The Oriental Insurance Co. Ltd. v. Air India Ltd.

Delhi High Court · 27 Sep 2019 · 2019:DHC:4994

Jyoti Singh, J.

O.M.P. (COMM) 400/2019

2019:DHC:4994

civil petition_dismissed Significant

AI Summary

Limitation for challenging a majority arbitral award runs from its receipt date, and defective initial filings beyond the prescribed limitation period cannot be cured by later re-filing, leading to dismissal of the petition.

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O.M.P. (COMM) 400/2019
HIGH COURT OF DELHI
Date of Decision: 27.09.2019

O.M.P. (COMM) 400/2019
THE ORIENTAL INSURANCE CO. LTD. ..... Petitioner
Through: Mr. Amit K. Singh, Mr. Apratim Animesh Thakur, Advocates

VERSUS

AIR INDIA LTD. ..... Respondent
Through: Mr. Dhanesh Relan, Ms.Gauri Chaturvedi, Advocates

CORAM:

HON'BLE MS. JUSTICE JYOTI SINGH JYOTI SINGH, J. (ORAL)
I.A. No. 13340/2019 (delay 90 days in filing)

JUDGMENT

1. This is an application filed by the petitioner seeking condonation of delay of 90 days in filing the petition.

2. The present petition is filed under Section 34(3) of the Arbitration & Conciliation Act, 1996 (‘Act’) challenging the majority Award dated 09.04.2019.

3. The petitioner has averred in the application that the Majority Award was passed on 09.04.2019 and received by the petitioner on 11.04.2019. The minority Award was passed on 15.06.2019 and was received on 20.06.2019. The period of limitation began to run from 20.06.2019 and as such the 2019:DHC:4994 petition is within time. It is further averred that even if limitation is counted from 11.04.2019, the petition is still within a period of 30 days beyond the statutory period of three months and thus can be condoned. The application filed by the petitioner is a brief one and is scanned below:-

4. Learned counsel for the petitioner firstly contends that limitation would start running from 20.06.2019 when the minority/dissenting Award was received by the petitioner. Counted from the said date, the present petition filed on 03.08.2019 is within the statutory period of three months, as laid down in Section 34(3) of the Act and there is no delay.

5. Without prejudice to the said contention, it is next contended that even assuming the limitation was to run from the date of the Majority Award, the same was received by the petitioner on 11.04.2019 and the filing is within the 30 days extended period available to the petitioner by way of proviso to Section 34(3) of the Act. Learned counsel argues that when the petition under Section 34 of the Act is filed within the extended period of 30 days, this Court has the discretion to condone the delay.

6. Learned counsel for the respondent who appears on advance copy submits that the petition is barred by limitation. No filing as envisaged in law was done by the petitioner even within the extended period of 30 days and thus the delay cannot be condoned and the application deserves to be dismissed. Consequently, the petition also deserves to be dismissed as delay cannot be condoned.

7. Learned counsel for the respondent points out that although the petition was initially filed on 03.08.2019, but on checking by the Registry, several defects were raised and some of them were very vital such as affidavits and statement of truth not signed and attested; Award not filed; no documents filed, which would be evident from a perusal of the scrutiny sheet.

8. Learned counsel further contends that while the petition is filed on 03.08.2019, the Court fees itself has been purchased on 03.09.2019 and thus apparently, the petition was filed without affixing the Court fees. Learned counsel further points out that the Certificate appended to the petition as well as the applications and the petition itself are dated 31.08.2019 and this is clearly evident from the index filed along with the said pleadings. He contends that above all, even the Vakalatnama bears the date of 31.08.2019. Learned counsel further points out that the affidavits filed in support of the applications are verified and attested on 03.09.2019. The submission therefore is that what was filed on 03.08.2019 as initial filing was not a proper petition but only a ‘bunch of 70 pages’ wherein the following documents were admittedly missing:-

(i) Vakalatnama

(ii) Court fees

(iii) Impugned Award

(iv) Requisite documents

(v) Signed and Attested Statement of Truth

(vi) Affidavits in support of the applications

9. Learned counsel for the petitioner in rejoinder, has sought to justify the said filing by stating that all the defects were subsequently cured and the petition was re-filed within a period of 30 days permitted under Rule 3 of the Delhi High Court Rules. Learned counsel submitted that the rigors and technicalities of initial filing should not apply to cases of re-filing.

