Arbitration Act | Condonation Must Be Treated As Exception Especially In Cases Involving Fixed Appeal Periods, Delhi High Court Dismisses S. 34 Application

Brief Facts:

The Appellant had a supply agreement with M/s Gitwako Farms Private Limited (“Respondent”). Disputes arose concerning the rejection of certain goods supplied by the Respondent to the Appellant. As per the agreement, the dispute was referred to arbitration and an Arbitral Tribunal adjudicated on the matter. It granted Rs. 16,67,136/- in favour of the Respondent and held that the rejection of the goods by the Appellant was unwarranted and deviated from established norms. Feeling aggrieved, the Appellant filed an application to set aside the award under Section 34 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) in a Commercial Court. The Commercial Court dismissed the application.

Dissatisfied with the judgment of the Commercial Court, the Appellant filed an appeal in the High Court of Delhi (“Delhi High Court”). The appeal faced a significant delay in submission, as the Commercial Court's judgment was pronounced on 19.08.2023, whereas the appeal was filed on 15.01.2024.

In a bid to justify the delay, the Appellant has submitted an application seeking an extension of 90 days for filing the appeal. The sole explanation offered for the delay was outlined in the application, attributing it to procedural intricacies. It stated that upon receipt of the judgment on 29.08.2023, the Appellant spent time until 11.10.2023, consulting the government counsel regarding the viability of an appeal under Section 37 of the Arbitration Act. Following this, the case was forwarded to counsel for drafting the appeal on 20.10.2023. Delays further ensued in supplying requisite documents to the counsel, particularly those dating back to 2013. Ultimately, the draft appeal was vetted and approved, culminating in its submission on 04.01.2024.

Observations by the High Court:

The High Court, after consideration of the Appellant's explanation for the delay in filing the appeal, found it insufficient to warrant condonation. The Appellant claimed to have obtained an opinion from the government counsel on the viability of the appeal on 11.10.2023, followed by marking the case for appeal drafting on 20.10.2023. However, the High Court noted that despite obtaining the counsel's opinion, necessary documents for filing the appeal were not provided for almost two months, eventually being supplied on 04.12.2023. The draft appeal was then received on 22.12.2023, with the final approval on 04.01.2024, leading to the appeal being filed 11 days later.

The High Court found it implausible that the Appellant sought legal opinion without essential documents readily available. This implied that the Appellant possessed the required documents at the time of seeking the counsel's advice. Moreover, it took nearly two months to collate documents that should have been readily available, considering they would have been submitted with the initial application under Section 34 of the Arbitration Act.

The High Court referred to the case of Postmaster General and Ors. v. Living Media India Ltd. and Anr [(2012) 3 SCC 563], and held that delays in matters involving government bodies, including commercial disputes, cannot be readily condoned without credible justification. The High Court underscored the obligation of government departments to perform duties diligently, without using procedural delays as excuses.

Furthermore, the High Court held that the objective of expeditious dispute resolution, as envisaged by the Commercial Courts Act, cannot be undermined by unwarranted delays. While recognizing the provision for condoning delays under Section 5 of the Limitation Act, the High Court emphasized that such condonation must be treated as an exception rather than a rule, especially in cases governed by fixed appeal periods.

Consequently, the application for condonation of delay, which exceeded one and a half times the original filing period, was dismissed.

Case Title: Union Of India vs M/s Gitwako Farms Private Limited & Anr.

Citation: 2024 LiveLaw (Del) 399

Case Number: FAO (COMM) 35/2024; CAV 80/2024; CM APPL. 10423/2024; CM APPL. 10424/2024 & CM APPL. 10425/2024

Advocate for the Appellant: Mr. K.D. Sharma

Advocate for the Respondent: Mr Sameer Rohatgi with Mr Akshit Pradha, Mr Kartikey Singh, and Mr Prateek Charan

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