Delhi High Court: The present appeal was filed under Section 37 of the Arbitration and Conciliation Act, 1996 (‘the Act’) assailing the judgment dated 12-09-2019 passed by a Single Judge of this Court (‘Impugned Judgment’) which dismissed the petition of appellants filed under Section 34 of the Act, on account of delay. The Division Bench of Rajiv Shakdher and Tara Vitasta Ganju*, JJ., held that every Arbitral Award and any corrigendum must be served upon all the parties for it to constitute valid service under Section 34(3) of the Act.
Background
Appellant entered into an agreement with respondent for construction of Emergency Care Services and for renovation of 16 existing VIP Rooms in Appellant 2, Dr. Ram Manohar Lohia Hospital, New Delhi which was run under the control of appellant. Disputes arose between the parties including with respect to payment and imposition of liquidated damages by appellant for adjudication of which respondent invoked the Arbitration Clause. Pursuant to an application filed by respondent under Section 11(6) of the Act, a Single Judge of this Court on 06-03-2017, appointed the Sole Arbitrator to adjudicate the disputes and differences between the parties.
The Sole Arbitrator published the Arbitral Award in favour of respondent of Rs. 22,05,09,651 holding that respondent was also entitled to costs of Rs. 25 lakhs along with pre-litigation, pendente lite and future interest. An application was filed by respondent under Section 33(1) of the Act setting forth errors in computing the pre-litigation and pendente lite interest awarded to it. By the Corrigendum Order, the application was allowed, and the amount awarded to respondent was reduced to Rs. 15,11,66,498 with interest and costs. Appellants 1 and 2 jointly filed the petition under Section 34 of the Act for setting aside the Arbitral Award and the Corrigendum Order. An application was also filed under Section 34(3) of the Act seeking condonation of the delay in filing the petition under Section 34 of the Act.
Appellant 1 submitted that it became aware of the Arbitral Award and the Corrigendum Order, upon receipt of a letter dated 14-03-2019 from Appellant 2. Appellant 1 was not sent a signed copy of the Arbitral Award, or the Corrigendum Order and the signed copy of the Arbitral Award was only sent to the authorized representative of Appellant 2. Even the Corrigendum Order was delivered only to the authorized representative of Appellant 2 and the lawyers for the parties and not to Appellant 1. It was thus contended that limitation for filing the petition under Section 34 of the Act would commence from 14-03-2019, making the petition within the statutory limitation period.
It was further submitted by Appellant 1 that delivery of the Arbitral Award/Order on an agent/Counsel of a party did not amount to proper service on the party. Section 31(5) read with Section 2(1)(h) of the Act, provided that a signed copy of the Arbitral Award/Order must be delivered to the party to the dispute.
Analysis, Law, and Decision
The issue for consideration was “whether delivery of true copy of Arbitral Award and copy of Corrigendum Order to an authorized representative of Appellant 2 would constitute delivery upon appellant in accordance with Section 31(5) of the Act for the purposes of calculating limitation under the Act?”.
The Court noted that the limitation under the Act for the petition filed under Section 34 of the Act was three months from the date of “receipt” of an Arbitral Award or from the date on which request under Section 33 of the Act was disposed. The proviso to Section 34(3) gave an additional 30 days to a party provided it could satisfy the Court that it was prevented from filing on time for sufficient reasons. The Court further noted that Section 31(5) of the Act provided that once an Award was made, a signed copy should be delivered to each ‘party’.
The Court opined that an application for setting aside an Arbitral Award might be made by such party within three months from the date of its receipt unless the proviso was applicable and that limitation under Section 34(3) of the Act commenced on the date when the party had received the Arbitral Award.
The Court relied on Benarsi Krishna Committee v. Karmyogi Shelters (P) Ltd., (2012) 9 SCC 496 (‘Benarsi Krishna Committee Case’), wherein the Supreme Court while relying on Union of India v. Tecco Trichy Engineers & Contractors, (2005) 4 SCC 239 (‘Tecco Trichy Case’), had held that the expression ‘party’ as defined in Section 2(1)(h) of the Act, clearly indicated a person who was a “party” to an Arbitration Agreement and in no way included the agent of the party to such Agreement.
The Court noted that the original Arbitral Award was provided to the Counsel for the parties and the Corrigendum Order was conveyed to the parties. The Court further noted that a copy of the Arbitral Award was sent to the Counsel for the parties and the authorized representative of Appellant 1 and not Appellant 1 and no other document was received from the Sole Arbitrator evidencing service on Appellant 1.
The Court after analyzing Benarsi Krishna Committee Case and Tecco Trichy Case, observed the following:
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A signed copy of Arbitral Award was to be delivered to each party;
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The delivery should be to a party who was competent to take a decision as to whether or not the Award was to be challenged;
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The expression ‘party’ did not include an agent or a lawyer of such party;
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The limitation under Section 34(3) of the Act commenced when the party making the application had received the Award;
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In the case of an application for correction of computational, clerical, or typographical errors under Section 33 of the Act, the limitation was to be calculated from the date on which the application was disposed of.
The Court further held that every Arbitral Award and any corrigendum must be served on all parties for it to constitute valid service under Section 34(3) of the Act.
The Court observed that the agreement between the parties was executed by Appellant 1 and respondent only and the recitals of the agreement provided that the agreement was executed by Appellant 1 on behalf of Appellant 2. Thus, it was Appellant 1 that was a party to the agreement and not Appellant 2.
[Ministry of Health & Family Welfare v. Hosmac Projects Division of Hosmac India (P) Ltd., 2023 SCC OnLine Del 8296, decided on 20-12-2023]
*Judgment authored by: Justice Tara Vitasta Ganju
Advocates who appeared in this case :
For the Appellants: Praveen Kumar Jain, Naveen Kumar Jain, Sachin Kumar Jain, Shalini Jha, Rashmi Kumari, Sheetal Raghuvanshi, Advocates
For the Respondent: Nakul Dewan, Senior Advocate; Pradhuman Gohil, Ranu Purohit, Neelu Mohan, Alapati Sahithya Krishnan, Advocates
Buy Arbitration and Conciliation Act, 1996 HERE
