Even Though Court Has Power To Condone Delay, Condonation U/s. 34(3) Of Arbitration Act Can't Be Granted Liberally- Delhi HC

The Delhi High Court has recently held that even though the power to condone the delay is conferred upon the Court, the condonation under Section 34(3) of the Arbitration and Conciliation Act, 1996 cannot be granted liberally.

The Court said that the conduct of the petitioner evidently signified his intention of evading the administration of justice by not complying with the procedure of law.

A Single Bench of Justice Chandra Dhari Singh observed, “… this Court is of the opinion that even though the power to condone the delay is conferred upon the Court, the condonation under Section 34(3) cannot be granted liberally as the same would defeat the very purpose of the enactment of the Arbitration Act, that is, the expeditious resolution of disputes. It is patent from the status of filing and re-filing that the petitioner has miserably failed to remove the defects owing to the want of due-diligence from the petitioner and thus, it is nothing but an attempt to be exempted from the bar of limitation imposed under Section 34 of the Act.”

The Bench further observed that the conduct on part of the petitioner does not provide any cogent reason to entertain the petition by condoning the delay and to interfere with the award passed by the Sole Arbitrator.

Senior Advocate Vibha Datta Makhija appeared for the petitioner while Advocate Vikas Goel appeared for the respondent.

In this case, the respondent, being a successful bidder against the tender entered into a contract with the petitioner. The completion certificate was issued by the petitioner to the respondent claimant after making the final bill payment and during the pendency of the work, the respondent demanded a resolution of his grievance relating to the delayed handover of the hindrance-free work site and thus, wrote a letter for the mutual settlement seeking compensation.

The petitioner filed an application under Section 151 of the CPC for condonation of delay in filing the additional affidavit. The petition under Section 34 of the Arbitration Act assailed the award passed by the Sole Arbitrator. The matter was therefore before the High Court.

The High Court after hearing both parties noted, “The provision under Section 34(3) of the Act stipulates that an arbitral award shall only be challenged within three months from the date when the award is received by the party challenging such award. … an application for setting aside the arbitral award has to be filed mandatorily within a total period of 120 days provided that the court is satisfied of the reasons stated for the delay beyond three months.”

It was further noted by the Court that the petition, though filed in the prescribed limitation period of three months, did not come before the Court for approximately the next four months due to the objections and defects notified by the registry.

“… the defects notified by the registry in the said petition were not technical in nature but rather were the basic requirements that must be fulfilled for the purpose of listing a petition/application before the Court. … the petitioner has taken more than four months to remove the defects lying in registry as the petition was first filed on 29th August 2018 and came on record on 9th January 2019 after the lapse of permissible delay of 30 days in accordance with above-mentioned Delhi High Court Rules”, the Court observed.

The Court also asserted that even though the petition was not barred by limitation at the very first instance, it did not meet the requirements for re-filing of the petition after the removal of the defects.

“The petition being filed on 29th August 2018 suffered from significant defects including absence of Vakalatnama, appropriate affidavits, etc which are the basic requirements to file any petition/application. It is further observed that the petitioner failed to take diligent steps for removal of defects within the maximum permissible period under the aforementioned High Court Rules”, the Court said.

The Court further said that when a petition/application is hit by the bar of limitation, only upon satisfaction of the Court of just and sufficient reasons for the delay, the way for adjudication of issues on merit paves out.

The Court, therefore, was not satisfied that the reasons stated for the delay are sufficient to condone the delay.

Accordingly, the Court dismissed the petition barred by limitation.

Cause Title- Ircon International Ltd. v. PNC-Jain Construction Co. (JV)

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