Delhi District Court
Ajay Kumar vs Shriram Transport Finance Co Ltd And Anr on 28 February, 2025
IN THE COURT OF MS. PREETI AGRAWAL GUPTA,
DISTRICT JUDGE (COMMERCIAL COURT)-01,
NORTH WEST, ROHINI, NEW DELHI
OMP (COMM) No.11/2024
CNR No.DLNW010025702024
Sh. Ajay Kumar
S/o Bhajan Lal
R/o E-5, Sewak Park
Uttam Nagar,
New Delhi-110059
...Petitioner
Vs
1. M/S Shriram Transport Finance Company Ltd.
Office At: G2, S-4/60,
Second Floor, New Mahavir Nagar
New Delhi -110018
2. Sh. Sukhdev Singh
(sole Arbitrator)
R/O E-104, Jhulelal Apartment
Road No. 44, Pitampura,
New Delhi - 110034
....Respondents
PETITION UNDER SECTION 34 OF THE ARBITRATION
& CONCILIATION ACT, 1996 SEEKING SETTING-ASIDE
THE ARBITRAL AWARD DATED 12.02.2022, IN
ARBITRATION CASE TITLED AS 'M/S SHRI RAM
TRANSPORT FINANCE CO. LTD. VS. AJAY KUMAR &
ANR'.
Date of institution of Petition : 16.03.2024
Date of Assignment to this Court : 18.03.2024
Date on which reserved : 17.02.2025
Date of Judgment : 28.02.2025
OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Page 1/28
Digitally signed
by PREETI
PREETI AGRAWAL
GUPTA
AGRAWAL Date:
GUPTA 2025.02.28
16:49:35
+0530
(PREETI AGRAWAL GUPTA)
District Judge (Commercial Court)-01
North-West/Rohini/New Delhi.
28.02.2025
JUDGMENT
1. By way of this judgment, the present petition Under Section 34 of the Arbitration & Conciliation Act, 1996 (hereinafter called as A & C Act) is being taken up for adjudication, as per law.
2. This petition has been filed on behalf the Petitioner Sh. Ajay Kumar, seeking setting aside of Arbitral Award dated 12.02.2022 passed by Sh. Sukhdev Singh, Ld. Sole Arbitrator, in respect of claim of the respondent namely M/s Shriram Transport Finance Co Ltd and Anr.. By way of the impugned Award, claim of the respondent/Claimant has been allowed.
3. Upon notice of the petition, Counsel for M/s Shriram Transport Finance Co. Ltd./respondent appeared and filed its detailed reply/response to the petition as well as application U/S 36(3) of the A & C Act.
4. The Arbitral Record was summoned and is placed on record. Original Arbitral Record dated 12.02.2022 alongwith arbitral proceedings, have been appreciated.
5. The present petition has been filed on behalf of Petitioner U/S. 34 of the Arbitration & Conciliation Act, 1996, challenging the ex-parte Award passed by Ld. Sole Arbitrator Sh. Sukhdev Singh on 12.02.2022, on various grounds which have been crystalised herein-below:-
Digitally OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. signed by PREETI Page 2/28 PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.02.28 16:49:43 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025
(i) The impugned Award has been passed by Ld. Sole Arbitrator, who was unilaterally appointed by the respondent and hence, not sustainable.
(ii) The impugned Award has been passed in the mechanical manner, on the basis of a standard form of contract and not binding upon the petitioners.
(iii) The intent of initiation of Arbitration was not notified to the Petitioner. The impugned Award has been passed ex-parte, without consent of the Petitioner.
(iv) Ld. Arbitrator failed to comply with the mandatory provisions of Section 31(5) of Arbitration and Conciliation Act by ensuring the delivery/supply of signed copy of Award, complete in all respect, upon the petitioner.
(v) The appointment of Ld. Arbitrator was not made in accordance with the provisions U/S 11 of the Arbitration and conciliation Act, as the consent of petitioner was not taken before appointment of Ld. Arbitrator.
(vi) Petitioner never gave consent for the place of arbitral proceedings as required u/s 20 of the Act.
(vii) Ld. Arbitrator failed to mention/consider that respondent no.1 illegally took the possession of the car/taxi of the petitioner, without seeking any valid interim orders of the Court U/S 9 of the A & C Act and subsequently, sold the same, clandestinely and surreptitiously in auction, without affording the notice of the auction to the petitioner.
(viii) Ld. Arbitrator failed to record reasons for accepting the applicant's known address, without reasonable inquiry under OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Page 3/28 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.02.28 16:49:48 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 Section 3 of the Arbitration and Conciliation Act. All the arbitration proceedings held at the back of the petitioner by Ld. Sole Arbitrator, without sending any notice of proceedings of arbitration to the petitioner or giving any opportunity of being heard, at the instance of respondent no.1.
(ix) The arbitration proceedings are void ab initio, which have been commenced and concluded by Ld. Sole Arbitrator in utmost haste and the impugned Award has been passed by Ld. Arbitrator without considering or even looking at the arbitrability of the dispute referred to him and without examining the arbitration law and condition precedence therein, for the invocation of the said Act.
