Delay in appeals filed under Section 37 of Arbitration Act to be condoned as exception and not rule: Supreme Court overrules NV International

The Supreme Court on Friday held that for appeals filed under section 37 of the Arbitration Act, 1996 that are governed by Articles 116 and 117 of the Limitation Act or section 13(1A) of the Commercial Courts Act, a delay beyond 90 days, 30 days or 60 days, respectively, is to be condoned by way of exception and not by way of rule (Government of Maharashtra v. Borse Brothers Engineers & Contractors Pvt Limited)..The Court in the process overruled its 2019 judgment in NV International v. State of Assam in which it had ruled that a delay beyond 120 days for filing a Section 37 appeal cannot be condoned..“In a fit case in which a party has otherwise acted bona fide and not in a negligent manner, a short delay beyond such period can, in the discretion of the court, be condoned, always bearing in mind that the other side of the picture is that the opposite party may have acquired both in equity and justice, what may now be lost by the first party’s inaction, negligence or lache,” the Court said..The judgment was rendered by a three-judge Bench of Justices Rohinton Nariman, BR Gavai and Hrishikesh Roy in three separate appeals against judgments of Bombay, Delhi and Madhya Pradesh High Court. .The High Courts of Bombay and Delhi had dismissed the appeals filed by the Government of Maharashtra and by the Union of India respectively, refusing to condone the delay in the filing of the appeal under section 37 beyond 120 days.The Madhya Pradesh High Court which had refused to follow the judgment of the Supreme Court Court in NV International stating that there is a conflict between NV International and a 2008 judgment of a larger Bench of the Supreme Court in Consolidated Engg. Enterprises v. Irrigation Deptt..The question the Bench was called upon to address was regarding the correctness of NV International.In NV International, which was also authored by Justice Rohinton Nariman, the Supreme Court had held that a Section 37 appeal has to be filed within a maximum period of 120 days including the grace period of 30 days.This was done after the Court drew from the time limit applicable to a Section 34 application.It had arrived at 120 days after adding a grace period of 30 days under Section 5 of the Limitation Act to the 90-day period provided under Section 37 of Arbitration Act.Delay cannot be condoned with respect to an appeal filed beyond that, a Division Bench of the top court had ruled in that judgment..The Supreme Court in the instant case examined the provision of the Arbitration Act, Commercial Courts Act and the Limitation Act to hold that Section 5 of Limitation Act will apply to appeals that are filed under Section 37.Thus, Articles 116 and 117 of the Limitation Act, which provide for a limitation period of 90 days and 30 days, depending upon whether the appeal is from any other court to a High Court or an intra-High Court appeal would apply, the Court ruled..“Section 37 of the Arbitration Act, when read with section 43 of the Act, makes it clear that the provisions of the Limitation Act will apply to appeals that are filed under section 37. This takes us to Articles 116 and 117 of the Limitation Act, which provide for a limitation period of 90 days and 30 days, depending upon whether the appeal is from any other court to a High Court or an intra-High Court appeal. There can be no doubt whatsoever that section 5 of the Limitation Act will apply to the aforesaid appeals, both by virtue of section 43 of the Arbitration Act and by virtue of section 29(2) of the Limitation Act,” the Court said..However, when the subject matter of arbitration is a commercial dispute above the specified value of Rs 3 lakh, the limitation period of 60 days under Section 13(1A) of the Commercial Court Act would apply.The application of Limitation Act is, however, not excluded by the Commercial Courts Act, the Court made it clear and in rare situations where an appeal, under Section 37 is less than the specified value of Rs. 3 lakh, the limitation under Articles 116 and 117 of the Limitation Act will apply..Regarding the correctness of NV International, the Court accepted the three-fold arguments made by Amalpushp Shroti in this regard.The Court accepted that in NV International, it had failed to notice the provisions of the Commercial Courts Act and the judgment would be per incuriam on that count.Consequently, the period of 90 days plus 30 days and not thereafter mentioned in section 34(3) of the Arbitration Act cannot now apply since the limitation period for filing of appeals under the Commercial Courts Act being 60 days and not 90 daysLastly, there being no provision curtailing the condonation of delay beyond the period provided in section 13 of the Commercial Courts Act, bodily lifting the same from the last part of section 34(3) into section 37 of the Arbitration Act as was done in NV International would also be unwarranted, the Court said..It therefore overruled NV International while holding that delay can be condoned in exceptional circumstances and it has to be done keeping in mind the object of speedy disposal sought to be achieved both under the Arbitration Act and the Commercial Courts Act."Given the aforesaid and the object of speedy disposal sought to be achieved both under the Arbitration Act and the Commercial Courts Act, for appeals filed under section 37 of the Arbitration Act that are governed by Articles 116 and 117 of the Limitation Act or section 13(1A) of the Commercial Courts Act, a delay beyond 90 days, 30 days or 60 days, respectively, is to be condoned by way of exception and not by way of rule," the judgment said. .Consequently, the appeals against Delhi and Bombay High Court judgments were dismissed. However, the top court set aside the judgment of the Madhya Pradesh High Court on the ground that it was bound to follow NV International which was at that point of time binding on it by virtue of Article 141. .[Read Judgment]