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10. Reliance has been placed on the judgment of the Apex Court in the case of Northern Railway Vs. Pioneer Publicity Corporation Private Limited (2017) 11 SCC 234.

11. Learned counsel has also placed reliance of the judgment in the case of Alka Kasana Vs. Indian Institute of Technology (2015) SCC OnLine Del 11455 for the proposition that where the Statute provides a consequence for its breach, only those consequences can be enforced and where the Statute does not envisage any consequence for non-compliance of its provisions, the petition cannot be dismissed on account of such noncompliance. Arbitration and Conciliation Act, 1996 does not provide for any consequences of non-filing the above stated documents at the time of initial filing and this petition cannot be dismissed on account of their non-filing.

12. I have heard the learned counsels for the parties and examined their respective contentions.

13. The contention of the petitioner that the limitation for filing a petition under Section 34 of the Act would run from the date of receipt of the Minority Award is without any merit. The limitation would necessarily run from the date the Majority Award is received by the petitioner. This issue is no longer res integra and has been clearly settled by the judgment of the Division Bench of this Court in the case of Government of India Bharat Sanchar Nigam Limited vs. Acome & Ors. AIR 2009 Delhi 102, where it was held as under:

“6. On the other hand, the contention of the appellant was that unless all the arbitrators give their reasoned award it cannot be said that there is an arbitral award. According to the appellant the limitation did not begin to run for filing objections to the majority award till the decision of the dissenting arbitrator, dated 18th September, 2002, was received by the appellant, which was received by the

appellant on 24th September, 2002. If limitation is computed from that date, the petition under Section 34 is well within time.

7. The learned single Judge on exhaustive consideration of the Act held that the award of a multi-member arbitral tribunal comes into force on making and publishing of the majority award, provided the reason for omission of the signature of the minority arbitrator is contained in the majority award itself. Consequently, the petition under Section 34 of the Act was dismissed as barred by limitation.”

14. A detailed reasoning by the learned Single Judge in the above mentioned matter is as under:-

“28. Section 31 (1) of the Act makes it clear, and this is the common case of both the parties, that the law contemplates the passing of only one arbitral award. Reading of Section 31(2) makes it clear that in an arbitral proceedings before a Tribunal consisting of more than one arbitrator, the award of the Tribunal would be sufficiently made, if it is signed by the majority of arbitrators, so long as the reason for the omission to sign by other arbitrators who are in minority is so stated in the award itself. It therefore follows, that a document containing the opinion of a minority of arbitrators cannot be called an award within the meaning of Section 31 of the Act. Apart from the decisions cited by the Respondent, I find that a Division Bench of this Court in Fertilizer Corporation of India Ltd. v. IDI Management (USA) & Others, AIR 1984 Delhi 333 has held that opinion of a minority of arbitrators cannot be looked at for any purpose. The award with which the law is concerned is the award of the majority. Reasons given by the minority are not reasons of the majority and as such does not form part of the majority. xxx xxx xxx

xxx

31. Where the Tribunal is a multi member body (it can only be an odd number under Section 10) and there is unanimous award by all the membersof the Tribunal, it does not raise any difficulty of the kind presented in this case. However, there is a possibility that a majority of the arbitrators agree on a particular form of award, and a minority does not. In that situation the minority is not obliged to sign an award prepared by the majority of arbitrators. It is open to the minority of arbitrators to prepare their own opinion and communicate it to the parties. This may happen either before, simultaneously with, or after the award of the majority is made and communicated to the parties. It is also open to the minority of arbitrators not to pen down their opinion at all. Where the minority gives its opinion even before the majority award is made and communicated, since it is only an opinion and not an arbitral award, it has no efficacy as an award and it cannot be enforced. It has no bearing on the rights and obligations of the parties as determined by the majority of arbitrators. Consequently, it is incapable of, and not required to be challenged or objected to as an award under Section 34 of the Act. Only when the award of the majority of arbitrators is received, which is the award of the Tribunal, it would give a cause to the aggrieved party/parties to object to the same. Limitation would therefore begin to run from the time the majority award is communicated to the party concerned.

