Delhi District Court
Rubal Sharma And Anr vs Shri Ram Transport Finance Company ... on 28 July, 2025
DLCT010002922024
IN THE COURT OF SH. M. K. NAGPAL, DISTRICT
JUDGE (COMMERCIAL COURT)-13, CENTRAL
DISTRICT, TIS HAZARI COURTS, DELHI
OMP (COMM) No. :- 5/2024
CNR No. - DLCT01-000292-2024
IN THE MATTER OF :-
1. Sh. Rubal Sharma
S/o Sh. G.D. Sharma
R/o C-220, Third Floor, Pocket-3,
DDA Flats, Binda Pur, New Delhi-110059.
2. Sh. Pradeep Vashisth
S/o Sh. Bhoo Dutt Sharma
R/o 157-A, Q-Extension, Uttam Vihar,
Uttam Nagar, New Delhi.
... Petitioners
Vs.
Shriram Transport Finance Company Limited
G-2, S-4/60, 2nd Floor, New Mahabir Nagar,
Opposite Janakpuri East Metro Pillar No. 551,
West Delhi-110018.
....Respondent
ORDER
28.07.2025
1. This petition has been filed by petitioners under the provisions of Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act'), challenging the ex- parte arbitral award dated 08.09.2022 (hereinafter referred to as the 'impugned award') passed by a Sole Arbitrator appointed by OMP (COMM) No. :- 5/2024 1/27 DLCT010002922024 respondent herein and adjudicating upon the disputes that arose between parties to this petition in arbitration case bearing No. ARB/JP/48/19 titled as 'Shriram Transport Finance Company Ltd. Vs. Rubal Sharma & Another.' CASE OF THE PETITIONERS AS PER PETITION
2. It has been averred by petitioners in petition that the petitioner No.1 had booked a vehicle make Totoya Etios-P with Galaxy Toyata, Najafgarh Road, Moti Nagar, Delhi and deposited the advance earnest money of Rs. 50,000/- through a cheque and thereafter, he purchased the said vehicle from above showroom on 20.05.2016 for an amount of Rs. 6,42,430/-. It has also been averred by petitioners that the said vehicle was got financed by petitioners from respondent vide Loan Agreement No. JANKP0605180001 dated 19.05.2016 and the loan amount was agreed to be repaid to respondent in 47 Equated Monthly Installments (EMIs) of Rs. 17,600/- each and petitioner No.1 had also deposited an amount of Rs. 90,804/- on account of insurance premium and life protector/GLTI etc. with respondent vide receipt dated 17.05.2016 and the said amount was agreed to be adjusted in total loan amount.
3. It is the case of petitioners that due to non-payment of some of the EMIs, the respondent extended threats to petitioner No. 1 that they will forcefully take possession of the above vehicle and will not handover the same to him. It has been averred that on 22.03.2018, the respondent had cleverly and with OMP (COMM) No. :- 5/2024 2/27 DLCT010002922024 a dishonest intention called the petitioner No.1 to its office at Janakpuri and had obtained his signatures on some blank papers/ forms and he was asked to deposit EMIs with an amount of Rs. 19,257/- and after arranging a sum of Rs. 22,000/-, he had deposited the same with respondent.
4. It is further the case of petitioners that since petitioner No.1 could not deposit any amount subsequently, the employees of respondent had stated that petitioners had entered into a fresh loan agreement with respondent for a sum Rs. 6,35,000/- vide agreement No. JANKP0803210003 dated 22.03.2018 in respect to the vehicle No. DLIRTA-8400 with respondent for a sum of Rs. 9,09,642/- and though lateron, the petitioner No.1 requested the respondent to put the petitioners on earlier loan agreement, but respondent did not listen or pay any heed to the said request. It has also been averred that thereafter, due to certain unavoidable circumstances, some of the EMIs could not be paid by petitioner No.1 and therefore, the respondent had seized the said vehicle from him at gunpoint and sold it at a price of Rs. 1,75,000/- and had still raised an illegal demand for an amount of Rs. 7,65,608/- from them as on 21.10.2019 with delayed payment charges @ 36% pa, despite adjustment of the above sale proceeds of vehicle. It has also been averred that the petitioner No.1 was compelled by respondent to sign on some blank papers and printing receipts against his wish, will and consent, but due to constant fear he could not take any legal action against the respondent.
