Delay In Publication Does Not Invalidate Award Unless It Is Shown That The Award Has Materially Affected Rights Of Parties: Delhi High Court

The Delhi High Court bench of Justice Dharmesh Sharma while dismissing an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 has observed that delay in publication of award does not invalidate the award unless it is shown that the award has materially affected the rights of the parties. Facts The Appellant was awarded a contract for work by the Respondent No. 1 which was valued at Rs.1, 53,054. The contract was to be completed on 31.10.1999, however, the work was completed on 03.04.2000, following the grant of an extension of time from 01.11.1999 to 03.04.2000. Upon completion, the Appellant raised claims for the work done, which were disputed by the Respondent No. 1. As per the agreement, the disputes were referred to arbitration. The Sole arbitrator entered reference on 03.09.2002. The final hearing was conducted on 04.08.2004, but the award was rendered on 11.05.2005, after an inordinate delay of nine months from the conclusion of proceedings. Aggrieved by the award, the Appellant filed a petition under Section 34, Arbitration and Conciliation Act, 1996 (“the Act”) whereby objections to the arbitral award were raised before the Additional District Judge (“ADJ”). However, vide an order dated 03.02.2010, the ADJ dismissed objections to the arbitral award. The Appellant has preferred the present appeal against the aforementioned order of the ADJ. Contentions The Appellant contended that the order of the ADJ was against the law and the facts of the case. It is erroneous and illegal as the learned ADJ failed to appreciate the merits. The Appellant submitted that without prima facie satisfaction, the ADJ wrongly held that the objections did not fall under Section 34 of the Act as the arbitral award itself was flawed as it did not address the disputes contemplated under the arbitration agreement. The Appellant further contended that the arbitrator took an unreasonable amount of time to publish the award, exceeding two years, and specifically delayed nine months after the final hearing on 04.08.2004, causing the stamp paper to become invalid after six months. Per Contra, the Respondents argued that the department provided full cooperation for the timely completion of the work, and there was no delay on its part. As per Clause 5 of the Agreement, time was of the essence, and the Appellant was required to complete the work within one month. However, the Appellant failed to organize the procurement and execution efficiently, leading to a six-month delay, with the work being completed only on 03.04.2000. The Respondents asserted that all claims raised by the appellant were baseless and an afterthought, aimed at dragging the matter into litigation. The Respondent highlighted that the Appellant had unsuccessfully challenged the award in Civil Court, Faridabad, and Tis Hazari Court, Delhi, with both petitions being dismissed on 11.01.2010 and 03.02.2010, respectively. Observations The Court started its analysis by delineating the scope of review under Section 34 of the Act. It reiterated that the jurisdiction of the Court under Section 34 of the Act is neither in the nature of an appellate remedy nor is in the nature of a revisional remedy. It is also settled that an award cannot be challenged on merits except on the limited grounds that have been spelled out in sub-sections (2) and (3) of Section 34 of the Act, by way of filing an appropriate application. The Court referred to the decisions of the Apex Court in MMTC Ltd. v. Vedanta Ltd. (2019) 4 SCC 163, Hindustan Construction Company Limited v. National Highways Authority of India 2023 SCC OnLine SC 1063 amongst others to spell out the powers of a court under Section 34 of the Act. The Court further discussed the scope of the expression “the public policy of India” contained in Section 34(2)(b)(ii) of the Act. The Court placed reliance on the decision of the Supreme Court in the case of ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705 wherein it was observed, “However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice”. In view of the aforesaid propositions of law, the Court held that it was unable to find any illegality, perversity in the impugned award passed by the arbitrator. A perusal of the record indicated that the parties were heard at length and the claims were duly considered. There was no issue of any proceeding being unfair or violative of the principles of natural justice in the course of arbitration. The Court acknowledged that there was a delay in passing the impugned award, but there was no prejudice suffered by the Appellant in any manner. The Court held that the delay in publication of award does not invalidate the award unless it is shown that the award has...

Delay In Publication Does Not Invalidate Award Unless It Is Shown That The Award Has Materially Affected Rights Of Parties: Delhi High Court

Arpita Pande

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