Limitation of Time Under Section 34 of The Arbitration and Conciliation Act, 1996

Limitation of Time Under Section 34 of The Arbitration and Conciliation Act, 1996

Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “1996 Act”) stipulates grounds to challenge the arbitral award made under Section 31. However, the challenge to the award can only be made within limitation period of three months from the date of receipt of the award. This period of limitation can be further extended by 30 days in cases where the applicant is able to show sufficient cause for delay in filing petition under Section 34. It is pertinent to note that Section 34 provides for calculation of limitation period from the date of receipt of the award. In contrast, Section 31(5) of the 1996 Act provides only for the delivery of the award to the parties which is followed by termination of arbitration proceedings. The term receipt is not used under Section 31(5) of the Act. The gap between “delivery” and “receipt” is further highlighted by reading of Section 3 of the 1996 Act which stipulates that a communication is “deemed receipt” on the date of delivery. Does this entail that delivery of the award amounts to receipt and the period of limitation is to be calculated from the date of delivery of award. This is a question which this article tries to answer. The aim of this article is to highlight this dichotomy.

Limitation of Time under Section 34:

Section 34(3) provides that an application for setting aside an award shall not be entertained by the Court if it is made after three months have elapsed from the date on which the applicant had received the arbitral award. The proviso to this Section further provides that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the prescribed time; it may entertain the application within a further period of 30 days but not thereafter. The importance of period fixed under Section 34 is highlighted under the 1996 Act by Section 36 which stipulates that where the time for making an application to set aside the arbitral award under Section 34 has expired, the award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as it was a decree of the Court. In catena of cases, the Supreme Court has held that the period mentioned under Section 34(3) cannot be extended. It is pertinent to note that Section 34(3) places emphasis on the “receipt” of the award.

Contradiction between Delivery and Receipt:

Section 31(5) of the 1996 Act stipulates that a signed copy of the award shall be delivered to each party. The delivery of the copy of the award has the effect of conferring rights on one party and the said entitlement to exercise those rights ends with the expiry of the prescribed period of limitation which would be computed from that date. Hence, the delivery of the award is imperative in the arbitral proceedings. Section 3 of the Act stipulates that communication is “deemed receipt” on the date of delivery. Therefore, it becomes important to analyze whether the date of delivery is to be taken as the date of receipt of the award under Section 34(3) of the Act.

Mere Delivery of Award Does Not Amount to “Deemed receipt”:

Further, in the case of State of Himachal Pradesh vs. Himachal Techno Engineers[3], the Supreme Court held that when the award is delivered or deposited or left in the office of a party on a non-working day, the date of such physical delivery is not the date of “receipt” of the award by that party. Delivery, thus, has to be effective so as to be called as receipt by the party.The gap between combined reading of Section 31(5) and Section 3 on one hand and Section 34(3) on the other hand was diluted by the Supreme Court in India in the case of Union of India v. Tecco Trichy Engineers and Contractors[1] wherein a three judge bench of the Supreme Court, with respect to the issue of limitation for filing objections under Section 34 for setting aside the arbitral award, held that the period of limitation would commence only after a valid delivery of an arbitral award takes place under Section 31(5) of the Act. The Court held that this is not a matter of mere formality. It is a matter of substance. The delivery of the arbitral award to the party, to be effective, has to be received by the party. This delivery by the arbitral tribunal, and receipt by the party, sets in motion the period of limitation. In State of Maharashtra & Ors v. Ark Builders Pvt. Ltd.[2], while following the judgment in Union of India vs. Techno Trichy Engineers and Contractors, the Supreme Court held that the expression “party making the application has received the arbitral award” cannot be read in isolation, and it must be understood that Section 31(5) requires a signed copy of the award to be delivered to each party.

Conclusion:

A bare reading of the Arbitration and Conciliation Act, 1996 provides that mere delivery would amount to deemed receipt of the award and therefore, the limitation period for the purpose of setting aside the award could be calculated from the date of delivery. However, the Indian Supreme Court in un-ambiguous terms has held that delivery has to be effective to be called as a receipt. Therefore, only on actual receipt of the award can an application for setting aside the arbitral award be filed in India.

[1] (2005) 4 SCC 239.[2] (2011) 4 SCC 616.[3] (2010) 12 SCC 210.

Comments (13)

  1. Prashant Pawar says on 12 Sep 2018

    What will be the limitation period for challenging the Arbitral Award when the first Award was amended by the Appellate Arbitrators after 2 months from the date of the first Arbitral Award?

