No Bar U/S 31 Arbitration Act 1940 That Objections Can Only Be Made When Award Is Filed: Madhya Pradesh HC
The Madhya Pradesh High Court observed that there is no bar under Section 31 of the Arbitration Act 1940 (1940 Act) that objections can only be made when award is filed.
A Single Bench of Justice Vishal Dhagat observed, “There is no bar in said section that objections can only be made when award is filed. Section 31 determines the Court which has to hear objections. Arbitrator has to file award in Court which has jurisdiction over the subject matter. Applications may be filed in the Court where award is to be filed. In view of same, no bar is created by Section 31 that Court cannot entertain application in respect of award until same has been filed.”
Advocate Surendra Verma represented the petitioner, while Advocate Sidharth Seth appeared for the respondents.
The parties had entered an agreement for the purchase of food grains. Despite attempts made to settle the matter through arbitration, the M.P. Rajya Beej Evam Vikas Nigam (respondent) did not respond, leading to the filing of an application under Section 11(1) of the 1940 Act.
After an award was passed, the appellant preferred an application under Section 34 of the 1940 Act for setting aside an arbitration award. The said application was ultimately dismissed on the grounds that parties cannot resort to Section 30 of the 1940 Act without first complying with the requirement of Section 14 of the 1940 Act.
The Court explained that after passing the award, the arbitrator had to sign it and notify the parties in writing to sign the award and deposit the required fees and charges. Once these payments were made, the arbitrator had to sign the award or a copy, along with depositions and evidence, and file it in Court. The Court would then notify the parties of the filing.
“Section 31 of the Arbitration and Conciliation Act determines the jurisdiction of Court to hear the objection. Court where award is to be filed or may be filed is having jurisdiction to decide the objections regarding validity of arbitral award in proceedings. Word used in Section 31 (3) "may be filed,” the Bench explained.
The Bench noted that the matter was of the year 2005 and sending it back to Court for passing fresh orders on objection would serve no purpose.
“Reference Court has carefully considered all the objections and has rightly come to a conclusion that application for appointment of Arbitrator was filed and registered in the Court on 25.07.1996. Due to Section 21 of the Arbitration and Conciliation Act, arbitration proceedings said to have commenced on 25.07.1996. Arbitration and Conciliation Act, 1996 was brought into operation on 22.08.1996. As per Section 85 of the Act of 1996 pending proceedings will continue under the old Act,” the Court remarked.
Consequently, the Bench held that the reference Court had not committed an error in considering the objections under the 1940 Act.
Accordingly, the High Court dismissed the appeal.
Cause Title: M/S Liladhar Laxminarayan Agrawal v. Managing Director M.P. Rajya Beej Evam Vikas Nigam
