This issue of LexCognito, which in Latin means 'awareness about law', seeks to provide you an insight into significant legal and regulatory developments that have taken place very recently in India.
Date: 1 October 2018
Challenging an Arbitral Award - Do it before time flies
The Arbitration and Conciliation Act, 1996 ("Act") provides a very short time period of three (3) months from the date of receipt of the award (or disposal of a request for correction and interpretation of award) within which an application for challenging the arbitral award must be filed. The Court may, however, further extend the said period by 30 days for a sufficient cause preventing an applicant from filing the application, but not thereafter. Even the Court is not empowered to stretch the limitation period beyond the period prescribed under the Act.
In the matter of P. Radha Bai and Ors. vs. P. Ashok Kumar and Ors. (26.09.2018-SC): MANU/SC/1063/2018, the Supreme Court of India has held that Section 17 of the Limitation Act, 1963 ("Limitation Act") cannot be invoked to condone the delay in preferring application to set aside an arbitration award caused on the account of alleged fraud played on the objector (party challenging the award) beyond the period of three (3) months prescribed under Section 34(3) of the Act.
While pronouncing the judgement, the Apex Court examined the applicability of Section 17 of the Limitation Act while determining the limitation period of three (3) months under Section 34(3) of the Act. During such examination, the Apex Court said that the Act is a special law and Section 34(3) is a limitation provision which is inbuilt into the remedy provision and also provides for the time limit for commencement of the limitation period. One does not have to look at the Limitation Act or any other provision for identifying the limitation period for challenging an award. The limitation provision of the Act also provides for condonation of delay by extending the said period by further 30 days, but the Court emphasized that the crucial phrase “but not thereafter” reveals the legislative intent to fix an outer boundary period for challenging an Award and such words are mandatory in nature and couched in negative terms which leaves no room for doubt. This tantamounts to express exclusion. Hence, Section 17 of the limitation Act is excluded.
Once the time limit or extended time limit for challenging the arbitral award expires, the period for enforcing the award under the Act commences. If Section 17 were to be applied, the outer boundary for challenging an Award could go beyond 120 days (90+30). This would defeat the Act’s objective of speedy resolution of disputes. The finality of award would also be in a limbo as a party can challenge an Award even after the 120 day period.
Interestingly, our litigation team also recently handled the similar case before the Apex Court which is discussed in subsequent paras.
Our litigation team recently represented M/s Ramjee Power Construction Limited ("Client") before the Supreme Court of India in respect of three (3) arbitration awards which were passed by the learned arbitrator appointed in the matter in favour of our Client. By way of the said awards, the arbitrator had allowed certain payments to be made by M/s Jharkhand Urja Vikas Nigam Limited and others to our Client.
The opposite parties had filed the applications under Section 34 of the Act for challenging the said awards but with the delay beyond the prescribed time period of three (3) months and further extendable period upto 30 days, on the ground of alleged fraud by certain officials of M/s Jharkhand Urja Vikas Nigam Limited and our Client. However, the said applications were allowed by the Sub Judge 1, Ranchi, who had condoned the delay in filing the applications under Section 34 of the Act. The High Court also upheld the order passed by the Sub Judge. The review petition filed by our Client was also rejected.
Aggrieved by the aforesaid orders, we, on behalf of our Client, filed the Special Leave Petitions before the Supreme Court of India. During the proceedings, we strongly contended before the Hon'ble Apex Court that that the court had no power to condone the delay in filing the application under Section 34 of the Act beyond the time period prescribed therein. After hearing the parties at length, the Hon'ble Apex Court, comprising Justice S.A. Bobde and Justice L. Nageswara Rao, allowed the appeals filed by our Client and set aside the impugned orders passed by the High Court and dismissed the applications filed by the opposite parties challenging the arbitral awards passed in favour of our Client.
Chambers of Rajan & Indraneel
T: +91 11 41000224, 41030225| Fax:+91 11 29239074
Mobile: +91 9810404086
N 103 Greater Kailash - I, New Delhi - 110048, India.
Chambers of Rajan & Indraneel is a premier full service law firm headquartered at New Delhi, India. The Firm represents amalgamation of vast experiences and practices of two eminent lawyers. Indranil Ghosh is highly reputed as a disputes lawyer. He was a senior partner and head of litigation practice in one of the oldest Indian law firm Fox Mandal for several decades before setting up his own practice. Rajan D Gupta is a rank holder Chartered Accountant turned Corporate Lawyer. He is also a licensed Insolvency Resolution Professional. He has been associated with internationally renowned big law firms in past and has held senior level positions in firms like PwC, Fox Mandal, Khaitan & Co. and SRGR Law, etc. before starting the Firm.
We have a team of experienced Lawyers, Chartered Accountants, Company Secretaries and Insolvency Resolution Professionals with access to network of high quality experienced lawyers in all major commercial cities of India.
The Firm offers a wide range of expert legal services in the areas of corporate and commercial laws and specializes in representing major foreign and domestic corporations with diverse business interests in India. The Firm is professionally equipped to handle large sized and complex corporate transactions like Mergers & Acquisitions, Corporate Restructuring, Joint Ventures, Inbound & Outbound Investments, Private Equity and Venture Capital Investment Transactions, Real Estate Transactions, Infrastructure Projects, Project Finance, Power Projects, Non-Conventional Energy Projects, Highways & Road Projects and Corporate Taxation as well as GST, etc. The Firm also offers proven capabilities in litigation and dispute resolution practice areas, especially in handling international and domestic arbitrations as well as litigation in Supreme Court, various High Courts of India and various judicial and quasi-judicial tribunals/forums including at National Client Law Tribunal, Appellate Tribunals, Tax Tribunals, Competition Commission, Electricity Tribunal, Telecom Disputes Tribunal, Designated Authorities and other adjudicatory bodies.
We have set up a Japan Business Desk (JBD) in order to serve our Japanese clients in a better way. The endeavour of the JBD is to act as a bridge between our professionals and clients from Japan so as to ensure that there are no barriers as to linguistic and cultural differences. This will indeed facilitate Japanese corporates doing business in India.
This newsletter contains general information available in public domain at the time of its preparation. It is intended as a general news update and is not intended to be comprehensive nor to provide specific business, financial, investment, legal, tax or other professional advice or opinion or services. This newsletter is not a substitute for such professional advice or services, and it should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Before making any decision or taking any action that may affect you or your business, you should consult a qualified professional adviser and refer to the source pronouncement/documents on which this business alert is based. It is also expressly clarified that this newsletter is neither a solicitation nor an invitation of any sort whatsoever or a source of advertising from our firm or any of its partners or lawyers or other professionals to create any adviser-client relationship. Whilst every effort has been made to ensure the accuracy of the information contained in this news alert, this cannot be guaranteed, and neither our firm nor any related person/entity shall have any liability to any person or entity that relies on the information contained in this publication. Any such reliance is solely at the user's risk.