Arbitral Award- laws on condonation of delay
in filing/refiling OF objection
By way of
the present write up the law is being analyzed as regards the issue as to
Whether Court Can Condone the Delay in filing objection to arbitral award and
also re-filing the application to Set Aside a Domestic Award beyond 3 months
and 30 days? The wholesome discussion, rather than a mere penumbra, therefore,
shall follow herein.
We know that objection to a domestic arbitral award is required to be
filed within 90 days from the date of receipt of signed copy of award from an
Arbitrator and in exceptional case a further period of 30 days in preferring
objection could be granted. No objection could be preferred beyond four (4)
months as per the dicta laid down by Supreme Court in Union of India vs. Popular
Construction Co. (2001) 8 SCC 470. However, there may be situation when the objection to arbitral award is
filed within the stipulated period of 90/120 days, as the case may be, but due
to the objection in the registry of high court, technical or substantive, the
same may be finally cleared after the prescribed limitation period. As per
Delhi High Court (original Side) Rules, the delay in re-filing could be
condoned up to 30 days. Though, it may be noted that seeking condonation of
delay in filing the objection to arbitral award or seeking condonation of delay
in refilling the objection are on different footing. The rigour of limitation period
for filing the objection to arbitral award is much higher than seeking
condonation of delay beyond 30 days for refilling. The courts have dealt with
the issues of filing objection to arbitral award as well as for refilling.
The limitation period for filing objection
to set aside a domestic award in India is 3 months and 30 days from the date of
receipt of the arbitral award as per the
proviso to Section 34 (3) of the Arbitration & Conciliation Act, 1996 (‘Arbitration
Act’) but not thereafter. This time limit is not liable to be extended as
is held in Union of India vs. Popular
Construction Co. (Supra).
It is significant to point out that
mere filing of application/objection within limitation period, only, with a
view to meet the limitation period, but missing the substantive particulars of
the objection cannot probably be entertained. The period of limitation is
prescribed for the purpose of filing a substantive petition and some anomaly or
omissions could be rectified and therefore, re-filing option to that extent
could be availed of, but to say, that filing is done in a mere skeletal manner
with no corresponding details, should not be construed as filing. Thus, what
follow is that, once, the objection under Section 34 of the Arbitration Act is
filed, the same should include necessary, proper and relevant documents and the
defect shall only revolve around some minor omissions or rectifications and no
substantive changes could be contemplated for re-filing.
The moot point, therefore, shall be
whether the limitation period as prescribed under Section 34(3) of the
Arbitration & Conciliation Act 1996 shall be considered as sacrosanct shall
apply in case of re-filing or not, more particularly, when only grossly incomplete
and skeletal application is preferred.? Whether the Court is empowered to condone
the delay in Re-filing such application?. Further, whether in Re-filing, the
Court can dispense with the requisite of annexing a duly signed copy of the
impugned award?
The Delhi High Court in Union
of India Vs Bharat Biotech International Ltd O.M.P (COMM) 399/2019 has
dealt with the aforesaid issues in detail. As a prelude, it may be apt to refer
that in Northern Railway Vs Pioneer Publicity Corporation Pvt Ltd, (2017) 11
SCC 234, the Supreme Court has held that Section 34(3) of the
Arbitration & Conciliation Act 1996 shall not apply while considering delay
in re-filing of the petition and that It only applies to the initial filing of
the objections under Section 34 of the Arbitration & Conciliation Act 1996.
No doubt, seeking condonation of
delay in refiling shall not be akin to seeking condonation of delay in filing
the petition itself, in as much as limitation period for filing as per section
34(3) of Arbitration & Conciliation Act is self contained and the same is fortified
by the dicta of Popular Constructions (Supra) and beyond 120 days no objection
to arbitral award can be preferred. However, the condonation of delay in
re-filing is on different footing. Though, refilling cannot be allowed as a
matter of course and delay in refiling shall have to be adequately accounted
for and explained as is held in Delhi Transco Ltd. & Anr. v. Hythro
Engineers Pvt. Ltd. 2012(3) ARB. LR 349 (Delhi). It therefore follows that
though the courts shall have discretion to condone the delay in Re-filing of
Section 34 application, but while doing so, the courts shall have to remain
reminded that the discretion cannot be applied liberally and the test of due
diligence and conduct of the applicant shall have to be given adequate consideration.