(x) Ld. Sole Arbitrator is not competent in terms of Section 12(5) of Arbitration and Conciliation Act, 1996 and hence passed the impugned Award, which is bad in the eyes of law. Petitioner never waived his right to object to ineligibility of an arbitrator of arbitrator u/s 12(5) of the Act and there was no express agreement executed between the parties, after the dispute arose.
(xi) The appointment of the Sole Arbitrator violates Section 12 of the Arbitration and Conciliation Act, as the same arbitrator was appointed by Respondent No.1 in many matters (Stock Arbitrator).
(xii) The impugned Award is against public policy, biased, against basic tenets of rules of justice and is unforceable.
(xiii) The signed copy of the Award was not provided by the Arbitral Tribunal/Sole Arbitrator, despite request by the applicant/petitioner on 27.02.2024, after receipt of notice of the OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Digitally signed by Page 4/28 PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.02.28 16:49:55 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 execution petition, for executing the Arbitral Award dated 12.02.2022. The mandatory provision under Section 31(5) of the Arbitration and Conciliation Act, 1996, which mandates providing a signed copy of the award to the applicant/petitioner, has not been complied with and therefore, the impugned Arbitral Award is not binding on the petitioner and is liable to be set aside.
6. The written reply/response was filed on behalf of respondent to the present petition, wherein all the allegations made in the petition have been denied and it is contended that the present petition is not maintainable for setting aside the Award under Section 34 of the Act. The present petition is alleged to be barred by time as per provisions of Section 34(3) of Arbitration and Conciliation Act 1996, whereby objections against any Award can be filed by an aggrieved party within a period of three months from the date of receipt of said Award and extendable to a maximum period of 120 days thereof. It is averred that the Arbitral Award dated 12.02.2022 is a well reasoned Award and is sustainable in the eyes of law. It is further averred that the Arbitral Award is neither against the public policy nor perverse or patently illegal, as claimed in the petition. It is further stated that the arbitration clause was invoked and matter was referred to Ld. Sole Arbitrator, in terms of arbitration clause in Loan cum hypothecation agreement executed between the parties. Respondent No.2, after entering upon the reference, issued notice of appearance dated 09.07.2021 to the petitioner and OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Page 5/28 Digitally signed by PREETI PREETI AGRAWAL GUPTA AGRAWAL Date:
GUPTA 2025.02.28 16:50:01 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 guarantor, Shri Ashok Kumar, via speed post at their last known addresses, for the hearing on 20.08.2021. As the notices were not returned as served or unserved, they were deemed duly served, and the arbitrator proceeded ex-parte against them. After completing the arbitration proceedings, the arbitrator passed and signed the Award on 12.02.2022. A copy of the award was sent to both the petitioner and the guarantor, but despite receiving it, they did not make the payment of the awarded amount to Respondent No.1. It is alleged that the Petitioner has concealed material facts, intentionally avoided to appear before Ld. Arbitrator to delay the proceedings, praying for dismissal of the petition for want of merits.
7. Arguments heard as addressed by both the sides. Arbitral record has been perused. Legal position has been examined. During the course of arguments on behalf of the petitioner, two main grounds that have been assailed for challenging the impugned Award are based on the legal position wherein the very appointment of the Sole Arbitrator has been challenged. Besides other objections on merits of the case, legal objection as to the impugned Award being unsustainable has been raised as being against public policy and principles of natural justice. As per the respondent, the main thrust during arguments, was on the point of maintainability of the present petition, in view of the provisions U/S 34(3) of the Act, raising a legal objection about the very petition U/S 34 of the Act before the Court, as barred by the law of Limitation. It is contended that the OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Page 6/28 Digitally signed by PREETI PREETI AGRAWAL GUPTA AGRAWAL Date:
GUPTA 2025.02.28 16:50:08 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 petitioner lost his legal right to assail the impugned Award dated 12.02.2022, by lapse of legal time.
8. On merits of the Award, Ld. Counsel for Petitioner has challenged the impugned Arbitral Award dated 12.02.2022 with the contentions that the applicant sought a vehicle loan from Respondent No.1 (Shriram Transport Finance Company Ltd.) in 2015 for a 'Honda Amaze' and entered into a loan agreement. The applicant took a loan of Rs.5,34,000/- with interest @ 9.43% p.a., totaling Rs.7,35,000/-, repayable in 47 EMIs of Rs.15,200/- each. After initially making regular payments, financial difficulties in 2017 led to some defaults, but the petitioner cleared dues by paying Rs.1,50,000/- on 28.05.2017. In November/December 2018, Respondent No.1 allegedly seized the vehicle, without court Authorization and auctioned it, without informing the applicant or disclosing the sale proceeds. Despite receiving funds from the auction, Respondent No.1 filed a claim of Rs.14,01,244/- with interest @ 24% p.a., on 07.06.2021. The Sole Arbitrator (Respondent No.2), unilaterally appointed by Respondent No.1, issued an ex-parte award on 12.02.2022, without giving the applicant an opportunity to present his case. The arbitrator also failed to account for the vehicle sale proceeds in the award.
