While drawing the red lines most clearly, the Apex Court has as recently as on December 16, 2021 in a learned, laudable, landmark and latest judgment titled Mahindra and Mahindra Financial Services Ltd vs Maheshbhai Tinabhai Rathod & Ors in Civil Appeal No. 11477 of 2014 with Civil Appeal No. 11478 of 2014 in exercise of its civil appellate jurisdiction has held quite clearly, cogently and convincingly that Section 5 of Limitation Act cannot be applied to condone the delay beyond the period prescribed under Section 34(3) of Arbitration and Conciliation Act, 1996. This must be followed always by all the courts in letter and spirit. There can be just no denying or disputing it!
To start with, the ball is set rolling right from para 1 itself of this brief, brilliant and balanced judgment authored by Justice AS Bopanna for a Bench of Apex Court comprising of CJI NV Ramana, himself and Justice Hima Kohli wherein it is put forth succinctly that, “The appellant in these appeals is assailing the order dated 24.09.2012 passed by the learned Division Bench of the High Court of Judicature at Bombay in Appeal Nos. 526 and 525 of 2012 in NM No. 925/2012, NIM No. 923/2012 in AP No. 209/2012 and AP No. 212 of 2012 respectively. By the said order the learned Division Bench has allowed the appeals, condoned the delay and directed to place the Arbitration Petition No. 209 of 2012 and 212 of 2012 filed under Section 34 of the Arbitration and Conciliation Act, 1996 (“Act 1996” for short) for admission hearing before the learned Single Judge for consideration on merits.”
While dwelling briefly on the facts, the Bench then envisages aptly in para 2 that, “The brief facts leading to the above appeals is that the respondent availed loan facility for purchase of tractors and an agreement No. 366533 dated 24.10.2005 was entered into between the parties in respect of the transaction. The further details relating to the transaction on merit is unnecessary to be adverted for the purpose of disposal of these appeals. However, it is noted that due to non-adherence to the terms of contract, dispute arose between the parties and the same was referred to arbitration by invoking the arbitration clause contained in the agreement. The learned Arbitrator passed the award dated 28.02.2011 and allowed the claim made by the appellant. The learned Arbitrator is stated to have dispatched the copy of the award to both the parties through Registered Post acknowledgment due. The appellant herein thereafter filed an execution petition on 27.06.2011 to execute the award and recover the amount due and payable by the respondent. The notice of execution petition from the court of the Civil Judge, District Court, Bhavnagar was issued to the respondent.”
While continuing in the same vein, the Bench then enunciates in para 3 that, “The respondent, at that stage, on 04.01.2012 assailed the arbitral award dated 28.02.2011 by filling the petition under Section 34 of the Act 1996. By such time there was delay of 185 days beyond the time period allowed under Section 34(3) of the Act 1996. Hence along with the petition, the respondent moved Notice of Motion No. 925 of 2012 in Arbitration Petition No. 209 and Notice of Petition No. 923 of 2012 in Arbitration Petition No. 212 of 2012 under Section 5 of the Limitation Act seeking condonation of delay contending that the respondent had knowledge of the proceedings only when the summons was received from the execution court on 15.11.2011. The appellant herein filed their objection to the Notice of Motion. The learned Single Judge while considering the Notice of Motion in the petition under Section 34 of Act 1996 noted that the respondent refused to accept the registered post containing the award and, in that view, declined to condone the delay. The respondent therefore filed an appeal before the learned Division Bench, which has by a cryptic order condoned the delay against the statutory provision and the law enunciated by this Court. The appellant is therefore aggrieved and is seeking that the order passed by the learned Division Bench be set aside, consequently the petition filed by the respondent under Section 34 of Act 1996 be dismissed as barred by time.”
To put things in perspective, the Bench then remarkably stipulates in para 6 that, “To appreciate the matter in its correct perspective it is necessary at the threshold to take note of Section 34(3) of Act 1996 providing for the period of limitation, which is as hereunder:
“Section 34(3): An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.””
