Author: Komal Bhati, 2nd year student at ICFAI Law School, Hyderabad.
Citation: 2021 SCC Online SC 157
Date: 2nd March 2021
Bench: Indu Malhotra, Ajay Rastogi
Original Copy: View
- Whether the Limitation period to file a petition under Section 34 of the Arbitration and Conciliation Act, 1996 begins from the date of receiving the draft award or from the date when the award’s signed copy was provided?
Background of the case:
- The appellant, Dakshin Haryana Bijli Vitran Nigam Ltd. and the respondent, M/s Navigant Technologies Pvt. Ltd. entered into a Service Level Agreement on 2nd May 2012, the termination of which led to disputes between the parties. According to clause 13 of this agreement, the disputes were placed for consideration in front of an Arbitral Tribunal of three arbitrators.
- Upon hearing both the parties, the tribunal awarded the parties in the ratio of 2:1. The majority stood in the favour of the respondent.
- The parties were informed about the award that was to be given to the respondents i.e the majority award on 27th April 2018. Whereas, the award for the appellant i.e., the minority amount award was to be given separately. The parties were asked to go through the draft copy of it to check for any errors or issues which would be taken into consideration on 12th May 2018.
- Later, the parties were sent the draft copy of the minority award and the date 19th May 2018 was specified to take up any issues with the copy. The parties did not come up with any issues regarding the draft and hence, the signed copies of the award were allotted to the parties on 19th May 2018, bringing the proceeding to an end.
- On September 10 2018, the award was objected to by the appellant under Section 34 of the Arbitration and Conciliation Act, 1996 before the Civil Court. The appellant submitted that according to Section 34(3), the objections were made within the prescribed time period. It was emphasised that since the signed draft of the minority award was received on 12th May 2018 objections were filed within the limitation period. The application was dismissed by the Civil Court. The reason for the dismissal of the application was stated to be the delay in filling the objections as the limitation periods started from 27th April 2018 when the draft for the majority award was received by the appellant.
- The appellant aggrieved with the decision moved to the High Court, which stood with the decision of the Civil Court. The appellant then filed a Special Leave Petition in the Supreme Court.
- The appellant submitted that –(a) No other merits were taken into consideration and the limitation period stood as the only reason for the dismissal of its objection by the Civil and High Court. (b) By considering the award given by the majority as the actual award, it indicates that the minority tribunal’s opinion stands immaterial.
- The respondent submitted- (a) The objections were not filed under the prescribed time and therefore should be dismissed. (b) Objections can be filed with the time period of 3 months under Section 34(3) of the said act and the limitation period had commenced from the date when the award given by the majority was issued as it is the arbitral award and that the minority tribunal’s opinion does not come in consideration regarding the computation of limitation period. (c) The respondent brought up Section 31(2) of the said act, stating that an award stands valid, be it signed by the majority.
- While passing the judgement the court took made the following points:
- For an arbitral award to be legally finalised, it should be signed by all the members of the tribunal.
- The award should be passed on one particular date i.e., both the awards should be delivered simultaneously on the same date. As, after the final award the tribunal’s duty officially comes to an end.
- The opinion of the minority in the tribunal, would stand supportive to the appellant’s objections as the court would take the same into consideration.
- It was then held by the court that it does not matter that the award was announced on 27th April 2018 but what matters is when the signed copies were made available i.e., 19th May 2018. On 27th April 2018, the copies were only provided to be reviewed by the parties for any issues whereas as no issues were brought up by the parties, the award was finalised and signed on 19th May 2018. And hence, the period of limitation for filing the objections would be computed from the date when the signed copies of the award were received by the parties.
- This case tried to clear the cloudiness that rides the inter-relation of the Arbitration and Conciliation Act, 1996 and limitation period. An award can be objected to from the date of receipt of the award, it can be objected to within a limitation period of 3 months.
- Under Section 34, an extension of 30 days can be allowed after the completion of the period of limitation if the applicant can explain the cause of the delay. Whereas Section 31(5) of the said act, states that the delivery of the award is sufficient for the termination of proceedings. Section 3 of the same act states that the communication of the award stands equal to receiving. All these making it hard to figure that whether the limitation period starts from the date of receipt of the award or from the date it was delivered, which was the issue that was discussed in this particular case.
- Through this verdict, the court cleared the issue by stating that the limitation period should be calculated from the day of receipt of the signed copies of the award. The court further gave value to the contradicting opinion of the minority in the tribunal by stating that the award should be signed by all the members of the tribunal to make it valid.