Appeal Under Section 37 of the Arbitration and Conciliation Act, 1996 – To Condone or Not to Condone Delay Beyond 120 Days, that was the Question!

One of the avowed objective of the Arbitration and Conciliation Act, 1996 (“the Arbitration Act, 1996”) is the speedy resolution of the disputes1. For achieving this objective of expeditious resolution of arbitral disputes, Parliament has twice amended the Arbitration Act, 1996 in 2016 and 2019 and brought in provisions which prescribe : an outer time-limit for the conclusion of the arbitral proceedings2, commencement of arbitral proceedings within 90 days from the date of the interim order passed by the court3, limited judicial inquiry and role at the stage of appointment of arbitrator4 among others.

 

In furtherance of this avowed objective, Section 34(3) of the Arbitration Act, 1996 provides that an application for setting aside an arbitral award must be made within 3 months from the receipt of the arbitral award. The proviso of the said Section 34(3) confers a limited discretion on the Court to allow such application within a further period of 30 days if the applicant has been prevented from filing such application within 3 month period due to “sufficient cause”.

 

An appeal can be filed under Section 37 of the Arbitration Act, 1996 in case the court sets aside or refuses to set aside the arbitral award under Section 34. Unlike, the time period of 3 months plus 30 days provided under Section 34, no time period has been prescribed under the Arbitration Act, 1996 for filing an appeal under Section 37. Since Limitation Act, 1963 is applicable to arbitrations and court proceedings by virtue of Section 43 of the Arbitration Act, 1996, appeals under Section 37 have to be filed within 90 days or 30 days according to Articles 116 and 117 of the Limitation Act, 1963, depending upon whether the appeal is from any other court to a High Court or an intra-High Court appeal, respectively. Section 13(1-A) of the Commercial Courts Act, 2015, further prescribes a limitation period of 60 days for appeals that are preferred under Section 37 of the Arbitration Act.5

 

Notably, the Supreme Court in Union of India v. Varindera Constructions Ltd.6 (“Varindera Constructions”) and N.V. International v. State of Assam7 (“N.V. International”) had held that an appeal under Section 37 cannot be filed after 120 days from the decision of the court under Section 34 and no condonation of delay is permissible beyond this 120 day period.

 

While almost all of the High Courts had followed8 the decision in N.V. International7, as they were bound to under Article 141 of the Constitution of India, however, the Jabalpur Bench of the Madhya Pradesh High Court in M.P. Poorv Kshetra Vidyut Vitran Co. Ltd. v. Swastik Wires9 (“Swastik Wires”) took a contrary approach.

 

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Advocate, Punjab and Haryana High Court.

*The article has been published with kind permission of Eastern Book Company. Cite as (2021) 3 SCC J-56

1Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131, paras 31 & 77.

2 Arbitration and Conciliation Act, 1996, Ss. 29-A & 29-B.

3Id, S. 9.

4Id, S. 11.

5 Appeals under Section 37 are governed by section 13 of the Commercial Courts Act, 2015 where the subject-matter of arbitration is a “commercial dispute” as defined therein of a value not less than three lakh rupees.

6(2020) 2 SCC 111.

7(2020) 2 SCC 109.

8 A detailed examination of the decision in N.V. International, (2020) 2 SCC 109, is undertaken herein since Varindera Constructions, (2020) 2 SCC 111, has been cited in toto therein. N.V. International, (2020) 2 SCC 109, has been followed by the Delhi High Court in PCDA (R&D) v. Sirius Global Ltd., 2020 SCC OnLine Del 1705; NHAI v. Bhubaneswar Expressway (P) Ltd., 2020 SCC OnLine Del 1704; Union of India v. B.S. Aggarwal, 2020 SCC OnLine Del 1706; Kerala High Court in Varghese v. Collector, 2020 SCC OnLine Ker 9796; Joy v. Collector, 2020 SCC OnLine Ker 9795; Bombay High Court in Malavika Chits India (P) Ltd. v. Dinesh Jaya Poojary, 2020 SCC OnLine Bom 5838; Union of India v. Shreem Electric Ltd., 2020 SCC OnLine Bom 5837 and Jharkhand High Court in Union of India v. Lakshman Singh, 2020 SCC OnLine Jhar 106; Union of India v. Phulwanti Devi, 2020 SCC OnLine Jhar 81

92020 SCC OnLine MP 3003.

10(2008) 7 SCC 169.

112021 SCC OnLine SC 233. The correctness of the law laid down in Varindera Constructions, (2020) 2 SCC 111 and N.V. International, (2020) 2 SCC 109 has also come under a cloud before a three-Judge Bench of the Supreme Court in NTPC Ltd. v. Voith Hydro Joint Venture, 2020 SCC OnLine SC 1071 and it seems likely that the well-reasoned decision in Borse Bros., 2021 SCC OnLine SC 233 will be followed by the Supreme Court therein.

12Borse Bros., 2021 SCC OnLine SC 233, para 65

13Sundeep Kumar Bafna v. State of Maharashtra, (2014) 16 SCC 623, p. 642, para 19.

14(2002) 4 SCC 638.

15Id, p. 650, para 7.

16 Cited with approval in State of Gujarat v. Utility Users’ Welfare Assn., (2018) 6 SCC 21, pp. 60-61, para 113.

17Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri, 1940 SCC OnLine FC 10 : AIR 1941 FC 5.

18N.V. International v. State of Assam, (2020) 2 SCC 109, p. 111, para 4.

19 As opposed to being dismissed on facts if the appeal had failed to disclose sufficient cause for the delay. The Supreme Court in N.V. International, (2020) 2 SCC 109, however, did not evaluate the reasons for the delay in filing of the appeal and whether there was any sufficient cause for the delay.

20 If the facts otherwise disclose sufficient cause for the delay.

21Consolidated Engg. Enterprises v. Irrigation Deptt., (2008) 7 SCC 169, p. 178, para 18.

22Id, pp. 181-82, para 23.

23Id, p. 187, para 35.

24Id, p. 190, para 45.

25Id, pp. 192-93, para 54.

26(2001) 8 SCC 470.

27Id, para 12.

28Consolidated Engg. Enterprises v. Irrigation Deptt., (2008) 7 SCC 169, paras 20, 28 & 53.

29State of Karnataka v. Consolidated Engineer Enterprises, 2005 SCC Online Kar 815.

30Consolidated Engg. Enterprises v. Irrigation Deptt., (2008) 7 SCC 169, para 30.

31State of Maharashtra v. Borse Bros. Engineers & Contractors (P) Ltd., 2021 SCC OnLine SC 233, para 62.

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