Briefly stated, it is then stated in para 7 that, “The scope available for condonation of delay being self contained in the proviso to Section 34(3) and Section 5 of Limitation Act not being applicable has been taken note by this Court in its earlier decisions, which we may note.” Those earlier decisions are as follows:-
1. State of Himachal Pradesh & Anr. vs. Himachal Techno Engineers & Anr. (2010) 12 SCC 210
2. P. Radha Bai vs. P. Ashok Kumar (2019) 13 SCC 445 – The Apex Court held as follows:
“33.2. The proviso to Section 34(3) enables a Court to entertain an application to challenge an award after the three months’ period is expired, but only within an additional period of thirty dates, “but not thereafter”. The use of the phrase “but not thereafter” shows that the 120 days’ period is the outer boundary for challenging an award. If Section 17 were to be applied, the outer boundary for challenging an award could go beyond 120 days. This Court has consistently taken this view that the words “but not thereafter” in the proviso of Section 34(3) of the Arbitration Act are of a mandatory nature, and couched in negative terms, which leaves no room for doubt.”
3. Assam Urban Water Supply & Sewerage Board vs. Subhash Projects & Mktg. Ltd. (2012) 2 SCC 624 and
4. Anil Kumar Jinabhai Patel vs. Pravinchandra Jinabhai Patel (2018) 15 SCC 178.
Be it noted, the Bench then observes in para 7.3 that, “The observations of this Court in different decisions relating to non-applicability of Section 5 of the Limitation Act in condoning the delay and extending the limitation prescribed under Section 34(3) of Act 1996 was taken note of by a bench of three Hon’ble Judges of this Court with approval, in Chintels India Limited vs Bhayana Builders Private Limited (2021) 4 SCC 602.”
Most significantly, what forms the cornerstone of this notable judgment is then elaborated upon in para 10 wherein it is held that, “In contradistinction, a perusal of the order passed by the learned Division Bench ex facie indicates that it has proceeded at a tangent. On referring to the contention that the respondent was a farmer and that no amount is due, has relied on the decision of this Court in Collector, Land Acquisition, Anantnag and Another vs Mst. Katji and Others AIR 1987 SC 1353 out of context and has made the same as the basis to allow the appeal. No doubt the delay of 197 days may not seem too inordinate. In appropriate cases the delay is to be condoned so as not to defeat the meritorious case. However, that would arise only when the power under Section 5 of Limitation Act is available to be exercised. The case of Katji (supra) is one where such power was available to be exercised as it was not excluded. In the instant case where limitation is prescribed, the extent to which it can be condoned is circumscribed and it has been held by this Court that Section 5 of Limitation Act is not applicable to condone the delay beyond the period prescribed under Section 34(3) of Act 1996, the learned Division Bench was not justified in condoning the delay in a casual manner. The order dated 24.09.2012 is not sustainable, the same is therefore set aside and the order of learned Single Judge is restored.”
Needless to say, the Bench then holds in para 11 that, “The appeals are accordingly allowed with no order as to costs.”
Finally, the Bench then concludes by holding in para 12 that, “All pending applications, if any, shall stand disposed of.”
All said and done, the long and short of this cogent, commendable, composed and convincing judgment is that the Apex Court has made it abundantly clear that Section 5 of the Limitation Act, 1963 cannot be invoked to condone the delay beyond the period prescribed under Section 34(3) of the Arbitration Act, 1996. It merits no reiteration that it is the bounden duty of all the courts in India to strictly abide by what the three Judge Bench of the Apex Court comprising of CJI NV Ramana, Justice AS Bopanna and Justice Hima Kohli have laid down so explicitly, elegantly and eloquently in this leading case along with quoting the relevant past case laws also. No denying it!
Most significantly, what forms the cornerstone of this notable judgment is then elaborated upon in para 10 wherein it is held that, “In contradistinction, a perusal of the order passed by the learned Division Bench ex facie indicates that it has proceeded at a tangent. On referring to the contention that the respondent was a farmer and that no amount is due, has relied on the decision of this Court in Collector, Land Acquisition, Anantnag and Another vs Mst. Katji and Others AIR 1987 SC 1353 out of context and has made the same as the basis to allow the appeal. No doubt the delay of 197 days may not seem too inordinate. In appropriate cases the delay is to be condoned so as not to defeat the meritorious case. However, that would arise only when the power under Section 5 of Limitation Act is available to be exercised. The case of Katji (supra) is one where such power was available to be exercised as it was not excluded.