referred to and followed the judgment in Essar Constructions and the judgment contained in Union of India v. Jain and Associates, ultimately holding:

"8. The decision in Popular Construction Co. case did not deal with specific issues in this case. In that decision it was held that in respect of "sufficient cause cases" the provisions of Section 34(3) of the Act which are special provisions relating to condonation of delay override the general provisions of Section 5 of the Limitation Act, 1963 (in short "the Limitation Act"). The position was reiterated in the Western Builders case [(2006) 6 SCC 239] and also in Fairgrowth Investments Ltd. v. Custodian .. There can be no quarrel with the proposition that Section 5 of the Limitation Act providing for condonation of delay is excluded by Section 34(3) of the Act."

36. The order of this Court does not in any manner touch upon the reasoning of the Bombay High Court. On the contrary, this court refers to the judgment of this Court in Himachal Techno Engineers, which as has been held by us

hereinabove, makes it clear that Section 5 of the Limitation Act is excluded by section 34(3) of the Arbitration Act, 1996 and that no condonation of delay can take place beyond the period of 120 days. It is on this ground, citing the learned District Judge's order, that this Court did not interfere. Consequently, it cannot be said that this Court approved of the judgment of the Division Bench of the Bombay High Court. Likewise, the reasoning contained in Radha Krishna Seth, does not commend itself to us. Both these judgments therefore do not state the law correctly and stand overruled."

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6(vi). In Mahindra and Mahindra Financial Services Limited Versus Maheshbhai Tinabhai Rathod and Others, (2022) 4 SCC 162, the Hon'ble Supreme Court has reiterated that the challenge to the Award, beyond 120 days period as prescribed under Section 34(3) and proviso thereto, is not condonable and a petition laying objections beyond the prescribed period, by invoking Section 5 of Limitation Act, is not condonable, in the following terms :-

9.3 The observations of this Court in different decisions relating to non-applicability of Section 5 of the Limitation Act in condoning the delay and extending the limitation prescribed under Section 34

(3) of Act 1996 was taken note of by a bench of three Hon'ble Judges of this Court with approval, in Chintels (India) Ltd. v. Bhayana Biuilders (P) Ltd….

10. In the above backdrop, a perusal of the order passed by the learned Single Judge indicates that as per the explanation put forth by the respondent herein, it was their case that the Arbitration Petition under Section 34 of Act 1996 filed on 4-1- 2012 was on having knowledge of the award, which according to the respondent was on 15-11-2011 when notice in the execution petition was received. The affidavit in reply was noted by the learned Single Judge, as per which it was brought on record that the learned Arbitrator had dispatched the award dated 28-2-2011 on 15-03-2011 by making an inscription, 'AWARD', on the envelope, by regd. post

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acknowledgment due. The refusal to receive was endorsed by the postal authority on 23.03.2011. The postal remark in Gujarati

"Lenavi Na Pade Che" (refused to accept) was noted by the learned Single Judge. In SCC OnLine Bom paras 9 and 10 of the order, the learned Single Judge has ascertained the factual position of the refusal made by the respondent and there being no denial on that front. In that light, the learned Single Judge concluded as hereunder:

"17. The envelopes forwarded by the learned Arbitrator to the Petitioners, which are returned by the postal authorities to the Arbitrator on the ground that the Petitioners have refused to accept service of the same, are opened in Court and it is noted that the learned Arbitrator had forwarded signed copies of the award to the Petitioners. As stated hereinabove, the Petitioners have admitted the fact that they have refused to accept service of the envelopes containing copies of the Arbitral Award. Refusal of service is good service in law. In view thereof, the Petitioners are deemed to have been served with the signed copy of the award on 23-3-2011. The

Petitioners have filed the Petition only on 2-1-2012 to 4-1-2012 i.e. after delay of about 197 days. The issue as to whether the provision of Section 34(3) of the Act, has the effect of excluding Section 5 of the Limitation Act, 1963, came up for consideration before the Hon'ble Supreme Court in the case of Consolidated Engg. Enterprises v. Irrigation Deptt.

wherein the Hon'ble Supreme Court has in para 53 of its decision, categorically

held that the provisions of Section 34(3) of the Act, has the effect of excluding Section 5 of the Limitation Act, 1963."

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13. In the instant case where limitation is prescribed, the extent to which it can be condoned is circumscribed and it has been held by this Court that Section 5 of Limitation Act is not applicable to condone the delay beyond the period prescribed under Section 34(3) of Act 1996, the learned Division Bench was not justified in condoning the delay in a casual manner. The order dated 24-9-2012 is not sustainable, the same is therefore set aside and the order of learned Single Judge is restored."

