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Arbitration - 'Dummy' Appeal Filed Without Award Copy Is Non Est; Cannot Extend Limitation : Delhi HC [Read Judgment]

Radhika Roy
22 March 2020 5:16 AM GMT
Arbitration - Dummy Appeal Filed Without Award Copy Is Non Est; Cannot Extend Limitation : Delhi HC [Read Judgment]
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The Delhi High Court has held that filing of 'dummy' appeals under Section 34 of Arbitration and Conciliation Act 1996 without the copy of the impugned award are non-est filings and therefore cannot be treated as filed within the limitation period. 


ISSUE

The Union of India sought for condonation of delay in re-filing of three petitions under Section 34 of the Arbitration and Conciliation Act, challenging three different arbitral awards dated 14.03.2019. It was contended by the Union of India that the re-filing was done before the statutory period of limitation of 90 days as prescribed under Section 34(3) of the Act had expired.

However, this was opposed by the Respondents on the ground that the petitions filed within the statutory period of limitation were merely a "bunch of papers" and could not be treated as valid in the eyes of law. The first copy comprised of 83 pages and did not include a copy of the impugned Award. Subsequently, after the limitation period had expired, the petition was re-filed with drastic alterations and ran into 441 pages.

The reason which had been provided by the Petitioner for condonation of delay was that the extra days were required to remove the defects pointed out by the Registry in the voluminous appeal.

ARGUMENTS

ASG Pinky Anand, appearing for the Union of India, submitted that the petition had filed within the statutory period of 90 days and was also supported by an affidavit, a statement of truth and a duly executed vakalatnama. Mere raising of defects and subsequent removal of the same could not render the filing as non est nor did it indicate any negligence on behalf of the Petitioner nor render the petition as being barred by limitation.

Anand also placed reliance on Chapter IV of the Delhi High Court (Original Side) Rules, 1967 to contend that failure to file a copy of the impugned Award was not fatal as it was never the intention of the legislature to insist on a copy of the arbitral award at the very first instance. She stated that even the Delhi High Court (Original Side) Rules, 2018 did not necessitate appending the copy of the arbitral award to the Section 34 petition.

"Rather, the practice directions enjoin the arbitral tribunal to transmit the arbitral record, including the award, to the Court once notice is issued in a Section 34 petition."

Anand further contended that the parameters for condonation of delay in re-filing a petition differ from those applicable for condonation of delay in filing the petition and that a liberal yardstick must be applied by the Court for the former. Reliance was placed on Northern Railway v. Pioneer Publicity Corporation Private Limited (2017), M/s Himachal Futuristic v. ITI Limited (2017), and Indian Statistical Institute v. M/s Associated Builderes and Ors (1978).

Senior Advocate Sandeep Sethi, on behalf of the Respondent, opposed the application as he submitted that the petition which had been filed at the first instance was merely a "bunch of papers as it suffered from critical deficiencies which cannot be disregarded by this Court". He contended that the initial filing was a dummy filing which bore references to documents which were completely alien to the dispute at hand.

Reliance was placed on Delhi Development Authority v. Durga Construction Co. (2013), Oriental Insurance Co. Ltd. v. Air India Ltd. (2019), Oil and Natural Gas Corporation Ltd. v. Joint Venture (2019) to buttress the point that as the initially filed petition was a mere skeletal filing, it could not be treated as a valid filing in the eyes of law.

HELD

While Justice Rekha Palli of the Delhi High Court agreed with primary contention of Anand that parameters for condoning delay in re-filing differed from those applicable to filing, she stated that the issue of the original filing being non est had to be considered in view of it being a condonation of delay of filing.

The Court first considered the question of whether the original filing was non est and a mere bunch, or whether the same was filed in compliance with all legal requirements.

In order to determine this, the Court relied upon the principles laid down in DDA v. Durga Construction Co (2013) wherein it was held that a party cannot be given the benefit of initial filing if the petitions or applications filed are so hopelessly inadequate and insufficient or contain defects which are fundamental to the institution of the proceedings.

The Court noted that the structure of the re-filed petitions had also changed and that the practice was entirely unacceptable. It was stated by the Court that if there was a need to assail a certain award, then it was unthinkable to not annex the copy of the award with the petition and therefore, the same could not be claimed as a valid filing as an application seeking for exemption from filing a copy of the impugned award had also not been moved.

The Court further observed that the initial filing "was a careless and deliberate attempt on the petitioner's part to somehow stop the clock on limitation amounting to clever manouevre to buy time". Therefore, the failure to annex the copy of the impugned award "cannot be underplayed as a trivial defect but is a defect of such gravity that it would render the original filing as a mere dummy filing".

In response to Anand's submission that the Original Side Rules nor the practice directions require the arbitral award to be filed along with the Section 34 petition, the Court stated that "a bare perusal of the practice directions issued on 30.08.2010, which are relevant herein and reproduced below, do not support this contention. Further, on perusing the 2018 Original Side Rules, I find that Chapter XXVIII Rule 1, being the applicable provision, also merely states that the existing practice directions in relation to the proceedings under the Act shall stand incorporated by inclusion in these Rules. The same, however, do not, in any manner, either deal with or dispense with the requirement of annexing a copy of the impugned award in a Section 34 petition."

The Court relied upon Executive Engineer v. Shree Ram Construction Co. (2010) and SKS Power Generation (Chhattisgarh) Ltd. v. ISC Projects Private Limited (2019) wherein it was held that non-filing of the impugned award would be fatal.

On finding that the petition could not be considered as filed before the expiry of the limitation period, the Court delved into the question of consideration of the condonation of delay application. It stated that "this Court does not have the power to condone delay caused beyond 30 days after the expiry of the limitation period of three months". Reference was made to decision in Union of India v. Popular Construction Co. (2001) wherein the Supreme Court had held that the Court cannot entertain an application to set aside the award beyond the extended period under proviso to Section 34(3) of the Act.

The Court further elaborated that "though the Court is empowered to condone delay beyond the extended period of limitation of 3 months and 30 days, it is requisite for the party seeking the condonation to show that despite his diligence, the rectification of defects and re-filing could not be carried out within the limitation period, for bonafide reasons beyond his control." Additionally, it is incumbent upon the Court to bear in the mind the legislative intent for prescription of the statutory period viz. ensuring expeditious disposal of arbitration and preventing delay in implementation of an award by parties who would malafidely challenge the same.

It was also observed that the intent behind to the Act was to "breathe life into a much needed alternate system of dispute resolution and lend credence to it, by removing any unwarranted obstacles to its smooth functioning". There was also a need to state that "liberal approach while dealing with an application for condonation of delay in challenging the award would only endanger and frustrate the purpose for which the Act was enacted".

On the basis of the above, the petitions filed by the Union of India were dismissed.

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