NHPC Limited granted relief as court acknowledges due diligence in pursuing arbitration case in wrong jurisdiction.
In a significant ruling, the Delhi High Court has pronounced that the provisions of Section 14 of the Limitation Act, 1963, are applicable to arbitration proceedings under the Arbitration and Conciliation Act, 1996. This decision came in the case of NHPC Limited v. Chairman-Cum-Managing Director, M/s Patel-L&T Consortium-Parbati He Project Stage-III, where NHPC was seeking to set aside an arbitral award dated 18.04.2017.
The judgment, delivered by Justice Subramonium Prasad, acknowledged that NHPC Limited had pursued its arbitration case bona fide and with due diligence in a court that was ultimately deemed to lack jurisdiction. This pursuit was initially in the District Court at Faridabad, and subsequently in the Commercial Court at Gurugram, Haryana, following a state notification transferring commercial matters. The Supreme Court later clarified that only the Delhi High Court had jurisdiction, leading NHPC Limited to refile its petition in Delhi.
Justice Prasad's ruling emphasized that Section 14 of the Limitation Act allows for the exclusion of time spent in bona fide litigation in a wrong forum. It does not provide a fresh limitation period but ensures that litigants are not penalized for procedural errors when pursuing legitimate claims. The court noted that NHPC's filing of the petition within 30 days of the Supreme Court's decision was timely, considering the procedural steps involved in transferring and modifying the petition.
The judgment also highlighted that a liberal interpretation of Section 14 is essential to advance justice, aligning with precedents set by the Supreme Court in previous cases. This ruling potentially sets a significant precedent for future arbitration-related disputes, reinforcing the applicability of the Limitation Act to arbitration proceedings.
The ruling underscores the importance of pursuing arbitration cases with diligence and good faith, even when jurisdictional issues arise. It also serves as a reminder of the procedural complexities involved in arbitration, especially when jurisdictional ambiguities are present.
Bottom Line:
Arbitration - Benefit of Section 14 of the Limitation Act can be extended to proceedings under the Arbitration and Conciliation Act, 1996, provided it is shown that the petitioner was pursuing the case bona fide and with due diligence in a court that lacked jurisdiction.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Section 34, Limitation Act, 1963 Section 14
