In Union of India v. Microwave Communication, the Delhi High Court was called on to consider a very important issue relating to the relationship between the Arbitration Act and the Limitation Act. In a remarkably clear decision, involving the interpretation of decisions of the Supreme Court and conflicting dicta from High Courts, the Court concluded that all provisions of Limitation Act, except section 5, apply to applications under section 34 of the Arbitration Act.
Section 34(3) of the Arbitration Act provides that-
An application for setting aside may not be made after three months have elapsed from the date on which die party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had bow disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter. [emphasis supplied]
The Supreme Court in Union of India v. Popular Construction, had held that this provision was absolute, and there was no scope for a further extension of the limitation period under section 5 of the Limitation Act (which allows a Court to extend the limitation period for sufficient causes). In arriving at this decision, the Court observed (¶¶ 12, 14),
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. Parliament did not need to go further. To hold that the Court could entertain an application to set aside the Award beyond the extended period under the proviso, would render the phrase ‘but not thereafter’ wholly otiose. No principle of interpretation would justify such a result.
Here by history and scheme of the 1996 Act support the conclusion that the time limit prescribed under Section 34 to challenge an Award is absolute and unextendable by Court under Section 5 of the Limitation Act.
Now, these passages and the rest of the decision make it clear that the Court was dealing only with section 5 of the Limitation Act. It did not deal with other provisions like section 4 (which provides that when the limitation period expires on a day when the Court is closed, the proceedings may be initiated on the day when the Court reopens).
However, several High Courts interpreted the Supreme Court’s dictum and especially the mention of ‘absolute and unextendable’ literally, holding that section 4 could not be invoked even when the limitation period expired during Court holidays. Taking the opposite view was one decision of the Andhra Pradesh High Court in Durga Enterprises v. Union of India, and a couple of decisions of the Supreme Court which had held that Popular Constructions should be read as applying only to section 5 of the Limitation Act.
The Delhi High Court in Microwave Communication concluded, it is submitted rightly, that the stance in Durga Enterprises was to be preferred. They observed (¶ 8),
Section 4 of the Limitation Act has been enacted not to enlarge the period of limitation but on the maxim lex non cogit ad impossibilia. When any party is prevented from doing a thing in Court on a particular day not by his own act but by the act of the Court he/she is entitled to do at the first available opportunity. As stated above, Section 4 does not enlarge the period of limitation but it only enables the party to file any suit, application, etc. on the reopening day of the Court if the Court is closed on a day when limitation expires.
This decision does not permit of any disagreement. However, an additional matter which arose on the facts was not addressed by the Court explicitly, which leaves small question unanswered. The limitation period in question in Microwave Communication, was not the period of three months provided in the body of section 34, but the discretionary period of 30 days mentioned in the proviso. Thus, it was the extended period of limitation that was ending in the Court holidays. Section 4 of the Limitation Act however, applies only for the expiry of the ‘prescribed period’ when the Court is closed. Does ‘prescribed period’ included the period extended for sufficient cause? The language of section 5 suggests that it does not, since it provides that when sufficient cause is shown, the proceedings may be initiated ‘after the prescribed period’. It is true that the marginal heading refers to ‘extension of prescribed period’. Nevertheless, it is atleast arguable that section 4 applies only to an expiry of the original ‘prescribed period’ and not the extended period. This interpretation is also arguably affirmed by the fact that section 4 precedes the extension provision in section 5.
Under the Limitation Act, since there is no limit on the period of extension under section 5, reading section 4 narrowly will not lead to any anomalies. Let us assume that the limitation period in a said action expires on 10.5.2010. The Court vacations can be assumed to date from 28.5.2010 to 3.7.2010. In that situation, if the proceedings are initiated on 3.7.2010, there is no issue of whether section 4 or section 5 applies, since the Court holidays will be considered sufficient cause, so long as the petitioner can show that there was sufficient cause for the period between 10.5.2010 and 28.5.2010. However, let us now assume that this was an application under section 34 of the Arbitration Act. Even if sufficient cause is shown, the limitation period under the proviso to section will not allow an extension of the limitation period beyond 10.6.2010, which will fall within the Court holidays. Hence, in applying section 4, it would be material whether ‘prescribed period’ includes the extended period, or is limited to the original period of limitation.
While this promises to be a fascinating issue of statutory interpretation, it is almost certain that ‘prescribed period’ will be read as referring to the extended period, and not only the original interpretation. It would have been ideal however, if the Delhi High Court had specifically addressed this issue. It is hoped that should this matter go up on appeal to the Apex Court, it affirms the High Court, and also considers the slight anomaly created due to the language of section 4.