# CHINTELS INDIA LTD v. BHAYANA BUILDERS PVT. LTD

- **Citation:** [2021] 1 S.C.R. 829
- **Court:** Supreme Court of India
- **Decided:** 2021-02-11
- **Case number:** Civil Appeal No. 4028 of 2020
- **Bench:** R.F. Nariman, Navin Sinha, K.M. Joseph
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/chintels-india-ltd-v-bhayana-builders-pvt-ltd-34802
- **Pages:** 29

## Headnote

Arbitration and Conciliation, 1996 - s. 37(1)(c) and s.34 -
Whether order of the Single Judge of the High Court refusing to
condone the Appellant's delay in filing an application u/s. 34 of the
Arbitration and Conciliation Act, 1996 is an appealable order u/s.
37(1)(c) of the said Act - Held: An appeal u/s. 37(1)(c) of the
Arbitration Act, 1996 would be maintainable against an order
refusing to condone delay in filing an application u/s. 34 of the
Arbitration Act, 1996 to set aside an award.
Arbitration and Conciliation, 1996 - s. 37(1)(c) - Arbitration
Act, 1940 - s.39(1)(vi) - Held: s. 39(1)(vi) of the 1940 Act is in pari
materia to s. 37(1)(c) of the Arbitration Act, 1996 - This was held in
two of the judgments of the Supreme Court i.e. Chief Engineer of
BPDP/REO Ranchi v. Scoot Wilson Kirpatrick India (P.) Ltd. (2006)
13 SCC 622:[2006] 8 Suppl. SCR 836 and Fuerst Day Lawson Ltd.
v. Jindal Exports Ltd. (2011) 8 SCC 333: [2011] 11 SCR 1.
Allowing the appeal, the Court
HELD: Whether order of the Single Judge of the High
Court refusing to condone the Appellant's delay in filing an
application u/s. 34 of the Arbitration and Conciliation Act, 1996
is an appealable order u/s. 37(1)(c) of the said Act ?
1. A reading of section 34(1) of the Arbitration and
Conciliation Act, 1996 would make it clear that an application
made to set aside an award has to be in accordance with both
sub-sections (2) and (3). This would mean that such application
would not only have to be within the limitation period prescribed
by sub-section (3), but would then have to set out grounds under
sub-sections (2) and/or (2A) for setting aside such award. What
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follows from this is that the application itself must be within time,
and if not within a period of three months, must be accompanied
with an application for condonation of delay, provided it is within
a further period of 30 days, this Court having made it clear that
section 5 of the Limitation Act, 1963 does not apply and that any
delay beyond 120 days cannot be condoned - State of Himachal
Pradesh v. Himachal Techno Engineers and Anr. (2010) 12 SCC
210 at paragraph 5. [Para 8][839-G-H; 840-A-B]
2. Now coming to section 37(1)(c) of the 1996 Act. It is
important to note that the expression "setting aside or refusing
to set aside an arbitral award" does not stand by itself. The
expression has to be read with the expression that follows -
"under section 34". Section 34 is not limited to grounds being
made out under section 34(2). Obviously, therefore, a literal
reading of the provision would show that a refusal to set aside an
arbitral award as delay has not been condoned under sub-section
(3) of section 34 would certainly fall within section 37(1)(c). The
aforesaid reasoning is strengthened by the fact that under section
37(2)(a), an appeal lies when a plea referred to in sub-section (2)
or (3) of section 16 is accepted. This would show that the
Legislature, when it wished to refer to part of a section, as
opposed to the entire section, did so. Contrasted with the
language of section 37(1)(c), where the expression "under section
34" refers to the entire section and not to section 34(2) only, the
fact that an arbitral award can be refused to be set aside for refusal
to condone delay under section 34(3) gets further strengthened.
[Para 9][840-B-E]
3. In Essar Constructions, a judgment rendered under
section 39 of the Arbitration Act, 1940 this Court was faced with
the same question as is raised in this appeal. In Essar
Constructions it was held that "the order refusing to condone
the delay in filing the claim petition has the effect of finally
disposing of the original petition. Such an order can, therefore,
be treated as an award and hence it is appealable". [Paras 10 and
12][840-E-F; 841-G-H; 842-A]
4. It will be noticed that so far as the present question is
involved, section 39(1)(vi) of the 1940 Act is in pari materia to
section 37(1)(c) of t

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 [2021] 1 S.C.R. 829
829
CHINTELS INDIA LTD.
v.
BHAYANA BUILDERS PVT. LTD.
(Civil Appeal No. 4028 of 2020)
FEBRUARY 11, 2021
[R.F. NARIMAN, NAVIN SINHA AND K.M. JOSEPH, JJ.]
Arbitration and Conciliation, 1996 - s. 37(1)(c) and s.34 -
Whether order of the Single Judge of the High Court refusing to
condone the Appellant's delay in filing an application u/s. 34 of the
Arbitration and Conciliation Act, 1996 is an appealable order u/s.