    • Singhania Partners says on 13 Sep 2018

      Dear Prashant PawarAs per Section 34(3) of the Arbitration and Conciliation Act, 1996, the limitation period for setting aside arbitral award may be made within three months from the date on which the parties had received the arbitral award. In case of amendment in the award, the aforesaid limitation of three months will run from the date on which the amended award has been passed by the Arbitral Tribunal.

      • Sanya Dua says on 07 Aug 2020

        Is there any judgment which states that the limitation shall run from the date of amendment of award?

    • Girish Vyas says on 26 Jul 2019

      Hi, i have chalange arbitration award under section 34, and high court ordered to set a side award but with liberty to respondent for doing arbitration process again ,I think its a mistake of my lawyer for argument .now what can i do for firm and fast judgment…plz to advise and help.Thanks in advanceRegards.

    • anil kumar says on 27 Aug 2019

      I was not challenged the order within 4 Month.i oppose appointment of arbitrator.and.Before arbiration process i file a criminal case against opposite party.Arbitration order is challenged after 1 year in this case?

    • Navinkumar Somaji Parmar says on 21 Sep 2020

      Today, I want to challenge award dated 07/03/2019 passed under act i can’t file application after limitation of section 34 sub section 3, how can challenge award after limitation

  2. Preetha Salgunan says on 15 Sep 2018

    The Arbitrator and Appellate Tribunal concluded that there were lapses on the part of the Respondent but no award for compensation or costs were granted . Can I challenge this under section 34 of the Arbitration and Conciliation Act 1996 and claim compensation and costs ? What other option do I have ? Please guide me .

    • Singhania Partners says on 17 Sep 2018

      Dear Preetha,To claim damages, the party making such claim has to lead evidence and establish incurring loss as per the principles governing damages. The onus to prove such loss or damage shall not cease except where actual damage from the breach of contract cannot be proved or calculated. Thus, mere breach of contract does not warrant an automatic grant of damages unless actual loss or injury is proven.Hence, if the aforesaid procedure has been done before the Arbitral Tribunal, the arbitral Award can be successfully challenged on the grounds specified in Section 34 of the Arbitration and Conciliation Act,1996.

      • Preetha Salgunan says on 19 Sep 2018

        Thank You very much for your reply. My trading account was suspended for more than three months after a notice was sent by the respondent through ordinary post which I never received. The agreement between us states that notices can be sent by Registered post, e-mail etc., but not by ordinary post. They submitted copy of other NSE regulations which was accepted by the panel and they concluded that the respondent was within its rights to send notice by ordinary post. My contention that these regulations are not applicable between us was not accepted.Before any adverse action is initiated due communication is necessary or else it would be against the principles of Natural Justice. If this rule is correct would it not be a serious blow to the common man. How can this rule be cancelled? Whom should I approach to get this rule changed? The respondent is a professional organization and the panel has been very lenient to its other lapses so there won’t be any change in their future conduct also. Shouldn’t professional lapses be taken more seriously so that it does not recur? I still feel that this rule is not correct and has to be changed to give a small protection to the common man. What if ultimately my contention turns out to be true ?

  3. beebom says on 11 Oct 2018

    My client filed an application under S. 34 of the Arbitration and Conciliation Act, 1996 in a principle civil court of original jurisdiction in the district of Lucknow, to set aside a partial award from an international commercial arbitration seated in India on 26th October, 2014. The partial award was set aside. A final award was later passed on 1st November, 2017. My client seeks to set aside this award too. Where should he file the application of setting aside this final award under S. 34? Kindly note that the definition of Court under S. 2(1)(e) has been amended via the 2015 Amendment act. Also note that the position of application of the amendment Act has been settled by the case of BCCI v. Kochi.

    • Singhania Partners says on 16 Oct 2018

      Dear Mr. Rathee,We have perused the query in detail. The answer to the query pertains to the jurisdiction of the Court in which a Section 34 application should be filed which is an area of expertise whose response cannot be given casually as this requires a detailed appreciation of the international commercial arbitration agreement. It requires appreciation of documents. For a detailed opinion in this regard, we would be pleased to connect with you in a meeting and take the discussions further.Regards,Madhu Sweta

  4. Gurinderjit Singh says on 07 Jul 2019

    When an appeal u/s 34 is filled without territorial jurisdiction It is filed in Delhi instead of Chandigarh. After three years advocate of petitioner admits the mistake. In what way the District judge at Delhi will dispose the appeal.What is the period of limitation to file fresh appeal in Chandigarh?

  5. Sridharan S.N says on 18 Jul 2019

    I have been awarded too little compensation..Can I challenge the same in a appropriate court.

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