Section 34 Petition Beyond Limitation Is Not Maintainable | Gujarat HC Says Court Without Jurisdiction Cannot Set Aside Arbitral Award on Merits
Sanchayita Lahkar
The High Court of Gujarat Division Bench of Chief Justice Sunita Agarwal and Justice D.N. Ray held that an application to set aside an arbitral award filed beyond the maximum permissible period under Section 34(3) of the Arbitration and Conciliation Act, 1996, is barred by limitation. The Court directed that the judgment dated 17.06.2017 passed by the 5th Additional District Judge, Surat, which had set aside the arbitral award, be quashed. The First Appeal was accordingly allowed, and the impugned order was held to be without jurisdiction.
The dispute arises from an arbitral award dated 12.06.2006 rendered by a panel of arbitrators appointed under the auspices of the Surat Adatiya Kapda Association in Arbitration Case No. SAKA/ARB/L-14/06. The arbitral proceedings culminated in an award passed in favor of the appellant. The signed copy of the award was issued to the parties after being attested by witnesses on 25.08.2006. The appellant received the signed award on 31.08.2006, whereas the respondent accepted it on 08.09.2006 after initially avoiding service.
Following the receipt of the award and in light of no steps having been taken by the respondent to challenge it, the appellant initiated execution proceedings under Section 36 of the Arbitration and Conciliation Act, 1996. The execution petition, registered as Execution Petition No.04 of 2007, was filed on 28.03.2007 and remained pending.
Subsequently, the respondent filed a petition under Section 34 of the Act on 14.08.2007, challenging the arbitral award. The maintainability of this Section 34 application became the focal issue in the appeal, as the appellant contended that it was filed well beyond the maximum prescribed limitation period of 120 days from the date of receipt of the award, including the statutory extension period of 30 days.
In support of this position, the appellant relied on Section 34(3) and its proviso, which allow a challenge to an arbitral award within three months, extendable by an additional 30 days, but “not thereafter.” The appellant cited several Supreme Court decisions, including:
- State of Himachal Pradesh & Anr. v. Himachal Techno Engineers & Anr., (2010) 12 SCC 210
- Assam Urban Water Supply & Sewerage Board v. Subhash Projects & Marketing Ltd., (2012) 2 SCC 624
- Anilkumar Jinabhai Patel (D) Thr. LRs. v. Pravinchandra Jinabhai And Ors., (2018) 15 SCC 178
- P. Radha Bai and Ors. v. P. Ashok Kumar and Anr., (2019) 13 SCC 445
In particular, the appellant pointed to the rigid statutory timeline enshrined in Section 34(3), stressing that the phrase “but not thereafter” expressly prohibits any extension beyond the 120-day limit. The argument included reference to the Supreme Court’s ruling in Union of India v. Popular Construction Co., (2001) 8 SCC 470, where it was held that extending the limitation beyond the statutory outer limit would render the said phrase meaningless and lead to an absurd interpretation.
The respondent, in defense of the trial court’s judgment, argued that the arbitral award was a nullity because no valid arbitration agreement existed between the parties. The arbitrator was allegedly appointed unilaterally by the Surat Adatiya Kapda Association without the respondent’s consent. Hence, the respondent asserted that the trial court rightly set aside the award, treating it as void ab-initio.
However, the Division Bench recorded that the maintainability of the Section 34 application was an independent jurisdictional threshold and took precedence over the merits of the award. Since the application was filed after the 120-day limit, the District Court lacked jurisdiction to entertain it, regardless of the nature of the challenge.
The High Court recorded, “It is settled principle of law that the provisions of the Limitation Act do not apply in the proceedings under Section 34 and the period prescribed under Section 34(3) of the Arbitration Act, 1996 cannot be extended beyond the time period prescribed in the proviso to Sub-section (3) of Section 34.”
It further stated, “The maximum period within which the application under Section 34 could have been moved by the respondent was 03 months plus 30 days = 120 days.”
“All these arguments on the merits of the award on the ground that the appointment of the Arbitrator itself was void ab-initio, cannot be looked into, inasmuch as the application under Section 34 where validity of the award was challenged, itself was time barred.”
The Bench then observed, “In our considered opinion, once the Court did not have jurisdiction to entertain the application under Section 34, having been filed beyond the period prescribed in Sub-section (3) of Section 34 read with proviso thereto, any deliberation on the validity of the award holding it void ab-initio, would be wholly without jurisdiction.”
Finally, it recorded, “The learned Court has committed a grave error of law in entertaining the application under Section 34, which was a time barred application.”
Accepting the appellant’s contention that the application under Section 34 was not maintainable as it was filed beyond the maximum statutory period, the Court ruled:
“The judgment and order dated 17.06.2017 passed by the learned 5th Additional District Judge, Surat in Misc. Civil (Arbitration) Application No.149 of 2007 is hereby set aside, being without jurisdiction.”
“The appeal stands allowed. No order as to cost.”
“Consequently, the connected Civil Application stands disposed of.”
Advocates Representing the Parties
For the Petitioners: Ms. Dilbur Contractor, Advocate
For the Respondents: Mr. Dakshesh Mehta and Mr. Rushang D. Mehta, Advocates
Case Title: Yash Textiles versus Vinayak Fashions
Case Number: R/First Appeal No. 2507 of 2017
Bench: Chief Justice Sunita Agarwal, Justice D.N. Ray
[Read/Download order]
