When Does the Clock Start Ticking? The Interplay Between Sections 33 and 34 of the Arbitration and Conciliation Act, 1996

Introduction

In the ever-evolving landscape of Indian arbitration law, the line between procedural precision and substantive fairness often defines the fate of a challenge to an arbitral award. One such procedural conundrum is the commencement of limitation period for challenging an award under Section 34 of the Arbitration and Conciliation Act, 1996¹. The conundrum is more nuanced in cases wherein the aggrieved party has, before challenging the award under Section 34², filed an application for modification/correction under Section 33³. The jurisprudence on this proposition required clarity and the same has now finally been put to rest by the Supreme Court in Geojit Financial Services Ltd. v. Sandeep Gurav⁴.

This judgment finally settles the principle that when a party files a timely and proper application under Section 33⁵, the limitation period under Section 34(3)⁶ begins only from the date on which that application is disposed of by the Arbitral Tribunal, irrespective of whether it is allowed, dismissed, or otherwise disposed of.

Factual background

The dispute in the present case arose out of an arbitral award rendered under the aegis of the National Stock Exchange (NSE). The respondent, , had initiated arbitration proceedings against Geojit Financial Services Ltd. (Geojit), a stockbroking company, alleging deficiencies and irregularities in the handling of his trading account. Upon conclusion of the arbitral proceedings, the sole arbitrator passed an award dated 13-7-2016, against Geojit, directing it to pay certain sums to the respondent..

Within thirty days of receiving the award dated 13-7-2016,⁷ and with notice to the opposing party, Geojit filed an application dated 8-8-2016, under Section 33(1)⁸ before the Arbitral Tribunal, seeking correction and clarification of alleged errors apparent on the face of the award. Subsequently, the Arbitral Tribunal vide order dated 26-8-2016, considered and disposed of Geojit’s Section 33 application, not modifying or amending the award, and effectively dismissing the request.

Following the disposal of its Section 33⁹ application, Geojit on 15-11-2016, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 before the Bombay High Court, challenging the arbitral award on merits. The petition was filed within three months from the date of disposal of the Section 33 application, reckoning limitation from that later date in accordance with the proviso to Section 34(3)¹⁰.

The Bombay High Court, however, dismissed Geojit’s Section 34¹¹ petition as being barred by limitation, holding that the limitation period for filing the Section 34 petition commenced from the date of receipt of the original award, and not from the date of disposal of the Section 33¹² application.

Thereafter, Geojit filed an appeal before the Bombay High Court under Section 37 of the Arbitration and Conciliation Act, 1996¹³, however, the same was dismissed by a Division Bench of the Bombay High Court vide order dated 12-2-2021 (impugned order) upholding the Single Judge’s order on the ground that the Section 34¹⁴ petition itself was barred by limitation under Section 34(3). The Court also observed that Geojit’s Section 33 application did not fall within the scope of Section 33(1)¹⁵, as it effectively sought a review of the merits of the award rather than a correction or clarification. Aggrieved by this order, Geojit preferred a petition before the Supreme Court.

Interplay between Sections 33 and 34

Before addressing the issue of computation of limitation period, the Supreme Court revisited its earlier judicial precedents interpreting Sections 33¹⁶ and 34(3)¹⁷ of the Arbitration and Conciliation Act, 1996, revealing a consistent judicial approach favouring certainty and fairness in computing limitation periods.

The Supreme Court has held in Ved Prakash Mithal and Sons v. Union of India¹⁸ that the phrase “disposed of” in Section 34(3)¹⁹ must be read to mean disposal by the Arbitral Tribunal, and the limitation period would commence from the date when the Section 33²⁰ request was disposed of by the Tribunal. This judgment clarified that “disposed of” cannot be read down to mean only where the Tribunal allows the request i.e. produces a corrected/modified award, as even a dismissal qualifies as disposal for the Section 34 clock if the twin condition of Section 33 was met i.e. a request under Section 33 shall be made within thirty days from the receipt of the arbitral award and with notice to the other party.

The ratio laid down in Ved Prakash case²¹ was reiterated by the Supreme Court in USS Alliance v. State of U.P.²², reaffirming the reasoning that where an award is amended/corrected under Section 33²³, it is the corrected award which is to be challenged, and the running of the limitation period must accommodate such correction, which is why the corrected/disposed date is salient for Section 34(3)²⁴.

