IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
JAY POLYCHEM (INDIA) LTD & ORS. - Petitioners
Versus
S.E. INVESTMENT LTD - Respondent
O.M.P. (COMM) 273 of 2016 & I.A. Nos. 6346 of 2016 & 2751 of 2017
Decided On : 07-05-2018
Arbitration - Impugning Arbitral Award - Arbitration and Conciliation Act, 1996 - Section 34 - 34(3) - 34(3) Proviso - Delhi High Court (Original Side) Rules, 1967 - Rules 1 & 2 of Chapter IV - Usurious Loans Act, 1918 - Punjab Relief of Indebtedness Act, 1934 - Negotiable Instruments Act, 1881 - Refiling of Petition - Time Limit - Condonation of Delay - Enforceability of Loan Agreements - Interest Rate - Usurious Loan Act, 1918 - Commercial Transaction - Jurisdiction to Condone Delay - Inordinate Delays in Refiling - Punitive Nature of Late Payment Charges
Fact of the Case:
The petitioners filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, impugning an arbitral award. The petition was dismissed due to delay in refiling and on merits. The dispute arose from Loan Agreements between the petitioners and the respondent, involving issues of loan enforceability, interest rate, late payment charges, and applicability of statutory provisions.
Finding of the Court:
The court found the petition not maintainable due to delay in refiling and dismissed it on merits. The court rejected the petitioners' contentions regarding the enforceability of the Loan Agreements, interest rate, and applicability of the Usurious Loan Act, 1918.
Issues: The issues involved the delay in refiling the petition, enforceability of Loan Agreements, interest rate, late payment charges, and applicability of statutory provisions such as the Usurious Loans Act, 1918 and the Negotiable Instruments Act, 1881.
Ratio Decidendi: The court held that the delay in refiling the petition was unreasonable and inordinate, and the explanations provided were insufficient. The court also found the Loan Agreements enforceable, upheld the interest rate determined by the Arbitral Tribunal, and rejected the contention regarding the Usurious Loan Act, 1918.
Final Decision: The petition was dismissed due to delay in refiling and on merits. The pending applications were also disposed of, and the parties were left to bear their own costs.
VIBHU BAKHRU, J.
1. The petitioners have filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter “the Act”), inter alia, impugning the arbitral award dated 31.07.2015 (hereafter “the impugned award”) delivered by the Arbitral Tribunal constituted by a sole arbitrator, Justice S.B. Sinha, a former Judge of the Supreme Court of India (hereafter “the Arbitral Tribunal”). The impugned award was rendered in the context of disputes that had arisen between the petitioners and the respondent with respect to the Loan Agreements dated 29.08.2011 (hereafter “the Loan Agreements”).
2. The present petition was filed on 31.10.2015. However, the said petition was neither signed on behalf of the petitioners nor supported by signed and attested affidavits. In addition to the above, the petition was also defective on several other grounds and, thus, was returned on 31.11.2015. It is relevant to note that the petition was filed just before the expiry of the period of three months available in terms of Section 34(3) of the Act, for filing a petition under Section 34 of the Act.
3. The petition was thereafter refiled on 23.12.2015. This was not only beyond the period of three months as prescribed under Section 34(3) of the Act but also beyond the further period of 30 days, which could be condoned by the Court in terms of proviso to Section 34(3) of the Act. Although, Section 34(3) of the Act is not applicable for any delay in refiling – as held by the Supreme Court in Northern Railway v. M/s Pioneer Publicity Corp. Pvt. Ltd: (2017) 11 SCC 234 as well as by a Division Bench of this Court in Delhi Development Authority v. Durga Construction Co.: 2013 (139) DRJ 133 – but what was filed by the petitioners on 31.10.2015 could not be considered as a petition at all in view of the defects noticed above.
4. In Ashok Kumar Parmar v. B.D.C. Sankiila & Ors: 1995 RLR 85, this Court had, in the context of Rules 1 & 2 of Chapter IV of the Delhi High Court (Original Side) Rules, 1967, observed as under:
“If the defects are of such character as would render a plaint, a non-plaint in the eye of law, then the date of presentation would be the date of re-filing after removal of defects. If the defects are formal or ancillary in nature not effecting the validity of the plaint, the date of presentation would be the date of original presentation for the purpose of calculating the limitation for filing the suit.”
5. The aforesaid view would also be applicable in case of a petition under Section 34 of the Act. In Delhi Development Authority v. Durga Construction Co (supra), a Division Bench of this Court had observed as under:
“..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.”
6. Clearly, a Statement, which is neither signed nor supported by an affidavit cannot be considered as an application under Section 34 of the Act. Thus, the petition filed on 31.10.2015 was non-est. In this view, the present petition is not maintainable, as it has been filed beyond the prescribed period of three months and also beyond the further period of thirty days within which this Court could entertain the petition on petitioners establishing that it was prevented from sufficient cause from presenting the petition within the period prescribed.
7. The Supreme Court in the case of Union of India v. Popular Construction: (2001) 8 SCC 470 has held that the time limit prescribed under Section 34(3) of the Act to challenge an award is not extendable by the Court under Section 5 of the Limitation Act, 1963 in view of the express lan
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