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Himachal pradesh electricity versus shyam indus power solution pvt. Ltd having, new delhi.

    Arbitration appeal no. 16 of 2021

    Decided On, 15 December 2021

    At, High Court of Himachal Pradesh

    By, THE HONOURABLE MR. JUSTICE TARLOK SINGH CHAUHAN & THE HONOURABLE MR. JUSTICE SATYEN VAIDYA

    For the Appellant: Tara Singh Chauhan, Advocate. For the Respondent: Neeraj Gupta, Senior Advocate, Ajeet Pal Singh Jaswal, Pankaj Kumar Singh Advocates.



Judgment Text

1. The instant appeal under Section 37 of the Arbitration and Conciliation Act, (hereinafter referred to as “the Act), has been filed by the appellant for setting aside the order passed by the learned Single Judge in OMP(M) No. 63 of 2019, whereby the application for condonation of delay in filing the application under Section 34 of the Act, against the award dated 16.1.2019 came to be dismissed.

2. An arbitration award to the extent of Rs. 4,28,98,551/alongwith interest at the rate of 6% per annum came to be passed against the appellant and aggrieved thereby, the appellant preferred an application under Section 34 of the Act for setting aside the award. Alongwith the same, he also filed an application under Section 34(3) of the Act, seeking condonation of delay in filing the same on the ground that at no point of time had the arbitrator supplied the signed copy of the award till 1.8.2019, therefore there was no occasion for the appellant to have filed the objections.

3. Learned Single Judge, after perusing the record came to the conclusion that signed copy of the award was supplied by the Arbitrator to one Robin Kumar Bansal, Assistant Executive Engineer with the respondentHPSEBL on 16.1.2019 and therefore the appellant could not feign ignorance regarding passing of the award.

4. It was thus concluded by learned Single Judge that having supplied copy of the award, the appellant failed to file the objections, within the stipulated period and therefore, objections were liable to be dismissed solely on the ground of limitation as per provisions of Section 34(3) of the Act.

5. We have heard learned counsel for the parties and gone through the provisions of Arbitration and Conciliation Act.

6. It is no longer resintegra that the period of limitation for filing the objections would only commence after signing of the award. A reference in this regard can conveniently be made to the judgment rendered by Hon’ble Supreme Court in Dakshin Haryana Bijli Vitran Nigam Ltd. vs. M/s Navigant Technologies Pvt. Ltd. 2021(7) SCC 657.

7. In fact a similar reiteration of law can be found in an earlier judgment rendered by a Division Bench of this Court, which is authored by one of us (Hon’ble Mr. Justice Tarlok Singh Chauhan) in case titled as “Himachal Pradesh Housing Board and another versus Ranjit Singh Rana” ILR 2015(I) HP 488.

8. Section 34 (3) of the Act reads as under:

“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.”

9. Section 34(3) of the Act provides that an application for setting aside the award cannot be made after three months and it is only if the Court is satisfied that the applicant was prevented by sufficient cause for making an application within such period of three months, which may entertain an application within a further period of 30 days but not thereafter, after considering Section 29 (2) of the Limitation Act.

10. An identical issue came up for consideration before the Hon’ble Supreme Court in ”Union of India versus Popular Construction Company”, (2001) 8 Supreme Court Cases 470, wherein it was observed as under:

“11. Thus, where the legislature prescribed a special limitation for the purpose of the appeal and the period of limitation of 60 days was to be computed after taking the aid of Sections 4, 5 and 12 of the Limitation Act, the specific inclusion of these sections meant that to that extent only the provisions of the Limitation Act stood extended and the applicability of the other provisions, by necessary implication stood excluded. 12. As for as the language of Section 34 of the 1996 Act is concerned, the crucial words are 'but not thereafter' used in the proviso to subsection (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the Court could entertain an application to set aside the Award beyond the extended period under the proviso, would render the phrase 'but not thereafter' wholly otiose. No principle of interpretation would justify such a result.

14. Here the history and scheme of the 1996 Act support the conclusion that the time limit prescribed under Section 34 to challenge an Award is absolute and unextendable by Court under Section 5 of the Limitation Act. The Arbitration and Conciliation Bill, 1995 which preceded the 1996 Act stated as one of its main objectives the need "to minimise the supervisory role of courts in the arbitral process".6 This objective has found expression in Section 5 of the Act which prescribes the extent of judicial intervention in no uncertain terms :

"5. Extent of judicial intervention. - Notwithstanding anything contained in any other law for the time being in force, in matter governed by this Part, no judicial authority shall intervene except where so provided in this Part."

