Challenging Varindera: Time to Reform Condonation?

Introduction

The Supreme Court recently held that the view taken in Union of India v. Varindera Constructions Ltd.¹, of not condoning the delay under the Limitation Act, 1963² (Limitation Act) for Section 37³ appeal under the Arbitration and Conciliation Act, 1996 (the Act) needs a reconsideration. The Supreme Court took note of Section 43 of the Act⁴ which provides for direct application of the Limitation Act to arbitrations. This article delves deep into the provisions of Limitation Act and its interplay with the Arbitration & Conciliation Act⁵. Further, it tries to show how the interplay between the statutes cannot be applied to appeals filed under Section 37 of the Act⁶, in a way providing reasons as to why the view taken in Varindera⁷ needs a reconsideration.

The interplay

The law that stands today is very strict and has stood too many tests by the Supreme Court. Section 34(3) of the Act⁸ accords for 90 days to be the time-limit to file an application under Section 34 of the Act. However, the proviso to Section 34(3) of the Act gives a further period of 30 days which can be condoned by the Section 34 court if there is a sufficient cause shown. This amounts to a total of 120 days for anyone to file an application under Section 34 of the Act. This has been strictly interpreted by the Supreme Court wherein the Section 34 courts are not allowed to condone any delay beyond 120 days.⁹

The reason to have a strict interpretation is the language adopted in Section 34. The word used in proviso to Section 34(3) of the Act is “but not thereafter”.¹⁰ This shows that the maximum period for court to condone the delay under Section 5, Limitation Act¹¹, is only 30 days and not thereafter. The power for further condonation is taken away by the usage of words “but not thereafter”.

This strict interpretation should also be looked into in yet another angle. Section 34(3) of the Act provides for a time period of 90 days. It further enables the court to condone the delay a period of 30 days if sufficient cause is shown. It is pertinent to note that this is the same power as that of any court under Section 5, Limitation Act. This power to condone a period beyond 90 days to 120 days is discretionary in nature. The purpose of Section 5, Limitation Act, is to condone a stipulated period to do substantial justice. The very purpose of condoning the delay is given with a further prescribed period of 30 days under Section 34(3) of the Act. This impliedly serves the purpose of Section 5, Limitation Act, the only difference being that there is a set period under Section 34(3) of the Act and there is no specific period under Section 5, Limitation Act. The very fact that a further condonable period is provided in the provision means that there is an implied exclusion of Section 5, Limitation Act beyond the stipulated period.

This implied exclusion should be looked into keeping in mind Section 29(2), Limitation Act¹², wherein application of Sections 4 to 24, Limitation Act¹³ is excluded insofar as it is expressly excluded by the special law. The very usage of the word “not thereafter” under Section 34 of the Act expressly excludes the application of Limitation Act. The very fact there is a further condonable period beyond the prescribed period also shows that there is an exclusion of application of Limitation Act.

It is pertinent to note the language employed in Section 29(2), Limitation Act. The provision provides for exclusion of Sections 4 to 24, Limitation Act only insofar as there is a period prescribed by the special law which is different from the period prescribed in the Schedule of the Limitation Act. In other words, for application of Section 29(2), Limitation Act, having a prescribed period by the special law is a sine qua non. This can be inferred from the provision as it says that this exclusion can be where a special law or local law prescribes for a time-frame.

Why Varindera needs a reconsideration

The current position of law warrants for an intervention and reconsideration of Varindera¹⁴.¹⁵ The Supreme Court in Varindera¹⁶ upholding the view taken by the High Court dismissed the special leave petition on the ground that there was a delay in filing Section 37 of the Act. It accorded for intention of the Act and held that the High Court cannot condone a delay beyond 120 days. The reasoning adopted reflects that the Supreme Court puts Section 37 of the Act on the same footing as that of Section 34 of the Act in terms of condonation of delay. The Supreme Court held that since Section 37 of the Act which is an appellate proceeding in continuation of the original proceeding has to go through the same drill as that of Section 34 of the Act has a strict timeline of 120 days.

This reasoning adopted is very narrow and warrants reconsideration for various reasons. Firstly, the Supreme Court has not accorded for the basic difference between Sections 34 and 37 of the Act. The notable difference is that there is no prescribed time period stipulated under Section 37 of the Act unlike Section 34 of the Act. Therefore, application of provisions of the Limitation Act for Section 37 of the Act cannot be same as that of Section 34 of the Act. This is in light of the precondition required for Section 29(2), Limitation Act to apply. In other words, the preconditions of Section 29(2), Limitation Act are not being fulfilled. Section 37 of the Act does not prescribe a special period other than the Schedule in the Limitation Act. Since there is no deviation from the Schedule of the Limitation Act by prescribing a time period, there cannot be an express exclusion of Sections 4 to 24, Limitation Act as enumerated under Section 29(2), Limitation Act. This is because Section 29(2), Limitation Act, only applies to such provisions of special law where there is a different time- frame prescribed.

In Section 37 of the Act there is no specified period beyond which the courts are obligated to not condone delay which is again a huge deviation from Section 34 of the Act. This can be said by reading Sections 37¹⁷ and 43¹⁸ of the Act harmoniously. A bare reading of Section 37 of the Act, shows that the appeal lies with the Court authorised by law who hears appeals from original decrees. Section 43 of the Act stipulates that Limitation Act will apply and further stipulates under Section 43(3) that the court have the power to extend the time-limit. This reflects that the Limitation Act applies to all provisions of the Act unless there is express exclusion as stipulated under Section 29(2). This now means that Section 43 of the Act will take effect. The whole of Limitation Act including Section 5, Limitation Act will apply. The discretionary powers of the courts under Section 5, Limitation Act will take effect. The High Court having sufficient cause being shown can condone any delay. This is also reflected under Section 37 of the Act, wherein the appeal lies under the Court authorised by law who hears appeals from original decrees.

Secondly, the reasoning adopted by the Supreme Court insofar as that the test should be similar as appellate proceeding is a continuation of the original proceeding is flawed. This can be said as the language adopted in Section 37 of the Act is different as that of Section 34 of the Act. The principle of applying the same test to appellate proceedings can only be when the intent of appellate proceedings and the original proceedings are same in nature. In the statute there is a clear distinction w.r.t. intent of Section 37 of the Act. The legislators clearly intended to have a strict approach under Section 34 of the Act unlike Section 37 of the Act. The legislators intended to provide High Court wider powers under Section 37 unlike the District Courts under Section 34 of the Act. This can be seen as there is no whisper of any time period restricting the scope of inter-reference of the High Court.

Thirdly, the view of Varindera¹⁹ needs a reconsideration also for the fact that it places High Court and District Court at the same footing. This cannot be the case as High Court normally have wider powers compared to District Courts in terms of condonation of delay. The High Court is a constitutional court and has a constitutional duty to interfere in the interest of justice. This interference is restricted by the view taken by Varindera²⁰.

Conclusion

This interplay between the Limitation Act and the Arbitration & Conciliation Act has to be carefully looked into by the Supreme Court. The view taken in Varindera²¹ hampers the very foundation and sanctity of High Courts. The Supreme Court should also keep in mind the hardships faced in terms of financial sense while taking such strict views. It is high time that courts should adopt a view which supports inter-reference in the interest of justice rather than focusing on the stagnant aims and objects of statutes.