Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2022 Supreme(SC) 261

SUPREME COURT OF INDIA
AJAY RASTOGI, SANJIV KHANNA, JJ.
Haryana Urban Development Authority, Karnal - Appellant
Versus
M/s. Mehta Construction Company And Another - Respondents
Civil Appeal No. 2693 of 2022 (Special Leave Petition (Civil) No. 6137 of 2022) (Diary No. 23287 of 2020)
Decided on : 30-03-2022

Advocates appeared:
For the Petitioner(s):Sumit Kumar Sharma, Monika Gusain, Advocates
For the Respondent(s):Sanjiv Kumar Pabbi, Ajay Kumar Singh, Yatharth Singh, Saket Jee, Nitesh Mishra, Advocates

IMPORTANT POINT
(1) Limitation Act, 1963 shall apply to arbitrations as it applies to proceedings in court.
(2) Appeal against arbitral award – Objections under Section 34 of Arbitration and Conciliation Act, 1996 require consideration and in-depth examination.

Headnote:
Arbitration and Conciliation Act, 1996 – Sections 34, 37 and 43(1) – Appeal against arbitral award – Application for setting aside of award dated 20th December 2013 was made on 28th March 2014 accompanied by application for condonation of delay – Court had power to condone eight days’ delay, which was less than thirty days, in terms of proviso to sub-section (3) to Section 34 of Act – Short delay had also occurred as sanctions and approvals were required from higher/competent authority – High Court and Additional District Judge, Karnal were not justified in refusing to condone delay – Application for condonation of delay in filing of objections should have been allowed – Limitation Act, 1963 shall apply to arbitrations as it applies to proceedings in court – Objections under Section 34 of Act did require consideration and in-depth examination and should not have been dismissed without proper and full application of mind with reference to provisions of Limitation Act and the Act – Impugned orders set aside and matter remitted to file of Additional District Judge, Karnal, who would hear objections afresh and on merits without being influenced by earlier orders and also present order. (Paras 11, 12, 14, 16, 17 and 18)
Facts of the case:
The sole Arbitrator passed an award dated 20th December 2013 awarding an amount of Rs.1,19,69,945/- along with interest @ 18% per annum on the delayed payments. The appellant preferred an appeal under Section 37 of the Act, which has been dismissed by the impugned judgment dated 11th December 2019 passed by the Single Judge of the Punjab and
Haryana High Court.
Findings of Court:
Observations made in this order are for the disposal of the present appeal and would not be treated as observations that are binding on the Additional District Judge, Karnal, when he examines and decides the objections under Section 34 of the Act on merits.
Result : Appeal allowed.

ORDER :

Delay condoned. Leave granted.

2. The appellant before us - Haryana Urban Development Authority, Karnal, Haryana, and the respondent - M/s. Mehta Construction Company, on 6th July 1998, had entered into an agreement whereby the respondent was to construct water body, water body fall, pedestrian bridge, backwall of deck, pump chamber (partly above and partly below the GI pipe), lay CI and RCC pipes and all other works contingent thereto for development of town park in Sector 8 and 9 (Phase - II), Karnal, for an amount not exceeding Rs.32.50 lakhs. The scope of the work was enhanced to Rs.40,23,962/-and then to Rs.45,87,326/-.

3. The contractual work was completed on 24th August 1999. It is the case of the appellant that the respondent had failed to comply with the terms and conditions of the contract and complete the work within the contractual period, whereas it is the case of the respondent that the appellant was responsible for the delay in completion of the work.

4. In April 2012, the respondent filed an application before the Punjab and Haryana High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short, the ‘Act’) for appointment of an arbitrator for adjudication of disputes in the subject contract.

5. The application was disposed of vide order dated 19th October 2012 with a direction to the parties to approach the Arbitrator-cum-Superintending Engineer, HUDA Circle, Karnal in terms of Clause 25-A of the agreement for settlement of disputes.

6. The sole arbitrator passed an award dated 20th December 2013 awarding an amount of Rs.1,19,69,945/-along with interest @ 18% per annum on the delayed payments.

7. On 28th March 2014, the appellant filed objections to the award before the Additional District Judge, Karnal, under Section 34 of the Act along with an application for condonation of delay. Upon notice, the respondent filed reply to both the objections under Section 34 and the application seeking condonation of delay.

8. By order dated 8th January 2018, the Additional District Judge, Karnal, held that the objections were barred by limitation and no plausible explanation was given to explain the delay. On the other hand, the respondents had duly proved the issues by “leading cogent and convincing evidence”. He also held that the award dated 20th December 2013 is perfect and a legal one and the fact that the respondent had completed the work after thirteen and a half months proved that the respondent was not able to comply with the terms and conditions of the contract. The appellant had granted extension for completion of work time and again without imposing penalty. Further, it was an admitted case that time was essence of the contract as there was a default clause.

9. The appellant preferred an appeal under Section 37 of the Act, which has been dismissed by the impugned judgment dated 11th December 2019 passed by the Single Judge of the Punjab and Haryana High Court. The reasoning given by the High Court reads as under:

“5. The Addl. District Judge, Karnal, while dismissing the objections filed by the appellant under Section 34 of the Act has observed that the arbitration award dated 20.12.2013 passed by the arbitrator is perfect and legal one and there is no ground proved on the file at the instance of the objector that the award suffers from any infirmities at all. It was further observed that the objections filed by the objector are barred by limitation as the same were not filed within the prescribed period. No plausible explanation could be given by the objector, for filing the objections at a belated stage. The Addl. District Judge, Karnal came to hold that the objections filed by the objector are not maintainable and the objections are also barred by limitation. Counsel for the appellant fails to point out any perversity in the findings returned by the court below. Counsel for the appellant miserably failed to point out as to how the objections filed by the appellant were within limitation

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2022 Supreme(SC) 261

IMPORTANT POINT(1) Limitation Act, 1963 shall apply to arbitrations as it applies to proceedings in court.(2) Appeal against arbitral award – Objections under Section 34 of Arbitration and Conciliation Act, 1996 require consideration and in-depth examination.

IMPORTANT POINT
(1) Limitation Act, 1963 shall apply to arbitrations as it applies to proceedings in court.
(2) Appeal against arbitral award – Objections under Section 34 of Arbitration and Conciliation Act, 1996 require consideration and in-depth examination.