OMP (COMM) No. :- 5/2024 3/27DLCT010002922024
5. It has further been averred by petitioners that thereafter, without issuing any notice to them for appointment of an arbitrator, the respondent had appointed a Sole Arbitrator in the case and had filed a statement of claim for an amount of Rs. 7,65,608/- before the Ld. Arbitrator with exorbitant interest @ 36% pa and the Ld. Arbitrator had passed impugned award dated 08.09.2022 in favour of respondent company for recovery of a sum of Rs. 7,65,608/- from petitioners with interest @ 12% pa w.e.f. 21.10.2019. It is the case of petitioners that since the said award has been passed ex-parte by a Ld. Sole Arbitrator appointed by respondent and the Ld. Arbitrator was appointed without issuance of any notices to them and he also failed to ensure their participation in arbitration proceedings, the said award is unsustainable in eyes of law and is liable to be set aside on the grounds mentioned in petition.
GROUNDS OF CHALLENGE TO THE IMPUGNED AWARD
6. The petitioners have challenged the impugned award dated 08.09.2022 passed by Ld. Sole Arbitrator mainly on following grounds:-
a) That the impugned award is against the settled principles of law of the land;
b) That the impugned award is liable to be quashed as the respondent had concealed the vital information regarding the execution and existence of previous hypothecation OMP (COMM) No. :- 5/2024 4/27 DLCT010002922024 agreement dated 19.05.2016 between parties with regard to the same vehicle and had played fraud upon petitioners by getting executed a fresh loan agreement dated 22.03.2018 from them;
c) That the Ld. Arbitrator failed to appreciate and take note of the fact that above loan agreement dated 22.03.2018 was an unregistered agreement and in terms of provisions contained in Section 35 of the Stamp Act, it was invalid and unenforceable in law being insufficiently stamped;
d) That the impugned award has been passed by Ld. Sole Arbitrator ex-parte and without ensuring the service of notices upon petitioners and giving them a reasonable opportunity to present their case, as required in terms of judgment of the Hon'ble High Court in case M/S Radharamana Capital Services Vs. M/S Paypee Capital Services Ltd.;
e) That the Ld. Arbitrator failed to pronounce the award within the given period of 12 months provided by Section 29A (1) of the above said Act;
f) That the appointment of Ld. Arbitrator itself was against the provisions of law/Act in view of the unsigned letter dated 23.11.2019 and thus, the arbitration proceedings initiated by him were totally against law as his OMP (COMM) No. :- 5/2024 5/27 DLCT010002922024 appointment was not valid as per law of the land and hence, the award pronounced by him is liable to be quashed/set aside;
g) That the findings arrived at by Ld. Arbitrator are erroneous on facts as well as in law and the same are also without any legal evidence, justification, lawful ground, reasonable and probable cause and excuse and contrary to the principles of natural justice, equity, good consciousness and fair play;
h) That Ld. Arbitrator failed to appreciate the record available before him and had allowed delayed payment interest, though as per Article 2(e) of the loan agreement no such penal interest was agreed upon by the parties; and
i) That the Ld. Arbitrator also failed to appreciate the documents and material placed before him and arrived upon wrong findings and had wrongly allowed the claim of respondent.
CASE OF RESPONDENT IN REPLY
7. Notice of the petition was duly served upon respondent company and it has even filed its reply to this petition denying most of the averments made by petitioners in petition, except the advancement of a loan amount of Rs. 6,35,000/- by it to petitioner No.1 vide loan-cum-hypothecation agreement dated OMP (COMM) No. :- 5/2024 6/27 DLCT010002922024 22.03.2018, upon a guarantee furnished by petitioner No.2, for purchase of the above said vehicle and the undertaking given by petitioners to repay the aggregate loan amount of Rs. 9,09,642/- in 47 EMIs. However, it is the case of respondent that since petitioners failed to adhere to the terms of above hypothecation agreement and to repay the outstanding loan amount with interest in terms of the said agreement, and also despite repeated requests, demands and the service of a legal notice, the respondent was left with no option but to appoint an arbitrator in terms of an arbitration clause contained in the said agreement and ultimately, the above arbitration award dated 08.09.2022 came to be passed in its favour by the Ld. Arbitrator.
8. The respondent company has defended the impugned award on grounds that the Ld. Arbitrator has rightly passed it after considering each and every fact and document available before him; that there was no concealment of facts made by respondent before the Ld. Arbitrator and that the Ld. Arbitrator made his best efforts to make petitioners join the arbitral proceedings and had even sent notices to them at their available addresses for joining it, but he could not succeed in securing their presence and hence, had to proceed ex-parte against them in accordance with law and thus, the Ld. Arbitrator was justified in announcing the above said award. It is also the submission of respondent that a copy of the said award was duly sent to petitioners, but they still failed to make any payment of the awarded amount to it and instead of complying with the terms of OMP (COMM) No. :- 5/2024 7/27 DLCT010002922024 award, the petitioners have filed this false and frivolous petition, though they do not dispute the disbursement of above loan amount and the claim of answering respondent.
