Signed Arbitral Award Served On Lawyer Or Agent Of The Party Doesn't Constitute A Valid Delivery : Delhi High Court

The bench of Justices Rajiv Shakdher and Tara Vitasta Ganju held that the term 'party' under Section 31(5) of the Act refers to the actual entity who executed the arbitration agreement, excluding agents or lawyers representing the party.

Facts

The dispute at hand arose from an agreement entered into on 07.05.2010 between the Appellant, the Ministry of Health and Family Welfare (Appellant/MoHFW), and the Respondent, Hosmac Projects Division of Hosmac India Pvt. Ltd. (Respondent/Hosmac). The agreement pertained to the construction of Emergency Care Services and the renovation of existing VIP Rooms at Dr. Ram Manohar Lohia Hospital, New Delhi (RML), under the control of the Appellant/MoHFW.

As disputes emerged, the Respondent/Hosmac invoked the arbitration clause, leading to the appointment of Retd. Justice Devinder Gupta as the Sole Arbitrator. The Sole Arbitrator rendered an Arbitral Award in favor of the Respondent/Hosmac, which was subsequently corrected through a Corrigendum Order.

The Appellant/MoHFW challenged both the Arbitral Award and the Corrigendum Order before the learned Single Judge under Section 34 of the Arbitration and Conciliation Act, 1996 (the Act). The Section 34 Petition was, however, dismissed on the grounds of limitation by the learned Single Judge, leading to the present Appeal.

Submissions

The appellant challenged the impugned order on the following grounds:

• That the delivery of the Arbitral Award and the Corrigendum Order to the authorized representative of RML did not constitute proper service on the Appellant.
• That, according to Section 31(5) of the Act, a signed copy of the Arbitral Award should be delivered to each party, and the term 'party' refers to the parties themselves and not their representatives.
• That the limitation period for filing the Section 34 Petition should commence from the date they received the Arbitral Award, which, according to them, was 14.03.2019.

The respondent made the following counter-arguments:

• That the service on RML should be considered as service on the Appellant/MoHFW, given that RML was actively participating and contesting in the arbitration proceedings.
• That the Appellant/MoHFW's objection to service was an afterthought to extend the delay in filing the Section 34 Petition.

Analysis by the Court

The Court analyzed the relevant provisions of the Act, emphasizing that an effective service of the Arbitral Award must be to the party itself, not its agent or advocate. Citing precedents, the Court clarified that the term 'party' refers to the entity that is a party to the arbitration agreement.

The Court held that a copy of the signed arbitral award served only on the lawyer or the agent of the party does not constitute a valid delivery in absence of the delivery on the party itself.

The Court held that the term 'party' under Section 31(5) of the Act refers to the actual entity who executed the arbitration agreement, excluding agents or lawyers representing the party.

In this context, the Court found that the Appellant/MoHFW, being the party to the agreement, should have received the Arbitral Award directly for proper compliance. The Court disagreed with the contention that service on RML constituted service on the Appellant/MoHFW.

Examining the records, the Court noted that there was no evidence of the Arbitral Award being served on the Appellant/MoHFW before 14.03.2019. The Court, therefore, concluded that the Section 34 Petition filed on 10.05.2019 was within the statutory limitation period.

Accordingly, the Court allowed the appeal and set aside the impugned order. It directed the Section 34 petition to be listed before the Single Bench for consideration on the merits.

Case Title: Ministry of Health & Family Welfare and Anr v. M/s Hosmac Projects, FAO(OS)(COMM) 236 of 2019

Citation: 2023 LiveLaw (Del) 1356

Counsel for the Appellants: Mr. Praveen Kumar Jain, Mr Naveen Kumar Jain, Mr Sachin Kumar Jain, Ms Shalini Jha, Ms Rashmi Kumari and Ms Sheetal Raghuvanshi, Advs. along with Dr Yashwant Singh, A.R. of Appellants.

Counsel for the Respondents: Mr Nakul Dewan, Sr. Adv. with Mr Pradhuman Gohil, Ms Ranu Purohit, Ms Neelu Mohan and Mr Alapati Sahithya Krishnan, Advs.

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