Supreme Court clarifies limitation in Arbitration Act

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The Supreme Court of India recently interpreted section 34 of the Arbitration and Conciliation Act, 1996, read with section 14 of the Limitation Act, 1963, to decide whether time spent before the wrong court could be excluded from the time prescribed for challenging an arbitration award.

Gavel_and_old_bookIn Consolidated Engineering Enterprises v Principal Secretary (Irrigation Department) & Ors, the appellant company challenged an impugned arbitration award in the wrong court and later filed the case before the appropriate court. Two main questions arose for consideration: first, whether the Limitation Act would apply to proceedings in a court under the Arbitration and Conciliation Act; and second, in the case that the Limitation Act did apply, whether the applicability of section 14 of the act would exclude proceedings under section 34(i) of the Arbitration and Conciliation Act.

While answering both questions in the negative, the court held that the inapplicability of section 5 of the Limitation Act was irrelevant to section 14, in relation to a case filed under section 34 of the Arbitration Act.

The Supreme Court found no provision in the Arbitration Act that excludes the applicability of section 14 of the Limitation Act to an application submitted under section 34 of the Arbitration Act. On the contrary, section 43 of the Arbitration Act makes the provisions of the Limitation Act applicable to arbitration proceedings. Further, the court found that the provisions of the Limitation Act applied to all proceedings under the 1996 act, both in court and for arbitrations, except where expressly excluded by the Arbitration Act.

The update of court judgments is compiled by Bhasin & Co, a corporate law firm based in New Delhi. The authors can be contacted at [email protected] or [email protected] Readers should not act on the basis of this information without seeking professional legal advice.