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Limitation Period Applies To Application Filed Under Section 8 Arbitration & Conciliation Act

In SSIPL LIFESTYLE PRIVATE LIMITED vs VAMA APPARELS (INDIA) PRIVATE LIMITED & ANR., CS (COMM) 735/2018, I.As. 15576/2018, 2756/2019, 2757/2019 & 2758/2019, the question before the Delhi High Court was whether there is a limitation period prescribed for filing of an application under Section 8 of the Arbitration and Conciliation Act? To this question the court also decided to seek answer to whether the limitation for filing of the written statement as prescribed in the Civil Procedure Code, 1908 as also the Commercial Courts Act, 2015 would be applicable for filing of a Section 8 application.

The court referring to various judgments observed that under the unamended provision, the objection as to the existence of the arbitration clause could be taken anytime (i) prior to the filing of the written statement (ii) in the written statement (iii) along with the written statement. So long as the written statement was not filed, Section 8 application could be filed. The Legislature has now made a conscious change by using the language “not later than the date of”. The use of the word ‘date’ itself signifies precision. A perusal of the various amendments brought about in 2016 Amendment Act show that the intention was to tighten the time limit within which arbitration proceedings shouldncommence and conclude. For example, under Section 9, previously, no limitation was fixed for commencement for invoking arbitration after seeking interim relief. However, in the amended provision, within 90 days after the interim order is passed, the arbitral proceedings have to bencommenced. Similar amendments have been brought about in Section 11. Section 29A provides that the award in matters other than international commercial arbitration may be made as expeditiously as possible and an endeavour may be made to dispose of the matter within a period of twelvenmonths from the date of completion of pleadings. Section 29 B provides for the adoption of a fast track procedure and the award under this section shall be made within a period of six months from the date of the arbitral tribunal enters upon the reference. Thus, the entire emphasis in the 2016
amendments have been to speeden arbitral proceedings. It is in this context that the change of language in Section 8 from “when” to the “date of” is to be construed. In the opinion of this Court, the words ‘not later than the date of submitting’ means that the date of submitting the statement on the substance of the dispute i.e. the written statement in a civil suit, is the outer limit for filing of a Section 8. Hence, in effect, there is a limitation period which is prescribed. 

Viewed in the background of the amendments in the CPC including the recent amendments in CPC in the context of the Commercial Courts Act, 2015 and the amendments in the Arbitration Act, 2016, this Court concludes that the amendment is a conscious step towards prescribing a limitation period
for filing the Section 8 application. The mention of the word “date” in the amended provision means that it is a precise date and usually incapable of ambiguity. The same is a crystalized date and not a ‘period’ prior to the filing of the first statement on the substance of the dispute. The entire intention is
that those parties who wish to proceed for arbitration ought to do so with alacrity and speed and not merely procrastinate.

The court referring to judgment in Krishan Radhu v. Emmar MGF Construction Pvt. Ltd. [CS(OS) 3281/2014, decided on 21st December, 2016, also decided that in view of the amended language in Section 8, the limitation for filing of the written statement under CPC for non-commercial suits and under the Commercial Courts Act for commercial suits would be applicable for filing of an application under Section 8. In view thereof, the Court concluded that the maximum period would be 90 days for ordinary civil suits and 120 days for commercial suits.

The court further observed that the arbitration clause, can thus be waived by a party under dual circumstances – one by filing of a statement of defence or submitting to jurisdiction and secondly, by unduly delaying the filing of the  application under Section 8 by not filing the same till the date by which the statement of defence could have been filed. Under both these situations, there can be no reference to arbitration

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