In O.M.P. (COMM) 436/2020-DEL HC- Filing of application u/s 33 of A&C Act, which is wholly incompetent and does not fall within scope of such provision, would not extend period of limitation to file petition u/s 34: Delhi HC
Justice Vibhu Bakhru [16-11-2022]

Read Order: VIDHUR BHARDWAJ v. HORIZON CREST INDIA REAL ESTATE & ORS 

Mansimran Kaur

New Delhi, November 17, 2022: The period of limitation for filing a petition under Section 34 of the Arbitration and Conciliation Act, 1996  runs from the date of the decision under Section 33, not only for the said applicant but for all other parties to the arbitration as well, the Delhi High Court has observed.

 A Single-Judge Bench of Justice Vibhu Bakhru dismissed the instant petition instituted by the  petitioner under Section 34 in order to impugn an arbitral award   rendered by an Arbitral Tribunal comprising of three arbitrators . 

The Bench was of the view that the  period of limitation, as reckoned from the date of receipt of the impugned award, was  beyond the period of thirty days that can be condoned by this Court.

The disputes between the parties, essentially, stemmed  from the Binding Settlement Agreement dated April 5, 2016  (BSA). By the impugned award, the Arbitral Tribunal  awarded damages quantified at Rs.4,795,079,144; costs quantified at Rs.59,829,209; and interest on the awarded amounts at the rate of 8% per annum from the date of the award till the date of payment, in favour of respondents one to six. 

The petitioner claimed that the impugned award to the extent it makes him liable to pay the awarded amount was ex facie, erroneous and contrary to the provisions of the BSA. It was his case that the BSA expressly provides that certain other individuals and him, shall not be personally liable for the obligations stipulated under the BSA. Therefore, in terms of the BSA, he could not be made liable for any monetary damages awarded against other corporate entities. More so, as respondent nos- one to six (the claimants before the Arbitral Tribunal) had specifically given up their claim to lift the corporate veil and impute the corporate liability on the shareholders/promoters of the corporate entities.

The preliminary question to be addressed was whether the present petition was  barred by limitation.

The Arbitral Tribunal also referred to Clause 10(I) of the BSA and the evidence tendered by CW-1 and accordingly, awarded a sum of Rs.4, 795,079,144on account of damages payable by the 3C Group to Horizon. Accordingly, the Arbitral Tribunal awarded a sum of Rs.4, 795,079,144 on account of damages and costs quantified at Rs.59,829,209/- along with interest at the rate of 8% per annum from the date of the award till the date of payment. 

Aggrieved by the impugned award, the petitioner filed the present petition.

After considering the submissions from both the sides, the Court noted that this it was unable to accept the view that the question whether the limitation would run from the date of disposal of the application under Section 33 of the A&C Act or from the date of receipt of the award is contingent upon the Arbitral Tribunal’s decision of the said application.

 It is only when an application under Section 33 of the A&C Act is disposed of that the parties are finally certain as to the content of the award. It is apparent that the rationale for providing that the limitation would run from the date of disposal of the application is to provide a reasonable time to the parties to take steps for filing the petition under Section 34 of the A&C Act after they are certain as to the final shape and contents of the arbitral award. Clearly, this cannot be contingent on the view that the Arbitral Tribunal may take in respect of the merits of the application under Section 33 of the A&C Act, the Bench opined.

 The Bench said, “Filing of an application under Section 33 of the A&C Act, which is wholly incompetent and cannot by any stretch of imagination be considered as a request under Section 33 of the A&C Act, would not extend the period of limitation to file the petition under Section 34 of the A&C Act.”

If a party harbours a bona fide belief that there is an apparent inadvertent error in the arbitral award, which requires correction, the application filed by the party under Section 33 of the A&C Act must necessarily be construed as such, notwithstanding the fate of the said application. It is possible that on a detailed examination of the contents of the application, an arbitral tribunal or a court may find that the relief sought cannot be granted under Section 33 of the A&C Act.

 The arbitral tribunal may find that what is claimed to be an inadvertent error is not so.However  that does not mean that the limitation would run from the date of the receipt of the award and not from the date on which an application under Section 33 of the A&C Act is decided, the Court further noted. 

The application filed by Mr. Nirmal Singh was for seeking correction of what he understood and described as an “accidental slip or omission”. The Arbitral Tribunal did not accept the same. However, in the given facts, the same may not lead to the conclusion that the application was wholly misconceived and by no stretch of imagination could be considered as an application under Section 33 of the A&C Act, the Court stated. 

Noting that the Arbitral Tribunal did consider it apposite to examine the application in some detail before taking a view on the same, the Court dismissed the petition.