The Hon'ble Supreme Court in its recent judgment Chintels India Ltd. v. Bhayana Builders Pvt. Ltd.1 settled the debate around the question, 'whether an order refusing to condone the delay in filing an application under Section 34 of the Arbitration and Conciliation Act, 1996 ("Act") is an appealable order under Section 37 (1) (c) of the Act'.
Background
The Ld. Single Judge of the High Court of Delhi, dismissed an application filed by Chintels India Ltd. ("Appellant") for the condonation of delay in filing its petition under Section 34 of Act. While dismissing the application for condonation of delay, the High Court held that sub-section 3 of Section 34, using the words "but not thereafter" restricts the power to condone delay beyond a period of 30 (thirty) days. To arrive at this conclusion, the High Court drew support from earlier precedents2 on the issue and held that the instant case was time-barred and refused to condone the delay while setting aside the application under Section 34 of the Act. The High Court then went on to hold that the order refusing to condone delay was not appealable under Section 37 of the Act. Consequently, the aggrieved party left with no remedy, approached the Hon'ble Supreme Court of India under Article 136 of the Constitution of India.
Contentions of the parties
The Appellant contended that a refusal to condone the delay by a court is in effect a refusal to set aside an award and an appeal against such an order is maintainable under Section 37 of the Act. Further, relying upon numerous precedents3, the Appellant submitted, that Section 39 of the 1940 Act permitted appeal from an order refusing to condone delay and was a pari materia provision to Section 37 of the Act. Therefore, such an order is appealable under Section 37 of the Act as well. The Appellant also distinguished such an order from one condoning delay, as a refusal imparts finality to the proceedings. The Appellant stated that the refusal to set aside an award 'under Section 34' includes Section 34 (3), under which the court may refuse to condone delay, making it appealable under Section 37 of the Act.
The Respondent, Bhayana Builders Pvt. Ltd. ("Respondent") on the other hand refuted the submission that Section 39 of the 1940 Act and Section 37 of the Act are pari materia and stated that Section 37 of the Act needs to be interpreted on its own terms. The Respondent submitted that the Act envisaged minimal judicial interference and the non-obstante clause in the beginning of Section 37 made it an exhaustive list of appealable orders and reference to 'under Section 34' is limited to an order 'setting aside or refusing to set aside an arbitral award'. The Respondent further submitted that such refusal to set aside can only be on merits to entail and appeal and not on some preliminary ground.
Findings of the Court
The Supreme Court took note of the language of Section 37 to state that sub section (1) (c) therein contained the expression 'setting aside or refusing to set aside an arbitral award', followed by the expression 'under Section 34', which makes it clear that it includes 34(3) as well and is not limited to grounds under Section 34 (2). The Court noted that Section 37 (2)(a) made specific reference to a part of Section 16, namely sub section (2) & (3), thus evidencing that when deemed necessary, the legislature did in fact make reference to a specific part of the section as opposed to a section in its entirety. Therefore, the reference to Section 34 in Section 37 includes the entire provision.
The Court further noted that the ultimate effect of refusing to condone delay is a refusal to set aside the award, thereby making it an appealable order as per the scope of Section 37. Whether objections to an award are dismissed on merits or on the ground of being filed beyond the time, the court dismissing them in-effect refuses to set aside the award. Thus, the court held that in so far as the present question is involved, Section 39 (1) (vi) of the 1940 Act is in pari materia to Section 37(1) (c) of the Act. Thus, the court found that the "effect doctrine" was inbuilt in Section 37 of the Act.
The Court further held that the above interpretation would not be contrary to Section 5 of the Act, which mandates the extent of judicial interference. The Court held that the provision, preceded by a non-obstante clause, states that no judicial authority shall intervene "except where so provided in this part". Therefore, Section 37 being a provision in the part to which Section 5 refers would not militate against the judicial interference envisaged under the Act. The Court thus held that an appeal under Section 37 (1) (c) is maintainable against an order refusing to condone delay in filing an application under Section 34 of the Act to set aside an award.
Footnotes
1 Civil Appeal No. 4028 of 2020
2 BGS SGS Soma JV v. NHPC Ltd. [(2020) 4 SCC 234]; State of Maharashtra v. Ramdas Construction Co. [(2006) SCC OnLine Bom 690]
3 Essar Constructions v. N.P. Rama Krishna Reddy [(2000) 6 SCC 94]; Chief Engineer of BPDP/REO Ranchi v. Scoot Wilson Kirpatrick India (P.) Ltd. [(2006) 13 SCC 622]; Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. [(2011) 8 SCC 333]
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
