Back
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
Ashis Kumar Chakraborty, J.
Srei Infrastructure Finance Limited – Petitioner
Vs.
Candor Gurgaon Two Developers And Projects Pvt. Ltd. – Respondent
A.P. No. 346 of 2018 with G.A. No. 1401 of 2018 and GA No. 1555 of 2018
Decided On : 12-07-2018
Arbitration Act - Interpretation of Procedural Provisions - Section 34(5) and (6) - The court held that the provisions in sub-sections (5) and (6) of Section 34 of the Act are purely procedural and directory in nature, and not mandatory. The court emphasized that the substantive right of a party to challenge an arbitral award under sub-sections (2) and (2A) of Section 34 would be defeated if the procedural provisions were held to be mandatory. The court also referred to various Supreme Court decisions and held that procedural laws are intended to achieve the ends of justice and should be construed liberally. The court found no merit in the respondent's contentions for rejection of the applications.
Fact of the Case:
The petitioner filed an application to set aside an arbitral award and for stay of its operation. The respondent raised objections to the maintainability of the application, contending that the petitioner failed to comply with the mandatory requirements of issuing a prior notice and filing an affidavit as per Section 34(5) of the Arbitration Act, 1996.
Finding of the Court:
The court found that the provisions in sub-sections (5) and (6) of Section 34 of the Act are procedural and directory in nature, and not mandatory. The court emphasized that the substantive right of a party to challenge an arbitral award under sub-sections (2) and (2A) of Section 34 would be defeated if the procedural provisions were held to be mandatory. The court also referred to various Supreme Court decisions and held that procedural laws are intended to achieve the ends of justice and should be construed liberally. The court found no merit in the respondent's contentions for rejection of the applications.
Issues: The main issue was whether the provisions in sub-sections (5) and (6) of Section 34 of the Arbitration Act, 1996 were mandatory or directory in nature.
Ratio Decidendi: The court held that the provisions in sub-sections (5) and (6) of Section 34 of the Act are purely procedural and directory in nature, and not mandatory. The court emphasized that the substantive right of a party to challenge an arbitral award under sub-sections (2) and (2A) of Section 34 would be defeated if the procedural provisions were held to be mandatory. The court also referred to various Supreme Court decisions and held that procedural laws are intended to achieve the ends of justice and should be construed liberally.
Final Decision: The court directed the application to appear in the list under the heading 'Motion New' on a specified date, indicating that the applications were not rejected.
Ashis Kumar Chakraborty, J.
1. The petitioner has filed the application, A.P. No. 346 of 2018 for setting aside of the arbitral award dated December 11, 2017, read with corrective award dated February 6, 2018 and an additional award dated March 05, 2018 passed by a sole arbitrator (hereinafter referred to as “the arbitral award”). In the application, G.A. No. 1401 of 2018 the petitioner has prayed for stay of operation of the impugned award. In the said application the petitioner has also prayed for condonation of its omission to issue the notice under Section 34(5) of the Arbitration Act, 1996, as amended by the Act 3 of 2016 (hereinafter referred to as “the Act”).
2. On June 19, 2018 when this application was taken up for hearing, a serious objection was raised on behalf of the respondent to the maintainability of the application. Therefore, before considering the petitioner’s prayer for stay of the arbitral award this Court fixed the heaving to decide the merit of the above objection raised by the respondent.
3. On June 29, 2018 when this Court took up the matter for hearing the objection of the respondent to the maintainability of the petitioner’s application the learned Senior Counsel for the petitioner further moved an application, G.A. No. 1555 of 2018. In the said application the petitioner stated that after filing the application, A.P. No. 346 of 2018 within the statutory period of 120 days, on June 20, 2018 it issued a notice under sub-section (5) of Section 34 of the Act which was received by the latter and its advocate. The petitioner also disclosed an affidavit showing receipt of the said notice dated June 20, 2018 by the advocate of the respondent. Therefore, in the said application, G.A. No. 1555 of 2018 the petitioner prayed for, inter alia, an order accepting the said notice dated June 20, 2018 and the affidavit annexed thereto as due compliance with the provisions in sub-section (5) of Section 34 of the Act. According to the respondent, even the said application, G.A. No. 1555 of 2018 is not maintainable.
4. Mr. Siddhartha Mitra, learned Senior Counsel appearing for the respondent submitted that in view of introduction of the provisions in sub-sections (5) and (6) of Section 34 of the Act by the Act 3 of 2016 in order to maintain an application before the Court for setting aside of an abitral award, the applicant must serve a prior notice on the other party and the application must be accompanied by an affidavit by the applicant endorsing compliance with the said requirement. According to him, sub-section (5) of Section 34 of the Act in clear terms provides that an application under Section 34 shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement. It was strenuously contended for the respondent that user of the words “shall” and “only” in sub-Section (5) of Section 34 of the Act contemplates that the right to file an application for setting aside an arbitral award by a party arises only when it has served a notice of the proposed application on the other party and an affidavit of service of the said notice is filed before the Court along with the application. Therefore, according to the respondent, the term “shall” appearing in sub-section (5) of Section 34 of the Act makes the service of prior notice of the application for setting aside of the arbitral award by the applicant upon the other party a mandatory requirement. Further, sub-section (6) of Section 34 of the Act lays down that an application for setting aside of an arbitral award ‘shall’ be disposed of expeditiously and in any event within a period of one year from the date of service of the notice under sub-section (5) upon the other party. Learned counsel for the respondent submitted that introduction of sub-sections (5) and (6) to Section 34 of the Act mandates, (i) an application for setting aside
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
