2020 (12) TMI 1210 - HC - Indian Laws

Condonation of delay in filing application - Section 37(1)(b) of the Arbitration Conciliation Act, 1996 - HELD THAT - Section 37(1)(b) while providing for the appealable orders, refers to Section 34 in entirety and not to Section 34(2); though BGS SGS Soma JV supra has held that the order which is appealable thereunder is an order testing the arbitral award on the grounds set out in Section 34 but in our humble opinion if the intention of the legislature was to confine the appeals only to grounds under Section 34(2), nothing prevented them from, instead of referring to Section 34 generally in Section 37(1)(c), referring only to Section 34(2). We are of the view that sub-section (3) of Section 34, by use of the words 'but not thereafter', as interpreted in Union of India Vs. Popular Construction Co. 2001 (10) TMI 1044 - SUPREME COURT , restricts the power otherwise vested in Court to condone the delay beyond thirty days, the same also creates a ground of time bar for refusing to set aside the award and is part of the self-contained code for setting aside of the award; thus, refusal to set aside an award on the ground of the said time bar, would be a refusal within the meaning of Section 37 and appealable under Section 37. There is also merit in the contention of Mr. Rajshekhar Rao, Advocate for the appellant that refusal to condone the delay also entails affirmation of the underlying order. By reading Section 37 as not permitting an appeal against refusal to condone the delay in applying for setting aside of the award, the persons aggrieved by the award are left with no remedy but to approach the Supreme Court by way of a petition under Article 136 of the Constitution of India. The refusal to set aside the award may not necessarily be by the Commercial Division of the High Court but may also be by the Commercial Courts of the country. No other remedy would be available to the persons aggrieved by the award, against the decision of any Commercial Court in the country refusing to condone the delay in applying for setting aside of the award, leaving such persons either with the option of accepting/remaining bound by the award even if having excellent grounds for setting aside of the same or of approaching the Supreme Court under Article 136 of the Constitution of India, thereby putting an avoidable burden on the Supreme Court which, as per the scheme of the Constitution of India, was envisaged to hear limited number of matters entailing constitutional issues and not to hear matters of condonation of delay. Though undoubtedly the scheme of expediency and limited judicial intervention is ingrained in the Arbitration Act but at the same time it cannot be forgotten that the Act nevertheless provides remedies against the arbitral award and it is felt that to vest the order, of any Commercial Court in the country refusing to condone the delay in applying for setting aside of the award, and which delay can be for varying reasons as diverse as the social, geographical and economic conditions prevalent in this country, and not even providing any opportunity to the High Courts to have a look therein, would be a very harsh outcome. Certificate under Article 133 read with Article 134A of the Constitution of India to the appellant is granted - appeal dismissed as not maintainable.

Summary

Issues Involved:
1. Maintainability of appeal under Section 37 of the Arbitration & Conciliation Act, 1996.
2. Interpretation of Section 34(2) and Section 34(3) of the Arbitration Act.
3. Applicability of the Commercial Courts Act, 2015 in arbitration matters.
4. Judicial precedents and their applicability to the present case.
5. Finality and remedy available for orders refusing to condone delay in filing applications under Section 34.

Issue-wise Detailed Analysis:

1. Maintainability of Appeal under Section 37 of the Arbitration & Conciliation Act, 1996:
The primary issue was whether an appeal is maintainable under Section 37 of the Arbitration Act against an order refusing to condone the delay in filing an application to set aside an arbitral award. The court referred to the judgment in BGS SGS Soma JV Vs. NHPC Ltd. which held that appeals in arbitration matters are maintainable only under Section 37 and not under other provisions such as Order XLIII Rule 1 or Section 10 of the Delhi High Court Act. The court noted that the refusal to set aside an arbitral award must be based on the grounds set out in Section 34, and the appeal should be maintainable only if these grounds have been applied and turned down.

2. Interpretation of Section 34(2) and Section 34(3) of the Arbitration Act:
The court discussed the differences between Section 34(2), which provides grounds for setting aside an award, and Section 34(3), which deals with the limitation period for filing such applications. The respondent argued that Section 34(3) is a bar to the maintainability of the application itself and does not constitute a ground for setting aside the award. The court noted that the language of Section 34(3) indicates it is a threshold provision, and refusal to condone delay under this section does not equate to a refusal to set aside the award on merits.

3. Applicability of the Commercial Courts Act, 2015 in Arbitration Matters:
The court examined the interplay between the Arbitration Act and the Commercial Courts Act. It was highlighted that Section 13 of the Commercial Courts Act does not confer an independent right of appeal but merely provides the forum for filing appeals. The court reiterated that appeals in arbitration matters must conform to the parameters set out in Section 37 of the Arbitration Act.

4. Judicial Precedents and Their Applicability:
The court referred to various precedents, including Harmanprit Singh Sidhu Vs. Arcadia Shares & Stock Brokers Pvt. Ltd., State of Maharashtra Vs. Ramdas Construction Co., and Chief Engineer, BPDP/REO, Ranchi Vs. Scoot Wilson Kirpatrick India (P) Ltd.. It was noted that the Supreme Court in BGS SGS Soma JV had not specifically addressed the issue of maintainability of appeals against orders refusing to condone delay under Section 34(3). The court also discussed the judgment in Ramdas Construction Co., where the appeal against an order refusing to condone delay was held not maintainable.

5. Finality and Remedy Available for Orders Refusing to Condon Delay:
The court acknowledged the argument that refusal to condone delay has an element of finality, effectively affirming the arbitral award and leaving no further remedy for the aggrieved party. It was noted that such refusal could only be challenged by approaching the Supreme Court under Article 136 of the Constitution, which could impose an undue burden on the Supreme Court. The court expressed concern that this could be a harsh outcome, especially considering the diverse socio-economic conditions in India.

Conclusion:
The court ultimately held the appeal to be not maintainable, being bound by the dicta in BGS SGS Soma JV and Ramdas Construction Co. However, recognizing the potential harshness of this outcome, the court granted a certificate under Article 133 read with Article 134A of the Constitution of India to the appellant, allowing them to approach the Supreme Court for further relief.