9. Further and besides above, the respondent has also pleaded that present petition filed by petitioners is hopelessly barred by time as a copy of the impugned award was immediately sent to them and they were required to challenge the said award within the given period of 3 months or within a maximum period of 120 days, whereas they had filed a petition under Section 34 of the above said Act earlier only in the month of July, 2023 and they even failed to file any application for condonation of delay in filing the said petition. It is also the submission of respondent that the petitioners have failed to explain the said delay in filing of above petition and each and every days' delay is required to be explained. It is further the submission of Ld. Counsel for respondent that after the expiry of above 120 days, the court has no powers to condone delay in filing of a petition under Section 34 of the said Act. The respondent has also referred to the judgment dated 05.10.2001 of the Hon'ble Supreme Court in case Union of India Vs. Popular Construction Co., Appeal (Civil) No. 6997/2001 and judgment dated 20.08.2008 in case Union of India Vs. M/S Mittal Steels, FAO No. 241/2008 and that dated 04.04.2016 in case Ahluwalia Contracts (India) Ltd. Vs. Housing & Urban Department, OMP No. 1122 & I.A. No. 18319/2013 of the Hon'ble High Court.
OMP (COMM) No. :- 5/2024 8/27DLCT010002922024
10. It is necessary to mention here that before filing of this petition, the petitioners had also earlier filed one similar petition bearing No. 52/2023 at Dwarka Courts and the same was assigned for disposal to the court of Ld. District Judge (Commercial Court)-02, Dwarka Courts and was registered as OMP (Comm) No. 52/2023. The said petition is stated to have been filed on 05.08.2023 and it was subsequently permitted to be returned back to petitioners for filing the same before an appropriate court having jurisdiction in the matter, vide order dated 19.12.2023 passed on an application under Order 7 Rule 10 CPC filed by the petitioners. The said application was filed as it was pleaded by respondent company in the above petition that the courts at Dwarka had no territorial jurisdiction to try the said petition and thereafter, the present petition has been filed by petitioners before this court on 08.01.2024.
11. It is also necessary to mention here that one application seeking execution of the impugned award and bearing No. 63/2023 filed by respondent herein against the petitioners is also pending before the court of Ld. District Judge (Commercial Court)-01, Dwarka Courts and the proceedings in said petition were earlier stayed by Ld. Predecessor of this court.
12. It also necessary of mention here that after filing of reply by respondent company to this petition, an application under Section 151 CPC came to be filed on behalf of petitioners seeking directions to the respondent to produce certain OMP (COMM) No. :- 5/2024 9/27 DLCT010002922024 documents i.e. a copy of the previous loan-cum-hypothecation agreement dated 19.05.2016 stated to have been executed between them and also copies of the insurance policy and statement of loan account of petitioners for the financial year in which the said vehicle was re-sold by respondent and this application was filed in order to find out if the said vehicle was sold at the market price or not. This application was allowed by the court vide order dated 08.04.2024 and the requisite documents were subsequently provided by respondent company to petitioners before filing of their rejoinder.
13. Further, it is also a matter of record that earlier on an application dated 13.01.2025 filed by petitioners, an affidavit of authorized representative of respondent company was also taken on record of the court regarding the number of other cases in which the Ld. Sole Arbitrator of this case had been appointed as an arbitrator by the respondent for resolution of their disputes arising from similar agreements executed with the other or third parties and it was disclosed in said affidavit that the Ld. Arbitrator had acted as such in total 102 other matters during the years from 2019 to 2022.
REJOINDER OF PETITIONERS
14. The rejoinder filed by petitioners contained reiteration of their case and the grounds of challenge to the impugned award. Apart of the same, petitioners have also questioned the sale price OMP (COMM) No. :- 5/2024 10/27 DLCT010002922024 of hypothecated vehicle and the genuineness of sale process in their rejoinder.
15. I have heard the arguments advanced by Sh. Vikram Panwar, Ld. Counsel for petitioners and Sh. Manoj Kumar, Ld. Counsel for respondents. The case record, including written submissions filed by petitioners as well as the original arbitral record, has also been perused.