It is to be seen whether the delay in re-filing is attributed to the reasons
beyond control of the applicant or not. Clearly, no elastic permission to
condonation of delay in re-filling could be granted. This is also to be
appreciated in the backdrop of the object of the statute which is expeditious
disposal of arbitral dispute.. Reference may be have to Himachal Futuristic Vs. IT I
Ltd. 2017 SCC OnLine Del 8522.
In the context of re-filing of
objection to arbitral award and for seeking condonation of delay in refilling,
the dicta laid down captioned as Delhi Development Authority Vs Durga
Constructions Co ILR(2014) 1 Delhi 153 (DB) shall be relevant. it
is held by the Division Bench of the Delhi High Court that the courts are
empowered to condone delay in Re-filing of a petition u/s 34 (3) of Arbitration
& Conciliation Act 1996 beyond the time prescribed under the Act, still,
what shall be integral to the exercise of power is that due diligence is
exercised by the applicant and despite that delay is caused in rectification of
defects in re-filing of that in the register of court.
The law that has evolved over the
years in this regard shall reflect that the most pertinent question, which is
to be considered by the court shall be whether the original filing was otherwise
in order, and the same was not filed merely for tokenism and to meet limitation
period. If the Court finds that the
initial petition filed was woefully inadequate or insufficient then the filing
has to be treated as non est, and the date of filing has to be
treated as the date on which the petitioner re-filed the petition after
annexing all the necessary documents and removing objections raised by the
Registry. This is so, as the initial finding should not contain fundamental and
most basic defects, conversely, if the initial filing appears to be in order
and with only minor defects, then the issue of condonation of delay can be
considered by the court as held in Union of India v. Bharat Biotech
International (Supra).
In Executive Dngineer (Irrigation
& Flood Control) & Ors Vs Shreeram Constructions Co. & Ors (2010)
120 DRJ 615 (DB), the award was assailed as only a photocopy of the
Award was annexed, whereas certified copy of impugned arbitral award should have
accompanied the application under Section 34 of the Arbitration &
Conciliation Act 1996 and as such, the filing of such an objection u/s 34(3) of
the Act could be treated as a fundamental defect and shall be akin to
non-filing of objection.
What has thus clearly emerged is that
whereas judicial discretion can be exercised while dealing with the application
for seeking condonation of delay in re-filing, what is nevertheless to be seen
is that the duly signed arbitral award was placed on record at the time of
initial filing, the court fees are affixed, the vakalatnama should be complete
with all particulars accompanying statement of truth as also the supporting affidavit
must be consistent and include the documents annexed along with record and not
in mechanical manner refer such other documents which are not annexed along
with the petition. A party cannot be permitted an indefinite and unexplainable
period for refilling the application/objection against the arbitral award.
As regards the Original Side Rules,
Chapter XXVIII Rule 1, which is applicable in such cases contains merely that
the existing Practice Directions in relation to the proceedings under the
Arbitration Act shall stand incorporated by inclusion in these Rules. It does
not in any manner deal with or dispense with the requirement of annexing a copy
of the impugned award in an objection u/s 34 of the Act.
While adjudicating in Bharat
Biotech (Supra) it is observed that it is important for the Court to
bear in mind that the legislative intent is to seek expeditious disposal of
arbitration dispute and therefore statutory period is prescribed under Section
34(3) of the Arbitration & Conciliation Act 1996 for preferring objection
under the Act. The challenge to the award merely with a view to delay the
enforcement of the award by parties is deprecated. The very object of alternate
dispute resolution system is based on early resolution of dispute and it seeks
to remove the unwarranted obstacle in the way of enforcement of arbitral award.
It is settled law that in case
the petition filed originally is a non-est
filing, then, as and when a valid petition is filed, the said date will be
treated as a date of fresh filing. It is equally settled that in case a proper
petition is filed, but it has certain defects which are not fundamental to the
filing but are only perfunctory, then, the Courts have to adopt a liberal
approach in re-filing, provided the delay is not unduly long and the party is
able to show ‘sufficient cause’ that prevented the re-filing within a
reasonable period.
In the case of Durga
Construction (supra) the Division Bench held that where the petitions
filed by a party are hopelessly inadequate and insufficient or contain defects
which are fundamental to the institution of the proceedings, the filing would
be non est and of no consequence. In
such a case, benefit of initial filing cannot be given and the date on which
defects are cured, would be the date of initial filing. Relevant portion of the
judgment is as under:-
“17. The cases of
delay in re-filing are different from cases of delay in filing inasmuch as, in
such cases the party has already evinced its intention to take recourse to the
remedies available in courts and has also taken steps in this regard. It cannot
be, thus, assumed that the party has given up his rights to avail legal remedies.
