2025 (9) TMI 1151 - SC - Indian Laws

No condonation of delay for Section 15(2) arbitration petition; technical email-access excuse held inadequate, no exceptional relief under Article 136

Tricolor Hotels Limited Versus Dinesh Jain & Ors.

SC dismissed the special leave petition, upholding the HC's refusal to condone delay in filing a Section 15(2) petition under the Arbitration Act. The HC ... Refusal to condone the delay in filing proceedings under Section 15(2) of the Arbitration and Conciliation Act, 1996 - failure to show any sufficient cause for delay - period of limitation as per Section 15(2) of the Arbitration and Conciliation Act, 1996 - HELD THAT:- The High Court while refusing to condone the delay in filing the petition under Section 15(2) of the Act of 1996 has noted that after the sole arbitrator on 27.07.2015 recused himself and communicated this fact to the parties through his email, the right to apply for appointing a substitute arbitrator accrued. The issuance of the email by the sole arbitrator and its receipt by the parties is not disputed. In the application for condonation of delay filed by the petitioner it has been stated in clear terms that though the sole arbitrator had communicated the order dated 27.07.2015 through email, the petitioner’s counsel could access the email account only in the second week of August, 2015 due to some technical issues. At the same time, the petitioner’s counsel informed the petitioner accordingly. After considering the grounds raised in the application for condonation of delay, the High Court found that no sufficient cause for the delay as occasioned had been furnished by the petitioner. An attempt to get over the aspect of delay was sought to be made by raising a plea of technical glitch of the email account of the petitioner’s lawyer. It found the explanation furnished to be ambiguous and hence was persuaded not to condone the delay. It is found from the impugned order that the High Court has considered the entire matter and was thereafter satisfied that the petitioner had failed to make out any sufficient cause for condoning the delay in filing the petition under Section 15(2) of the Act of 1996. The view as taken cannot be said to be perverse or resulting in manifest injustice for this Court to intervene in exercise of jurisdiction under Article 136 of the Constitution of India. No special circumstances are shown to exist nor do the proceedings raise any issue of sufficient gravity for this Court to undertake a review of the decision appealed against. There are no reason to entertain the Special Leave Petition. It is accordingly dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the delay in filing a petition under Section 15(2) of the Arbitration and Conciliation Act, 1996 (for substitution of an arbitrator) was sufficiently explained so as to justify condonation of delay. 2. When the period of limitation for filing under Section 15(2) accrues - on the date the arbitrator recused himself (communication date) or on the date the applicant actually gained knowledge of that communication. 3. Whether the 30-day period available under Section 11(5) operates (i) from the date of arbitrator's recusal when parties initially nominate an arbitrator, or (ii) is excluded where the arbitrator to be replaced was originally appointed by the Court under Section 11(6), thereby requiring appointment only by Court under Section 15(2). 4. Whether the High Court's refusal to condone delay in the facts constituted a perverse exercise of discretion calling for interference under the supervisory jurisdiction. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Condonation of delay: legal framework Legal framework: Section 15(2) of the Arbitration and Conciliation Act, 1996 permits substitution of an arbitrator and such applications are subject to limitation principles; condonation of delay is governed by the court's discretion under the Limitation Act, 1963 and settled principles on 'sufficient cause.' Precedent treatment: Authorities on what constitutes 'sufficient cause' and condonation of delay were invoked by both sides (including decisions emphasizing diligence and bona fide explanations). The Court did not overrule any precedent but applied settled standards of discretionary review. Interpretation and reasoning: The High Court examined the explanation that the applicant's counsel could access the email communication only in the second week of August 2015 due to a technical glitch. The High Court found the explanation ambiguous and insufficient. The Court accepted the High Court's assessment that the explanation did not constitute sufficient cause, noting the absence of any special circumstance that would make that finding perverse. Ratio vs. Obiter: Ratio - an inadequate, ambiguous explanation of technical or clerical delay does not automatically constitute 'sufficient cause' for condonation; trial court/High Court's evaluation of sufficiency of cause is entitled