Arbitration | Limitation For S. 34 Appeal Runs From Disposal Of S.33 Application Whether Allowed Or Rejected: Supreme Court

The Supreme Court on Tuesday (June 2) reiterated that the limitation period under Section 34(3) of the Act for filing an application seeking setting aside of an arbitral award would begin from the date on which a Section 33 application is disposed of.

“Once proceedings under Section 33 are initiated and entertained by the Arbitral Tribunal, the award remains subject to the limited jurisdiction of the tribunal for correction, interpretation, or supplementation as contemplated under the provision. So long as such proceedings remain pending, the parties cannot be compelled to institute proceedings under Section 34 merely as a matter of abundant caution. The parties can effectively pursue their remedy under Section 34 only upon conclusion of the proceedings under Section 33. Consequently, the limitation prescribed under Section 34(3) can start only from the date on which the proceedings under Section 33 are disposed of.”, observed a bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe, citing USS Alliance vs State of Uttar Pradesh, 2023 LiveLaw (SC) 20.

The Court rejected the contention that the limitation period for filing a challenge under Section 34 would commence from the date of disposal of a Section 33 application only if the application was allowed. It held that the relevant date is the disposal of the Section 33 application itself, regardless of its outcome. Accordingly, whether the application seeking correction or interpretation of the arbitral award is allowed, rejected, or otherwise disposed of, the limitation period under Section 34 must be computed from the date of such disposal.

“…the contention of the Respondent that only an application which is “maintainable” under Section 33 can defer the commencement of limitation under Section 34(3), cannot be accepted. Whether the application under Section 33 ultimately succeeds or fails, or whether the Arbitral Tribunal eventually finds that no correction or modification of the award is warranted, is not determinative for the purpose of Section 34(3). What is relevant is that whether the jurisdiction of the Arbitral Tribunal under Section 33 had been formally invoked and that such proceedings remained pending consideration before the tribunal.”, the Court observed.

Background

The dispute arose out of land acquisition proceedings initiated for a national highway project in Karnataka's Ballari district. Following acquisition under the National Highways Act, 1956, compensation was determined by the competent authority. Dissatisfied with the compensation, NHAI invoked arbitration under the National Highways Act.

After the High Court remanded the matter for fresh consideration, the Arbitrator passed an award granting certain statutory benefits available under the Land Acquisition Act, 1894.

Subsequently, NHAI filed an application under Section 33(1)(a) of the Arbitration Act seeking correction of the award, contending that the grant of additional market value and interest under the Land Acquisition Act was legally unsustainable. The landowner also filed a Section 33 application seeking an additional award. Both applications were dismissed by the Arbitrator through a common order.

After receiving a certified copy of that order, NHAI filed applications under Section 34 challenging the arbitral award. The District Court condoned the delay and entertained the applications. However, the Karnataka High Court quashed that order, holding that NHAI's Section 33 application was not maintainable and therefore could not extend the limitation period under Section 34(3).

Decision

Setting aside the High Court's judgment, the Supreme Court observed that “for the purposes of computation of limitation under Section 34(3) of the Act, it is the date of disposal of the application under Section 33 of the Act that would earmark the starting point of limitation for filing an application under Section 34 of the Act.”

The Court emphasized that the Act does not distinguish between Section 33 applications that are ultimately allowed and those that are dismissed. Nor does it stipulate that only a "maintainable" Section 33 application can postpone the commencement of limitation under Section 34.

According to the Court, had Parliament intended to restrict the benefit only to successful or maintainable applications, it would have expressly incorporated such a qualification into the provision.

"The said provision does not distinguish between the applications which are ultimately allowed or dismissed. The said provision also does not indicate that only an application which is maintainable under Section 33 of the Act would defer the commencement of litigation under Section 34(3) of the Act. Had the legislature intended to restrict the benefit only to the applications which were ultimately allowed or which were held to be maintainable, it would have expressly provided so. The Court cannot read into the provision a restriction which the legislature itself has not consciously incorporated.", the Court observed.

“…once jurisdiction under Section 33 is formally invoked and such proceedings are entertained by the Arbitral Tribunal, the limitation for filing an application under Section 34 would commence only from the date on which such request is disposed of by the Arbitral Tribunal.”, the court added.

Ultimately, the Court found that since the NHAI had received the certified copy of the order disposing of the Section 33 applications on September 15, 2022 and filed its Section 34 applications within the prescribed statutory period thereafter, hence the High Court committed an error in interfering with the District Court's order condoning the delay in filing of an application under Section 34.

The appeal was allowed.

Cause Title: NATIONAL HIGHWAY AUTHORITY OF INDIA VERSUS T. YOUNIS & ANR.

Citation : 2026 LiveLaw (SC) 589

Click here to download judgment

Appearance:

For Petitioner(s) : Ms. Pinky Anand, Sr. Adv. Mr. Tarun Dua, Adv. Mr. Sumit Gupta, Adv. Ms. Saudamini Sharma, Adv. Mr. Akshay Kumar Tiwari, Adv. Ms. Tanya Shrotriya, Adv. Mr. Venkita Subramoniam T.r, AOR

For Respondent(s) : Mr. Sushil Kumar Jain, Sr. Adv. Mr. Anandakumar A Magadum, Adv. Mr. Darpan Km, Adv. Ms. Amrita Sharma, Adv. Mr. Rajat Jonathan Shaw, Adv. Mr. Ajay Magadum,, Adv. Ms. Easha Chandhok, Adv. Mr. Prashant Upadhyay, Adv. Ms. Mahima Sadawat, Adv. Mr. Sidharth Jain, Adv. Ms. Rashi Bansal, AOR