The columnist deals with the Suo Motu Order of the Supreme Court of India dated 23 March 2020, whereby the apex court suspended the limitation period until the lockdown imposed due to Covid-19 was lifted. The Court deliberated on the difficulties faced by the affected citizens in conducting court business of filing applications, appeals, cases, petitions and so on and passed the time extension Order
A case in the District Court Bangalore, Jalan Infotech Private versus Lenovo India Private Limited on 21 May, 2020, illustrates the importance of time bar in an arbitration dispute. The petition was filed under Section 34 of the Arbitration and Conciliation Act, 1996, requesting to set aside the Arbitral Award dated 12 December 2014 passed by the Arbitrator. The case sheds light on the arbitral award problems faced by not only citizens filings various applications and petitions but also by companies who file suits concerning arbitral awards during the Covid-19. Jalan was the distributor for Lenovo Infotech for computers and its accessories. The parties had an agreement to settle their claims of proceeds annually. A dispute arose due to the payment amounts – Jalan held that the amount to be paid was less than the amount demanded by Lenovo. Further the limitation period had elapsed. Upon application, an arbitrator was appointed who held in favour of Lenovo, for the arbitral award. Jalan challenged it with an appeal only to be rejected by the District Judge of Bangalore who held that the arbitrator had dealt with the case fairly with the materials presented to him, and that the Court had no reason to overrule or review the arbitral award.
Jalan’s argument was that it was barred by time and that the respondent company had no case to its claims. For according to the Section 34 (2) of the Arbitration and Conciliation Act, 1996, an arbitral award may be set aside if the party making application offers adequate proof, wherein there some incapacity existed. However, it was found that under the Limitation Act, 1963 (Art. 133) Lenovo was within the time period. The main lesson from this case is the importance of time in the arbitral award. The companies would do well to apply their mind to specifically state under which section or sections of law the arbitration award should apply, thereby excluding any other impeding law. Companies could suffer enormous losses for the oversight of time limitation.
The question is what happens to the arbitration period in the event of the Acts of God, namely, circumstances that occur beyond the powers of human control such as earthquakes, cyclones, plagues, volcanic eruptions, pandemic and the like? Although common sense dictates that it is obvious but in the eyes of the law only what is specified is the basis for the outcome. The wisdom that common sense helps to formulate good laws holds, what does not hold is its presumption. For as the fundamental principle of law states that ignorance of law is not an excuse.
As Covid-19 hit the world and the lockdowns began early in the year and still its restrictions and disastrous consequences continue, the time barred limitations have come under the microscope of the law as much as the virus pathogens in a lab. The impact of Covid-19 on such cases is enormous as the litigant companies have to deal to rectify matters as per the direction of the courts. Indeed, the courts have taken cognizance of the same as the following Suo Motu order of the court demonstrates.
The Supreme Court of India in its order of 23 March 2020 declared: It has done away with the requirement of filing condonation of delay along with the contemplated legal proceedings. It also made it clear that this relaxation is only for the government implemented lockdown period. The purpose of this exceptional action is for the sake of all those who are faced with such problems as filing or attending court proceedings due to the suspension of all services to the people, the need for social distancing, lack of transport, cancellation of work, both public and private, etc.
What is most interesting to note here is the fact that the Article 142 of the Constitution of India has given the Supreme Court this exceptional power to deal with a case like pandemic disease:
The Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed or orders so made shall be enforceable throughout the territory of India in such manner as may be prescribed by or under any law made by Parliament and, until provision in that behalf is so made, in such manner as the President may by order prescribe. (Sec.142 (1)). The Supreme Court of India, it has been reported, heard 593 cases and delivered over 215 judgments from the beginning of lockdown until April, 2020 end; this count by now must have grown by another three times more. Of all these staggering numbers, what the companies have appreciated the most is the Suo Motu Order of the Supreme Court on the extension of the arbitration period. What the companies must carefully note is that the above discussed court order applies within the limits of the Union of India. In a globalized world India is one of the leading trade and commerce countries. With staggering volumes of business transactions there are also numerous disputes related in the area of arbitration awards. The impact of Covid-19 is unmistakable and companies across the world are trying to cope with the situation to find legal solutions.
India is a member of the Permanent Court of Arbitration (PAC) headquartered in The Hague of The Hague Convention, 1899. The Arbitration and Conciliation Act, 1996, Section 11 consisting of 12 clauses lays down rules for international arbitration. The method of arbitration rather than court suit settlements is an Alternative Dispute Resolution (ADR) method. It is able to solve disputes in trade and commerce agreeable to both the parties. The arbitrator is accepted by both the parties and as per the arbitration contract the proceedings are set. The Section 2 (1) of the Act clearly defines arbitration where at least one of the parties to the disputes is Indian citizen or body corporate. To conclude, the ADR method has been quite accessible internationally due to the validated and acceptable means of technology.
The international arbitration has not hit any roadblock due to the ongoing pandemic. In India too, it has found an increasing foothold and has been accepted by the Supreme Court of India to conduct proceedings through electronic media. Technology would further benefit companies both in speed and in financial terms to conduct dispute resolutions
