Section 34 A &C Act Imposes A Strict & Non-Negotiable Deadline For Challenging Arbitral Awards: Allahabad HC
The Allahabad High Court observed that Section 34 of the Arbitration & Conciliation Act, 1996 imposes a strict and non-negotiable deadline for challenging arbitral awards.
The Court held thus while upholding the decision of the lower Court where it dismissed an application under Section 34 of the A & C Act as time-barred on the ground that the application was beyond 120 days and Section 5 of the Limitation Act would not apply.
The bench of Justice Shekhar B. Saraf observed, “The usage of the phrase “but not thereafter” in Section 34(3) of the Act is of immense significance. This seemingly innocuous phrase underscores the legislature’s intent to impose a strict and non-negotiable deadline for challenging arbitral awards, precluding the courts from exercising any discretion in granting additional time beyond what is specified in Section 34(3) of the Act.”
Brief Facts-
The land acquisition by the Appellant Dharmveer Tyagi and others occurred in 2015, followed by an arbitration award in 2018. A Writ Petition was filed in 2019 and it was directed by the Court that the challenge should be made under Section 34 of the Arbitration and Conciliation Act, 1996. An application under Section 34 was filed in 2020, which was dismissed by the Additional District Judge as time-barred, due to exceeding 120 days since the High Court's ruling.
The Court observed, “Section 34 of the Act delineates the procedural contours governing recourse against the arbitral awards. Central to this section is the stipulation regarding the timeline within which an application for setting aside an arbitral award must be made. Section 34(3) of the Act unequivocally mandates that such an application cannot be made after three months from the date on which the party received the arbitral award or, if a request under Section 33 of the Act was made, from the date on which such request was disposed of by the arbitral tribunal. Section 34(3) of the Act also provides that the courts may allow an application filed under Section 34 of the Act within a further period of thirty days, but not thereafter.”
The Court said that the temporal constraint as mentioned under the 1996 Act is not merely a procedural formality but embodies crucial legal principles essential for maintaining the integrity, efficiency, and finality of the arbitral process. According to the Court, the imposition of a strict timeline serves to promote legal certainty, preserve the integrity of the arbitral process, and safeguard against dilatory tactics employed by parties dissatisfied with arbitral outcomes.
The Court mentioned the decision in Union of India v. Popular Construction Co. reported in (2001) 8 SCC 470, where according to the Court the Supreme Court propounded that Section 5 of the Limitation Act would not apply to applications made under Section 34 of the Act and the period prescribed by Section 34(3) of the Act is absolute and unextendible.
The single bench quoted, “As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are “but not thereafter” used in the proviso to sub-section (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of that Act.”
Finally, the Court found no reason to interfere with the decision of the lower Court dismissing the application u/s 34 as time-barred.
Cause Title: Dharmveer Tyagi v. Competent Authority, DFCC, Special Land Acquisition (Neutral Citation: 2024:AHC:85334)