ANALYSIS OF GOVERNMENT OF MAHARASHTRA (WATER RESOURCES DEPARTMENT) V. M/S BORSE BROTHERS ENGINEERS & CONTRACTORS PVT. LTD.
A short delay in filing appeals under section 37 of the Arbitration Act can be condoned in exceptional cases.
The three-judge bench of RF Nariman, BR Gavai and Hrishikesh Roy, JJ of Supreme Court in the matter of Government of Maharashtra v. M/s Borse Brothers Engineers & Contractors Pvt. Ltd. CIVIL APPEAL NO. 999 OF 2021, overruled one of its judicial precedent in the matter of NV International v. State of Assam (2020) 2 SCC 109. The Supreme Court clarified that an aggrieved party must file an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, within 60 days from the date of order. The Supreme Court further held that the appellate court could condone a delay in filing appeals under Section 37 of the A&C Act. However, such condonation must be granted only by exception and permissible if the delay is ‘short’.
BACKGROUND OF THE CASE
In two appeals before the Supreme Court, the High Courts of Bombay and Delhi had refused to condone the delay in filing appeals under Section 37 of the Arbitration and Conciliation Act beyond 120 days. There was another appeal against a judgment of the High Court of Madhya Pradesh, which held that it was open for a High Court to condone the delay in filing an appeal under Section 37 under Section 5 of the Limitation Act 1963 (“Limitation Act”). Appeals were filed against decisions of three different High Courts. The Supreme Court clubbed and disposed of three appeals by a common judgment of Government of Maharashtra v. M/s Borse Brothers Engineers & Contractors Pvt. Ltd.
- The substantial question of law that arises in these appeals is whether the judgment of a Division Bench of this Court in N.V. International v. the State of Assam lays down the law correctly.
- Whether the appellate court can condone the delay in filing the appeal under Section 37 of the A&C Act
FINDINGS AND ANALYSIS OF THE COURT
In NV International, the Supreme Court had held that in the absence of a limitation period to prefer an appeal under Section 37 of the Arbitration and Conciliation Act, the limitation period for an appeal against an order under Section 34 would be governed by the period stipulated under Section 34 of the Arbitration and Conciliation Act, i.e., a period of three months, extendable by further thirty days- NV International v. the State of Assam.
The Supreme Court premised its inference that an appeal is a continuation of the original proceedings. Hence, the thresholds for the limitation period which apply to proceedings under Section 34 would also apply to an appeal under Section 37.
In the present case, the Supreme Court held that N.V. International did not consider the provisions of the Commercial Court Act for determination of the limitation period for an appeal under Section 37. It was, therefore, through inadvertence on this aspect. Further, the Commercial Court Act held that the hard stop provided in Section 34 vis-a-vis absence thereof in Section 13 of the Commercial Court Act did not allow for a ‘bodily lifting’ of the limitation period under Section 34 of the Arbitration and Conciliation Act into Section 37 of the A&C Act. Therefore, the limitation period under Section 34 could not be continued into the appeal provision under Section 37 of the Arbitration and Conciliation Act- Brother Borse.
The Supreme Court emphasised that any delay must be condoned by the appellate court by way of exception and not that of a rule and only in cases
- where a party has otherwise acted bona fide and not in a negligent manner,
- there is a short delay beyond the statutory period,
- The opposite party is not prejudiced of his rights in equity and justice arising out of the erring party’s inaction and negligence.
- Relying on one of its earlier decisions, the Supreme Court also noted that merely because sufficient cause has been made out in the facts of a given case, there is no right in the appellant to have the delay condoned.
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