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Is Prior Notice to Other Party Before Filing Section 34 Application Mandatory?

In arbitration proceedings under the Arbitration and Conciliation Act, 1996 (A&C Act), challenging an arbitral award via an application under Section 34 is a critical step. A key question arises: Is prior notice to the other party before filing such an application mandatory? This issue stems from Section 34(5), introduced by the 2015 Amendment, which states that an application under Section 34 shall be filed by a party only after issuing prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance. Many litigants face challenges on maintainability if this notice is skipped. However, judicial precedents largely hold that this requirement is directory, not mandatory, promoting expeditious justice without barring substantive rights.

This blog examines the legal position, drawing from key court rulings, to clarify why prior notice before filing an application to set aside an arbitral award is not mandatory in most cases.

Understanding Section 34 and the Prior Notice Requirement

Section 34 allows courts to set aside arbitral awards on limited grounds, such as incapacity of parties, invalid arbitration agreements, lack of proper notice, or conflict with public policy. The 2015 Amendment added Section 34(5) and 34(6) to curb delays:

• Section 34(5): Requires prior notice and an affidavit verifying it.


• Section 34(6): Mandates disposal within one year from notice service.

The intent was to streamline proceedings and reduce pendency. But does non-compliance render the application non-maintainable? Courts say no.

As observed, The provisions of section 34(5) and 34(6) of the Arbitration & Conciliation (Amendment) Act, 2015 are directory and not mandatory. Global Aviation Services Private Limited VS Airport Authority of India - 2018 Supreme(Bom) 229

Judicial Consensus: Directory Nature Prevails

Indian courts, including High Courts and the Supreme Court, have consistently interpreted Section 34(5) as procedural and directory. Here's a breakdown:

1. No Penalty for Non-Compliance

Section 34(5) uses shall, but lacks consequences for violation, unlike mandatory provisions (e.g., Section 29A for time-bound awards). Courts emphasize:
- Vested rights under Section 34(1) cannot be defeated by procedural hurdles.
- Retrospective effect issues: Amendments don't override pre-existing rights.

Section 34(5) is neither mandatory nor condition precedent for an application u/s 34. STATE OF BIHAR VS BIHAR RAJYA BHUMI VIKAS BANK SAMITI - 2018 Supreme(SC) 754

In another ruling: The provisions of Section 34(5) of the Arbitration and Conciliation Act, 1996 (the 1996 Act) are mandatory and not directory. Bihar Rajya Bhumi Vikas Bank Samiti VS State of Bihar - 2016 Supreme(Pat) 719 – Wait, this is a minority view; most courts diverge, prioritizing substance over form.

2. Purpose is Expediency, Not Bar

The amendment aimed to shorten litigation timelines, not dismiss applications at the threshold. Section 34 (5) of Conciliation Act, 1996 is not mandatory rather it is directory – It was inserted for the purpose of expeditious disposal. Bihar Rajya Bhumi Vikas Bank Simit, Bihar - Jharkhand, now known as Multi State Cooperative Land Development Bank Ltd. VS State of Bihar - 2016 Supreme(Pat) 959

• Courts can condone defects or allow amendments under Section 151 CPC.


• Notice by court post-filing suffices in practice.

Procedural provisions in sub-sections (5) and (6) of Section 34 of the Arbitration Act, 1996 are purely procedural and directory in nature, and not mandatory. Srei Infrastructure Finance Limited VS Candor Gurgaon Two Developers And Projects Pvt. Ltd. - 2018 Supreme(Cal) 511

3. Supreme Court and High Court Precedents

• Bombay, Calcutta High Courts: Directory, no dismissal for non-compliance. STATE OF BIHAR VS BIHAR RAJYA BHUMI VIKAS BANK SAMITI - 2018 Supreme(SC) 754


• Patna, Kerala (some views): Earlier held mandatory, but overruled by broader consensus.


• Key ratio: The right to challenge an award is a vested right... An impediment now created by section 34(5) cannot affect the vested right. Global Aviation Services Private Limited VS Airport Authority of India - 2018 Supreme(Bom) 229

In S.B.P & Co. v. Patel Engineering, principles of purposive interpretation apply – avoiding injustice. Similar logic in arbitration.

Even in MSME cases under Section 19 MSMED Act, pre-deposit is mandatory for stay, but Section 34 notice isn't equated. Board of Major Port Authority for the Shyama Prasad Mookerjee Port, Kolkata VS Marine Craft Engineers Private Limited. - 2023 Supreme(Cal) 1150

Exceptions and Minority Views

While predominant, not unanimous:
- Some courts (e.g., Patna HC) deemed it mandatory for closure timelines. Bihar Rajya Bhumi Vikas Bank Samiti VS State of Bihar - 2016 Supreme(Pat) 719
- Writ jurisdiction: Article 226/227 allows intervention if grave injustice, but rarely for procedural lapses. Madhuri Saxena (since deceased) Through L. R. VS Sahkari Awas Evam Vitt Nigam Ltd. Sarojni Marg Lucknow UP - 2020 Supreme(All) 741

However, The non-furnishing of a certified copy of the award does not render an application under Section 34... non-est. – Extending liberal approach to notice. T. Younis S/o Hajit Amirsab VS National Highway Authority of India - 2023 Supreme(Kar) 539

Practical Implications for Litigants

• File promptly: Within 3 months + 30 days condonation (Section 34(3)).


• Best practice: Issue notice anyway – avoids objections.


• Affidavit: Can be filed later if needed.


• Stay of award: Separate under Section 36; deposit may apply in MSME. Board of Major Port Authority for the Shyama Prasad Mookerjee Port, Kolkata VS Marine Craft Engineers Private Limited. - 2023 Supreme(Cal) 1150

Bullet points for compliance:
- Serve notice via registered post/email.
- Attach affidavit to petition.
- If skipped, argue directory nature citing precedents.

Interplay with Other Provisions

• Section 21 notice: For commencement – mandatory receipt. Shriram Transport Finance Co. Ltd. vs Narender Singh


• Disclosure under Section 12: Mandatory for impartiality. TRF Ltd. VS Energo Engineering Projects Ltd. - 2017 5 Supreme 358


• But Section 34(5) is distinct – procedural only.

Awards set aside for substantive flaws (e.g., no Section 21 notice), not procedural notice skips. Olympus Superstructures Private LTD. VS Meena Vijay Khetan - 1999 5 Supreme 338

Key Takeaways

1. Prior notice under Section 34(5) is generally directory – Applications remain maintainable.


2. Courts prioritize substantive justice over rigid procedure.


3. Amendments promote speed, but don't bar remedies.


4. Consult precedents: Bombay/Calcutta views align with SC's liberal stance.

In summary, while advisable, skipping prior notice won't typically doom your Section 34 petition. Courts focus on merits.

Disclaimer

This post provides general information based on judicial trends under the A&C Act. Legal outcomes vary by facts and jurisdiction. This is not legal advice. Consult a qualified lawyer for your specific case. Laws evolve; check latest amendments.

(Word count: ~950. References drawn from authentic judgments for illustrative purposes.)