Arbitration Act – Limitation Period U/Section 34(3) vis-a-vis ‘Section 33 Requests’

Section 34(3) of the Arbitration and Conciliation Act reads as follows: An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.

Generally, this means, the limitation Period for making application for setting aside Award is 3 months which can be further extended for a further period of 30 days if there is sufficient cause. The starting point of limitation is the date on which the party making that application had received the arbitral award. However, if a request had been made under section 33, the limitation period starts running from the date on which that request had been disposed of by the arbitral tribunal.

Section 33 is the provision that deals with correction and interpretation of award. A party, with notice to the other party can request the Arbitral Tribunal to (a) to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award; (b) if so agreed by the parties, to give an interpretation of a specific point or part of the award.

This request has to be made within thirty days from the receipt of the arbitral award, unless another period of time has been agreed upon by the parties. If the arbitral tribunal considers this request as justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form part of the arbitral award. It is further provided that the arbitral tribunal can correct any error of the type referred in (a), on its own initiative, within thirty days from the date of the arbitral award.

Scenario 1

An Award was passed on 1st January 2023 and I received the award on 3rd January 2023. If I have to challenge this award, I have to file Section 34 Application within 90 days from 3rd January 2023.

Scenario 2

I make a request to Arbitral Tribunal under Section 33 to correct the award on 31st January (within 30 days from 3rd January) – Arbitral Tribunal considers and makes correction of the Award on 28th February (within 30 days from 31st January). Section 34(3) limitation period starts running from the date on which that request had been disposed of by the arbitral tribunal, and thus it means it will start running from 28th February.

Scenario 3

What if (in the above illustration) the Arbitrator had rejected my request by an order dated 28th February ? Will the limitation start running from 3rd January or from 28th February?

Regarding this, in Amit Suryakant Lunavat v. Kotak Securities, Mumbai 2010 (6) Mh.L.J. 764, the Bombay High Court view was that the benefit of fresh commencement of limitation is contemplated only on a situation where the Arbitrator corrects or interprets and/or add or decide to add any additional claims and modified the award as only in such cases the original award looses its originality. The High Court had, to hold thus, relied on a SC judgment in State of Arunachal Pradesh v. Damini Construction. In the said case, the party had, after the period of limitation under Section 34(3) expired, written a letter to the arbitrator for review of the award and also sought clarification. The Supreme Court held that the application was totally misconceived and the reply sent by the arbitrator does not entitle the party a fresh cause of action so as to file an application under Section 34(3).

In Ved Prakash Mithal and Sons vs. Union of India (2018) SCC Online 3181 , the Apex Court, disapproved this view and held that  “disposal” of the application can be either by allowing it or dismissing it. This means, in our illustration, the limitation period would start running from 28th February.

But I feel that this interpetation helps a party who intends to extend the period of limitation provided under Section 34(3) just by making an application seeking correction. This means, in the above illustration, the party gets about 28 days extra (just because he made an application on 31st January) as well as the days (about 28 days in above illustration) which the Arbitral Tribunal takes to dispose of this application by dismissing/rejecting it. But that is something for the law makers to look into.

Scenario 4

What if no requests were made by the party to correct the award, but the Arbitral Tribunal suo moto corrected the award. In a recent order [in USS Alliance vs State of Uttar Pradesh | 2023 LiveLaw (SC) 20 ] , the Supreme Court dealt with this situation and held as follows: “The starting point for the limitation in case of suomoto correction of the award, would be the date on which the correction was made and the corrected award is received by the party. Once the arbitral award has been amended or corrected, it is the corrected award which has to be challenged and not the original award. The original award stands modified, and the corrected award must be challenged by filing objections.“

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