Kiran Raj

The Supreme Court of India, Division Bench comprising Justice Pamidighantam Sri Narasimha and Justice Prashant Kumar Mishra, held that an application filed under Section 34 of the Arbitration and Conciliation Act, 1996, on the next working day following the expiry of the three-month limitation period due to a court holiday, is within the permissible timeframe. The Court upheld the Chhattisgarh High Court's judgement allowing the respondent's Section 34 application as timely filed and directed that the interim stay on execution of pending recovery shall continue until the matter is decided on merits.

The appeal originated from a dispute between M/s R. K. Transport Company (Appellant) and M/s Bharat Aluminium Company Ltd. (BALCO) (Respondent) concerning payments under a contract dated 1 April 2002 for bauxite mining and delivery. Following the emergence of disputes, the matter was referred to arbitration, which culminated in an arbitral award of Rs. 51,33,40,100 in favour of the appellant, dated 9 April 2022. It was undisputed that the signed copy of the award was delivered to the respondent on the same date.

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Subsequently, the respondent filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter "ACA") on 11 July 2022 seeking to set aside the award. Alongside this, the respondent also sought a stay on the award. The Trial Court, in an ex-parte order dated 13 July 2022, accepted that the application was within the limitation period, reasoning that the 3-month period expired on 9 July 2022, which was a second Saturday, followed by a Sunday. The court being closed on both days, the application filed on the next working day, 11 July 2022, was deemed timely. The Trial Court further directed the respondent to deposit 50% of the arbitral amount, which was complied with, and the appellant withdrew the sum upon furnishing a bank guarantee.

The appellant filed a writ petition under Article 227 of the Constitution before the High Court of Chhattisgarh challenging the Trial Court's ex-parte order. The High Court allowed the appellant to file a recall application. Upon filing, the Trial Court on 25 April 2023 allowed the recall and held that the Section 34 application was barred by limitation, stating that the 3-month period expired on 8 July 2022, a working day.

The respondent appealed this order under Section 37 of the ACA. The Chhattisgarh High Court set aside the Trial Court's finding, stating that the application was filed within the limitation period as 9 July 2022 (when the period expired) was a court holiday. The High Court relied on Section 12 of the Limitation Act, 1963, and the Supreme Court's decision in State of Himachal Pradesh v. Himachal Techno Engineers [(2010) 12 SCC 210].

Before the Supreme Court, senior counsel Mr. Mukul Rohatgi appeared for the appellant, contending that the limitation should be calculated from the date of receipt of the award (9 April 2022), and the 3-month limitation period thus expired on 8 July 2022, which was a working day. He submitted that the Limitation Act does not apply to Section 34 ACA proceedings and that the respondent did not file any application seeking condonation of delay. He further argued that the respondent should be directed to deposit the entire arbitral sum, instead of 50% as directed by the High Court.

Senior counsel Mr. Ranjit Kumar, appearing for the respondent, argued that under Section 12 of the Limitation Act, the date of receipt of the award must be excluded while calculating the limitation period. He submitted that the limitation period commenced on 10 April 2022 and expired on 9 July 2022, which was a court holiday. Therefore, in accordance with Section 4 of the Limitation Act, the application filed on 11 July 2022 was within time. He also pointed out that the appellant in its writ petition had only sought deposit of 60% of the award sum and a bank guarantee for the remaining 40%, and hence could not now demand full deposit.

The Supreme Court examined the applicability of the Limitation Act to Section 34 proceedings under the ACA. Referring to its earlier decisions, the Court noted in My Preferred Transformation & Hospitality Pvt Ltd v. Faridabad Implements Pvt Ltd [2025 INSC 56]: "There is no wholesale exclusion of the provisions of the Limitation Act in calculating the period of limitation under Section 34(3). Rather, each provision’s applicability/exclusion has been individually tested by this Court, on a case-to-case basis."

The Court stated the relevance of Section 12(1) of the Limitation Act, which states: "In computing the period of limitation for any suit, appeal or application, the day from which such period is to be reckoned, shall be excluded."

Referring to Himachal Techno Engineers (2010) and State of West Bengal v. Rajpath Contractors and Engineers Ltd [(2024) 7 SCC 257], the Court observed that Section 12(1) applies to Section 34 ACA proceedings, thereby requiring exclusion of the date of receipt of the arbitral award.

In this case, the respondent received the signed award on 9 April 2022. The Court held: "Since Section 12(1) applies, this date must be excluded and the 3-month limitation period must be reckoned from 10.04.2022. This expires on 09.07.2022, which happened to be a second Saturday when the court was not working."

Therefore, Section 4 of the Limitation Act, which allows filings on the next working day when the limitation period ends on a holiday, was applicable. The Court stated: "Section 4 of the Limitation Act applies to Section 34(3) of the ACA. It benefits a party only when the 'prescribed period', i.e., the 3-month limitation period under Section 34(3), expires on a court holiday."

Accordingly, the Court found that the respondent's Section 34 application, filed on 11 July 2022 (next working day), was within limitation. The Court further noted that: "There was no delay in filing the application and sufficient cause need not be shown for condonation of delay."

The Court also declined to interfere with the High Court's interim direction to stay execution of pending recovery, considering that the appellant had already withdrawn 50% of the arbitral sum deposited by the respondent. The Court observed: "We do not wish to interfere with the High Court’s direction to stay the execution of pending recovery till the matter is adjudicated on merits, since the same is interim in nature."

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The Supreme Court upheld the High Court's judgement, stating that the Section 34 application filed on the next working day after the expiry of the 3-month limitation period, which fell on a court holiday, was within the limitation period.

The Court recorded: "The respondent’s application under Section 34, which was filed on 11.07.2022, i.e., the next working day of the court, must be considered as being filed within the limitation period."

The Court dismissed the appeal and stated: "In this view of the matter, the present appeal is dismissed. No order as to costs. Pending applications, if any, stand disposed of."

Advocates Representing the Parties

For the Appellant: Mr. Mukul Rohatgi, Senior Advocate.

For the Respondent: Mr. Ranjit Kumar, Senior Advocate

Case Title: M/s R. K. Transport Company v. M/s Bharat Aluminum Company Ltd. (BALCO)

Neutral Citation: 2025 INSC 438

Case Number: Civil Appeal No. 4763 of 2025 arising out of SLP (C) No. 26489 of 2024

Bench: Justice Pamidighantam Sri Narasimha, Justice Prashant Kumar Mishra

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