9. It is contended that petitioner never received the copy of impugned Award dated 12.02.2022 and thus, Ld. Arbitrator has not complied with the provisions of Section 31(5) OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Page 7/28 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.02.28 16:50:14 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 of the Arbitration and Conciliation Act, 1996. It is also submitted that the appointment of the ld. Arbitrator was not made in accordance with the provisions u/s 11 of the Arbitration and Conciliation Act, 1996 by respondent no.1 as the consent of the petitioner was not taken before appointment of respondent no.2, and also that the petitioner never gave consent for the place of the arbitral proceedings as required u/s 20 of the Act. Thus, it is contended that the arbitration proceedings have bee held without the knowledge and consent of the applicant since, notice of the arbitration proceedings were never served upon the petitioner, ignoring provisions of Section 12(5) of the Arbitration and Conciliation Act, 1996 and whole proceedings were held, at the instance of respondent no.1. The applicant challenges the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, arguing that the arbitration process was unfair, the appointment of the arbitrator was unilateral and invalid, and the award was arbitrary, biased, and contrary to Indian law and principles of natural justice.
10. The petition has been strongly contested on behalf of the respondent asserting that a well reasoned and legally enforceable Award dated 12.02.2022 has been passed by Ld. Arbitrator, who was appointed as per the binding terms and conditions of the Loan cum Hypothecation Agreement executed between the parties, incorporating an Arbitration Clause. It is contended that the present petition is barred by limitation as the Arbitral Award was passed on 12.02.2022, copy of which, was OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Page 8/28 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.02.28 16:50:19 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 duly sent to the petitioner, by post, immediately. However, the petitioner filed the present petition only in the first week of April 2024 (sic March 2024), which is far beyond the prescribed limitation period of three months from the date of receipt of Award. As no sufficient cause has been shown for the delay, nor has an application for condonation of delay been filed. Even otherwise, the petition has not been filed within the maximum extendable period of 120 days from the date of deemed receipt of the impugned Arbitral Award by the petitioner. It is further contended that respondent No.2 (Sole Arbitrator), after entering upon the reference, issued notice on 09.07.2021 to the petitioner and guarantor, Shri Ashok Kumar, via speed post at their last known addresses for the hearing on 20.08.2021. As the notices were not returned as served or unserved, they were deemed duly served, and the arbitrator proceeded ex-parte against them, when the petitioner deliberately failed to participate in the arbitration proceedings, despite Notice. It is contended that a copy of the Award was sent to both, the petitioner and the guarantor, but despite receiving it, they did not comply for payment nor filed any challenge to the impugned Award, as per law. It is contended that the vehicle in question was repossessed as per law and was duly accounted for in the claim filed by the petitioner before the Ld. Arbitrator. It has been contended that the Petitioners failed to raise any objection, during the arbitration proceedings and have thus, waived their right to challenge the appointment of the Sole Arbitrator. It is contended that a valid and enforceable Award dated 12.02.2022 was passed by Ld. Sole Arbitrator / respondent OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Page 9/28 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.02.28 16:50:25 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 no.2 and that the petition be dismissed, as time-barred and on merits.
11. The Court has appreciated vehement arguments on behalf of respective Counsels and has perused and briefly reproduced herein-above the averments and pleadings before the Court. The Statutory provisions have also been considered. During course of arguments, numerous Authorities have been relied upon by Ld. Counsels, which have also been appreciated as per the facts and circumstances of this case.
12. In the peculiar facts of the case, the impugned Award dated 12.02.2022 has been passed by a Sole Arbitrator, after the claimant/respondent no.1 nominated the Sole Arbitrator, which was accepted. Allegedly, upon notice of arbitration, the Petitioner, who is respondent before the Arbitrator, did not appear, was proceeded ex-parte and the claimant filed its Statement of Claim, affidavit of evidence. The Arbitrator proceedings were concluded after final hearing, leading to passing of the impugned Award dated 12.02.2022. By way of the said Arbitral Award, respondent no.1 herein as claimant, sought recovery on outstanding dues computed in respect of Car Loan Facility availed by the Petitioner herein, from the respondent. The claim was deemed proved by the Ld. Arbitrator, who passed the impugned Award dated 12.02.2022, as per the Claim, alongwith interest and costs.