6(vii). While dealing with in-applicability of Limitation Act [Section 4 of Limitation Act], the Hon'ble Supreme Court has mandated in

Bhimashankar Sahakari Sakkare Karkhane Niyamita Versus Walchandnagar Industries Limited [Wil] (2023) 8 SCC 453, that though Limitation Act may apply but so far as the provisions for assailing Award, the timeline prescribed under Section 34(3) and proviso thereto, being a special provision has to prevail over general provisions of Limitation Act. Thus, an application for condoning delay beyond the prescribed period of 90 days and period of 30 days as provided under proviso to Section 34(3) of the Act i.e. a special provision is not condonable beyond 120 days by applying the

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general provisions of Section 5 of Limitation Act. It has been mandated that applying Section 5 of Limitation Act, shall be contrary to the scheme and legislative intent of Arbitration Act, in the following terms :-

"39. Now, so far as the submission on behalf of the appellant that the judgment in Assam Urban has the effect of denying the parties to right to file their application for condonation in situation where the discretionary period expires during vacation and that such interpretation was incorrect inasmuch as it leaves parties at the mercy of "fortuitous circumstance", it is submitted that such a submission is not tenable. It is submitted that the court vacations are notified well in advance and would not account to a fortuitous circumstance as alleged. It is submitted that on the date of receipt of award, the party would be well aware of the limitation period under Section 34(3) of the Arbitration Act and ought to diligently secure its right. It is submitted that in the present case, having received the award on 24-8-2016, the appellant had a further period of 25 days after expiry of "prescribed period" and before commencement of the winter

vacation of the trial court. However, the appellant-petitioner chose not to file its petition during this time and therefore, has to suffer for the inevitable consequences.

40. It is further submitted that right under Section 34 of the Arbitration act is a restricted right to challenge an award on extremely limited ground. The proviso to Section 34(3) of the Arbitration Act further excludes the general power of the Court under Section 5 of the Limitation Act and imposes a strict timeline for

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presentation of a petition under Section

34. In such circumstances, acceptance of the appellant's argument will have the effect of providing an unduly enlarged time period (beyond the statutory 30- day discretionary period) for delayed presentation of a petition under Section 34, which would be contrary to the scheme and intent of the Arbitration Act."

54. Now, so far as the submission on behalf of the appellant that the Limitation Act shall not be applicable to the proceedings under the Arbitration Act is concerned, the aforesaid has no substance. Section 43(1) of the Arbitration Act specifically provides that Limitation Act, 1963 shall apply to arbitrations as it applies to proceeding in Court. However, as observed and held by this Court in the case of Assam Urban, Limitation Act, 1963 shall be applicable to the matters of arbitration covered by 1996 Act save and except to the extent its applicability has been excluded by virtue of express provision contained in Section 34(3) of the Arbitration Act.

56. In Hindustan Construction Co., in fact this Court has emphasized the mandatory nature of limit to the extension of period provided in proviso to Section 34(3) and has held that an application for setting aside an arbitral award under Section 34 of the Arbitration Act has to be made within time prescribed under sub- section (3) of Section 34 i.e. within three months and a further period of 30 days on sufficient cause being shown and not thereafter."

6(viii). Recently the applicability of Limitation Act [Section 4 and 12] the Hon'ble Supreme Court, in

State of West Bengal Versus Rajpath Contractors

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and Engineers Limited, (2024) 7 SCC 257, after relying upon the mandate in the case of Popular Construction Co. [supra] has mandated that the

"prescribed period" for assailing the Award in Section 34 proceedings is three months and period of 30 days in proviso to Section 34 of Act "is not the period of limitation and therefore, not the prescribed period". Such 30 days period is not "prescribed period but is extendable period, on showing sufficient cause within said days period" which cannot be extended or enlarged further by invoking Section 4 or Section 5 of Limitation Act. In these circumstances, the challenge beyond 120 days [90 days prescribed period of limitation and extendable period of 30 days] is not condonable, in the following terms :-

"9. We may note here that Section 43 of the Arbitration Act provides that the Limitation Act shall apply to the arbitrations as it applies to proceedings in the Court. We may note here that the consistent view taken by this Court right from the decision in Union of India v. Popular Construction Co. is that given the language used in the proviso to sub-section (3) of Section 34 of the Arbitration Act, the applicability of Service 5 of the Limitation Act to the petition under Section 34 of the Arbitration Act has been excluded.

