Supreme Court Clarifies Limitation for Setting Aside Arbitral Awards, Applying Limitation Act Provisions

This appeal before the Supreme Court arose from an order of the Chhattisgarh High Court concerning the limitation period for filing an application under Section 34 of the Arbitration and Conciliation Act, 1996 (ACA) to set aside an arbitral award. The arbitral award, amounting to Rs. 51,33,40,100, was delivered to the respondent, M/S Bharat Aluminum Company Ltd. (BALCO), on April 9, 2022.

The respondent filed an application to set aside this award on July 11, 2022, along with a stay application. The Trial Court initially held the application to be within limitation, a decision later recalled, leading to the High Court's intervention under Section 37 of the ACA, which ultimately held the Section 34 application to be within the limitation period.

The question before the Supreme Court wasto find whether the application to set aside the arbitral award under Section 34 of the ACA was filed within the prescribed three-month limitation period. This necessitated examining the applicability of the Limitation Act, 1963, specifically Section 12(1) concerning the exclusion of the day from which the limitation period is reckoned, and Section 4 regarding the expiry of the limitation period on a court holiday.

The Apex Court reiterated its position from Himachal Techno Engineers and State of West Bengal v. Rajpath Contractors and Engineers Ltd. that Section 12(1) of the Limitation Act applies to the calculation of the limitation period under Section 34(3) of the ACA, meaning the date of receipt of the arbitral award must be excluded. The Court also affirmed the applicability of Section 4 of the Limitation Act, which provides that if the prescribed period expires on a day when the court is closed, the application may be filed on the next day the court reopens. The Supreme Court clarified that the limitation period under Section 34(3) is three calendar months, not 90 days.

The Supreme Court dismissed the appeal, upholding the Chhattisgarh High Court's order. The Court concluded that since the respondent received the award on April 9, 2022, this date was to be excluded for limitation calculation, making the three-month period expire on July 9, 2022, which was a second Saturday (a court holiday). Consequently, the filing of the Section 34 application on the next working day, July 11, 2022, was considered within the limitation period by virtue of Section 4 of the Limitation Act. The Court did not interfere with the High Court's interim stay on the execution of the recovery.

CORAM: JUSTICE PAMIDIGHANTAM SRI NARASIMHA & JUSTICE PRASHANT KUMAR MISHRA
BETWEEN: MS R. K. TRANSPORT COMPANY VS MS BHARAT ALUMINUM COMPANY LTD. (BALCO) 2025 INSC 438
DATE OF JUDGMENT: 03-04-2025