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IN THE HIGH COURT OF DELHI AT NEW DELHI
Chandra Dhari Singh, J.
Omaxe Ltd. – Appellant
Versus
Joginder Singh Nijjar – Respondent
O.M.P. (COMM) 52 of 2023 & I.A. 2406 of 2023 & I.A. 2407 of 2023 & I.A. 2408 of 2023 & I.A. 2409 of 2023 & I.A. 6309 of 2023
Decided On : 19-07-2023
ARBITRATION - Setting aside of arbitral award - Limitation - Delay in filing petition - Condonation of delay - Sufficient cause - Scope of interference in arbitral award - Principle of unbreakability.
Fact of the Case:
Petitioner, a real estate development company, entered into a collaboration agreement with landowners for the construction of a shopping mall. The project was stalled for 60 months due to objections raised by the Archaeological Survey of India (ASI). The respondent, who had booked a commercial property in the project, invoked arbitration seeking refund of principal amount on account of delay in carrying out construction. The sole arbitrator passed an impugned award in favor of the respondent. The petitioner filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (Act) seeking to set aside the award.
Finding of the Court:
1. The petition was barred by limitation as it was filed beyond the three-month period prescribed under Section 34(3) of the Act. The delay in filing the petition was not condoned as the petitioner failed to show sufficient cause for the delay. The petitioner's contention that the delay was due to the COVID-19 pandemic was rejected as the Hon'ble Supreme Court's order excluding the period from 15th March 2020 to 28th February 2022 for the purposes of limitation was applicable to petitions under Section 34 of the Act. The petitioner had also failed to act with due diligence in pursuing the matter and had caused a delay much above the mandated period without any just cause and reason. 2. The Court held that the scope of interference in an arbitral award under Section 34 of the Act is limited and narrow. The Courts shall not sit in an appeal while adjudicating a challenge to an Award which is passed by an Arbitrator, the master of evidence, after due consideration of facts, circumstances, evidence, and material before him. The principle of unbreakability enshrined under Section 34(3) of the Act prevents any grounds for setting aside the award that emerge after the three-month time-limit has expired from being raised.
Issues: 1. Whether the petition was barred by limitation. 2. Whether the delay in filing the petition should be condoned. 3. Whether the Court could interfere with the arbitral award on merits.
Ratio Decidendi: 1. The limitation period prescribed under Section 34(3) of the Act is three months from the date of receipt of the award with an additional period of 30 days within which the application raising objections may be filed, if sufficient cause is shown for not filing it within the threshold period of 90 days. The power to condone the delay is conferred upon the Courts, but the condonation under Section 34(3) of the Act cannot be granted liberally as the same would defeat the very purpose of the enactment of the Act, that is, the expeditious resolution of disputes. 2. The delay in filing the petition was not condoned as the petitioner failed to show sufficient cause for the delay. The petitioner's contention that the delay was due to the COVID-19 pandemic was rejected as the Hon'ble Supreme Court's order excluding the period from 15th March 2020 to 28th February 2022 for the purposes of limitation was applicable to petitions under Section 34 of the Act. The petitioner had also failed to act with due diligence in pursuing the matter and had caused a delay much above the mandated period without any just cause and reason. 3. The scope of interference in an arbitral award under Section 34 of the Act is limited and narrow. The Courts shall not sit in an appeal while adjudicating a challenge to an Award which is passed by an Arbitrator, the master of evidence, after due consideration of facts, circumstances, evidence, and material before him. The principle of unbreakability enshrined under Section 34(3) of the Act prevents any grounds for setting aside the award that emerge after the three-month time-limit has expired from being raised.
Final Decision: The petition was dismissed as it was barred by limitation and the delay in filing the petition was not condoned.