32. In a case where the minority of arbitrators choose not to give their opinion unless agreed to by the parties, in my view should not prevent the making of a majority award by the Tribunal. By preferring not to sign the majority award, or by failing or refusing to give its opinion altogether, the minority of arbitrators cannot defeat or frustrate an arbitral proceeding. This appears to be the reason why the law states that it “shall be sufficient” for the majority of the Arbitral Tribunal to sign the award, so long as they disclose the reasons for the omission of signatures of the minority of arbitrators.

33. Once the award is signed and communicated by the majority of arbitrators, (since the decision of the panel of arbitrators is to be governed by majority under Section 29, unless otherwise agreed) the parties are put to notice, and are aware of the determination made by the Arbitral Tribunal. Each party knows his rights and obligations as crystalised in the award of the majority and the consequences flowing therefrom. If a party is aggrieved by the majority award, he can and must challenge the same within the time provided for the purpose. His grounds of challenge have to be gathered from the majority award and the arbitral proceedings. They are not dependent upon the giving of the minority opinion by the minority of arbitrators. If and when it is given, such a minority opinion(s) may be used by a party challenging the award to bolster his challenge. However, the aggrieved party cannot await the giving of the minority opinion to challenge the majority award, which binds him and affects his rights.

34. Consequently, it is immaterial whether the opinion of the minority of arbitrators, if any, is made available to the parties at the same time as the award of the majority or not. From the decisions cited above, it is evident that it has always been the law that an award which is signed by the majority of arbitrators is a valid and enforceable award. The contention of the petitioner that an award, of necessity, has to be signed by all the arbitrators, or that even if there are two or more opinions, they should all be expressed in writing and communicated by the arbitrators before a valid and binding arbitration award comes into being, therefore, does not appear to be correct and is rejected. This submission is also not in consonance with Section 31(2) of the Act, which provides that the signature of the majority of all arbitrators of the Arbitral Tribunal shall be “sufficient”. The language used by the legislature in Section 31 of the Act is clear, and on a plain reading of the section no other reasonable conclusion can be reached. It may be noted that in spite of the language used by the Parliament in Section 10 read with Section 14 of the Arbitration Act, 1940, the Madras High Court in R. Dashratha Rao (supra) took the view that an award might be pronounced by a majority of arbitrators, and the failure of the minority to sign the Award does not affect the validity of the Award. Under the 1996 Act, the Parliament has made it explicit and clear that it shall be “sufficient” if the award is signed by the majority of arbitrators and the reasons for the omission of the minority to sign are stated in the award.

35. In my view the limitation for filing of objections would begin to run from the date the parties are put to notice of the majority award. That to my mind is also the purposive interpretation of the provisions of the Act. The party succeeding before the Arbitral Tribunal, in whose favour the award has been rendered, would be left high and dry if it is taken that the majority award cannot be challenged or executed unless all the arbitrators give their respective opinions. Such an interpretation would have the potential to frustrate the scheme of the Act whenever there is a multimember Arbitration Tribunal constituted. The object of the Act is to provide speedy and alternative resolution of disputes. This would be defeated if one or more arbitrators in minority choose to either delay the publication of their opinion, or choose not to give it at all.”

15. Seen in the light of this settled position of law, the delay would have to be examined taking 11.04.2019 as the date from which the limitation would start i.e. when admittedly, the Majority Award was received by the petitioner. Under Section 34 of the Act, the limitation period for filing objections against the Award is three months. Proviso to Section 34(3) of the Act provides an extended period of 30 days within which the objections can be filed and on a sufficient cause being shown by the party which prevented it from filing the objections within a period of 3 months, the Court on being satisfied, can in its discretion condone the delay. However, in case the delay is even one day more than the total period of 120 days then the Court has no power to condone the delay. This law is also now well settled and relevant portions of some of the judgments on this aspect are being quoted hereinafter.

