CPC Applies To Court Proceedings Arising From Arbitration Unless Excluded: Patna High Court

The Patna High Court on 6 August held that while the Code of Civil Procedure, 1908 (CPC) does not bind arbitral tribunals, it applies to court proceedings arising from an arbitral award unless expressly excluded.

A Division Bench comprising Justices Rajeev Ranjan Prasad and Ramesh Chand Malviya set aside a Commercial Court order dismissing the Bihar State Warehousing Corporation's challenge to a Rs. 5.99 crore arbitral award after it cured a Rs. 245 court fee deficit 62 days beyond the statutory outer limit. The judges held:

“Section 19 of the Act of 1996 only provides that the arbitral tribunal shall not be bound of CPC. It only excludes the applicability of CPC before the arbitral tribunal and not the proceedings before the court arising out of the arbitral award.”

The dispute arose from a 29 June 2020 agreement under which Pushpheera Infrastructure Pvt. Ltd. agreed to provide a 10,000 MT godown on rent to the Bihar State Warehousing Corporation for ten years. Following alleged delays and deviations in construction, the Warehousing Corporation cancelled the agreement on 5 April 2023.

The parties referred their disputes to arbitration. On 7 August 2024, the Sole Arbitrator passed an award of Rs. 5,99,48,823 in favour of Pushpheera Infrastructure. The award included amounts towards interest, capital subsidy, additional cost, stamp duty and compensation.

Aggrieved by the award, the Warehousing Corporation approached the Principal District Judge-cum-Commercial Court, Patna under Section 34 of the Arbitration and Conciliation Act, 1996, seeking to set it aside. It filed the application on 19 October 2024, within the prescribed limitation period.

A subsequent registry report found a Rs. 245 deficit in the court fee payable under Entry 17(iv) of Schedule II to the Court-Fees Act, 1870. The Commercial Court granted time to cure the deficiency, which the Warehousing Corporation ultimately paid on 7 February 2025.

However, on 2 April 2026, the Commercial Court dismissed the Section 34 application as time-barred. It held that the deficit court fee had been paid 62 days beyond the statutory outer limit of three months plus 30 days and could not relate back to the original filing. The Warehousing Corporation thereafter approached the Patna High Court in a commercial appeal against the dismissal.

Before the High Court, the Warehousing Corporation argued that Section 34(3) of the Arbitration and Conciliation Act, 1996 governed only the initial filing of an application challenging an arbitral award and that Section 149 of the CPC empowered the Court to permit payment of a deficit court fee subsequently.

Pushpheera Infrastructure, on the other hand, argued that once the maximum period prescribed under Section 34(3) had expired, the Commercial Court had no jurisdiction to accept the deficient court fee.

The Court rejected this contention, holding that Section 34(3), which prescribes the limitation period for challenging an arbitral award, applies to the filing of the Section 34 application and does not prescribe a separate deadline for curing a deficit in court fee. It held:

“We are of the considered opinion that sub-section (3) of Section 34 of the Act of 1996 neither prescribes any period of limitation for filing the deficit court fee nor any such provision may be read into the said sub-section of Section 34 of the Act of 1996.”

Further, the Bench held that Section 19 of the Arbitration and Conciliation Act, 1996 excludes the CPC only from proceedings before an arbitral tribunal and not from proceedings before a civil court arising from an arbitral award. It noted:

“A Civil court is ordinarily bound to follow the CPC in dealing with any proceeding before it or an application under Section 34 of the Act until and unless the applicability of the CPC has been excluded,"

Accordingly, the High Court set aside the Commercial Court's 2 April 2026 order and remitted the Section 34 application to the Commercial Court for consideration on merits, preferably within three months.

Appearances for appellant (Bihar State Warehousing Corporation): Senior Advocate Rajendra Narain; Advocates Mithilesh Kumar Rai, Annapurna Sinha and Anant Kumar Sinha.

Appearances for respondent no. 1 (M/s Pushpheera Infrastructure Pvt. Ltd.): Senior Advocate Amit Shrivastava; Advocates Kunal Tiwary and Himanshu Singh.

Appearances for the State: AC to AG Shashwat Aggarwal.