Limitation Period for objections is computed from when signed copy of Award is available to parties

Dakshin Haryana Bijli Vitran Nigam Ltd. v. M/S Navigant Technology Pvt. Ltd.

Civil Appeal No. 791 of 2021(Arising out of SLP (C) No. 10372 / 2020)

Decided on March 2, 2021.

A two-judge bench comprising Justice Indu Malhotra and Justice Ajay Rastogi decided the present case. The Court allowed the petition to succeed, setting aside the decision of the Civil court and High Court by stating that the period of limitation for filing an objection is allowed from the date when all the parties receive the signed copy of the award.

On 16.10.2014, the appellant corporation terminated the Service Level Agreement executed in favour of the Respondent-company providing call centre services, which led to disputes between the parties. The disputes were referred to arbitration by a three-member tribunal. The arbitral tribunal orally pronounced the award [2:1] on 27.04.2018, whereby the claims of the respondent company were allowed. On 12.05.2018, a copy of the dissenting opinion was provided by the third arbitrator to the parties and on 19.05.2018, the tribunal recorded that both the parties had not filed any application to point out any clerical or typographical mistakes in the award, or dissenting opinion. On this date, the signed copy of the arbitral award was provided to both the parties, and the proceedings were terminated.

The Appellant under Section 34(3) of the Arbitration and Conciliation Act, 1996 (hereinafter the Act) filed a petition in the Civil court on 12.10.2018 to challenge the award dated 27.04.18 along with the application for condonation of delay. The civil court dismissed the petition stating that the time period to file the petition had already expired from 27.04.2018. The time period allowed under Section 34(3) of the Act is 3 months and the Court may entertain the application within a further period of 30 days; in the present case, the application u/S. 34 was filed even after the expiry of the further period of 30 days. Thereafter, the appellant filed an appeal under Section 37 of the Act before the High Court, wherein the court stated that under Section 31, once the majority of arbitrators sign the award, it will from that day forward count as an award. Aggrieved by the dismissal from the High Court, the appellant approached the Supreme Court.

The Court crystallized the issue before it: The issue which has arisen for our consideration is as to whether the period of limitation for filing the Petition under Section 34 would commence from the date on which the draft award dated 27.04.2018 was circulated to the parties, or the date on which the signed copy of the award was provided. (Para 2)

The appellant contended that the High Court and the Civil Court dismissed the appeal on the grounds of mere limitation and not on merits. It was further stated that Section 31(1) of the Act clearly states that all members of the tribunal shall sign the award and Section 31(2) which permits an award to be rendered so long as it is signed by the majority of the members, and reasons for omission of the signature of the third arbitrator applies only in the case of a unanimous award, that Section 31(2) has no application when there is dissenting view rendered by one of the arbitrators. Furthermore, it was stated that even if the award was pronounced on 27.04.18, both the parties signed the award on 19.05.18 after checking the award published by the minority opinion. The appellant placed reliance on Ssangyong Engineering and Construction Co. Ltd. v. NHAI., 1 2019 (15) SCC 131, that the dissenting opinion has been held to be the correct view by courts in various cases.

The Respondent contended that the petition needed to be dismissed on the grounds of limitation under Section 34 and the date of the award was passed was on 27.04.18 and under Section 34(3), the 3 months and 30 days limitation period will start from this date. Further, it was stated that the minority opinion was not to be considered as an award and was only a view of the minority under Section 31(2). The Respondent brought the court’s attention to the case of Bharat Sanchar Nigam Ltd. v. Acome and Ors., 3 AIR 2009 Delhi 102, which gave the decision that the limitation period under Section 34(3) of the Act shall commence from the date when the award is passed.

The Court heard arguments from both parties and stated that they will examine the Arbitration and Conciliation Act, 1996, which included the definition of an arbitral award, the decision-making panel of the arbitrators and the legal requirements of signing the award.

The Court observed:

The reference to the phrase “arbitral award” in Sections 34 and 36 refers to the decision of the majority of the members of the arbitral tribunal. A party cannot file a petition u/S. 34 for setting aside, or u/S. 36 for enforcement of a dissenting opinion. What is capable of being set aside u/S. 34 is the “arbitral award” i.e. the decision reached by the majority of members of the tribunal. Similarly, u/S. 36 what can be enforced is the “arbitral award” passed by the majority of the members. (Para 4(v))

The Court further observed the relevance of the dissenting opinion, by quoting the commentary of ‘Russel on Arbitration’. The court also took into view the case of Ssangyong Engineering & Construction Co. Ltd v. NHAI, (2019) 15 SCC 131, to assert the importance of dissenting opinion.

The Court applied the law to the facts of the present case and from a perusal of the arbitral proceedings, stated:

We are of the considered opinion that the period of limitation for filing objections would have to be reckoned from the date on which the signed copy of the award was made available to the parties i.e. on 19.05.2018 in the instant case. (Para 6)

It is the admitted position that the objections were filed within the period of limitation prescribed by Section 34(3) of the Act, if reckoned from 19.05.2018. Undisputedly, in the instant case, the objections have been filed within the period of limitation prescribed under Section 34(3) from the date of receipt of the signed award. (Para 7)

The Court allowed the appeal to succeed and set aside the judgment of the Court of the District and Sessions Judge, Haryana, and the impugned order passed by the High Court of Punjab & Haryana.

View/Download Judgment: Dakshin Haryana Bijli Vitran Nigam Ltd. v. M/S Navigant Technology Pvt. Ltd.

Utkarsh Kumar Jayaswal