Dismissed

Chhattisgarh Medical Services Corporation Ltd. and Another v. M/s Esteem Industaries and Inc.

Himachal Pradesh HC17 Oct 2024OMPM/10/2024

Case brief

AI extract

What is this about?

Applicants sought condonation of delay in challenging an ex-parte arbitral award under Section 34. Having admitted receipt of the award on 28.06.2023 and delay being beyond the extendable period, the court held Section 34(3) permits no further extension and dismissed the application and arbitration case.

What the court decided

AI extract

Chhattisgarh Medical Services Corporation Ltd. and… — Arbitration | Himachal Pradesh HC (2024)

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IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA OMP(M). 10 of 2024 in Arb. Case No. 451 of 2024

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Date of Decision: 17.10.2024

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Chhattisgarh Medical services corporation Ltd. & another

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…...Applicants

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Versus

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M/sEsteem Industries and Inc. …..Respondent.

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Coram Justice Jyotsna Rewal Dua, Judge. Whether approved for reporting?¹ For the applicants/petitioners : Mr. Gautam Sood, Advocate. For the respondent: Ms. Madhurika Shekhon, Advocate.

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4._ ________________________________________________________

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Jyotsna Rewal Dua, Judge

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This application has been moved under Section 34 of the Arbitration and Conciliation Act, 1996 (as amended up to date) read with Section 5 of the Limitation Act and Section 94 and 151 of the Civil Procedure Code, 1908, with the prayer for condoning the delay in filing the objection petition under Section 34 of the Arbitration and Conciliation Act.

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2. Background Facts

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2(i) An ex-parte arbitral award was passed against the

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applicants/petitioners on 11.6.2023. In terms of the award, claim petition preferred by the respondent under Section 18 of the Micro,

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1 Whether reporters of Local Papers may be allowed to see the judgment?

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2( 2024:HHC:9950 )

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Small and Medium Enterprises Development Act 2006 was allowed as under:

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“In view of the afore detailed discussion the claim petition is allowed by holding the claimant entitled to the amount of Rs.3,64,22907/- (Rupees Three crores Sixty-Four Lakhs Twenty-Two Thousand Nine Hundred and Seven only) due as on 28.02.2022 and the claimant is also entitled to the cost of litigation and other expenses which are quantified at Rs.1,00,000/- (Rupees One Lakh only). The claimant is also held entitled to interest on the amount awarded from 01.03.2022 up till its final realization to the tune of three times the interest notified by the RBI from time to time.

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Award announced, file retained in my office and signed copies of the award are supplied to the parties.”

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The aforesaid award has been assailed by the applicants/petitioners in the main objection petition filed under Section 34 of the Arbitration and conciliation Act, 1996.

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2(ii). The aforesaid main petition was instituted on 14.3.2024. 90 days period available to the applicants/petitioners for assailing the award lapsed on 28.09.2023. The petition has been filed after 168 days after the expiry of 90 days.

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3. Learned counsel for the petitioners submits that the award was passed ex-parte against the petitioners. Applicants/petitioners were not aware about the passing of the award; Appellants/ petitioners became aware of the award only during

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second week of February, 2024 when they received summons/notices in the execution petition No. 28 of 2023-P instituted

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3( 2024:HHC:9950 )

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against them by the respondent; It is for this reason, delay has occurred in preferring the objections. Prayer was made for condoning the delay.

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4. Consideration

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4(i) The above factual assertions cannot be accepted in view of petitioner’s own admission in para 2 of the application that they had received arbitral award through post on 28.6.2023.

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Learned counsel for the applicants/petitioners has also fairly admitted that duly signed copy of the award had also been received by the applicants/petitioners on 28.06.2023 as is apparent from endorsement/ receipt No. 2998 on the award (Annexure P-3 page 19 of the paper book). If that is so, it was for the applicants/petitioners to institute their objection petition under Section 34 of the Act within the period prescribed therein.

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4(ii) It is well settled that Section 5 of the Limitation Act has no applicability to an application challenging an arbitral award under Section 34 of the Act. Under Section 34(3) of the Act, an application for setting aside the award on the grounds mentioned in Section 34 (2) of the Act can be made within three months and the period can only be extended for a further period of thirty days on showing sufficient cause and not thereafter. The use of the words “ but not thereafter” in the proviso to Section 34 makes it clear that extension cannot be granted beyond thirty days (Ref:Simplex Infrastructure

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4( 2024:HHC:9950 )

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Limited versus Union of India).² In Bhimashankar S.S. Karkhane Niyamita vs. Walchandnagar Industries Ltd.)³ It was reiterated that Arbitration Act being a special law and provides a period of limitation different from that prescribed under the Limitation Act, the period of Limitation prescribed under the Arbitration Act shall prevail and shall be applicable and to that extent the Limitation Act shall be excluded.

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The application challenging an award filed beyond the period mentioned in Section 34(3) of the Arbitration Act would not be an application in accordance with Sub Section (3) as required under Section 34(1) of the Act. An application for setting aside an arbitral award has to be made within time prescribed under Sub Section (3) of Section 34 i.e within three months and a further period of 30 days on sufficient cause being shown and not thereafter.

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In the instant case, there is delay of 168 days after the expiry of 90 days in moving the application under Section 34 of the Act. Hence, this delay in moving the application under Section 34 of the Act cannot be condoned. The facts of the case also do not justify condoning the delay.

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5. In view of above, application as well as the arbitration case are dismissed.

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Jyotsna Rewal Dua Judge

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October 17, 2024 (veena)²

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2 (2019) 2 SCC 455

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3 AIR 2023 SC 1990

Chhattisgarh Medical Services Corporation Ltd. and Another v. M/s Esteem Industaries and Inc.

Case brief

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Chhattisgarh Medical Services Corporation Ltd. and Another v. M/s Esteem Industaries and Inc.

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