16. In the written submissions filed by petitioners, it is also found specifically submitted by them that the impugned award is liable to be quashed and set aside for violation of provisions of Section 21 and Section 34(2) (iii) of the above said Act as no notice of invocation of arbitral clause by respondent and even no notice by Ld. Arbitrator for joining the arbitration proceedings was given to them. Further, the same is also found to have been challenged on ground of violation of provisions of Section 12 of the said Act while submitting that Ld. Sole Arbitrator failed to furnish the requisite disclosure or declaration in terms of the said Section and it has further been submitted that the Ld. Arbitrator was appointed unilaterally and he was biased and hence, the award pronounced by him is illegal. In support of the above submissions, Ld. Counsel for petitioners has also relied upon various judgments in cases of Alupro Building Systems Pvt. Ltd. Vs. Ozone Overseas Pvt. Ltd., 2017 SCC Online Del 7228; Perkins Eastman Architects DPC Vs. HSCC (India) Ltd., (2020) 20 SCC 760; order of the Hon'ble High Court in OMP (COMM) No. :- 5/2024 11/27 DLCT010002922024 FAO (Comm) 60/2021 in case Ram Kumar & Anr. Vs. Shriram Transport Finance Col. Ltd.; order dated 13.10.2022 of the Hon'ble High Court in FAO (Comm) 179/2021 in case Shriram Transport Finance Co. Ltd. Vs. Shri Narender Singh; order dated 07.10.2023 of the Hon'ble High Court of Gujarat in R/Special Civil Application No. 728/2023 in case M/S Rich and Royal through its proprietor Mr. Ravindrabhai Rameshbhai Gamit Vs. Authorized Officer, Hinduja Leyland Finance Ltd.; and order of the Hon'ble High Court of Judicature for Rajasthan Bench at Jaipur in case M/S Atlanta Ltd. Vs. Govt. of India.
17. As it emerges out from above discussion, the award impugned in this petition has been passed by Ld. Sole Arbitrator appointed by the respondent company herein unilaterally and besides challenging the said award on this ground and on merits, the petitioners have also challenged it on various other legal grounds pertaining to violation of the provisions contained in Section 12 and 21 of the said Act and the award has been sought to be declared illegal and to be quashed on various legal grounds and as per the mandate contained in Section 34 of the said Act.
18. However, as also discussed above, a specific objection regarding maintainability of this petition has been raised by respondent company on ground that this petition is hopelessly barred by limitation and it has not been filed within the time period as provided by Section 34 (3) of the said Act.
OMP (COMM) No. :- 5/2024 12/27DLCT010002922024
19. It is well settled that the preliminary objections raised on certain grounds like limitation or territorial and pecuniary jurisdiction of the court etc. are required to be decided first and before the court can consider or appreciate the pleadings or rival contentions of parties to be made on merits in a particular case. It is so because the above legal objections or issues go to the root of case and if at a later stage, the court finds or comes to a conclusion that the claim raised before it by a party or petitioner is barred by the law of limitation or the court has no jurisdiction to entertain it for any such reason, then the findings arrived at or the judgment or decision of the court to be pronounced on merits shall stand rendered to be an illegality. Reference on this aspect can be made to a judgment of the Hon'ble Supreme Court in case of Asma Lateef And Anr. Vs. Shabbir Ahmad And Ors., (2024) 4 Supreme Court Cases 696 and the relevant observations made by their lordship are as under:-
46. The essence really is that a court must not only have the jurisdiction in respect of the subject matter of dispute for the purpose of entertaining and trying the claim but also the jurisdiction to grant relief that is sought for. Once it is conceded that the jurisdiction on both counts is available, it is immaterial if jurisdiction is exercised erroneously. An erroneous decision cannot be labelled as having been passed 'without jurisdiction'. It is, therefore, imperative that the distinction between a decision lacking in inherent jurisdiction and a decision which suffers from an error committed in the exercise of jurisdiction is borne in mind.
47. Moving on to decisions of not too distant an origin, we notice that this Court in Rafique Bibi v. Sayed Waliuddin16 whilst relying on (2004) 1 SCC 287 Vasudev Dhanjibhai Modi (supra), has made valuable observations as to the circumstances where an order passed could be regarded as a nullity. The relevant observations made in OMP (COMM) No. :- 5/2024 13/27 DLCT010002922024 Rafique Bibi (supra) read thus:
"6. What is 'void' has to be clearly understood. A decree can be said to be without jurisdiction, and hence a nullity, if the court passing the decree has usurped a jurisdiction which it did not have; a mere wrong exercise of jurisdiction does not result in a nullity. The lack of jurisdiction in the court passing the decree must be patent on its face in order to enable the executing court to take cognizance of such a nullity based on want of jurisdiction, else the normal rule that an executing court cannot go behind the decree must prevail.
7. Two things must be clearly borne in mind. Firstly, 'the court will invalidate an order only if the right remedy is sought by the right person in the right proceedings and circumstances. The order may be 'a nullity' and 'void' but these terms have no absolute sense: their meaning is relative, depending upon the court's willingness to grant relief in any particular situation. If this principle of illegal relativity is borne in mind, the law can be made to operate justly and reasonably in cases where the doctrine of ultra vires, rigidly applied, would produce unacceptable results."