Digitally OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. signed by PREETI Page 10/28 PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.02.28 16:50:31 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025
13. The present petition has been filed by the Petitioner raising objections on several grounds, as crystalised in the foregoing Para 5 herein-above. It is contended in support of the petition that the Petitioner did not receive any Notice of Invocation/ information of appointment of Sole Arbitrator, vide letter dated 28.06.2021. Having no notice of the Arbitral proceedings, the Petitioner never appeared before the Ld.Sole Arbitrator, to either consent to the unilateral appointment of the Sole Arbitrator or to defend the claim, whatsoever. It is further case contended vehemently that the appointment as Sole Arbitrator, unilaterally and without consent of the Petitioner, is bad in the eyes of law and violative of principles of natural justice and therefore, any Award or Order dated 12.02.2022, passed by the Sole Arbitrator, in disregard of law, is bad in the eyes of law and liable to be set-aside. On the other hand, the filing of the present petition U/S 34 of Arbitration and Conciliation Act, 1996 by the petitioner/principal borrower, has been objected to on the aspect of lapse of time, in terms of provisions U/S 34 (3) of the Act stating that the Award dated 12.02.2022 was duly desptached to the petitioner by the Arbitral Tribunal vide postal receipt dated 13.05.2022 and deemed served upon the petitioner. It has been contended that even if sufficient cause is shown by the petitioner for delayed filing of the petition beyond the period of three moths during the date of receipt of the arbitral Award, the maximum extendable period as per law, is 30 days, but not thereafter. It has been strongly objected that the petition fails on the legal ground alone. Submitting contentions OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Digitally Page 11/28 signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.02.28 16:50:37 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 on the merits of the petition, it is stated that a well reasoned Award has been passed by the Arbitrator on actual facts of the present case, as per law and that the petitioner himself deliberately did not participate in the arbitral proceedings despite Notice and is accordingly, liable to pay, as per the Award, praying for dismissal of the present petition.
14. Considered. Arbitral proceedings have been perused to show that Claimant (Respondent) sent Notice of Invocation/appointment of Arbitrator 28.06.2021 invoking the arbitration clause to Mr. Sukhdev Singh (Ld. Sole Arbitrator -
handed over personally by AR of the petitioner), with copy allegedly sent to respondent (Petitioner herein) through speed port, appointing thereby Mr. Sukhdev Singh as Sole Arbitrator to decide the dispute. Further notice of appearance dated 09.09.2021 was sent to petitioner, for 20.08.2021. As per the case of the Petitioner, the said notices were never delivered to him, before or after the claim petition was entertained by the Sole Arbitrator. It is admitted case of respondent no.1 that as the notices were not returned as served or unserved, they were deemed duly served, and the arbitrator proceeded ex-parte against them. Perusal of the Arbitral record reflects a postal receipt dated 13.05.2022 in favour of Sh. Ashok Kumar, purportedly comprising of the copy of the Arbitral Award for its onward delivery to the said respondent. However, there is no postal receipt on record to show the alleged delivery of the Award in question to the petitioner namely Sh. Ajay Kumar, who was the OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Digitally signed by PREETI Page 12/28 PREETI AGRAWAL GUPTA AGRAWAL Date:
GUPTA 2025.02.28 16:50:44 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 Principal Borrower. It is otherwise, the case put forth by the petitioner that even the notices if any issued to the petitioner by the Arbitrator were without any application of mind, as regards the correctness of address of the respondent, who is petitioner herein. No postal service report (Tracking Report) has been filed or is available on record to support the contention of respondent no.1, with regard to due service upon petitioner in respect of the Notice of Invocation, Notice of the commencement of the Award allegedly issued by the Arbitrator for appearance during Arbitration or in respect of the service of the Arbitral Award dated 12.02.2022 upon the petitioner. As per the Arbitral proceedings, respondent never appeared to participate in the arbitration proceedings and was proceeded ex-parte by the Ld. Arbitrator.
15. It is worth mentioning that during the arbitral proceedings, on the initial date of hearing on 20.08.2021 itself, petitioner was proceeded with ex-parte. It is not out of mention that petitioner has vehemently denied the service of invocation notice or notice of arbitration proceedings or supply of signed copy of Award dated 12.02.2022. It is case of the respondent that petitioner was duly served with the notice of invocation/appointment of Arbitrator and further notice of arbitration proceedings, at his last known address available with respondent no.1 through speed post. It is also pertinent to mention that it is admitted case of respondent no.1 that as the notices were not returned, as served or unserved, they were Digitally OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. signed by PREETI Page 13/28 PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.02.28 16:51:30 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 deemed duly served, and the arbitrator proceeded ex-parte against them. Respondent no.1 has failed to file any postal service report, on record, to support the contention of respondent no.1, with regard to due service of the Invocation notice, notice of appearance or supply of Award dated 12.02.2022, upon petitioner, which is vehemently contested by the petitioner. It has been specifically observed that even the postal receipt annexed in respect of alleged despatch of the copy of the impugned Award to the non-claimant/respondent, even no proof of despatch by way of postal receipt (postal service report/Tracking Report) is available in the Arbitral Record to show that the copy of the Award was delivered to the petitioner. As per the case of the petitioner, he got knowledge about the impugned Award dated 12.02.2022 after issuance of warrants of attachment in the execution petition filed on behalf of respondent no.1 before the Ld. District Judge (Commercial) Dwarka Court and that the said information of issuance of warrants of attachment against the petitioner, was received on 27.01.2024. The present petition was filed on 16.03.2024 and taken up before the Court on 18.03.2024 for the first time.