11. In “State of Himachal Pradesh and another versus Himachal Techno Engineers and Another”, 2010 12 SCC 210, the Hon’ble Supreme Court while dealing with the provisions of Section 34(3) of the Act observed as under:

“Having regard to the proviso to Section 34(3) of the Act, the provisions of Section 5 of the Limitation Act, 1963 will not apply in regard to petitions under Section 34 of the Act. While section 5 of the Limitation Act does not place any outer limit in regard to the period of delay that could be condoned, the proviso to subsection (3) of Section 34 of the Act places a limit on the period of condonable delay by using the words “may entertain the application within a further period of thirty days but not thereafter.” Therefore, if a petition is filed beyond the prescribed period of three months, the Court has the discretion to condone the delay only to an extent of thirty days, provided sufficient cause is shown. Where a petition is filed beyond three months plus thirty days, even if sufficient cause is made out, the delay cannot be condoned.”

12. The similar issue came up before the Hon’ble Supreme Court in “Simplex Infrastructure Limited versus Union of India”, (2019) 2 Supreme Court Cases 455, and it was held that Section 5 of the Limitation Act has no application to an application challenging an arbitral award under Section 34 of the 1996 Act, as per para11 of the judgment (supra), which reads as under:

“Section 5 of the Limitation Act, 1963 deals with the extension of the prescribed period for any appeal or application subject to the satisfaction of the Court that the appellant or applicant had sufficient cause for not preferring the appeal or making the application within the prescribed period. Section 5 of the Limitation Act, 1963 has no application to an application challenging an arbitral award under Section 34 of the 1996 Act. This has been settled by this Court in its decision in Union of India v. Popular Construction Company,”, wherein it held as follows: (SCC pp. 47475, paras 12 & 14)

“12. As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are “but not thereafter” used in the proviso to subsection (3) In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the Court could entertain an application to set aside the award beyond the extended period under the proviso, would render the phrase “but not thereafter” wholly otiose. No Principle of interpretation would justify such a result.

14. Here the history and scheme of the 1996 Act support the conclusion that the timelimit prescribed under Section 34 to challenge an award is absolute and unextendible by Court under Section 5 of the Limitation Act.”

13. Thereafter, the similar issue again came up before the Hon’ble Supreme Court in “Dakshin Haryana Bijli Vitran Nigam Ltd. Vs. M/s Navigant Technologies Pvt. Ltd.”, case (supra), wherein the Hon’ble Supreme Court after placing reliance upon the judgments in ”Union of India versus Popular Construction Company”, (2001) 8 Supreme Court Cases 470, and in “Simplex Infrastructure Ltd. Vs. Union of India, (2019) 2 Supreme Court Cases 455, observed as under:

“35. The date on which the signed award is provided to the parties is a crucial date in arbitration proceedings under the Arbitration and Conciliation Act, 1996. It is from this date that:

35.1 The period of 30 days for filing an application under Section 33 for correction and interpretation of the award, or additional award may be filed.

35.2 The arbitral proceedings would terminate as provided by Section 32(1) of the Act.

35.3 The period of limitation for filing objections to the award under Section 34 commences.

36. Section 34 provides recourse for judicial scrutiny of the award by a Court, upon making an application under subsections (2) and (3) for setting aside the award. The period of limitation for filing the objections to the award under Section 34 commences from the date on which the party making the application has “received” a signed copy of the arbitral award, as required by Section 31 (5) of the 1996 Act. Section 34(3) provides a specific timelimit of three months from the date of “receipt” of the award, and a further period of thirty days, if the Court is satisfied that the party was prevented by sufficient cause from making the application within the said period, but not thereafter.

37. In Union of India v. Popular Construction Co., this Court held that Section 5 of the Limitation Act, 1963 would not apply to apply to applications filed under Section34 of the Arbitration Act. It was held that : (SCC pp. 47475, para 12)

“12. As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are “but not thereafter” used in the proviso to subsection (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the Court could entertain an application to set aside the award beyond the extended period under the proviso, would render the phrase “ but not thereafter” wholly otiose. No principle of interpretation would justify such a result.” In Simplex Infrastructure Ltd. v. Union of India this Court held that the phrase “but no thereafter” provided under Section 34(3) of the Act makes it evident that the statutory period of limitation for filing an application for setting aside is three months, which is extendable by thirty days, if sufficient cause is made out. No further period of time can be granted for the filing of an application under Section 34.”