11. The meaning of "the prescribed period" is

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no longer res integra. In Assam Urban Water Supply & Sewerage Board v. Subash Projects & Mktg. Ltd. in paras nos. 13 and 14, the law has been laid down on the subject. The said paragraphs read thus:

"13. The crucial words in Section 4 of the 1963 Act are "prescribed period".

What is the meaning of these words?

14. Section 2(j) of the 1963 Act defines:

"2. (j) 'period of limitation' [which] means the period of limitation prescribed for any suit, appeal or application by the Schedule, and 'prescribed period' means the period of limitation computed in accordance with the provisions of this Act;

Section 2(j) of the 1963 Act when read in the context of Section 34(3) of the 1996 Act, it becomes amply clear that the prescribed period for making an application for setting aside an arbitral award is three months. The period of 30 days mentioned in the proviso that follows subsection (3) of Section 34 of the 1996 Act is not the "period of limitation" and, therefore, not the

"prescribed period" for the purposes of making the application for setting aside the arbitral award. The period of 30 days beyond three months which the court may extend on sufficient cause being shown under the proviso appended to subsection

(3) of Section 34 of the 1996 Act being not the "period of limitation"

or, in other words, the "prescribed period", in our opinion, Section 4 of the 1963 Act is not, at all, attracted to the facts of the present case."

Even in this case, this Court was dealing with the period of limitation for preferring a petition under Section 34 of the Arbitration Act. We may note that the decision in the case of State of H.P. v. Himachal Techno Engineers which is relied upon by the appellant, follows the aforesaid decision.

12. In the facts of the case in hand,

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the three months provided by way of limitation expired a day before the commencement of the pooja vacation, which commenced on 1-10-2022. Thus, the prescribed period within the meaning of Section 4 of the Limitation Act ended on 30-9-2022. Therefore, the appellants were not entitled to take benefit of Section 4 of the Limitation Act. As per the proviso to sub-section (3) of Section 34, the period of limitation could have been extended by a maximum period of 30 days. The maximum period of 30 days expired on 30-10-2022. As noted earlier, the petition was filed on 31-10-2022.

13. Thus, looking from any angle, the High Court was right in holding that the petition filed by the appellants under Section 34 of the Arbitration Act was not filed within the period specified under sub-section (3) of Section 34.

Hence, we find no merit in the appeal, and it is, accordingly, dismissed."

6(ix). A Coordinate Bench, of this Court, has decided a similar issue in Arbitration Appeal No.25 of 2024, titled as National Highway Authority of India vs Sansaru Devi & Ors., decided on 01.09.2024, in following terms :-

"4. It is well settled that Section 5 of the Limitation Act has no application to an application challenging an arbitral award under Section 34 of the Act. Under Section 34(3) of the Act, an application for setting aside the award on the grounds mentioned in Section 34(2) of the Act can be made within three months and the period can only be extended for a further period of thirty days on showing sufficient cause and not thereafter. The use of the words "but not thereafter" in the

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proviso to Section 34 makes it clear that extension cannot be beyond thirty days (Ref. Simplex Infrastructure Limited Versus Union of India).

In the instant case, three months' period from the date of receipt of award expired on 07.12.2022. Further period of 30 days lapsed on 06.01.2023. The petition under Section 34 of the Act was instituted on 20.02.2023. There was a delay of about 44 days in moving the application under Section 34 of the Act by the present applicant. Learned District Judge, therefore, did not err in holding that a delay beyond 120 days in moving the application under Section 34 of the Act could not be condoned.

5. In view of above, there is no merit in this appeal. The same is accordingly dismissed along with pending miscellaneous application(s),

if any."

CONCLUSION:

7. In backdrop of the settled law, this Court is of the view that provisions of Section 5 of the Limitation Act, has no application to an application to a petition, challenging an arbitration Award under Section 34(3) of the Act. Section 5 of Limitation Act being a general provision has to succumb to the special provision prescribing time-line for assailing Award in Section 34(3) and proviso thereto. An application for setting aside the Award, on grounds mentioned in Section 34 of the Act can only be

29

made within three months and the further period of thirty days thereafter, on showing sufficient cause and not thereafter. The use of the words "but not thereafter" in the proviso to Section 34 makes it clear that extension cannot be beyond thirty days. Invoking Section 5 of Limitation Act beyond 120 days shall certainly defeat and frustrate the legislative intent and object of ensuring efficient and expeditious resolution to disputes by alternative disputes mechanism. Condoning delay beyond 120 days shall frustrate the finality of Awards, by defeating its execution under Section 36, which accrues to a party on expiry of time-line in Section 34(3) and proviso thereof. Permitting invocation of Section 5 of Limitation Act would be contrary to mandate of law declared by Hon'ble Supreme Court in

Popular Construction Co.; Simplex Infrastructure; P. Radha Bai; Chintel(s) India Pvt. Ltd; Mahindra & Mahindra Financial Services Ltd.; Bhimashankar Sahakari Sakkare Karkhane Niyamita and Rajpath Contractors and Engineers Ltd. and therefore, the challenge to Impugned Order is devoid of any merit.