JUDGMENT
Chandra Dhari Singh, J. The instant petition under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter "the Act, 1996") has been filed on behalf of the petitioner seeking the following reliefs:
a. Pass an order summoning the entire original arbitral record from the Ld. Sole Arbitrator in the arbitration proceedings arising out of Arbitration Petition No.16/2015 titled Joginder Singh Nijjar Vs. Omaxe Ltd.;
b. Pass an order thereby setting aside the impugned award dated 20.03.2020 passed in arbitration proceedings arising out of Arbitration Petition No.16/2015 titled Joginder Singh Nijjar Vs. Omaxe Ltd.;
c. Pass an order thereby allowing the Counter Claims made by the petitioner in arbitration proceedings arising out of Arbitration Petition No.16/2015 titled Joginder Singh Nijjar Vs. Omaxe Ltd.;
d. Stay the operation and execution of the impugned Award dated 20.03.2020 passed by the Ld. Sole Arbitrator during the pendency of the present proceedings.
e. Pass an order allowing costs of the present proceedings in favour of the Petitioner and against the Respondents;
f. Pass any other or further order(s) deemed fit in the facts and circumstances of the case and in the interest of justice.
FACTUAL MATRIX
2. The present petition has arisen out of the following set of events and circumstances:
a. The petitioner is a Real-Estate Development Company duly incorporated under the aegis and provisions of the Companies Act, 1956/2013, and is engaged in the business of construction and development of commercial, residential, and integrated real estate projects Pan-India.
b. The petitioner began the construction and development of a shopping/commercial mall in the name and style of "Omaxe Novelty Mall" situated at Lawrence Road, Amritsar, Punjab (hereinafter "the Project/said Project") in collaboration with the landowners, M/s. Novelty Associates Pvt. Ltd., on a land area admeasuring 4850 sq. yd. approx. on a free-hold basis, vide a Collaboration Agreement dated 23rd May 2005. Pursuant to the execution of the Collaboration Agreement dated 23rd May 2005, the landowners also executed the Power of Attorney dated 23rd May 2005 in favour of the petitioner for carrying out the objectives contained in the Collaboration Agreement.
c. The sale proceeds of the aforesaid collaboration/joint venture were to be shared by the landowners and the petitioner in the ratio of 52.75% and 47.25%, respectively, after adjusting 10% of receipts towards costs and expenses for advertising and marketing etc.
d. The Municipal Corporation, Amritsar, vide its letter dated 25th May 2006, sanctioned the building plan of the Project in question with a height of up to 30 meters. After the sanction of the building plan by the Municipal Corporation, Amritsar, the petitioner started the construction of the mall, and by April 2007, the construction of two basements and one floor had been completed.
e. Thereafter, the respondent approached the petitioner with the intention of purchasing commercial real estate and in furtherance of the respondent's intentions, the petitioner offered them an opportunity to purchase a commercial property/shop in their Project. Accordingly, the respondent submitted an application dated 10th December 2006 with the petitioner expressing his desire to be provisionally allotted a Unit in the Project and subsequently following a mutual agreement and deliberations between the respondent and the petitioner, vide Allotment Letter/Agreement, and Addendum thereto, dated 22nd March 2007, the respondent were allotted Unit No. 26 on Second Floor in the Project, having an approximate super area of 518.41 sq. ft. at a basic sale consideration of Rs.34,65,648/- plus additional charges.
f. The Archaeological Survey of India, Punjab (hereinafter "ASI") issued a letter/Show Cause Notices to the petitioner as well as the landowners i.e., M/s Novelty Associates, on the ground that the Project in question was within the regulated area of the monument of Maharaj
The scope of interference in an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 is limited and narrow. The Courts shall not sit in an appeal while adjudicating a challen....
The main legal point established in the judgment is the significance of adhering to the prescribed limitation period under the Arbitration Act and the requirement for parties to exercise their rights....
The Court emphasized the importance of due diligence and dispatch in exercising the right to challenge an Arbitral Award within the prescribed time, as per the provisions of the Arbitration Act.
The judgment establishes the strict interpretation and application of the limitation period under Section 34(3) of the Arbitration Act, emphasizing the requirement for sufficient cause and the mandat....
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