14. Learned counsel for the appellant would still contend that period of limitation as provided under Section 5 of the Limitation Act is available to the appellant in terms of a judgment rendered by a larger Bench of the Hon’ble Supreme Court, comprising of three Hon’ble Judges in “Chintels India Limited verus Bhayana Builders Private Limited” (2021) 4 Supreme Court Cases 602.

15. It would be noticed that the Hon’ble Supreme Court in the aforesaid case was primarily dealing with the case relating to condonation of delay under Section 37 of the Act in filing of the appeal and it was in this background that a primary issue was whether an appeal against an order refusing to condone the delay in filing an application under Section 34 of the Arbitration Act, 1996 is appellable under Section 34(i)(c) of the Act?

16. As regards, the interpretation of Section 34 of the Act, it was categorically held that if the application for setting aside the arbitral award is not filed within three months, then it must be accompanied by an application for condonation of delay provided it is within a period of 30 days, as is evident from the following observations made in para11 of the judgment (supra)

“A reading of Section 34(1) would make it clear that an application made to set aside an award has to be in accordance with both subsection (2) and (3).This would mean that such application would not only have to be within the limitation period prescribed by subsection (3), but would then have to set out grounds under subsection (2) and/or (2A) for setting aside such award. What follows from this is that the application itself must be within time, and if not within a period of three months, must be accompanied with an application for condonation of delay, provided it is within a further period of 30 days, this Court having made it clear that Section 5 of the Limitation Act, 1963 does not apply and that any delay beyond 120 days cannot be condonedsee State of H.P. v. Himachal Techno Engineers at para 5.”

17. Hon’ble the Supreme Court while dismissing SLP (Civil) Diary No(s) 19846/2020 titled as Union of India Vs. Central Tibetan Schools Admin & Ors on 4.2.2021 on account of delay observed as under:

“ We have repeatedly being counseling through our orders various Government departments, State Governments and other public authorities that they must learn to file appeals in time and set their house in order so far as the legal department is concerned, more so as technology assists them. This appears to be falling on deaf ears despite costs having been imposed in number of matters with the direction to recover it from the officers responsible for the delay as we are of the view that these officers must be made accountable. It has not had any salutary effect and that the present matter should have been brought up, really takes the cake.

The aforesaid itself shows the casual manner in which the petitioner has approached this Court without any cogent or plausible ground for condonation of delay. In fact, other than the lethargy and incompetence of the petitioner, there is nothing which has been put on record. We have repeatedly discouraged State Governments and public authorities in adopting an approach that they can walk in to

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the Supreme Court as and when they please ignoring the period of limitation prescribed by the Statutes, as if the Limitation Statute does not apply to them. In this behalf, suffice to refer to our judgment in the State of Madhya Pradesh & Ors v. Bheru Lal [SLP (C) Diary No. 9217/2020 decided on 15.10.2020] and the State of Odisha & Ors v. Sunanda Mahakuda [SLP [C] Diary No. 22605/2020 decided on 11.01.2021].” 18. It would be noticed that even though the appellant vide impugned award was saddled with liability to pay a whopping amount of Rs. 4,28,98,551/yet it perceived delay in a nonserious matter and its lackadaisical tendency is exhibited by its nonchalant manner in which an application was filed and contested before the learned Single Judge. 19. In the given facts and circumstances of the case, we are of the considered view that the matter cannot be led to rest and it needs to be inquired into. 20. Accordingly, we find no merit in the appeal and the same is dismissed. The Executive Director (Personnel) of the appellantBoard is directed to conduct a detailed inquiry and fix the responsibility so that such gross negligence is not given a premium and the Board is not unnecessarily burdened with financial liability. Such inquiry be conducted personally by the Executive Director (Personnel) and completed as expeditiously as possible and in no event later than 31.3.2022. A copy of this order be sent to the Chief Secretary to the State of H.P. as also the Chairman, H.P.S.E.B. Ltd for information as also for necessary action in the matter. Pending application(s), if any, are also disposed of.
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