8. A distinction exists between a decree passed by a court having no jurisdiction and consequently being a nullity and not executable and a decree of the court which is merely illegal or not passed in accordance with the procedure laid down by law. A decree suffering from illegality or irregularity of procedure, cannot be termed in executable by the executing court; the remedy of a person aggrieved by such a decree is to have it set aside in a duly constituted legal proceedings or by a superior court failing which he must obey the command of the decree. A decree passed by a court of competent jurisdiction cannot be denuded of its efficacy by any collateral attack or in incidental proceedings."
48. Also, a reading of Rafique Bibi (supra) makes it clear that the lack of jurisdiction must be patent on the face of the decree to enable an executing court to conclude that the decree was a nullity. Hence, it is clear that all irregular or wrong decrees would not necessarily be void. An erroneous or illegal decision, which was not void, could not be objected in execution or incidental proceedings. This dictum was also affirmed by a Bench of 3 (three) Hon'ble Judges of this Court in Balvant N. Viswamitra v. Yadav Sadashiv Mule.
49. What follows from a conspectus of all the aforesaid decisions is OMP (COMM) No. :- 5/2024 14/27 DLCT010002922024 that jurisdiction is the entitlement of the civil court to embark upon an enquiry as to whether the cause has been brought before it by the plaintiff in a manner prescribed by law and also whether a good case for grant of relief claimed been set up by him. As and when such entitlement is established, any subsequent error till delivery of judgment could be regarded as an error within the jurisdiction. The enquiry as to whether the civil court is entitled to entertain and try a suit has to be made by it keeping in mind the provision in section 9, CPC and the relevant enactment which, according to the objector, bars a suit. Needless to observe, the question of jurisdiction has to be determined at the commencement and not at the conclusion of the enquiry.
(emphasis supplied)
20. Coming back to present case, the factual position which emerges out from pleadings of parties and submissions made by their respective Counsels on this aspect is that the impugned award of this case has been passed by the Ld. Sole Arbitrator on 08.09.2022 and the present petition under Section 34 of the above said Act has been filed by petitioners on 08.01.2024. However, it is also an admitted fact brought on record by the parties that prior to filing of this petition, the petitioners had filed a similar petition, bearing OMP No. 52/23, at Dwarka Courts on 05.08.2023 and the same was returned back to petitioners on 19.12.2023 on an objection on the ground of territorial jurisdiction with liberty to file it before the appropriate court, as also discussed above.
21. Section 34 (3) of the above said Act provides that an application for setting aside of an arbitral award may not be made after 3 months have elapsed from the date on which the party making the said application had received the arbitral award or, if a request has been made under Section 33, then from the date on OMP (COMM) No. :- 5/2024 15/27 DLCT010002922024 which that request has been disposed of by the Arbitral Tribunal. Section 33 of the Act relates to proceedings, if any, to be carried out with regard to request of parties for correction and interpretation etc. of an arbitral award. Since the said Section 33 has got no applicability in present case, the above period of 3 months provided by Section 34 (3) of the Act for filing a petition by petitioners herein for setting aside of the impugned award of this case has to be counted from the date on which they had received a copy of the said award. Further, in terms of proviso to this sub-section (3) of Section 34 of the Act, the court is empowered to entertain such a petition within a further period of 30 days, but not thereafter, but in such a case the petitioners have to satisfy the court that they were prevented by some sufficient cause from filing the said petition.
22. It is necessary to mention here that when this court had fixed the matter for consideration/orders, after hearing the rival submissions made by Ld. Counsels for parties on merits of this petition, an application under Section 5 of the Limitation Act, 1963 r/w Section 151 CPC came to be filed on behalf of petitioners seeking condonation of a delay of 4 days in filing their objections or the above previous petition under Section 34 of the Act against the impugned award. As per submissions made on behalf of petitioners in the said application, as well as in the main petition, they had received a copy of the impugned award only during the course of above execution proceedings, after they had put in their appearance before the concerned executing court OMP (COMM) No. :- 5/2024 16/27 DLCT010002922024 on 21.04.2023. A copy of the said order dated 21.04.2023 is also found annexed by petitioners with the present petition, which contains a direction to the DH/respondent herein to supply the complete set of execution petition to Ld. Counsel for JDs i.e. petitioners herein within 3 days. However, it is the submission of petitioners that they had actually received the copy of impugned award and other documents in terms of the said order only on 13.05.2023 and it is also found recorded in the above application of petitioners filed for condonation of delay that they had even received certified copies of the entire record from the office of Ld. Arbitrator on 03.05.2023. Hence, it is the submission of petitioners that while calculating the limitation period from this date of 03.05.2023, the present petition was to be filed by them within the given period of 3 months. It is also their submission that since their Counsel was not familiar with the process of e- filing, the petition could actually be filed before the Dwarka Courts on 05.08.2023 i.e. with a delay of 4 days and the hard copy of petition presented earlier for filing was not accepted by the Facilitation Centre of Dwarka Courts. It is further the submission of petitioners that they have been able to show a sufficient cause for the above delay and it is required to be condoned in view of judgments of the Hon'ble Supreme Court in matters of N. Balakrishnan Vs. M. Krishmlmurthy (1998) 7 SCC 123, State of Nagaland Vs. Lipokao (2005) 3 SCC 752 and Collector Land Acquisition Vs. Mst. Katiji 167 ITR 471 (SC) as the rules of limitation are not meant to destroy the rights of parties and they are meant to ensure justice.
