Case Briefs
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Chintels India Ltd. v. Bhayana Builders Pvt. Ltd.


Author: Shefali Chaudhary, 2nd year student at ICFAI University Dehradun.

Citation: N/A

Date of Decision : February 11, 2021

Original copy: View

Bench: R. F Nariman, Hemant Gupta, B. R. Gawai

Statutes Involved: Arbitration and Conciliation Act, 1996, Commercial Courts Acts, 2015, Limitation Act, 1963

Issues in Question: 

  • Whether the single Judge’s order refusing to condone the delay in filling an application under Section 34 of the Arbitration Act, 1996 is an appealable order under Section 37(1)(c) of the said Act?

Background of the Case:

  • The appeal emerged from a certificate given by the Division seat of Hon’ble Delhi High Court under Art. 133 read with Art. 134A of the Constitution of India. The Hon’ble Court was hearing an appeal under Section. 37 of the Arbitration and Conciliation Act, 1996 read with Section 13 of the Commercial Courts Act, 2015 for condonation of postponement in the non-est filing of an application under Section 34 of the Arbitration Act, 1996, and henceforth thusly dismissed the Section 34 application itself, being limited by the ratio of the decisions in several cases.
  • The High Court considered that Section 34(3) of the Arbitration Act, 1996 by utilization of the words “but not thereafter”, as interpreted in  Union of India vs Popular Construction Co. [(2001) 8 SCC 470] judgment, confines the power vested in Court to to condone the delay beyond 30 days and the same creates a ground of time bar for refusing to set aside award and is essential for the self contained  code for setting the award. So the refusal to set aside an award on the ground of the said time bar would be a refusal inside the meaning  of Section 37 and appealable under Section 37.
  • Considering about another part of this, the High Court saw that any Commercial Court in the nation refusing to condone the delay in applying for setting aside of award, and where delay can be for differing reasons as the social, geological and financial conditions common in this country, and not giving any chance to the High Courts to look in that, would be a harsh outcome.
  • Considering the significance of the substantial question of law in this case, the High Court granted a certificate under Art. 133 read with Art. 134A to the appellant. Henceforth, the appeal was preferred under the Supreme Court.

Judgement:

  • The Supreme Court firstly looked into the issue of time-period mentioned under Section. 34 of the Arbitration Act, 1996, which is, towards an application to set aside an award. The Supreme Court held that in all procedural reasonableness, the Section 34(1) application should be presented within a time of 90 days, and if not then, within a further time period of 30 days including a application mentioning the condonation for delay. Further, Section 5 of the Limitation Act, 1963 doesn’t apply to the arbitration proceedings, and any delay beyond 120 days can’t be condoned, as mentioned in the  State of Himachal Pradesh v. Himachal Techno Engineers and Anr. [(2010) 12 SCC 210]  judgment.
  • The Supreme Court analyzed Section 37(1)(c) of the Arbitration Act, 1996 and held that the expression “setting aside or refusing to set aside arbitral award” must be read with the expression that follows” under Section 34.
  • The Supreme Court explained the dichotomy between Section 34 and Section 37 of the Arbitration Act, 1996 and held that under Section 37(1)(a), where a party is referred to arbitration under Section 8, then, at that point no appeal lies. Reason being, the impact of such order is that the parties should go to arbitration, and it being left to the learned Arbitrator to decide points under segment 16 of the Act, which then, at that point become the subject of appeal under Section 37(2)(a).
  • The Supreme Court subsequently held Section. 39(1)(vi) of the Arbitration Act, 1940 to be pari materia to Section. 37(1)(c) of the Arbitration Act, 1996 considering the points of reference in the case of Chief Engineer of BPDP/REO Ranchi vs Scoot Wilson Kirpatrick India (P.) Ltd. [(2006) 13 SCC 622]
  • As an outcome, the Court concluded that an appeal under Section 37(1)(c) of the Arbitration Act, 1996 would be maintainable against a request refusing to condone delay in filing an application under Section 34 of the Arbitration Act, 1996 to set aside an award. Subsequently, Hon’ble Court overruled the Bombay High Court judgment in State of Maharashtra vs Ramdas Construction Co. [2006 (6) Mah. L.J. 678], and Allahabad High Court in Union Of India And Others vs Radha Krishna Seth And Another [2006 ARBLR ALL 2 441].

Critical Analysis:

  • This judgment has given necessary clearness on the part of maintainability and limitation period for challenge to an arbitral award and has rectified the problem predicated on misinterpretation of statutory provisions enumerated under 34(3) by different High Courts.
  • This judgment has given a relief to award debtor individuals to effectively use the legal sword given under Section 34 and not be left without remedies because of an expensive understanding running contrary to express legal interpretation.

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