Author: Mahima, 5th Year student at School of Law, UPES, Dehradun.
Date of Judgment: April 1st, 2021
Bench: Anil Kshetarpal
Original Copy: View
Issues in Question:
- Whether it is mandatory for the sole Arbitrator or the Arbitral Tribunal to ensure that a signed copy of the award was delivered to the parties under Section 31(5) of the Arbitration and Conciliation Act, 1996?
Background of the Case:
- Micro and Small Enterprises Facilitation Council made a reference under Section 18 of the Micro Small and Medium Enterprises Development Act, 2006 following which arbitral proceedings under Arbitration and Conciliation Act, 1996 were commenced by the Sole Arbitrator.
- The Arbitrator passed judgment on 27.09.2018 and a photocopy of the same was received by the respondents. However, it cannot be warranted by the Arbitrator or his secretary that the photocopy of the award was received by or dispatched to the appellant.
- Appellant filed a petition dated 18.04.2019 under Section 19 of MSMED Act, 2006 read with Section 34 of A&C Act, 1996 adducing that the copy of award was received on 19.12.2018. In addition, it also filed an application seeking exculpation of hindrance of 30 days.
- The Respondents didn’t respond to the petitioner’s application seeking condonation of delay even after the proceedings were ongoing before the Additional District Judge for more than a year and half. The Court rejected condoning the delay on ground that since the application was filed beyond the maximum period the Court is entitled to condone the delay, i.e., original limitation period along with the additional 30 days from the date of award.
- An application for summoning record of Arbitrator was also filed by the appellant during the pendency of petitioner’s application which however continued to be put on hold.
- The respondent, too, filed an application before the Additional District Judge under Section 19 of MSMED Act, 2006 in addition to another application seeking release of amount deposited and adjournment of date of hearing. To prove that a copy of the award was delivered to the Appellant, the Respondent produced a copy of receipt of Indian Posts and tracking details of the package.
- The counsel for appellant contended that there is no way to establish that the copy of the award delivered to the appellant was a signed copy which is a mandatory prerequisite under Section 31(5) of the Act of 1996.
- However, the counsel for respondent argued that appellant failed to prove their allegation that they received the copy of award on 19,12,2018 as they could not even submit that copy of the award which they received.
- Careful perusal of Section 31(5) establishes that ensuring delivery of signed copy of the arbitral award is not merely a provision to guarantee authenticity but it also helps in determining the commencement of the limitation period for raising objections under Section 34 or for enforcement of the award under Section 36 of the Act of 1996.
- In the case of Dakshin Haryana Bijli Vitran Nigam Limited v M/s Navigant Technologies Pvt. Ltd, the Supreme Court concluded that termination of arbitral proceedings is marked only by complete compliance of Section 31 which also includes delivery of signed copy of the award.
- In the case of Banarsi Krishan Committee and Ors v Karamyogi settlers Pvt Ltd, the Court concluded that Section 31(5) expressly indicates that the signed copy of the award should be delivered to the parties and compliance to this provision is hindered when the signed copy of the award is not received by the parties themselves.
- In the present case, the High Court observed that prime error was committed by the Arbitrator as he gave the envelope containing a copy of the award to the counsel of the opposite party and still there was no evidence to prove that the copy posted by the counsel was a signed copy.
- It was also concluded that the District Court failed to ponder upon the appellant’s pleading that they inquired about the award in November, 2018, after expiry of two months as the last they knew, the Arbitrator had reserved the award on 24.09.2018.
- In addition, the respondents failed to file their response against the application moved in front of the Learned Additional District Judge, leaving this Court with no other option except to accept that the assertions made by the appellant for seeking condonation of delay was valid.
- The Punjab and Haryana High Court allowed the petition for condonation of delay and directed the Learned Additional District Judge to adjudicate the objection petition under Section 34 positively within two months from the date of receiving this order. The Court ordered the parties to appear before the District Court on 09.04.2021.
- This case not only discussed the importance of the provisions laid down under Section 31 of the Arbitration and Conciliation Act, 1996 regarding the form and content of an Arbitral Award but also worked towards sensitizing the courts about arbitral proceedings.
- The Punjab and Haryana High Court observed that the application for condonation of delay was filed on 18.04.2019 but wasn’t considered for 30 days the Learned Additional District Judge discarding the fact that time is of essence in arbitral proceedings entered upon reference as Section 29A (1) mandates the arbitral proceedings to be concluded within 12 months from the date of commencement.