However, in certain cases where the petitions or applications filed by a party
are so hopelessly inadequate and insufficient or contain defects which are
fundamental to the institution of the proceedings, then in such cases the
filing done by the party would be considered non est and of no consequence. In
such cases, the party cannot be given the benefit of the initial filing and the
date on which the defects are cured, would have to be considered as the date of
the initial filing. ………”
In SKS Power Generation
(Chhattisgarh) Ltd. vs. ISC Projects Private Limited, 2019 SCC OnLine Del 8006,
Delhi High Court, while examining the petition, as a matter of record, found
that the petition was filed without any affidavit, Vakalatnama or documents and
therefore, held that it was only a ‘bunch of papers’ and not a proper petition.
In the case of Oil and Natural Gas Corporation Ltd v. Joint Venture of Sai Rama
Engineering Enterprises (Sree) & Megha Engineering & Infrastructure
Limited (Meil), 2019 SCC OnLine Del 10456, basic parameters were laid
down, which cumulatively, must be fulfilled, in order to term the filing as a
‘proper’ filing. Thus, what clearly emerges thus, in the opinion of the Delhi
High Court is, that a petition, when filed, can be termed as a ‘bunch of
papers’ when it lacks all the parameters as detailed in the various judgments,
cumulatively. However, when the petition filed substantially complies with most
of the parameters, it cannot be said that a mere ‘bunch of papers’ is filed.
This expression is intended to apply to a situation where the petition is filed
without Vakalatnama, Statement of Truth, Signatures, Court Fees etc.
cumulatively, and is ‘hopelessly inadequate’ in the words of the Division Bench
in Durga
Construction (supra).
As narrated above, Re-filing of a
petition is governed by the Delhi High Court Rules, as mentioned above, which
require refiling to be done within a time of 7 days at a time and 30 days in
aggregate as per Rule 5.
In the case of Union
of India vs. M/s. Gupta Construction Co. and Anr., 2014 SCC Online Delhi 968,
it is held that while dealing with delay in re-filing of a petition under
Section 34 (3) of the Act, if it appears to the Court that the grounds taken by
the petitioner are bona fide, then, the benefit of delay would go in favour of
the petitioner. If original petition is filed in time, as far as re-filing is
concerned, in Delhi Development Authority v. Durga Construction Co (Supra)
the Division of Delhi High this Court has come to the conclusion that the
aspect of re-filing has to be considered as per its own merit.
In the said case also delay in re-filing was
contested under the provisions of Rule 5 of the Delhi High Court Rules. The
Division Bench was of the view that Court has the jurisdiction to condone the
delay in refiling, even if the period extends beyond the time specified in
Section 34(3) of the Act, subject, of course, to the sufficient cause being
shown by the applicant and the Court being satisfied that the matter was
pursued diligently. In Durga Constructions (Supra) relevant
paras of the judgment are as under :-
“12. It is also contented by
the counsel for respondent that as per Rule 5 in Chapter 1-A (a) of Volume 5 of
the Delhi High Court Rules, the objections should have been re-filed within a
time not exceeding 7 days at a time, and 30 days in aggregate to be fixed by
the Deputy Registrar/Assistant Registrar, Incharge of the Filing Counter. Rule
5(3) of the said Rules also makes it abundantly clear that in case the petition
is filed beyond the time allowed by the Deputy Registrar/Assistant Registrar,
In charge of the Filing Counter under Sub-Rule 1, it shall be considered as a
fresh institution. The moment it becomes a fresh filing, then under the settled
law, the delay beyond the expiry of prescribed period cannot be condoned on any
ground. The maximum period of 30 days is provided under Rule 5, Chapter 1, Part
A of Vol. 5 of the High Court Rules and Orders for removing the objections by
re-filing of the petition. In the present case, the same was not done and the
application was filed after the expiry of 166 days”
A plain reading of section 34(3)
of the Act indicates that the period of limitation prescribed is with respect
to making an application for setting aside an award and not in respect of
further steps once such an application is made. Thus, there is no time
specified in the Act, in respect of re-filing of an application under section
34 of the Act, which has been returned to remove to certain defects. Thus, in
our view, while section 34(3) of the Act does indicate the intention of the
legislature to ensure that there is no undue delay in filing of an application
under section 34 of the Act, the same does not provide any time limit for
re-presenting the application. Any restriction with regard to the jurisdiction
of the court in condoning the delay in re filing cannot be read into the
provision of section 34(3) of the Act.
