Jammu & Kashmir & Ladakh High Court: Period Of Limitation To Challenge Arbitral Award Starts Running Only After Delivery Of Signed Copy of Award To Parties
The Jammu & Kashmir And Ladakh High Court was considering a Petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the Arbitral Award.
The Jammu & Kashmir and Ladakh High Court has held that delivery of a signed copy of the award to the parties in terms of Section 31(5) of the Arbitration and Conciliation Act is a mandatory requirement and the period of limitation to challenge the award starts to run against the party challenging the award from the date of delivery of the signed copy of the award to such party.
The Court was considering a Petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the Arbitral Award.
The single bench of Justice Sanjay Dhar observed, ".....if law prescribes that copy of award is to be communicated or sent to parties concerned in a particular way and also sets a period of limitation for challenging award by aggrieved party, then the period of limitation commences from date on which award was received by the party concerned in the manner prescribed by law. Thus, merely because the petitioners defaulted in paying the fee of the learned Arbitrator for a few months, cannot alter the situation in favour of the respondent/claimant....."
The Petitioner was represented by Deputy Advocate General Syed Musaib while the Respondent was represented by Showkat Ali Khan.
Facts of the Case
The Court at the outset pertinently mentioned that in terms of Section 31(5) of the Arbitration and Conciliation Act, 1996, a signed copy of the award was delivered by the Arbitrator to the Respondent-Claimant on the same day, but copy of the award was not delivered to the petitioners on the ground that they had failed to pay the outstanding amount of fee and the incidental charges. It is when the Petitioners paid the balance amount of fee to the Arbitrator, a signed copy of the award was delivered to the Petitioners, whereafter the Instant Petition under Section 34 of the Act of 1996 came to be filed.
Counsel for the Respondent-Claimant contended that time for filing a Petition under Section 34 of the Act of 1996 would start running against the Petitioners from the date of the award i.e., March 01, 2025 and not from the date when copy of the award was actually delivered to the Petitioners i.e., October 18, 2024. It was contended that the Petitioners cannot take advantage of their default in payment of fee to the Arbitrator and get extension in limitation period for challenging the said award. According to the Counsel, the Petitioners had the knowledge of passing of the award on March 01, 2024 itself and, as such, they could challenge the award only within 06 months from the said date or at the most within 08 months from the said date. In support of his argument, the Counsel relied upon the judgment of the Supreme Court in case Krishna Devi @ Sabitri Devi (Rani) vs. Union of India and others.
Contrarily, Counsel for the Petitioners contended that as per the provisions of sub-section (3) of Section 34 of the Arbitration and Conciliation Act, 1996, limitation period for challenging an award of the arbitral Tribunal starts to run from the date on which the party making the application receives the arbitral award and not from any previous date. He further contended that as per the provisions of sub-section (3) of Section 34 of the Arbitration and Conciliation Act, 1996, limitation period for challenging an award of the Arbitral Tribunal starts to run from the date on which the party making the application receives the arbitral award and not from any previous date and therefore instant petition under Section 34 of the Act of 1996 has been filed well within the prescribed period of limitation.
Reasoning By Court
The Court observed that while it is true that the Petitioners defaulted in making the payment of fee to the Arbitrator before the date of the award, at the same time it is also a fact that requirement of delivering a signed copy of the award to a party is mandatory.
"The same is clear from the provisions contained in Section 31(5) of the Arbitration and Conciliation Act. While provision contained in Section 31(5) of the Arbitration and Conciliation Act appears to be procedural in nature, yet it has broad connotations. The Supreme Court has, in the case of Union of India vs. Tecco Trichy Engineers & Contractors, 2005(4) SCC 239 emphasized the importance of delivery of a signed copy of the arbitral award on the parties," the Court held.
It clarified that the delivery of an Arbitral Award to a party is of paramount importance so far as initiating of various processes under the Arbitration and Conciliation Act are concerned.
"Delivery of copy of the arbitral award sets in motion the limitation period, it confers certain rights upon the parties and it terminates the arbitral proceedings. The party against whom award is made is conferred with right of challenging the same within the prescribed period of limitation, whereas the party in whose favour the award is made is conferred with right of enforcing his entitlement under the award against the losing party. Thus, delivery of a signed copy of the award to the parties is the mandatory requirement which is substantive in nature," the Court observed.
It stated that there is a distinction between making of award and delivering an award.
"Making an award refers to the period when Arbitral Tribunal finalizes its decision resolving disputes between the parties. An award is deemed to have been made when it is signed by the Arbitrator. Delivering of an award refers to formal communication or handing over of the signed award to the parties in terms of Section 31 (5) of the Act 1996. The time to challenge the award under Section 34 of the Act starts only from the date the award is delivered to the parties and not from the date when it is made," the Court observed.
It cited Supreme Court's ruling in State of Maharashtra & others vs. ARK Builders (P) Ltd. to hold that merely because the petitioners defaulted in paying the fee of the Arbitrator for a few months, cannot alter the situation in favour of the Respondent/ Claimant.
"Once the law prescribes a particular mode for starting limitation for challenging the award, the same has to be followed in all situations. Even otherwise, if the respondent/claimant desired to avoid the delay, it was open to it to pay the share of the fee payable by the petitioners to the learned Arbitrator in terms of proviso to Section 38 of the Act of 1996. The same could have been taken care of by the learned Arbitrator while awarding costs in terms of Section 31 A of the Act of 1996. Thus, it is not a case where the respondent was rendered remediless because of default of the petitioners," the Court observed.
It thus concluded that since delivery of a signed copy of the award to the parties in terms of Section 31(5) of the Act of 1996 is a mandatory requirement and the period of limitation to challenge the award starts to run against the party challenging the award from the date of delivery of the signed copy of the award to such party, therefore, in the instant case, the period of limitation would start to run against the Petitioners from October 18, 2024 and not from the date of award viz. March 01, 2024.
Cause Title: Chief Engineer PW(R&B) Department and another vs. M/s Abdul Salam Mir