16. The Court shall first examine the aspect of Limitation applicable to filing of a Petition U/S 34 of Arbitration and Conciliation Act, 1996, as applicable to the facts of the present case. Legal objections have been raised on behalf of the respondent no.1 to the maintainability of the petition on the ground that the petition is hopelessly time-barred, placing Digitally signed OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. PREETI by PREETI AGRAWAL Page 14/28 AGRAWAL GUPTA Date:
GUPTA 2025.02.28 16:51:36 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 reliance on the pronouncements of Hon'ble High Court of Delhi in 'Union of India Versus M/s Mittal Steels', passed on 20.08.2008 in FAO No.241 of 2008, wherein the Hon'ble Court while passing the judgment, has held as under:-
"The limitation period for filing objections to an arbitral award is provided in Section 34(3) of the Arbitration and Conciliation Act, 1996 (in short called 'the Act of 1996'). This is how it runs:-
"34(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."
The same view has been taken by the Hon'ble Apex Court in case titled as 'Union of India Versus Popular Construction Co.', decided on 05.10.2001 in Appeal (Civil) No.6997 of 2001, wherein it has been held in the following terms:-
"As far 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 OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Page 15/28 Digitally signed by PREETI PREETI AGRAWAL GUPTA AGRAWAL Date:
GUPTA 2025.02.28 16:51:44 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 render the phrase, but not thereafter, wholly otiose.
No principle of interpretation would justify such a result."
Similar view has been taken by the Hon'ble Delhi High Court in case titled as 'Ahluwalia Contracts (India) Ltd. Versus Housing & Urban Development', decided on 04.04.2016 passed in O.M.P. No.1122 of 2013 & I.A. No.18319/2013.
17. It is contended that as per the provisions of Section 34(3) of the Arbitration & Conciliation Act, 1996, objections against any award can be filed by an aggrieved party within a period of three months from the date of receipt of the said award and in case for any reason, the said objections could not be filed within the said period of 90 days, in that event, the said party can file the same within a period of 120 days from the date of receipt of the said award but that too by seeking the permission of the Hon'ble Court thereby showing sufficient cause for not filing the same within the statutory period. It is contended on behalf of respondent no.1 that delay in filing the present objection petition is hopelessly time-barred and prayed that the present petition be dismissed with costs.
18. The petitioner has claimed that the duly signed copy of the impugned Award was never delivered by the Arbitral Tribunal/Sole Arbitrator upon the petitioner, contending that the Limitation envisaged under Section 31(5) of the Arbitration Act, did not commence to operate against the petitioner, at any point of time or even till date. As per law, there is mandatory provision OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Digitally signed Page 16/28 by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.02.28 16:51:49 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 which have to be complied by Arbitral Tribunal after completing the Arbitral proceeding according to Section 31(5) of Arbitration Act, which cast a mandatory duty upon the arbitral tribunal that "after the arbitral award is made, a signed copy shall be delivered to each party". But in the present case, it is alleged that Ld. Sole arbitrator (respondent no.2) has not fulfilled the duty cast upon him u/s 31(5) of the Act, till the filing of the application under section 34 of Arbitration Act.
19. It is well settled principal of law, after examining the statutory provisions and the binding landmark judgment that, the Limitation period for filing the present application under Section 34 Arbitration and Conciliation Act is three months from receiving of the signed copy of Arbitral Award, from the Arbitral Tribunal. In the present case, it is contended for the petitioner that he never received any signed copy of the impugned Arbitral Award and that respondent no1 in connivance of respondent no.2, has filed an execution petition against the appellant, on the basis of the impugned Award.
20. It is also the case of the petitioner that despite request by the applicant/petitioner to the Sole Arbitrator, who was the Arbitral Tribunal in the present case, made on 27.02.2024, the Arbitral Tribunal/sole Arbitrator expressed his inability to make available the signed copy of the Award for want of records in his possession. It has been asserted that the knowledge of the impugned Award was gained by the petitioner OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Digitally signed by Page 17/28 PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.02.28 16:51:55 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 only after receipt of warrants of attachment in the execution petition filed by respondent no.1 herein, on the basis of impugned Arbitral Award. It has been prayed that the limitation as envisaged U/S 31(5) of the Act has not come into play for want of supply of the copy of the arbitral Award, by the Arbitrator.
21. The cause of action for filing the petition under Section 34 of the Arbitration and Conciliation Act, 1996, is claimed in favour of the petitioner as Respondent No. 2 (sole arbitrator) failed to comply with the mandatory requirement under Section 31(5) of the Act to provide the applicant with a signed copy of the Arbitral Award, which the respondent No. 2 has failed to provide/deliver till date. However, meanwhile, Respondent No. 1 has filed an execution petition against the applicant to enforce/execute the Arbitral Award dated 12.02.2022.
