2022 (4) TMI 1600 - SC - Indian Laws

Arbitral award challenge dismissed after 337-day delay under Section 37 - government bound by limitation law

The SC dismissed a special leave petition challenging an arbitral award where the appeal was rejected due to 337 days delay in filing under Section 37 of ... Validity of Arbitral Award - appeal dismissed solely on the ground of delay - sufficient cause for delay or not - HELD THAT:- The explanation as given in the affidavit in support of the application for condonation of delay filed by the Petitioners in the High Court does not make out sufficient cause for condonation of the inordinate delay of 337 days in filing the appeal Under Section 37 of the Arbitration and Conciliation Act. The law of limitation binds everybody including the Government. The usual explanation of red tapism, pushing of files and the rigmarole of procedures cannot be accepted as sufficient cause. The Government Departments are under an obligation to exercise due diligence to ensure that their right to initiate legal proceedings is not extinguished by operation of the law of limitation. A different yardstick for condonation of delay cannot be laid down because the government is involved. The right of appeal is a statutory right, subject to the laws of limitation. The law of limitation is valid substantive law, which extinguishes the right to sue, and/or the right to appeal. Once an appeal is found to be barred by limitation, there can be no question of any obligation of the Court to consider the merits of the case of the Appellant - When consideration of an appeal on merits is pitted against the rejection of a meritorious claim on the technical ground of the bar of limitation, the Courts lean towards consideration on merits by adopting a liberal approach towards 'sufficient cause' to condone the delay. The Court considering an application Under Section 5 of the Limitation Act may also look into the prima facie merits of an appeal. This Court is, however, not inclined to entertain this Special Leave Petition since the Petitioners have failed to show sufficient cause for the condonation of the inordinate delay of 337 days in filing the Appeal in the High Court. Moreover, there are no grounds for interference with the arbitral award impugned. The impugned judgment and order of the High Court need not be interfered - SLP dismissed. Issues Involved:1. Rejection of Arbitration Award Challenge2. Delay in Filing Appeal3. Condonation of Delay and Government Procedures4. Merits of the Case and Public InterestIssue-wise Detailed Analysis:1. Rejection of Arbitration Award Challenge:The Petitioners challenged an arbitral award dated 17th April 2010 under Section 34 of the Arbitration and Conciliation Act, 1996. The Arbitral Tribunal, composed of a former High Court judge, had awarded the Respondent Rs. 40,61,264/-. The District Judge, Agra, dismissed this challenge on 26th April 2018. The arbitral award was found to be well-reasoned, with the Arbitrator addressing each issue comprehensively. The Tribunal found that the contract allowed for additional work payments and that the Petitioner State had failed to cooperate in the timely completion of the project. The Tribunal also rejected the State's claim that payments were contingent on fund availability, deeming the final bill produced by the State unreliable.2. Delay in Filing Appeal:The Petitioners filed an appeal under Section 37 of the Arbitration and Conciliation Act on 9th July 2019, 337 days beyond the limitation period. They sought condonation of delay under Section 5 of the Limitation Act, 1963, citing procedural formalities and internal communications within the Public Works Department as reasons for the delay. The High Court dismissed the appeal, noting that the limitation period had expired well before the appeal was filed.3. Condonation of Delay and Government Procedures:The High Court found the reasons provided by the Petitioners insufficient to condone the delay. The affidavit detailed internal communications and procedural steps taken within the Public Works Department but failed to demonstrate due diligence or a bona fide reason for the delay. The Court emphasized that government departments are not exempt from the law of limitation and must exercise due diligence to avoid extinguishing their right to legal proceedings. The usual bureaucratic delays and red-tapism were not accepted as sufficient cause.4. Merits of the Case and Public Interest:The Petitioners argued that the dismissal of their appeal on grounds of delay, without considering the merits, resulted in unjust enrichment of the Respondent. They contended that the case involved substantial public money and should have been examined on its merits. However, the Supreme Court reiterated that the right to appeal is subject to statutory limitations and that the law of limitation extinguishes the right to sue or appeal once the period expires. The Court noted that while a liberal approach might be adopted in some cases, the Petitioners failed to show a strong prima facie case or plausible cause for the delay.Conclusion:The Supreme Court dismissed the Special Leave Petition, agreeing with the High Court's decision that the delay in filing the appeal was inordinate and not justifiable. The Court held that the Petitioners did not provide sufficient cause for the delay and that there were no grounds for interference with the arbitral award. The dismissal was based on the procedural lapse and not on the merits of the case, underscoring the importance of adhering to statutory limitations.