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23. Per contra, it is the contention of Ld. Counsel for respondent company that the limitation period in this case is not to be counted from the above date 03.05.2023, but the same is actually to be counted from an earlier date when a copy of the impugned award was got delivered to petitioners by the Ld. Sole Arbitrator and Ld. Counsel for respondent has also referred to and shown to the court two original postal receipts of date 19.09.2022 contained in the file of arbitral record, copies of which have even been filed with this petition by the petitioners themselves. These postal receipts are in respect to dispatch of the arbitral award by Ld. Sole Arbitrator at the given addresses of petitioners through speed post and it is the submission of Ld. Counsel that the said postal process in normal course should have been received by petitioners in a day or two as they both are the local residents of Delhi and hence, in view of the same, even the above earlier petition filed by them on 05.08.2023 was apparently time barred as the given period of 3 months and also the extended period of 30 days available for condonation of delay in discretion of the court stood expired long back in the month of January, 2023 itself and the said petition was filed after a delay of around 7 months.
24. As argued above and as found on perusal of the original arbitration record, a copy of the impugned award dated 08.09.2022 is shown to have been sent to petitioners herein through speed post on 19.09.2022 and the original postal receipts OMP (COMM) No. :- 5/2024 18/27 DLCT010002922024 to this effect are found contained in said record and it has been apparently sent as per the mandate contained in Section 31 (5) of the said Act, which makes it necessary for an arbitrator to deliver a signed copy of the award to each of the parties. Though it is the case of petitioners that they did not receive any copy of the award from Ld. Sole Arbitrator and they came to know about existence of the said award for the first time only during the course of pendency of above execution proceedings initiated against them by respondent, but it has been vehemently argued by Ld. Counsel for respondent that in terms of the provisions contained in Section 3 of the said Act, this court should presume and hold that the above process was duly delivered at the given addresses of petitioners through the said mode within a day or two or within a reasonable time.
25. The provisions of Section 3 of the Arbitration and Conciliation Act, 1996 are being produced herein below for a better understanding of the above contention of Ld. Counsel for respondent:-
3. Receipt of written communications.
(1) Unless otherwise agreed by the parties-
(a) any written communication is deemed to have been received if it is delivered to the addressee personally or at his place of business, habitual residence or mailing address, and
(b) if none of the places referred to in clause (a) can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressees last known place of business, habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it.OMP (COMM) No. :- 5/2024 19/27
DLCT010002922024 (2) The communication is deemed to have been received on the day it is so delivered.
(3) This section does not apply to written communications in respect of proceedings of any judicial authority.
26. Since the above postal process sent through a registered and speed mode is not shown to have been actually received by or delivered to the petitioners personally as per Clause (a) of Section 3 (1) of the said Act, in light of provisions contained in Clause (b) thereof as well as sub-section (2) of this Section, the same is deemed to have been received by and delivered to them, if it was sent to them at their last known place of business or residential addresses etc. It has been observed on a perusal of the arbitration record and the file of this petition that the above process by Ld. Sole Arbitrator was sent at the same addresses of petitioners and not at any other addresses and hence, as per the provisions contained in above Clause (b) of Section 3 (1) as well as sub-section (2) of the said Section, the court has to presume a deemed delivery of the said process carrying a copy of the impugned award upon petitioners at their said addresses. It has also not been submitted or even argued on behalf of petitioners that their given addresses as appearing in the arbitral award are not correct and hence, simply because the notices sent to them by Ld. Sole Arbitrator at the said addresses are shown to have been received back undelivered on some subsequent occasions, it cannot be said that they were not existing at the said addresses at the time when the above speed post process carrying a copy of OMP (COMM) No. :- 5/2024 20/27 DLCT010002922024 the award was or might have tendered for service or delivery at these addresses.