22. The Court has carefully considered the material record and the contentions raised on the aspect of limitation to the present petition. It is well settled principal of law as laid down in numerous authorities following the view taken by Hon'ble Apex Court in 'Union of India Versus Popular Construction Co.' (Supra), holding that by virtue of provisions U/S 34(3) of the Arbitration and Conciliation Act, limitation period of filing objection to an Arbitral Award provides for a limitation of three months from the date on which the parties making that application/petition had received the Arbitral Award.
OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Page 18/28
Digitally
signed by
PREETI
PREETI AGRAWAL
AGRAWAL GUPTA
GUPTA Date:
2025.02.28
16:52:01
+0530
(PREETI AGRAWAL GUPTA)
District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 It is the statutory as well as law laid down by precedence and forms the binding law of the land that the Court, on its satisfaction of sufficient cause, may extend the said period of three months to entertain the petition within a further period of 30 days but not thereafter in terms of Section 34(3) of the Act. As per law, there is no other interpretation or extension of limitation that can be extended for entertaining the petition U/S 34 of the Act, beyond the maximum stipulated period of 120 days from the date of receipt of the Arbitral Award, by the party challenging the Award.
23. The Court shall now examine the legal position for determination of 'effective date' on which the petitioner was delivered and received the Arbitral Award for the purpose of commencement of the period of limitation within the meaning of sub-section 3 of Section 34 of the Act, in the present case.
Sub-sections (1) and (3) of Section 34 are relevant for our purpose and are reproduced hereunder:
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).
xxx xxx xxx xxx (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 OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Digitally signed by Page 19/28 PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.02.28 16:52:09 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."
The Hon'ble Supreme Court of India in 'Union of India Vs. Tecco Trichy Engineers & Contractors', (2005) 4 SCC 239, observed as under:
"Taking a final decision would be possible only if the subject matter of challenge namely, the arbitral award is known to the Departmental Head, who is directly concerned with the subject matter as well as arbitral proceedings. In the large organizations like Railways, "party" as referred to in Section 2(h) read with Section 34(3) of the Act has to be construed to be a person directly connected with and involved in the proceedings and who is in control of the proceedings before the Arbitrator. The delivery of an arbitral award under sub-Section (5) of Section 31 is not a matter of mere formality. It is a matter of substance. It is only after the stage under Section 31 has passed that the stage of termination of arbitral proceedings within the meaning of Section 32 of the Act arises. The delivery of arbitral award to the party, to be effective, has to be "received"
by the party. This delivery by the arbitral tribunal and receipt by the party of the award sets in motion several periods of limitation such as an application for correction and interpretation of an award within 30 days under Section 33(1), an application for making an additional award under Section 33(4) and an application for setting aside an award under Section 34(3) and so on. As this delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry of the prescribed period of limitation which would be calculated from that date, the delivery of the copy of award by the tribunal and the receipt thereof by each party constitutes an important stage in the arbitral proceedings."
24. This view of Hon'ble Apex Court has been reaffirmed by Hon'ble Supreme Court of India in 'State of Maharashtra v. Ark Builders (P) Ltd.', (2011) 4 SCC OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Page 20/28 Digitally signed by PREETI PREETI AGRAWAL GUPTA AGRAWAL Date:
GUPTA 2025.02.28 16:52:17 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025
616. After considering the widely developed position of various earlier pronouncements of the Hon'ble Apex Court itself and various Hon'ble High Courts, the Hon'ble Supreme Court reaffirmed its earlier view in Union of India Vs. Tecco Trichy Engineers & Contractors(Supra) and laid down as under:
"....the period of limitation prescribed under section 34(3) of the Act would start running only from the date a signed copy of the award is delivered to/received by the party making the application for setting it aside under section 34(1) of the Act. The legal position on the issue may be stated thus. If the law prescribes that a copy of the order/award is to be communicated, delivered, dispatched, forwarded, rendered or sent to the parties concerned in a particular way and in case the law also sets a period of limitation for challenging the order/award in question by the aggrieved party, then the period of limitation can only commence from the date on which the order/award was received by the party concerned in the manner prescribed by the law."
25. The legal position has been further fortified by Hon'ble Apex Court in 'Dakshin Haryana Bijli Vitran Nigam Limited Vs.Navigant Technologies Pvt. Ltd.' Civil Appeal No.791 of 2021, dated 02.03.2021, after considering the development on the aspect of commencement of Limitation U/S 34(3) of the Act and was pleased to consider its own earlier judgment, as discussed herein-above and held as under :-
"28. In union of India v. Tecco trichy engineers &contractors [union of India v. Tecco trichy engineers& contractors, (2005) 4 scc 239], a three- judge bench of this court held that the period of limitation for filing an application under section 34 would commence only after a valid delivery of the Digitally OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. signed by PREETI Page 21/28 PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.02.28 16:52:24 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 award takes place under section 31(5) of the act. It was held as under: (SCC p. 243, para 8)
29. The judgment in Tecco Trichy Engineers [Union of IndiaV. Tecco Trichy Engineers & Contractors, (2005) 4 SCC 239] was followed in State of Maharashtra v. Ark Builders (P) Ltd. [State of Maharashtra v. Ark Builders (P) Ltd., (2011) 4 SCC 616: (2011) 2 SCC (civ) 413], wherein this court held that section 31(1) obliges the members of the arbitral tribunal to make the award in writing and sign it. The legal requirement under sub-section (5) of section 31 is the delivery of a copy of the award signed by the members of the arbitral tribunal/arbitrator, and not any copy of the award. On a harmonious construction of section 31(5) read with section 34(3),the period of limitation prescribed for filing objections would commence only from the date when the signed copy of the award is delivered to the party making the application for setting aside the award. If the law prescribes that a copy of the award is to be communicated, delivered, dispatched, forwarded, rendered, or sent to the parties concerned in a particular way, and since the law sets a period of limitation for challenging the award in question by the aggrieved party, then the period of limitation can only commence from the date on which the award was received by the party concerned in the manner prescribed by law.
