Whether A Signed Copy Or Certified Copy Of The Award, Purpose Of S. 31(5) of A&C Act Is To Inform The Party: Bombay High Court

Taking note that the award debtor had obtained the certified copy of the signed award from the Arbitrator, the bench of justice Avinash G. Gharote rejected its plea that since the signed copy of the award was not delivered to it, the time for making the Section 34 application to set aside the award had not expired and thus, the execution proceedings were infirm.

The petitioner/ award debtor, Rahul, filed a writ petition before the Bombay High Court contending that the execution proceedings initiated by the respondent/ award holder, Akola Janta Commercial Co-Operative Bank Limited, for enforcement of the arbitral award, were premature.

It claimed that since the signed copy of the award was not delivered to it, in terms of Section 31(5) of the A & C Act, the time for making the application for setting aside the arbitral award under Section 34 (3) had not expired and the execution proceedings were therefore infirm.

To this, the respondent, Akola Janta Commercial, averred that a certified copy of the award was obtained by the petitioner, which was signed by the Arbitrator himself. The same would be a sufficient compliance with the requirement of Section 31 (5) of the A&C Act, it pleaded.

Perusing the relevant provision of the A&C Act, the court noted that as per Section 34(3), an application for setting aside an arbitral award must be made within three months from the date on which the party making the application had received the arbitral award.

The bench held that the entire object and purport of Section 31(5) of the A & C Act is that the nature, effect and import of the award is made known to the party to the award, so that each party may then take a decision whether to challenge the award under Section 34, or to get it corrected by filing an application under Section 33 of the A&C Act before the Arbitrator.

“This also so, for the reason that both Section 33(1) and 34(3) of the A&C Act, provide for limitations of time in this regard to approach either the Arbitral Tribunal or the Court for the said purpose and therefore the delivery of the award as contemplated in Section 31(5) has the effect of setting in motion these time periods, within which the remedies available are to be availed of by the party,” the court added.

The court concluded that the delivery of the signed copy of the award is, therefore, information regarding the contents of the award, which is brought to the notice and knowledge of each party, so as to make the ‘party’ aware that the limitation to raise a challenge has started to run. It added that the said knowledge/information is equally available to the ‘party’, when it receives the certified copy of the award signed by the Arbitrator.

The bench ruled that the situation is quite different when the award is not delivered to the ‘party’, or obtained by the ‘party’, as defined in Section 2(h) of the A&C Act, but is delivered or obtained to/by the counsel or agent of the ‘party. Since the knowledge of a ‘party’, as defined in Section 2(1) (h) of the A & C Act, is what is contemplated by Section 31(5), in such circumstances a plea can be successfully raised by the ‘party’, of non-compliance with the requirement of Section 31(5). The same would then entitle it to claim that the time for challenging the award under Section 34(3) or for correction/interpretation/modification of the award or for passing an additional award under Section 33(1), did not begin to run.

The court reckoned that Section 36 (1) of the A&C Act provides that when the time for making an application to set aside the arbitral award under Section 34 has expired, then subject to Section 36(2), the award shall be enforced as a decree under the Code of Civil Procedure.

Perusing the facts of the case, the court took note that the petitioner had obtained the certified copy of the signed award from the Arbitrator on 7.3.2015, and the application under Section 34 of the A&C Act came to be filed by the petitioner on 8.6.2015, i.e., beyond the limitation period.

While dealing with the contention of the petitioner that since the signed copy of the award was not delivered to it in terms of Section 31(5), the time for making the Section 34 application had not expired and thus, the execution proceedings were infirm, the court remarked that the same was a too literal and narrow view of the language of Section 31(5).

The bench ruled the said interpretation would defeat the very purpose and object of the A&C Act itself, as once a ‘party’ is held to have received/obtained the signed copy/ certified copy of the award, the information regarding the contents of the award stands attributed to the party, and therefore, the time would begin to run for raising a challenge to the award.

“Once that time has expired, it cannot be permitted to be said that though a certified signed copy was obtained by the ‘party’, from the Arbitrator, still the time under Section 33(1) or 34(3) of the A & C Act, did not run and expire, as a signed copy of the award, in terms of Section 31(5) was not delivered to the ‘party’,” the court said.

Referring to Section 36 of the A&C Act, as substituted by the 2015 Amendment Act, the court noted that even filing of an application under Section 34(3) of the A & C Act, within the time frame as provided, does not have the effect of stalling the enforcement of the award by invoking Section 36(1).

The court thus dismissed the petition.

Case Title: Rahul S/o Omprakash Gandhi vs The Akola Janta Commercial Co-Operative Bank Limited

Dated: 10.04.2023

Counsel for the Petitioner: Mr. Sharad Bhattad

Counsel for the Respondent: Mr. R.L.Khapre, Sr. Advocate assisted by Mr. D.R. Khapre, Advocate

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