When Application U/S 33 Of A&C Act Is 'Disguised Review', Limitation For Challenging Award U/S 34 Cannot Be Extended: Delhi HC

Brief Facts

On 30.08.2012, the Petitioner issued a notice inviting tender for the design and construction of tunnels and underground metro stations on the Janakpuri West-Kalindi Kunj corridor under the Delhi MRTS Phase III project. The Respondent submitted its bid on 23.11.2012 and was awarded the contract on 07.02.2013 for Rs. 8,65,98,00,000. The parties entered into a contract on 28.02.2013. Work commenced on 18.02.2013 and was to end on 17.05.2016. Due to delays, multiple extensions were granted.

On 30.07.2018, the Respondent claimed compensation for delays, which the Petitioner rejected. Negotiations failed. The Respondent then invoked arbitration on 07.09.2019, whereafter the Tribunal was constituted on 24.09.2020. The majority award was passed in favour of the Respondent. The Petitioner then filed an application under Section 33 of the Arbitration & Conciliation Act, which was dismissed on 03.06.2024.

The Petitioner filed the petition under Section 34 of the Act, challenging the Award dated 23.02.2024 whereby the Respondent was awarded Rs.60.28 crores.

Contentions

Senior Counsel for the Respondent submitted that the application under Section 33 filed by the Petitioner was in the nature of a review of the award on merits, which is not permissible under Section 33. It was contended that when a section 33 petition is filed as a review petition, then the party is not entitled to claim the time taken from filing of the petition under Section 33 till its disposal for challenging the award under Section 34.

Per contra, Counsel for the Petitioner contended that the application under Section 33 was not a mere review of the award and had been filed for a very limited purpose of correction of factual errors made by the Arbitral Tribunal. He stated that the date of disposal of the application was terminus quo for calculating the limitation for challenging the award under Section 34.

Issue

Whether the terminus quo would start from the date of disposal of Section 33 application or from the date of the receipt of a signed copy of the arbitral award?

Observations

The court noted that as per Section 34(3) of the Act, if an application is filed under Section 33, the three-month period for filing an application to set aside the award will commence from the date on which the application under Section 33 is disposed of by the Tribunal.

The court referred to the case of Gyan Prakash Arya v. Titan Industries Ltd. (2023), wherein the Respondent had moved an application under Section 33 seeking an increment in the valuation of gold based on the prevailing market value, which the Petitioner was required to pay under the award. The Supreme Court while setting aside the order of the Arbitral Tribunal in the Section 33 application, observed that "only in a case of arithmetical and/or clerical error, the award can be modified and such errors only can be corrected”.

It also referred to State of Arunachal Pradesh v. Damani Constructions (2007), where the Supreme Court held that only when an application under Section 33 meets the threshold laid out in Section 33(1) would the terminus quo under Section 34(3) apply. Merely because an application is styled as one under Section 33 of the Act, the objector would not be entitled to the extension of limitation under Section 34 of the Act. In Vidhur Bhardwaj v. Horizon Crest India Real Estate (2022), the Court held that an incompetent application under Section 33 would not extend the period of limitation.

The court observed that the legislative intent behind Section 33 was to permit rectification of typographical and computational mistakes and nothing more. It held that if the application under Section 33 is purely an application for review, then the person seeking to challenge the award cannot avail of the time taken between the filing of the application under Section 33 and the date of disposal for calculating the period to challenge the award.

The court stated that Section 33 cannot be allowed to be used as a stratagem for prolonging limitation under Section 34. It observed that permitting time taken in disposal of application under Section 33, which is in the nature of a review, will create a situation where such applications are used by vexatious parties to delay challenging an award.

The court held that:

“A review of the Award is unequivocally proscribed by the Act. Such an approach subverts the purpose of Section 33, rendering the application ineligible for the benefit of an extended limitation period under Section 34(3).”

The court noted that given that the terminus quo for the application was the date of receipt of the award (i.e. 23.02.2024) and the date of filing the petition was 31.08.2024, the petition was barred by limitation. The court, therefore, dismissed the application.

Case Title: DELHI METRO RAIL CORPORATION LTD. Vs. HCC SAMSUNG JV

Case Number: O.M.P. (COMM) 381/2024 & I.A. 38567/2024

For Petitioner: Mr. Tarun Johri, Mr. Ankur Gupta and Mr. Vishwajeet Tyagi, Advocates.

For Respondent: Mr. Dayan Krishnan, Senior Advocate with Mr. Nitin Bhatia, Mr. Deepank Singhal, Ms. Simran Rao, Mr. Shridhar, Ms. Yugandhara Pawar Jha, Ms. Yasha Goyal, Advocates.

Date of Decision: 20.02.2025