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7(i). Learned Counsel for appellant-NHAI contends that the Impugned Order dated 19.04.2023 [Annexure A-1], is illegal, against the provisions of law and public policy, is without merit for the reason, that the learned counsel for appellant-NHAI has not been able to point out as to on what basis, the Impugned Order is against the provisions of law and public policy. Once the Award was passed by Arbitrator on 09.02.2022, enhancing the compensation, then, in case, the appellant-NHAI had any foundational basis, then, the aforesaid Award could have been assailed within the maximum time- line as prescribed under the proviso to Section 34(3) and extendable period under the proviso thereto and not thereafter. Moreover, nothing has been pointed out, even during the course of hearing as to how the Award is against public policy. Bald averments will not confer a right to assail the Award, when, appellant-NHAI has failed to prove the infraction of any of the ingredients in Section 34(2) and/or Section 34(2A) of the Arbitration and Conciliation Act. In absence of any assertion pointing

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out violation or infraction of any of the foundational facts/grounds, the challenge is misconceived.

7(ii). Another contention of Learned Counsel for appellant is that appellant has been rendered remediless, is also devoid of any merit, for the reason, that once the remedy under Section 34 was available to the appellant-NHAI but appellant-NHAI slept over the matter and chose not to pursue its available remedy and permitted such remedy to lapse due to afflux of time, attributable to their own inaction, within the time-line mandated by law, which was not relaxable in any eventuality, then, the Impugned Order does not suffer from any infirmity or illegality.

7(iii). Another contention raised by Learned Counsel is that Learned District Judge had adopted a hyper-technical approach, as the matter was discussed at various levels and the same required approval, resulting in delay which was not intentional and bonafide and therefore, the delay in filing Section 34 petition along with the application under Section 5 of Limitation Act should have been condoned

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by Learned District Judge will also not come to the rescue of appellant-NHAI, for the reason, that Section 5 of the Limitation Act, as per the mandate of law, as referred to in preceding paras of this judgment, prescribing 120 days of outer limit for filing petition under Section 34, against the Award of Arbitrator is not tenable. Further, the appellant-NHAI being a statutory body, having legal experts, was expected to act expeditiously. Mere averment that the matter was taken-up at departmental level and required several approvals further indicates that appellant- NHAI remained inactive and due to their lethargy and slackness, the limitation under proviso to Section 34(3) of the Arbitration and Conciliation Act expired. Thus, the inaction, slackness and lethargy of the appellant-NHAI cannot be a ground to seek invocation of Section 5 of Limitation Act, which is not applicable in proceedings under Section 34 of the Act, as per the mandate of law, referred to above.

7(iv). On facts of instant case, the Award dated 09.02.2022, was received by the appellant- NHAI on 08.09.2022 and the prescribed three months

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period expired on 07.12.2022. Even 30 days period lapsed on 06.01.2023. However, the appellant-NHAI filed the petition under Section 34 on 19.01.2023 along with an application under Section 5 of Limitation Act, seeking condonation of delay of 14 days in filing Section 34 petition. Once, as per the mandate of law, as discussed hereinabove, Section 5 of Limitation Act was not applicable then, the delay of 14 days was not condonable and the application under Section 5 of Limitation Act was rightly dismissed by the Learned District Judge.

DIRECTIONS:

8. In view of the above discussion and for the reasons recorded hereinabove, the instant appeal is dismissed, in the following terms :-

(i) Arbitration Appeal No.30 of 2024 shall stand dismissed;

(ii) Impugned Order dated 19.04.2023 [Annexure A-1], passed by Learned District Judge, Mandi [HP], on application under Section 5 of the Limitation Act [CMA No.41 of 2023] in Section 34 proceedings, is upheld;

(iii) The Award dated 09.02.2022, passed by Learned Arbitrator-cum-Divisional

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Commissioner, Mandi, in reference petition is upheld;

(iv) Parties to bear respective cost(s).

In aforesaid terms, the instant appeal and also pending miscellaneous application(s), if any, shall stand disposed of.

(Ranjan Sharma) Judge

November 21, 2024

(Chiranjeev)

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