Allahabad High Court Directs Inquiry Against Officers Who Failed To File Arbitration Appeals Within Prescribed Limitation

The Allahabad High Court has directed Principal Secretary/Additional Chief Secretary, Irrigation, Uttar Pradesh to conduct an inquiry against officers who were responsible for filing appeals under Section 37 of the Arbitration and Conciliation Act, 1996 which were filed after a delay of 513 days.

While dismissing the appeals filed under Section 37 of the Arbitration and Conciliation Act, 1996, the bench comprising of Chief Justice Arun Bhansali and Justice Vikas Budhwar held that “the proceedings have been conducted in reckless manner which is other than bona fide.”

The Court held that the explanation provided by the appellant in the delay condonation application before the High Court as well as the explanation for 4years delay in filing application under Section 34 of the Act were insufficient.

“Since the matter involves monetary aspects that too from State Exchequer, thus, promptness and diligence was required not only at the stage of filing of application under Section 34 of the 1996 Act for setting aside of the award but also at the stage of preferring present appeals before this Court. Since the bona fides are lacking which not only needs to be checked but introspection is to be made at the level of the officers and the functionaries of the State Government who are on the helm of the affairs.”

Factual Background

Four Arbitral Awards were passed in 2017 fixing liability of Rs. 33,13,109/-, Rs. 39,19,379/- , Rs. 24,14,915/- and Rs. 21,42,435/- with 4% interest on each award. Applications under Section 34 of the Act was filed before the Commercial Court, Gorakhpur after a delay of 4 years and 9 months. The application was rejected in 2022 on grounds of delay. Appeals under Section 37 of the Act were filed after a delay of 513 days from the date of the order under Section 34 of the Act.

Counsel for appellant-State argued that the delay was unintentional and bonafide. It was argued that delay must be condoned since the arbitral award was illegal. It was stated in the appeal that permission for filing the appeal was obtained on 08.12.2023 after which appeals were filed.

Counsel for claimant-respondent submitted that the explanation provided in the delay condonation application was unsatisfactory. It was further submitted that there was an unexplained delay of 4 years in filing application under Section 34 of the Act because of which the Court had rightly rejected the appeals as time barred.

High Court Verdict

The Court observed that the explanation given by the appellant in the delay condonation application was a usual and stereotypical explanation regarding file moving from one State officer to another. The Court observed that there was diligence on part of the authorities to file the appeals within prescribed period of limitation.

Observing that the appellants had knowledge about the arbitral award and the order under Section 34, the Court held that due promptness was necessary on part of the appellants in filing the appeals.

The Court relied on Madhya Pradesh & Others v. Bherulal where the Supreme Court held that where delay is caused by officers who sit on the file and do not take any action. The Court held that cost of wastage of judicial time must be recovered from such erring officers.

Further, reliance was placed on State of Uttar Pradesh & Others v. M/s.Satish Chandra Shivhare & Brothers where the Supreme Court had held that yardstick for condonation of delay cannot be different for appeals filed by the government. The Court held that though the delay can be condoned by virtue of Section 5 of the Limitation Act, however, inordinate delay must not be condoned where it is caused by negligence of officers.

“Liberal approach does not mean that an appeal should be allowed even if the cause for delay shown is glimsy. The Court should not waive limitation for all practical purposes by condoning inordinate delay caused by a tardy lackadaisical negligent manner of functioning,” held the Supreme Court.

The Court held that the period of filing of application under Section 34 against the arbitral award is 90days with a grace period of 30 days. Whereas the appellants had approached the Commercial Court after a delay of 4 years and 9 months.

Accordingly, the Court rejected the delay condonation applications. Consequently, the appeals were dismissed.

Case Title: Executive Engineer Drainage Division v. Ms Ayush Construction And Another [APPEAL UNDER SECTION 37 OF ARBITRATION AND CONCILIATION ACT 1996 DEFECTIVE No. - 89 of 2024]

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