Non-Est Filing: A Roadblock To Challenge The Arbitral Award

Arbitration has been thriving in the legal landscape for more than two decades now. The Arbitration and Conciliation Act 1996 Act (hereinafter “Act”), the 2015 amendments and the evolving arbitration jurisprudence through various judgements have brought much need clarity in the law. All these efforts of making arbitration, effective, efficient, time saving, user friendly, etc. have made arbitration a go to option for the parties to settle their disputes. However, as merrier it may look, not all arbitrations may end up in the execution of the award.

Most often, the awards are challenged on one of the grounds embellished u/s 34 of the Act. With the due course of time, the courts through various judgments have hammered down and narrowed the scope for challenging an award. One such area where the courts have restricted the challenging of an award is with respect to the intersection between limitation and procedural formality for filing a challenge petition before the court.

Time and again the courts have iterated the procedural formalities for filing a section 34 petition before the court. It is essential to analyse these decisions through which a detailed checklist could be established for filing a proper challenge petition u/s 34 of the Act.

Limitation period u/s Section 34 of the Act

One notable aspect of Section 34 is its time limit for filing a challenge application. Parties have a strict three-month window, extendable by 30 days, from the date of receiving the arbitral award to initiate the process. This limitation ensures that challenges are made promptly, avoiding unnecessary delays.

At times, the judgment debtor strategically uses the Section 34 petition as a means to procrastinate and hinder the enforcement of the award. Adding to the complexity, an incomplete filing is submitted to shrug under the umbrella of limitation period. While such filings may be accepted with a condonation of delay, the lingering question persists – should these incomplete submissions be deemed non-est filings?

Beyond the already time-consuming nature of the Section 34 petition, the court is burdened with the additional task of determining the validity of these filings. This entire legal battle unfolds as a time-draining and works against the interests of the award holder. Thus, it becomes necessary for the courts to draw a line as to what would be considered a non-est filing and take proactive disposal of challenge petition.

Understanding non-est filing

It may happen that a section 34 petition may contain some procedural flaws, making it fall under the objections while scrutiny by registry. Defects and objection in filing are fairly common. Usually, such defective filings are returned to the petitioner with certain comments, which are then rectified and the petition is filed again. However, it is important to understand the nature of defects/objections and to what extent can such defects impact the validity of filing.

Broadly speaking, the defects can be categorized into:

a) minor defects:

For the refiled petition having some minor defects, the date of filing is considered to be the day when the original petition (having defects) was filed for the first time. Thus, the date of filing of original petition is taken into consideration for the purpose of computing the limitation period.

b) major defects.

When the defects are major and of such a nature that hits the validity of the petition, then in such cases the date for filing of original petition is not considered, and the limitation would be computed only when such petition is refiled after removing all the major defects. Thus, filing of such flawed/incomplete petition having major defects is considered as a non-est filing in law.

However, in the process of refiling the petition and removing all the defects, it might happen that the limitation period of 90 + 30 days would run out. Hence, the petitioner would be stuck with no remedy to avail.

Power of court in condoning the limitation

It is important to recognize that the courts possess the authority to condone the delay in refiling, when the original filing was non-est and the proper refiling was done outside the timeframe stipulated in section 34(3) of the Act.

However, it is crucial to emphasize that such authority is not easily exercised by the courts. The party seeking this respite must convincingly demonstrate^[1] to the court that they pursued their case diligently and the protracted delays were beyond their control, constituting unavoidable circumstances.^[2] The legislative intent underpinning the establishment of a statutory period of limitation, as delineated in Section 34(3) of the Act is also considered.

Conundrum of non-est filing

Time and again the courts have iterated the position with respect to a non-est filing, however, there seems no common consensus among the judicial precedents as to what is the minimum threshold for considering a filing to be proper.

While filing a challenge petition, the absence of critical documents, including the Vakalatnama, board resolution/authority, affidavit, and signature of party can prove to be a non-est filing in law.^[3]

Another instance when only the challenge petition was filed without any other document, the court remarked it as merely a “bunch of paper”.^[4] Absence of signatures of the party, lack of affidavit and non-filing of vakalatnama, renders the filing invalid.^[5]

Where the signatures of the party and their legal counsel were present on the petition, and a duly signed vakalatnama had been filed, yet the filing was non-est due to non filing of arbitral award and statement of truth.^[6]

Changing the entire structure of the refiled petition would apparently show that the original filing was not valid.^[7] Thus, were the originally filed petition spanning a mere 66 pages, inexplicably went up to 859 pages during the refiling process, the court held the same to be non-est.

