Under Section 34(3) Of The A&C Act, The Limitation Period Of 3 Months Plus 30 Days In Inelastic And Inflexible: Delhi High Court Reiterates

The bench of Justices Suresh Kumar Kait and Neena Bansal Krishna explained that the challenge petition must be filed within 3 months from the date of the receiving of the award, however, a grace period of 30 days is given in which the Court can exercise discretion to condone the delay in the filing of the application. However, the court is left with no discretion to condone a delay in filing after the period of 3 months plus 30 days grace is over.

Facts

The facts in all three cases were identical. The arbitral award was made on 14.03.2019, and petitions under Section 34 of the Act, 1996, were subsequently filed. Condonation of delay, ranging from 50 to 55 days, was sought in filing/refiling applications. The learned Single Judge dismissed the applications, stating that the valid filing occurred beyond the prescribed period of 3 months and 30 days under Section 34(3) of the Act, 1996.

In the judgment dated 18.03.2020, the learned Single Judge observed that the original petitions were filed carelessly and deliberately as an attempt to manipulate the clock on limitation, allowing for a strategic delay. The petitioner's failure to file the arbitral award along with the original petition and re-filing within the extended period of limitation was considered a defect of significant gravity, rendering the original filing a mere dummy filing.

The learned Single Judge found the petitioner's explanations for the delay to be perfunctory, vague, and lacking justification. The petitioner's assertion that objections raised by the Registry caused the delay was contradicted by the Registry's logbook, showing that most defects were not rectified in a timely manner. Consequently, the Court rejected the petitioner's application for condonation of delay.

Aggrieved thereby, the appellant filed the appeals under Section 37 of the A&C Act.

Contention of the Parties

The petitioner challenged the impugned order on the following grounds:

• Original petition filed on 31.05.2019 within the prescribed three-month limit of Section 34. Although there was a delay in re-filing the petition to address Registry-noted defects, they asserted that the condonation of this delay should not be subject to the inflexible requirements of Section 34(3) of the Act.
• No statutory obligation to file the award with the petition. Referred to Practice Directions issued by the Hon'ble High Court and asserted that the record and the award would be obtained from the arbitrator after Notice is issued on a petition under Section 34. They emphasized that the Award was not envisioned as a necessary part of the petition
• Filing of the award is a basic requirement, should not lead to outright dismissal without considering merits.

The respondents made the following counter-submissions:

• Initial filing on 31.05.2019 deemed non-est and void, not meeting minimum requisites for a valid petition.
• Date asserted for re-filing considered the first filing, exceeding the period under Section 34(3) of the Act.
• Support for the dismissal of objections as beyond the prescribed period under Section 34(3) of the Act.

Analysis by the Court

At the outset, the Court explained that the challenge petition must be filed within 3 months from the date of the receiving of the award, however, a grace period of 30 days is given in which the Court can exercise discretion to condone the delay in the filing of the application. However, the court is left with no discretion to condone a delay in filing after the period of 3 months plus 30 days grace is over.

The Court held that the period of 3 months and 30 days is inelastic and inflexible, meaning thereby, that a Court cannot condone a delay beyond this period and the filing or the re-filing, as the case maybe, must be done in this period only. Any petition filed thereafter would be deemed time barred.

Next, the Court observed that the initial filing as well as the first re-filing were without the copy of the award and without the requisite prayer and it is only during the second refiling that these defects were cured. However, second re-filing was done after the expiry of the 120 days, including the grace period of 30 days.

The Court held that filing of an award along with the challenge petition is not an empty procedural requirement as sans the award, the Court is left absolutely clueless to comprehend the grounds taken in the objection Petition and thereby unable to decide whether the Petition merits Notice to be issued or outright rejection.

The Court held that without a prayer to set aside the impugned award, a petition cannot be considered valid as such petitions would merely amount to empty submissions without a relief. It held that without a prayer, the Court cannot decipher the relief that a party is seeking on the basis of the averments made in the petition and without seeking relief, the petition is not maintainable rendering it non-est.

Ergo, the Court held that since the original filing as well as the first re-fling were non-est due to the fatal defects in them.

The Court emphasized that condoning the delay in re-filing the petitions beyond the prescribed period of 3 months plus 30 days would entangle arbitrations in a web of prolonged delays. Such a situation, the Court reasoned, would undermine the very purpose of opting for arbitration, rendering it meaningless.

Accordingly, the Court upheld the decision of the single bench to dismiss the petition as time-barred.

Case Title: Union of India v. M/s Panacea Biotec Limited, FAO(OS)(COMM) 81 of 2020

Date: 19^th December 2023

Counsel for the Appellant: Mr. Kirti Man Singh, CGSC with Ms. Manmeet Kaur Sareen , Mr. Varun Rajawat, Mr. Taha Yasin, Mr. Bhagwan Swaroop Shukla, CGSC, Mr. Rajesh Ranjan, Sr. Panel Counsel, Mr. Saran Kumar, Mr. Archit Chauhan, Mr. Aman Kapoor and Mr. Adil Vasudeva, Advocates.

Counsel for the Respondent: Mr. Sandeep Sethi, Sr. Advocate along with Mr. Kawal Nain, Mr. Rohit Dadwal, Ms. Kavita Sharma and Ms. Riya Kumar, Advocates.

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