16. The Apex Court in the case of Union of India Vs. Popular Construction Company (2001) 8 SCC 470 held as under:

“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 unextendible 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 minimize the supervisory role of courts in the arbitral process”. 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 matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.”

17. The Apex Court in the case of Simplex Infrastructure Ltd. vs. Union of India (2019) 2 SCC 455 has clearly held as under:

“18. A plain reading of sub-section (3) along with the proviso to Section 34 of the 1996 Act, shows that the application for setting aside the award on the grounds mentioned in sub-section (2) of Section 34 could be made within three months and the period can only be extended for a further period of thirty days on showing sufficient cause and not thereafter. The use of the words “but not thereafter” in the proviso makes it clear that the extension cannot be beyond thirty days. Even if the

benefit of Section 14 of the Limitation Act is given to the respondent, there will still be a delay of 131 days in filing the application. That is beyond the strict timelines prescribed in sub-section (3) read along with the proviso to Section 34 of the 1996 Act. The delay of 131 days cannot be condoned. To do so, as the High Court did, is to breach a clear statutory mandate.”

18. The Apex Court in Bharat Barrel and Drum Mg. Co. Ltd. Vs. ESI Corpn., (1971) 2 SCC 860 explained the rationale of prescribing the period of limitation as under:-

“7. The necessity for enacting period of limitation is to ensure that actions are commenced within a particular period, firstly to assure the availability of evidence documentary as well as oral t enable the defendant to contest the claim against him; secondly to give effect to the principle that law does not assist a pardon who is inactive and sleeps over his rights by allowing them when challenged or disputed to remain dormant without asserting them in a court of law. The principle which forms the basis of this rule is expressed in the maximum vigilantibus, non dermientibus, jura subveniunt (the laws give help to those who are watchful and not to those who sleep). Therefore the object of the statutes of limitations is to compel a person to exercise his right of action within a reasonable time as also to discourage and suppress stale, fake or fraudulent claims”

19. Thus, what the objector has to show to the Court is that the petition has been filed within 30 days extended period beyond the three months statutory limitation as also satisfy the Court that there is sufficient cause for delay. Tested on this touchstone, no doubt that even when counted from 11.04.2019, the petition in the present case was filed within the 30 days extended period. To this aspect, there is no dispute even by the respondent. Thus, if the petitioner satisfies the Court that there is sufficient cause for condonation, the Court has the power to exercise the discretion and condone the delay.

20. The issue in the present case, however, is on a different pedestal. The question that falls for consideration before this Court is whether the petition initially filed on 03.08.2019 was a proper petition in the eyes of law or a ‘non-est filing’.

21. The Registry while entertaining the e-filing maintains a system of generating scrutiny sheets as well as log information. In addition, the Registry maintains a list of defects which have certain prescribed Codes. When a petition is checked for defects, depending on the defects that are found, the Code numbers are indicated depicting the nature of defects. In addition, the details of the defects are also indicated. From a perusal of the scrutiny sheet/log information, it can be easily deciphered as to what were the defects raised by the Registry when the petition was filed or re-filed.

22. A perusal of the log information in the present case indicates that when the petition was filed on 03.08.2019, several defects were marked by the Registry while checking on 06.08.2019. These defects were indicated with details and code numbers were clearly reflected. Amongst other defects, the main defects that emerged when the petition was initially filed were as under: (i) 70 pages filed

(ii) Affidavit and Statement of Truth not signed and attested

(iii) Award not filed

(iv) No documents filed

(v) Vakalatnama not filed

(vi) Court fees missing

(vii) Pecuniary jurisdiction not mentioned

23. Scanned copy of the log-in information is as under:-

24. As rightly pointed out by the learned counsel for the respondent, the dates appearing on the Court fees, Vakalatnama and Affidavits, are indicative of the fact that they were not filed on 03.08.2019 along with the petition. This was the 116th day from the date of start of the limitation period. Thereafter, the petition was refiled only on 31.08.2019, which was far beyond the 120th day, upto which this Court has the power to condone the delay, on sufficient cause being shown by the party.