27. Moreover, the postal tracking report available in arbitral record also reflects that on one such occasion, the petitioner no. 2 herein was duly served with notice of the arbitration proceedings on date 21.10.2021 through his mother namely Ms. Manju and in view of the said report, the contrary reports regarding non- delivery of the postal process at the same address of petitioner no. 2, or even at the given address of petitioner no. 1, subsequently may be manipulated reports and this inference is strengthened even from the fact that the petitioners themselves have given the same addresses in this petition later on.
28. Now, the next question for consideration of this court is as to when or on which date the above speed post process should be taken to have been delivered at the given addresses of petitioners. Since Section 3 of the above Act is silent on this aspect, the provisions of Section 27 of the General Clauses Act can be helpful in this regard and this Section lays down that if a postal process is properly addressed, prepaid and posted through a registered mode, then its service shall be deemed to have been effected upon the addressee at the time at which the said process would be delivered to him in the ordinary course of post, unless the contrary is proved. As stated above, the above award was sent through a registered and speed post mode and the same was also prepaid and properly addressed and since the process was OMP (COMM) No. :- 5/2024 21/27 DLCT010002922024 dispatched for local addresses of petitioners in Delhi, in normal or ordinary course of post the same should have been delivered in 2/3 days or at the most within a week.
29. However, in terms of decision of the Hon'ble Supreme Court in case Subodh S. Salaskar Vs. Jay Prakash M. Shah and Anr. in Crl. Appeal No. 1190/2008, arising out of SLP (Crl) No. 541/2008 and to be on a safer side, such process at the most can be deemed to have been served upon addressee within a period of 30 days from the date of issuance thereof. The relevant observations made by their lordships in this regard are being reproduced as under:-
23. The complaint petition admittedly was filed on 20.04.2001. The notice having been sent on 17.01.2001, if the presumption of service of notice within a reasonable time is raised, it should be deemed to have been served at best within a period of thirty days from the date of issuance thereof, i.e., 16.02.2001. The accused was required to make payment in terms of the said notice within fifteen days thereafter, i.e., on or about 2.03.2001. The complaint petition, therefore, should have been filed by 2.04.2001.
(emphasis supplied)
30. Coming back to the facts of present case and while applying the prepositions of law laid down by the Hon'ble Supreme Court in case of Subodh S. Salaskar (supra), the above speed post process carrying the impugned award can be deemed to have been served upon petitioners at the most by 19.10.2022. However, the above previous petition under Section 34 of the said Act was admittedly filed by petitioners before the OMP (COMM) No. :- 5/2024 22/27 DLCT010002922024 courts at Dwarka on 05.08.2023. The prescribed period of 3 months in terms of Section 34 (3) of the said Act for filing of the said petition expired on 18.01.2023 and even the further period of 30 days which the court could have extended in terms of proviso to this Section for filing of the said petition expired on 17.02.2023. Hence, the above previous petition bearing OMP No. 52/23 was filed by petitioners after a delay of more than five and half months and the same was apparently time barred. Since the earlier petition was returned back for its presentation before the appropriate court of jurisdiction, this petition has to be treated as the same petition presented before this court afresh as per law and not a fresh petition.
31. Now coming to the question of condonation of delay in filing the above previous petition, it is clear from above discussion that the Ld. Counsel for petitioners has filed an application under Section 5 of the Limitation Act, 1963 seeking condonation of a delay of around 4 days in filing the said petition and this delay has been calculated by him while taking the date of service of impugned award upon petitioners on 13.05.2023, in terms of directions given in the order dated 21.04.2023 passed by the Ld. executing court. However, the above claim of petitioners regarding service of copy of the impugned award upon them on 13.05.2023 has been rejected by this court, as already discussed, and a copy of the said award has been deemed to have been delivered to them by post, at the most, on or by 19.10.2022 and OMP (COMM) No. :- 5/2024 23/27 DLCT010002922024 thus, there is found to be a delay of more than five and half months in filing of the said petition.
32. It is crystal clear on a bare perusal of the provisions contained in Section 34 (3) of the above said Act, as well as the proviso added thereto, that the above period of 3 months and 30 days from the date of receiving of a copy of an arbitral award is the maximum period during which an award can be challenged by a party and it cannot be challenged thereafter. It is also now well settled that this court has no powers under the above Section or even under provisions of the Limitation Act, 1963 to grant any further time to a party to challenge the said award or to extend the above limitation period prescribed by the Arbitration Act as the proviso of Section 34 (3) thereof uses the words "but not thereafter". Ld. Counsel for respondent has rightly referred to and relied upon the judgment of the Hon'ble Supreme Court in case Popular Construction Co (supra) on this aspect, wherein their lordships have made the following observations:-
4. As for as the language of Section 34 of the 1996 Act is concerned, the crucial words are 'but not thereafter' used in the proviso to sub-
section (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the Court could entertain an application to set aside the Award beyond the extended period under the proviso, would render the phrase 'but not thereafter' wholly otiose. No principle of interpretation would justify such a result.
