Government Entities Must Also Be Viewed Equally In Delay Condonation Applications Under Section 37 Of Arbitration Act: Calcutta High Court

The bench held that while government agencies are not granted undue favor as litigants, there should also be no undue bias against them.

Brief Facts:

The matter pertained to an application seeking the condonation of delay in filing an appeal under Section 37 of the Arbitration and Conciliation Act, 1996. Hindustan Aeronautics Ltd. (Petitioner) contended that the delay was primarily due to differences of opinion among the advocates advising it and procedural delays in obtaining administrative approvals from intra-departmental authorities. This, it argued, constitutes sufficient cause for the delay warranting the court's indulgence to allow the appeal to proceed despite being filed late.

In opposition, Civcon Construction Pvt. Ltd. (Respondent) argued against the condonation of delay pointing out that there was a delay of approximately 71 days in filing the appeal. The Respondent referred to Government of Maharashtra (Water Resources Department) Represented by Executive Engineer vs. Borse Brothers Engineers and Contractors Private Limited (2021) 6 SCC 460 where it was held that in commercial disputes, the limitation period for appeals under Section 37 of the Arbitration and Conciliation Act is 60 days. The Respondent argued that the Supreme Court's interpretation in this judgment regarding the definition of "sufficient cause" in the context of condoning delays highlights that such delays should be treated as exceptions rather than the rule. The Supreme Court noted that the statutory goal of speedy disposal under the Arbitration Act and the Commercial Courts Act requires strict adherence to the limitation periods and delays beyond these periods can only be condoned in exceptional cases where the party seeking condonation has acted bona fide.

Observations by the High Court:

The High Court noted that the application presented by the Petitioner outlined the reasons for the delay which included the need to obtain necessary administrative approvals from various authorities. It noted that this process caused unavoidable delays in approving the appointment of an alternative advocate. Also, the Petitioner explained that the change in advocates was driven by differing legal opinions regarding the necessity and feasibility of filing the current appeal.

The High Court noted that the application provided detailed accounts of the timeline, including when the papers were transferred from the previous advocate to the current one around January 29, 2024, and when the current advocate decided to file the appeal against the order dated October 13, 2023. After a thorough review of these details, the High Court found that the Petitioner demonstrated sufficient cause for the delay. While considering the Petitioner's status as a government entity, the High Court held that it is also adequate from an egalitarian perspective. The High Court held that governmental agencies, like ordinary litigants, should not be unfairly disadvantaged or given undue preference.

Thus, the High Court allowed the application granting the condonation of delay in filing the appeal under Section 37 of the Arbitration Act.

Case Title: Hindustan Aeronautics Ltd. Vs Civcon Construction Pvt. Ltd.

Case Number: APOT/75/2024 IA NO: GA-COM/1/2024, GA-COM/2/2024

Ms. Nilanjana Adhya, Adv. Mr. Dipankar Das, Adv. …for the appellant

Mr. Debraj Sahu, Adv. …for the respondent

Date of Judgment: 21st August, 2024

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