25. Since the petition filed on 03.08.2019 is a non-est petition, it cannot be argued by the learned counsel for the petitioner that a proper petition was filed within the extended 30 days available to it under Section 34(3) of the Act and the delay be condoned.

26. This Court in the case of SKS Power Generation (Chhattisgarh) Ltd. Vs. ISC Projects Private Ltd. in OMP (Comm) 132/2019 decided on 03.04.2019, has clearly termed such a petition as nothing more than a mere ‘Bunch of Papers’, relying on the judgment of a Division Bench of this Court in Delhi Development Authority vs. Durga Constructions Co., 2013 (139) DRJ 133 [DB] as affirmed by the Apex Court. Relevant portion of the judgment of a coordinate Bench of this Court in SKS Power Generation (supra) is as under:-

“11. I have considered the submissions made by the learned counsels for the parties. It is not contested by the petitioner that the original petition filed on 14.01.2019 contained only 29 pages with blanks and with no signature of the petitioner or its authorized representative. There was no vakalatnama filed authorizing the advocate to file the said bunch of papers. I am intentionally using the words "bunch of papers" as

what was filed was nothing more than that. The petition sought to impugn the Arbitral Award and the Additional Award without even annexing the same. Clearly what was filed was merely a 'bunch of papers' to somehow stop the period of limitation from running. The petitioner thereafter made no endeavour to refile the petition with expedition once the same had been returned back under objection on 15.01.2019. The petitioner took another two months to refile the petition only on 26.03.2019, albeit, still under defects. This filing was beyond a period of 30 days from three months of receipt of the Additional Award by the petitioner.

12. In my view, while considering the application seeking condonation of delay in refilling, the above is a very relevant criteria and consideration to be kept in mind. As held by this Court in Durga Construction Co. (supra), where the petitions or applications filed by a party are so hopelessly inadequate and insufficient or contain defects which are fundamental to the institution of the proceedings, then in such cases the filing done by the party would be considered non est and of no consequence. This was reiterated by this Court in Sravanthi Infratech Pvt. Ltd. (supra), where the petition had been filed without documents, vakalatnama, affidavit or authority.”

27. The judgment of Durga Construction (supra), in my opinion, completely covers the present case. The relevant paras are quoted as under:

“17. The cases of delay in re-filing are different from cases of delay in filing inasmuch as, in such cases the party has already evinced its intention to take recourse to the remedies available in courts and has also taken steps in this regard. It cannot be, thus, assumed that the party has given up his rights to avail legal remedies. However, in certain cases where the petitions or applications filed by a party are so hopelessly

inadequate and insufficient or contain defects which are fundamental to the institution of the proceedings, then in such cases the filing done by the party would be considered non est and of no consequence. In such cases, the party cannot be given the benefit of the initial filing and the date on which the defects are cured, would have to be considered as the date of the initial filing….”

28. Keeping in view the entire conspectus of the law as aforementioned, the delay in filing the present petition cannot be condoned. It may also be highlighted that the petitioner has not even laboured to explain in its application seeking condonation of delay, either the chronology or the narrative of the facts and dates of filing and refiling. No efforts worth mentioning have been made to even set up a ‘sufficient cause’, if any. The application is completely silent on the dates when the affidavits and the statement of truth or the vakalatnama were signed. Even the date of purchasing the Court Fees has not been mentioned, to say the least.

29. This Court finds no merits in the various contentions raised by the petitioner. The application is dismissed. O.M.P. (COMM) 400/2019 with I.A. No. 13338/2019 (Stay) and I.A. 13341/2019 (delay 18 days in re-filing)

30. Since the application seeking condonation of delay in filing the petition is dismissed, the present petition is dismissed along with the above applications.

JYOTI SINGH, J SEPTEMBER 27, 2019 pkb/

The Oriental Insurance Co. Ltd. v. Air India Ltd.

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