SC on Limitation Period For Filing Application to Set Aside Arbitral Award u/S 34 of Arbitration Act

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August 13, 2018

In this recent case, the Supreme Court has held that the limitation period to file application for setting aside arbitration award under Section 34 of the Arbitration Act  commences from the date on which the party received the Arbitral award or from the date of disposal of application made under Section 33 of the Arbitration Act and Disposal can be both acceptance or dismissal of application to correct the award under Section 33

Case name: M/S Ved Prakash Mithal and Sons v. Union of India & Ors.

Date of Judgment: August 08, 2018

In the case, the Respondent had initially filed an application to correct the Arbitral Award. Accordingly, the application was decided and disposed of by the Arbitrator under Section 33 of the Act on 14.12.2015 and the application to set aside the Award under Section 34 of the Arbitration Act was filed by the respondent on 11.03.2016.

The Appellant contended that the application under Section 34 of the Arbitration Act was time-barred as the limitation period of 3 months from the date of receipt of the Award had already expired.

In appeal, the High Court held that as Section 33  application had been disposed of only on 14.12.2015, the period mentioned in Section 34(3) would start running only from then, in which case, the Section 34 application could be said to be within time.

Section 34(3) enumerates that an application for setting aside the award shall be made within three months from the date on which the party making the application had received the award or from the date on which application for correction of award was disposed of under Section 33 of the Act.

Aggrieved by the aforesaid, the Appellant approached the Supreme Court which also upheld the High Court’s order and overruled Bombay High Court’s order in the case of Amit Suryakant Lunavat vs. Kotak Securities, Mumbai[1], wherein the Court opined that application for setting aside the award needs to be filed within three months from the date of receipt of such corrected or modified award only where the Arbitrator corrects or interprets and/or add or decide to add any additional claims and modified the award as only in such cases the original award looses its originality.

The Supreme Court in the instant case has held that Section 34(3) specifically speaks of the date on which a request under Section 33 has been “disposed of” by the Arbitral Tribunal and that a “disposal” of the application can be either by allowing it or dismissing it.

The entire case can be accessed here.

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[1] 2010(6) Mh.L.J. 764