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Rejection Of Belated Application For Amendment Of Claim - Not An Interim Award: Delhi High Court

Parina Katyal
13 Sep 2022 3:04 PM GMT
Rejection Of Belated Application For Amendment Of Claim - Not An Interim Award: Delhi High Court
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The Delhi High Court has ruled that the order of the Arbitral Tribunal rejecting the application for amendment of statement of claims on the ground that it was filed at a belated stage, does not constitute an interim award and thus, it is not challengeable under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act). While observing the distinction between the rejection...

The Delhi High Court has ruled that the order of the Arbitral Tribunal rejecting the application for amendment of statement of claims on the ground that it was filed at a belated stage, does not constitute an interim award and thus, it is not challengeable under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act).

While observing the distinction between the rejection of application for amendment of claims and counter claims on the ground of limitation vis-à-vis on the ground that the amendment was sought belatedly, the single bench of Justice Prateek Jalan  held that Section 23 (3) of the A&C Act vests discretion in the arbitral tribunal to disallow a party to amend or supplement its pleadings on the ground that the application is filed belatedly.

The Court thus ruled that dismissal of an application for amendment of claims on the ground of delay is an interlocutory order, which is not susceptible to challenge under Section 34.

The petitioner/claimant Punita Bhardwaj filed an application for amendment of its statement of claims before the Arbitral Tribunal, which was rejected by the Tribunal. Observing the delay in making the application for amendment of statement of claims, the Arbitral Tribunal held that the claimant deliberately wanted to delay the completion of the arbitral proceedings.

Against the said order, the petitioner filed a petition under Section 34 of the A&C Act before the Delhi High Court.

The respondent Rashmi Juneja, disputing the maintainability of the petition under Section 34, submitted before the High Court that challenge against the interlocutory orders of the Arbitral Tribunal is not maintainable under Section 34.

Section 23(3) of the A&C Act provides that unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it.

The Bench referred to the decision of the Delhi High Court in Container Corporation of India Ltd. versus Texmaco Limited (2009), where the High Court ruled that dismissal of an application for amendment of the written statement so as to disallow a party from including fresh counter claims at a belated stage, cannot be termed as an interim award and hence, it cannot be challenged under Section 34 of the A&C Act.

However, the Court noted that the Delhi High Court in M/s Cinevistaas Ltd. versus M/s Prasar Bharti (2019) had held that rejection of an application for amendment of statement of claims on the ground of limitation decides the claims finally, and therefore, the said order is in the nature of an interim award; hence, the petition under Section 34 of the A&C Act was maintainable against an order dismissing the application for amendment on the ground of limitation.

Further, the Court observed that the Delhi High Court in M/s Cinevistaas Ltd. (2019) distinguished the judgment in Container Corporation of India Ltd. (2009), ruling that an application for amendment of counter claims was rejected in Container Corporation of India Ltd. (2009) on the ground that it was filed belatedly and not on the ground of limitation.

The Court noted that a suit was filed by the petitioner against the respondent before the Delhi High Court in 2014, which was referred to arbitration in 2016. Further, the suit itself was treated as a statement of claim and that an application for amendment of statement of claims was filed by the petitioner only in 2017. The Court observed that after all the issues were framed by the Arbitral Tribunal, the petitioner sought an adjudication of the said application in 2019.

While observing that Section 23 (3) of the A&C Act vests discretion in the arbitral tribunal to disallow a party to amend or supplement its pleadings on the ground that the application is belated, the Court held that the application for amendment of statement of claims filed by the petitioner was rejected by the Arbitral Tribunal only on the ground that the amendment was sought belatedly, and not on merits.

"The statute clearly vests discretion in the arbitral tribunal to disallow a party to amend or supplement its pleadings on the ground that the application is belated. In Container Corporation25, the amendment was rejected by the arbitral tribunal on this ground and the challenge under Section 34 of the Act was held not to be maintainable. In M/s Cinevistaas26 and Lt. Col. H.S. Bedi Retd.27 on the other hand, the Court came to the conclusion that the rejection of the amendments were in the nature of final adjudication of the claims and defences proposed to be raised. It is this factor which clothed the orders of the tribunal with the characteristic of finality and rendered them susceptible to challenge as interim awards. This distinction, in my view, is the key to determining the maintainability of the present petition."

Hence, the High Court held that the order passed by the Arbitral Tribunal of dismissing the application for amendment of statement of claims on the ground that it was filed belatedly, does not constitute an interim award and thus, it is not challengeable under Section 34 of the A&C Act.

Holding that the petition was not maintainable, the Court thus dismissed the petition.

Case Title: Punita Bhardwaj versus Rashmi Juneja

Citation: 2022 LiveLaw (Del) 859

Dated: 31.08.2022 (Delhi High Court)

Counsel for the Petitioner: Mr. A.K. Singla, Senior Advocate with Mr. Rahul Shukla and Mr. Akshit Sachdeva, Advocates

Counsel for the Respondent: Mr. Siddharth Batra, Mr. Siddharth Satija, Mr. Akash Sachan and Ms. Shivani Chawla, Advocates

Click Here To Read/Download Order

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