(emphasis supplied) OMP (COMM) No. :- 5/2024 24/27 DLCT010002922024
33. Reference on this aspect can also be made to the judgment of the Hon'ble Supreme Court in case Assam Urban Water Supply & Sew. Board Vs. M/s Subash Projects & Marketing Ltd., 2012 Latest CaseLaw 57 SC, wherein their lordships have made the following observations:-
7. Section 34 (3) of the 1996 Act provides that an application for setting aside an award may be made within three months of the receipt of the arbitral award. The proviso that follows sub-section (3) of Section 34 provides that on sufficient cause being shown, the court may entertain the application for setting aside the award after the period of three months and within a further period of 30 days but not thereafter.
(emphasis supplied)
34. Again, in case of M/s Simplex Infrastructure Ltd. Vs. Union of India, 2018 Latest CaseLaw 907 SC also, the Hon'ble Supreme Court has reiterated the above legal position in following words:-
8. Section 34 of the Arbitration and Conciliation Act, 1996 provides thus:
"34. Application for setting aside arbitral award.-- (1) 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)... (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that 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." Section 34 provides that recourse to a court against an arbitral award may be made only by an application for setting aside such award "in accordance OMP (COMM) No. :- 5/2024 25/27 DLCT010002922024 with" sub-section (2) and sub-section (3). Sub-section (2) relates to the grounds for setting aside an award. An application filed beyond the period mentioned in sub- section 3 of Section 34, would not be an application "in accordance with" that sub-section. By virtue of Section 34 (3), recourse to the court against an arbitral award cannot be beyond the period prescribed. Sub-section (3) of Section 34, read with the proviso, makes it abundantly clear that the application for setting aside the award on one of the grounds mentioned in sub-section (2) will have to be made within a period of three months from the date on which the party making that application receives the arbitral award.
The proviso allows this period to be further extended by another period of thirty days on sufficient cause being shown by the party for filing an application. The intent of the legislature is evinced by the use of the words "but not thereafter" in the proviso. These words make it abundantly clear that as far as the limitation for filing an application for setting aside an arbitral award is concerned, the statutory period prescribed is three months which is extendable by another period of upto thirty days (and no more) subject to the satisfaction of the court that sufficient reasons were provided for the delay.
(emphasis supplied)
35. Further, even in the case of Bhimashankar Sahakar Sakkare Karkhane Niyamita Vs. Walchandnagar Industries Ltd. (WIL), 2023 Latest Caselaw 303 SC, following observations came to be made by the Hon'ble Supreme Court:-
2.1 That, an arbitral award was passed against the appellant under the provisions of the Arbitration Act on 24.08.2016. As per Section 34(3) of the Arbitration Act, 90 days are prescribed for preferring an application under Section 34 of the Arbitration Act against the arbitral award. However, the said period was extendable by a further period of 30 days in terms of the proviso to Section 34 (3) of the Act, 2016. In the present case, the period of 90 days prescribed under Section 34 (3) of the Arbitration Act expired on 24.11.2016. The appellant was entitled to a further extended period of 30 days from 23.11.2016 onwards in terms of the proviso to Section 34 (3) which was upto 24.12.2016.
(emphasis supplied) OMP (COMM) No. :- 5/2024 26/27 DLCT010002922024
36. Hence, in view of the above factual and legal discussion, this petition filed by petitioners under the provisions of Section 34 of the above Arbitration and Conciliation Act, 1996, which has been filed or presented in continuity of the previous petition bearing No. 52/2023, challenging the validity of impugned award dated 08.09.2022 pronounced by the Ld. Sole Arbitrator appointed in this case by respondent herein is held to be barred by limitation and is dismissed as such. Since the petition is held barred by law and is being dismissed on the point of limitation, this court cannot embark on a journey to adjudicate upon merits of the case or the grounds on which the petitioners have challenged the impugned award.
37. Parties are left to bear their own costs. File be consigned to Record Room, after due compliance.
Digitally signed by M K MK NAGPAL
Announced in the open court NAGPAL Date:
2025.07.28
Dated: 28.07.2025 17:05:31 +0530
(M. K. Nagpal)
District Judge, Commercial Court-13
Central District, Tis Hazari Courts,
Delhi/28.07.2025
OMP (COMM) No. :- 5/2024 27/27