Delhi High Court: A Full Bench was constituted questioning whether non-filing of the Arbitral Award itself would render a petition filed under Section 34 of Arbitration and Conciliation Act as ‘non-est’. A full bench of Rekha Palli, Navin Chawla and Saurabh Banerjee, JJ., held that non-filing of the Arbitral Award along with an application under the Section 34 of Arbitration and Conciliation Act would make the said application liable to be treated and declared as non-est, and the limitation prescribed under Section 34(3) of Arbitration and Conciliation Act shall continue to run in spite of such filing.
This Full Bench was constituted to answer the reference made by the Single Judge vide his Order dated 21-03-2024. The Single Judge was of the opinion that there is a conflict of view expressed by the two Division Benches; one in Oil and Natural Gas Corporation Ltd. v. Joint Venture of Sai Rama Engineering Enterprises, 2023 SCC OnLine Del 63, which held that the non-filing of the Statement of Truth under Order VI Rule 15-A of Civil Procedure Code (‘CPC’), as applicable to the Commercial Courts Act, 2015 will not make a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 as “non-est’; and in Oil and Natural Gas Corporation Ltd. v. Planetcast Technologies Ltd., 2023 SCC OnLine Del 8490, which had held that a petition filed under Section 34 of the A&C Act without a Statement of Truth or with a Statement of Truth which is neither signed nor supported by an affidavit, shall be “non-est’.
While the above reference was pending adjudication before the Full Bench, by an Order dated 09-05-2024 passed by the Division Bench of this Court, the question whether non-filing of the Arbitral Award itself would render a petition filed under Section 34 of the A&C Act as “non-est’ is the main issue for consideration in the present case.
In Sunny Abraham v. Union of India, (2021) 20 SCC 12, the Supreme Court has held that the term “non-est’ conveys the meaning of something that is treated to be not in existence because of some legal lacuna in the process of creation of subject instrument which goes beyond remedial irregularity. It refers to a case where a legal instrument is deemed to be not in existence because of certain fundamental defects in its issuance and subsequent action cannot revive its existence and rectify acts done in pursuance. Such instruments are treated as invalid, that is, what is non-existent in the eyes of law and cannot be revived retrospectively.
The Court observed that Section 34(2)(a) of Arbitration and Conciliation Act states that an Arbitral Award may be set aside by the Court only if the party making the application “establishes on the basis of the record of the Arbitral Tribunal” that a party was under some incapacity; or the Arbitration Agreement is not valid; or the party making the application was not given proper notice of appointment of an Arbitrator or the arbitral proceedings; or was otherwise unable to present its case; or the Arbitral Award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration for it contains a decision on matters beyond the scope of submission to arbitration; or the composition of the Arbitral Tribunal or the arbitral procedure, was not in accordance with the agreement of the parties.
The Court stated that it may under Section 34(2)(b) of Arbitration and Conciliation Act, also set aside an Arbitral Award if it finds that the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being enforced, or the Arbitral Award is in conflict with the public policy of India. Under Sub-Section 2A of Section 34 of Arbitration and Conciliation Act, an Arbitral Award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the Award is vitiated by patent illegality “appearing on the face of the Award”. Thus, none of the above conditions can be satisfied unless the Arbitral Award under challenge is placed before the Court. Therefore, filing of the Arbitral Award under challenge along with the application under Section 34 of the A&C Act is not a mere procedural formality, but an essential requirement. Non-filing of the same would, therefore, make the application “non-est” in the eyes of the law.
On the aspect whether the non-filing of the Statement of Truth or a defect therein would also render an application filed under Section 34 of Arbitration and Conciliation Act to be considered as “non-est, the Court held in negative because while the provisions of the CPC have been held to be introduced with an object of expediting the adjudication of the proceedings, they being procedural in nature, are in fact directory and not mandatory, and noncompliance thereto would not make the filing ‘non-est’.
The Court concluded that while filing of the Statement of Truth is essential, at the same time, merely because of non-filing of the same, or a defect in the same, an application filed under Section 34 of Arbitration and Conciliation Act cannot be treated as non-est. It is only where the non-filing of the Statement of Truth, or the defect in filing the same, is accompanied with other defects in the application so filed, makes the Court to form an opinion that the only intent of the petitioner filing the same was to stall the limitation, can an application filed under Section 34 of Arbitration and Conciliation Act be described as non-est. The application filed with the Statement of Truth or with defects therein, if accompanied with other defects, which cumulatively leads the Court to form an opinion that the initial filing was not done with a bona fide intent but only to stop the period of limitation, or that the non-filing or defect in filing of the Statement of Truth was not a bona fide error, the Court will be free to declare such filing to be non-est.
The Court also concluded that non-filing or filing of a defective Vakalatnama; the petition not being signed or properly verified; changes in the content of petition being made in form of addition/deletion of facts, grounds, or filing of additional documents from arbitral record, or filing with deficient court fee, each of these defects, individually would not render to filing of an application under Section 34 to be treated and declared as non-est. However, presence of more than one of such defects may, in the given set of facts involved in a case, justify the conclusion of the Court that filing of the application was never intended to be final and therefore, is liable to be declared non-est.
[Pragati Construction Consultants v Union of India, FAO(OS) (COMM) 70/2024, decided on 07-02-2025]
Advocates who appeared in this case :
Mr. S.S. Sastry, Mr. Brijesh Tiwari, Mr.Priyank Garg & Mr.Umesh Kr, Advocates for appellant
Mr.Shashank Garg, Sr. Adv. with Mr.Ripu Daman Bhardwaj, CGSC, Ms.Nishtha Jain, Ms.Aradhya Chaturvedi, Ms.Vidhi Gupta, Mr.Hussain Taqvi, Advs. for UOI. And Mr.Gurmail, XEN/C/Northern Railway. Ms.Suparna Jain, Mr.Dushyant K Kaul, Advs. for Intervenor.
In O.M.P. (COMM) 20/2024 & I.As. 568/2024, 570/2024, 3462/2024 & 9732/2024
Mr. Jayant Mehta, Sr. Adv. with Mr. Deepayan Mandal, Mr. Mridul Bansal & Mr. Naman Varma, Ms. Ayushi Kumar, Advocates for petitioner
Mr. A. K. Thakur, Mr. Rishi Raj, Mr. Sujeet Kumar & Mr. Ningthem Oinam, Advs. Ms. Payal Chawla, Ms. Hina Shaheen & Ms. Latika Arora, Advocates for Intervenors
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