37(1)(c) of the said Act - Held: An appeal u/s. 37(1)(c) of the
Arbitration Act, 1996 would be maintainable against an order
refusing to condone delay in filing an application u/s. 34 of the
Arbitration Act, 1996 to set aside an award.
Arbitration and Conciliation, 1996 - s. 37(1)(c) - Arbitration
Act, 1940 - s.39(1)(vi) - Held: s. 39(1)(vi) of the 1940 Act is in pari
materia to s. 37(1)(c) of the Arbitration Act, 1996 - This was held in
two of the judgments of the Supreme Court i.e. Chief Engineer of
BPDP/REO Ranchi v. Scoot Wilson Kirpatrick India (P.) Ltd. (2006)
13 SCC 622:[2006] 8 Suppl. SCR 836 and Fuerst Day Lawson Ltd.
v. Jindal Exports Ltd. (2011) 8 SCC 333: [2011] 11 SCR 1.
Allowing the appeal, the Court
HELD: Whether order of the Single Judge of the High
Court refusing to condone the Appellant's delay in filing an
application u/s. 34 of the Arbitration and Conciliation Act, 1996
is an appealable order u/s. 37(1)(c) of the said Act ?
1. A reading of section 34(1) of the Arbitration and
Conciliation Act, 1996 would make it clear that an application
made to set aside an award has to be in accordance with both
sub-sections (2) and (3). This would mean that such application
would not only have to be within the limitation period prescribed
by sub-section (3), but would then have to set out grounds under
sub-sections (2) and/or (2A) for setting aside such award. What
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follows from this is that the application itself must be within time,
and if not within a period of three months, must be accompanied
with an application for condonation of delay, provided it is within
a further period of 30 days, this Court having made it clear that
section 5 of the Limitation Act, 1963 does not apply and that any
delay beyond 120 days cannot be condoned - State of Himachal
Pradesh v. Himachal Techno Engineers and Anr. (2010) 12 SCC
210 at paragraph 5. [Para 8][839-G-H; 840-A-B]
2. Now coming to section 37(1)(c) of the 1996 Act. It is
important to note that the expression "setting aside or refusing
to set aside an arbitral award" does not stand by itself. The
expression has to be read with the expression that follows -
"under section 34". Section 34 is not limited to grounds being
made out under section 34(2). Obviously, therefore, a literal
reading of the provision would show that a refusal to set aside an
arbitral award as delay has not been condoned under sub-section
(3) of section 34 would certainly fall within section 37(1)(c). The
aforesaid reasoning is strengthened by the fact that under section
37(2)(a), an appeal lies when a plea referred to in sub-section (2)
or (3) of section 16 is accepted. This would show that the
Legislature, when it wished to refer to part of a section, as
opposed to the entire section, did so. Contrasted with the
language of section 37(1)(c), where the expression "under section
34" refers to the entire section and not to section 34(2) only, the
fact that an arbitral award can be refused to be set aside for refusal
to condone delay under section 34(3) gets further strengthened.
[Para 9][840-B-E]
3. In Essar Constructions, a judgment rendered under
section 39 of the Arbitration Act, 1940 this Court was faced with
the same question as is raised in this appeal. In Essar
Constructions it was held that "the order refusing to condone
the delay in filing the claim petition has the effect of finally
disposing of the original petition. Such an order can, therefore,
be treated as an award and hence it is appealable". [Paras 10 and
12][840-E-F; 841-G-H; 842-A]
4. It will be noticed that so far as the present question is
involved, section 39(1)(vi) of the 1940 Act is in pari materia to
section 37(1)(c) of the Arbitration Act, 1996. This was held in
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two of the judgments of the Supreme Court i.e. Chief Engineer
of BPDP/REO Ranchi v. Scoot Wilson Kirpatrick India (P.) Ltd.
and Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. [Para 14]
[843-C-D]
5. The reasoning in Essar Constructions commends itself
to this Court, being on a pari materia provision to that contained
in section 37(1)(c) of the Arbitration Act, 1996. This Court may
only add that the reasoning of the aforesaid judgment is further
strengthened by analysis of the additional words "under section
34" which occur in section 37(1)(c), and which are absent in section
39(1)(vi) [the pari materia provision to section 34 of the
Arbitration Act, 1996 being section 30 of the Arbitration Act,
1940]. [Para 19][846-C-E]
6. The counsel for the respondent has relied on section 5
of the Arbitration Act, 1996. According to respondent, in
furtherance of this object, section 37 was enacted giving a limited
right of appeal. He argued that an appeal, being a creature of
statute should not, therefore, be enlarged beyond what is
provided by the Legislature. This section does not take
respondent's argument much further, as after the non-obstante
clause, the section states that no judicial authority shall intervene
"except where so provided in this Part". What is "provided in
this part" is section 37, which therefore brings us back to square
one. Undoubtedly, a limited right of appeal is given under section
37 of the Arbitration Act, 1996. But it is not the province or duty
of this Court to further limit such right by excluding appeals which
are in fact provided for, given the language of the provision as
interpreted by us hereinabove. Thus, this last argument also has
no legs on which to stand. [Paras 35 and 36][856-G-H]
7. Consequently, the question of law is answered by stating
that an appeal under section 37(1)(c) of the Arbitration Act, 1996
would be maintainable against an order refusing to condone delay
in filing an application under section 34 of the Arbitration Act,
1996 to set aside an award. [Para 37][857-B-D]
Essar Constructions v. N.P. Rama Krishna Reddy (2000)
6 SCC 94 : [2000] 3 SCR 923; Chief Engineer of
BPDP/REO Ranchi v. Scoot Wilson Kirpatrick India (P.)
