Case Note & Summary
The applicant, Bharat Electronics Limited, filed an Interim Application seeking exclusion of 1854 days from 5 April 2017 to 1 November 2022 for computing limitation to challenge an award dated 31 March 2017 passed by the Facilitation Council under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act). The award was in favor of the respondent, IBEX Integrated Business Express Pvt. Ltd. The applicant initially filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 before the Bombay High Court on 5 April 2017, but the petition was returned on 1 November 2022 due to lack of jurisdiction, as the award under the MSME Act was to be challenged before the Principal District Court. The applicant then filed the present petition on 2 November 2022. The issue was whether the period spent in the wrong forum should be excluded under Section 14 of the Limitation Act, 1963. The court held that the applicant acted bona fide and with due diligence, and the period from 5 April 2017 to 1 November 2022 is liable to be excluded. Additionally, the court noted that the period from 15 March 2020 to 28 February 2022 was excluded by the Supreme Court due to the COVID-19 pandemic. The court allowed the application, condoned the delay, and directed that the petition be considered on merits.
Headnote
A) Limitation Act, 1963 - Section 14 - Exclusion of Time of Proceeding Bona Fide in Court Without Jurisdiction - The applicant sought exclusion of 1854 days during which it pursued a remedy under Section 34 of the Arbitration Act before a court that lacked jurisdiction, as the award was under the MSME Act. The court held that the applicant acted bona fide and with due diligence, and the period spent in prosecuting the wrong forum is liable to be excluded. (Paras 1-10) B) Arbitration and Conciliation Act, 1996 - Section 34(3) - Limitation for Setting Aside Arbitral Award - The court considered the limitation period of three months plus 30 days for filing a Section 34 petition. The applicant filed the petition on 2 November 2022, which was beyond the prescribed period. However, the court excluded the period from 5 April 2017 to 1 November 2022, thereby condoning the delay. (Paras 1-10) C) MSME Act, 2006 - Facilitation Council Award - Challenge under Section 34 of Arbitration Act - The award was passed by the Facilitation Council under the MSME Act. The applicant initially filed a Section 34 petition in the wrong court, which was returned. The court held that the applicant is entitled to exclusion of time under Section 14 of the Limitation Act for the period spent in the wrong forum. (Paras 1-10) D) COVID-19 Pandemic - Exclusion of Period - The court noted that the period from 15 March 2020 to 28 February 2022 was excluded by the Supreme Court due to the pandemic. The applicant's delay during this period was also covered by the exclusion. (Para 10)
Issue of Consideration
Whether the period of 1854 days from 5 April 2017 to 1 November 2022 should be excluded in computing limitation for filing a petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an award under the MSME Act, 2006.
Final Decision
The Interim Application is allowed. The period of 1854 days from 5 April 2017 to 1 November 2022 is excluded in computing the period of limitation for filing the petition. The delay is condoned. The petition is to be considered on merits.
Law Points
- Exclusion of time under Section 14 of Limitation Act
- 1963
- Section 34(3) of Arbitration and Conciliation Act
- 1996
- MSME Act
- 2006
- COVID-19 pandemic
- bona fide prosecution
- condonation of delay
