Can delay be condoned in an appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996?

Introduction
Recently, the Full Bench of the Hon’ble Supreme Court (“SC”) in the case of Government of Maharashtra (Water Resources Department) v. M/s. Borse Brothers Engineers & Contractors Pvt. Ltd. overruled its Division Bench judgment passed in the matter of M/s. N.V. International v. State of Assam(“N.V. International”). While doing so, the SC relied upon Article 116 and Article 117 of the Limitation Act, 1963 (“Limitation Act”) and Section 13(1A) of the Commercial Courts Act, 2015 (“CCA”) and held that delay for a period beyond 90 days, 30 or 60 days respectively in filing an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (“Act, 1996”) can be condoned by way of exception and not by way of rule. The SC also observed that, in a fit case in which a party has otherwise acted bona fide and not in a negligent manner, a short delay beyond such period can, in discretion of the court can be condoned.

Issues framed

1. Applicability of Limitation Act to appeals filed under Section 37 of the Act.
2. Whether the application of Section 5 of the Limitation Act was excluded by virtue of the CCA?

Brief analysis
The SC exhaustively discussed and examined the interplay between the relevant provisions of the Act, the CCA and the Limitation Act. It observed that the main objective of the Act as provided under Section 5 is speedy disposal of disputes through an arbitral process which is efficient and minimizes the supervisory role of courts. The SC noted that Section 37 of the Act, when read with Section 43 made it clear that the Limitation Act applied to appeals which were filed under Section 37 of the Act. Article 116 and Article 117 of the Limitation Act provides for a limitation period of 90 days and 30 days depending on whether the appeals are from other court to High Court or an Inter-High Court appeal. The SC also observed that Section 5 of the Limitation Act will apply to appeals under Section 37 by virtue of Section 43 of the Act and Section 29(2) of the Limitation Act.

The appeals filed before the SC under Section 37 of the Act, 1996, were also governed by Section 13 of the CCA, which is a special law in contrast to the Limitation Act, which is a general law. Section 13 (1A) of the CCA only laid down a period of limitation of 60 days uniformly for filing an appeal that is a period that is halfway between 30 days and 90 days provided by Articles 116 and 117 of the Limitation Act. Contentions were raised before the SC that as Section 21 of the CCA is a —non-obstante clause, the applicability of other acts including Section 5 of the Limitation Act would be overridden. The SC rejected the contention that application of Section 5 of the Limitation Act would be excluded given the scheme of the CCA and placed reliance on its observation made in in the case of B.K. Educational Services (P) Ltd. v. Parag Gupta & Associates wherein the Court had rejected the argument that the provisions of Section 238 of the Insolvency and Bankruptcy Code, 2016 overrides the provisions of the Limitation Act.

Another issued which was raised before the SC for consideration was whether the case of N.V. International laid down the law correctly. The Court accepted the contention that N.V International judgment does not notice the provisions of the CCA and therefore the judgment can be per incuriam on this count. While dealing with this issue, the SC was also considered the question as to the applicability of Section 5 of the Limitation Act to appeals which are governed by a uniform 60-day period of limitation in contrast to the ratio laid down in N.V. International which does not allow condonation of delay beyond 30 days. It is in these two extremes that the Supreme Court opined that it was essential to steer a middle course. Having said that, the Supreme Court relied upon the course contained in the Latin maxim ut res magis valeat quam pereat which inter alia states:

“…The provisions of one section of the statute cannot be used to defeat those of another unless it is impossible to effect reconciliation between them. Thus a construction that reduces one of the provisions to a “useless lumber” or “dead letter” is not a harmonized construction. To harmonize is not to destroy.”

Factual Narration / observation

1. Bombay High Court Order (Civil Appeal arising out of SLP (C) No. 665 of 2021)
   The Bombay High Court had dismissed the appeals filed by the Government of Maharashtra under Section 37 of the Act, 1996 by refusing to condone the delay in filing appeals beyond 120 days. The matter also governed by the provisions of the CCA. This decision was challenged before the SC by way of Special Leave Petition (“SLP”). While dismissing the SLP, the SC observed that the Government Maharashtra had not approached the court bona fide and with clean hands. The SC also noticed the delay of 131 days beyond 60 days provided for filing an appeal under Section 13(1A) of the CCA was without sufficient cause.
2. Delhi High Court (Civil Appeal arising out of SLP (C) Diary No. 18079 of 2020)
   The Delhi High Court had dismissed the appeals filed by the Union of India under Section 37 of the Act, 1996 by refusing to condone the delay in filing appeals beyond 120 days. The matter also governed by the provisions of the CCA. The SC dismissed the appeal, observing that there is a huge delay of 227 days in filing the appeal, and a 200-day delay in refiling without sufficient cause.
3. Madhya Pradesh High Court (Civil Appeal arising out of SLP (C) No. 15278 of 2020)
   The Madhya Pradesh High Court refused to follow the N. V. International judgment stating that there is conflict between the said judgment and Consolidated Engg. Enterprises v. Irrigation Deptt. (“Consolidated Engg”) and held it was open for the High Court to condone the delay in applying Section 5 of the Limitation Act; as a matter of fact, a delay of 57 days was condoned. The SC, set aside the impugned judgment of Madhya Pradesh High Court on the ground that High Court placed reliance upon Consolidated Engg judgment incorrectly and ought to have relied upon N.V. International which considers Section 5 of the Limitation Act. The Court also set aside the delay condonation granted on the ground that the explanation provided falls woefully short of making out any sufficient cause.

Conclusion
To conclude, the courts in most of the cases refrained from interfering with the arbitral awards, promote the principles of speedy redressal and thereby have strictly dealt with applications seeking delay condonation. However, when application for delay condonation is bona fide and reflect prima facie sufficient cause for parties not being in a position to approach the court within the stipulated timeframes, the Courts have condoned such delays even for cases governed by special statues having non-obsolete clause one of such recent case being SC’s judgment in the Sesh Nath Singh & Anr. v. Baidyabati Sheoraphuli Co-operative Bank Ltd. & Anr,.which we have discussed in one of our articles.