Ltd. (2006) 13 SCC 622 : [2006] 8 Suppl. SCR 836;
CHINTELS INDIA LTD. v. BHAYANA BUILDERS PVT. LTD.
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Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. (2011) 8
SCC 333 : [2011] 11 SCR 1; Union of India v. Manager,
Jain and Associates (2001) 3 SCC 277 : [2001] 1 SCR
889; Amar Nath Om Prakash v. State of Punjab (1985)
1 SCC 345 : [1985] 2 SCR 72 - relied on.
State of Maharashtra and Anr. v. M/s Ramdas
Construction Co. and Anr. 2006 (6) Mah. L.J. 678;
Union of India v. Radha Krishna Seth and Anr. 2005
SCC OnLine All 8400 - overruled.
BGS SGS Soma JV. v. NHPC Limited (2020) 4 SCC 234
- distinguished.
Union of India v. Simplex Infrastructures Ltd. (2017)
14 SCC 225 - held inapplicable.
Harmanprit Singh Sidhu v. Arcadia Shares and Stock
Brokers Pvt. Ltd. 2016 SCC OnLine Del 5383; State
of Himachal Pradesh v. Himachal Techno Engineers
and Anr. (2010) 12 SCC 210 - referred to.
Case Law Reference
[2000] 3 SCR 923
relied on
Para 3
[2006] 8 Suppl. SCR 836
relied on
Para 3
[2011] 11 SCR 1
relied on
Para 13
(2020) 4 SCC 234
distinguished
Para 3
(2017) 14 SCC 225
held inapplicable
Para 4
(2010) 12 SCC 210
referred to
Para 8
[2001] 1 SCR 889
relied on
Para 15
[1985] 2 SCR 72
relied on
Para 28
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 4028 of 2020.
From the Judgment and Order dated 04.12.2020 of the High Court
of Delhi at New Delhi in FAO(OS)(Comm) No. 68 of 2020.
 Mukul Rohtagi, Sr. Adv., Rajshekhar Rao, Arshdeep Singh, Kotla
Harshavardhan, Ms. Neeha Nagpal, Areeb Amanullah, Karthik Sundar,
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Ms. Mansi Sood, Ms. Vishakha Gupta, Shreedhar Kale, Udbhav Nanda,
Malak Manish Bhatt, Saurabh Kirpal, Gaurav Mitra, Ms. Meghna Mishra,
Debmalya Banerjee, Ms. Manmeet Kaur, Rohan Sharma, Kartik
Bhatnagar, Yashvardhan Bandi, Ujjwal Singh, Vardaan Wanchoo, Ms.
Anjali Dwivedi for M/S. Karanjawala & Co., Advs. for the appearing
parties.
The Judgment of the Court was delivered by
R. F. NARIMAN, J.
1. This appeal arises out of a certificate issued under Article 133
read with Article 134A of the Constitution of India by the High Court of
Delhi in the impugned judgment dated 04.12.2020. The question raised
in this appeal is whether a learned single Judge's order refusing to
condone the Appellant's delay in filing an application under section 34 of
the Arbitration and Conciliation Act, 1996 ("Arbitration Act, 1996") is
an appealable order under section 37(1)(c) of the said Act. After
considering, in particular, two judgments of this Court, the High Court
held:
"18. We have considered the rival contentions. Though, as observed
by us in the hearing on 5th November, 2020, in view of BGS SGS
Soma JV supra having referred to the grounds under Section 34
in entirety and not confined to Section 34(2) only, we were inclined
to differentiate between a case of return of an application under
Section 34 on the ground of the Court to which it is presented not
having territorial jurisdiction, on the one hand and rejection of an
application under Section 34 on the ground of having not been
filed within the prescribed time, on the other hand, but in view of
the Supreme Court having been approached against Ramdas
Construction Co. supra, expressly holding an appeal as the one
before us, to be not maintainable under Section 37, and having
dismissed the appeal with a speaking order, though not expressing
any opinion on the maintainability of the appeal, we consider
ourselves bound thereby and hold this appeal to be not
maintainable.
19. We may however observe that Section 37(1)(b) also, while
providing for the appealable orders, refers to Section 34 in entirety
and not to Section 34(2); though BGS SGS Soma JV supra has
held that the order which is appealable thereunder is an order
CHINTELS INDIA LTD. v. BHAYANA BUILDERS PVT. LTD.
