This article has been written by Mridul pursuing a Certificate Course in Arbitration: Strategy, Procedure and Drafting from LawSikho.
Table of Contents
Introduction
Provision for appeal in the Arbitration & Conciliation Act, 1996 is provided in Section 37. Appeals are allowed from the following orders of the Court:
- refusing to refer parties to arbitration under Section 8
- granting or refusing to grant any measure under Section 9
- setting aside or refusing to aside an arbitral award under Section 34
Also, appeals from the following orders of the arbitral tribunal are allowed:
- accepting the plea referred to in Section 16(2) or Section 16(3)
- granting or refusing to grant interim relief under Section 17
It is very clear that Section 37 provides for appeals against orders and not against awards. Furthermore, it is also provided in this section that no second appeal is allowed from an order passed under this section.
However, it is worthy to note that this section does not mention any period of limitation for such appeals. Also, it is not clear as to whether the provisions of the Limitation Act, 1963 will apply to the Arbitration Act or not. Thus, there is no clarity regarding the limitation period for appeals under section 37. In this Article, I will make an effort to analyze how the outer limit of 120 days was determined by the Court for filing an appeal under section 37 of the Arbitration & Conciliation Act, 1996 as is this limited period of 120 days a settled position?
Determining the limitation period of 120 days
Position of the High Courts on the limitation period
In Oil and Natural Gas Corporation Ltd. v. Jagson International Ltd. (2005), Bombay High said that “…while providing an appeal under Section 37, the Legislature has chosen not to prescribe any period of limitation. In this view of the matter, therefore, in my opinion, the Court will not be justified in importing the period of limitation provided by Section 34 for filing an application and making it applicable to an appeal filed under Section 37. Thus, in the Limitation Act, there is no provision made prescribing the period of limitation for filing an appeal under Section 37.”, and decided that the limitation period provided for appeals under section 34 would not apply to appeals under Section 37. It was also held that there was no provision in the Limitation Act, 1963 for providing a period of limitation for filing an appeal under Section 37.
The judgement in Jagson was revisited by the Bombay High Court in Oil & Natural Gas Corporation Ltd v. M/s Dynamic Corporation (2012). The Court said that the judgement given in Jagson case was flawed since it was based on an erroneous premise and Section 29 of the Limitation Act, 1963 & Section 43 of the Arbitration & Conciliation Act, 1996 were not considered while making the judgement. In this particular case, the appeal was against an order of the High Court, where an arbitral award was set aside under Section 34. The Court held that Section 117 of the Limitation Act would apply to the appeals under Section 37 and that the limitation period would be 30 days.
The Rajasthan High Court in Shivraj Singh v. Shri Ram Transport Finance Co Ltd (2013) held that the period of limitation for initiating an appeal against the order granting or refusing to grant interim relief is 90 days from the date of the decree as per Section 116(a) of the Limitation Act. Therefore, if the appeals are filed beyond this limitation period, they shall be barred by time.
The Meghalaya High Court in North Eastern Electric Power Corporation Ltd v. M/s Patel Unity Joint Venture (PUJV) (2017) held that clause (a) of Article 116 of the Schedule to the Limitation Act would apply to appeals under 37 of the Arbitration Act.
Thus, we see that various High Courts in their judgments have given different limitation periods for appeals and there is no uniform period of limitation for appeals under Section 37 of the Arbitration Act. So, the ambiguity surrounding appeals under Section 37 of the Arbitration Act remains.
Position of the Supreme Court on the limitation period
Now let us examine the view of the Supreme Court regarding the limitation period for appeals under Section 37 of the Arbitration Act by looking at some of its judgements.
The Apex Court in M/s Consolidated Engineering Enterprises v. The Principal Secretary (Irrigation Department) & Ors (2008) said that unless expressly excluded by the Arbitration Act, Article 116 of the Limitation Act, which provided a 90-day limitation period for appeals to the High Court under the Code of Civil Procedure 1908, would regulate the terms of limitation for appeals under Section 37 of the Arbitration & Conciliation Act, 1996.
In the case of Union of India vs M/s Varindera Const. Ltd (2018), the Supreme Court determined the 120 days as the limitation period under Section 37 of the Act by comparing it to the limitation period provided under Section 34 of the Act. The Court said that “…since a Section 34 application has to be filed within a maximum period of 120 days including the grace period of 30 days, an appeal filed from the self-same proceeding under Section 37 should be covered by the same drill.”
Again, in M/s N.V. International v. The State of Assam & Ors (2019), where an appeal was filed under section 37 against an order under Section 34, the Supreme Court upheld the limit of 120 days as the limitation period for appeals under Section 37 of the Act and stated that “…We may only add that what we have done in the aforesaid judgment is to add to the period of 90 days, which is provided by statute for filing of an appeal under Section 37 of the Arbitration Act, a grace period of 30 days under Section 5 of the Limitation Act by following Lakshmeshwar Prasad Shukul, as also having regard to the object of speedy resolution of all arbitral disputes which was uppermost in the minds of the framers of the 1996 Act, and which has been strengthened from time to time by amendments made thereto. The present delay being beyond 120 days is not liable, therefore, to be condoned.”
So, we saw how the Supreme Court through its various judgements interpreted the limitation period of 120 days for filing an appeal under Section 37 of the Arbitration Act.
Is the 120 days limitation period a settled position?
Even after the N.V. International case, there was no uniformity regarding the limitation period. The judgement in the N.V. International case, which had some shortcomings, led to contradictory approaches being followed by the High Courts.
The shortcomings in the M/s N.V. International case were:
- Will the ruling be applied to intra-court appeals as well?
- Will it also extend to appeals from commercial court orders made under Sections 9 and 34 of the Arbitration Act?
The judgement of the Supreme Court in the Government of Maharashtra (Water Resources Department) represented by Executive Engineer v. Borse Brothers Engineers & Contractors Pvt. Ltd. (2021) overruled the N.V. International, corrected its shortcomings and also settled the confusion regarding the limitation period under section 37 of the Arbitration Act.
The Court said that the limitation period for filing an appeal would be as under:
- In case of an inter-court appeal, where the claim amount is below three-lakh rupees, the Arbitration & Conciliation Act,1996 would be read with Article 116 of the Limitation Act, 1963 and the period of limitation will be 90-days.
- In case of an intra-court appeal, where the claim amount is below three-lakh rupees, the Arbitration & Conciliation Act,1996 would be read with Article 117 of the Limitation Act, 1963 and the period of limitation will be 30-days.
- If the claim amount is above three-lakh rupees, both in case of inter-court as well as intra-court appeals, the Arbitration & Conciliation Act,1996 would be read with Section 13(1A) of the Commercial Courts Act, 2015 and the period of limitation will be 60-days.
So, it is clear that the limitation period for an appeal will depend upon the category of the dispute (commercial or non-commercial).
The Court also added that delays would only be condoned in exceptional cases where the parties have acted honestly in good faith and not in a negligent manner. Further, the Court also clarified that this ruling would only be applied prospectively. Thus, with this case, the Apex Court finally settled the law relating to the limitation period for appeals under Section 37 of the Arbitration Act.
Conclusion
The ruling of the Apex Court in the Borse Brothers case (supra) cleared the ambiguity regarding appeals under Section 37. Finally, it is also worthy to note that the Court while emphasizing the intent of the Arbitration Act and the Commercial Courts Act stated, “Given the object sought to be achieved under both the Arbitration Act and the Commercial Courts Act, that is, the speedy resolution of disputes, the expression “sufficient cause” is not elastic enough to cover long delays beyond the period provided by the appeal provision itself.”
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