Condonation of delay under Commercial Courts Act: What the Delhi HC has held

Condonation of delay under Commercial Courts Act: What the Delhi HC has held

Aditi Singh

Reiterating that condonation of delay by Court must be based on a sufficient cause, the Delhi High Court has held that condonation of delay for filing an appeal Section 37 of the Arbitration & Conciliation Act, 1996 read with Section 13 of Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 cannot be allowed if it strikes at the object and the spirit behind the Commercial Courts Act.

The Judgement was passed by a Division Bench of Justices GS Sistani and Sangita Dhingra Sehgal.

The Central Government and Associated Construction Co had entered into a contract for the provision of OTM Accommodation for CASD at Delhi Cantt. Subsequently, certain disputes arose during the execution of work between the parties and arbitration was invoked as per the terms of the contract.

The Sole Arbitrator awarded a sum of Rs. 49,25,240 with a simple interest of 12% per annum with respect to certain claims in the favour of Associated Construction.

Aggrieved by the Award, the Central Government moved the Court under Section 34 of the Arbitration Act. The same was dismissed by a Single Judge Bench on the ground that the Sole Arbitrator had pronounced the award in consonance with the contract.

Aggrieved by the dismissal, the Central government preferred an appeal under Section 37 of the Arbitration Act.

After perusing the facts of the case, the Court noted that at the outset, the Central Government was seeking condonation of 227 days’ delay in filing the present appeal and 200 days in re-filling of the appeal. The Central Government argued that the delay in filing the appeal was not intentional but for bonafide reasons. It was contended that after obtaining a certified copy of the judgment, the appeal could not be filed within the period of limitation due to procedural delays arising out of governmental hierarchies.

Associated Construction argued that Section 5 of the Limitation Act has to be construed in a very narrow manner for the purpose of the Commercial Courts Act and the present case did not make out any sufficient cause for condonation of delay. Associated Construction relied on Section 14 of the Commercial Courts Act to highlight that any appeal has to be disposed of expeditiously within a period of six months from the date of its filing, in sync with the aims and objectives of the Commercial Courts Act.

Therefore, any plea for condonation of delay must be decided by the Court while keeping in mind the genesis of the Commercial Courts Act, its scheme and objects, one of which was to do away with administrative red-tapism, it was submitted.

The files were in fact pushed from one desk to another showing scant respect for the law of Limitation as though the Limitation Act did not exist or that delay would be condoned mechanically as a matter of right.“, Associated Construction Co said.

After hearing the parties, the Court iterated that the Limitation Act would be applicable to the Arbitration Act until otherwise expressly barred by some provisions.

The Court then went on to comment on the enactment of the Commercial Courts Act as a special law to enhance the efficiency of the Indian Judicial System.

The intention and the urgency behind putting the Commercial Courts Act into force was to streamline and stimulate the growth of business, which can be gauged from the fact that the parliament went through the ordinance route to ensure that there is no delay in initiating the process for setting up ‘Commercial Courts’ for adjudication of ‘Commercial Disputes’. An attempt has been made to make the proceedings efficient in stipulated time by enforcing strict timelines. In order to ensure that the parties must not misuse the process of law, stringent rules have been laid and cost imposition has been introduced at places where the Court finds that the claim put forward by any of the party is frivolous and vexatious..”

The Court further stated that the Supreme Court has though consistently spoken about the liberal approach to Section 5 of the Limitation Act but the essence of ‘sufficient cause’ has always been given the importance while deciding the applications seeking condonation of delay.

“..condoning the delay is a matter of discretion which can only be available if the person does not sleep over his right and also is able to show sufficient cause or explanation for such delay..”

The Court opined that the grounds for condonation of delay put forth by the Central Government were baseless and vague as they failed to show any valid sufficient cause for the delay.

It is the case of the appellant that he had no knowledge about the impugned order and acquired the knowledge about the same in the first instance when the impugned order was uploaded on the web. Thereafter, certain rounds in the government department also led to the delay. We find these grounds baseless and vague and the same fail to show any valid sufficient cause for the delay.”

In view of the above, the Court concluded that there were no cogent grounds to condone the delay and then appeal was dismissed.

Central Government was represented by Advocates Ruchir Mishra, Mukesh Kumar Tiwari.

Associated Construction was represented by Advocates Amit George, Rishabh Dheer, Swaroop George, Amol Acharya.

Read the Judgement:

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