When Court Lacks Jurisdiction To Entertain Application U/S 34 Of Arbitration Act, It Cannot Set Aside Award On Merits: Gujarat High Court

Brief Facts:

This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 challenges the judgment dated 17.06.2017 by the 5th Additional District Judge, Surat, in Misc. Civil (Arbitration) Application No. 149 of 2007 filed under Section 34 of the Act, which sought to set aside the arbitral award dated 12.06.2006 passed by Arbitrators appointed by the Surat Adatiya Kapda Association.

The Appellant submitted that the signed arbitral award dated 12.06.2006 was dispatched after being signed by witnesses on 25.08.2006. The appellant received it on 31.08.2006, while the respondent, who initially avoided service, received it on 08.09.2006. As the respondent did not challenge the award, which was in favour of the appellant, the appellant filed an execution petition under Section 36 on 28.03.2007, which remains pending.

It was further submitted that the District Court, when the application was filed under Section-34, had no jurisdiction to entertain the application beyond the time period prescribed in Sub-section (3) of Section-34 read with the proviso to Sub-section (3) there. The maximum period within which the application under Section-34 could have been moved by the respondent was 03 months plus 30 days = 120 days.

It was also submitted that the proviso to Section 34(3) of the Arbitration Act allows a challenge to an arbitral award beyond the initial three-month period, but only within an additional 30 days. The phrase “but not thereafter” clearly sets 120 days as the maximum limit. Therefore, any application filed beyond this period is barred, and the court lacks jurisdiction to entertain or condone such delay.

Observations:

The court observed that the provisions of the Limitation Act do not apply in the proceedings under Section 34 and the period prescribed under Section-34(3) of the Arbitration Act cannot be extended beyond the time period prescribed in the proviso to Sub-section (3) of Section 34, in case an application is filed beyond the period of 03 months.

It further said that the respondent argued that the award was a nullity due to the absence of an arbitration agreement and the unilateral appointment of the arbitrator by the Surat Adatiya Kapda Association without their consent. However, these contentions regarding the validity of the arbitral process cannot be entertained because the Section 34 application challenging the award was filed beyond the statutory time limit and is thus barred by limitation.

The court concluded that once the Court lacked jurisdiction to entertain the Section 34 application—having been filed beyond the limitation prescribed under Section 34(3) and its proviso—any finding on the validity of the arbitral award as void ab initio was without legal authority. Entertaining a time-barred application under Section 34 was a grave error of law on the part of the learned Court.

Accordingly, the present appeal was allowed and the impugned order was set aside.

Case Title: YASH TEXTILES Versus VINAYAK FASHIONS

Case Number: R/FIRST APPEAL NO. 2507 of 2017

Judgment Date: 11/06/2025

Appearance:

MS.DILBUR CONTRACTOR(6388) for the Appellant(s) No. 1

MR DAKSHESH MEHTA(2430) for the Defendant(s) No. 1

MR. RUSHANG D MEHTA(6989) for the Defendant(s) No. 1

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