26. Now the facts of the present case have been considered herein-above and are re-appreciated to observe that there is absence of any substantial material in the Arbitral record to show that the mandatory provisions U/S 31(3) of the Act were complied with by the Arbitrator. It is the legal position that delivery of a Arbitral Award U/S 31(5) of the Act is not a mere formality and even the mere despatch of the Arbitral Award to the party to he effective, has to be 'received by the party'. There is nothing on record to even show the despatch or delivery of the Digitally OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Page 22/28 signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.02.28 16:52:30 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 Arbitral Award in favour of the petitioner. The only postal receipt that has been reflected from record pertaining to the alleged despatch of the Arbitral Award, is against the other respondent, who is stated to have been impleaded during the Arbitral proceedings as the guarantor of the subject matter of loan, from which the dispute has arisen. Even for the sake of arguments, there is no postal receipt of despatch, as per record of the Arbitral proceedings, of the Arbitral Award in favour of the petitioner.
The petitioner has outrightly denied receipt of even the Invocation Notice, notice of the Arbitral proceedings, on the ground that the Arbitrator never satisfied itself about the correctness of the address of the respondent given by the claimant therein. It has also been asserted, without substantiating any letter or document on behalf of the petitioner that he approached the sole Arbitrator for receiving the copy of the Award which was not provided to him, for want of availability by the said Sole Arbitrator. For the purpose of commencement of period of limitation U/S 34(3) of the Act, the petitioner has outrightly denied receipt of signed copy of the Arbitral Award or for that matter, any copy of the Award, prior to it having received the warrants of attachment, pursuant the execution petition filed by respondent no.1 herein. It is further averred that even at the request of the petitioner to Ld. Sole Arbitrator, he expressed his in-ability to provide copy of Award, after the petitioner came to know about the impugned Award having been passed, for which an execution was filed against him. There is nothing on record to establish the delivery of the impugned Award by the Arbitral OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Page 23/28 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.02.28 16:52:35 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 Tribunal upon the petitioner and receipt of the Award by the petitioner, to set the period of limitation U/S 34(3) of the Act, in motion. As per law, there is no Bar of limitation to file the present petition, which is now being examined on merits of the petition, as hereinafter.
27. On merits of the petition, the petition U/S 34 of the Act, has been filed on behalf of petitioner against the impugned Arbitral Award dated 12.02.2022. The locus of the petitioner in the dispute is as a principal borrower against the auto loan sanctioned by the respondent no.1 herein. The admitted facts are that an Arbitral Award dated 12.02.2022 has been passed pursuant to the Invocation of the Arbitration Agreement by the respondent. The Sole Arbitrator has passed an ex-parte Award dated 12.02.2022, purportedly on merits of the claim filed by the respondent herein, before the Arbitrator. The present petition has been filed on behalf of the non-applicant/petitioner U/S 34 of Arbitration and Conciliation Act 1996, on various grounds which have been detailed herein-before vide para-5 of this judgment. Besides several grounds raised by the petitioner challenging the impugned Award, the prime most challenge to the impugned Award has been raised on the ground that the impugned Award has been passed by the sole Arbitrator who was unilaterally appointed by the respondent, without knowledge or consent of the petitioner and that the very appointment of the Arbitrator violates Section 12(5) of the Arbitration and Conciliation Act 1996. It is prayed by way of the petition that the impugned Award OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Digitally signed by PREETI Page 24/28 PREETI AGRAWAL GUPTA AGRAWAL Date:
GUPTA 2025.02.28 16:52:43 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 be declared non-est in the eyes of law, being against public policy and basic principal of natural justice.
28. It shall be now relevant to examine the well settled legal position, in regard to the scope of interference by the Court as per Section 34 of the Arbitration and Conciliation Act. The relevant statutory provisions which empowers the Petitioner to take recourse to a Court against the Arbitral Award, has been provided under Sub-sections (1) and (2) of Section 34, as amended by the Arbitration and Conciliation (Amendment) Act, 2019. This Court has to exercise its judicial discretion in the backdrop of the Statutory Law provided under Section 34 of the Act, by way of well settled judicial pronouncements and landmark judgements of Hon'ble Superior Courts.
