Commercial Courts Act Does Not Exclude Application Of Section 5 Limitation Act : Supreme Court

The Supreme Court held that the application of section 5 of the Limitation Act is not excluded by the scheme of Commercial Courts Act.

This means that delay for filing appeals under Section 13 of the Commercial Courts Act can be condoned by showing sufficient cause as per Section 5 of the Limitation Act.

The bench headed by Justice RF Nariman observed thus while overruling the decision in M/s NV International vs State of Assam which had strictly held that a delay of more than 120 days in filing of appeals under Section 37 of the Arbitration and Conciliation Act 1996 cannot be condoned.

One of the issues considered by the bench, also comprising Justices BR Gavai and Hrishikesh Roy, was whether the application of section 5 of the Limitation Act is excluded by the scheme of the Commercial Courts Act. 

To answer this, the court noted that section 13(1A) of the Commercial Courts Act does not contain any provision akin to section 34(3) of the Arbitration Act. Section 13(1A) of the Commercial Courts Act only provides for a limitation period of 60 days from the date of the judgment or order appealed against, without further going into whether delay beyond this period can or cannot be condoned, the bench said.

To contend that the Section 5 of Limitation Act stands excluded, the respondent's counsel [Dr. Amit George] had placed reliance on the judgment in CCE & Customs v. Hongo India (P) Ltd., (2009) 5 SCC 791 which dealt with section 35-H(1) of the Central Excise Act. The court observed:

Unlike the scheme of the Central Excise Act relied upon in Hongo (supra), there are no other provisions in the Commercial Courts Act which provide for a period of limitation coupled with a condonation of delay provision which is either open-ended or capped. Also, the period of 180 days provided was one indicia which led the Court to exclude the application of section 5 of the Limitation Act, as it was double and triple the period provided for appeals under the other provisions of the same Act. Section 13(1A) of the Commercial Courts Act, by way of contrast, applies an intermediate period of 60 days for filing an appeal, that is, a period that is halfway between 30 days and 90 days provided by Articles 116 and 117 of the Limitation Act.

Yet another contention was made by referring to Section 21 of the Commercial Courts Act. It was urged that the non-obstante clause contained in the Commercial Courts Act would override other Acts, including the Limitation Act, as a result of which, the applicability of section 5 thereof would be excluded. The court negatived this contention by referring to B.K. Educational Services (P) Ltd. v. Parag Gupta & Associates, (2019) 11 SCC 633

"For all these reasons we reject the argument made by Shri Georgethat the application of section 5 of the Limitation Act is excluded given the scheme of Commercial Courts Act", the judgment said.

SC Overrules 'NV International' Verdict Which Held Delay Beyond 120 Days For Arbitration Appeal Under Section 37 Can't Be Condoned

The bench also clarified that the expression "sufficient cause" is not elastic enough to cover long delays beyond the period provided by the appeal provision itself.

"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. 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 laches", the court added.

Case: Government of Maharashtra vs Borse Brothers Engineers and Contractors Pvt Ltd. [CA 995 OF 2021]

Coram: Justices RF Nariman, BR Gavai and Hrishikesh Roy

Counsel: Sandeep Sudhakar Deshmukh, Senior Advocate Aishwarya Bhati(ASG), Amalpushp Shroti, Senior Advocate Vinay Navare, Manoj Chouhan, Dr.Amit George

Citation : LL 2021 SC 170

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