After a round of negating judgments on what would not constitute a proper filing, the Delhi High Court in Oil and Natural Gas Corporation Ltd. Vs. Joint Venture of Sai Rama Engineering Enterprises (Sree) & Megha Engineering & Infrastructure Limited (Meil)^[8] (hereinafter “ONGC”) shed some light outlining the prerequisites of filing a section 34 petition, namely:-

1. Each page of the Petition as well as the last page should be signed by the party and the Advocate;
2. Vakalatnama should be signed by the party and the Advocate and the signatures of the party must be identified by the Advocate;
3. Statement of Truth/Affidavit should be signed by the party and attested by the Oath Commissioner;

Thus, the court laid down a set of parameters to consider a section 34 petition as 'proper filing'. In a subsequent decision, there was another addition to the basic parameter list, i.e. filing of impugned award.^[9]

However, the courts slowly transitioned towards a more liberal position in some of the subsequent judgments. In doing so, the division bench of Delhi High Court^[10] held that the petition should bear the signature of the party/authorized representative and a duly signed vakalatnama. The reason for these two prerequisites is necessary as the ownership of the petition filed is attributable to such prerequisites.

Establishing the minimum threshold

Although the parameters established in the ONGC case provided a guiding light, the same was stringent and not arbitration friendly. Subsequently, it was overturned in an appeal by the division bench of the Delhi High Court wherein the court explained that the minimum threshold set out by the single bench is important, but considering these defects separately and in isolation would not render the filing invalid.^[11] Intelligible filing, proper authorisation, accompanying of award, and contents setting out material particulars should be looked into before holding a filing improper.

To consider the question whether a filing is non-est, the court must address the question whether the application, as filed, is intelligible, its filing has been authorised; it is accompanied by an award; and the contents set out the material particulars including the names of the parties and the grounds for impugning the award.

As the right to challenge an award is a valuable right for party as it marks the last attempt to rectify the decision of the tribunal, a more liberal approach is to be adopted before declaring a filing as 'non-est'.^[12] Moreover, holding a petition as non-est would vary from case to case and will be based on the circumstances of the matter.

An ideal checklist for filing a section 34 petition

The evolving position of law has made it difficult to figure out the minimum threshold for the filing of a section 34 petition, and thus, to assume and find a minimum threshold for the filing could be a bit challenging. Therefore, in order to stay on a safer side, it is important to analyse and club together various decisions on this question to come up with an ideal checklist. The following would be the constituents for an ideal checklist for filing a challenge petition:

• Copy of Impugned Award
• Vakalatnama appointing the counsel, duly signed by both – the party and the counsel Statement of Truth
• Each page of the Petition as well as the last page should be signed by the party and the Advocate
• Statement of Truth/Affidavit should be signed by the party and attested by the Oath Commissioner;
• The content of the petition should set out the material particulars including the names of the parties and the grounds for impugning the award

Even after numerous judgments on the issue of non-est filing, there is still no straight jacket formula for procedural requirements that would lay down the minimum threshold to qualify a filing as a proper petition. In absence of such, it would be better to take a cautious approach and to comply with all the necessary prerequisites to avoid non-est filing.

Apart from the other procedural formalities, the party filing such challenge petition should also consider the respective High Court for any definite guidelines on the same.

Moreover, as summarized in the subsequent judgments, the courts should adopt a lenient approach and should not be too technical while scrutinizing the compliance to procedural formalities. Holding a filing as non-est may deprive the party of an essential right to challenge the award as once the original filing is held non-est it might happen that the subsequent filing would be outside the limitation period, thereby extinguishing the right to challenge an award.

Author: Mohd. Suboor is an Associate Counsel at the Indian Institute of Arbitration & Mediation, New Delhi. Views are personal.

1. RAJ KUMAR GUPTA v. M/ S NARANG CONSTRUCTIONS & FINANCIERS PVT. LTD. 2023 LiveLaw (Del) 13 ↑

2. Delhi Development Authority v. Durga Construction Co. 2013 SCC OnLine Del 4451 ↑

3. Sravanthi Infratech Private Limited vs. Greens Power Equipment (China) Co. Ltd., 2016 SCC Online Del 5645 ↑

4. SKS Power Generation (Chhattisgarh) Ltd. vs. ISC Projects Private Limited 2019 SCC OnLine Del 8006 ↑

5. Director-cum-Secretary, Department of Social Welfare vs. Sarvesh Security Services Pvt. Ltd. MANU/DE/1639/2019. ↑

6. Ministry of Youth Affairs and Sports v. ERNST and YOUNG PVT LTD 2023 LiveLaw (Del) 762 ↑

7. Ircon international v reacon engineer 2022 LiveLaw (Del) 607 ↑

8. 2019:DHC: 5082 ↑

9. Union Of India vs Panacea Biotech Limited 2020:DHC:1748 ↑

10. Oriental Insurance Co. Ltd. Vs. Air India Ltd. 2019 SCC OnLine Del 11634 ↑

11. Oil and Natural Gas Corporation Ltd. Vs. Joint Venture of Sai Rama Engineering Enterprises (Sree) & Megha Engineering & Infrastructure Limited (Meil)2023 SCC OnLine Del 63 ↑

12. Ambrosia Corner House Private Limited v. Hangro S Foods 2023 LiveLaw (Del) 124 ↑