[Arbitration Act] Arbitrator Obligated U/S 31(5) To Deliver Signed Copies Of Award To Parties, Irrespective Of No Specific Requests: Allahabad High Court

The Allahabad High Court has held that the arbitrator is obligated to deliver signed copies of arbitral award to each party to the arbitration. It has been held that irrespective of the fact that no specific request has been made by the parties for certified copy of the award, the arbitrator must deliver the award in terms of Section 31(5) of the Arbitration and Conciliation Act, 1996.

“Section 31(5) of the Act unequivocally imposes an obligation upon the Arbitrator to deliver a signed copy of the arbitral award to each party involved in the arbitration. This statutory duty is not contingent upon a party's request for the award; rather, it is an imperative that must be fulfilled by the Arbitrator irrespective of any such request. The failure to comply with this statutory obligation can lead to significant procedural irregularities, potentially undermining the arbitral process and the enforceability of the award,” held Justice Shekhar B. Saraf.

Section 31(5) of the Arbitration and Conciliation Act, 1996 provides that after the arbitral award is made, a signed copy shall be delivered to each party.

Section 34 of the Act provides a party aggrieved by the arbitral award, a remedy to challenge it before a Court. Section 34(3) provides that an application under Section 34 cannot be made after 3months from the date on which the aggrieved party had received the arbitral award. Further, 30 day period delay can be condoned by the Court provided sufficient cause is shown.

Factual Background

Appellant's land was acquired under the National Highways Act, 1956. The Competent Authority awarded certain compensation which the appellant was not satisfied with. Accordingly, an arbitrator was appointed under Section 3G(5) of the NHAI Act.

Appellant challenged the arbitral award before the District Judge, Rampur under Section 34 of the Act of 1996 which was also dismissed.

While contesting appeal under Section 37 of the 1996 Act, counsel for appellant argued that no findings were recorded by the District Judge regarding service of signed award on the appellant and consequently, he had erred in holding that the application under Section 34 of the Act was beyond limitation. It was stated that under Section 34(3) of the Act, limitation only begins when the arbitral award is received by the aggrieved party.

It was submitted that the appellant had specifically stated in the application under Section 34 that the award was not pronounced on the date fixed but was pronounced months later and there was no delay in filing the application under Section 34. Further, it was submitted that the respondent had not denied that the award was published on the later date.

Counsel for respondent-NHAI argued that the appellant was dishonest as she applied for a certified copy of the award after expiry of limitation under Section 34, even though the award was passed on the date fixed. It was stated that the appellant, at the belated stage, cannot argue that she had no knowledge of the award.

High Court Verdict

The Court relied on Union of India v. Tecco Trichy Engineers, where the Supreme Court held that delivery of an arbitral award under Section 31(5) is not a matter of mere formality as once the award is delivered and 'received' by a party, various limitation periods under the Act begin.

In Dakshin Haryana Bijli Vitran Nigam Limited v. Navigant Technologies Private Limited, the Apex Court held that the period of limitation under Section 34(3) for challenging the arbitral award only begins when signed copy of the award is delivered to the party who intends to challenge it as per Section 31(5).

The Court held that delivery of the award to the parties represents the beginning of the limitation under Section 34 of the Act.

“The duty to deliver an arbitral award, a cornerstone of the arbitration process, is unequivocally cast upon the arbitral tribunal. Rooted in the foundational principles of arbitration, procedural fairness, and judicial integrity, this obligation embodies the essence of justice delivery and the sanctity of due process,” held Justice Saraf.

The Court observed that arbitral tribunals are quasi-judicial in nature and the proceedings often involve parties with difference in legal knowledge and resources. In such circumstances, the Court held that placing the onus on the parties to obtain copies of the arbitral award would be disadvantageous to those with limited resources and legal knowledge which is not the outcome intended as it is against principles of equity and fairness.

The Court held that the only exception to delivery of award as contemplated in Section 31(5) is when a party having knowledge of the award has acted upon its contents without actual delivery being effectuated upon. The Court held that by accepting the award through written means or by conduct, the party waives the right to raise procedural objections at a later stage.

“By consciously accepting the award, the party essentially waives any procedural rights related to the formal receipt of the signed award copy. This waiver is based on the principle that actions speak louder than words; if a party behaves in a manner that indicates acceptance, insisting on formal delivery becomes redundant. Similarly, if a party acts upon the award, such as by making payments or performing obligations stipulated by the award, this conduct also signifies acceptance.”

The Court observed that in appellant's case, the arbitrator had pronounced the award on the alter date, as claimed by the appellant, and back dated the same, which was not allowed.

The Court distinguished the judgments passed by the Chhattisgarh High Court in Union of India v. Bhola Prasad Agarwal & Anr. and by the Madras High Court in Resurgent Power Projects Limited v. ABB India Limited, which were relied upon by the respondent-NHAI on grounds that there was nothing brought on record to show that the appellant had any knowledge of the award or had acted upon it.

It was observed that the award was passed on 31^st January, 2024, and a certified copy was received by the appellant on 1^st February, 2024. Thereafter, application under Section 34 was filed on 7^th February, 2024 which was within limitation under Section 34(3), held the Court.

The Court held that Section 31(5) casts a specific duty upon the arbitrator to deliver a signed copy of the award to the parties. The Court held that the practice of backdating arbitral awards has serious implications on the rights and obligations of the parties, including hampering their right to seek legal recourse by changing the timelines.

Since the appellant had preferred the application under Section 34 within limitation, the Court allowed the appeal under Section 37 of the Act and directed the District Judge. Rampur to adjudicate upon the appellant's application on merits.

Case Title: Smt. Jasvinder Kaur v. National Highways Authority Of India And 2 Others 2024 LiveLaw (AB) 372 [APPEAL UNDER SECTION 37 OF ARBITRATION AND CONCILIATION ACT NO. 264 of 2023]

Citation: 2024 LiveLaw (AB) 372

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