The Delhi High Court, in the case of Vidhur Bhardwaj v. Horizon Crest India Real Estate & Others [Commercial Arbitration Appeal Number 436 of 2020 and Interim Applications number 6549 of 2021 and 7266 of 2021 decided on 16.11.2022], held that the limitation period for filing an application under Section 34 of the A&C Act would commence after the disposal of the application under Section 33 of the A&C Act. The extended limitation is available to all the parties and not only to the party filing an application under Section 33 of the A&C Act.
FACTS
Mr. Vidhur Bhardwaj (hereinafter referred to as the “Petitioner”) and Horizon Group and Others (hereinafter referred to as the “Respondents”) entered into a Binding Settlement Agreement (hereinafter referred to as the “Agreement”) on 05.04.2016. Due to the disputes arising between the parties, the Arbitration Clause was invoked. The Arbitral Tribunal passed an Arbitral Award on 02.07.2019, damages quantified at Rs.4,795,079,144/-, costs quantified at Rs. 59,829,209/- and interest of 8% per annum in favour of the Respondents (hereinafter referred to as the “Impugned Award”).
Mr. Nirmal Singh, one of the Respondents before the Arbitral Tribunal filed an Application under Section 33 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “A&C Act”) on 01.08.2019 stating that he along with other Respondents before the Arbitral Tribunal (hereinafter referred to as “LG Respondents”) were not personally liable in accordance of the Clause 21 of the Agreement. The Arbitral Tribunal issued a procedural order directing the parties to file a response to the application of Mr. Nirmal Singh within 3 weeks.
The Petitioner also filed an application under Section 33 of the A&C Act on 14.10.2019, before the Arbitral Tribunal, which was beyond the period of limitation and was unsustainable. The Arbitral Tribunal rejected the application of the LG Respondents.
Being aggrieved by the Impugned Award, the Petitioner has filed the present petition under Section 34 of A&C Act.
ISSUES BEFORE THE SUPREME COURT
- Whether the present petition is barred by limitation?
- Whether the time limitation has to be computed from the disposal of the application filed by the petitioner under Section 33 of the A&C Act?
- Whether the delay in filing the petition would be condoned with sufficient reasons at disposal?
CONTENTIONS OF THE PARTIES
The Petitioner contended that the Impugned Award is ex-facie, erroneous, and contrary to the provisions of the Agreement. It was argued that the Agreement expressly provided that certain individuals including the Petitioner shall not be held personally liable for the conditions under the Agreement. Hence, according to the Agreement, the Petitioner was not liable for the monetary damages as awarded under the Impugned Award.
The Petitioner claimed that the period of limitation to file an application under Section 34 of the A&C Act would commence from the date of the decision of the Arbitral Tribunal regarding an application under Section 33 of the A&C Act and not from the date of the Impugned Award.
The Respondents argued that the benefit of extended limitation is available only to the party preferring the application under Section 33 of the A&C Act. The Respondents contended that as the application under Section 33 of the A&C Act preferred by LG Respondents was not allowed by the Arbitral Tribunal, the Petitioner is liable to pay as per the Impugned Award.
The Respondents asserted that the application under Section 33 of the A&C Act filed by the LG Respondents is of the nature of the review, and hence, cannot be considered as an application. Therefore, the limitation period is to be computed from the date of the Impugned Award.
DECISION AND FINDINGS
The Hon’ble Delhi High Court observed that Section 34(3) of the A&C Act provides that when an application under Section 33 of the A&C Act is filed, the limitation for filing an application under Section 34 of the A&C Act would commence after the disposal of the application under Section 33 of the A&C Act.
It was held that the application filed by the LG Respondents under Section 33 of the A&C Act for seeking correction of the arbitral award as a result of “accidental slip or omission” cannot be construed as a misconceived application under Sections 33 and 34 of the A&C Act because it was rejected on merits by the Arbitral Tribunal.
The High Court further allowed the application for condonation of delay in re-filing the present petition due to the sufficient cause shown by the Petitioner.
The Delhi High Court relied on the case of Nirmal Singh v. Horizon Crest India Real Estate [OMP (COMM) No.434/2020] and rejected the application seeking condonation of delay in filing objections because it was beyond the period of limitation and the Court is not competent to condone such delay.
AMLEGALS REMARKS
The Delhi High Court held that the period of limitation for filing of an application under Section 34 of the A&C Act commences after the Arbitral Award has reached its finality. Moreover, if an application under Section 33 of the A&C Act is filed, the limitation would commence after the disposal of the application. The extended period of limitation is available to all the parties and not only the party filing an application under Section 33 of the A&C Act.
The High Court has also upheld that it had jurisdiction to condone the delay for filing of the application under Section 34 of the A&C Act but does not have the jurisdiction to condone the delay for filing of the objections. It is pertinent to note that the laws of a country are not be construed in a hyper-technical sense so as to deny justice to the parties and further prevent an aggrieved party from accessing the tools of justice.
– Team AMLEGALS assisted by Ms. Anushka Sharma (Intern)
For any queries or feedback, please feel free to get in touch with rohit.lalwani@amlegals.com or himanshi.patwa@amlegals.com.
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