In State of Arunachal Pradesh v. Damani Construction Co.²⁵, the Supreme Court confronted a situation wherein the party, instead of filing a formal application under Section 33²⁶, had merely addressed a letter to the Arbitral Tribunal seeking a review of the award on merits. The Court held that such a communication could not be treated as a valid request under Section 33, as it did not fall within the limited purposes contemplated by the provision, namely, correction of computational, clerical or typographical errors, or issuance of an additional award in respect of omitted claims. Consequently, the Court ruled that since no proper Section 33 application had been made, the limitation period for filing a petition under Section 34(3)²⁷ could not be extended. Therefore, the “disposal” contemplated under Section 34(3), presupposes the existence of a valid and maintainable Section 33 request, complying with the twin condition laid down therein.

Decision and analysis

The Supreme Court in Geojit case²⁸ squarely adopted the reasoning in Ved Prakash case and USS Alliance case²⁹ and held that where an application under Section 33(1)³⁰ has been filed within the thirty-day period and with notice to the other party, satisfying the twin condition, the starting point for the three months’ limitation under Section 34(3)³¹ is the date on which the Section 33 application was “disposed of” by the Arbitral Tribunal, irrespective of whether the Tribunal allowed the request or dismissed it.

The Court explained that Damani Construction Co. is distinguishable to the present case as in Damani Construction case³² there was no formal and proper Section 33³³ application filed and instead only a letter seeking relief outside the scope of Section 33 was addressed to the Tribunal, and therefore, the communication could not be treated as a valid application so as to extend the timeline provided under the second part of Section 34(3)³⁴.

The Supreme Court emphasised on having an objective yardstick to determine the commencement and termination of limitation period under the statutes. The term “disposed of” used in Section 34(3)³⁵ envisages both prospects i.e. allowed or dismissed. Merely because a validly filed application has been dismissed by the Tribunal, the Court cannot go behind the dismissal order and render a qualitative assessment on the Section 33³⁶ application thereby depriving an aggrieved party of its complete entitlement of three months to challenge the award after disposal of the Section 33 application.

The Court held that unless and until a decision on the request under Section 33³⁷ is made, which may or may not have culminated into any correction or interpretation or rendition of an additional award, there can be no effective occasion for a party otherwise aggrieved by the said award to apply for setting aside under Section 34³⁸.

The Court observed that for the purpose of computation of limitation under Section 34(3)³⁹, what is material is not whether such request fell within the purview of the said provision or not, but only that such request was made in the manner delineated under Section 33⁴⁰, complying with the twin condition.

The Court reiterated that the legislative intent underlying Section 33⁴¹ is to enable the Arbitral Tribunal to correct minor errors or omissions without resorting to court proceedings. Therefore, once a party files an application under Section 33, satisfying the twin condition i.e. within statutory thirty-day period and serving notice upon the opposite party, the arbitral process continues until the Tribunal finally disposes of that request. The Court further opined that if the intention of the legislature was that the date of disposal of only those applications under Section 33 which culminated into a correction or interpretation of the award or rendition of an additional award, would be of relevance for the purpose of computation of limitation under Section 34(3)⁴², then it would not have used the word “disposed” therein, and would have employed the word “allowed” instead.

Therefore, the Supreme Court ultimately held that since Geojit had filed its Section 34⁴³ petition within three months from the date of disposal of its Section 33⁴⁴ application, the petition was within limitation. The Court accordingly set aside the impugned order passed by the Bombay High Court and remitted the matter for consideration on merits, while clarifying the legal position governing the computation of limitation in such circumstances.

Conclusion

The Supreme Court’s decision in Geojit case⁴⁵ reinforces clarity and fairness in the computation of limitation for arbitral challenges. By holding that the limitation period under Section 34(3)⁴⁶ begins from the date on which a duly filed and notified Section 33⁴⁷ application is disposed of, irrespective of whether it is allowed or dismissed, the Court has ensured that the running of limitation is governed by objective and ascertainable criteria.

That being said, this approach does create a risk of abuse wherein parties may file a weak Section 33⁴⁸ application solely to buy time and delay the commencement of the Section 34⁴⁹ challenge period. Therefore, the Tribunal must remain extremely vigilant against sham filings, even though the same have been made following the twin test laid. The object behind this decision is not to immunise abuse but to offer procedural clarity while exercising one’s right to take recourse against an award.

The judgment harmonises procedural precision with substantive justice, aligning with the broader legislative intent to prevent technicalities from undermining genuine challenges. At the same time, by distinguishing Damani Construction case⁵⁰, the Court cautioned that only bona fide and properly framed Section 33⁵¹ applications attract this protection. Geojit case⁵² thus establishes a workable balance between preserving efficiency in arbitral proceedings while safeguarding the litigant’s right to a fair and determinable opportunity to seek judicial redress.