Delay In Appeals Filed U/S 37 Of A&C Act To Be Condoned As Exception And Not Rule: SC

CASE TITLE:
Government of Maharashtra Vs. M/S Borse Brothers Engineers & Contractors Pvt. Ltd.

DATE OF ORDER:
19 March 2021

JUDGE(S):
Justice R.F Nariman
Justice BR Govai
Justice Hrishikesh Roy

SUBJECT

The Apex Court in the present case held that delay in filing of appeals u/s 37 of the A&C Act should be condoned as an exception, not as a rule. The Court also overturned judgement of N V International v. State of Assam [(2020) 2 SCC 109] which had strictly imported that under Section 37 of the Arbitration and Conciliation Act, 1996, the limitation period for an appeal under Section 37 would be controlled by the term provided in Section 34 of the Arbitration and Conciliation Act, 1996, which is three months and can be extended by thirty days. The Court held that the limitation period u/s 34 of the A&C Act could not be extended into the appeal provision under Section 37 of the Act.

IMPORTANT LEGAL PROVISIONS

• Section 5 of Limitations Act - Extension of specified period in certain cases.
• Section 13 of the Commercial Courts Act- Appeals from decrees of the Commercial Courts and the Commercial Divisions.
• Section 34(3) of Arbitration and Conciliation Act- an application for setting aside an award shall not be entertained by the Court if it is made after three months have elapsed from the date on which the applicant had been presented with the arbitral award.
• Section 37 of Arbitration and Conciliation Act-provides for an appeal against orders passed under Sections 9, 34, 16 and 17 of the Act.

BRIEF FACTS OFTHE CASE

• Three appeals were filed before the Supreme Court against the decision of High Courts of Bombay, Delhi and Madhya Pradesh.
• In the case before Bombay and Delhi Case, they held that it was not open for the courts to condone delay in filing of appeal u/s 37 of A&C Act beyond the period of 120 days.
• However, Madhya Pradesh High Court held that Court can condone such delay.
• Supreme Court clubbed all three appeals in the present case.

LEGAL ISSUE

• Whether the Appellate Court can condone the delay in filing appeal u/s 37 of A&C Act?
• Whether limitation period for filing a petition to challenge an award under Section 34(3) of the A&C Act can be construed to be the limitation period for filing an appeal against the order, under Section 37 of the A&C Act?

ANALYSIS BY THE COURT

• The Court while adjudicating upon the matters in great length, discussed extensively the various provisions laid down in Arbitration and Conciliation Act, CC Act and the Limitation Act.
• The Court dealt with the nexus between section 37 of A&C Act and section 13(1A) of CC Act. Section 13(1A) did not bestow any independent right but rather only provided for a forum for appeals originating from Order XLIII Rule 1 (read with Section 104) of the CPC and Section 37 of the Arbitration Act. Therefore, the issue of condonation of delay would have to be analysed in view of both the Arbitration and CC Acts.
• The Court observed that a combined reading of section 37 and section 43 of A&C Act makes it clear that provision of Limitation Act will apply to appeals filed u/s 37 of A&C Act. As a result, the limitation period for filing of appeal will be determined in respect to Article 116 and 117 of the Limitation Act i.e a period of 90 or 30 days, depending on whether the appeal is from any subordinate court to a High Court or intra- High Court appeal.
• The Court further observed that section 5 of the Limitation Act will thus be applicable to appeals u/s 37 as per both section 43 of A&C Act and section 29(2) of Limitation Ac
• Upon the issue of applicability of CC Act, the Court observed that though section 13(2) of CC Act provides for a limitation period of 60 days in case of appeals, it fails to take into account for any condonation of delay in filing the same. The Bench answered the issue of exclusion of the provision of Limitation Act owing to section 21 of the CC Act which stipulates the overriding effect of the Act in negative, while placing reliance on the decision in B K Education Services Pvt Ltd v Parag Gupta & Associates [(2019) 11 SCC 633].
• However the Apex Court then went on to observe that delay in filing of appeal can be condoned only if a there is a ‘sufficient cause’ for that delay. It noted ‘given the object sought to be achieved under both the statutes, the scope of ‘sufficient cause’ under Section 5 of the Limitation Act cannot be expanded to cover long delays beyond the period provided under the provision.’
• The Court held that condonation of delay must generally be allowed in following cases-

1. The party had not acted mala fide or negligently
2. The delay is rather short
3. There will be no prejudice to the other party on such condonation.

CONCLUSION

In light of the above observations, the Court concluded that condonation of delay must be an exception, not a rule. Supreme Court also noted that merely because sufficient cause has been made out in the facts of a given case, there is no right in the appellant to have the delay condoned.

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