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testing the arbitral award on the grounds set out in Section 34 but
in our humble opinion if the intention of the legislature was to
confine the appeals only to grounds under Section 34(2), nothing
prevented them from, instead of referring to Section 34 generally
in Section 37(1)(c), referring only to Section 34(2). We are of the
view that sub-section (3) of Section 34, by use of the words 'but
not thereafter', as interpreted in Union of India Vs. Popular
Construction Co. (2001) 8 SCC 470, restricts the power otherwise
vested in Court to condone the delay beyond thirty days, the same
also creates a ground of time bar for refusing to set aside the
award and is part of the self-contained code for setting aside of
the award; thus, refusal to set aside an award on the ground of
the said time bar, would be a refusal within the meaning of Section
37 and appealable under Section 37. There is also merit in the
contention of Mr. Rajshekhar Rao, Advocate for the appellant
that refusal to condone the delay also entails affirmation of the
underlying order. Mention in this regard may be made of Section
27 of the Limitation Act, 1963 which, though in the context of suit
for possession of any property, extinguishes the right to property
at the determination of the period prescribed for instituting the
suit for possession thereof. However we need not discuss further
since, as aforesaid, we are bound by the dicta in BGS SGS Soma
JV and Ramdas Construction Co. supra.
20. We may also consider another aspect. By reading Section 37
as not permitting an appeal against refusal to condone the delay in
applying for setting aside of the award, the persons aggrieved by
the award are left with no remedy but to approach the Supreme
Court by way of a petition under Article 136 of the Constitution of
India. The refusal to set aside the award may not necessarily be
by the Commercial Division of the High Court but may also be by
the Commercial Courts of the country. No other remedy would
be available to the persons aggrieved by the award, against the
decision of any Commercial Court in the country refusing to
condone the delay in applying for setting aside of the award, leaving
such persons either with the option of accepting / remaining bound
by the award even if having excellent grounds for setting aside of
the same or of approaching the Supreme Court under Article 136
of the Constitution of India, thereby putting an avoidable burden
on the Supreme Court which, as per the scheme of the Constitution
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of India, was envisaged to hear limited number of matters entailing
constitutional issues and not to hear matters of condonation of
delay. Though undoubtedly the scheme of expediency and limited
judicial intervention is ingrained in the Arbitration Act but at the
same time it cannot be forgotten that the Act nevertheless provides
remedies against the arbitral award and it is felt that to vest the
order, of any Commercial Court in the country refusing to condone
the delay in applying for setting aside of the award, and which
delay can be for varying reasons as diverse as the social,
geographical and economic conditions prevalent in this country,
and not even providing any opportunity to the High Courts to have
a look therein, would be a very harsh outcome.
21. Thus, while dismissing the appeal as not maintainable, being
bound by the dicta of the Supreme Court in BGS SGS Soma JV
and in Ramdas Construction Co. supra, we grant certificate under
Article 133 read with Article 134A of the Constitution of India to
the appellant."
2. It may be noted that the learned single Judge of the High Court
dismissed the application for condonation of delay in an application filed
under section 34 of the Arbitration Act, 1996 to set aside an award
dated03.05.2019vide its judgment dated 04.06.2020, and consequently
dismissed the section 34 application itself.
3. Shri Rajshekhar Rao, learned Advocate appearing on behalf of
the Appellant, has relied strongly upon the judgment of this Court in
Essar Constructions v. N.P. Rama Krishna Reddy (2000) 6 SCC
94, which was a judgment delivered under section 39 of the Arbitration
Act, 1940. His argument is that since section 39 of the 1940 Act is in
parimateria with section 37 of the Arbitration Act, 1996, in that an appeal
lies where a single Judge refuses to condone delay, resulting in an order
refusing to set aside an arbitral award, the ratio ofEssar Constructions
(supra) would apply on all fours to the same provision contained in section
37. This being so, he argued that it is clear that refusal to condone delay
would result in a refusal to set aside an award, an appeal against such
order being maintainable under section 37 of the Arbitration Act, 1996.
He also strongly relied upon the judgments of this Court in Chief
Engineer of BPDP/REO Ranchi v. Scoot Wilson Kirpatrick India
(P.) Ltd. (2006) 13 SCC 622 and Fuerst Day Lawson Ltd. v. Jindal
Exports Ltd. (2011) 8 SCC 333 to buttress his submission that section
CHINTELS INDIA LTD. v. BHAYANA BUILDERS PVT. LTD.
[R.F. NARIMAN, J.]
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39 of the 1940 Act was aparimateria provision to section 37 of the
Arbitration Act, 1996. He then relied upon judgmentsof the Madhya
Pradesh1, Bombay2, Karnataka3, Delhi4 and Calcutta5 High Courts to
argue that an order refusing to condone delay stands on a completely
different footing from an order which condones delay, as the latter order
cannot be said to impart any finality to the proceeding, as, when an order
condones delay, it cannot be said that the court has refused to set aside
an award as it may ultimately set aside the aforesaid award on the grounds
mentioned in section 34(2) of the Arbitration Act, 1996. He further argued
that the judgment of the Allahabad High Court in Union of India v.
