What is non-Est in the eyes of law
Non-Est" is a Latin term that translates to "it is not" or "does not exist".When used in a legal context, it indicates that something is considered invalid, void, or ineffective, and therefore has no legal standing or consequences. The Hon'ble Apex Court in Sunny Abraham v. Union of India [(2021) 20 SCC 12] has noted that the term 'non-est' conveys the meaning of something that is treated to be not in existence because of some legal lacuna in the process of creation of the subject instrument which goes beyond remedial irregularity. It refers to a case where a legal instrument is deemed to be not in existence because of certain fundamental defects in its issuance and subsequent action cannot revive its existence and rectify acts done in pursuance. Such instruments are treated as invalid, that is, what is non-existent in the eyes of law and cannot be revived retrospectively.
Non-Est Filing and Arbitration & Conciliation Act, 1996
A party can file an application under Section 34 of the Arbitration and Conciliation Act, 1996 ("the Act") before a Court to challenge and set aside an arbitral award. As per Section 34(3) of the Act,1 once the arbitral award is received by a party, the application under Section 34 must be filed within three months from the date of receipt of the award, which can be further extended for a period of 30 days by showing sufficient cause. This limitation ensures that the application for setting aside the award is made promptly, avoiding unnecessary delays.
However, it is a common practice wherein in order to circumvent the strict period of limitation mentioned in Section 34(3), an incomplete filing is done only to be within the limitation period as prescribed under Section 34(3) of the Act.
Full Bench Reference in Pragati Constructions v. Union of India
The Hon'ble Single Bench of the Delhi High Court, vide its order dated 21.03.2024 passed in OMP(COMM) 20/2024 titled Bharat Broadband Network Limited v. Sterlite Technologies Limited, referred the issue of the requirement of a valid filing under Section 34 of the Act to a larger bench. Accordingly, the question came to be referred before the Full Bench constituted in the case of Pragati Constructions v. Union of India.2 ("Pragati Constructions ")
The Full Bench considered two primary issues:
- Whether the non-filing of the arbitral award itself renders an application under Section 34 of the Act as "non-est".
- Whether the non-filing of the Statement of Truth or a defect in its filing renders an application under Section 34 of the Act as "non-est" (i.e., non-existent in the eyes of the law).
The Full Bench Judgement on Non-Est Filing under the Act
In absence of any statutory guidance under the Act, the Court majorly relied on the following two principles applicable to a petition under Section 34 for deciding the essential ingredients for filing a Section 34 Application under the Act,
- Strict adherence to Limitation: The Court while noting the strict timeline provided under Section 34(3) of the Act for challenging the award, held that this object could not be defeated by allowing a Party to file an application under Section 34 of the Act without the basic attributes of a Section 34 Petition, with an intent to merely stall the period of limitation from running.
- Section 34 as Sole Remedy: The Court also acknowledged that the only remedy available with a Party against a domestic Arbitral Award is an application under Section 34 of the Act. This right, therefore, ought not be negated on mere technicalities, and the procedural requirements should not be allowed to defeat the substantive rights of a party.
Applying the above principles, the Court unequivocally held that there were certain mandatory requirements for filing a Section 34 challenge which could not be waived and had to be complied with. The Court also emphasized that the intent of the party filing the Section 34 application is crucial. If the Court finds that the filing was made to stall the limitation period and not with a bona fide intent to challenge the award, the application may be declared "non-est".
Consequences of the Non-Filing of the Impugned Award under Section 34 of the Act
The Court interpreted the statutory mandate prescribed under Section 34 of the Act to hold that the filing of the Arbitral Award under challenge along with the application under Section 34 of the Act was not a mere procedural formality, but an essential requirement. Therefore, the non-filing of the same would make the application "non-est" in the eyes of the law. The Court rightly opined that a Court could not reasonably decide or appreciate the merits of the Award without the same being placed before it.
In deciding so, the Court refused to refer to other statutes which specifically provide for filing of a copy of the impugned decree/order along with the appeal,3 in contrast to Section 34 of the Act. The Court reinforced that the Arbitration Act, being a complete code, does not require analogies from other statutes mandating similar filings.
Pertinently, this stance aligns consistently with previous judgments such as ONGC V. Planetcast Technologies Ltd.4, Oriental Insurance Co. Ltd. v. Air India Ltd.5, and Delhi Development Authority v. Gammon Engineers & Contractors Private Limited.6 In all the said judgements, the Hon'ble Courts have unanimously held that the filing of the Impugned Arbitral Award is not an empty procedural requirement and is, therefore, absolutely essential for adjudication of a Section 34 challenge.
Accordingly, the Court answered the Reference in Pragati Constructions holding that non-filing of the impugned Arbitral Award is a fatal defect under Section 34, rendering the application "non-est". With regards to limitation, the Court held that in such cases, the date of re-filing of the application with the correct award would be considered as the date of the first filing of the application under Section 34 of the Act, and the period of limitation shall stop running only on that date, with no benefit being extended to the applicant of the initial date of filing of the application for limitation under Section 34(3) of the Act.
Consequences of the Non-Filing of the Statement of Truth under Section 34 of the Act
The second significant question that the Full Bench has addressed is whether the non-filing of the Statement of Truth or a defect therein would also render an application filed under Section 34 of the Act to be considered as non-est, the Court answered the question in the negative for the following reasons-
- Non-filing of the Statement of Truth is a procedural defect that is curable in nature.
- Order VI Rule 15A of the Civil Procedure Code, 1908 ("CPC") which incorporates the rule of the verification of pleadings in a commercial dispute (as introduced by the Commercial Courts Act, 2015) is a procedural requirement and its non-compliance does not make a Section 34 petition non-est in law
However, the Court, added a crucial caveat that if the non-filing of the Statement of Truth, or any defect in its filing, is accompanied by other similar defects in the application, it may lead the Court to conclude that the sole intent of the Petitioner in filing was to stall the limitation. In such cases, an application filed under Section 34 of the Act can be deemed non-est by the Court. Put simply, while Courts would usually not permit procedural defects to defeat the substantive rights of the Parties, however, if it appears to the Court that the Petition so filed has been made with the sole intention to stop the limitation then such applications may be rendered non-est in law.
Conclusion
The judgement by the Hon'ble Delhi High Court underlines that the non-filing of the impugned award along with the Section 34 Application is a material defect which might render such Application non-est in law. At the same time, it importantly holds that substantive rights (such as those vested under Section 34) should not be allowed to be negated on procedural technicalities and hence, for describing an application under Section 34 of the Act as non-est, a more liberal view in favour of the party filing the same should be taken. In summary, the judgement by the Hon'ble Court reinforces the fact that the time limit for filing Section 34 is inelastic, and Parties therefore cannot misuse the same for extending the time-limit citing extraneous grounds.
Footnotes
1 Section 34(3) of the A&C Act reads as under:
―34. Application for setting aside arbitral award.
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal. Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter
2 Pragati Constructions v. Union of India, FAO(OS) (COMM) 70/2024
3 For instance, Order XLI Rule 1 of the Civil Procedure Code and Section 423 of the Bharatiya Nagarik Suraksha Sanhita mandate filing a copy of the impugned judgement/decree along with the Appeal.
4 ONGC V. Planetcast Technologies Ltd, 2023 SCC OnLine Del 8490.
5 Oriental Insurance Co. Ltd. v. Air India Ltd., and 2021 SCC OnLine Del 5139.
6 Delhi Development Authority v. Gammon Engineers & Contractors Private Limited, 2024 SCC Online Del 5154
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