In a recent judgment, the Calcutta High Court ruled that the moratorium period under Section 14 of the Insolvency and Bankruptcy Code ( IBC ) during the Corporate Insolvency Resolution Process ( CIRP ) is excluded from the limitation period for filing an application under Section 34 of the Arbitration and Conciliation Act, 1996.
The primary issue in this case concerns whether the current application under Section 34 of the Arbitration and Conciliation Act, 1996, is barred by the statute of limitations.
The counsel for the respondent Mr. Swatarup Banerjee argued that under Section 34(3) of the Arbitration and Conciliation Act, 1996, an application to set aside an arbitral award must be made within three months of receiving the award. The proviso allows the court to entertain an application within an additional thirty days if sufficient cause is shown, but not beyond this period. Therefore, the statute explicitly bars any application filed after this three-month period, with the thirty-day extension being at the court’s discretion and not part of the limitation period.
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In this case, the petitioner received the arbitral award on November 30, 2019. The current challenge was filed under Section 34 on November 16, 2023, well past the three-month period and the additional thirty days.
Mr. Rohit Dasrepresenting the petitionercites Supreme Court judgments related to pandemic relaxations, arguing that the outer limit for the expiration of the limitation period was extended to February 28, 2022. Even assuming the best case for the petitioner, this extended period would have expired in May 2022.
However, the petitioner also invokes the moratorium period during the Corporate Insolvency Resolution Process (CIRP) concerning the respondent-company, which ended on August 11, 2023. According to the petitioner, this should further extend the limitation period. The petitioner argues that the application under Section 34 was filed within time, considering both the pandemic relaxation and the CIRP moratorium.
The court, however, rejected the petitioner’s attempt to combine the benefits of the pandemic relaxation and the CIRP moratorium. It emphasizes that the Supreme Court’s pandemic relaxation provided a ninety-day extension from March 1, 2022, which expired on May 29, 2022. The court asserts that the petitioner cannot defer this ninety-day relaxation period to a later date of its own choosing.
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The court further noted that the petitioner had already exhausted most of the three-month limitation period by February 28, 2020, and had only fifteen days left as of March 15, 2020. Even giving the most lenient interpretation, the petitioner would have had until May 29, 2022, to file the application under Section 34.
The court concluded that the petitioner’s application, filed on November 16, 2023, is time-barred. The petitioner cannot simultaneously claim the pandemic relaxation and the CIRP moratorium benefits, as this would contradict the intention behind the pandemic relaxation, which was to benefit those genuinely prevented from filing due to the pandemic.
The single bench of Justice Sabyasachi Bhattacharyya held that the petitioner’s application under Section 34 of the Arbitration and Conciliation Act, 1996, is barred by limitation, having been filed well beyond the permissible period. The petitioner’s attempt to combine the benefits of both the pandemic period and the CIRP moratorium fails. The application is therefore permanently time-barred, and the court does not have the power to condone the delay.
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