Clarification of Limitation Period under Section 34(3) of the Arbitration and Conciliation Act by Supreme Court

A two-judge bench consisting of Judges Pamidighantam Shri Narsimha and Justice Prashant Kumar Mishra passed a judgment dated April 3,2025 in the case of M/S R.K.Transport Company versus M/S Bharat Aluminum Company Ltd. (BALCO) Civil Appeal No. 4763 of 2025 arising out of SLP ( C) No. 26489 of 2024 wherein the Supreme Court interpreted  three months period mentioned in Section 34(3) of the Arbitration and Conciliation Act, 1996 and held it to be three calendar months and not 90 days period.

The present Appeal arises out of an order of the Chhattisgarh High Court dated 27.09.2024 by which the Respondent’s Appeal under Section 37 of Arbitration and Conciliation Act 1996 was allowed and Application under Section 34[1] was held to be filed within limitation period.

Facts of the case:

That on 01.04.2002, the parties entered into a contract for bauxite mining and delivery.   When the disputes arose on payments under the contract, the matter was referred to arbitration that resulted in an arbitral award of Rs. 51,33,40,100 dated 09.04.2022 in favour of the Appellant and delivered to Respondent on the same day. That on 11.07.2022, the Respondent filed an application to set aside the Award along with the Application for stay of the Award. That on 13.07.2022, The Trial Court passed an ex-parte order that Section 34 Application was within limitation because the court was closed on Second Saturday and Sunday.   The Respondent was directed to deposit 50% of the arbitral sum.

The Appellant challenged the Order dated 13.07.2022 by filing a Writ Petition under Article 227 of the Constitution wherein a recall Application was filed in Trial Court and it was held that Section 34 Application is barred by Limitation as 3-month period expired on 08.07.2022 on which day the court was working.

The Respondent then filed an Appeal under Section 37 against this Order.

Advocate for Appellants:

The Advocate for the Appellants asserted that the limitation period must be calculated from date of receiving of Award i.e. 09.04.2022 and thus the 3 month Limitation period expired on 08.07.2022. He asserted that Limitation Act including Section 12 does not apply to proceedings under Section 34 Arbitration and Conciliation Act.

Advocate for Respondents:

The Advocate for the Respondents relied on Section 12 of Limitation Act and judgment on Himachal techno Engineers case[2] and submitted that the date on which Arbitral Award is received i.e. 09.04.2022 must be excluded while calculating the limitation period.

Interpretation of Section 34(3) of Arbitration and Conciliation Act

The Court interpreted Section 34(3) and held the limitation period for filing Application to set aside an Arbitral Award was 3 months from the date party receives the Arbitral Award i.e. 3 calendar months as opposed to 90 days.

The Court referred to decision in My Preferred Transformation & Hospitality Pvt Ltd versus Faridabad Implements Pvt Ltd.[3] And held that- “The Provisions of Limitation Act cannot be wholly excluded while calculating period under Section 34(3). It depends on case-by-case basis.”

The Court also applied Section 12(1) of Limitation Act in recent decision of State of West Bengal v. Rajpath Contractors and Engineers Ltd.[4]

Analysis of Supreme Court Judgment

The Court held that the Respondents received the signed copy of the Award on 09.04.2022. So according to Section 12(1), the date is excluded and the 3-month limitation period must be reckoned from 10.04.2022 and expires on 09.07.2022 which is a Second Saturday which is a holiday.

Thus, the Court held that the Respondent’s Application which was filed on 11.07.2022 was filed within limitation period and no delay Application showing sufficient cause for condonation of delay be filed.  Thus the Court upheld the decision of High Court.

Conclusion

In conclusion, the Supreme Court’s Judgment in the case of M/S R.K. Transport Company vs. M/S Bharat Aluminum Company Ltd. (BALCO) clarifies the interpretation of the three-month limitation period under Section 34(3) of the Arbitration and Conciliation Act, 1996. The Court held that the three-month period should be understood as three calendar months rather than a 90-day period, ensuring that the date of receipt of the arbitral award is excluded from the calculation of the limitation period, in accordance with Section 12(1) of the Limitation Act. This interpretation aligns with the principle that legal time limits must be determined based on calendar days, with holidays taken into account.

The Court further emphasized that the provisions of the Limitation Act cannot be completely disregarded in proceedings under Section 34, and the applicability of its provisions must be assessed on a case-by-case basis. In this case, the Respondent’s Application to set aside the arbitral award was deemed to have been filed within the permissible time frame, as the limitation period, which started from 10.04.2022, expired on 09.07.2022, a holiday, thereby allowing the Application filed on 11.07.2022 to be considered timely.

Consequently, the Supreme Court upheld the Chhattisgarh High Court’s decision, affirming that the Respondent’s appeal under Section 37 of the Arbitration Act was rightly allowed. This Judgment provides a crucial interpretation for future cases involving the limitation period for filing applications to set aside arbitral awards, ensuring consistency and clarity in the legal framework surrounding arbitration proceedings.

 

 TRISHA SAXENA

SENIOR LEGAL ASSOCIATE

THE INDIAN LAWYER AND ALLIED SERVICES

 

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[1] Section 34(3) of the ACA reads:

“34. Application for setting aside arbitral award.— (3) An application for setting aside may not be

made after three months have elapsed from the date on which the party making that application had

received the arbitral award or, if a request had been made under section 33, from the date on which

that request had been disposed of by the arbitral tribunal:

Provided that if the Court is satisfied that the applicant was prevented by sufficient cause

from making the application within the said period of three months it may entertain the application

within a further period of thirty days, but not thereafter.”

[2] State of Himachal Pradesh v. Himachal Techno Engineers (2010) 12 SCC 210

[3] My Preferred Transformation & Hospitality Pvt Ltd v. Faridabad Implements Pvt. Ltd. 2025 INSC 56

[4] State of West Bengal v. Rajpath Contractors and Engineers Ltd. (2024) 7 SCC 257