Radha Krishna Seth and Anr., 2005 SCC OnLine All 8400 and that of
the Bombay High Court in State of Maharashtra v. Ramdas
Construction Co. 2006 (6)Mah. L.J. 678 did not state the law correctly
and ought to be overruled by this Court. He argued that where a right of
appeal is granted by statute, a dismissal on a preliminary ground is
nevertheless a dismissal of the appeal, since it cannot be heard thereafter.
He also argued that a right of appeal, once granted, ought not to be
limited by statutory interpretation where the words used are capable of
a wider construction. In particular, referring to the language of section
37(1)(c) of the Arbitration Act, 1996, he argued that there must be refusal
to set aside an arbitral award "under section 34", which includes section
34(3), under which a court may refuse to condone delay in filing an
application under section 34. Coming to the two Supreme Court judgments
referred to in the impugnedjudgment, it was his contention that the focus
of thisCourt in BGS SGS Soma JV. v. NHPC Limited(2020) 4 SCC
234, was on a completely different question, namely, as to whether an
application to set aside an award under section 34 should be returned to
the proper court dependent upon where the seat of arbitration was located.
1Bisleri International Pvt. Ltd. and Ors. v. Sun Petpack Jabalpur Pvt. Ltd. and Anr.
2009 (4) M.P.L.J. 514.
2E-Square Leisure Pvt. Ltd., Pune v. K.K. Dani Consultants and Engineers Pvt. Ltd.
2013 (3) Mh.L.J. 24;
Jayshri Ginning & Spinning Pvt. Ltd. v. C.A. Galiakotwala & Company Pvt. Ltd. 2016
SCC OnLine Bom 5067.
3M/s Crompton Greaves Ltd. v. M/s Annapurna Electronics and Ors. ILR 2015 KAR
4199.
4Harmanprit Singh Sidhu v. Arcadia Shares & Stock Brokers Pvt. Ltd. (2016) 234 DLT
30.
5Damodar Valley Corporation v. Sanjay Singh Rathor 2018 SCC OnLine Cal 4014.
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It was only in the course of discussion relatable to this question that this
Court approved certain observations made in the decision of the Delhi
High Court inHarmanprit Singh Sidhu v. Arcadia Shares and Stock
Brokers Pvt. Ltd. 2016 SCC OnLine Del 5383, in which a learned
single Judge of the Delhi High Court allowed an application for
condonation of delay,a Division Bench then holding that an appeal against
such an order was not maintainable under section 37 of the Arbitration
Act, 1996. He contended that it is only in this context that paragraph 17
of BGS SGS Soma (supra) approved of the observations made
inHarmanprit Singh Sidhu (supra), inasmuch as it cannot be said that
the Court has refused to set aside the award under section 34, as it may
yet do so if any of the grounds contained in section 34(2) are made out.
So far as this Court's order dated 12.04.2017 in State of Maharashtra
and Anr. v. M/s Ramdas Construction Co. and Anr. [C.A. Nos.
5247-5248 of 2007]is concerned, he argued that this Court did not go
into the maintainability aspect at all, but ultimately dismissed the Civil
Appeals on the ground that the District Judge, Nagpur had held that the
period of delay being beyond four months, the court had no jurisdiction
to entertain the application for condonation of delay or the application on
merits under section 34 of the Arbitration Act, 1996.
4. Shri Mukul Rohatgi, learned Senior Advocate appearing on
behalf of the Respondent, strongly refuted the fact that section 37 of the
Arbitration Act, 1996 is in parimateria with section 39 of the 1940 Act.
According to him,section 39 of the 1940 Act is materially different, and
concerns itself with grounds that were made out under section 30 of the
said Act, which grounds were completely different from the grounds
that could be made out under section 34(2) and (2A) of the 1996 Act.
Therefore, Shri Rohatgi argued that section 37 needs to be interpreted
on its own terms, and that consequently, this Court's judgment in Essar
Constructions (supra) would not be applicable. He relied strongly upon
section 5 of the Arbitration Act, 1996, by which it was statutorily made
clear that judicial intervention is to be minimal in the arbitration process.For
this purpose he also relied upon the Statement ofObjects and Reasons
for enacting the Arbitration Act, 1996. He then went on to state that
section 37 of the Arbitration Act, 1996 in fact carries out this object.He
stressed that this object was reinforced first, by the non-obstante clause
contained in section 37(1); andsecond, by the fact that the grounds of
appeal contained in section 37 are exhaustive, and makes explicit that an
appeal shall lie only from the following orders "and from no others". He
CHINTELS INDIA LTD. v. BHAYANA BUILDERS PVT. LTD.
[R.F. NARIMAN, J.]
