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The Delhi High Court recently refused to condone a delay of 28 days in filing a challenge to an Arbitral Award after it held that change of counsel did not amount to "sufficient cause" under proviso to Section 34 (3). (Chintels India vs Bhayana Builders)
The order was passed by a Single Judge Bench of Justice Jyoti Singh.
The Petitioner, Chintels India had filed the petition under Section 34 of the Arbitration & Conciliation Act, 1996 after a delay of 28 days. The petition was re-filed thereafter, after 16 days.
The Petitioner claimed that the delay was not deliberate and was covered under the ambit of the extended 120 days deadline in terms of Proviso to Section 34(3) of the Act.
It was explained after the Award was published, the counsel who originally appeared before the Tribunal expressed his inability to continue further in the matter and returned the record.
The present counsel received the record near the time when the three-months deadline was about to end and given the voluminous record and complex nature of the issues, it was not possible to file the plea immediately, it was said.
It was further explained that the petition also had several defects which were notified from time to time and were subsequently cleared by the counsel.
Stating that all perfunctory defects were removed within the outer limit of 120 days, the counsel for the Petitioner argued that strict rigours of filing should not be applied to refiling.
The Petitioner also filed an affidavit to support its cause for condonation of delay.
In the affidavit, the Petitioner stated that apart from the award in question, another award was passed between the parties and a suo moto clarification on case number with regard to the other award was issued by the Tribunal in July.
The Petitioner claimed that it was under an impression that the clarification would apply to both the Awards and thus could not file the Section 34 plea within the stipulated time.
In response, the Respondent, Bhayana Builders argued that the Arbitration Act mandated a strict limitation period for challenging an Award under Section 34(3) of the Act.
It was submitted that once the 3 months’ limitation period expired, objections could be filed within an outer limit of 30 days, but after proving sufficient cause.
In the present case, the Respondent said, the petition was first filed on August 30, 2019, beyond the limitation period of 3 months, as a mere stack of papers.
The defects were finally cleared beyond the period of 120 days, the Respondent stated.
The Respondent contended that the application for condonation of delay contained no reason which could be termed as “sufficient cause” to enable the Court to condone the delay.
It was also argued that even the petition filed within 120 days was a non-est filing.
The Court observed that Section 34(3) provided a limitation period of 3 months for filing objections against an Arbitral Award and the Proviso extended this by 30 days if the court was satisfied that with the existence of a "sufficient cause".
Relying on a series of decisions on the issue, the Court sad,
"..the use of the words “but not thereafter” in the Proviso makes it clear that extension cannot be beyond 30 days."
In view of the above, the Court remarked that the first and the foremost issue that needed to be examined was whether the Petitioner had shown "sufficient cause" for condonation of delay of 28 days in filing the petition.
The Court noted that significantly, the Section 34 petition was not dated August 30, 2019 but September 27, 2019 and the supporting affidavit was also verified and attested on the date in September.
The counsel for the Petitioner explained that although the filing date was August 30, 2019, the date on the Petition was that of September because the entire petition was refiled on A4 size papers.
After perusing the e-record of filing, the Court observed that it was correct that the petition was filed on August 30, 2019 but the application for condonation of delay was not filed in support of the petition on the said date.
The application itself is thus filed beyond a period of 120 days, the Court said.
"There is no doubt that even in the present case the Petitioner was aware that the petition was being filed beyond the 3 months period and ought to have filed the application for condonation of delay, along with the petition.", the Court remarked as it opined that the reasons for condonation of delay i.e. change of counsel was "far from meeting the requirement" of "sufficient cause” under proviso to Section 34 (3).
With regards the plea taken in the affidavit, the Court said,
"Even the said ground, does not appeal to be 'sufficient cause' for condonation to meet the strict requirements of Section 34 (3) of the Act. A clarification in the case number of a connected Award can hardly be a reason for a party to wait for filing objections to an Award, being fully aware of the strict and inflexible limitation period under Section 34(3) of the Act."
In view of the above, the application for condemnation of delay, as well as the Section 34 petition, was dismissed.
The Petitioner was represented by Advocates Rajshekhar Rao, Kotla Harshavardhan, Mansi Sood, Shreedhar Kale.
Senior Advocate Rajiv Nayar with Advocate Gaurav Mitra and Karanjawala & Co Advocates Meghna Mishra, Manmeet Kaur, Yashvardhan Bandi, Riya, Anjali Dwivedi, Adit Singh appeared for Respondent.