On 02.03.2021, the Supreme Court in the case of Dakshin Haryana Bijli Vitran Nigam Ltd. v. M/s. Navigant Technologies Pvt. Ltd. (Civil Appeal No. 791 of 2021), settled the law of limitation on filing a petition under S. 34 of the Arbitration and Conciliation Act, 1996 ("Act"). The court was countenanced with the issue whether the period of limitation for filing the petition under S. 34 would commence from the date on which the draft award was circulated to the parties or the date on which the signed copy of the award was received by the parties. The judgment has threefold significance: firstly, it settles the proposition with respect to the law of limitation; secondly, it re-emphasizes the importance of content and procedure of arbitral award and thirdly, it has given a voice to the dissenting opinion in an arbitral award.
The Appellants and Respondents entered into a Service Level Agreement providing for resolution of disputes through arbitration by a three member tribunal. Thereafter, the Appellant terminated the Service Level Agreement which led to disputes between the parties and the dispute was referred to the three member tribunal. The arbitral tribunal orally pronounced the award on 27.02.2018, allowing the claims of the Respondent herein. The arbitral tribunal informed the parties that the third arbitrator has a dissenting opinion and would be rendering a separate opinion. The signed award was only given to the parties on 19.05.2018 and the proceeding was terminated. The Appellant filed a petition under S. 34 before the Civil Court for setting aside the award dated 19.05.2018 on 10.09.2018 along with application for condonation of delay and contended that the petition was filed within the prescribed period i.e., 3 months and 30 days from the date of receipt of award. The Civil Court dismissed the application for condonation for delay on the ground that the Appellant has received the majority award on 27.04.2018 and thus the limitation period commences from that date and having exhausted the prescribed period under S. 34, the petition under S. 34 is liable to be dismissed. The Civil Court further held that the dissenting opinion cannot attain the status of arbitral award. The High Court, in appeal, affirmed the position of the contents of the order passed by the Civil Court.
Submissions of Parties
The Appellant contended that the reference to the arbitral award in the Arbitration Act includes both the majority award as well as the minority opinion. The Appellant took reference to S. 34, which provides for objections to be filed against the arbitral award and not the majority award alone and thus time period prescribed under S. 34(3) does not relate only to the majority award, but to the arbitral award, which includes the opinion of the dissenting member of the tribunal. The arbitral award gives relevance not only to the majority award but to the dissenting opinion also and relied on Ssangyong engineering and Construction Co. Ltd. v. NHAI,2and Axios Navigation v. Indian Oil Corporation3.
The Respondent contended that objections filed by the Appellant under S. 34 is barred by limitation as the majority award was pronounced on 27.04.2018 and thus limitation period should commence from this date. The Respondent contended that the dissenting opinion is not an award for the purpose of calculating the limitation period under S. 34(3) and thus reliance was placed on S. 31(2) of the Act which provides that the signature of all the members of the tribunal was not required, so long as the award was signed by a majority of the members, and reasons for omission of the signature of the third arbitrator were recorded in the award and reliance for the same was placed on Bharat Sanchar Nigam Ltd. v. Acome and Ors.4, Axios Navigation v. Indian Oil Corporation,5 and Oriental Insurance Co. v. Air India Ltd.,6 wherein it was held that the limitation period under S. 34(3) of the Act shall commence from the date when the award is passed.
Discussion and Analysis
The Court analyzed the scheme of the Arbitration and Conciliation Act, 1996 and noted that a party cannot file a petition under S. 34 for setting aside, or under S. 36 for enforcement, of dissenting opinion of the arbitral award, and what is capable of being set aside or enforced is the arbitral award, i.e., the decision reached by the majority of members of the tribunal. Refence was also made to S. 29A of the Act, where by the prescription of the law, the
mandate of the arbitrator(s) would terminate if the limits given under S. 29A(1) and (3) are not followed. The court then dwelled upon legal requirements of signing the award under S. 31 of the Act and noted that the term 'shall' makes it mandatory for all the members of the tribunal to sign the award so that the award attains finality, so long as the reason for any omitted signature is stated, since signing of the award gives legal effect and validity to it. The court further noted that the making and delivery of the award are different stages of an arbitration proceedings and an award is made when it is authenticated by the person who makes it. The court, after doing a harmonious construction of S. 31(1) and (4) held that the receipt of a signed copy of the award is the date from which the period of limitation for filing objections under S. 34 would commence. The Court substantiated this position by taking reliance on Union of India v. TeccoTrichy Engineers & Contractors,7 and State of Maharashtra v. Ark Builders.8 After perusal of the facts in hand and relevant law the court held that the period of limitation for filing objections would have to be reckoned from the date on which the signed copy of the award was made available to the parties and further held that the petition under S. 34 was within the prescribed period of limitation under S. 34(3).
Relevance of dissenting opinion
It is pertinent to note that dissenting opinion doesn't form the part of Award but the recourse of dissenting opinion can be taken in order to add weight to the arguments or buttress the submissions of the party wishing to challenge the Award. Also, the Court is not precluded from considering the findings and conclusions of the dissenting opinion of the minority member of the tribunal.
The Apex Court ruling finally crystallizes the perennial issue pertaining to the initiation of limitation period for challenging the award under section 34 of the Act. The court emphasized on the textual wordings of Section 34(3) the Act, which specifically provided the strict timeline of 3 months from the date of "receipt" of Award. Furthermore, the Court made a notable distinction between making of Award and the delivery of Award. The Court noted that delivery of Arbitral award is not a matter of mere formality rather it is a matter of substance. The computation of limitation period will start from the date on which the Award is received by the party.
Views are Personal
The Authors are Lawyers at Delhi High Court