Arbitration Act | Misplacement Of File By Lawyer Not Sufficient Ground For Condoning 966 Days Delay: Allahabad High Court

“Misplacement of files due to office shifting, especially during a holiday period, is not an uncommon occurrence. However, the burden lies on the appellant to ensure that necessary precautions and timely measures are in place to prevent such eventualities from affecting crucial legal processes. The appellant's advocate, being a legal professional, is expected to maintain a higher standard of care in managing case files, especially those that are time- sensitive,” held Justice Shekhar B. Saraf.

The appeal under Section 37 of the Arbitration and Conciliation Act, 1996 was filed by the Ghaziabad Development Authority with a delay of 966 days.

The Court relied on M/s N.V. International v. State of Assam and others, where the Supreme Court refused to condone delay beyond 120 days as 90 period is provided under Section 37 for filing appeal, and only 30 days grace period under Section 5 of the Limitation Act  can be granted for condoning any further delay.

In Government of Maharashtra (Water Resources Department) Represented by Executive Engineer v. M/s Borse Brothers Engineers & Contractors Pvt. Ltd., the Apex Court held that given the object of speedy dispute resolution under the Arbitration Act and the Commercial Courts Act, delay beyond the prescribed period can only be condoned by way of exception.

“In a fit case in which a party has otherwise acted bona fide and not in a negligent manner, a short delay beyond such period can, in the discretion of the court, be condoned, always bearing in mind that the other side of the picture is that the opposite party may have acquired both in equity and justice, what may now be lost by the first party's inaction, negligence or laches,” held the Apex Court.

Further reliance was placed on a coordinate bench decision of the Allahabad High Court in National Highway Authority of India v. Smt. Sampata Devi and others, where the Court held that even though Section 5 of the Limitation Act applies to the proceedings under Section 37 of the Arbitration Act, long delays cannot be condoned on showing of 'sufficient cause'.

Lastly, reliance was placed on Pathapati Subba Reddy (Died) By L.Rs. and others v. The Special Deputy Collector (LA) wherein the Supreme Court has laid down the principles regarding application of limitation laws. The Apex Court held that grant of relief in similar matters to other persons will not entitle person to the same relief if there is inordinate delay in approaching the court. It was held that though Courts have the discretion to condone delay, other parameters like the period of delay, negligence and diligence must also be seen while condoning delay.

Observing that arbitration is speedy dispute resolution mechanism, Justice Saraf held that delays can only be condoned if a very strong case is made out by the party seeking such condonation.

The Court held that misplacement of file by the advocate during shifting of office, during festival period, is not sufficient ground for condonation delay of 966 days.

The Court held that explanation provided was insufficient for the Court to exercise its discretion in condoning the delay. Holding that the Ghaziabad Development Authority had acted in a lackadaisical manner and was trying to cloak its “laissez faire attitude”, the Court refused to condone the delay of 966 days.

Accordingly, appeal under Section 37 of the Act was dismissed.

Case Title: Ghaziabad Development Authority v. M/S S.P.G. Infra Projects (Pvt) Limited 2024 LiveLaw (AB) 365 [APPEAL UNDER SECTION 37 OF ARBITRATION AND CONCILIATION ACT 1996 DEFECTIVE No. - 33 of 2022]

Citation: 2024 LiveLaw (AB) 365