2010 (4) TMI 595 - SC - Companies Law

Court denies post-limitation amendment introducing new grounds in appeal; emphasizes originality & justice.

The High Court dismissed the appeal, refusing to permit an amendment in the memorandum of appeal to introduce entirely new grounds after the limitation ... Whether in an appeal under section 37 of the Arbitration and Conciliation Act, 1996 from an order refusing to set aside the award, an amendment in the memorandum of appeal to raise additional/new grounds can be permitted? Whether the High Court committed any error in rejecting the appellant's application for addition of new grounds in the memorandum of arbitration appeal? Held that:- Appeal dismissed. As in the application for setting aside the award, appellant set up only five grounds, viz., waiver, acquiescence, delay, laches and res judicata. The grounds sought to be added in the memorandum of arbitration appeal by way of amendment are absolutely new grounds for which there is no foundation in the application for setting aside the award. Obviously, such new grounds containing new material/facts could not have been introduced for the first time in an appeal when, admittedly, these grounds were not originally raised in the arbitration petition for setting aside the award. Moreover, no prayer was made by the appellant for amendment in the petition under section 34 before the concerned court or at the appellate stage. Thus the grounds of appeal which are now sought to be advanced were not originally raised in the arbitration petition and that the amendment that is sought to be effected is not even to the grounds contained in the application under section 34 but to the memo of appeal. In the circumstances, it cannot be said that discretion exercised by learned Single Judge in refusing to grant leave to appellant to amend the memorandum of arbitration appeal suffers from any illegality. Issues Involved:1. Whether an amendment in the memorandum of appeal to raise additional/new grounds can be permitted in an appeal under section 37 of the Arbitration and Conciliation Act, 1996, from an order refusing to set aside the award.Issue-wise Detailed Analysis:1. Permissibility of Amendment in Memorandum of Appeal:The Supreme Court addressed whether an amendment in the memorandum of appeal to raise additional/new grounds can be allowed in an appeal under section 37 of the Arbitration and Conciliation Act, 1996, from an order refusing to set aside the award.Background:- The dispute arose between Hindustan Construction Company Limited (respondent) and the State of Maharashtra (appellant) regarding various claims related to a construction contract.- The arbitral tribunal awarded Rs. 17,81,25,152 to the respondent, with additional interest if unpaid within two months.- The appellant sought to set aside the award under sections 28, 33, and 16 of the 1996 Act, citing grounds such as waiver, acquiescence, delay, laches, and res judicata.- The district judge rejected the application to set aside the award.- The appellant then appealed under section 37 of the 1996 Act and later sought to amend the memorandum of appeal to add new grounds.Arguments by Appellant:- The appellant argued that the grounds/objections in a petition under section 34 are in the nature of pleadings, and amendments should be guided by principles governing amendments to pleadings.- Cited precedents like L.J. Leach and Company Ltd. v. Jardine Skinner and Co. and Jai Jai Ram Manohar Lal v. National Building Material Supply, Gurgaon, which support the view that amendments should be allowed if required in the interest of justice.Arguments by Respondent:- The respondent countered that the time limit prescribed under section 34(3) to challenge an award is absolute and un-extendible.- Cited cases like Union of India v. Popular Construction Co. and Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department, which emphasize the strict time limits for challenging arbitral awards.Court's Analysis:- The court examined whether principles relating to amendment of pleadings apply to amendments in applications for setting aside awards or appeals under section 37.- Referenced Madan Lal v. Sunder Lal and another, which highlighted that objections to an award must be made within the limitation period.- Emphasized that procedural law is intended to facilitate substantive justice, and amendments should be allowed if they can be made without injustice to the other side.- Noted that the appellate court has the power to grant leave to amend the memorandum of appeal, similar to the power to amend pleadings in a suit.Conclusion:- The court concluded that while amendments in applications for setting aside awards or appeals under section 37 should generally not introduce entirely new grounds after the limitation period, amendments that are necessary for the interest of justice and do not amount to a fresh application may be allowed.- In the present case, the new grounds sought to be added were entirely new and had no foundation in the original application for setting aside the award.- The appellant did not seek amendment in the section 34 petition before the concerned court or at the appellate stage.- Therefore, the High Court did not err in rejecting the appellant's application for amendment in the memorandum of arbitration appeal.Judgment:- The appeal was dismissed with no order as to costs.