Section 34 pleas filed sans award not exempt from limitation: Delhi High Court

A Full Bench of the Delhi High Court recently ruled that failure to file an arbitral award along with an application under Section 34 of the Arbitration Act renders the application “non-est” (non existent). [Pragati Constructions v. Union of India].A Bench of Justices Navin Chawla, Rekha Palli and Saurabh Banerjee said held that in such situations, the limitation period prescribed under the Act will continue to run despite the filing.“Non-filing of the Arbitral Award along with an application under the Section 34 of the Arbitration & Conciliation Act, 1996 Act would make the said application liable to be treated and declared as non-est, and the limitation prescribed under Section 34(3) of the A&C Act shall continue to run in spite of such filing.”.The case stemmed from two separate references: one concerning the absence of a statement of truth and the other regarding the non-filing of the arbitral award itself.The Court considered two conflicting division bench judgments. In ONGC v. Sai Rama Engineering Enterprises, it was held that the lack of a statement of truth, while a defect, was curable and didn't render the petition non-est. Another division bench in ONGC v. Planetcast Technologies took a stricter view, stating that petitions without a signed statement of truth or a supporting affidavit were invalid.The Full Bench analysed these judgments alongside other relevant precedents, particularly those dealing with the strict timelines for filing such petitions to set aside arbitral awards under Section 34(3) of the Act. This provision mandates filing of pleas within three months of receiving the award, with a possible 30-day extension for sufficient cause..The Court distinguished between delays in filing and delays in re-filing. While delays beyond 30 days in the initial filing cannot be condoned, re-filing delays, even exceeding 30 days, may be condoned.It emphasised two key principles governing Section 34 petitions: the need for expeditious dispute resolution through arbitration, and the protection of a party's right to challenge an award on substantive grounds rather than mere technicalities. It noted that arbitration's efficacy relies on swift disposal, which is why judicial intervention and timelines under Section 34 are limited. Conversely, the right to challenge an award, the sole remedy against a domestic award, shouldn't be nullified by procedural imperfections, it held.To balance these principles, courts employ the "non-est" filing test, it noted. This test determines if the initial Section 34 application is so deficient that it effectively doesn't constitute a legal filing. Even if submitted within the limitation period, a "non-est" filing doesn't stop the clock; the limitation period continues to run. The critical question becomes defining what constitutes a "non-est" filing.It noted that Section 34 itself outlines the grounds for setting aside an award, but doesn't prescribe a specific format or essential requirements for the application. Similarly, the Delhi High Court Rules lack clear guidelines on what constitutes a "non-est" filing.The Supreme Court, in Sunny Abraham, clarified that "non-est" refers to a legal instrument so flawed that it is considered non-existent in law, exceeding mere remedial irregularities. A Section 34 application must go beyond such irregularities to be deemed non-est, the apex court had said..Despite this lack of explicit rules, the Court opined that an application under Section 34 cannot be submitted in any form. Thus, it said, "We, therefore, have no hesitation in holding that filing of the copy of the Impugned Award, which is under challenge, is a bare minimum, rather, mandatory requirement for an application under Section 34 of the A&C Act. Further, non-filing of the same would make such an application “non-est‖ in the eyes of law, thereby, not stopping the period of limitation from running.”The Court ruled that the mere absence of a statement of truth or defects in its filing (such as blanks or lack of attestation) does not automatically render the application "non-est." However, if the absence of the statement of truth is accompanied by other significant defects, the Court may declare the filing as "non-est" if it finds that the intent was merely to stall the limitation period..It went on to state, “...while filing of the Statement of Truth is essential, at the same time, merely because of non-filing of the same, or a defect in the same, an application filed under Section 34 of the A&C Act cannot be treated as non-est. It is only where the non-filing of the Statement of Truth, or the defect in filing the same, is accompanied with other defects in the application so filed, makes the Court to form an opinion that the only intent of the petitioner filing the same was to stall the limitation, can an application filed under Section 34 of the A&C Act be described as non-est.”.The Court also addressed other procedural defects, such as:1. Non-filing or defective filing of a vakalatnama.2. Unsigned or improperly verified applications.3. Substantive changes in the application during re-filing.4. Insufficient court fees.The Court held that these defects, individually, do not render the filing "non-est." However, if multiple defects are present, the Court may conclude that the filing was not bona fide and declare it "non-est.".Pragati Constructions was represented by Advocates SS Sastry, Brijesh Tiwari, Priyank Garg and Umesh Kumar.Bharat Broadband was represented by Senior Advocate Jayant Mehta with Advocates Deepayan Mandal, Mridul Bansal, Naman Varma and Ayushi Kumar.The Union of India was represented by Senior Advocate Shashank Garg and Advocates Ripu Daman Bhardwaj,Nishtha Jain, Aradhya Chaturvedi, Vidhi Gupta and Hussain Taqvi.Sterlite Technologies Limited was represented by Advocates AK Thakur, Rishi Raj, Sujeet Kumar and Ningthem Oinam.Advocates Payal Chawla, Hina Shaheen and Latika Arora appeared for intervenors..[Read Judgment].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.