Delhi HC allows an application under The Limitation Act to admit a petition under Arbitration Act

Contributed by: Khaitan & Co







A single bench of the High Court of Delhi comprising of Hon’ble Ms Justice Rekha Palli passed an order dated 17 June 2020 in in the matter of NHPC Limited v BGS-SGS-SOMA JV, OMP (Comm) 23 of 2020 and allowed an application under section 14 of the Limitation Act 1963 (“Limitation Act”) seeking to exclude the time spent before various courts in respect of an application under Section 34 of the Arbitration and Conciliation Act 1996 (“Arbitration Act”) challenging a 2016 domestic award.


The application under Section 14 of the Limitation Act was filed before the Hon’ble High Court of Delhi by the NHPC Limited (“Petitioner”) seeking exclusion of the time spent by the Petitioner in prosecuting its initial challenge to the arbitral Award before various courts, which was held as without jurisdiction. The Supreme Court vide its order dated 10 December 2019 directed the Petitioner to present the original Section 34 petition before the Hon’ble High Court of Delhi. It is to be noted that by the time the Petitioner could approach the Hon’ble High Court of Delhi, the period of 120 days from the date of arbitral award had long expired. Therefore, the Petitioner filed an application under Section 14 of the Limitation Act styled as seeking condonation of delay, seeking exclusion of the time spent by the Petitioner in prosecuting its initial challenges to the impugned arbitral award before various courts.


The High Court had to examine whether an application under Section 14 of the Limitation Act seeking condonation of delay is bona fide while deciding admissibility of a petition under Section 34 of the Arbitration Act?


It was observed by the court that under section 34 (3) of the Arbitration Act, the Petitioner was entitled to file a petition impugning the Arbitral Award within the 90 days of passing of such award, which is further extendable to 30 more days hence making it a total of 120 days. However, it was argued by the BGS-SGS-SOMA JV (“Respondent”) that even if the application under section 14 of the Limitation Act is allowed, the Petitioner had delayed the filing of the Petition by 160 days. The Court accepted Petitioner’s submission that concurrent jurisdiction over the award vested in Courts both at Faridabad and Delhi, based on the cause of action and seat of arbitration. The Court reiterated the settled proposition that when a petition is returned for re-presentation by a Court lacking jurisdiction to a Court with the necessary jurisdiction, the petition has to be treated as a fresh plaint.


It was observed that the Hon’ble Supreme Court in MP Steel Corporation v Commissioner of Central Excise (2015) 7 SCC 58 has held that the Section 14 of the Limitation Act shall be applied in a manner which furthers the cause of justice and the same can be gathered from the following:

“The object of Section 14 is that if its conditions are otherwise met, the plaintiff/applicant should be put in the same position as he was when he started an abortive proceeding. What is necessary is the absence of negligence or inaction.”

It was further observed by the Court that after excluding the entire period of the previous litigations, the net time taken by the Petitioner to approach this court for assailing the Arbitral Award works out to be 105 days, therefore, the Petition cannot be held as time barred in terms of Section 34 (3) of the Arbitration Act. The Court differentiated from the plea of Respondent such that if the Supreme Court ruling of re-presentation of the original petition before the Court had come at a time when the petition was already time-barred, the plea of Respondent would have been admissible.


Further, the Court noted that the break-up of 105 days showed that the Petitioner was 15 days late beyond the 90 days period envisaged under Section 34 (3) of the Arbitration Act and held that under Section 34 (3) of the Arbitration Act, such delay of 15 days beyond the initial 90 days could be condoned up to the outer limit of 120 days. The Court directed that the Section 34 Petition would be taken up for consideration on merits.



Contributed by Khaitan & Co


The above article is authored by Mr. Ajay Bhargava (Partner), Ms. Abhisaar Bairagi (Principal Associate), Ms. Swati Jain (Associate). For any queries please contact: editors@khaitanco.com



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