Section 3 A&C | Deemed Service Is Rebuttable, If Party Establishes Delivery Could Not Be Made Despite Fulfilling Conditions u/s 3: Delhi High Court

Brief Facts:

The Petitioner approached the Delhi High Court and filed an application under Section 34 of the Arbitration and Conciliation Act (“Arbitration Act”), aiming to set aside the award issued by the Sole Arbitrator concerning the Lease Agreement between the parties concerning premises in Greater Kailash, New Delhi. In this agreement, the Petitioner acted as the lessor and the respondent as the lessee.

Dispute arose when the Petitioner served a notice terminating the tenancy, resulting in the Respondent vacating the premises. However, disagreements surfaced regarding the refund of the security deposit, repair costs, and other related claims.

The arbitration proceedings began around 2010-12 at the request of the Respondent-tenant, who presented a total of 8 claims before the arbitrator, including refunds, repair expenses, losses incurred, and legal costs. The Petitioner countered with 8 claims of their own, ranging from unpaid stamp duty to damages for loss of profit.

After some evidence was recorded, both parties ceased participation in the arbitration. The Arbitrator, upon learning of the Respondent's hospitalization due to depression and the Petitioner's frequent travel abroad, suspended proceedings. Attempts to revive the proceedings were made by the Respondent's son, but the Petitioner's whereabouts were uncertain. Despite efforts to contact the Petitioner, the Arbitrator proceeded in their absence and issued the contested award.

The Respondent initiated execution proceedings, leading to summons being served on the Petitioner.

The Petitioner asserted that he was unaware of the arbitration's revival or the issuance of the award until the receipt of summons in April 2023. It requested a signed copy of the award, received an unsigned copy in May 2023, and filed the petition within the three-month statutory period stipulated by Section 34(3) of the Arbitration Act.

In contrast, the Respondent contended that the petition was filed beyond the allowable statutory period and that the delay was not justifiable for condonation.

Observations by the High Court:

The High Court noted that the Petitioner remained unserved even during the revival application initiated by the Respondent, after the arbitral proceedings were suspended for approximately 7-8 years due to inaction from both parties. Furthermore, it noted that despite three notices issued by the learned Arbitrator upon the filing of the revival application, two were returned unserved with the remark 'not available at the premises'.

The High Court noted that the impugned award indicated that upon the Petitioner's failure to appear, the Arbitrator made telephonic contact with the Petitioner's son, who informed about the Petitioner's unavailability due to settling abroad, without providing further contact details. It's crucial to highlight that throughout the arbitral proceedings, the Petitioner had only provided one address, and no alternative address was available to the arbitrator.

Regarding the applicability of Section 3 of the A&C Act to the delivery of the signed copy of the award under Section 31(5) of the Act, the High Court noted that Section 3 outlines the receipt of written communications, while Section 31 delineates the form and contents of the arbitral award. Additionally, Section 34(3) specifies the limitation period for filing objections against the award, commencing from the date of receiving a signed copy of the award.

It held that delivery of a signed copy of the arbitral award to a party isn't merely procedural but confers a substantive right upon them to challenge the award within the statutory period. It's essential to note that the use of words 'but not thereafter' in the proviso to Section 34 indicates the mandatory nature of the provision, leaving no discretion with the Court to condone delay beyond 30 days after the expiry of the statutory period.

It held that the Petitioner remained unrepresented post-revival of the arbitral proceedings. Despite repeated attempts by the Arbitrator to contact the petitioner, including sending three notices on the revival application filed by the Respondent, the award was eventually passed in the petitioner's absence.

Section 31(5) of the Arbitration Act mandates the delivery of a signed copy of the award to the parties, but it doesn't prescribe a specific mode or manner of delivery. In contrast, Section 3(1)(b) addresses the service of written communications and provides for deemed service under certain conditions.

The High Court held that the presumption of deemed service under Section 3 of the Arbitration Act is rebuttable and can be negated if a party establishes that delivery of the written communication could not have been effected despite fulfilling the conditions under Section 3. It held that the Petitioner demonstrated that the premises where the copy of the arbitral award was claimed to have been delivered were sealed, as confirmed by the Arbitrator. Therefore, it was not legally permissible to presume service at a sealed address.

Considering the above, the deemed delivery of the arbitral award claimed by the respondent under Section 3(1)(b) was not substantiated. The High Court listed the matter before Roster Bench on 28^th March 2024.

Case Title: Avdhesh Mittal Vs Deepak Vig.

Citation: 2024 LiveLaw (Del) 342

Case Number: O.M.P. (COMM) 271/2023, CRL.M.A. 25425/2023, I.A. 13924/2023, I.A. 13925/2023, I.A. 13926/2023.

Advocate for the Petitioner: Mr. Ravi Gupta, Sr. Advocate with Mr. Arun Batta, Mr. Rohan Sharma, Ms. Ranjna Ahuja, Mr. Abdul Vahid, Ms. Neha Kumari and Ms. Muskaan Mehra, Advocates.

Advocate for the Respondent: Ms. Maninder Acharya, Sr. Advocate with Ms. Jyoti Taneja, Ms. Niharika, Mr. B.K. Singh and Mr. Sivam Malhotra, Advocates.

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