It is now well-settled that
limitation does not extinguish an obligation but merely bars a party to take
recourse to courts for availing the remedies as available to the party. Thus,
in the event a party fails to take expeditious steps to initiate an action
within the time as specified, then the courts are proscribed from entertaining
such action at the instance of such a party. The rationale of prescribing time
limits within which recourse to legal remedies can be taken has been explained
by the Supreme Court in the case of Bharat Barrel and Drum Mfg. Co. Ltd. v. ESI
Corpn., (1971) 2 SCC 860 as under:
“7. … The necessity for
enacting periods of limitation is to ensure that actions are commenced within a
particular period, firstly to assure the availability of evidence documentary
as well as oral to enable the defendant to contest the claim against him; secondly
to give effect to the principle that law does not assist a person who is
inactive and sleeps over his rights by allowing them when challenged or
disputed to remain dormant without asserting them in a court of law. The
principle which forms the basis of this rule is expressed in the maximum
vigilantibus, non dermientibus, jura subveniunt (the laws give help to those
who are watchful and not to those who sleep). Therefore the object of the
statutes of limitations is to compel a person to exercise his right of action
within a reasonable time as also to discourage and suppress stale, fake or
fraudulent claims”.
It is in Shree Ram Construction Co.
(supra) that the Court actually examined as to what is the magnitude of delay
in re-filing, which the Court may tolerate and permit to be condoned in a given
case. Obviously, there cannot be any hard & fast rule in that respect, and
the Court would have to examine each case on its own facts & merits and to
take a call whether, or not, to condone the delay in refiling the objection
petition, when the initial filing of the petition is within the period of
limitation. However, what is to be borne in mind by the Court is that the
limitation period is limited by the Act to three months, which is extendable,
at the most, by another thirty days, subject to sufficient cause being
disclosed by the petitioner to explain the delay beyond the period of three
months. Therefore, it cannot be that a petitioner by causing delay in re-filing
of the objection petition, delays the re-filing to an extent which goes well
beyond even the period of three months & thirty days from the date when the
limitation for filing the objections begins to run. If the delay in re-filing
is such as to go well and substantially beyond the period of three months and
thirty days, the matter would require a closer scrutiny and adoption of more
stringent norms while considering the application for condonation of delay in
refiling, and the Court would conduct a deeper scrutiny in the matter. The
leniency shown and the liberal approach adopted, otherwise, by the Courts in
matter of condonation of delay in other cases would, in such cases, not be
adopted, as the adoption of such an approach by the Court would defeat the
statutory scheme contained in the Act which prescribes an outer limit of time
within which the objections could be preferred. It cannot be that what a
petitioner is not entitled to do in the first instance, i.e. to file objection
to an award beyond the period of three months & thirty days under any
circumstance, he can be permitted to do merely because he may have filed the objections
initially within the period of three months, or within a period of three months
plus thirty days, and where the refiling takes place much after the expiry of
the period of three months & thirty days and, that too, without any real
justifiable cause or reason.
CONCLUSION
Thus, the objection to arbitral
award shall have to be initially filed within the period of 120 days (inclusive
of 30 days additional period subject to explaining reasonable cause of delay)
and not thereafter, thus, there is a clear embargo in preferring the objection
to arbitral award beyond 120 days. However, court would have jurisdiction to
condone delay in re-filing, even if the period extends beyond the time
specified in section 34(3) of the Act. However, this jurisdiction is not to be
exercised liberally, in view of the object of the Arbitration and Conciliation
Act 1996, i.e to ensure that arbitration proceedings are concluded
expeditiously. Though, delay in re-filing cannot be permitted to frustrate this
object of the Act. The applicant would have to satisfy the Court that it had
pursued the matter diligently and the delays were beyond his control and were
unavoidable. If there has been an inordinate delay such as of more than 100
days and if no satisfactory explanation is forthcoming, then the condonation for
re-filing may be declined. It is also no res
integra that a liberal approach in condoning the delay in refiling an
application under section 34 of the Act is not called for, as it would defeat
the purpose of specifying an inelastic period of time within which an
application, for setting aside an award, under section 34 of the Act must be
preferred. Thus, once the initial filing is within the 3 months limitation
period or the extended 30 days are met and if that is a valid filing, then
refilling has to be looked at with a liberal approach. Secondly, even if the
re-filing is beyond the period specified under Section 34(3) of the Act, the
delay can be condoned in view of the judicial dicta enumerated hereinabove.
------------
Anil
K Khaware
Founder
& Senior Associate
Societylawandjustice.com
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