CASE TITLE:
Dakshin Haryana Bijli Vitran Nigam Ltd. Vs. M/s Navigant Technologies Ltd.
DATE OF ORDER:
2 March 2021
JUDGE(S):
Justice Indu Malhotra
Justice Ajay Rastogi
SUBJECT
The Apex Court in the present case observed that the period for computing the limitation u/s 34 of A&C Act would commence from the date on which the signed copy of the award is furnished to the parties. The Bench comprising Justice Indu Malhotra and Justice Ajay Rastogi held that it is only after an award is signed that a legal effect can be attributed to it. The Bench also observed that where a dissenting opinion exists in a particular case, both the majority and the minority award shall be furnished on the same date. It stated – “There is only one date recognised by law i.e. the date on which a signed copy of the final award is received by the parties, from which the period of limitation for filing objections would start ticking. There can be no finality in the award, except after it is signed, because the signing of the award gives legal effect and finality to the award”
IMPORTANT LEGAL PROVISIONS
ARBITRATION AND CONCILIATION ACT
- Section 32- provides that the arbitral proceedings shall be terminated after the final award is passed.
- Section 34(3)- provides a specific time limit of three months from the date of “receipt” of the award, and a further period of thirty days, if the Court is satisfied that the party was prevented by sufficient cause from making the application within the said period, but not thereafter.
- Section 31 (5)- enjoins upon the arbitrator / tribunal to provide the signed copy of the arbitral award to the parties.
BRIEF FACTS OFTHE CASE
- The appellant and the respondent entered into an agreement, clause 13 of which provided that in case of any dispute, the same shall be referred to arbitration.
- The termination of the agreement led to some dispute between the parties. In compliance with clause 13, the matter was presented before three arbitrators of the Arbitration Tribunal.
- Divergent opinions were formed by the arbitrators. Two of them ruled in the favour of the respondent, while the remaining arbitrator ruled in favour of the appellant.
- As a result, the tribunal awarded the parties in the ratio of 2:1.
- After informing the parties that the dissenting arbitrator will render his separate opinion, a copy of the draft award was given to them on 27.04.2018 to point out any clerical or technical defects in the same.
- On 12.05.2018, a copy of the dissenting opinion was provided by the third arbitrator to the parties to point out any clerical or technical error in the same.
- Finally, on 19.05.2018, the tribunal recorded that no objection has been raised by the parties and then provided a signed copy of the arbitral award to the parties.
- The Appellant corporation on 10.09.2018, challenged the award before the Civil Judge, who rejected it on the ground that the said plea was barred by limitation.
- High Court also affirmed the impugned order of the Civil Court.
- The aggrieved corporation had filed the present appeal in respect of the same.
ARGUMENTS RAISED BY THE APPELLANT
- The appellant contended that as per section 34(3) of the A&C Act, the objection was made before the expiry of the period of limitation.
- It was also submitted that no other merits apart from the limitation period were taken into consideration before deciding the issue.
- The decision of the Civil Court and the High Court which considers the majority award as the actual award renders the minority tribunal’s opinion immaterial.
ARGUMENTS RAISED BY THE RESPONDENT
- The respondent contended that the limitation period of the award shall start from the date when the majority award was given to the parties.
- The respondent also placed reliance of section 31(2) of the Act that states that an award that is signed by the majority is also valid.
LEGAL ISSUE
- Whether the limitation period for challenging an arbitral award is to commence from the date of the signed copy of the award by the parties or from the date when a draft copy of the same was issued to the parties?
ANALYSIS BY THE COURT
- The Court observed that in terms of section 31(1) of the A&C Act, an arbitral order shall mandatorily be signed by all the arbitrators. It is only after the award is signed that a legal effect can be attributed to it.
- The Court opined that the signature of the members of the arbitration tribunal is not merely a ministerial act or an empty formality that can be dispensed with.
- The Court further held that in view of the provision contained in sub section 5 of section 31, it is the copy of the award signed by the members that is to be delivered to the parties and not any copy of the same. The Court suggested that section 34(3) and 31(5) must be read constructively. On a harmonious construction of section 34(3) and 31(5), it is observed that the period of limitation for filing the objection would commence from the date when the signed copy of the award was issued to the parties.
- The Court also observed that both majority and minority award shall be delivered contemporaneously on the same date as the final award, and not on any other date because after the award is so delivered the duties of the tribunal comes to an end as per section 32 of A&C Act.
CONCLUSION
In light of the above observations, the Court concluded that the date on which the signed award is delivered to the parties is crucial for the purposes of computation of the period of limitation u/s 34 of A&C Act. As such in the present case the period of limitation would commence from 19.05.2018and as such the objection has been filed well within the period of limitation prescribed by section 34(3).
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