29. The numerous landmark binding judgments in "Perkins Eastman Architects DPC & Anr. Vs. HSCC (India) Ltd." reported in [2019] 17 S.C.R. 275 and "Bharat Broadband Network Limited Vs. United Telecoms Limited" reported in [2019] 6 S.C.R 97, have laid down resonating legal position to hold that a unilaterally appointed arbirator is de jure ineligible to perform his functions and that his mandate is automatically terminated under Section 14(1)((a) of the Act. It has been further laid down that the ineligibility of the Sole Arbitrator, who has been unilaterally appointed by the claimant, as contained in Section 12(5) of Act, can be cured only through an express waiver.
OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Digitally signed by Page 25/28 PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.02.28 16:52:49 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025
30. In this respect, Hon'ble High Court of Delhi has been further pleased to consider and lay down the binding law in EFA(COMM) 2/2023 CM APPL. 25636/2023, CM APPL. 25637/2023, CM APPL. 25638/2023, CM APPL. 25639/2023 & CM APPL. 25635/2023, in case titled 'SBI Card and Payment Services Limited. Vs. Narendra Kumar Prajapat' vide orders dated 17.05.2023. Hon'ble High Court of Delhi has been pleased to hold that an Award rendered by an Arbitrator, who is ineligible to act as an Arbitrator by virtue of Section 12(5) of the 'Act' is a nullity and, therefore, cannot be enforced. The finding of the Hon'ble High Court of Delhi have been fortified by Hon'ble Apex Court in Special Leave Petition (Civil) Diary No(s). 47322/2023, vide orders dated 12.12.2023, and is accordingly, the law of the land.
31. The legal position has been now nailed and well settled by the recent pronouncement by five Judge's Constitution Bench of Hon'ble Apex Court in case titled 'Central Organisation of Railway Electrification Vs. M/s ECI SPIC SMO MCML (JV)' in Civil Appeal Nos.9486-9487 of 2019, dated 08.11.2024. The Hon'ble Apex Court, by majority view, was seized of the matter pertaining to a Government Agency wherein the arbitration proceedings involved three member tribunal. The Hon'ble Apex Court duly considered the Reference after appreciating the adequate safeguards provided within the OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Page 26/28 Digitally signed by PREETI PREETI AGRAWAL GUPTA AGRAWAL Date:
GUPTA 2025.02.28 16:52:54 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 Arbitration Act to ensure a level playing field between the disputing parties, having commercial conflict of interests which needs to be adjudicated by a mutual forum. The Hon'ble Supreme Court gave the following authoritative and binding conclusion as under:-
"VII. Neither public policy considerations under the Contract Act or the Arbitration Act restrain the parties to the arbitration from maintaining a panel of arbitrators in any manner. However, arbitration agreements enabling one of the parties to unilaterally constitute arbitral tribunal do not inspire confidence of independence and may violate the public policy requirement of constituting an independent and impartial tribunal. The Court will, therefore, scrutinise the agreement and hold them to be invalid if it considers it appropriate."
32. In the present case, the impugned award dated 12.02.2022, was passed by a Sole Arbitrator, who was unilaterally appointed by way of letter of Invocation dated 28.06.2021, issued by respondent no.1 as Claimant. The very appointment of the Sole Arbitrator suffers from a permanent and indelible mark of bias and prejudice and as per Law, such a unilaterally appointed Arbitrator cannot be deemed to be an unbiased, neutral and independent arbitral tribunal. Furthermore, it is matter of record that the Petitioner, who was respondent in the Arbitration proceedings, did not ever issued any Letter of Consent in favour of the Arbitrator and accordingly, there is absence of any express waiver as contemplated by Section 12(5) of the Act, to lend any legal sanctity to the Arbitral proceedings, that took placed before the Ld. Sole Arbitrator, who has been OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Digitally Page 27/28 signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.02.28 16:53:00 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 unilaterally appointed by the Claimant, without consent of the Petitioner. Therefore, the Sole Arbitrator, as the adjudicating Arbitral Tribunal lacks inherent jurisdiction and competence to adjudicate the disputes in hand, and thus, the impugned award is an unenforceable award and a nullity.
33. Accordingly, this Court is satisfied that the Award dated 12.02.2022 passed by Ld. Arbitrator is unenforceable, void ab initio and non-est in the eyes of law and cannot be sustained and is therefore, set aside.
Parties to bear their own cost.
Petition stands disposed of accordingly. File be consigned to Record R oom.
Announced in the open Court today
on this 28th day of February, 2025 PREETI Digitally signed
by PREETI
AGRAWAL
AGRAWAL GUPTA
Date:
GUPTA 2025.02.28
16:53:09 +0530
(PREETI AGRAWAL GUPTA)
District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025 OMP (Comm.) 11/2024 Ajay Kumar. Vs. Shriram Transport Finance Co. Ltd. Page 28/28 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.02.2025