State Of Maharashtra And Anr. vs Ramdas Construction Co. And Anr.
2006 Latest Caselaw 685 Bom

JUDGMENT

R.M.S. Khandeparkar, J.

1. Heard the learned Advocate for the parties.

2. This is an appeal stated to have been filed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") against the order dated 23-12-2005, whereby the lower Court has rejected the application filed by the appellants in terms of Section 34(3) of the Act.

3. A preliminary objection has sought to be raised on behalf of the respondents that the impugned order is not an appealable order within the meaning of said expression under Section 37 of the Act.

4. The contention of the respondents is that Section 37(1) of the Act clearly provides that an appeal is maintainable against granting or refusing to grant any measure under Section 9 and against setting aside or refusing to set aside an arbitral award under Section 34 of the Act. By the impugned order, the Court has neither dealt with nor disposed of the application which was filed by the respondents for setting aside of the award. The impugned order only deals with and decides the application which was filed by the appellants under Section 34(3) for extension of time or for condonation of delay in filing the application by the appellants for setting aside the award.

5. On the other hand, it is the case of the appellants that the application for setting aside the award being required to be filed in compliance with the provisions of Sub-sections (2) and (3) of Section 34 of the Act, the impugned order is in the cause of disposal of such application for setting aside of the award, and therefore, the order impugned is appealable within the meaning of the said expression under Section 37 of the Act.

6. It is not in dispute that by the impugned order the lower Court has dealt with the issue relating to the delay in filing application for setting aside the award, as to whether such delay should be condoned and whether the application for setting aside the award should be entertained. The issue as to whether the arbitral award should be set aside or not has not been dealt with under the impugned order.

7. Section 37(1) clearly provides that an appeal shall lie from the orders passed either granting or refusing to grant any measure under Section 9, or setting aside or refusing to set aside an arbitral award under Section 34 of the Act. Undisputedly, therefore, whenever there is order passed either for setting aside of the award or refusing to set aside the arbitral award and such order is passed in exercise of powers under Section 34, the same would be appealable under Section 37(1)(b) of the Act. In the case in hand, since it is not in dispute nor it can be disputed that the impugned order does not deal with the issue as to whether the arbitral award should be set aside or not and it merely deals with the issue in relation to the delay in filing an application for setting aside of the award, evidently the impugned order cannot be said to be an appealable order within the meaning of the said expression under Section 37(1)(b) of the Act.

8. Section 34(1) of the Act provides that recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with Sub-section (2) and Sub-section (3). In other words an application for setting aside of award should satisfy the requirements of Subsection (2) as well as Sub-section (3) of Section 34 of the Act. Merely because the application satisfies the requirements of any one of Sub-sections (2) and (3) of Section 34 of the Act, it cannot be said that it is a valid and lawful application under Section 34(1) of the Act. Such application has necessarily to satisfy the requirements of both the Sub-sections.

9. Sub-section (3) of Section 34 of the Act provides that an application for setting aside may be made after three months have elapsed from the date on which the party making such application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral tribunal, provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months, it may entertain the application within a further period of thirty days, but not thereafter. This provision of law expressly reveals that the legislature has provided a specific period of limitation for filing an application for setting aside of the award and simultaneously the Court has been given discretion to extend such period only by thirty days, and not beyond the said period of thirty days. The provision is very clear in that regard. However, the scope of enquiry under Sub-section (3) is restricted to the cause for delay in filing the application but it does not relate to the merits of the application for setting aside of the award. Being so, a order which is to be passed in exercise of powers under Sub-section (3) of Section 34 of the Act cannot extend to the subject matter of the application for setting aside of the award but has to restrict to the aspect of delay in filing such application only. Such an order is not contemplated to be an appealable order within the meaning of the said expression under Section 37 of the Act. It is very clear from the fact that Section 37 refers to the orders dealing with the aspect of setting aside or refusing to set aside an arbitral award. It does not refer to the proceedings preceding the enquiry in relation to the issue of setting aside or refusing to set aside an arbitral award. The subject-matter of delay in filing an application and the condonation thereof relates to the proceedings preceding the enquiry for setting aside or refusing to set aside an arbitral award. Once it is clear that Section 37(1)(b) does not contemplate any order passed in such proceeding relating to the matter preceding the enquiry in relation to setting aside or refusing to set aside an arbitral award, such an order cannot be considered as an appealable order within the meaning of the said expression under Section 37 of the Act.

10. Undoubtedly the impugned order while rejecting the application for condonation of delay, clearly observes:

Consequently, application under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the award is also rejected being barred by time.

In other words, the Court has not dealt with the application for setting aside of the award on merits and the same has been disposed of solely as a consequence of rejection of the application for condonation of delay and there has been no enquiry as regards the rights of the parties on the issue of setting aside of the award. The appealable order which is contemplated for the purpose of exercise of appellate jurisdiction is the one which deals with the merits of the case in relation to the claim for setting aside or refusing to set aside an arbitral award. As already slated above, the appellate powers under Section 37 are not in relation to the proceedings which precedes the enquiry regarding setting aside or refusing to set aside an arbitral award. Being so, the consequence of the order of dismissal of the application for condonation of delay cannot itself amount to an appealable order under Section 34(1) for the purpose of appeal under Section 37(1) of the Act.

11. It is to be noted that the jurisdiction of the Court to entertain an application to set aside depends upon the existence of an application which would satisfy the requirement of Section 34(2) and (3) of the said Act. In absence of such lawful application, the Court is not entitled to entertain the same. The expression 'award' in Section 34(1) of the said Act is clearly to the effect that, "...be made only by an application for setting aside such award in accordance with Sub-section (2) and Sub-section (3)." The words "only" and "in accordance with" qualified by the words "Sub-section (2) and Sub-section (3)" apparently disclose the intention of the legislature to make the compliance of both the subsections to be mandatory to have a lawful application for exercise of jurisdiction regarding the subject of setting aside the award by the Court.

12. At this stage the learned advocate for appellant submitted that the appellant has no other remedy available under the Act to challenge the award and that, therefore, the impugned order which results in dismissal of the application for setting aside of the award should be construed as an order under Section 34(1) of the Act. Considering the phraseology of Section 34(1) of the Act, we are afraid we cannot accept the contention sought to be raised on behalf of the appellant. Section 34(1), as already stated, requires compliance of both the Sub-section (2) and (3) to have a valid and lawful application for setting aside of the order. Non-compliance of any of two Sub-sections would render the application to be not maintainable in law. Once the application is considered bad in law, being not maintainable, the order cannot be said to have been passed on merits of the case. Hence, the contention in this regard is to be rejected.

13. The learned advocate for the appellants also submitted that in view of absence of any remedy in the Act, the appellants be granted liberty to file writ petition against the impugned order. Question of granting any liberty as such, for filing writ petition does not arise. In case, the appellants are entitled to challenge the impugned order by way of writ petition, it will be open for the appellants to take appropriate steps in this regard.

14. In the result, therefore, the appeal is dismissed in limine as being not maintainable under Section 37(1)(b) of the Act for the reasons stated above. There shall be no order as to the costs.

15. At this stage, at the request of the learned advocate for the appellants, which is objected to by the learned advocate for the respondents, the execution of the impugned order shall remain suspended for the period of eight weeks.