Extension Of Limitation For Section 34 Application, Is Not Contingent On Merits Of Section 33 Application: Delhi High Court

The Delhi High Court has ruled that the benefit of extension of limitation for filing an application under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), by virtue of an application filed under Section 33, for correction and interpretation of award, would not apply solely to the parties making the request under Section 33. The single bench of Justice Vibhu Bakhru held that the issue whether the limitation for filing a Section 34 application would run from the date of disposal of the application under Section 33 or from the date of receipt of the award, is not contingent upon the arbitral tribunal's decision on the application filed under Section 33. Certain disputes arose between the petitioner- Vidhur Bhardwaj, and the respondents, including- Horizon Crest India Real Estate, under a Binding Settlement Agreement, which was referred to arbitration. The Arbitral Tribunal passed an award in favour of the respondents, awarding them damages. The petitioner filed a petition under Section 34 of the A&C Act challenging the arbitral award before the Delhi High Court. The petitioner Vidhur Bhardwaj submitted before the High Court that as per the relevant Clause contained in the Binding Settlement Agreement, certain individuals, including the petitioner, cannot be made personally liable for the obligations stipulated under the said Agreement. Therefore, he contended that he could not be made liable for any monetary damages awarded against the respondents/award holders. The respondent Horizon Crest argued that the petition was not maintainable since it was barred by limitation. The Court observed that as per Section 34(3) of the A&C Act, an application under Section 34 is required to be filed within a period of 3 months from the date of the receipt of the arbitral award or, if a request has been made under Section 33, for correction and interpretation of award, from the date on which that request had been disposed of by the arbitral tribunal. The bench further noted that one of the award debtors, Nirmal Singh, had filed an application under Section 33 of the A&C Act before the Arbitral Tribunal, raising a similar contention as that of the petitioner that it could not be made personally liable for the obligations stipulated under the Agreement. Nirmal Singh had averred before the Arbitral Tribunal that as per the relevant Clause contained in the Binding Settlement Agreement, certain individuals, including him, could not be made personally liable under the said Agreement. In its application before the Tribunal, Nirmal Singh had contended that due to an error in the award, he was not expressly excluded from the award, unlike other parties which fell under the ambit of the relevant clause. The Arbitral Tribunal had, however, rejected the applicant Nirmal Singh's application. The Tribunal ruled that Section 33(1) of the A&C Act did not permit the arbitral tribunal to alter its findings and exclude any particular party from the Award already made against him. The Court observed that the said applicant, Nirmal Singh, had filed the application under Section 33 within a period of 30 days from the receipt of the award, as stipulated under Section 33(1) of the A&C Act. The Court further took into account that subsequently, the petitioner filed a similar application under Section 33 of the A&C Act. However, the said application was filed beyond the period of 30 days, as stipulated under Section 33(1). The bench held that filing of an application under Section 33 of the A&C Act, which is incompetent on account of being beyond the period of limitation, would not automatically result in extending the period of limitation for filing the petition under Section 34 of the A&C Act. Thus, it ruled that since the petitioner's application under Section 33 of the A&C Act was filed beyond the period prescribed under the A&C Act, the same was not maintainable. Therefore, the filing of the said application would not extend the benefit of extension of limitation to the petitioner for filing an application under Section 34. The petitioner Vidhur Bhardwaj argued before the Court that since the application under Section 33 of the A&C Act was filed by it beyond the stipulated period, it would not extend the limitation period. However, it contended that since the application filed by Nirmal Singh under Section 33 was filed within the prescribed time, the period of limitation for filing the application under Section 34 would commence from the date of the decision of the Arbitral Tribunal in regard to the said application and not from the date of receipt of the award. To this, the respondent Horizon Crest contended that only the party filing an application under Section 33 can avail the benefit of extension of limitation. Also, the respondent argued that the application filed by Nirmal Singh under Section 33 of the A&C Act was in...

Extension Of Limitation For Section 34 Application, Is Not Contingent On Merits Of Section 33 Application: Delhi High Court

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Extension Of Limitation For Section 34 Application, Is Not Contingent On Merits Of Section 33 Application: Delhi High Court

Parina Katyal

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