2012 (11) TMI 880 - HC - Indian Laws

Condonation of Delay of 108 days in filing of Application - for setting aside of Contract - held that - Time was the essence of the contract. The Railways were not prepared to deliver the goods(scrap).Hence it committed breach. Even then the learned arbitrator directed delivery of the goods within thirty days from the date of publication of the award simultaneously upon payment and in default thereof the sale would stand cancelled. There is no need to make any comment on the merits of the objection raised by the Railways in its application for setting aside. Section 34(3) of the 1996 Act was clear and unambiguous. It restricted the power of the court to consider an application for condonation of delay if it was filed within thirty days after expiry of the stipulated period and not thereafter . In the present case, from the pleadings no case made out by the Union of India, either before the arbitrator or this court. Mr. Chatterjee would seek leave from us to amend his application for setting aside - not to grant such leave at this belated stage that would cause immense prejudice to the respondent - Plea of fraud was conspicuously absent at all stages. It was nothing but an attempt made at the bar that would not inspire us to extend the scope of the appeal - dismissal of appeal would foreclose the opportunity to challenge the award - unable to accede to the prayer of the Union of India - appeal fails and is hereby dismissed.

Summary

Issues:
- Delay in challenging arbitration award under Section 34(3) of the Arbitration & Conciliation Act, 1996
- Application of the Limitation Act in condoning delay in filing the challenge

Issue 1: Delay in challenging arbitration award under Section 34(3) of the Arbitration & Conciliation Act, 1996:

The case involved a scrap dealer who participated in a public auction held by the Railway and was successful. Dispute arose when the Railway failed to deliver the goods despite the dealer's deposit of earnest money. The arbitrator, a deputy General Manager of the Railways, awarded in favor of the dealer. The Railways challenged the award after 108 days, beyond the stipulated period of ninety days. The Single Judge dismissed the application as grossly delayed. The High Court considered Section 34(3) of the Act, which allows for setting aside an award within three months, with a provision to condone delay within a further thirty days, but not thereafter.

The Court cited Apex Court decisions and held that the phrase "not thereafter" debarred the Court from considering any application beyond 120 days. The Court noted that the Railways' delay of 108 days could not be condoned as per the statutory provisions. The Railways argued fraud but failed to substantiate it adequately. The Court found no grounds to extend the period for challenging the award due to fraud allegations made belatedly.

Issue 2: Application of the Limitation Act in condoning delay in filing the challenge:

The Railways contended that the Court should apply the principles laid down in a specific Apex Court decision to extend the period for challenging the award based on fraud committed by the dealer and connivance of officials. However, the Court found that the fraud plea was not raised at earlier stages and could not be entertained at a later stage without proper particulars and proof. The Court emphasized that taking a plea on fraud at the bar would not suffice and that the dismissal of the appeal would foreclose the opportunity to challenge the award.

In conclusion, the High Court dismissed the appeal, stating that the Railways' delay in challenging the award could not be condoned under the statutory provisions. The Court rejected the plea of fraud due to lack of evidence and particulars, ultimately upholding the Single Judge's decision to dismiss the application as grossly delayed.

This detailed analysis of the judgment highlights the key legal issues of delay in challenging arbitration awards and the application of the Limitation Act in condoning such delays, providing a comprehensive overview of the High Court's decision.