This article has been authored by Nachiketa Narain and Syed Raiyyan, 3rd year students pursuing B.A. LL.B. (Honours) at RGNUL, Punjab.
Introduction
The eminent jurist HLA Hart asserted that Courts inevitably have to confront what he called the problem of penumbra. These are legal questions ‘that arise outside the hardcore of standard instances or settled meaning’. Simply put, he talks about legal problems the solutions to which are not readily available under the existing corpus of ‘Law’. Once in every while, Courts have to steer the Law through these patchy and unplumbed terrains to find the answers to questions that lie ‘outside’ of the Law. This has remained a fundamental function of Courts of Common Law, for, as Lord Scarman once said, “it[common law] knows no gap”.
One such ‘peculiar circumstance’ that the Hon’ble Supreme Court has encountered concerns Section 34(3) of the Arbitration & Conciliation Act, 1996 (“A&C Act”). The provision stipulates that any application to set aside an arbitration award may not be filed after three months from the date of the passing of the award. However, it vests the Courts with the authority to extend this period by up to 30 days, but not after that. The question now arises as to what if this period of these additional 30 days falls on a Court holiday? Section 4 of the Limitations Act 1963 caters to this problem. It provides that if a suit, appeal, or application has a‘prescribed period’ that falls on a day when the court is closed, it may be taken up the next day if the court is open. The chief question thus trickles down to – to what extent does Section 4 of the Limitation Act apply to Section 34(3) of the A&C Act?
The Approach of the Court
The Court had the opportunity to deal with this issue on multiple occasions. It first came across this lacuna legis in the Assam Urban Water Supply & Sew. Board v. M/S. Subash Projects & Marketing Ltd. In this case, the plaintiff wanted to file an appeal against an Arbitration Award received by them on August 26, 2003. According to Section 34(3), the fourth month, or the additional 30-day period, would fall on 26th December, 2003. However, the Court’s vacation started on 24th December, and as a result, the Plaintiffs were compelled to approach the Court on the first day since its re-opening. The primary question before the Court was whether the appeal could be entertained. After unfavourable decisions from the subordinate Courts, the Plaintiff approached the Supreme Court.
To its credit, the Supreme Court acknowledged the peculiarity of the issue and refused to singularly rely on the tradition of stare decisis et non quieta movere. The court, to settle the law on this point, decided to depend upon the meaning of Section 2(j) of the Limitation Act, 1963, which states, ‘“Prescribed period” means the period of limitation computed in accordance with the provisions of this Act’. Interpreting this provision, the Court derived that this ‘prescribed period’ merely refers to situations where the appeal is filed as a matter of right and, thus, the period where the Court’s discretion is involved, such as the 30-day extendable period under Section 34(3), will not be included. Therefore, though Section 4 of the Limitation Act would apply to the first part of Section 34(3) of the A&C Act, it would not cover the latter part, i.e., the 30-day extendable period. As a result, the appeal was rejected. This interpretation was later consolidated in the Bhimashankar Sahakari Sakkare Karkhane Niyamita v. Walchandnagar Industries Ltd. (“Bhimashankar”) case, where the question before the Court was almost identical.
The Anomaly of the Law
This interpretation leads to deleterious results, considering that the discretion provided under Section 34(3) of the A&C Act both empowers and constrains the Courts. This was emphasised by the Supreme Court in State Of Maharashtra v. M/S Hindustan Construction Co. Ltd., where it found that an application for setting aside an Arbitral Award under Section 34 of the A&C Act ought to be made within the time prescribed under sub-section (3) of Section 34, i.e., within three months and a further period of 30 days on sufficient cause being shown and not thereafter. Interestingly, the prescribed period here seems to include both the three months and the 30 days. Even more interesting is the fact that the Court in the Bhimashankar case relied upon the case to reach its conclusion, but missed this pertinent implication.
In such a situation, the Court’s interpretation would lead to an anomaly. It would follow that if an arbitral award is made adequately prior to Court vacation, the parties would have been statutorily entitled to appeal against the decision for up to 3 months, and additionally, a period of 30 days. Indeed, this additional period would be subject to the Court’s discretion; nevertheless, the party would at least have their plea considered instead of being rejected ab initio. In cases where the award is rendered 3 months prior to Court vacations, then the parties would not have an option to extend the period, no matter how justified their reason for delay might be. This would, in effect, render the latter part of Section 34(3) inapplicable to such parties. This anomaly essentially discriminates between the two groups of parties, without any reasonable ground, violating the principles of natural justice.
Plausible Alternatives
‘Let justice be done, though heaven may fall’ has been the adage, but we propose a few much simpler alternatives to this particular issue. These can be subdivided into short-term and long-term solutions.
Short-term solutions are temporary and should be implemented until a final long-term solution is arrived at. This particular solution should abide by the principle of actus curiae neminem gravabit, essentially meaning that an act of the court shall prejudice none. Therefore, the apt approach would be to consider the ‘discretionary period’ as a period‘prescribed’ for discretion. This would lead to an interpretation of the provision in a manner that is in consonance with the aforementioned maxim, since it would be included in the definition of ‘prescribed period’ as per the Limitation Act, and nothing prevents it from being within the ambit of Section 4 of the Limitation Act pertaining to condonation of delay.
In the normal course of proceedings, the court, while condoning the delay of the application for setting aside the Arbitral Award, would analyse the circumstances and reasons for the delay in the application. The same can be applied even when this additional 30-day period falls on a court holiday. The relevant court can analyse the reasons given by the applicant justifying the delay in filing the application; if the reasons are genuine, the court may condone the delay and adjust the additional 30-day period after taking note of the court holiday.
The long-term approach should be to eliminate this ambiguity. The feasible solution would be to amend the provision in question in order to make the A&C Act a self-contained code in itself.
This can be ensured by specifying that the time period is to be understood as ‘working days’ of the court. Presently, the 3 months, plus 30 days scheme entails 3 calendar months (and not 90 days) in addition to 30 days, which is subject to the court’s discretion. This can be reformed by removing the additional 30-day period altogether, defining days as ‘working days’, and further reducing the prescribed time period.
In order to refine the time period, the provision could define days as ‘working days’ to avoid hassles on delay condonation. Since this definition would elongate the span of the time period, the revised time period should be carefully reduced to offset the addition of time period due to its definition as working days. Inspiration for reducing the time period can be taken from laws around the globe, most pertinently from the UK, given the Common Law roots.
As per Section 57 of the UK Arbitration Act 1996, the time limit for filing an application for setting aside an Arbitral Award is just 28 days. This is in conformity with the spirit of arbitration as an efficient and quick dispute resolution mechanism as enshrined in the UNCITRAL Model Law on International Commercial Arbitration. India can take cues from the aforementioned legislation in order to further refine and align its laws with the spirit of arbitration as a dispute resolution mechanism.
Conclusion
The present interpretation of the Supreme Court fails to accomplish the spirit of the law and more specifically, the maxim actus curiae neminem gravabit. Therefore, the need of the hour is to interpret the provision in a manner that does no harm to the aggrieved. In the short term, the court must evolve its interpretation of the discretionary period as a period prescribed for discretion. With change being the life of law, this should not become the final solution; the legislature must amend the provision to remove the ambiguity and to further align the A&C Act with global practices.