30 Apr 2121

The Expression “the date of the order of the court” used in connection with setting aside of an arbitral award under Section 43(4) of the Arbitration and Conciliation Act, 1996, would cover the date of the final order of the appellate or revisional court, as the case may be - Bombay High Court

Case : Siddhivinayak Realties Pvt. Ltd. Vs. V. Hotels Limited and Ors. Notice of Motion No.119 of 2016 in Commercial Suit No.133 of 2018

Court : Bombay High Court

Bench : Justice S. C. Gupte

Decided on : 30 Apr 2121

Relevant Statutes

Order XIII-A of the amended Civil Procedure Code, 1908.

Sections 11, 34 & 43(4) of the Arbitration and Conciliation Act, 1996.

Section 37(5) of the old Arbitration Act, i.e., Arbitration Act, 1940.

Section 14 of the Limitation Act, 1963

Brief Facts and Procedural History

1The ‘Master Asset Purchase Agreement’(MAPA) was executed between the parties for the sale of the suit property. In October 2005, defendant no.1 by arbitration notice to the plaintiff claimed that ‘the MAPA had stood frustrated or become impossible of performance and the former had stood discharged from fulfilling its obligations to the latter thereunder’.

2. Before filing the Commercial Suit, defendant no. 1 filled the arbitration application u/sec. 11 of the Arbitration and Conciliation Act, 1996. Upon this, the court referred the dispute to a sole arbitrator. In July 2011, the arbitrator passed an award in favour of defendant no. 1 and dismissed the counterclaim of the plaintiff by holding that the MAPA had stood frustrated on account of its repudiation by the Plaintiff and acceptance of such repudiation by Defendant No.1.

3. The plaintiff challenged the said award before the single bench of the High Court. The single bench in May 2013 set aside the same. Again, in July 2013, defendant no. 1 by filing an appeal before the division bench of the High Court, challenged the setting aside the order of award. The appeal was admitted by the division bench and is pending hearing and final disposal.

4. In the backdrop of these facts, in February 2016 the plaintiff filed the present Commercial Suit before the High Court in which defendant no.1 moved the Notice of motion for a summary judgment of dismissal of the Commercial Suit under Order XIII-A of the amended Civil Procedure Code, 1908 on the ground of bar of limitation. According to the petitioner, in computing the period of limitation to file the present commercial suit, the said pending appeal cannot be computed. 

The Issue of the Case

Whether the Commercial suit, filed during the pendency of the appeal, is, within the period of limitation?

The Observations of the Court

1. For reckoning the exclusion period, the court decided to go by the special provision of Section 43(4) of Arbitration and Conciliation Act, 1996 and not the general provision of Section 14 of the Limitation Act or its analogy.

2. “Section 43(4) – Where the Honourable Bombay High Court orders that an arbitral award is set aside, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1963 (36 of 1963), for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted.”

3. The Honourable Bombay High Court explained “where the Division Bench reverses the order of the Single Judge setting aside the award, during the period of limitation, obviously the plaintiff would have an extended period of limitation up to the date of the final order of the Supreme Court restoring the order of the Single Judge setting aside the award”

4. The Honourable Bombay High Court observed that the “order of the court” referred to in Section 43(4) of the Arbitration and Conciliation Act, 1996 is the final order of the court – whether the first-order setting aside the award, which is not subjected to further challenge or the order in appeal, if the original order setting aside the arbitral award is carried in appeal and affirmed. There is a clear case for treating such appeal as a continuation of the original proceeding for setting aside the award.

The Decision Held by the Court

1. The Honourable Bombay High Court held that there is no case for a summary judgement of dismissal of the commercial suit under Order XIII-A of the amended Civil Procedure Code 1908 on the ground of bar of limitation. The Notice of Motion is, accordingly, dismissed. Costs to be costs in the cause.

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