Supreme Court Of India Affirms The Inviolability Of Timelines For Setting Aside Arbitral Awards

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The Indian Supreme Court has recently reaffirmed that the timelines for filing a challenge to an arbitral award are sacrosanct and that even days on which the courts are closed will not be permitted to be excluded in counting the timelines. The judgment, Bhimashankar Niyamita vs. Walchandnagar Industries Ltd., serves as a reminder that even if the extended period for filing a challenge against an arbitral award falls within a designated court vacation, there exists no opportunity to file immediately on the reopening of the court.

The case involved an arbitral award passed on August 24, 2016, for which the prescribed period for filing an application under Section 34 of the Arbitration & Conciliation Act, 1996 (for setting aside the arbitral award) was 90 days. An additional extension of 30 days was permissible upon showing cause. The period of 90 days expired on November 24, 2016, and the further 30 days expired on December 24, 2016, which fell within the winter vacation of the court, resulting in the court being closed.

The aggrieved party filed the application for setting aside the award along with an application showing cause for the delay before the trial court on the reopening day, January 2, 2017. However, the trial court rejected the said applications on the ground that such delay was not condonable under the Act. An appeal was filed, which was dismissed by the High Court, and then appealed before the Supreme Court of India, which upheld the orders of the trial court and the high court, dismissing the appeal.

This case highlights the practical challenges for litigants in India, where courts typically have pre-set calendars with various vacations scheduled throughout the year. The Limitation Act, 1963, and the General Clauses Act, 1897, provide certain provisions to ensure that litigants are not prejudiced by these court vacations. Section 43 of the Limitation Act, 1963, provides for a situation where the expiry of limitation falls when a court is closed, allowing the suit, appeal or application to be instituted, preferred or made on the day when the court reopens. Section 104 of the General Clauses Act, 1897, provides for the manner of computation of time and states that if an act or proceeding is directed or allowed to be done or taken in any Court or office on a certain day or within a prescribed period, and the Court or office is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterward on which the Court or office is open.

In Assam Urban Water Supply, the Supreme Court had taken a view that the benefit of Section 4 of the Limitation Act applied only to the initial period of 90 days and that the additional 30 days given to file the application showing cause did not fall within the definition of the ‘period of limitation.’ However, the recent judgment in Bhimashankar Niyamita vs. Walchandnagar Industries Ltd. effectively reaffirms that even the additional 30 days are not extendable and must be strictly adhered to.

In conclusion, this judgment is a reminder to litigants that timelines for filing an application for setting aside an arbitral award under the Arbitration & Conciliation Act, 1996, are not extendable, even in cases where the courts themselves are closed due to vacations. Therefore, it is essential for litigants to be mindful of these practical challenges and ensure that filings are done well in time.