Practice Of Backdating Of Arbitral Award Inherently Problematic: Allahabad HC
The Allahabad High Court stated that the pronouncement of an arbitral award with a backdate introduces procedural irregularity as the said practice was inherently problematic since it obscured the actual timeline of the arbitral proceedings.
The Bench also explained the importance of delivering a signed copy of the arbitral award to the parties as mandated under Section 31(5) of the Arbitration & Conciliation Act, 1996 (the Act). Section 31(5) of the Act unequivocally imposes an obligation upon the Arbitrator to deliver a signed copy of the arbitral award to each party involved in the arbitration. The Court clarified that this statutory duty was not contingent on a party's request but had to be fulfilled by the Arbitrator irrespective.
A Single Bench of Justice Shekhar B. Saraf observed, “The eventual pronouncement of the award with a backdate, introduces a further layer of procedural irregularity. The practice of backdating an arbitral award is inherently problematic as it can obscure the actual timeline of the arbitral proceedings, potentially affecting the parties’ rights and obligations. In this case, the backdated pronouncement of the award could mislead the parties regarding the timeline for challenging or enforcing the award, thereby affecting their legal recourse.”
Advocate Gunjan Jadwani represented the appellant, while Advocate Pranjal Mehrotra appeared for the respondents.
The appellant challenged an arbitral award under Section 34 of the Act. The award, initially scheduled for pronouncement in 2022, was eventually pronounced in 2023, without the knowledge of the appellant. Subsequently, the appellant received a certified copy of the award in 2023. Her application to set aside the Award was dismissed by the trial court as time-barred.
It was argued that the trial court erred in dismissing her application as time-barred as it failed to ascertain when the signed copy of the award was served to her. The appellant contended that under Section 31(5) of the Arbitration Act, the limitation period for challenging an arbitral award commences upon receipt of the signed award by the aggrieved party.
The High Court rejected the NHAI’s argument that the appellant never requested for a certified copy of the award explaining that such a request was of no consequence since Section 31(5) of the Act casted a duty upon the Arbitrator to deliver the award.
“This statutory duty is not contingent upon a party’s request for the award; rather, it is an imperative that must be fulfilled by the Arbitrator irrespective of any such request. The failure to comply with this statutory obligation can lead to significant procedural irregularities, potentially undermining the arbitral process and the enforceability of the award,” the Court remarked.
The Court observed that the NHAI did not provide evidence that the appellant had knowledge of the award's content before receiving the certified copy in 2023. Thus, the limitation period for the appellant’s challenge started from that date, making her application timely.
Accordingly, the High Court allowed the appeal.
Cause Title: Smt. Jasvinder Kaur v. National Highways Authority Of India & Ors. (Neutral Citation: 2024:AHC:96873)
Appearance:
Appellant: Advocates Gunjan Jadwani and Chandrika Patel
Respondents: Advocate Pranjal Mehrotra