Refusal To Condone Delay For Appeal Under Section 34 Of Arbitration Act Appealable Under Section 37 : Supreme Court

In a significant verdict, the Supreme Court has held that an order refusing to condone the delay in filing an appeal under Section 34 of the Arbitration and Conciliation Act 1996 is appealable under Section 37 of the Act.

"..the question of law is answered by stating that an appeal under section 37(1)(c)of the Arbitration Act, 1996 would be maintainable against an order refusing to condone delay in filing an application under section 34 of the Arbitration Act, 1996 to set aside an award", observed a bench comprising Justices RF Nariman, Navin Sinha and KM Joseph.

This important pronouncement settling a widespread confusion came in the case Chintels India Ltd v Bhayana Builders Pvt Ltd, which was an appeal arising out of a Delhi High Court judgment which held that such an appeal was not maintainable.

Considering the importance of the question of law, the High Court had granted certificate for appeal to Supreme Court under Articles 133 and 134A of the Constitution of India.

The Supreme Court observed that it is important to note that the expression "setting aside or refusing to set aside an arbitral award "does not stand by itself. The expression has to be read with the expression that follows-"under section 34". Section 34 is not limited to grounds being made out under section 34(2).

"Obviously, therefore, a literal reading of the provision would show that a refusal to set aside an arbitral award as delay has not been condoned under sub-section (3) of section 34 would certainly fall within section 37(1)(c)", the SC observed.

The SC further said that this reasoning is strengthened by the fact that under section 37(2)(a), an appeal lies when a plea referred to in sub-section (2) or (3)of section 16 is accepted. This would show that the Legislature,when it wished to refer to part of a section, as opposed to the entire section,did so. Contrasted with the language of section 37(1)(c),where the expression "under section 34"refers to the entire section and not to section 34(2) only, the fact that an arbitral award can be refused to beset aside for refusal to condone delay under section 34(3) gets further strengthened, added the Court.

The Court rejected the argument that since Arbitration Act allows for minimal judicial intervention, appeals against orders refusing to condone delay should not be entertained.

The Court said that when the language of the provision allows for such appeals to be filed, the court cannot limit its scope.

"Undoubtedly, a limited right of appeal is given under section 37 of the ArbitrationAct, 1996. But it is not the province or duty of this Court to further limit such right by excluding appeals which are in fact provided for,given the language of the provision as interpreted by us hereinabove", the judgment authored by Justice RF Nariman held.

The Court distinguished the judgments in BGS SGS Soma JV. v. NHPC Limited and State of Maharashtra and Anr. v. M/s Ramdas Construction Co. and Anr(2017).

Allowing the appeal, the Supreme Court set aside the impugned judgment of the Division Bench ,and the matter was remitted to a Division Bench of the High Court of Delhi to decide whether the Single Judge's refusal to condone delay is or is not correct.

Case Details

Title : Chintels India Ltd v Bhayana Builders Pvt Ltd

Bench : Justices RF Nariman, Navin Sinha and KM Joseph.

Appearances : Advocate Rajshekhar Rao appeared for the appellant. Senior Advocate Mukul Rohatgi appeared for the respondent.

Citation  : LL 2021 SC 77

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