04 May 2121

Section 3 of the Limitation Act 1963 bars the remedy but does not destroy the right to which the remedy relates to - Bombay High Court

Case : M/s Satish K. Narang & Co. v. Jamandas Morarje Secs Ltd. Appeal no 989 of 2005 in Arbitration Petition No. 36 of 2004

Court : Bombay High Court

Bench : Justice R. D. Dhanuka and Justice V. G. Bisht

Decided on : 04 May 2121

Relevant Statutes

Section 2(4), 37, 43 of Arbitration and Conciliation Act (1996)

Section 3 of the Limitation Act, 1963

Brief Facts and Procedural History

1. The Appellant purchased shares of various companies through the respondent and also returns some of the shares to the respondent. The respondent further had sold some of the shares but did not give the credit of the sale proceeds to the appellant. Also, according to the Appellant statement of the account showed a difference of Rs. 3100 . Later the respondent sent a letter for the reconciliation of the statements which the appellant forwarded. Later, the appellant sent various reminders for the payment due to him. The respondent did not make any payment. 

2. The appellant filed an appeal under Section 37 of the Arbitration and conciliation Act 1996 from the order dated 2nd May 2005 by the learned Single Judge where the court dismissed the Arbitration petition filed by the appellant under section 43 of the Arbitration and Conciliation Act 1996. 

The Issues of the Case

Whether the period of the limitation is applicable to the transaction prior to the 29th of August 1998 or section 2(4) shall read with section 43 of Arbitration and Conciliation Act, 1996?

Whether the new Amendment will apply to the provisions of the Limitation Act or there is any right vested in favour of the appellant?

The Observation of the Court

1. The Honourable Bombay High Court observed the judgments of the Arbitral Tribunal and Judges. The Honourable Bombay High Court referred to one of the judgments i.e. Ramprasad Dagaduram vs. Vijaykumar Motilal Hirakhanwala & Ors, (AIR 1967 SC 278) and held that the appellant had not filed any arbitral proceedings prior to the date of the amendment to Bye-law 252(2), Therefore no right had been vested in favour of the appellant by the section 2(4) of the Arbitration and Conciliation Act 1996. 

2. In The Allahabad Bank Ltd. vs. Rane Sheo Ambar Singh & Ors. (AIR 1976 Allahabad 447), it was held that if The Limitation Act, 1963 does not prescribe any period of limitation for an application then it will be an unlimited period or vice versa then it will be 90 days from the commencement of The Limitation Act, 1963.

3. The Honourable Bombay High Court held that the appellant will be governed by the amended Bye-law 252(2) for filing any claim prior to the amendment. The Honourable High court held that provisions of the limitation act will be applied on the date of filing such arbitral proceedings not prior to the date of applicability of the provisions of the Limitation Act 1963. 

4. In Punjab National Bank and Ors. Vs. Surendra Prasad Sinha 1993 (1) SCC 499, It was held that Section 3 of the Limitation Act, 1963  bars the remedy not the right. The Honourable High Court held that the period of limitation would commence from 29th August 1998.

5. The Honourable Bombay High Court held that the time taken by the Investor’s Grievances Redressal Cell for deciding the complaint is required to be excluded and the cause of the action would not commence from the date of rejection of complaint by the Investor’s Grievances Redressal Cell. There was no acknowledgement of liability after commencing the period of limitation. 

Decision Held by the Court

An appeal was dismissed.

Click here to view/download the judgement >