Limitation under Section 34 of Arbitration and Conciliation Act, 1996

The purpose of Section 34 of the Arbitration and Conciliation Act, 1996 (“Act”)is to elucidate upon the grounds available to challenge an Arbitral Award by either party who is aggrieved by such Award. While it gives an aggrieved party an opportunity to challenge an Award, the same is open to challenge only for a limited period of time as envisaged under Section 34(2) of the Act i.e., 90 months from the day of passing of such award and an additional 30 days if such aggrieved party is able to show reasonable cause for such inordinate delay. However, if a party fails to challenge such Arbitral Award within the given time period the same shall be barred by limitation for any future challenge.

It pertinent to note that while the discussion has always been around the application of Section 34 and the grounds available to challenge, however, issues with respect to limitation have always been left debatable and no specific answers have been found, these issues are:

a. From which date will the period of limitation be calculated; will it be from the day of passing of the Arbitral Award or form the day the parties receive the signed copy of such Award [Dakshin Haryana Bijli Vitran Nigam Ltd. v. M/s Navigant Technologies Pvt. Ltd., Judgment dated March 2, 2021 passed in Civil Appeal No. 791 of 2021].

b. If any party fails to file a challenge within the stipulated time period envisaged under Section 34(2), would such party be allowed to file such challenge post expiration of such period of limitation [Chintels India Ltd v. Bhayana Builders Pvt Ltd, Judgment dated 11 February 2021 passed by the Supreme Court in Civil Appeal No 4028 of 2020].

It is pertinent to note that the issue with respect to calculation of limitation is the most important issue as the object of the Law of limitation is to prevent disturbance or deprivation of what may have been acquired in equity and justice by long enjoyment or what may have been lost by party’s own inaction, negligence or laches. Thus, the in light of the said object the applicability of limitation in case of challenge to an Arbitral Award has always been in dispute and clarity regarding the same has been anticipated for a long period of time. However, in the recent few years a lot of jurisprudence has evolved with respect to the issues of limitation. In the recent few there had been various judgments of different High Courts, no such judgment had been passed by the Hon’ble Supreme Court until in the last few months wherein the Hon’ble Court had not only expounded upon the importance of limitation but also on both of the above-mentioned issues.
Thus, vide the instant article both these issues would be discussed in brief and what has been the recent development that might have finally put to rest to both of the above-mentioned issues.