Non-filing of arbitral award renders Section 34 application non-est – Delhi HC on procedural defects in arbitration challenges, Read Judgment

"Arbitration, being an alternate dispute resolution mechanism, must ensure expeditious disposal; filings that do not meet basic requirements should not be permitted to stall the period of limitation from running." With this guiding principle, the Delhi High Court's Full Bench addressed a significant legal conflict regarding procedural defects in petitions filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “A&C Act”). The matter arose from a reference made by a Single Judge to resolve contradictory rulings by different Division Benches on whether defects like the absence of a Statement of Truth or non-filing of the arbitral award could render a Section 34 petition non-est in the eyes of the law.

A Full Bench was constituted following a reference by a Single Judge of the Delhi High Court in Bharat Broadband Network Ltd. v. Sterlite Technologies Ltd., to resolve conflicting Division Bench rulings on procedural defects in Section 34 petitions under the Arbitration and Conciliation Act, 1996.

In ONGC v. Sai Rama Engineering Enterprises (2023), the court held that the absence of a Statement of Truth was a curable defect, while in ONGC v. Planetcast Technologies Ltd. (2023), a Division Bench ruled that such a petition was non-est. To settle this conflict, the Single Judge referred the matter to a larger bench under Rule 2, Chapter II of the Delhi High Court (Original Side) Rules, 2018.

Additionally, the Division Bench raised another question—whether the non-filing of the arbitral award rendered a Section 34 petition non-est. Given conflicting views in Union of India v. Panacea Biotec Ltd. (2023) and other cases, this issue was also referred to the Full Bench.

The key questions before the Full Bench were:

1. Whether a Section 34 petition without a duly filed Statement of Truth is non-est.
2. Whether non-filing of the arbitral award itself renders the petition non-est.

The petitioner argued that Order VI Rule 15A of the CPC does not apply to Section 34 applications under the A&C Act, as it pertains only to "pleadings," which are defined as "plaints" or "written statements." They assert that the absence of a Statement of Truth is a procedural defect and curable. The petitioner relied on Supreme Court and High Court judgments to support the position that the A&C Act is a self-contained code, and procedural requirements should not defeat substantive rights. Further, they contended that the filing of the arbitral award or vakalatnama is not mandatory under Section 34, as the legislature has not explicitly required it, unlike other provisions in CPC or BNSS.

Contentions of the Respondent:

The respondent argued that the absence of a Statement of Truth is a fundamental defect that renders the Section 34 application "non-est" and does not stop the limitation period from running. They emphasize that arbitration proceedings are meant to be expedited, and the Statement of Truth ensures transparency in document submission. They further asserted that substantial changes to a Section 34 application post-filing should be treated as a fresh filing for limitation purposes. Additionally, they contended that the filing of the arbitral award and vakalatnama is mandatory, citing multiple High Court judgments, as the court cannot assess the challenge without the award.

The Court clarified that non-filing or defects in the Statement of Truth do not render a Section 34 application non-est. It relied on Vidyawati Gupta, where the Supreme Court held that procedural defects are curable and do not invalidate a filing. Similarly, Prayag Polytech Pvt. Ltd. recognized that delays in filing a Statement of Truth may be condoned based on case facts.

While "procedural defects cannot be allowed to triumph the substantive rights of a party," the Court warned that if defects are left unaddressed "with a mala fide intent of only stopping the period of limitation from running," the application may still be deemed non-est. There is "no straight jacket formula," and each case must be assessed on its facts.

Regarding amendments, the Court noted that only "substantial changes at the time of defect removal" may indicate that the initial filing was not meant to be final. However, "minor changes, or even addition or deletion of few facts or grounds" would not render the original application non-est.

Ultimately, the intent of the party is crucial in assessing a filing’s validity. If the Court finds that an application was filed "only to stall the limitation from running" and consisted merely of a "bunch of papers," it can declare the filing non-est.

The Court held that the non-filing of the Arbitral Award along with a Section 34 application rendered the application non-est, and the limitation period under Section 34(3) of the A&C Act continued to run despite such filing.

It was further observed that a missing or defective Statement of Truth did not automatically make the filing non-est. However, if accompanied by other defects, the Court could determine that the filing was non-est based on a cumulative assessment.

Similarly, the absence or defect in a Vakalatnama, improper signing or verification of the petition, substantial modifications in facts or grounds, omission or addition of documents from the arbitral record, or deficient court fee did not individually render the Section 34 application non-est. However, the presence of multiple such defects could lead the Court to conclude that the filing was not intended to be final, thereby making it liable to be declared non-est.

The matters were directed to be listed before the Roster Bench(s) on 19th February 2025, subject to the orders of the Hon’ble Chief Justice and the Judge-in-Charge (Original Side).

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