Introduction 

• This is a landmark judgment which talks about the applicability of Section 17 of Limitation Act, 1963 when determining the limitation period under Section 34(3) of the Arbitration and Conciliation Act, 1996 
• The Judgment was delivered by a 2 judge bench consisting of Justice S Abdul Nazeer and Justice NV Ramana. 

Facts   

• In the present facts Mr. P. Kishan Lal ran a business and owned multiple properties. 
• Upon his death, his estate was inherited by eight legal heirs (Appellants 1-6 and Respondents 1-2). 
• Dispute & Arbitration: 
  • Disputes arose among the legal heirs regarding property division. 
  • Five arbitrators were appointed to resolve the dispute. 
  • On 18th February 2010, the arbitrators issued a unanimous Award, which was received by all parties on 21st February 2010. 
• Memorandum of Understanding (MoU): 
  • After the Award, the Appellants and Respondents entered into an MoU, granting additional properties to Respondent No. 1. 
  • The Appellants delayed executing the required Gift and Release Deeds. 
• Execution of Award & Delay: 
  • The Appellants filed an Execution Petition (EP) after the limitation period for challenging the Award had expired. 
  • The trial court held that the EP was not maintainable, but the High Court reversed this decision. 
• Challenge to the Award: 
  • On 8th February 2011, Respondents filed an application under Section 34(3) of the Arbitration and Conciliation Act, 1996 (A & C Act) seeking to set aside the Award, 236 days after receiving it. 
  • They also filed an application under Section 5 of the Limitation Act, 1963 (LA) for condonation of the delay, citing: 
    a) Lack of legal knowledge, 
    b) Attempts at conciliation through the MoU, 
    c) Illness of one Respondent. 
• Trial Court’s Decision (21st February 2012): 
  • Dismissed the delay condonation application. 
  • Held that Section 5 of the LA does not apply to Section 34 of the A & C Act. 
  • Stated that the court could not extend the limitation period beyond three months and 30 days. 
  • Rejected Respondents’ reasons for delay, including ignorance of law and illness. 
• High Court’s Order (18th June 2012): 
  • Remanded the matter to the trial court to examine the applicability of Section 17 of the LA in the Section 34 application. 
• Supreme Court Appeal: 
  • The Appellants challenged the High Court’s remand order before the Supreme Court.

Issue Involved  

• Whether Section 17 of the LA (which deals with fraud or mistake) is applicable when determining the limitation period under Section 34(3) of the A & C Act?  

Observation 

• The Court observed that while it would normally have agreed with the High Court to remand the case to consider the applicability of Section 17, the considerable delay in resolving the dispute warranted a conclusive determination. 
• The Court noted that Section 29(2) of the LA provides that Sections 4 to 24 apply to special laws only to the extent they are not "expressly excluded" by such special law. 
• The Court determined that "express exclusion" need not be explicitly stated but can be inferred from the language, scheme, and object of the special law. 
• The Court found that Section 34(3) of the A & C Act expressly excludes Section 17 of the LA because the phrase "but not thereafter" in the proviso creates a mandatory outer boundary of 120 days for challenging an award. 
• The Court highlighted that the purpose of the Arbitration Act is to provide speedy dispute resolution, and allowing Section 17 to apply would undermine this objective by enabling challenges beyond the 120-day period. 
• The Court emphasized that Section 34(3) reflects the principle of "unbreakability" in arbitration proceedings, meaning the time limit for challenging awards should be definitive. 
• The Court observed that once a party receives an arbitral award, they have knowledge of it and the limitation period commences, making Section 17 inapplicable thereafter. 
• In this specific case, the Court determined that since the Respondents had received the Award on 21st February, 2010, the limitation period had already commenced, regardless of any subsequent fraud alleged in the MoU executed on 9th April, 2010. 
• The Court ultimately allowed the appeals, set aside the High Court's judgment dated June 18, 2012, and also set aside the order condoning the delay of 236 days in filing objections. 

Conclusion 

• The Supreme Court concluded that Section 17 of the LA is expressly excluded from applying to Section 34(3) of the A & C Act because allowing its application would defeat the legislative intent of ensuring speedy resolution and finality of arbitral awards, as evidenced by the phrase "but not thereafter" which creates a strict 120-day outer boundary for challenging awards.