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also stressed the fact that the word "namely" makes it clear that it is
only from the orders set out in section 37 that an appeal can be filed. He
went on to argue that an appeal, being a creature of statute, has to be
read as the statute provides without expanding any of the words
used.According to him, section 37(1)(c) is clear and without any
ambiguity - the expression "under Section 34" has to be read with the
preceding words "setting aside or refusing to set aside an arbitral award",
and when so read, it is clear that the refusal to set aside the award can
only be on merits and not on some preliminary ground which would then
lead to a refusal to set aside the award. He relied strongly upon the fact
that this Court in BGSSGS Soma (supra) had approved of Harmanprit
Singh Sidhu (supra), and stated exactly this in paragraph 17 thereof.He
then strongly relied upon the judgment in Union of India v. Simplex
Infrastructures Ltd. (2017) 14 SCC 225 for the proposition that whether
delay is or is not condoned, the same result ensues - it cannot be said
that by condoning or refusing to condone delay, an arbitral award either
gets or does not get set aside. He ended by saying that in point of fact
the Bombay High Court Division Bench judgment in Ramdas
Construction Co. (supra) was the correct enunciation of the law, and
that we should accept this enunciation and overrule the judgments of the
other High Courts.
5. Having heard learned counsel for the parties, it is important to
first set out section 37 of the Arbitration Act, 1996 which is as
follows:
"37. Appealable orders.-(1) Notwithstanding anything
contained in any other law for the time being in force, an appeal
shall lie from the following orders (and from no others) to the
Court authorised by law to hear appeals from original decrees of
the Court passing the order, namely:-
(a) refusing to refer the parties to arbitration under section 8;
(b) granting or refusing to grant any measure under section 9;
(c) setting aside or refusing to set aside an arbitral award under
section 34.
(2) Appeal shall also lie to a court from an order of the arbitral
tribunal-
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(a) accepting the plea referred to in sub-section (2) or sub-section
(3) of section 16; or
(b) granting or refusing to grant an interim measure under section
17.
(3) No second appeal shall lie from an order passed in appeal
under this section, but nothing in this section shall affect or
takeaway any right to appeal to the Supreme Court."
6. Since we are directly concerned with section37(1)(c), it is
important to advert to the language of section 34 as well. Section 34(1)
reads as follows:
"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)."
7. Section 34(2) and (2A) then sets out the grounds on which an
arbitral award may be set aside. Section 34(3), which again is material
for decision of the question raised in this appeal, reads as follows:
"(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."
8. A reading of section 34(1) would make it clear that an application
made to set aside an award has to be in accordance with both subsections (2) and (3). This would mean that such application would not
only have to be within the limitation period prescribed by sub-section(3),
but would then have to set out grounds under sub-sections (2) and/or
(2A) for setting aside such award. What follows from this is that the
application itself must be within time, and if not within a period of three
months, must be accompanied with an application for condonation of
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delay, provided it is within a further period of 30 days, this Court having
made it clear that section 5 of the Limitation Act, 1963 does not apply
and that any delay beyond 120 days cannot be condoned - see State of
Himachal Pradesh v. Himachal Techno Engineers and Anr. (2010)
12 SCC 210 at paragraph 5.
9. We now come to section 37(1)(c). It is important to note that
the expression "setting aside or refusing to set aside an arbitral award"
does not stand by itself. The expression has to be read with the expression
that follows -"under section 34". Section 34 is not limited to grounds
being made out under section 34(2). Obviously, therefore, a literal reading
of the provision would show that a refusal to set aside an arbitral award
as delay has not been condoned under sub-section (3) ofsection 34 would
certainly fall within section 37(1)(c).The aforesaid reasoning is
strengthened by the fact that under section 37(2)(a), an appeal lies when
a plea referred to in sub-section (2) or (3) of section 16 is accepted. This
would show that the Legislature, when it wished to refer to part of
asection, as opposed to the entire section, did so. Contrasted with the
language of section 37(1)(c), where the expression "under section 34"
refers to the entire section and not to section 34(2) only, the fact that an
arbitral award can be refused to be set aside for refusal to condone
delay under section 34(3) gets further strengthened.
10. In Essar Constructions (supra), a judgment rendered under
section 39 of the 1940 Act, this Court was faced with the same question
as is raised in the appeal before us. In order to appreciate the ratio of
this judgment, it is necessary to first set out section 39 of 1940 Act,
which reads as under:
"39. Appealable orders:- (1) An appeal shall lie from the
following orders passed under this Act (and from no others) to
the Court authorised by law to hear appeals from original decrees
of the Court passing the order:
An order -
(i) superseding an arbitration;
(ii) on an award stated in the form of a special case;
(iii) modifying or correcting an award;
(iv) filing or refusing to file an arbitration agreement;
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(v) staying or refusing to stay legal proceedings where there is an
arbitration agreement;
(vi) setting aside or refusing to set aside an award;
Provided that the provisions of this section shall not apply to any
order passed by a Small Cause Court.
(2) No second appeal shall lie from an order passed in appeal
under this section, but nothing in this section shall affect or take
away any right to appeal to the Supreme Court."
11. The question which the Court was required to answer was set
out as follows:
"5. But was the Civil Judge's order dismissing the respondent's
application under Section 5 at all revisable under Section 115 of
the Code or did an appeal lie from it under Section 39 of the
Arbitration Act, 1940? The answer is of moment as the powers
of an appellate court are wider than those available under Section
115. Section 39(1)(vi) of the Arbitration Act, 1940 says that an
appeal shall lie inter alia from an order "refusing to set aside an
award".
