Arbitration - Application under Section 33 for correction in award does not automatically extend limitation

Calcutta High Court Overrules District Judge, Sets New Precedent in Arbitration Limitation Case Application Date Under Section 33 to Determine Limitation Period for Section 34 Challenges, Rules High Court

In a significant ruling, the Calcutta High Court has set aside an order by the District Judge of Darjeeling, providing clarity on the calculation of limitation periods in arbitration cases. The case, Chief Engineer, Siliguri Zone, MES v. M/S Agarwal & Co, revolved around the interpretation of Sections 33 and 34 of the Arbitration and Conciliation Act, 1996, and the timing of filing challenges to arbitral awards.

The appellants, Chief Engineer, Siliguri Zone, MES, filed an application under Section 33 of the Arbitration and Conciliation Act, 1996, seeking correction of the interest rate in an arbitral award dated March 29, 2019. The application was dismissed on May 15, 2019. The appellants subsequently filed an application under Section 34 to challenge the arbitral award on August 14, 2019. However, the District Judge dismissed this application on the grounds of being time-barred, calculating the limitation period from the original date of the award rather than from the date of the Section 33 decision.

The High Court, comprising Justices Debangsu Basak and Md. Shabbar Rashidi, overturned the District Judge’s order, emphasizing that when an application under Section 33 is not deemed misconceived or filed with mala fide intentions, the date of disposal of this application should be considered as the date of the award. This effectively extends the limitation period for filing a challenge under Section 34.

The Court highlighted that the appellants’ application under Section 33 was filed within the permissible timeframe and was not without basis, even though the arbitrator rejected it. The judgment draws a distinction from the precedent set in State of Arunachal Pradesh v. M/s Damani Construction, where the Supreme Court had dealt with a misconceived Section 33 application.

The ruling mandates the District Judge to reassess the Section 34 application on its merits, free from the constraint of the previously applied limitation period. This decision is expected to have significant implications for the arbitration process, providing a more flexible timeline for parties seeking to challenge arbitral awards, provided their Section 33 applications are bona fide.

Bottom Line:

Arbitration and Conciliation Act, 1996 - Application under Section 33 for correction in the award does not automatically extend the limitation period for filing an application under Section 34 unless the application is found to be not misconceived or mala fide.

Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 33, 34

Chief Engineer, Siliguri Zone, MES v. M/S Agarwal & Co, (Calcutta)(DB)(Circuit Bench At Jalpaiguri) : Law Finder Doc Id # 2811778