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2013 Supreme(Del) 1711

DELHI HIGH COURT
Sanjay Kishan Kaul, Sanjeev Sachdeva, JJ.
Jhang Co-Operative Group Housing Society Ltd. - Appellant
Versus
Pt.Munshi Ram and Associates Pvt. Ltd. - Resopndent
FAO (OS) 582 of 2012
Decided On : 09-05-2013

Advocates Appeared:
For the Appellant:Mr. J.P. Sengh, Sr. Advocate with Mr. Sumeet Batra, Advocate.
For the Respondent:Ms. Anusuya Salwan , Ms. Renuka Arora, Advocates.

The main legal point established is the limited scope of judicial intervention in arbitration proceedings and the narrow scope of judicial scrutiny and interference in arbitral awards.

Headnote:

Arbitration - Appeal - Section 37 of the Arbitration and Conciliation Act, 1996 - 2 (1) (c ) - Summary of Acts and Sections: Arbitration and Conciliation Act, 1996, Section 34 - The court discussed the limitations for challenging an arbitral award, the definition of arbitral award, and the scope of judicial intervention in arbitration proceedings.

Fact of the Case:

The appellant appealed the dismissal of objections under Section 34 of the Arbitration Act challenging the interim and final awards. The dispute arose from a construction agreement, and the appellant objected to the delay and termination of the contract.

Finding of the Court:

The court held that the challenge to the interim award was time-barred and rejected the same. It also emphasized the limited scope of judicial intervention in arbitration proceedings and declined to interfere with the findings of the arbitrator in the final award.

Issues: The issues included the timeliness of challenging the interim award, the scope of judicial intervention in arbitration proceedings, and the validity of the findings in the final award.

Ratio Decidendi: The court's decision was based on the limitations for challenging arbitral awards, the definition of arbitral award, and the narrow scope of judicial scrutiny and interference in arbitration proceedings.

Final Decision: The appeal was dismissed, and the parties were left to bear their own costs.

Sanjeev Sachdeva, J.—

1. This is an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Said Act’) impugning the judgment dated 24th May, 2012, whereby the objections of the appellant under Section 34 of the Arbitration Act challenging the interim award dated 05th July, 2002 as well as final award dated 27th September, 2002 were dismissed. The objection petition under Section 34 of the Arbitration and Conciliation Act impugning both the interim and the final award was filed on 02.01.2003.

2. The respondent had entered into an agreement with the appellant society on dated 26th February, 1988 for construction of 490 residential units at Plot No. 40, Sector-13, Rohini, New Delhi. The date of start of construction stipulated in the work was 26th February, 1988 and the stipulated date for completion was 25th August, 1990. The work was delayed and ultimately the contract was rescinded by the appellant society on 13th January, 2000.

3. Pursuant of the rescission of contract certain disputes and doubts arose between the parties in the matter of execution of the said work. The respondent invoked the Arbitration clause and the Administrator of the appellant society, the Persona Designata appointed the Sole Arbitrator. On resignation of the Sole Arbitrator, the Administrator appointed Sh. D.N. Kathuria as the Sole Arbitrator who passed both the interim and the final award.

4. During the pendency of the arbitration proceedings, both the parties consented to passing of an interim award in respect of some of the claims raised by the claimant in the arbitration proceedings.

5. In the interim award, the Arbitrator granted the relief of Declaration holding that the appellant society was responsible for non-performance of their obligation and consequently the work was prolonged. The Arbitrator further held that the rescission/termination of contract was arbitrary and without jurisdiction and he thus declared the rescission as illegal.

6. With regard to the claim in respect of the payment for the work done in the 45th Running Account (RA) Bill and after the 45th R.A. Bill the Arbitrator directed both the parties to submit joint measurements for the remaining items and joint bill for the undisputed items. Consequent to the direction both the parties submitted their joint measurement and joint bill for undisputed items. The joint bill submitted by the parties indicated certain disputed items which were left to be adjudicated by the Arbitrator.

7. The Arbitrator in the interim award directed the appellant to pay the undisputed amount as mentioned in the joint bill and further with respect to the disputed items decided to adjudicate the same in his final award.

8. The appellant did not challenge the interim award made and published on 5th July, 2002 and it is only after the Arbitrator adjudicated upon the remaining disputes and passed the final award dated 27.09.2002 that the appellant filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 objecting to both the interim award and the final award.

9. The learned Single Judge vide the impugned order dated 24.05.2012 has held that the challenge to the interim award dated 5.7.2002 was time barred and accordingly has rejected the same.

10. Section 2 (1) (c ) of the Said Act defines arbitral award to include an interim award. Under Section 34 of the said Act recourse to a court against an arbitral award has to be made within three months from the date on which the party making the application receive the arbitral award. As per Section 34 (3) of the Act, the court has been empowered to condone a maximum delay of 30 days, subject to the applicant showing sufficient cause which prevented the applicant from making the application within the said period of three months and not thereafter. In the present case, admittedly the objections to the interim award have neither been made within three months from the date as stipulated in Section 34 (3) or















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