to deference unless perverse. Conclusion: The refusal to condone delay was justified on facts; no interference warranted. Issue 2 - Accrual of limitation: date of recusal vs. date of actual knowledge Legal framework: Limitation governed by Article 137 of the Limitation Act, 1963 (three years) was referred to; accrual of right to apply arises when the event giving rise to the right occurs, subject to any rule of knowledge where plainly applicable. Precedent treatment: Both sides invoked decisions on accrual and knowledge; the Court observed the general proposition that right to apply accrues when the arbitrator communicates recusal. Interpretation and reasoning: The High Court held that the right to apply for substitution accrued on the date the sole arbitrator recused himself and communicated the recusal (27.07.2015) - issuance and receipt of the email was not disputed. The Court accepted that accrual occurred on that date and that mere later actual access to the communication, absent a convincing explanation, did not delay accrual. The petitioner's contention that limitation should run from actual knowledge was considered but not accepted on the facts because the communication had been sent and received. Ratio vs. Obiter: Ratio - where an arbitrator's recusal is communicated to parties, the right to apply under Section 15(2) accrues on the date of such communication; limitation will ordinarily run from that date unless a compelling, credible reason postpones accrual or justifies condonation. Conclusion: Limitation commenced on the date of recusal/communication; petitioner's later access did not alter accrual absent sufficient cause. Issue 3 - Applicability of the 30-day period under Section 11(5) when the arbitrator to be replaced was court-appointed under Section 11(6) Legal framework: Section 11(5) prescribes a 30-day period for parties to agree on an arbitrator in an agreed appointment process; Section 11(6) allows court appointment where parties do not agree. Section 15(2) deals with substitution. Precedent treatment: The parties relied on earlier cases interpreting the interplay between consensual appointment timelines and court appointments; the Court noted the contention but did not rest its decision on re-shaping those principles. Interpretation and reasoning: The respondents argued that where the arbitrator was appointed by Court under Section 11(6), parties could not re-trigger the 30-day consensual nomination period upon recusal and instead had to apply to Court under Section 15(2). The Court observed this contention was raised but did not make a general pronouncement altering existing law; the decision turned on facts and limitation/condonation rather than resolving the broader legal question definitively. Ratio vs. Obiter: Obiter - the treatment of applicability of the 30-day period where the replaced arbitrator was court-appointed was discussed but not adopted as a binding principle altering prior authorities; no express overruling or firm rule announced. Conclusion: The Court did not disturb the High Court's factual conclusion and did not find it necessary to decide categorically whether the 30-day period applies where original appointment was by Court; the petition failed on sufficiency of cause and limitation grounds. Issue 4 - Interference with High Court's exercise of discretion under supervisory jurisdiction Legal framework: Appellate/special leave jurisdiction permits interference where the lower court's decision is perverse, results in manifest injustice, or involves an error of law of sufficient gravity. Precedent treatment: The Court referred to established principles limiting interference with discretionary judicial decisions on condonation of delay unless the view is perverse or causes manifest injustice. Interpretation and reasoning: The Court examined the High Court's detailed reasoning, the contemporaneous record (email communication), the petitioner's explanation of technical difficulty, and the High Court's evaluation that the explanation was ambiguous. Finding that the High Court had considered the matter and reached a tenable conclusion, the Court held there was no perversity or manifest injustice warranting interference under supervisory jurisdiction. Ratio vs. Obiter: Ratio - appellate interference with the discretionary refusal to condone delay is inappropriate where the lower court has engaged with the facts and reached a non-perverse conclusion about sufficiency of cause. Conclusion: The High Court's refusal to condone delay survives supervisory scrutiny; no interference by the higher court. OVERALL CONCLUSION The Court upheld the High Court's refusal to condone delay in filing the Section 15(2) petition: the right to apply accrued on the date of the arbitrator's communicated recusal; the explanation for delay was found insufficient by the High Court and not shown to be perverse; no special circumstances justified interference; the special leave petition was dismissed.