Party Can't Evade Two-Tier Arbitration By Questioning Authority Of Appellate Tribunal To Dismiss Appeal On Grounds Of Limitation: Madras HC

The Madras High Court bench of Justice Abdul Quddhose has held that once the petitioner chooses to file the appeal instead of directly approaching the Court under Section 34 of the Arbitration Act, the petitioner cannot wriggle out of the two-tier arbitration, by stating that they were not given an opportunity by the Appellate Tribunal to prosecute the appeal on grounds of limitation.Two-tier arbitration refers to a process where a dissatisfied party can file an appeal in the Appellate Tribunal.Additionally, the court held that ignorance of the law is no excuse, and the petitioner cannot claim that they were not put on notice by the Appellate Tribunal about the fact that their appeal is barred by limitation. Brief Facts of the case: The petitioner challenged an award passed by the Arbitral Tribunal before the Appellate Tribunal. After the award was passed the Arbitral Tribunal, the petitioner had two options to challenge the award under the statutory bye-laws. Either the petitioner can directly file a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (“Act”) or file the statutory appeal before the Appellate Tribunal as prescribed under the statutory bye-laws. The petitioner chooses to file the statutory appeal before the Appellate Tribunal. But the Appellate Tribunal dismissed the appeal on the ground of limitation since it was filed beyond the period of limitation. Then, the petitioner filed a petition under Section 34 of the Act to set aside the arbitral award passed by the Appellate Panel of Arbitrators in its entirety and to direct the respondent to pay the costs. Observation of the Court: The court noted that the petitioner, being a regular share broker involved in security transactions, would have known the procedure for filing any statutory appeal under the statutory bye-laws, if aggrieved by any award passed by any Arbitral Tribunal against them. The court held that ignorance of law is no excuse, and the petitioner cannot claim that they were not put on notice by the Appellate Tribunal about the fact that their appeal is barred by limitation. Additionally, the court noted that the petitioner chooses to file the appeal instead of directly approaching the Court under Section 34, the petitioner cannot wriggle out of the two-tier arbitration by stating that they were not given an opportunity by the Appellate Tribunal to prosecute the appeal by filing the condonation of delay application. Further, the court observed that from the order of the Appellate Tribunal, the appeal was filed with a delay of 56 days on 06.06.2023 and the same was dismissed on 21.09.2023. At least, during the pendency of the appeal, the petitioner as a share broker of repute, ought to have known that the appeal has been filed beyond the period of limitation. Only after the appeal got dismissed, the petitioner has raised grounds blaming the Appellate Tribunal for not informing the petitioner about the delay, which cannot be entertained by the court under Section 34 petition. Finally, the court dismissed the petition. Case Title: ICICI Securities Limited versus Kariabettan SugumarCitation: 2025 LiveLaw (Mad) 238 Case Number: Arb. O.P. (Com. Div.) No.361 of 2024 Counsel for the Petitioner: Mr. H. Ilangovan Counsel for the Respondent: Mr. Naveen Kumar Murthi Date of Judgment: 03.07.2025 Click Here To Read/Download The Order

Party Can't Evade Two-Tier Arbitration By Questioning Authority Of Appellate Tribunal To Dismiss Appeal On Grounds Of Limitation: Madras HC

Soumya Chakrabarti

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