Order XXIII Rule 1(4) CPC Not Applicable To Application Challenging Arbitral Award U/S 34 Arbitration & Conciliation Act: Patna High Court

The Patna High Court has held that an application filed under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award is not a suit. Thus, the provisions of Order XXIII Rule 1(4) of the Civil Procedure Code, 1908 pertaining to withdrawal of suit shall not apply.

Justice Anil Kumar Sinha rejected the petitioner's argument that liberty to file a fresh application was not sought by the Respondent while withdrawing its earlier application, and observed,

"As per Section 19 of the 1996 Act, the arbitral tribunal shall not be bound by the Civil Procedure Code, 1908 or the Indian Evidence Act and the parties are free to determine their own procedure to be followed in arbitration proceeding based upon the equal treatment. Though, certain provisions of the Civil Procedure Code, 1908 for the purpose of execution of decree and in taking assistance of the Court for recording evidence are available, but in my opinion, an application challenging the award by way of Misc. case before the District Judge is not a suit and, accordingly, the provisions of Order XXIII Rule 1 (4) of the Civil Procedure Code, 1908, will not apply in an application under Section 34 of the 1996 Act."

Background

The petitioner is a firm engaged in selling petroleum products. The petitioner company was granted the license for operating a petroleum product by BPCL. However, the said license was canceled, which was challenged by the petitioner. The High Court directed the petitioner to arbitration and appointed an Arbitrator.

After the conduction of the arbitral hearing, an award was passed in favor of the petitioner. The award quashed the termination of the license holding it to be illegal. The respondent, Bharat Petroleum Corporation Ltd [BPCL], filed a case under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award.

However, the same was dismissed as withdrawn based on objections raised by the petitioner. Thereafter, a fresh application was filed by the Respondent herein, after complying with requirement of Section 34 (5) of the 1996 Act.

The present petition was filed under Article 227 challenging the District Judge's order to admit the case for hearing.

Findings of the Court

Having refused to interfere with the impugned order, the Court noted that the facts of the matter of maintainability before the District Judge show that the said case was withdrawn for a bonafide reason, for compliance with the statutory provision of the 1996 Act was not adhered to.

The Court also rejected the petitioner's second condition that there has been a delay of 239 days, which is more than the prescribed period for challenging an award under Section 34(3) of the 1996 Act.

It referred to several judicial precedents to note that if the failure of prior proceeding was due to a defect of jurisdiction or other cause of like nature, Section 14 of the Limitation Act could be pressed into service.

In the present case, BPCL filed the first case within time. However, due to statutory defect, which is not mandatory, the same was re-filed after fourteen days of withdrawal of the first case. Therefore, the Court noted,

"Since the first case was withdrawn on the objection raised by the petitioner and for bona fide reason, the second application was filed immediately thereafter, in my opinion, the principle of Section 14 of the Limitation Act will come into play in the facts of the case in favor of the petitioner and after applying the principle of Section 14 of the Limitation Act, the second case (Misc. Case No. 12 of 2019) was filed within the limitation period of 120 days by the respondent-Corporation, i.e., on 80th day."

Case Title: M/s Dwivedi and Sons v. Bharat Petroleum Corporation Ltd.

Citation: 2022 LiveLaw (Pat) 2

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