6. To arrive at a conclusion as to whether the order passed by the
Senior Civil Judge, Kakinada was an order "refusing to set aside
the award", we have to consider the facts."
12. After setting out the order of the Senior Civil Judge, who
refused to condone delay in filing an application for setting aside the
award, the Court then held:
"11. The outcome of the order in effect wasthat the prayer for
setting aside the award was refused on the ground of delay.
12. The "effect test" was applied by the High Court of Andhra
Pradesh in Babumiyan&Mastan v. K. Seethayamma [AIR 1985
AP 135] which said:
"In the light of the rulings in G. Gopalaswami v. G.
Navalgaria [AIR 1967 Mad 403] and the decision of the Bench
in CMA No. 612 of 1977 dated 3-4-1978, the legal position may
be enunciated as follows: The order refusing to condone the delay
in filing the claim petition has the effect of finally disposing of the
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original petition. Such an order can, therefore, be treated as an
award and hence it is appealable."
13. Again a Division Bench of the Assam High Court
in MafizuddinBhuyan v. AlimuddinBhuyan [AIR 1950 Ass 191]
has said:
"Whether objections to an award are dismissed on the merits or
they are dismissed on the ground that they are filed beyond time,
the Court by dismissing them in effect refuses to set aside the
award, and an order refusing to set aside an award is clearly
appealable under Section 39."
14. In some High Courts, no separate application is filed under
Section 5 of the Limitation Act and the prayer for condonation of delay
is included along with the prayers made for substantive relief. Courts
have entertained appeals from an order dismissing an application on
the ground of limitation. Thus, in State of W.B. v. A. Mondal [AIR
1985 Cal 12 (DB)] where an application under Section 30 of the
Arbitration Act was dismissed on the ground of limitation, an appeal
was entertained.(See also Damodaran v. Bhaskaran [(1988) 2 KLT
753].)
15. The procedure appears to have been approved by the Supreme
Court in the case of Union of India v. Union Builders [AIR
1985 Cal 337 (DB)] where on an appeal to the Supreme Court
from an order dismissing an application under Section 30 on the
ground of delay, the appeal was remanded to the High Court to be
disposed of.
16. The position should be no different in courts where a separate
application under Section 5 of the Limitation Act is required to be
filed. If the various High Courts' decisions noted earlier are correct,
then the application under Section 5 being dismissed, the application
under Section 30 would consequently also have to be dismissed
although this might be a mere formality. The end result would be
the same.
xxx xxx xxx
21. Section 39(1)(vi) of the Arbitration Act, 1940 does not indicate
the grounds on which the court may refuse to set aside the award.
There is nothing in its language to exclude a refusal to set aside
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the award because the application to set aside the award is barred
by limitation. By dismissing the application albeit under Section 5,
the assailability of the award is concluded as far as the court
rejecting the application is concerned. Ultimately therefore, it is
an order passed under Section 30 of the Arbitration Act though by
applying the provisions of the Limitation Act."
13. The Court ultimately concluded:
"25. Reading Section 39(1)(vi) and Section 17 together, it would
therefore follow that an application to set aside an award which is
rejected on the ground that it is delayed and that no sufficient
cause has been made out under Section 5 of the Limitation Act
would be an appealable order."
14. It will be noticed that so far as the present question is involved,
section 39(1)(vi) of the 1940 Act is inparimateria to section 37(1)(c) of
the Arbitration Act, 1996. This was in fact held in two of the judgments
of this Court. In Chief Engineer of BPDP/REO Ranchi (supra), this
Court when considering a similar question held as follows:
"5. Section 37(1)(b) of the Act is in parimateria with Section
39(1)(vi) of the Arbitration Act, 1940 (in short "the old Act"). The
provisions in the Acts read as follows:
1996 Act
"37. (1) An appeal shall lie from the following orders (and from
no others) to the court authorised by law to hear appeals from
original decrees of the court passing the order, namely-
***
(b) setting aside or refusing to set aside an arbitral award under
Section 34."
1940 Act
"39. Appealable orders.-(1) An appeal shall lie from the
following orders passed under this Act (and from no others) to
the court authorised by law to hear appeals from original decrees
of the court passing the order:
An order-
***
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(vi) setting aside or refusing to set aside an award:"
15. Having so held, this Court then referred to and followed the
judgment in Essar Constructions (supra) and the judgment contained
in Union of India v.Manager, Jain and Associates(2001) 3 SCC
277, ultimately holding:
"8. The decision in Popular Construction case [(2001) 8 SCC
470] did not deal with specific issues in this case. In that decision
it was held that in respect of "sufficient cause cases" the provisions
of Section 34(3) of the Act which are special provisions relating
to condonation of delay override the general provisions of Section
5 of the Limitation Act, 1963 (in short "the Limitation Act"). The
position was reiterated in the Western Builders case [(2006) 6
SCC 239] and also in Fairgrowth Investments
Ltd. v. Custodian [(2004) 11 SCC 472] . There can be no quarrel
with the proposition that Section 5 of the Limitation Act providing
for condonation of delay is excluded by Section 34(3) of the Act.
9. But the question in the instant case is not about the applicability
of Section 5 of the Limitation Act, and the question really is
whether the appeal was maintainable. The High Court did not
consider this aspect. The appeal is clearly maintainable. Therefore,
the order of the High Court is set aside. The High Court shall deal
with the matter and examine the respective stand on merits treating
the appeal to be maintainable."
16. Likewise, in Fuerst Day Lawson Ltd. (supra)this Court held:
"37. These general principles are culled out from the decisions of
this Court rendered under Section 104 CPC and various other
Acts, as noted above. But there is another set of decisions of this
Court on the question under consideration rendered in the context
of Section 39 of the 1940 Act. Section 39 of the erstwhile Act
contained the provision of appeal and provided as follows:
"39.Appealable orders.-(1) An appeal shall lie from the following
orders passed under this Act (and from no others) to the court
authorised by law to hear appeals from original decree of the
court passing the orders:
An order-
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(i)
superseding an arbitration;
(ii)
on an award stated in the form of a special case;
(iii)
modifying or correcting an award;
(iv)
filing or refusing to file an arbitration agreement;
(v)
staying or refusing to stay legal proceedings where there
isan arbitration agreement;
(vi)
setting aside or refusing to set aside an award:
Provided that the provisions of this section shall not apply to any
order passed by a Small Cause Court.
(2) No second appeal shall lie from an order passed in appeal
under this section, but nothing in this section shall affect or take
away any right to appeal to the Supreme Court."
(Insofar as relevant for the present, Section 37 of the 1996 Act, is
very similar to Section 39 of the previous Act as quoted above.)"
17. It then referred to an argument of counsel that there would be
no material difference between the provisions of section 39 of Arbitration
Act, 1940 and section 37 of the Arbitration Act, 1996 vis-à-vis section
50 of the 1996 Act, as follows:
"43. Mr Dave, in reply submitted that the words "(and from no
others)" occurring in Section 39 of the 1940 Act and Section 37
of the 1996 Act were actually superfluous and seen, thus, there
would be no material difference between the provisions of Section
39 of the 1940 Act or Section 37 of the 1996 Act and Section 50
of the 1996 Act and all the decisions rendered on Section 39 of
the 1940 Act will apply with full force to cases arising under Section
50 of the 1996 Act."
18. So far as section 37 of the Arbitration Act, 1996 and section
39 of the Arbitration Act, 1940 were concerned, this Court agreed with
counsel's argument, but disagreed with the submission insofar as section
50 of the 1996 Act was concerned, as follows:
"52. Having regard to the grammatical use of brackets or
parentheses, if the words "(and from no others)" occurring in
Section 39 of the 1940 Act or Section 37 of the 1996 Act are
viewed as "an explanation or afterthought" or extra information
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separate from the main context, then, there may be some substance
in Mr Dave's submission that the words in parenthesis are
surplusage and in essence the provisions of Section 39 of the
1940 Act or Section 37 of the 1996 Act are the same as Section
50 of the 1996 Act. Section 39 of the 1940 Act says no more and
no less than what is stipulated in Section 50 of the 1996 Act. But
there may be a different reason to contend that Section 39 of the
1940 Act or its equivalent Section 37 of the 1996 Act are
fundamentally different from Section 50 of the 1996 Act and hence,
the decisions rendered under Section 39 of the 1940 Act may not
have any application to the facts arising under Section 50 of the
1996 Act. But for that we need to take a look at the basic scheme
of the 1996 Act and its relevant provisions."
19. The reasoning in Essar Constructions (supra) commends
itself to us, being on a parimateria provision to that contained in section
37(1)(c) of the Arbitration Act, 1996. We may only add that the reasoning
of the aforesaid judgment is further strengthened by our analysis of the
additional words "under section 34" which occur in section 37(1)(c),
and which are absent in section 39(1)(vi) [the pari858
materia provision to section 34 of the Arbitration Act, 1996 being
section 30 of the Arbitration Act, 1940].
20. In point of fact, the "effect doctrine" referred to in Essar
Constructions (supra) is statutorily inbuilt in section 37 of the Arbitration
Act, 1996 itself.For this purpose, it is necessary to refer to sections
37(1)(a) and 37(2)(a).So far as section 37(1)(a) is concerned, where a
party is referred to arbitration under section 8, no appeal lies. This is for
the reason that the effect of such order is that the parties must go to
arbitration, it being left to the learned Arbitrator to decide preliminary
points under section 16 of the Act, which then become the subject matter
of appeal under section 37(2)(a) or the subject matter of grounds to set
aside under section 34 an arbitral award ultimately made, depending
upon whether the preliminary points are accepted or rejected by the
arbitrator. It is also important to note that an order refusing to refer
parties to arbitration under section 8 may be made on a prima facie
finding that no valid arbitration agreement exists, or on the ground that
the original arbitration agreement, or a duly certified copy thereof is not
annexed to the application under section 8.